Michael Swanson is a Chief Agricultural Economist for Wells Fargo with more information about the ag economy than most of us can wrap our heads around. He recently spoke at the 2016 Crop Insurance and Reinsurance Bureau Annual Meeting and tried to break down some of his information in a seminar entitled “Challenges Facing the World Agriculture Market.” Chuck Zimmerman caught up with him afterward to talk about some of his key takeaways.
Swanson started off with the cost crop insurance premiums as part of a grower’s budget. “Crop insurance premiums, as measured by the government, are only 4 percent of the total spending in the ag sector, so when we talk about what’s too expensive and what we should cut money on, that’s way down the list,” Swanson says. Producers wanting to cut costs should take a look at areas such as cash rents, fertilizer and machinery as more effective ways to reduce spending.
For growers hoping to increase income, however, ethanol probably isn’t the way to go, Swanson cautions. With gas prices so low the consumer would pay more to increase the amount of ethanol. Since a vast majority of the population are drivers, agriculture should try to stay friends with them. But there are ways to make $4.00 corn work on a farm, Swanson reassures us. If prices settle there growers have the opportunity to make money if the set-up of the operation is designed accordingly.
Listen to more of Chuck’s interview here: Interview with Michael Swanson, Chief Agricultural Economist, Wells Fargo