AgWired

The financial crisis that has gripped many of the urban areas of the country is now spreading out to the rural parts of America. And that is bad news (obviously)… and actually some good news.

Attendees of the Farm Foundation’s Food and Agriculture Policy Summit in Washington, D.C. heard from a panel looking at the risks and challenges facing American agriculture… and the state of rural finances was on that list.

While most of the traditional rural banks have stayed out of much of the mess their urban cousins got into when financing homes that lost their values, Paul Ellinger, an extension specialist in agricultural finance with the University of Illinois, told the group that the impact is starting to be felt in rural America because more rural financing was starting to come from the large institutions and insurance companies that have been hit by the crisis. He says commodities are taking the first hit.

“We’re now seeing the indirect effects of the financial crisis now that it is affecting commodity prices. Now, land prices are starting to soften a little in various areas.”

Ellinger says there are funds available for agriculture right now, but bankers might get a bit more choosy if margins get too tight.

So what’s the good news in all this? Well, Ellinger says the softening of land prices might slow the trend of prime farmland being turned into housing tracks… an issue we discussed in one of my earlier posts.

That’s another one of the great things about a conference like this, where lots of different viewpoints are brought to the table. You see how interconnected everything really is.

If you want to hear my conversation with Paul just before he took the stage at the Farm Foundation meeting, click here: ellinger1.mp3

Download the audio here. (mp3)

Rural America’s infrastructure challenges cut to the heart of the six challenges outlined during this morning’s session of the Farm Foundation’s Food and Agriculture Policy Summit being held in Washington, D.C.

As you might remember from my earlier post, this morning, Farm Foundation Pres. Neil Conklin outlined the six major areas of challenges facing agriculture over the next 30 years: 1. Global financial markets and recession, 2. Global food security, 3. Global energy security, 4. Climate change, 5. Competition for natural resources, and 6. Global economic development. Gene Griffin with the Upper Great Plains Transportation Institute at North Dakota State University told the group attending today’s Farm Foundation session that a crumbling rural infrastructure, in particular, the roads, touches each one of these six challenges and threatens to make them even worse.

“The engineers will tell you [the pavements] look OK on the surface, but underneath it is starting to crumble.” Griffin says by the time the damage is clearly noticeable, it costs two to three times as opposed to normal maintenance and repair.

“Just getting the political will of people to pay for systems they want to use… but they’ve gotten used to the idea they don’t necessarily have to pay for it. And I think those are two huge problems.”

Griffin says in his home state, where rural roads are seeing a huge amount of big trucks working the biodiesel and ethanol industries and North Dakota’s burgeoning petroleum industry is also taking a toll, that infrastructure needs the funding… although it might not see the same amount of traffic a higher-density population area would see. He says if the cities want the fuels that are produced in rural areas, we need to develop a system that links the high-density traffic areas with the low-density ones.

He says it comes down to deciding if we’re going to pay for the infrastructure that will help us be more energy independent now at a lower price or at a much higher price… down the road.

Listen to my entire conversation with Gene here: Griffin1.mp3

Download the audio here.