News

Interest rates on the rise

The Federal Reserve has raised interest rates for the third time this year which USDA’s Chief Economist says could cause more trouble for farmers.

Rob Johansson says when interest rates have increased in the past, the dollar becomes stronger.  “And that has the effect of making it more difficult for our producers to sell our products overseas, it makes them a little less competitive on the global scene.”

Johansson says higher interest rates can depreciate land and capital equipment values.  “As interest rates go up, it becomes more difficult to buy those and therefore demand for those assets will fall.”

He says higher rates can also lower commodity prices and cost farmers more when borrowing money.

The Fed says short-term rates are now a quarter point higher to keep the economy strong and moving forward.  Rates have been raised eight times since 2015 and are expected to continue higher through next year.