Word on the street is the committee's markup of the budget bill was postponed over disagreements on the Milk Income Loss Contract ... which is a subsidy to dairy farmers. Chairman Saxby Chambliss wants to reauthorize the program for two years at a cost of nearly $1 billion. Some on the committee oppose that plan, saying the money would have to come from other USDA programs.
Money headaches exist in the Southern Hemisphere, as well. But in Brazil those problems are tied N-O-T to a national debt, but to personal liability.
Brazilian farmers in one of that country's booming agricultural regions are running head-on into the problems of rapid expansion, not the least of which is a massive debt load.
An analysis released by a Brazilian agricultural consultancy called Agrosecurity shows farmers in the Mato Grosso region are under enough financial stress that soybean planting intentions likely will shrink.
The analysis says farmers have amassed huge debt in recent years through purchases of land and equipment. Further, repayment of the debt has slowed as the Brazilian currency has strengthened against the U.S. dollar. The Brazilian real has risen 28 percent in value against the dollar in the past year alone. That rise has inflated the dollar-linked debt and depressed local crop prices.
According to the analysis, medium-sized farmers will lose about 8.5 percent on their initial investment for the upcoming crop year. That means a reduction in inputs of 11 percent for corn ... and 20 percent for soybeans. Many farmers, the report says, could go out of business.
Mato Grosso is Brazil's top soybean producing state. Many farmers there held old crop in storage in anticipation of a U.S. drought that never materialized. The expected jump in global soybean prices never happened and the result was ample stocks of low-priced Brazilian beans.
The problem is NOT short-term. Sagging land values, reduced yields from bad weather and soy rust, and rising energy costs all have contributed to the rapid expansion woes.