How farmers coped with high interest rates, inflation and drought

TWIN FALLS, Idaho (KMVT/KSVT) — Idaho is one of the most agriculturally abundant states. In fact, the state was number one in production of potatoes, barley, alfalfa, peppermint oil, and food trout. However, this did not happen without some difficulties.

“The drought and the economy have been both a double-edged sword for producers,” said Jason Fellows, a first-generation farmer and rancher.

Fellows, an 11-year-old farmer now, had to take out operating loans every year, like most farmers do. However, with massive interest rate hikes in an attempt to fight inflation, it has faced an additional challenge over the past year.

“We’re talking 9% on an operating loan,” he said. 9% is a ton of money considering that farmers and herders live on a 2-3% margin on the goods they produce. »

According to Fellows, rising commodity costs also had a very negative impact.

“We are working on a lower margin because our inputs have cost so much,” he said. “The price of hay is $250/tonne. Those cows that eat the same amount per ton. You can’t ration these cows so you can get the same weight.

With a historic drought continuing to affect the region, a typical solution to inflation has become harder to find.

“The way you can get out of inflation sometimes is to be able to produce more.” the fellows said. “With the drought, we unfortunately cannot produce more. In fact, many people had to cut production simply because they had no water.

After talking to many farmers and ranchers, they say they are a resilient group. Most have plans in place to make ends meet. Fellows says that for him it was very important to have a good relationship with his bank.

“I think your banker is a really good asset for you to consider having a strategic plan in place,” Fellows said. “You will be able to see how you allocate your assets.”

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