Farmers feel effect of recession; cut purchases

After largely avoiding the declines felt by other industries, agriculture is being squeezed by the recession, as both crop and land prices fall. As a result, farmers are cutting purchases, creating a ripple effect through rural and farming-related business. "Overall, I think conservative is probably the word that would best describe where we're at on things," farmer Steven Althouse of Wahoo, Neb., told Josh Funk of The Associated Press.

Crop prices that hit records in 2008, are starting to drop, and farmers are seeing less profit. Many who took on loans when crop prices were high are now finding themselves struggling to pay off their debt in tougher times. "At the John Deere dealership in Wahoo, combines and tractors farmers ordered last year with proceeds from $7 per-bushel corn are still being delivered -- despite the fact that corn prices are now closer to $4 per bushel," Funk reports.

But relatively speaking, some say farmers are still in decent financial shape, thanks to lessons learned from the farm crisis of the 1980s. Mike Duffy, an economics professor at Iowa State University, told Funk that the crisis taught farmers to keep their debt low: "About three-fourths of our land [in Iowa] is held without debt. So if it drops in value, it isn't like they're going to have to dump it." (Read more)