Farm supply co-ops and other ag retailers are seeing their accounts receivable balances on the rise and are facing challenges as a result. A new report out from Cobank says retailers are having to adjust to tougher financial conditions because of the current ag commodity cycle. This is a direct result of low commodity prices that have knocked down farm incomes and tightened up on-farm cash flows. The ag industry has seen a downturn in fertilizer prices as well as mergers in the seed and fertilizer industries. “The drop in farm income over the past three seasons is the biggest we’ve seen since the Great Depression,” said Tyler Ehmke, a Cobank senior economist. He said accounts receivable balances at ag retailers across the country have jumped 11 percent this year and will likely go higher as farmers continue to struggle with their cash flow balances.
Fertilizers usually account for half the revenue stream for ag retailers, but those prices are falling as well, making it difficult to maintain positive margins.
Source: NAFB News Service