The high price of inputs is causing plenty of consternation in corn country as spring begins, but one vital ingredient for farmers remains relatively cheap: money. Interest rates are off lows established around the first of the year, but remain very reasonable by historical standards. That includes loans on both operating notes and real estate mortgages.
With the economy suffering its worst period since the 1930s, short-term interest rates are likely to remain low for the foreseeable future, as policy makers keep the monetary spigots open at full throttle, trying to pump life into consumer and business spending. Operating notes tied to the prime rate — usually 3% above the Federal Funds target of the Federal Reserve — are the least likely to budge. Those tied to the LIBOR have crept a little higher, but these too shouldn't jump before the economy turns around.
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