Saturday, July 25, 2009

Heifers vs Lenders

On Friday, July 24, 2009 USDA National Agricultural Statistics Service (NASS) released its “Cattle” report. As of July 1, 2009 there were 2 % fewer dairy cattle but, the same number of dairy heifers as last year.

There is much hand wringing and some variation of woe is virtually everyone. Keep in mind though, the increase in heifers is nothing compared to the crash in loans to dairy farmers. There are also some reports of feed dealers, with $70 million on the books, unable to obtain money from banks.

Banks who have received TARP funds cannot make business loans to businesses with negative cash flows.

All of means this is likely to play out as a completely different problem than the conventional experts have been predicting

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