USA: American farmers should diversify, says analyst

US grain farmers are facing a financial crunch and are looking for ways to overcome it. They have been cutting costs since the downturn began 2.5 years ago by reducing equipment purchases, fertilizers, and crop protection products, and negotiating lower land rents. Now, they are increasing operating lines of credit for the first time in years, indicating a potential surge in agricultural debt similar to the 2013-2014 downturn. RaboResearch predicts a $20 to $25 billion increase in lines of credit debt over the next few years. The analyst suggests that US farmers may need to diversify their crops, particularly towards those suited for low carbon intensity fuel feedstock, food grade soybeans, ESG cotton, and "orphaned" crops like oats, to remain competitive, especially with Brazil's lower production costs. The article also highlights the potential of Canada as a model for diversification, as Canadian farmers have shifted towards growing less heavily traded crops, leading to higher net farm income than in the US.