Sept. 11 will have a long-lasting impact on everyone's lives. The way in which we live and travel will be dramatically altered for months and years to come. The safety and travel issues are fairly obvious. Let's look at business, in general, and agriculture.

The U.S. economy was in a recession before Sept. 11 even happened. What this does now is accelerate the overall business problems.

This recession is going to last for a long time. The pressure on the stock market is not going to be alleviated soon, but we do not expect any major collapse from these price levels.

This is what we told subscribers in The Brock Report even before this happened: The overall bear markets in stock, if past cycles are any indication, should last at least into the fall of 2002. That is a time frame when you should seriously consider investing in the stock market for the long term — not today.

Interest rates are going to stay low and may go even lower. The Fed will try to stimulate the economy by lowering rates. It won't work. Look at the Japanese. They've tried it for 10 years and it still hasn't worked. This is a long process and quick fixes like lowering interest rates do not work.

The Farm Bill

With the Farm Bill in the process of being written, the recession and terrorist attacks will have an immediate impact. Consider the following:

  • Food security will become a more significant issue.

  • Food supply will also become a more significant issue. It's possible that more emphasis may be shifted to encourage farmers to store more grain to guarantee U.S. consumers an ample food supply.

  • Maintaining supplies of grain will become an important issue when we look at acreage reduction programs. It's doubtful that the new Farm Bill will get the government back into the grain storage business. But along with incentives for farmers to store grain, there will be less emphasis on cutting back planted acreage of feed grains and oilseeds.

  • Funds may be cut. The LDP program as we know it today will be history.

Immediate Impact

This crisis is not going to be bullish for the grain market. As long as we have ample supplies and an LDP program, which, as this is written, is still effective for the crop that will be planted in the spring of 2002, there will be pressure on feed grain and oilseed prices.

Input Prices Will Decline

This is at least one piece of good news for producers. With energy prices collapsing and no sign of recovering soon, we will for the first time in many years start to see pressure put on input prices for corn and soybean producers.

Parting Thoughts

This is a very upsetting situation for all of us to be in. The bottom-line impact on farmers, however, will be much less negative than what is occurring to many other businesses throughout the country.

Gross incomes will decline. But since we still have the LDP program, we at least have a somewhat reasonable safety net.

Input prices will decline somewhat. So as we look 12 months out, my guess is that farm incomes will be down only modestly, and most of us will still be profitable.

However, this will further underscore the importance of marketing. Those who choose to sit back and put little effort into marketing and use only the loan rate will be left behind financially.


Richard A. Brock is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report. For a trial subscription and information on Brock services, call 800-558-3431 or visit www.brockreport.com.