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After “gloom and doom” in the U.S. economy in 2009, last year was a good one for north Mississippi agriculture, says Abbott Myers, Dundee, Miss., grains producer and chairman of the Mississippi Land Bank, which serves 32 counties in north Mississippi. And while he sees the nation’s weighty debt and inflation as problems that need to be dealt with going forward, he told the bank’s stockholders at their annual meeting at Como, Miss., that the outlook for agriculture continues strong.
Farmland outlook is good
“If you can afford it and can buy at the right time, I think the outlook for farmland as an investment is good.
“There’s a saying: ‘The difference between gold and land is that land will pay you a dividend and gold won’t.’ A lot of investors, rather than putting money in gold, are putting it in Mississippi farmland because they think it’s a good investment.”
With the cyclical nature of agriculture, “We have to be prepared to meet changes, to cope with good times and bad,” Myers says.
The U.S. economy, after two and a half years, “is still in turmoil today,” he says. “Housing remains a disaster area, with foreclosures running around 14 percent, and an astounding 13 percent of the houses in the U.S. are vacant. Housing starts are the lowest they’ve been since World War II.
“Congress has just passed a $3.7 trillion budget. This fiscal year’s deficit is projected to be $1.65 trillion, and the total deficit is almost $14.3 trillion. Congress approved cuts of $38.5 billion in the fiscal 2011 budget, but the Congressional Budget Office says federal spending will be reduced by only $352 million below the 2010 rate, and that if emergency spending is included, the total is actually just $3.3 billion more than 2010.”
The $38.5 billion in cuts represents only about 1 percent of the federal budget, Myers notes, “which is pretty much spit in the ocean in terms of reducing the deficit.
“Almost everyone is worried about interest rates, and I can tell you: they’re going up. Some economists think they’re only going to rise about 2 percent over the next two or three years. I think you’d better hold onto your chairs, because interest rates could go up significantly.
“It all depends on what the government does. If they actually manage to balance the budget — which I don’t see happening — all the projections could change. But from what we see, interest rates will go up, and we need to be prepared for it.”
Government analysts have made a big deal out of the recent drop in unemployment numbers, Myers says. “But the decline was only one-tenth of 1 percent; the overall rate is still around 9 percent, and the forecast is for unemployment to continue high for a long period.
“The economy is growing by 1 percent to 2 percent — but that’s too slow; it needs to be 3 percent to 3.5 percent.
All the traditional monetary policies that have worked in past economic downturns haven’t been working this time around.
“In the last two and a half years, we’ve had the lowest interest rates I’ve seen in my lifetime, and still the economy has not moved much. Overseas, the European Monetary Fund has had to provide bailouts for Greece, Ireland, Iceland, and Portugal because they couldn’t balance their budgets.
“The U.S. could face a similar crisis if we can’t manage to balance our budget. We can’t finance our massive debt by borrowing more money.”