Big-income year for producers trickling down to local businesses
March 14, 2012
Glenn Pfeif has certainly heard more work boots thudding around his implement dealership in east Greeley during recent times.
In another part of town, Tyler Herr at Red Wing Shoes has seen an increase in sales of the footwear at his store.
Meanwhile, Vic Fiscus is sending his employees at Valley Irrigation of Greeley all over the local countryside, updating and installing watering systems.
Their consecutive booms in business – which go along with many other tales of ongoing high times – are by no means a coincidence.
“When the farmers and ranchers have a good year, we have a good year,” explained Pfeif, the owner of G&M Implement. “It’s just that simple.
“And last year was a good one.”
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High commodity prices, increased demand for food overseas and plenty of water in most parts of the state while drought-plagued sections of the lower Midwest – among other factors – led Colorado producers to post a record net farm income of about $1.7 billion in 2011.
And that money has been trickling down to local businesses.
Pfeif said farmers have been using that extra cash to buy new tractors priced at hundreds of thousands of dollars, tillage machinery, hay equipment – all purchases they were hesitant to make during the lean years of farming that preceded the agriculture boom recently.
“Some machinery is moving out of here as fast as we can get it in,” he said.
Herr at Red Wing Shoes said farmers and ranchers are now buying brand-new boots instead of having old ones repaired – which goes along well with the increase in business he’s seen from oil and gas industry workers.
And Fiscus at Valley Irrigation – which sells equipment, designs and installs irrigation systems – said he’s seeing many farmers making investments in, among other things, center pivots. Such an irrigation system costs much more up front than a flood-irrigation setup, Fiscus explained, but saves money down the road due to its water-efficiency and requirement of less labor.
And farmers now have enough jingle in their pockets to pay for it, he said.
“We certainly have no complaints,” said Buddy Truesdell, owner of B&G Equipment in Greeley.
Truesdell said 2010 was the best year his dealership had had during his 25 years in business, then sales to local farmers increased by about 10 percent to 12 percent in 2011.
“We’ve just had a couple phenomenal years,” said Truesdell, who said tractors and row-crop, wheat and tillage equipment have all sold well at his business.
John Green of Fort Collins has been an agriculture economist for 25 years, working for the U.S. Department of Agriculture for 10 years and serving as a professor at the University of Northern Colorado for 15. He estimates the current overall economic impact of agriculture in Weld County to be somewhere around $4.5 billion.
“Agriculture still has an impact on how the rest of the local economy operates,” he said. “A lot of local businesses are seeing that now.”
Bankers, too, are witnessing a change that has come with a healthy ag economy. Instead of farmers taking out loans to cover expenses when cash flow is tight, they now see loan volume declining and farmers paying down existing debt.
“Our loan activity is actually a little lower than we’d like to see it,” said Tony Miller, senior vice president at First Farm Bank – a lender that has nearly two-thirds of its loans tied up in agriculture. “At the same time though, bad loans are where we lose the most money … and we’re not seeing any of those right now in ag.”
While bubbles have burst in other sectors of the economy – such as the housing market – economists believe the high values in agriculture are now more sustainable because of growing global demand for grains and meat, and while continued domestic ethanol production will also keep crop prices high.
“Everything points to 2012 being another good year,” Truesdell said. “And we’re alright with that.”