It’s a question of degree. But agriculture will feel the effects of the sweeping financial legislation that’s awaiting a vote in the U.S. Senate, not just Wall Street.
Of particular interest to agriculture is the measure’s impact on derivative rules. These are financial tools that derive value from something else. According to the Wall Street Journal, crop futures are some of the first of these instruments. And farmers, ranchers and agribusinesses all depend on these tools to manage risk and hopefully, improve profitability.
“During the financial crisis, they became notorious as American International Group Inc. and others were gutted by bad bets on derivatives linked to bad mortgages,” the newspaper reports.
The full effects of the legislation are not expected to be realized for several years. But this uncertainty leaves many people and businesses feeling unsettled. And that’s not a comfortable sentiment.
Source: Wall Street Journal