WASHINGTON -- Farmers and the food industries do not have a credit or financial crisis in the short term, but the future farm economy depends on the strength of the world economy and farmers are likely to have to handle more risk themselves in the future, a range of farm lenders said at a Nov. 18 Farm Foundation conference in Washington.
"We cannot find the agricultural credit crisis," said Cornelius Gallagher of the Bank of the America. But Gallagher noted that commodity prices have fallen in recent months while the cost of fertilizer and some other inputs have stayed high, raising the likelihood of problems in the farm sector next year. Paul Marsh of Prudential Agricultural Investments said some farmers are shifting from cash farmland rents to rents that vary based on commodity prices and yields.
J. Robert Frazee, CEO of Mid Atlantic Farm Credit, says the farm credit system is not experiencing high delinquency rates because its institutions have maintained strict credit standards since the farm crisis of the 1980s. Frazee noted that the farm credit system maintains its own insurance fund unlike its sister government-sponsored enterprises, Fannie Mae and Freddie Mac.
But Joe Brasher of the First State Bank of Sharon, Tenn., said volatility in the markets has increased farmers' need for capital.
Paul Ettinger of the University of Illinois said some suppliers are demanding cash up front for fertilizer and that farmers have to be concerned some suppliers may go out of business before they deliver their orders.
