Five feet high and rising

Now that the bailout package has passed, it is not exactly reassuring to see the Dow Jones continue its dive, now uncomfortably below 10,000. Perhaps John McCain will have buyer's remorse for having voted for the bill, since there appears to be little to no benefit to market psychology from the bailout. How this all impacts the farm community is getting a little more play. Here are a few headlines snatched from the Web about agricultural lending.



Ag lending thrives amid financial turmoil From The Modesto Bee:

"The fundamental economics of agriculture overall are positive," said Roger Sturdevant, an executive vice president with Bank of the West and manager of its farm lending division, based in Fresno.


Farmers, ranchers could feel credit crunch From the AP's Betsy Blainely

While there's no immediate problem because agricultural lending institutions remain strong, there's fear that the recent financial meltdown will make bankers far more cautious, said Carl Anderson, an agricultural economist at Texas A&M University.

"I would say that everybody's pretty cautiously concerned," said Don Langston, a longtime cotton producer in Texas, the nation's leading producer of the fluffy fiber and the nation's No. 2 agricultural state.

Farmers still able to get bank loans From The Des Moines Register:


Farm Credit Services' bonds are the principal source of funding for the agency. As government sponsored entities, they are tax-exempt and thus can be sold at a more attractive rate.

Kinnison noted that unlike Fannie Mae and Freddie Mac, Farm Credit Services doesn't package its farm loans and resell them in securities markets. Instead, it processes and services its own loans, which can have durations of up to 25 or 30 years. That practice put Fannie Mae and Freddie Mac, plus several major private investment houses, in financial trouble as the nation's housing market has sunk.

"We keep and administer our own loan portfolios, and our bad-debt ratio is 0.29 percent of our total portfolio," Kinnison said. "We like to think of ourselves as a poster boy for how an agency like ourselves should act."

Tight credit could nip farm sector From Reuters:

My understanding is the financial lenders in rural America are very strong," Buis said. "We hope it doesn't spread."

Interest rates on price-support loans by the Agriculture Department fell by one-quarter percentage point for loans made in October. The loans, which use crops as collateral, can be a short-term financing tool for growers.