Page 68 - July-August 2018 GSE Report Flip Book

FARM CREDIT SYSTEM / FARMER MAC JJUALN. U- ARUYG. 22001188
driving that is a lack of inventory of farms for sale.” (Newsweek, David Magee, 08/02/18) Kansas City Fed president Esther George said:
Many things are relative. If you look at history, back to the 1980s, it’s
not so bad. On the other hand, the farm sector has experienced a lot of consolidation. Today’s farms are much bigger than they were before and banks, I think, are still mindful of their underwriting standards.
...We are in a rising rate environment. It does not help when you have marginal borrowers or borrowers who are struggling, perhaps young farmers who’ve incurred a lot of debt in the purchase of land and equipment. There are pockets of stress as we look around. I don’t think it’s anything to the point of alarming at this stage, but the question is how much longer we will experience this continuation of low commodity prices and low farm income.
One thing of note throughout the current stress situation... has been how land values, for the most part, have held up in the face of falling incomes.
That is something to look at. I suspect that is providing some support to borrowers today. It is giving some assurance to some of the lenders as they look at operating lines. Eventually, that catches up with you, as cash flow matters.
We see stress in ag banks, but no where near the concerns we had in the 1980s. We need to keep an eye on it. The banks are keeping a close eye on it as well. (High Plains Journal, Larry Dreiling, 08/06/18)
© 2018 by Canfield Press, LLC. All rights reserved. www.canfieldpress.com 69