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Bankers, economists see 2016 as pivotal in farm finance

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A panel discussion on the generational differences in banking was featured at the National Agricultural Bankers Conference hosted by the American Bankers Association in Kansas City. From left are Keith Phillips, senior vice president, First Bank and Trust Company, Harrisonburg, Va.; Dinese Watson, vice president for ag lending at Merchants Bank of Indiana in Lynn; Caleb Hopkins, a loan officer at Westside State Bank of Halbur, Iowa, and Samuel Miller, managing director and head of agricultural banking at BMO Harris Bank in Appleton, Wis. (Jerry Hagstrom/The Hagstrom Report)


KANSAS CITY — Farmers have enough reserves and good enough credit ratings to make it through this year, even though commodity prices are low, but 2016 will be the year to see how the future looks, bankers and economists said at the National Agricultural Bankers Conference here last week, hosted by the American Bankers Association.

“A 1980s bust seems unlikely, but cash flow is becoming a more significant concern and farm consolidation could intensify as some producers face intensifying financial stress,” said Nathan Kauffman, the assistant vice president in the Omaha branch of the Federal Reserve Bank of Kansas City.

“More than 10 percent of the banks in the Kansas City district say that more than 10 percent of their loans are on a watch list,” Kauffman said. If that environment continues in the farm economy, those percentages could rise, he said.

The bankers have also reported that there have been more requests for loans over $100,000, he said.

“Ranchland values have continued rising but cropland values have pulled back somewhat,” he noted.

Michael Swanson, the agricultural economist for Wells Fargo banks, noted that even though the world population is increasing that doesn’t mean that people will make money in agriculture.

Pork, poultry, beef and dairy products need exports, he noted, and the high dollar may make that difficult.