by Tim Alexander

State of Ag Lending: Healthy

URBANA – Many of the agricultural banks did not participate aggressively in the high-risk housing or commercial real estate markets compared with “Main Street” banks, which led to the economic meltdown of six years ago, notes Paul Ellinger, economist at the University of Illinois College of Agricultural and Consumer Economics (ACES). In fact, the profitability of agriculture in the past decade has helped mitigate the nonfarm real estate losses for banks lending to agriculture.

“The financial health and profitability of commercial banks lending to agriculture continues to improve,” according to Ellinger, who authored a summary on the financial health of banks lending to agriculture that he posted June 27 on the U of I farmdocdaily.com blog site. “There will continue to be new challenges and headwinds. New regulations will add regulatory compliance costs. Tighter profit margins for producers combined with volatile commodity prices increase the risks faced by borrowers.

“Moreover, interest rate risk may increase in the next 18 months. Banks will need to continue to implement prudent risk-management strategies, monitor economic conditions, and explore new opportunities to enhance competitiveness and viability. The strong financial health of the sector provides a solid base. The commercial banking sector is in a strong position to meet the capital needs of agricultural borrowers.”

Subcommittee Examines Ag Credit Availability

WASHINGTON, D.C. – While local banks supply a significant amount of credit for farmers and rural communities, federal programs such as the Farm Credit System (FCS) of 1916 and the “Farmer Mac” Federal Agricultural Mortgage Corporation program of 1988 provide credit for ag real estate, rural housing and more. Members of the House Agriculture Committee’s Subcommittee on Livestock, Rural Development and Credit held a public hearing recently, during which they heard from two panels of witnesses that included representatives from Farm Credit Administration, the Federal Reserve Bank, Farmer Mac and local banks, among others. The summit provided insight into the availability of credit for farmers along with the associated risks.

“As we know, the agricultural economy is highly cyclical–eventually interest rates will go up, and record-high commodity prices will come down. In fact, after a recent period of historic highs, crop prices have declined, and farmland values are slightly decreasing. In order to sustain an abundant supply of food and fiber well into the future, we must ensure that responsible farm and agricultural credit policies are in place,” said subcommittee chairman Rick Crawford.

“We must ensure that credit is available to our producers, and it is vital to the continued prosperity of the agricultural economy. Support programs…are essential reforms that will help bolster rural America and instill confidence in our agricultural economy,” added ranking member Jim Costa.

The panel judged the institutions currently offering credit to rural Americans and communities as fundamentally sound. (House Committee on Agriculture news release)

Elliott to Represent Corn Farmers in Beltway

MONMOUTH – Illinois farmer Rob Elliott’s past leadership experience with the Illinois and National Corn Growers Associations has helped him gain valuable perspective when it comes to addressing current challenges facing corn growers. That experience will come in handy this fall when he begins a three-year leadership role with NCGA, beginning as first vice president in October before advancing to president in 2015 and chairman in 2016.

“The challenges seem to come from a lot of different angles and can become fairly expensive to deal with,” he said during a recent phone interview. “Certainly we will continue to increase our corn yields, which will require us to try to balance the different demand components: ethanol, exports and livestock. We’ll have to keep finding new demand, or we’re going to fall behind with an oversupply. That’s probably the number one (challenge).”

“Certainly our challenges in the ethanol industry have come from the Big Oil camp hard and fast. We’ll have to continue to fight efforts to repeal the Renewable Fuel Standard. And livestock is a huge customer of corn and we certainly appreciate that, but we need to find a middle ground (on pricing) and not be sideways with each other, so that’s certainly a challenge.”

Elliott’s concerns also include speedier biotech approval for new seed entries into the marketplace. He’s concerned that slow biotech approval processes are hampering U.S. producers, while foreign approval of U.S. biotech seed traits is also often slow in coming. He’s also concerned that government limitations on how farmers can utilize fertilizer and crop protection products are going too far.

“We just have a lot of folks who don’t understand agriculture trying to impact how we operate,” he said. “That’s got to keep us on our toes.”

Soybean Growers Visit Mexico, Talk Sustainability

BLOOMINGTON – A delegation from the Illinois Soybean Association (ISA) traveled from Bloomington along with members of the U.S. Soybean Export Council (USSEC) to meet with key customers in Mexico City and Guadalajara to share Illinois farming practices that promote sustainability. During the trip, ISA and USSEC officials met with groups representing more than 90 percent of the soybean, meal and oil used in Mexico.

“We are working to promote best practices in the soybean market and around the world,” stated John Longley, ISA district director from Aledo. “ISA recognizes the demand for sustainable crops in Mexico and aims to support the key customers who buy our soybeans.”

ISA is proud to show their customers what Illinois farmers are doing to preserve the environment for future generations, added Dwain Ford, a USSEC board member from Kinmundy, Ill. “We know our customers demand sustainably sourced products and we strive to be global leaders in sustainability,” he noted. (ISA news release)

Illinois Farm Fact:

Over the last 30 years, Illinois soybean farmers have decreased their soil erosion by 90 percent. (United Soybean Board)

(Tim Alexander is a freelance reporter who writes agriculture, news and feature articles for the News Bulletin, Farm World and many other publications.)