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H&N photo by Jill Aho - Ross Fleming drives his tractor alongside a truck in a potato field near Klamath Falls this fall. Credit services officials say farmers should be figuring out how they will finance their operations for next year. |
Many farmers borrow money to keep their operations running and rely on credit to finance everything from operating costs to equipment. And those lines of credit are often needed and expected each year.
Local farm lender Northwest Farm Credit Services has always been a conservative lender, said Mitch Stokes, relationship manager.
“We have not changed our credit underwriting criteria in response to current economic conditions,” he said. “In these times, we have not been able to get as many exceptions to policy. We are less likely to deviate from our core principles.”
Agency sells bonds
But, he added, the credit services agency is not having trouble with its financing. Because it sells bonds, it is less affected by the contraction in available credit, he said.
“Our bonds are seen by the bond investors as a safe and secure investment,” he said. “We went into this crunch as prepared as a financial institution could.”
Willie Riggs, an agricultural economist with Oregon State University Klamath Basin Research and Extension Center, maintained an optimistic outlook.
“Some lending institutions in general are really scrutinizing who they’re lending to,” Riggs said. “There’s a number of opportunities in the banking industry, as it’s tied to agriculture, that might make agriculture less risky than some other areas.”
Riggs said farmers who do not have longstanding relationships with their lenders might find financing to be more difficult to obtain.
Farm Services Agency specializes in helping beginning and other operations get off the ground.
“We haven’t changed how we look at what people are bringing in to us,” said Dorothy Scull, the Klamath Falls farm loan officer. “We have to follow federal guidelines, so we’ve always had to look at the total picture.”
Scull said each potential loan is examined on a case-by-case basis. Loans through the FSA are limited to $300,000 for operating costs and farm ownership loans to family farms.
“Our criteria is not as tight as commercial lenders,” Scull said, adding that the loan to collateral value is often higher in commercial situations than the FSA requires.
Get plans in order
Scull advises that farmers get their business plans in order early.
“They need to know if their regular lender is not going to be able to lend to them,” she said. “It’s the end of the year when they’re getting everything together. It’s best to start planning now and come into their lenders earlier rather than later.”
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