Farmers need trade, RFS ‘stability,’ trade aid
Farmers need trade and ethanol policy to be stable and another round of trade aid payments to make it through next year, Farm Credit bankers said at a briefing Tuesday in Washington.
“The key thing is we need stability in all these different sectors so people can make appropriate financial decisions,” said Jeff Swanhorst, CEO of AgriBank, a wholesale lender and business-service provider to a 15-state network of local farm credit associations in a district that stretches from Ohio to Wyoming and Minnesota to Arkansas.
“Whenever these net farm income projections are put together, they always project in a stable environment. They are assuming that the Renewable Fuel Standard stays where it has been,” Swanhorst said.
The Environmental Protection Agency’s policy on small refinery exemptions “could be a significant negative factor if the RFS is not held up to the 15 billion gallons,” he said.
Swanhorst, Byron Enix, CEO of American AgCredit in Santa Rosa, Calif., and Vance Dalton, CEO of Carolina Farm Credit based in Statesville, N.C., all said that, with trade conflicts unresolved, another round of Market Facilitation Program payments will be needed in 2020.
Swanhorst also said he expects there will be a “lot of interest” in putting acres into the Conservation Reserve Program, which pays farmers to idle acres for environmental and wildlife benefits.
Enix said that the quality of loans is still “pretty good,” but that stress is building because farmers are “starting to move through the earnings they had in the past.”
The livestock sector also has problems because bad weather and fires make it difficult for cattle to gain weight, Enix said.
Farmers are trying to use technology to address labor shortages, but technology development “is not keeping up fast enough,” he added.
Dalton noted that 35 percent of Carolina Farm Credit’s loans go to small, part-time farmers who will pay back the loans with off-farm income. His lending area has the advantage that 60 people a day moving into Charlotte and 50 a day moving into Raleigh-Durham. “Many of these new residents move into rural areas and help revitalize them,” he said.
The customers with off farm-income help stabilize the institution’s portfolio of full-time farmers, he said. The poultry industry is “very strong,” and many young and beginning farmers want to get into it, he added.
Farm Credit Council President and CEO Todd Van Hoose noted that nonperforming loans are “nothing like the mid ’80s,” when the nonperforming rate was over 20 percent.
Farm Credit also released a series of charts on farm economics.
–The Hagstrom Report