Rural bankers in 10 states worry over farm loan defaults

[cigaretteman]

A monthly survey of rural bankers in parts of 10 Plains and Western states suggests banks are growing increasingly concerned about farm loan defaults in 2019.

More than 4 of every 10 bankers questioned for the Rural Mainstreet survey for January said they expect farm loan defaults to be the year's biggest challenge.

Creighton University economist Ernie Goss, who oversees the survey, says their outlook is being negatively influenced by tariffs, trade tensions, weak commodity prices and the partial federal government shutdown.

The survey's overall index dropped to 51.5 from December's 54.2. Any score above 50 suggests a growing economy in the months ahead, while a score below 50 indicates a shrinking economy.

Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming were surveyed.

https://www.press-citizen.com/story...ers-worry-over-farm-loan-defaults/2610894002/

 

[CelticHawk]

Bullshit. You think farmers are broke? Lol.

They aren't liquid, but far from broke.


Another poor farmer thread. Lol

 

[joelbc1]

Gee, I wonder why? Trade wars are soooo easy to win! Of course, if the bank loses, it is no longer “winning”.......

 

[jasonrann]

Gee, I wonder why? Trade wars are soooo easy to win! Of course, if the bank loses, it is no longer “winning”.......

Yup, I told a few of the boys back in NW Iowa that are YUGE Trump supporters to let me know how soybean prices look next fall.

 

[ihhawk]

This has been an issue even before the soybean tariff. Bankers were telling farmers not to buy machinery and pay the cash rents they were paying in 2017. There is a major adjustment that is going to take place.

 

[rocketclone]

This has been an issue even before the soybean tariff. Bankers were telling farmers not to buy machinery and pay the cash rents they were paying in 2017. There is a major adjustment that is going to take place.

Exactly, it has been a concern for a couple of years. Nothing new

 

[Joes Place]

So....aside from the farm fallout from tariffs, we have a housing market that's due for a dip, government shut down that is pulling a few percent off GDP and likely huge deficits from a bad tax plan, so there'll be no money to provide a jumpstart for the next correction.

That's not sounding too good.

 

[joelbc1]

This has been an issue even before the soybean tariff. Bankers were telling farmers not to buy machinery and pay the cash rents they were paying in 2017. There is a major adjustment that is going to take place.

Shit always runs down hill, ih. Always has, always will. As long as bankers are patient, they will always win. House odds. Not because they are very smart. Some are....most aren’t.

 

[joelbc1]

So....aside from the farm fallout from tariffs, we have a housing market that's due for a dip, government shut down that is pulling a few percent off GDP and likely huge deficits from a bad tax plan, so there'll be no money to provide a jumpstart for the next correction.

That's not sounding too good.

That’s different!
I am sure that is Obama’s fault.

 

[3 and Out on D]

Bullshit. You think farmers are broke? Lol.

They aren't liquid, but far from broke.


Another poor farmer thread. Lol

Good farmers, that is.

 

[ihhawk]

Shit always runs down hill, ih. Always has, always will. As long as bankers are patient, they will always win. House odds. Not because they are very smart. Some are....most aren’t.

I agree the bankers always win.

I’m just pointing out that bankers have been telling farmers no for several years. The tariffs hurt bean prices but bean prices were low to begin with

 

[AuroraHawk]

At our firm’s annual meeting a week ago, our commercial lending practice group predicted an uptick of litigation work in 2019 for loan defaults. Take it FWIW.

 

[Herkmeister]

ANF stickers need to go.

I hate most farmers. (Not all) They are the most coddled business people in the world.

As a rule, they are the worst people with whom to do business because they think they're so special.

I have friends in Iowa who will not use ethanol because it helps farmers.

My rant is done. I'm starving. I'm going to go eat mass quantities of cheap food.

 

[joelbc1]

I agree the bankers always win.

I’m just pointing out that bankers have been telling farmers no for several years. The tariffs hurt bean prices but bean prices were low to begin with

But still lending them the funds.........bankers get hurt when they get greedy. Bankers are inherently greedy for the most part. But then, the bankers only profit by lending other people’s money....but they can’t lose....because it is “ other people’s money.” The dichotomy of capitalism.

 

[ihhawk]

But still lending them the funds.........bankers get hurt when they get greedy. Bankers are inherently greedy for the most part. But then, the bankers only profit by lending other people’s money....but they can’t lose....because it is “ other people’s money.” The dichotomy of capitalism.

They will loan them operating money. Not land and not machinery. Last year in SE Iowa bankers were stepping in and telling farmers they would not approve the loan for the cash rent on some acres because the price was too high and the math didnt work.

Rent prices in a lot of Iowa havent dropped much since the days of $7.00 corn. Think about that. We are not even at $4 corn but rent is still set as if its $7. The hardest thing a farmer will ever do is stop renting ground willingly.

 

[Pepperman]

Values on farmland overshot 5-7 years ago and now we're paying for it. I for one don't think the "trade war" is having that much of an impact.

 

[soybean]

Bullshit. You think farmers are broke? Lol.

They aren't liquid, but far from broke.


Another poor farmer thread. Lol

Many farmers are near broke, but few landowners are.

 

[CelticHawk]

Many farmers are near broke, but few landowners are.

Good point.

 

[Old_wrestling_fan]

Many farmers are near broke, but few landowners are.

This is a good point. ^^ The notion that Farmer Joe is farming just his own land nowadays is less and less true all the time. As older farmers pass on, etc, the land often remains in some sort of a trust held by surviving family members and then is rented out to a nearby farmer.

I have seen this many times over the past 10-20 years. At the same time...it is darn hard for any given farmer to make enough money farming just farming only the acres that he/she owns. It is very common that the people actually farming are tilling their own land, "Mom's" ground and a couple/few neighbors ground as a part of their operation.

The actual people farming are much more at risk to the market variability than the owners are.

 

[Herkster5]

Many farmers are near broke, but few landowners are.

Many farmers? Break that down to a percentage for me, if you would.

Corn prices have been relatively stagnate since the fall of 2014, incredibly so in fact. Looking at crop insurance prices on corn since that Fall price in 2014 was set, all being set within $.48 of each other (spring and fall, since fall of 14). There have been spikes, and if a guy were to use his crop insurance to forward market his guaranteed bushels, which have allowed guys to remain profitable, or at least afloat.

Did the tariffs hurt the beans? Of course they did, but I've pointed it out several times. The Nov 18 soybean contract price made it's high after the tariffs were announced, and still made decent rallies since they were implemented. We have a supply problem, mostly. Hell, I'm not sure how bean prices are where they are right now, considering they are talking about 900mb of carryover (which is only a record, by about 500mb).

High rents and shiny paint will be the demise of some farmers. Those that kept their operation in check, didn't try to outspend their tax bills, and are generally sound operators that take advantage of the crop insurance products that are offered to them, are going to be fine. It might be tight, cash wise, but they'll survive it. And sure, some guys have had to sell ground, some guys have had to let ground go, but it's either that or not survive at all...

 

[rocketclone]

Land prices that hit 14 to 18,000 per acre is killing some guys right now.

Land prices are still high at 7 or 8. Just doesn't pencil out.

 

[Herkster5]

Land prices that hit 14 to 18,000 per acre is killing some guys right now.

Land prices are still high at 7 or 8. Just doesn't pencil out.

We hit a high around 12,500 - 13,000 in our area. Still, way to much, and yes, 8k land doesn't pencil unless you have a bunch of cash down, or you are loaning against other owned ground (which not many want to do). It might be just a "losing" money piece, that you are gaining equity in, as long as a guy can still cash flow everything with the additional purchased acres, of course.

 

[NI hawk]

Farmers still paying $300 a acre rent in my area.
A couple years ago $400 a acre was not unheard of.
I grew up on a farm have good friends who still farm.
Parents now rent farm out.
One of the few professions you can live in a 300-400 thousand dollar house, drive a $60,000 pickup and kids get free dental and health care and reduced school lunch prices.
(Not my family)

 

[ihhawk]

Look at the cost of a bag of seed corn from 2012 to 2018. Look at fertilizer costs. Chemical costs.

 

[MitchLL]

We need more subsidies. Chuck... you listening? How about you, Joni?

 

[BigDelHawk]

Farmers still paying $300 a acre rent in my area.
A couple years ago $400 a acre was not unheard of.
I grew up on a farm have good friends who still farm.
Parents now rent farm out.
One of the few professions you can live in a 300-400 thousand dollar house, drive a $60,000 pickup and kids get free dental and health care and reduced school lunch prices.
(Not my family)

Plus, even if you are flush with cash, you can buy land and leverage your income prior to the years your kids go to college, and look dead poor. Kids are eligible for reduced college costs via Pell Grants. Take out loans, for living expenses. Once the kids graduate, you sell the land, cash out and make yourself liquid.