Ag Bankers Admit Nervousness,
But Say No Crisis Is Imminent

PIERRE, S.D. —(AP)— Bankers are nervous about financial hardships facing many farmers and ranchers, but the situation cannot be called a crisis, says the Agricultural Credit Committee chairman of the South Dakota Bankers' Association.

Nathan Franzen of First Dakota Bank at Yankton says current conditions do not compare with those that occurred in the farm crisis decade of the 1980s.

Thousands of the state's farmers and ranchers were forced out of business then by high interest rates, declining land values, weak commodity prices and a lengthy drouth.

"A lot of people are calling it a farm crisis now, and I don't think we're at a crisis point yet," Franzen says, adding that the bankers' committee has discussed the flagging farm economy. "Commodity prices are not good, and cash flows are going to be real tight. But hopefully things will turn around."

If a farm crisis does not exist now, it is right around the corner, says Brent Thiel, who raises purebred cattle and runs a cow-calf operation near Isabel.

Prices for cattle, wheat and other commodities are so low that many farmers will be forced out of business, he says.

"I see more doom and gloom among my neighbors and customers now than I did in the eighties," Thiel says. "If the agricultural economy would turn around right now, within the next couple of months, then it could end up not being as severe as the eighties.

"But if it would continue to stay bad for a year or two, I think we could see the biggest mass exodus of farms since the thirties."

Farmers and ranchers unable to make loan payments or unsure about the future should not hesitate to talk with their bankers about financial arrangements, Franzen says.

"Interest rates are favorable enough to where they can use some of their equity in real estate to lock in some long-term funds that will protect them," he says.

"Land values are strong, and now's the time if you're in a situation to do so to lock in cheaper money because it will put you in a better short-term cash situation going into tough years, if that is in fact what we're going to see."

Most farmers are better prepared today than they were in the 1980s for financial difficulties, Franzen says.

"Producers nowadays are much more sophisticated and better managers and businessmen," he says. "A lot of that is because of the hard lessons learned in the eighties."

Although many troubled farm borrowers were abandoned by bankers in the 1980s, bankers are more apt to stick with them in the current financial crunch, Thiel says.

"What's going to happen, though, is some people are going to leave agriculture because they've had enough of it and they can get out with some assets, and I think the bankers will encourage the farmers to stay."