Amid all the uncertainties in the
future of farming and ranching, you can
be sure about a couple of things
1 The credit needs of agriculture will
continue to grow probably even faster
than in the past
2 Commercial banks, such as the
one that sends you THE FARM PIC
TURE each month, will do everything
in their power to make sure farmers
IT TAKES LOTS OF CAPITAL
and ranchers get the financial backing
needed for a strong, competitive agri
culture
That came through loud and clear at
the 20th National Agricultural and Ru
ral Affairs Conference held recently m
Kansas City Sponsored annually by
the American Bankers Association, this
conference is to the nation’s agricultural
bankers what the “game of the year” is
to your favorite football team This
year 749 registered for the conference,
indicating the keen interest bankers
have in the credit needs and financial
affairs of agriculture
A special agricultural credit task
force, set up by the American Bankers
Association, presented preliminary re
ports Here are some of the trends of
imnortance to farmers
• Total dollar credit needs will be
much greater in the future
• Individual loans will be larger as
farming operations grow in size and be
come more highly mechanized
• The need will increase for longer
A REPORT FROM
THE NATIONAL AGRICULTURAL
CREDIT CONFERENCE
By Dean Wolf, Editor
THE FARM PICTURE
WOLF
ALLEN
term operating loans and for special
ized loans Terms will be tailored to the
type of fai m operation and prospective
schedule for repayment.
• The concept of continuous credit
will grow This is the leasing of capital
with the farm business never plan
ning to be out of debt but simply man
aging debt continuously
• There will be pressure for ways to
finance so-called “growth operators” or
“comers”. These are the farmers with
some demonstrated or probable poten
tial for success but needing credit on
terms far more liberal than is usually
considered bankable credit Included in
this category are operators who are
long on ability and know-how but short
on financial assets.
One of the task force reports con
cluded that agriculture, in most cases,
has been adequately financed in the
past, and will be in the future But the
job ahead will take some changes in
and out of the banking system
One of the big problems is getting
enough money into the right places. For
example, there is a growing need for
transferring funds from urban centers
into rural communities. Rural banks
simply will not be able to generate the
amount of deposits needed to supply
the credit required by their farm and
ranch customers.
The correspondent banking system
now m operation is working effectively
in many instances to provide rural
banks the additional funds they need to
finance farming But the system has
limitations It does not, for example,
serve as a mechanism for shifting funds
from urban centers to rural areas
The task force pointed out that banks
should be working toward identifica
tion of secondary markets for farm
credit “paper” and the development of
trade channels or vehicles to move such
credit into the secondary markets This
would help increase the supply of loan
funds available to farmers
There also needs to be some way of
sharing the risk or insuring against
loss —in addition to the usual way of
participation in a loan It was pointed
out that possibly society as a whole
should accept responsibility for some
of this risk to insure a healthy agri
culture and plenty of food.
A new approach to the business of
financing agriculture in the future is
likely to come from the efforts of bank
ers serving on the ABA’s agricultural
credit task force. Their recommended
action focuses on seeking legislation
that would permit banks to join togeth
er in forming an agricultural credit
corporation.
This could be an organization of com
mercial banks operating on their own
Or it may involve some financial back
ing from the government to provide for
a more ready marketability of the cor
poration’s paper to banks and others
with a surplus of loanable funds. In
either case, the purpose of the new cor
poration would be to increase the
money available for financing farmers
and ranchers.
The ag credit corporation also would
open the way for commercial banks to
tap the secondary money markets. One
way would be through approval to is
sue debentures just as the Farm Credit
System can do now. If not that, it could
approach insurance companies, pen
sion funds, or other sources of money
and offer participation in loans held by
the ag credit corporation.
A bill has been introduced in the U S.
Senate that would enable national
banks to invest up to 10 percent of
their unimpaired capital and surplus in
an agricultural credit corporation. Au
thorization of state banks to partici
pate would have to come from state
legislatures Some states permit this
at the present time
The important thing about all this
from the viewpoint of farmers is that
the nation’s agricultural bankers are
out in front working on ways to assure
adequate financing for agriculture in
the future Their attention is not only
focused on providing enough credit but
also on loan terms that fit the changing
needs of farmers and ranchers.
FINANCIAL PLANNING
KITS ARE AVAILABLE
Printed forms are available to help
you with your financial planning.
They will help you determine cred
it needs, get a loan and avoid cash
flow problems Individual financial
planning kits at $2.50 each may be
ordered from Farm Business Coun
cil, 1300 Hagan St, Champaign,
111. 61820 Please send check with
your order.