—Lancaster Farming, Saturday, November 18. 1972 28 T Farmers are expected to drive up outstanding farm debt to $lO7 billion in 1980 —double the 1970 mark This projection by a Federal Reserve Board economist, writing in the July issue of ERS’s Agricultural Finance Review, is based mainly on the growing costs of farm inputs. According to the economist, records for each of the major uses of capital (machinery, buildings, land improvements, money balances, and inventories of crops and livestock) reveal that during the last 2 decades there has been relatively slow growth in most items in constant prices, and an actual decrease in some items. On balance, the capital flows—farmland tran sfers and other outlays—rose because price increases drove up the cost of expenditures One of the larger capital flows is the purchase of farmland from retiring farmers and nonfarm heirs This capital need is directly related to farmland prices Land prices are expected to climb nearly 4 percent a year, based on projected rates of general price inflation and a decrease in farm numbers. By 1980, $6 billion a year may be required to transfer farmland not directly inherited by farmers, compared with less than $4 billion in 1970 Machinery purchases are the other big expenditure, ac counting for around $5 billion annually in recent years Most goes to replace wornout or ob solete machinery, since net additions to existing stock are small But with projected annual' price increases of nearly 3 per cent, farmers would be spending over $8 billion a year for machinery by 1980. Expenditures for buildings and land improvements are projected at around $1.5 billion in 1980, about the same as currently The cost of net annual additions to financial assets and to in ventories of livestock and stored crops may average about $BOO million by 1980, compared with less than $5OO million during 1950- K It 70. Of that amount, additions to livestock inventories are projected to use $2OO million annually. Summing all these items, farmers’ total annual capital flow is expected to reach $16.7 billion by 1980—up more than 50 percent from 1970. Farmers pay for these capital expenditures either out of their NOW THAT WE HAD FROST TOP DRESS ALFALFA with ALFALFA PREMIUM 0-12-34 contains Mg., Boron, Sulpher 0-15-30, 0-18-36, 0-26-26 also Available also Chloro IRC can be incorporated in any grade for Chickweed Control ASK ABOUT OUR WINTER DISCOUNT PROGRAM FALL PLOWING FOR CORN Anhydrous Ammonia Can Be Applied Apply P & K Needs This Fail And Save CALL US FOR PROMPT SERVICE! f BULK BLENDS ) ORGANIC fkwmtim plant T I anhydrous ammonia J FA AH 2313 Norman Rd. rUUI# VV« Lancaster, Pa. Ph: 397-5152 own pocket or by borrowing. If fanners use the same share of their income this decade as in the 1960’5, out-of-pocket spending would account for about 60 percent of the projected capital flow. Borrowing for the remainder will cause outstanding debt to rise nearly 7 percent a year in the 1970’s —reaching the $lO7 billion total by 1980. This is less than the 9-percent growth rate in farm debt during the 1960’5. Examination of credit supply factors at major farm lender groups led the economist to believe that the projected credit demands can be easily met by lenders. For example, if land prices rise as projected, causing the cost of farmland transfers to increase, sellers of farms will also be relatively better able to “invest” sizable funds in farm mortgages or land contracts. However, life insurance companies may tend to move in and out of farm lending due to variations in their supply of funds and in the profitability of farm loans relative to other in vestments. Rural banks, though faced with similar fund supply and profitability conditions, have a long-run incentive to favor local lending. Future deposit growth at rural banks could match the projected 7-percent annual rise in farm credit demands. But individual rural banks are unlikely to grow as fast as credit use per farm—projected to rise 145 percent during this decade. As a result, some rural banks may seek increased lending capacity through merger or by affiliation with holding com panies. Other important farm lenders include Federal land banks, production credit associations, the Farmers Home Ad ministration, large banks, and 'farm supply and equipment corporations. They obtain part or all of their loanable funds in the national money market. Because the money market is an elastic source of funds for agriculture, these lenders can assure an adequate supply of credit to farmers—even if farm credit demands run higher than projected—provided that far mers pay the going market price for these funds. Too, these len ders can fill in the gaps at times when others reduce their farm lending. 1 Volume-Belt Cattle Feeder! K °"i Only 1-1/2 hp. Up to 250 Feet J Big Capacity Belt Carries Feed k Works In-Barn or Out k ■■«%! W | Phone 393-3906. | Manheim Pike Lancaster* Pa. 17601 I\EW HOLLAND Offers Fast Unloading... Long Reach! In a Complete Line of GRINDER-MIXERS! New Holland grinder-mixers cut un loading time to the bone... a big Al ♦ advantage in bad weather! Choose either 13-, 17- or 20-foot fold-back jjL unloading auger. Model 352 and 354 equipped with 16" mill. Model 357 For Comp/ate Unloading Convtnionco. You Con Choosa Tha Unloading Augar That Bast Fits Your Oparation! A.B.C. Groff, Inc. 110 S. Railroad Ave. New Holland 354-4191 C. E. Wiley & Son, Inc., 101 S. Lime St., Quarryville 7K-289S Oldest Tree Food Walnuts are the oldest known tree food used by man. Shells of walnuts were found in the Swiss Lake dwellings of Neolithic man, dating from about 7000 B.C. L. H. Brubaker 350 Strasburg Pike Lancaster 397-5179 Roy A. Brubaker 700 Woodcrest Ave. Lititz 6?«-77fi« LS 154/352
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