D24—Lancaster Farming, Saturday, November 10,1984 WASHINGTON, D.C. - Whatever its final impact, the farm debt restructuring program announced in September comes at a time of severe financial stress on a small, but significant, proportion of the nation’s farms. Many operators have already found it necessary to refinance short-term loans, others have been forced to sell off some land or equipment, and some have given up or faced foreclosure. For their part, farm lenders are in creasingly . concerned about defaults and delinquencies. Credit DEBT TABLE Interest Rales Are Down From Earlier Peaks, Bui They're Much Higher Than They Were 10 Years Ago Rural banks PCA s FmHA interest rales on new short-term farm loans' 9 27 8 49 8 64 13 65 14 19 14 84 11 77 12 10 8 53 9 09 9 20 16 39 17 02 17 40 14 20 14 10 'Rales shown are tor (he second quartet ot each year TUBULAR STEEL GATES spaced closer at the bottom for a pig tight gate. 50” high with adjustable clamp style hinges. All hardware needed for a complete installation is included. Painted finish. 4' Length *45.95 *36.95* 12’ length .39.95* 14’ Length .41.45* 16’Length 43.95* 6' Length . 8' Length . 10' Length KEY-AID DISTRIBUTORS (Formerly Zimmerman s Animal Health Supply) RDM Box 141Lititz Pa 17543 717-738-4241 3 mile west of Ephrata, ■/« mile south of Rt. 322 along Wood Corner Road. requirements have been tightened, and more overdue accounts are being closed out. Net Income to Drop “Many farmers are doing very well, but there’s no doubt that others need help with cash flow and debt problems,” says Agriculture Department economist Gary Lucier of the Economic Research Service. Although agricultural interest rates have fallen since 1981 and 1982, they remain high. Last year, net cash farm income, adjusted for inflation, reached the highest level since 1980, but PIK program BEVERAGE TABLE Soft Drinks and Beer Gain at the Expense ol Cotlee and Milk Milk Fruit Juices Tea Cottee Soft drinks Beer Wine 6 75 8 50 8 00 1201 14 15 14 85 1025 10 25 Distilled spirits All beverage* 'Excludes tonialo and offer vegetable juices 'Excludes water and reconstituted dunk mixes ibes 52.75* 55.50 * * Plus Sales Tax disbursements take much of the credit. On an inflation-adjusted basis, 1984 net cash income is expected to drop below the figures for the last several years. If overall conditions for agriculture appear more stable than they were a year or two ago, as many economists contend, the greater stability has not yet given some farmers the breathing room they need to handle their ac cumulated debts. In a recent issue of USDA’s FARMLINE magazine, economists Stephen Gabriel and George Amols point to several signs of continuing financial dif ficulties: Based on responses of 522 agricultural lenders to a January survey by the American Bankers Association, 2.5 percent of their loans were under foreclosure and 8.7 percent were considered distressed. Another 22 percent were under close supervision. The numbers are small, but they are up. 1963 1973 1983 gallons per person 33 2 30 7 26 5 33 56 7 1 The Federal Reserve Bank of Minneapolis estimated that, between October 1983 and March 1984, 3.4 percent of farmers and ranchers in its area discontinued farming because of financial difficulties. For comparison, the estimate was 2 percent for the same period a year earlier. 66 7 5 66 37 7 32 8 25 3 17 7 26 8 40 0 15 3 20 1 24 3 09 17 23 14 19 .18 116.1 127 1 133 9 Contractor Loader-Dozer ★ TUBELESS * 16 9x24 8 ply - 16 9x24 10 ply - 17 5Lx24 6 ply - 17 5x24 8 ply - 15 5x25 12 ply - 17 5x25 12 ply- ★ TUBE TYPE ★ 14 9x24 6 ply- $200.00 14 9x24 8 ply- $220.00 16 9x246 ply- $220.00 16 9x24 8 ply- $235.00 16 9x24 10 ply- $280.00 17 5Lx24 8 ply- $240.00 16 9x2BBply- $260.00 18 4x28 10 ply- $340.00 20 5x25 12 ply- Call For 23 5x25 16 ply - Quote 1300x24 10 ply- $225.00 1300x24 12 ply- $245.00 1400x24 10 ply - $255.00 1400x24 12 ply- $280.00 The American Council of Life HLxlsBply $BO.OO 11 Lx 16 8 ply $92.00 111x16 10 ply *98.00 750800x16 10 ply 111x16 12 ply $l3O 00 145 75 16 1 10 ply $225 00 $265.00 $330.00 $240.00 $270.00 $320.00 $445.00 8 3x24 $95.00 9 5x24 112.00 14 9x24 6 ply 195.00 16 9x24 6 ply 210.00 18 4x16 16 ply 245.00 18 4x26 6 ply 340.00 11 2x28 4 ply 152.00 13 6x28 6 ply 225 00 Used Grass Tires In Our Stock More farmers lea Insurance reported that 2.6 per cent of the farm debt held by life insurance companies last December was in the process of foreclosure. Figures were 2.4 percent for 1982 and 1.2 percent for 1981. USDA analysts don’t have precise figures, but they agree that more farmers are leaving agriculture because of financial troubles. Why, Who, and Where? They also say that farm financial problems cannot be traced to a single source. Agriculture’s long term pattern of growing volume, lower margins on sales, and declining real prices for farm commodities may be partly to blame. A more direct cause was the fairly abrupt shift from the rapid appreciation in farmland values, high inflation, and low interest rates of the 1970’5. It was an en vironment that encouraged credit financed expansion, and, in some cases, overexpansion. Farmers who borrowed heavily to expand or enter agriculture were hit by a sharp rise in interest rates, the recent recession, the slump in farm exports, and the decline in land values-the collateral base for much of the credit. “In the last few years, the agricultural sector has been ex- F-3 $BO 00 Ask About Our 4 Year Guarantee On Rear Tires Strongest In The Country We Install Tires On Your Farm Skid f Loader \ Tires 700x15 6 ply $65 00 750x15 6 ply $6B 00 10 16 5 6 ply $BOOO 12 16 58ply $l2OOO Steel Shield 10 16 5 6 ply $95 00 Above Tires Shipped To You FREE * Centre Hall * Williamsport •Sunbury 'Allentown * North Penna. • New Jersey * Northern Maryland periencing extremely difficult financial conditions,” explains Stephen Gabriel. “Low and volatile real farm income, growing debt, record-high interest rates, variable-rate loans, and the declining value of farmland have all converged to place many farmers, particularly the highly leveraged operators, in vulnerable financial positions.” Cash Grain Hit Although debt problems are not limited to any specific com modities, regions, or farm sizes, debt tends to be more heavily concentrated among certain types of farms in certain areas. Cash grain farms, for example, show a relatively high proportion of operators with large debts relative to their assets. The Corn Belt, Northern Plains, Great Lakes states, and the Mississippi Delta are identified as areas where the debt-to-asset ratios of farmers registered the greatest increases between 1980 and 1983. In the Corn Belt, debts reached an average of 21.4 percent of assets in 1983, up from 15 per cent in 1980. Average debt-to-asset ratios were even higher in the Northern Plains and Great Lakes area, at 26 percent and 25 percent, respec tively. 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