Farmers talk about their bankers and lenders
RACINE, WI In the last few
years, economic changes have
placed many farmers on the brink
of bankruptcy. Some blame
agricultural lenders, who, during
the booming 1970’5, often en
couraged farmers to borrow
heavily. What are farmer’s at
titudes toward their lenders? Qo
farmer’s blame lenders for un
manageable debt?
Surprising, no. More than 55
percent of farmers surveyed give
ag lenders favorable marks and
rate them as their most important
partner in business.
Another statistic proves far
mers’ loyalty to their regular
lender: 72 percent of farmers have
never changed lending institutions.
These findings stem from an
independent marketing research
study, just released by Case IH,
which measures farmer attitudes
toward lenders, ranks lender
services and explores the lender
farmer relationship.
In September, interviewers
telephoned a geographically
balanced sample of 679 Class 1-A
farmers throughout North
America. Respondents averaged
more than 25 years of farming
experience and represented a
cross-section of crop, dairy and
livestock operations.
Here’s what surveyed farmers
conclude about lenders;
General attitudes
As noted before, 55 percent of
fanners rate lenders favorably, 30
percent are neutral and 15 percent
rate lenders unfavorably.
On specific attributes, more than
40 percent of farmers believe
agricultural lenders have good
reputations, offer a valuable
service and meet their needs.
However, almost 25 percent of
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farmers believe lenders do not
know the agriculture business. A
small group (7.0 pecent) said
lenders encourage unneeded loans.
Six percent said lenders require
too much collateral and that loans
are too difficult to obtain.
Of all farmers, crop and dairy
farmers tended to have slightly
higher opinions of lenders than
livestock farmers. “Crop and
dairy farmers may have more
frequent contact with lenders,
resulting in better relationships,”
• Borden observes.
Farmers perceive their ag
lenders as their most important
professional partner, ranking
above fertilizer/chemical dealers,
agricultural equipment dealers,
accountants, veterinarians and
lawyers.
What are the most important
services an ag lender can offer 9 On
a 5.0 scale, the following all
received 4.1 ratings: These ser
vices were viewed with equal
importance.
* a full range of services to
provide for all credit needs,
• the lowest interest rates in the
area,and
* flexibility in dealing with farm
credit
On the same scale, other ser
vices were rated as follows; These
services outranked other services
such as providing ideas to make
more money (3.4); long-term
planning (3.3); marketing advice
(3.1); estate planning (3.0); tax
advice (3.0); and equipment
leasing programs (2.4).
U.S. farmers consider lender
services to be slightly more im
portant overall than their
Canadian counterparts, but
specific services are ranked in the
same order of value. “More severe
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cash flow problems and dif
ferences in government programs
may have caused U.S. farmers to
rely more heavily on their lenders
in recent years,” explains John A.
Borden, executive vice president
marketing, CaselH.
Changing Relationship
More than 71 percent of farmers
believe that the farmer-lender
relationship has changed
significantly in the last several
years, primarily due to the tough
economic climate. More than 63
percent say lenders are more
conservative and tighter with
money and 21 percent believe that
lenders are stricter and require
more detailed records.
How often do farmers meet with
their lenders. The typical farmer
visits his lender’s office 4.5 times a
INSTITUTION PROVII
year.
Types of credit used
Almost all farmers (98 percent)
have access to and use several
types of lending institutions. Most
popular are commercial banks,
used by 62 percent of farmers,
followed by Federal Land Banks
(FLB’s) at 42 percent, Production
Credit Association (PCA’s) at 39
percent and the Farmer’s Home
Administration (FmHA) at 18
percent. Rounding out the sample,
16 percent of farmers use
manufacturers’ credit, 8 percent
rely on insurance companies and 6
percent use savings and loan in
stitutions.
“One of the most under-utilized
forms of credit is offered by
manufacturers. Only 43 percent of
farmers think that they have ac-
cess to this type of credit,” saic
Borden.
Different types of lending in
stitutions seem to fill varying
credit needs. Fifty percent of
farmers give high marks to
commercial banks for convenience
and familiarity. Forty-four per
cent say FLB’s offer good long
term loans and 34 percent say they
have low, competitive rates.
Farmers preferring PCA’s give a
wide range of reasons for choosing
these lenders including low in
terest rates (31 percent), con
venience (22 percent), good ser
vice and the perception that len
ders at PCA’s have a greater
understanding of agriculture (15
percent). ,
Farmers cite competitive in-
(Turn to Page Dl4)
Case IH sponsored survey