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THE ROLE OF BANKS IN FINANCING AGRICULTURE
By ,..
o
Rex J, No r t h l a n d , D e p u t y D i r ect or
U
D i v i s i o n of Re s e a r c h
F e d e r a l D e p o s i t In s u r a n c e Co r p o r a t i o n

6th




c~>

‘B e f o r e T he

ANNUAL SOUTHERN COMMODITY PRODUCERS CONFEREN
Sp o n s o r e d By

THE ALABAMA FARM BUREAU FEDERATION
BIRMINGHAM, ALABAMA
J u l y 28, 1978
fir* ♦

*« r a r «
V

FEDERAL DEPOSIT

/m o u

CORPORATION0

Banks h a v e b e e n , ar e n o w , a n d p r o b a b l y w i l l c o n t i n u e to b e ,
a major e l e m e n t

in t h e f i n a n c i n g of a g r i c u l t u r e .

T he i r c o m m i t m e n t

TO FINANCE AGRICULTURE HAS REMAINED CONSTANT OVER THE YEARS EVEN
THOUGH FUNDS HAVE BEEN TIGHT AT VARIOUS TIMES.

As

A MATTER OF

FACT, THE RELATIVE AMOUNT OF FARM LOANS MADE BY BANKS HAS INCREASED
OVER TIME.

IN 1940 THEY PROVIDED ABOUT 15 PERCENT OF THE APPROXI­

MATELY 9.5 BILLION DOLLARS OF TOTAL OUTSTANDING FARM DEBT (EXCLUD­
ING CCC l o a n s ).

By 1948

they provided

25

percent and

in

1972

and

EACH OF THE SUCCEEDING YEARS THEY ACCOUNTED FOR MORE THAN 29 PERCENT
OF THE GREATLY INCREASED TOTAL.
T he t r e n d in t o t a l f a r m d e b t s i n c e 1340

is

interesting,

It was a p p r o x i m a t e l y 9.5 b i l l i o n d o l l a r s in t h a t y e a r , T he t o t a l
INCREASED ONLY 1.1 BILLION IN THE NEXT DECADE, BUT THEN IT TOOK
OFF LIKE A SHOT,

IT DOUBLED IN THE FIFTIES, MORE THAN DOUBLED

AGAIN IN THE SIXTIES, AND IN THE FIRST EIGHT YEARS OF THIS DECADE
HAS INCREASED BY ANOTHER 159 PERCENT
FARM DEBT OUTSTANDING, EXCLUDING
IN 1949, OR $115,2 BILLION.

CCC

On JANUARY 1, 1978, TOTAL
LOANS, WAS 12 TIMES ITS SIZE

Of THIS TOTAL, BANKS SUPPLIED 29.1

PERCENT (OR $33,5 BILLION), THE FARM CREDIT SYSTEM 30.7 PERCENT,
the

Fa r m e r s Hom e Ad m i n i s t r a t i o n 6,2 p e r c e n t , a n d l i f e i n s u r a n c e

COMPANIES 7,6 PERCENT,

INDIVIDUALS AND OTHERS SUPPLIED THE

REMAINING 26,5 PERCENT.




/

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2

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OVER THE PERIOD SINCE 1940 NON-REAL ESTATE FARM DEBT HAS
INCREASED MORE RAPIDLY THAN REAL ESTATE FARM DEBT,
THE MAJOR SOURCE OF SUCH FUNDS,

BANKS HAVE BEE

THEY SUPPLIED 30 PERCENT OF THE

$3,0 BILLION OUTSTANDING NON-REAL ESTATE DEBT IN 1940,
PERCENTAGE INCREASED STEADILY UNTIL 1970,

THIS

?ANKS HAVE SUPPLIED

MORE THAN 50 PERCENT OF THE NON-REAL ESTATE FARM LOANS IN 1972
AND LATER YEARS,

THE ALABAMA BANK PERCENTAGES ARE HIGHER,

AS YOU MIGHT EXPECT, BANKS HAVE NOT BEEN AS IMPORTANT A
SOURCE OF FUNDS FOR FARM REAL ESTATE LOANS, BUT THEY ALWAYS
HAVE BEEN A SIGNIFICANT FACTOR IN THAT FIELD TOC,

In 1040, THEY

PROVIDED 8,1 PERCENT OF THE APPROXIMATELY -5,6 BILLION DOLLARS IN
FARM REAL ESTATE DEBT,

AND SINCE 1947 THE PERCENTAGES HAVE

REMAINED RELATIVELY CONSTANT AROUND 12 PERCENT AS FARM REAL ESTATE
DEBT GREW TO $54,2 BILLION IN 1978,
the

AGAIN, AS YOU MIGHT EXPECT,

Farm Cr e d i t Sy s t e m has b e e n t h e m a j o r s o u r c e of f a r m r e a l

ESTATE FUNDS, ACCOUNTING FOR 33,4 PERCENT IN 1278.
AND OTHERS" SUPPLIED A SLIGHTLY LARGER AMOUNT,

"INDIVIDUALS

INTERESTINGLY,

THE COMMERCIAL BANKS IN ALABAMA SUPPLIED 23,3 PERCENT OF THE
TOTAL FARM REAL ESTATE DEBT ($191,6 MILLION OUT OF $824,0 MILLION)
WHICH WAS ALMOST DOUBLE THE NATIONAL AVERAGE,

THE FOUR SOUTH­

EASTERN STATES, INCLUDING ALABAMA, SUPPLIED ABOUT A THIRD MORE
THAN THE AVERAGE FOR THE FIFTY STATES,




F igures on l o a n s m a d e d i r e c t l y t o f a r m i n t e r e s t s by b a n k s
tell only p a r t of t h e s t o r y , of c o u r s e ,
larly

T he

U.S.

Tr e a s u r y r e g u ­

SURVEYS A GROUP OF APPROXIMATELY 6,000 COMMERCIAL AND

MUTUAL SAVINGS BANKS (OUT OF A TOTAL OF APPROXIMATELY 15,000)
TO DETERMINE THE OWNERSHIP OF TREASURY OBLIGATIONS AND THE DEBT
of

Fed e r a l a g e n c i e s .

On A p r i l 30, 1978

b a n k s h e l d a t o t a l of

APPROXIMATELY $10 BILLION IN SECURITIES ISSUED BY THESE AGENCIES;
THUS BANKS SUPPLIED ALMOST ONE-FOURTH OF THE FUNDS RAISED IN THE
CREDIT MARKET BY THE CONSTITUENT ELEMENTS OF THE FARM CREDIT
System a n d t h e Fa r m e r s Ho m e A d m i n i s t r a t i o n . T h u s , b a n k s ,
DIRECTLY OR INDIRECTLY, SUPPLIED 3/3's OF THE TOTAL FARM DEBT
OUTSTANDING AS OF JANUARY 1, 1078,
T he r e is no s t e r e o t y p e d a g r i c u l t u r a l b a n k — t h e y c o m e in
ALL SIZES AND SHAPES, JUST LIKE PEOPLE.
some a g r i c u l t u r a l l o a n s ,

ALMOST ALL BANKS MAKE

Som e of c o u r s e m a k e o n l y a f e w , b u t

IN MANY BANKS FARM LOANS ARE THE LARGEST CATEGORY IN THE LOAN
portfolio,

T h o s e w i t h t h e l a r g e r p e r c e n t a g e s of f a r m l o a n s in

THEIR PORTFOLIO USUALLY ARE SMALLER BANKS FOR 3ANKS IN THE AGRI­
CULTURAL AREAS OF THE COUNTRY USUALLY ARE SMALLER THAN THOSE IN
THE MAJOR CITIES.

APPROXIMATELY 73 PERCENT OF THE COMMERCIAL

BANKS IN THE UNITED STATES EACH HAD TOTAL RESOURCES OF 25 MILLION
DOLLARS OR LESS ON JANUARY 1, 1977.




THESE BANKS HELD 15 PERCENT

OF THE TOTAL DEPOSITS IN ALL BANKS, BUT THEY MADE 51 PERCENT OF
THE FARM LOANS BY DOLLAR AMOUNT,

OVER TWO-THIRDS OF THE FARM

LOANS WERE MADE BY BANKS WITH DEPOSITS OF LESS THAN $50 MILLION
AND ALMOST THREE-FOURTHS WERE MADE BY THOSE WITH DEPOSITS OF LESS
THAN IOC MILLION.
Sm a l l e r b a n k s as a g r o u p t y p i c a l l y m a d e m o r e s h o r t - a n d
INTERMEDIATE-TERM LOANS AND FEWER FARM REAL ESTATE LOANS THAN DID
THE LARGER BANKS,

THE GROUP HAVING UNDER $25 MILLION IN DEPOSITS

HAD 53 PERCENT OF THE SHORT- AND INTERMEDIATE-TERM LOANS AND ONLY
43 PERCENT OF THE REAL ESTATE LOANS HELD BY BANKS,

THE LARGEST

BANKS, THOSE WITH TOTAL DEPOSITS OF OVER $100 MILLION, HAD 24
PERCENT OF THE PRODUCTION AND EQUIPMENT LOANS HELD BY BANKS AS
A WHOLE AND 53 PERCENT OF THE REAL ESTATE LOANS.

THE ROLE OF

THE LARGER BANKS IS NOT COMPLETELY DISCLOSED BY THESE PERCENTAGES
HOWEVER, FOR THEY ARE THE SAFETY VALVE AND ASSIST THE SMALLER
BANKS BY TAKING PARTICIPATIONS IN THEIR LARGE LOANS AT ANY TIME
AND IN OTHER LOANS AT THE PEAK OF THE LENDING SEASON WHEN THE
RURAL BANKS DO NOT HAVE ENOUGH FUNDS TO FINANCE THE HARVESTING
AND MOVING OF CROPS.
D a t a fo r t h e So u t h , o n e of t h e f i v e a g r i c u l t u r a l r e g i o n s
in the

Un i t e d St a t e s , s h o w e q u a l l y s t r o n g s u p p o r t f o r a g r i c u l t u r e

there,

B a n k s w i t h d e p o s i t s u n d e r $25 m i l l i o n c o n s t i t u t e d a p p r o x ­

imately

72 PERCENT OF ALL BANKS IN THE REGION AND HELD ABOUT




ONE-FOURTH OF THE TOTAL BANK DEPOSITS,

THESE "MIGHTY MITES",

HOWEVER, HELD 54 PERCENT OF THE NON-REAL ESTATE FARM LOANS,
52 PERCENT OF THE REAL ESTATE FARM LOANS, OR 55 PERCENT OF ALL
OUTSTANDING FARM DEBT IN THE REGION THE FIRST OF LAST YEAR,
Have we d o c u m e n t e d t h e s t a t e m e n t t h a t b a n k s h a ve b e e n , a r e
now , and p r o s p e c t i v e l y w i l l be a m a j o r s o u r c e of f u n d s for

FARMERS?

If SC, LET US MOVE ON TO THE CURRENT AND THE PROSPECTIVE

AGRICULTURAL LOAN SITUATION AS FAR AS BANKS ARE CONCERNED.
That p r o b a b l y is of m o r e i n t e r e s t t o y o u ,

I would characterize

THE CURRENT SITUATION AS STILL BEING TIGHT, BUT BETTER THAN IT
WAS LAST YEAR, WITH SOME IMPROVEMENT IN THE SITUATION STILL TO
COME,

,'iOST FARMERS HAVE BEEN ABLE TO GET CREDIT AS SHOWN BY A

12 STATE SURVEY MADE IN MARCH 1978 BY THE FCONOMICS, STATISTICS,
and

Co o p e r a t i v e s S e r v i c e of t h e U.S, D e p a r t m e n t of Ag r i c u l t u r e .

The surve y c o v e r e d o v e r 5,309 b a n k s in G e o r g i a a n d 11 M i d w e s t e r n
s t ate s ,

Ma n y of t h e a n s w e r s in t h e s u r v e y m a y be c h a r a c t e r i z e d

IN THE FORM OF "ON THE ONE HAND— BUT ON THE OTHER HAND— ".
Loans in t h e b a n k s c o v e r e d by t h e s u r v e y a v e r a g e d 61 p e r c e n t of
THEIR TOTAL DEPOSITS, WHICH MAY BE A LITTLE HIGH,

THIRTY-NINE

PERCENT OF THEM SAID THAT THE LOANS ON JANUARY 1, 1978 WERE ABOVE
THE DESIRED LEVEL, BUT ON THE OTHER HAND 41 PERCENT SAID THAT
THEIR LOANS WERE BELOW THE DESIRED LEVEL,

As

FAR AS THE QUALITY

OF THE BANK LOAN PORTFOLIO IS CONCERNED, 24 PERCENT INDICATED




-

6

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that the q u a l i t y of t h e p o r t f o l i o had d e c r e a s e d
or

in t h e l a s t y e a r

TWO BUT 26 PERCENT BELIEVED THE QUALITY HAD INCREASED.

THE

COMPARISON OF THE QUALITY OF FARM LOANS TO OTHER LOANS IN THE
PORTFOLIO IS QUITE INTERESTING.

TWENTY-FIVE PERCENT OF THE BANKS

REPLYING INDICATED THAT THEY THOUGHT THEIR FARM LOAN PORTFOLIO
WAS OF BETTER QUALITY THAN THE OVERALL LOAN PORTFOLIO OF THE BANK,
AND ONLY 13 PERCENT THOUGHT THAT THE FARM LOANS WERE OF POORER
quality .

T ha t l e f t 62 p e r c e n t t h a t t h o u g h t t h a t t h e q u a l i t y of

THE FARM LOANS WAS ABOUT THE SAME AS THAT OF OTHER TYPES OF LOANS
IN THEIR PORTFOLIO,
T he s u r v e y s u b s t a n t i a t e d t h e f a c t t h a t t h e a g r i c u l t u r a l
LOAN SITUATION IS TIGHTER THAN NORMAL.

BANKS PARTICIPATING IN IT

INDICATED t h a t t h e r e w a s s o m e i n c r e a s e in t h e p e r c e n t a g e of f a r m
LOAN APPLICATIONS NOT QUALIFYING FOR ADDITIONAL LOANS IN 1278,
About 3 p e r c e n t of t h e a p p l i c a t i o n s f r o m l a s t y e a r 's b o r r o w e r s
DID NOT QUALIFY THIS YEAR WHEREAS THE NORMAL PERCENTAGE WAS
APPROXIMATELY ONE PERCENT.

THEY ALSO INDICATED THAT SIX PERCENT

OF CURRENT BORROWERS COULD NOT OBTAIN ADDITIONAL FUNDS BECAUSE
THEY HAD BORROWED UP TO THE LIMIT.

THE SIX PERCENT FIGURE IS

EXACTLY DOUBLE THE NORMAL THREE PERCENT FOR THIS CATEGORY.
T he s e f i g u r e s w o u l d h a v e b e e n m o r e s e r i o u s if i n c r e a s e s in
farm

LAND VALUES HAD NOT CREATED ADDITIONAL EQUITY FOR FARMERS.

This e n a b l e d a l a r g e r n u m b e r t h a n u s u a l (7 p e r c e n t v e r s u s 2 p e r c e n t )




-7-

TO REDUCE SHORT-TERM LIABILITIES BY REFINANCING THROUGH ADDI­
TIONAL BORROWING ON FARM REAL ESTATE.

SIMILAR CONCLUSIONS,

WITHOUT ANY NUMBERS, WERE REACHED BY MEMBERS OF THE EXECUTIVE
COMMITTEE OF THE AGRICULTURAL BANKERS DIVISION OF THE AMERICAN
Bankers A s s o c i a t i o n at a m e e t i n g t h i s s u m m e r ,
We s h o u l d e m p h a s i z e a l s o t h a t t h e c u r r e n t s i t u a t i o n w o u l d
BE SIGNIFICANTLY WORSE IF IT WERE NOT FOR THE LOANS MADE BY THE
Farmers Ho m e Ad m i n i s t r a t i o n a n d t h e Sm a l l B u s i n e s s Ad m i n i s t r a t i o n
TO CUSHION THE EFFECTS OF DROUGHT, FLOODS AND OTHER NATURAL
disasters,

T hey a l s o h a v e m a d e l o a n s to f a r m e r s w h o s e f i n a n c i a l

CONDITION DID NOT QUALIFY FOR FURTHER BANK LOANS,
T he l a t e s t q u a r t e r l y s u r v e y s of a g r i c u l t u r a l c r e d i t
CONDITIONS IN FIVE FEDERAL RESERVE BANK DISTRICTS ALSO INDICATE
THAT THE CURRENT SITUATION IS TIGHTER THAN USUAL BUT THAT IT IS
NOT DESPERATE,

THE PERCENTAGE OF BANKS REPORTING SLOWER FARM

LOAN PAYMENTS AT THE END OF 1977 RANGED FROM 55 PERCENT IN ONE
OF THE DISTRICTS TO 70 PERCENT IN ONE OF THE OTHERS, BUT THIS
REPRESENTS AN IMPROVEMENT OF SOMETHING BETWEEN 5 AND 10 PERCENT
OVER THE SITUATION THAT EXISTED AT THE FIRST OF THE YEAR.

INTEREST­

INGLY ENOUGH, ABOUT 40 PERCENT OF THE BANKS REPLYING SAID THAT
THEIR RATIO OF LOANS TO TOTAL DEPOSITS WAS HIGHER THAN DESIRED,




p

This is a p p r o x i m a t e l y t h e same as t h e 7° PERCENT REPORTED IN THE
SURVEY BY THE ECONOMICS, STATISTICS AND COOPERATIVES SERVICE OF
the

U.S.E.A.

One f i n a l f i g u r e on t h i s sa m e s u b j e c t : T h e r e are

APPROXIMATELY 5,000 BANKS IN THE COUNTRY IN WHICH AGRICULTURAL
LOANS CONSTITUTE 25 PERCENT OR MORE OF THE TOTAL LOANS IN THE
BANK,

tHESE 5,000 BANKS ACCOUNT FOR MORE THAN ONE-HALF OF ALL

THE FARM LOANS MADE BY BANKS.

OUT OF THIS SAMPLE OF 5,000, ABOUT

3/8'S OF THE BANKS HAD A LOAN TO DEPOSIT RATIO ABOVE 70 PERCENT
IN MID-1977 BUT THIS HAD DROPPED TO ABOUT 1/4 BY THE END OF THE
YEAR.

How

l e t 's

GET OUT THE CRYSTAL BALL AND SEE WHAT IT TELLS

US ABOUT THE PROBABLE FUTURE COURSE OF AGRICULTURAL CREDIT.

ÏHE

STARTING POINT IS OUR CURRENT SITUATION WHICH WE'VE CHARACTERIZED
AS BEING TIGHTER THAN USUAL BUT IMPROVING.

T he IMPROVEMENTS

RESULT FROM INCREASES IN PRODUCTION AND PRICES IN THE AGRICULTURAL
SECTOR, INCREASES IN DEPOSITS OF BANKS, FROM CORRESPONDENT AND
OUTSIDE BANKS TAKING OVER PART OF THE LARGE LOAN TOTALS, AND
ESPECIALLY FROM THE EMERGENCY AND OTHER PROGRAMS REPRESENTED BY
OTHER GOVERNMENTAL PARTICIPANTS ON THIS PANEL.

THE PROBABLE FUTURE

FARM CREDIT SITUATION WILL BE INFLUENCED STRONGLY BY THE GENERAL
AGRICULTURAL CONDITIONS IN THE BALANCE OF THIS AND NEXT YEAR, THE
GENERAL ECONOMIC CONDITIONS THROUGHOUT THE NATION, THE INTERNATIONAL
trade s i t u a t i o n of t h e




Un i t e d St a t e s , a n d t h e i n t e r n a t i o n a l e c o n o m i c

_0_

CONDITIONS,

I WON'T TRY TO DISCUSS THESE BROAD, IMPORTANT

ASPECTS, BUT I BELIEVE THAT IN GENERAL THERE SHOULD BE SUFFICIENT
CREDIT AVAILABLE FOR BANKS TO CONTINUE TO PROVIDE APPROXIMATELY
30 PERCENT OF THE TOTAL AMOUNT OF OUTSTANDING FARM INDEBTEDNESS,
What h a p p e n s t o t h e i n d i v i d u a l f a r m e r c a n be a d i f f e r e n t q u e s t i o n ,
of c o u r s e .

W h e t h e r y o u or a n y o t h e r f a r m e r w i l l b e a b l e to

BORROW FROM YOUR NORMAL BANK SOURCES WILL DEPEND UPON YOUR OWN
INDIVIDUAL FINANCIAL CONDITION.

ANALYZING THIS INVOLVES A STUDY

OF THE NATURE OF AND RELATIONSHIP OF ASSETS AND LIABILITIES ON
YOUR BALANCE SHEET, YOUR NEEDS FOR ADDITIONAL CAPITAL FUNDS IN
ADDITION TO OPERATING MONEY, YOUR NET INCOME OVER THE PAST FEW
YEARS AND ANY CHANGES IN THAT PROSPECTIVE INCOME IN THE NEXT
YEAR OR TWO,

THE BANKS SHOULD HAVE THE FUNDS AMD ARE INTERESTED

IN LENDING TO GOOD PRODUCERS SO THE GREAT MAJORITY OF THE ENERGETIC,
CAPABLE FARMERS SHOULD HAVE NO DIFFICULTY IN OBTAINING BANK
CREDIT FOR THE BALANCE OF THIS YEAR AND NEXT YEAR,
ON THE WHOLE, BANKS ARE MORE INTERESTED IN MAKING SHORT­
TERM CROP AND LIVESTOCK LOANS AND INTERMEDIATE-TERM EQUIPMENT AND
LIVESTOCK LOANS THAN THEY ARE LONGER-TERM REAL ESTATE LOANS, BUT
THEY ARE AND WILL CONTINUE TO BE INTERESTED IN SOME REAL ESTATE
lo ans ,

T his is e v i d e n c e d b y t h e f a c t t h a t a t t h e b e g i n n i n g of

THIS YEAR THEY WERE HOLDING APPROXIMATELY 7.8 BILLION DOLLARS IN
FARM REAL ESTATE LOANS, OVER 12 PERCENT OF THE TOTAL OF SUCH
LOANS OUTSTANDING IN THE UNITED STATES.




I
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W h a t can y o u do t o he l p a s s u r e an a d e q u a t e li n e of b a n k
CREDIT FOR YOURSELF IN PARTICULAR AND FOR YOUR FARMER FRIENDS IN
general ?

F irst a n d m o s t i m p o r t a n t , y o u c a n m a n a g e y o u r own

AFFAIRS PROFITABLY AND WELL.

SECONDLY, KEEP YOUR BANKER FULLY

INFORMED ABOUT YOUR CURRENT FINANCIAL SITUATION AND YOUR INCOME
PROSPECTS.

A n d , d o n 't le t a l o a n r e m a i n p a s t d u e e v en if y o u

can 't pay t h e p r i n c i p a l .

T h i r d l y , h e lp y o u r b a n k e r o b t a i n t h e

funds he n e e d s to m e e t his l o a n d e m a n d s .

Th a t m a y m e a n t h e r e m o v a l

OF CEILINGS OR LIMITS ON THE INTEREST HE CAN PAY TO DEPOSITORS
IN ORDER TO ATTRACT TIME AND SAVINGS ACCOUNTS.

CONVERSELY, IT

ALSO MAY MEAN THE REMOVAL OF CEILINGS ON THE INTEREST HE CAN CHARGE
ON LOANS MADE BY HIM SO HE CAN EARN ENOUGH TO PAY THAT HIGHER
RATE ON DEPOSITS,

FINALLY, LET YOUR LEGISLATORS KNOW THAT LOANS

FOR AGRICULTURAL PRODUCTION ARE AS IMPORTANT TO THE WELL-BEING OF
the

Am e r i c a n p u b l i c as a r e r e s i d e n t i a l l o a n s or o t h e r t y p e s t o

WHICH SPECIAL PROVISIONS SOMETIMES APPLY.
T he b a n k e r has his o w n r e s p o n s i b i l i t i e s t o f u l f i l l in r e t u r n
FOR WHAT YOU ARE DOING FOR HIM.

He MUST EXPECT TO COMPETE FOR

FUNDS AND FOR LOANS IN THE OPEN MARKET WITHOUT GEOGRAPHIC OR
STATUTORY PROTECTION FROM OTHER COMPETITORS.

H e MUST KNOW THE

CHANGING AGRICULTURAL TECHNOLOGY AND THE CREDIT NEEDS OF FARMERS.
He must p r o v i d e a s t a b l e , c o n t i n u i n g s o u r c e of a g r i c u l t u r a l l o a n s —
NOT AN "on AGAIN OFF AGAIN" SUPPLY AS MONEY MARKET RATES FLUCTUATE




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UNDER TEMPORARY, SHORT-TERM INFLUENCES— AND IF HE DOES YOU SHOULD
STICK WITH HIM THE SAME WAY THROUGH TEMPORARY FLUCTUATIONS IN
RATES FOR YOUR DEPOSITS,

AND, HE MUST CONTINUE TO NURTURE THE

ECONOMY OF YOUR LOCAL COMMUNITY, INCLUDING THE AGRI-BUSINESS
PART OF IT.

In SUMMARY, WE MAY NOT BE AELE TO REPEAT THE "FOUR BELLS
AND ALL'S WELL" OF THE WATCH ON A SHIP, BUT I BELIEVE THAT WE
CAN SAY' WITH CONFIDENCE THAT THE AGRICULTURAL LOAN SITUATION
OVERALL IS MANAGEABLE AND IS IMPROVING, AT LEAST AS FAR AS BANKS
ARE CONCERNED, ALTHOUGH IT IS A BIT TIGHTER THAN NORMAL,

THE

BANKS SHOULD HAVE LOAN FUNDS AVAILABLE TO TAKE CARE OF THE
CAPABLE FARMERS WHO HAVE BEEN BORROWING FROM THEM AND TO FINANCE
THEM THROUGH THE BALANCE OF THIS YEAR AND NEXT YEAR WITHOUT
UNDUE STRAIN EITHER ON THE FARMERS OR ON THE BANKS THEMSELVES,