Farm Progress

Fast Facts about Banking

David Kohl, Contributing Writer, Corn+Soybean Digest

July 1, 2009

1 Min Read

A West Coast road trip to speak to the Washington Agricultural Bankers’ program allowed me to share the podium with John Blanchfield, director of the American Bankers Association’s Center for Agricultural and Rural Banking. John, in his usual energetic style, presented some interesting points about the banking industry:

  • Banks have sufficient funds to make farm loans in 2009 and beyond; however, it is not going to be business as usual, with more conservative assessments in working with borrowers.

  • Ninety-eight percent of the over 8,400 banks are well-capitalized, with many being agricultural banks.

  • Farm equity now exceeds $2 trillion dollars, nearly doubling in this decade. Much of the increase is the result of appreciation in farmland values.

  • Farm debt is now $2.5 billion dollars and is being serviced by record profits of 2008, which are projected to be down by 17% in 2009. This is still much above average.

  • The percentage of farm assets financed by debt is now 9.1%, a record low, and down from 15% in 1991.

  • Land values nationwide increased by 8%, with much of the increase resulting from double-digit price increases in the Midwest.

John left the audience with his former conservative upstate ag banker perspective: What goes up can come down. Be prepared for changes in government programs as they relate to agriculture and ag lending.

About the Author(s)

David Kohl

Contributing Writer, Corn+Soybean Digest

Dr. Dave Kohl is an academic Hall of Famer in the College of Agriculture at Virginia Tech, Blacksburg, Va. Dr. Kohl has keen insight into the agriculture industry gained through extensive travel, research, and involvement in ag businesses. He has traveled over 10 million miles; conducted more than 7,000 presentations; and published more than 2,500 articles in his career. Dr. Kohl’s wisdom and engagement with all levels of the industry provide a unique perspective into future trends.

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