North Dakota agricultural credit will be available and reasonably priced in 2009 despite all the recent turmoil on Wall Street, according to poll of 300 participants who attended NDSU's annual agricultural lenders conferences in Grand Forks, Minot, Bismarck and Fargo in November.
During the conference, Cole Gustafson, NDSU Department of Agribusiness and Applied Economics professor, collected lenders' anonymous reactions to several statements using a new audience response system.
He asked lenders to specify how much 2009 interest rates on operating credit would change from 2008. Forty percent of the lenders expected rates at their financial institution to decrease from 2008 levels.
Many lenders felt that agricultural interest rates would trend lower following the Federal Reserve's recent efforts to ease monetary policy and lower interest rates across the economy.
Twenty-nine percent of the lenders felt interest rates would remain steady. Only one-third of the lenders expect an increase, but the vast majority of that group felt rates would increase less than 1 percent point (100 basis points).
About one-third of the lenders said they expected all of their 2008 customers to obtain credit next year.
Forty six percent of the lenders expected to deny 2009 credit to about 2% of their customers who received financing in 2008.
Sixteen percent of the lenders estimated that 5% of their previous customers would be unable to qualify for 2009 credit.
There was considerable regional variation in lenders' responses, especially from north to south. Northern lenders were more optimistic that existing customers would receive credit in 2009. Part of the explanation is new income from oil and wind lease arrangements. In the southern regions, recent layoffs in Gwinner and poor crops in the southwestern region were contributing factors.
Lenders were asked to estimate how long North Dakota would take to recover from any slowdown. More than one-third of the lenders felt North Dakota's economy wouldn't slow down at all or, if it did, the state would recover in less than six months. More than half of the lenders estimated that the state's economy would take one or two years to rebound. Only a few expected a long-term impact by saying economic troubles would last five years or more. Again, considerable variation existed regionally, with the northern lenders expecting a quicker recovery.
Source: NDSU Extension Communications