FROM THE HARVESTER, FEBRUARY 1978

FARM CREDIT BANKERS CONFIDENT AS THEY LOOK INTO THE FUTURE

He said that while the weather has been a chief contributor to the problems of farmers, “…we would have to add to that the high cost of operations – inputs. This past year (1977) was a very expensive year to conduct farming operations.”

Darr pointed out that 1977 yields were down, which contributed to the problems of farmers throughout the country. He said farm income was down at the same time expenses were up and that farmers have less money to use to pay debts to carry on farming activities and on which to live.

“Probably the major problem facing farmers for 1978 is their uncertainty about what to plant or to raise that holds promise of making a profit,” Darr said. Farmer prosperity in the new year depends to some extent on acreage planted (and to what ), weather and adjustments in the livestock sector, he continued. He referred to weakened grain prices in 1977, a factor that may allow cash receipts from livestock to inch ahead of crop receipts.

Darr sees little improvement in 1978 farm income over last year. He does feel farmer earnings will be supplemented with larger benefits from the new farm program.

The banker, now dean of all Farm Credit Bank presidents, told the group production expenses are expected to rise four to five percent this year, offsetting gains in gross income. He said production expenses of farmers have more than doubled in the past 10 years.

Getting into the financial situation, President Darr said: “The financial outlook for farmers in 1978 is projected as a continuation of the conditions we have observed in recent months.

“Farmers have had considerably less cash flow than they normally would have. Many farmers have experienced financial difficulties due to reasons beyond their control. There is no doubt that there will be competing demands for capital in the capital markets of the country in 1978. I believe the record of the Farm Credit Banks in selling their bonds to private investors for 60 years has been so outstanding that there is no question as to whether we will be able to sell our bonds to get the capital needed by agriculture.”

Darr then told about the new Consolidated Federal Farm Credit Bank Bond, recently introduced by the 37 Farm Credit Banks. This means all the banks are going into the capital market together and selling one bond with varying maturities to private investors. He said the first issue of the new bond “resulted in a high degree of confidence being shown.”

Continuing, Darr said: “We believe the long-term future is good. We need to remain calm, to do some deliberate thinking and to avoid panic situations.

“We in Farm Credit have confidence in the future of agriculture. We are building our personnel (and people make institutions what they are) and improving our development of human resources, training people, building our capital structure, increasing our sources of funding so that we will be able to provide double the service to farmers within the next eight years.”

He said the Farm Credit Banks' “posture” will be to “stick with farmers during hard times who have tried and acted in good faith… whenever a farmer experiences difficulties in paying his debt, we encourage him to apply proceeds to the limit of his ability and to come in and talk to us. We ask for a realistic budget on needs for operating and living expenses.”

Darr concluded by saying: “Farmers are concerned – everyone is concerned about the agricultural situation. We have hit a little rough spot in the road, this rough agricultural situation, kind of like a detour in a highway. We have got to slow down and tighten our belt and drive carefully, keep cool heads, and we will work out of this situation. I believe the best is yet to be in agriculture and especially if we make it so.”