AUBURN, Ind. - Volatile commodity prices and the contracting auto sector are cause for concern at Dekalb Financial Credit Union. The vast majority of the $88-million credit union's members are farmers or auto workers; both find themselves in hard times these days as car manufacturing plants continue to close and crop prices swing wildly.
"We're all auto workers around here so our members are being laid off so that is a problem and it seems like it is spreading," said CEO Ronald Linstromberg, adding that farmers are suffering because the price of corn and other grains first rose sharply and then declined just as quickly while seed and other input prices remain high.
As a major farm lender, no one is hitting the panic button yet as many farmers in America's Midwest still have crops to harvest and sell. But there is a good chance that many will not see the prices they originally anticipated when grain prices went through the silo roof this past summer.
Since then, there has been a precipitous decline that has roughly followed the decline of crude oil; the problem is that the cost to plant next year's crop has not seen a similar drop.
"We've had low prices before, but we also had low inputs, but it seems like they hiked the prices of fertilizer and gas doubled," Linstromberg said. "We actually had a drought in August - it did not rain. So their yields are down 25%. A combination of things is hurting us."
Though the wait-and-see attitude toward the agricultural sector may work, there is no doubt that auto workers will face hardship in the very near future as those that had been laid off will not see their jobs returning soon - if ever.
With employment hard to come by and crop yields possibly trailing off and selling for less than anticipated, Linstromberg knows lending demand will rise and Dekalb will have to work closely with its members.
"We just have to sit down and figure out exactly who is going to be in trouble and who is not," he said. "We're going to have to be flexible on this."
