Mid-Wisconsin Bank may be in the heart of dairy cow country, but it's finding a new market in loaning money to fish and elk farmers.
The Medford bank still makes dairy loans, but it has also made 25 loans- about 2.5% of its $180 million loan portfolio-to what it deems "nontraditional" agriculture ventures.
"It used to be, around here, that if you weren't a dairy farmer, you weren't a farmer," said Russel Kuehn, a vice president at $261 million- asset Mid-Wisconsin. "But those days are gone. These farms have created a lot of jobs in the area, and that creates new customers for the bank."
Mr. Kuehn said that, if bankers keep an open mind, there are opportunities in "niche" farming.
Finding new customers to lend to is important for agriculture-dependent banks, especially in light of the Federal Agriculture Improvement and Reform Act of 1996, said John M. Blanchfield, manager of agricultural banking and rural development at the American Bankers Association.
This law will reduce, over six years, some government subsidies for farmers. It also loosens restrictions on what the government will pay farmers to grow, giving the farmer more freedom to try new crops.
"Between now and the year 2002, there is going to be a mad scramble by farmers to come up with something to grow other than the corn and beans that government programs once encouraged," Mr. Blanchfield said. "Farmers will be growing different products, and bankers should be looking for new deals."
The nontraditional farmers Mid-Wisconsin does business with raise mink and elk, for example. And he's also discovered aquaculture-fish farming-as a new line of business, Mr. Kuehn said. There are not only numerous white perch farms in the area but also a farm that raises bass for recreational fishing.
In addition to dairy loans, Bank of Edgar (Wis.) does a lot of business lending to ginseng farmers. Roy Jaeger Jr., president, said most of the $70 million-asset bank's ginseng farmers are dairy producers who grow the root product for supplemental income. He said the two sources of income should help make these farmers stable customers.
"It is like any other company," Mr. Jaeger said. "The more diverse you are, the less you are at the mercy of market whims."
He said that about $5 million of the bank's $42 million loan portfolio is in ginseng loans. The bank has a total of about $15 million in agriculture loans.
American Community Bank, Wausau, Wis., has stayed away from nontraditional agriculture business in favor of the local dairy market.
Duane Wolding, president and chief executive officer of the $85 million- asset bank, said he is aware of nontraditional farms in his area but regards them as still a small business with limited opportunities.
"It is a small market that needs to develop," Mr. Wolding said. While he did not rule out lending to nondairy farmers, he said he would want to see some sort of positive track record before committing money.
Mr. Kuehn said most bankers would rather do business with traditional farmers because they know the business better.
Funding new products means learning about them, and that takes time, he admitted. For example, he recommended, before a bank lends to a fish farm, the lender should ask the borrower to give examples of successful fish farmers.
