Rural banks cannot survive by just making loans to farmers, the president of the American Bankers Association said.

The banks already face stiff competition from the Farm Credit System, equipment manufacturers, and other lenders.

Speaking to the ABA's agriculture banking conference, R. Scott Jones said rural banks need to sell more checking accounts, trust services, and other products to their farm customers.

A farmer "ought to know he can come to you for advice and direction, not just money," said Mr. Jones, chairman and chief executive officer of Goodhue National Bank in Red Wing, Minn. "You ought to go from just being a lender to an outright partner with that customer."

Mr. Jones announced the formation this week of an ABA task force to focus on agricultural banking in the 21st century. The task force, which has already met twice, will work on a strategy to ensure that banks are the primary source of credit for farmers.

"The main objective of the task force will be to develop legislative initiatives, banker training, and other programs that will be vital to a sound agriculture economy," Mr. Jones said.

That part of the U.S. economy has struggled of late. Crop prices are at five-year lows and are not expected to rise until there are turnarounds in Asia, Latin America, and Russia-key importers of wheat, corn, and other commodities.

Farm income is predicted to drop by 12% this year from a record $61 billion in 1997, according to the Department of Agriculture. Exports, which reached $60 billion in 1996, are expected to fall to $52 billion in 1999.

The fallout from low crop prices was the main topic of discussion during the three-day ABA conference, which attracted about 750 bankers. A representative from the wheat industry, for example, complained that prices had dropped to $2.50 a bushel, down $3 from 1996.

"Bleak is a good way to describe it," said Bill Flory, president of the National Association of Wheat Growers.

Agriculture Secretary Dan Glickman said Tuesday that the government has sent out $3 billion in emergency aid to farmers and plans to distribute an additional $2.5 billion in the next 30 days. The extra money likely will go to farmers in Texas, North Dakota, South Dakota, Minnesota, and parts of the Southeast that have been hit hardest by natural disasters.

Mr. Glickman also said he will meet with Korean companies shortly to encourage pork sales, and he noted that the administration is buying millions of tons of grain for Russia and Central America.

Still, with commodity prices unlikely to rise, lenders can expect low employment growth and more consolidation in the farm sector.

"Be prepared for thinner margins and for a lot fewer customers," said Mark Drabenstott, vice president and director for the Center for the Study of Rural America at the Federal Reserve Bank of Kansas City.

Bankers at the conference said low prices are not hurting everyone. Richard M. Nyswonger, senior vice president of Pilot Grove (Iowa) Savings Bank, said a banner harvest offset low prices for corn growers in his area.

"I think they were pleasantly surprised with the yields," he said. "It's not as grim as maybe we thought over the summer."

There are 2,400 agriculture banks, classified as such if a quarter of their loans are farm-related, and they have $123.7 billion of total assets, the Federal Deposit Insurance Corp. said. These banks had $75.5 billion in farm loans in the second quarter, up from $69.8 billion a year earlier.

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