Agricultural bankers are boning up on how to be educators, as well as lenders, to farmers in the post-farm-subsidy era.

Farmers will be forced to find new ways to manage their risk and stabilize their incomes after all farm subsidies are phased out in seven years, as determined by the farm bill approved earlier this year.

Although some farmers are comfortable with using such financial instruments as futures contracts and options, others are baffled and perplexed by such "farm marketing" strategies.

That's where bankers believe they come in.

Attendees of the American Bankers Association Agricultural Bankers Conference here were keenly aware that their fates hinge upon those of their customers and their ability to negotiate the volatile farm economy without a government safety net.

Donald E. Pflum, vice president of First Trust Bank, Taylorville, Ill., spoke for most of those attending the conference in saying, "Bankers are going to have to fill an educational void."

The topic was a matter of concern for lenders at small and large banks alike.

"We're looking at how we can help some of our customers with marketing, especially with changing grain prices," said Curt Brye, assistant vice president of United Bank, Osseo, Wis. "There are going to be a lot of tough decisions to be made."

Kerry R. Biddle, vice president of Seafirst Bank, a Seattle-based subsidiary of BankAmerica Corp., agreed.

"We want to look at how to protect their downside," Mr. Biddle said. "We have to be as proactive as possible and preach about building liquidity to survive down periods, because you will have down periods."

Texas agriculture consultant Randy Allen, one of the conference speakers, hammered on this theme during a session titled, "Ag's 'Big Top' Markets and New Highwire Act."

"Fifty percent of farmers need their subsidy check to break even," Mr. Allen asserted. "Banks really need to allocate some of their budget to the training of their clientele."

Bankers said they could provide guidance through methods ranging from distributing literature to sponsoring seminars to organizing discussion groups dedicated to the issue of farm marketing.

William L. Gray, assistant vice president for Bank 10, said the Drexel, Mo.-based institution already has made progress in this area.

"We've put together conferences and seminars to help them with marketing strategies and spreading risk around," said Mr. Gray, himself a former teacher.

Other bankers saw a need to revamp or intensify programs already in place.

"We had a marketing club a couple of years ago; it may be time to restart it," said Jim Atchison, vice president of agricultural services for Bank One Janesville in Wisconsin.

"I'm here to become a little more literate about using options and being able to counsel farmers a little better on how to minimize risk," said

Most bankers at the conference expressed optimism that their customers would be able to meet the demands of the coming marketplace. But they conceded that some farmers will need more prodding than others.

"We have got the whole gamut," said Randy Luke, vice president of $19 million-asset Horizon State Bank in Cameron, Mo.. "We've got some that are doing it now, some who would like to do it but don't understand it, and some that don't understand it at all."

A Kansas banker also said that some bankers might be resisting the culture shift.

"Some of them tend to have a plan and some of them don't; it's not tied to age," said Rex Hoskinson, vice president of $43 million-asset First National Bank and Trust, St. John.

Bankers generally agreed that the post-subsidy era is going to be as challenging for them as for their customers.

"We're going to have to be more savvy and do a better job of educating customers to help them be more savvy," Mr. Atchison said.

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