When farmers choose a lender, knowledge of the agriculture industry is more important than location or low interest rates, according to a survey released this week.

Nearly 70% of the farmers surveyed said it is "extremely important" for a lender to have a good understanding of the often-unpredictable farm economy. Meanwhile, fewer than 45% of the 184 respondents said they choose a lender because it has the lowest interest rate, and only 20% rated convenient location as critical.

"Although pricing is important, a lot of other criteria are more important," said Lynn Henderson, president of Doane Agricultural Services Co., the St. Louis firm that did the survey.

The survey also found that farmers view commercial banks as more dependable sources of credit than Farm Credit System lenders, insurance companies, or equipment makers. Seventy-six percent said they rely on commercial banks; 55% said the same for Farm Credit lenders. Only 6% said insurance agencies are dependable credit sources.

Doane presented the survey results at the American Bankers Association's annual agricultural bankers conference here this week. The survey was mailed to about 1,000 farmers with annual sales of at least $100,000.

Farmers say banks are more flexible and make quicker loan decisions than other lenders and are more likely to support economic development in their communities. Banks, however, do not price loans as aggressively as Farm Credit lenders, according to the survey.

Among the survey's other findings:

Farmers are more likely to finance ranch and land purchases with Farm Credit System loans than with commercial bank credits.

Forty-one percent of farmers say they borrow from equipment makers to buy machinery; 38% turn to banks.

Farmers rely more on banks for crop input loans than on Farm Credit lenders, insurance firms, and equipment dealers combined.

About 51% of the farmers responding said a banker had visited in the last 12 months. And though that figure is higher for banks than for other lenders, Mr. Henderson said, there is room here for improvement.

"It's a competitive marketplace," he said, "but if this survey is half right, there are some other key prospects that you want to take a look at."

Richard A. Krug, vice president at Farmers Savings Bank and Trust in Traer, Iowa, said it is not easy to find time to visit farmers.

"Bankers have to wear a lot of hats and have difficulty getting out of the office," he said. However, he added, "you just have to leave your desk and get out there."

Of course, that's not to say banks should ignore existing customers- especially now, during a period of low crop prices. Michael Boehlje, agricultural economist at Purdue University, said bankers who stick by farmers during the current downturn will probably keep those customers for life.

"Farmers have very long memories of those that stay with them through the tough times," he said.

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