Farmers' Woes Worrisome for Farmer Mac

effects of the economic crisis confronting farmers across America. Delinquent payments in Farmer Mac's loan program for full-time farmers jumped from 0.71% in June 1998 to 1.81% by March of this year. By June 30, the number of delinquent borrowers had fallen back to 1.07%, but Farmer Mac lenders worry it might climb again. "The farm crisis is a concern for the entire industry," says Stephen Burrier, vice president of Zions Agricultural Finance in Ames, Iowa. "Farmers are facing a cash-flow problem, and we're anticipating some challenges." Farmers in the Northeast were hit hard by drought this summer, and producers in the Great Plains suffered through heavy rains this spring that prevented planting. In addition, producers across the nation this year and last have faced some of the lowest commodity prices in decades for a host of products, including wheat, soybeans, and hogs. "Farmers can't survive if these weak prices continue long-term," says Deryl Hunter, a vice president of the First National Bank of Altus, Okla. Effects of the crisis already are cropping up at banks that make Farmer Mac loans. At D.L. Evans Bank in Burley, Idaho, about 40% of the Farmer Mac real-estate loans now being generated are being used to consolidate operating debt by using the farmer's existing property as collateral, says Eric Stiegers, the bank's Farmer Mac manager. Mr. Stiegers believes that number could rise this fall. "Once our farmers finish up the crop harvest, they'll assess where they're at," Mr. Stiegers says. "But we haven't seen a whole lot of improvement in the agriculture markets lately."

- Craig Woker

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