Farm bankers often complain that the federal Farm Credit System is eating their lunch, but some numbers from the U.S. Department of Agriculture show otherwise.

Since 1982, the data show, the Farm Credit System's share of the total farm debt has eroded steadily. Commercial banks, in aggregate, have been gaining and have had a bigger share than the government-sponsored system since 1987.

The Farm Credit System's share of the total debt peaked at 34% in 1982 and fell to 25% in 1992. Conversely, commercial banks increased over those 10 years to 37% from 22%.

The total pie shrunk over that period, to $139.7 billion from $188.8 billion. More than one-third of it is controlled by neither banks nor the Farm Credit System: the Farmers Home Administration has 10%, life insurance companies 7%, and individuals and others such as equipment suppliers hold 21%.

Of those groups, only the insurers have gained market share since 1982, and by less than a percentage point.

Banks See Price Disadvantage

Ronald K. Ence, director of agricultural finance for the Independent Bankers Association of America, said, "We hear from individual bankers -- not from some nationwide statistician -- that they cannot compete with the Farm Credit System."

Mr. Ence insists the Farm Credit System prices loans at rates so low that the nation's 4.000 agricultural bankers can't with it. But he said he does not have numbers to back up his conclusion.

Daryl L. Tabor, president of First International Bank and Trust in Harvey, N.D., said the Farm Credit System charges interest at 100 to 175 basis points lower than his $21 million-asset bank. Mr. Tabor said he gives farmers better service, but that's not enough.

Less Service but Lower Rates

Borrowers are "willing to put up with some lower quality service because they are saving money," Mr. Tabor said. "You can't beat that rate."

Agriculture Department economist James T. Ryan said banks "can't have that much of a comparative disadvantage and still be gaining market share every year."

But Mr. Ryan said the situation could vary from state to state, since Farm Credit lenders in some areas are more aggressive than in others.

The Agriculture Department data show that in eastern states such as New York, Connecticut, and South Carolina, the federal farm lending program has a much higher share of the market than commercial banks.

In some midwestern and western states, such as Michigan, Nevada, and Colorado, Farm Credit tops the banks.

In Nebraska, banks have 51% of the market to Farm Credit's 15%. In Missouri, South Dakota, Oklahoma and Washington, banks? percentages are more than twice those of Farm Credit.

The Farm Credit System is an independent government-sponsored enterprise chartered in 1916. It is a network of 14 banks and 243 local credit associations that borrows money at rates just above Treasury levels. It then re-lends to farmers, ranchers, and rural cooperatives.

Stephen Blakely, spokesman for the Farm Credit System trade association, the Farm Credit Council, said:

"We have to wonder what the bankers are complaining about. They posted record profits last year and their market share is growing."

Mr. Ryan of the Agriculture Department said lenders are chasing after farmers that aren't borrowing as much as they used to. "They still have a lot more money to loan than they have qualified loan applicants."

The IBAA's Mr. Ence said that while agricultural bankers may be increasing market share at the expense of the federally sponsored system, the latter "is getting the biggest and best loans."

Agriculture Department economists think that bankers who have worked hard to build their market share fear the consequences of a Farm Credit System that has nearly recovered from a government bailout during the 1980s.

"From now on out, you are going to be seeing a lot more competition," said an Agriculture Department official.

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