John H. Colvin keeps a close eye on the "trinkets."

That's what Mr. Colvin, president of North Salem (Ind.) State Bank, calls the sophisticated, pricey farm machinery that often dazzles younger farmers and sends them to the bank for larger loans. While Mr. Colvin said he believes most young farmers are financially savvy, the banking veteran said he still sometimes must steer them away from buying, say, a $210,000 combine.

Mr. Colvin isn't the only agricultural banker keeping a close watch on the bank's youngest farm customers. With many young farmers planning for growth in their operations over the next few years, some bankers say they're worried that the next generation may not be prepared for an economic downturn. And there's growing concern that the new farmers are too quick to build credit card debt.

A recent survey by Doane Agricultural Service Inc., St. Louis, said 91% of all farmers younger than 35 plan to expand their operations over the next five years.

The expansion-minded plan to rely more heavily on real estate loans, land leases, and equipment leases as their farms grow, according to the survey, which was released at an agricultural conference of the American Bankers Association.

While the next generation of farmers should bring new business to banks, some bankers at the convention said they are worried that their youngest clients are too bullish.

James E. Atchison, vice president of Banc One's Janesville, Wis., branch, said he believes the survey shows farmers are not learning from the lessons of the 1980s farming crisis.

Gayle Kaarlberg, executive vice president of Farmers and Merchants Savings Bank, agreed.

"You see signs of those memories fading," he said in an interview. "If times are good, it's only a natural human tendency to be bullish."

David M. Kohl, a professor of agricultural and applied economics at Virginia Polytechnic Institute & State University, said farm family living expenses have gone up eightfold since 1967.

"Today, producers want to have a life," he said. "They plan $32,000 for family living expenses, but that's underestimating what they'll spend."

To make up the difference, many farmers are relying on credit cards, a product they have traditionally avoided, Dr. Kohl said.

Agricultural bankers say they've begun closely monitoring farm clients' credit card spending habits. Mr. Colvin said he was surprised last year when a yearend credit check revealed two of his farm borrowers were deep in credit card debt.

But not everyone is looking skeptically at the younger farmers. John Blanchfield, associate director of agriculture banking for the ABA, said he believes younger farmers are better financial planners than their predecessors and will be prepared for market ups and downs.

"We can't continue to have the '80s drive our understanding of farming," he said. "I have to personally believe that we have a new generation of farmers and bankers that have a better understanding of the finances."

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