Credit Crisis Hits Farmers

EmploymentCrossing.com The worsening financial meltdown is making it harder and more expensive for farmers and cattlemen to borrow money to pay for feed, land and salaries, according to the Associated Press. While the credit squeeze on the agricultural sector is buffered somewhat by subsidies and other federal assistance, the timing is nonetheless bad: the costs of fertilizer, fuel, seed and equipment have all risen sharply in recent years, and a global recession is on the horizon. . With confidence dwindling in borrowers' ability to repay loans, banks are requiring more collateral and higher interest rates from crop farmers, ranchers and meat processors, said Carl Anderson, an agricultural economist at Texas A&M University. This is the toughest lending environment farmers have faced in 25 years. At the same time, the agricultural sector has historically done better than other industries during a recession because of the local lenders' familiarity with the area, the safety net provided through farm bill programs and producers having crop and revenue insurance coverage. In response to the lending crunch, farmers and ranchers are expected to rein in costs wherever they can -- whether it means using less fertilizer, restructuring debt or putting off new equipment purchases. While the weakening global economy is putting downward pressure on fuel prices, it is also depressing the value of grains and livestock -- and that will eat into farmers' and ranchers' pocketbooks. The upside for consumers is that food prices are likely to come down.

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