Credit Tightening in Agricultural Loans

By Camaron Abundes   
NewsWest 9

WEST TEXAS- The credit crunch may force local farmers and ranchers to tighten their already snug belts.

"It's depressing it's not a lot of good news," Rancher Guy Bell at the annual Beef Expo, said. "Not everybody can survive it."

Jason Henderson, Vice President and Branch Executive of the Federal Reserve Bank of Kansas City, Omaha Branch gave the forecast to a crowd of ranchers on Tuesday.

"Thinner profit margins in 2009," he said. Henderson says land values will dip slightly, while banks ask for more collateral of clients to offset risks in the market.

"It is a gamble every time a farmer plants a crop, and it's a gamble when he comes to harvest a crop and that's what he and the banker are trying to sort out when they decide to loan him money," Jim Brueggen with the New Mexico Branch of the USDA, said.

Brueggen says the number of small farms fell last year.

"The credit issue is huge right now," he said.

Brueggen says the issue of keeping farmers in business is deeper than the growing recession.

"I think food is a security issue," Brueggen said. "I think the day that we're dependent on another country for our food, we're in real trouble."

While profits are expected to fall in 2009 the cost of fertilizer and equipment continue to grow. Energy costs are yet another unknown in a business based on the biggest unknown of all, the weather.

"Your whole livelihood is dealt around moisture," Bell said.

Henderson tells NewsWest 9, it's important for everyone to start saving more and paying down their debt.

"I think in 2009 there is so much uncertainty any forward outlook is more of a guess," Henderson said.