US FARMERS will continue to be able to find credit despite the tightening of world credit markets, but the world financial meltdown and accompanying slide in commodity prices will be major problems in 2009, analysts said.
Presenters at a seminar on the Internet hosted by AgriMarketing said credit would tighten for producers, but that some factors still work in their favor.
"The question is, 'is there money to lend agriculture and agribusinesses', and the answer is unequivocally 'yes'," said Michael Swanson, agricultural economist with Wells Fargo Bank. "Now, the problem is the price of money has changed, and we will see some issues emerge."
Falling land values pose one problem, he said, and many recent land deals "that just got done will prove to be very poor financial decisions."
Jeff Greenlee, president of NBC Bank in Altus, Okla., and chairman of the American Bankers Association's agriculture committee, said an increase in farmers' assets in recent years has been due largely to cash income, rather than land value increases, which is a good signal for their ability to pay off debt.
Presenters also said that community banks are relatively strong.
"The Main Street banks out there, they seem to be fairly good across the board," he said.
Greenlee added that while residential properties have been purchased in recent years by people holding excessive debt, a lot of the interest in farmland has been from outside investors, and that "a lot of these purchases are being done by cash."
Farmers' profits will be strong in 2008, presenters said, but recently plunging commodity prices coupled with skyrocketing input costs will be major hardships next year.
"I think 2009 is going to be a train wreck for a lot of producers," said Richard Brock, owner and president of Brock and Associates.
Many producers did the opposite of what they should have done this year, by forward-pricing input costs but not their product, he said. Now they are locked into very high input costs as corn prices have plunged toward $4.
But Brock said he thinks the market is overextended now, just as it was when corn was above $7.
Farmers who didn't previously price their 2009 crop should now be patient, he said.
"I think a farmer just waits now," Brock said. "There's a lot of time to price the 2009 crop."
-By Ian Berry, Dow Jones Newswires