Credit Sieze-up in Agriculture?

[Kodiak]

I'm interested in hearing what others are hearing about credit availability and cost for the ag industry?

Will the next crop production cycle be able to be financed? How are grain end-users and livestock feeding operations financing their operations?

Who is still getting credit and who is not? Are/will banks and credit unions be doing business as usual in agriculture? Are/will input suppliers still offer their credit programs?

How do you put a value on inventory, property, and improvements? What is your equity in these things? We're running a business, and turning everything into cash is just not possible - unless you plan to go out of business.

Today I have far more questions than I have answers!

[parsley]

Feds, this morning, are backing banks so credit is available

[Fransisco]

Talked to my banker this week. So far it's buisness as usual, he see's credit becoming a bit more expensive, half a point maybe, but it will be there.

We have to remember, this is how they make money, by lending it out and people paying it back. If you've always paid it back I think they want to do buisness with you now more than ever.

[wilagro]

I had only one operating loan ever. I have always financed my own operation for years since. If you require an operating loan every year, then you shouldn't be farming. If the bank controls your farm then you had might as well give it to them as your "life style" is designed around pleasing them.

Besides that, they are all @#$^*! parasites who live off of your labour.

[bucket]

Jeez wilagro what do call the cwb?

In these troubled times they could pay us our finals, and put out an interim to show they are getting that imanginary premium.

Couldn't resist everyone - he walked into that one.

[Kodiak]

Congratulations Wilagro. You run a tight ship.

Aside from being unaffected directly in the credit situation becuase you are not borrowing, how are you preserving capital? I think if your customers require credit even if its just revolving 30 or 90 day credit to buy your product it will affect your return. That will affect your balance sheet.

Do you know if your fertilizer or fuel dealer has the credit necessary to cash flow their operation? Do the CWB's customers (who are ultimatley your's) all have enough credit to continue business as usual?

I'm really just wondering. The answers to all these questions are not as clear to me as they were a year ago, and if that kind of uncertainty is prevelant what has to happen to reverse things?

Maybe I'm worrying needlessly.

[charliep]

What bothers me is asset values.

Won't talk farming but will be the city guy. Paid $135,000 for my houseabout 8 years ago. A mortgage but payments not excessive. Paying down but still some owing.

Skip to last year. Price (perhaps in my dreams) $400,000. I couldn't afford my house at this price. Those that paid this price and financed a big portion are in big trouble.

Today. $270,000 ish maybe but a big question. Still above what I paid. From a weird stand (althought close to reality on a 25 year mortgage), I couln't afford my house at the current price today assuming credit was available. Even in Alberta, still further to go down but likely hopefully won't fall to the purchase price (knock on wood).

Even those who are better healed/have limited debt will be impacted via lower equity value. The issue for all will be surviving the storm.

[TOM4CWB]

Wilagro,

I am curious...

How did you 'buy' the farm you 'farm'?

A loan?

It was 'given' to you?

Did you always buy your farm equipment with cash?

Sounds way to simple to a dirt farmer from Alberta that has not know any other grain grower around these parts... that has no loans and needs no credit!

Are you sure you are telling us everything?

[wilagro]

Tom: I paid for my farm by writing out a cheque. I saved my money for twenty years (I had a manager's job with a retailer).

I paid cash or by cheque for my machinery. Same for the livestock. If I couldn't afford to buy, I did without until I saved enough money. No deep secret Tom, just good money mamagement. My vehicles are not new, nor my tractor or other equipment.

I didn't give one red cent to any church and had one bad habit...smoking, (since discontinued).

And holidays, who needs them? Living in Alberta is like living in paradise anyway.

[parsley]

I admire that, wilagro.

Pars

[vvalk]

Wilagro
Never heard of anything so, not sure of the word. It is impossible to buy land and equipment of any size by saving up from an outside job. How do you save up money to buy land thats costs $100000 to $200000 a quarter or a combine that even used sells for $200000? You are not running your business properly if you are not borrowing. Why not borrow at 5% to make a return of 10% to 50%. Its called leverage. What a simplistic comment you have made and shows to me the size and scope of your farm. Does not surprise me in the least that your a devout CWB supporter.

[bluefargo]

I've always borrowed lots of money ...Operating, machinery , land. You name it.
I never could have gotten into farming without credit and lots of it. Now why anyone would want to get into farming is the topic for another thread. All I know is that , for me at least, with a wife and family, saving up enough to get started would have been futile.
Currently I owe way more than a guy my age should ever owe. But I love farming and I have no regrets.

[parsley]

vvalk,
wilagro had a job apart from farming. Maybe he couldn't initially get credit. maybe he has one leg. Maybe he had other responsibilities. Maybe his wife refused to live on a farm. I know lots of people who work off-farm and buy land and farm what they think they can handle IN THEIR SITUATION.

People farm for different reasons. Not everyone copies as you design, nor should they feel they should. It's called choice.

Parsley

[furrowtickler]

That was 30 yeasr ago or longer willie. I admire youself, the granparrents and forefathers who did so, but today's world is light years from that time in history. Today you would need 10 - 20 times the money you saved to buy the same size farm bought back then. And that is just the dirt.
Do not get me wrong, I think we all would like do the same thing today, but that would be virtually imposible.
Do you have any siblings lined up to take over?

[TOM4CWB]

Wilagro,

ARE YOU AND YOUR FAMILY PROSPEROUS AND HAPPY?

ARE YOUR NIEGHBOURS glad to have you around?

ARE THE BUSINESSES you choose to partner with... glad to have you as a customer?

If you can honestly say 'YES' to these questions... then I am happy for you... and wonder why you don't share your good side with us too?