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Lenders see how downturn in ag economy has a ripple effect

The current economic downturn for farmers is having a ripple effect on the rest of the rural economy.  United FCS Chief Executive Officer Mark Knisely says it’s evident in the drop in machinery sales and equipment loans.  He says, “In watching the marketplace, equipment sales in some parts of the area we serve are probably off 15-20 percent, something like that, and that does obviously have an impact on our rural communities.”

Knisely says the economy moves in cycles, and he expects the ag sector to eventually come back, but probably not in 2017.   He’s optimistic commodity prices will eventually go up, triggering more farmer spending.  “Thankfully, agriculture kind of helped carry the community through that 2008 global financial crisis, and so those communities are reliant on agriculture, and hopefully, we can get commodity prices stabilized and get things back into a profitable order again for our producers, and then they can begin to spend money and reinvest in these local communities because I know they rely on them.”

Unlike the financial crisis in the 1980’s, Knisely says the majority of their members are hanging in there. “Our delinquencies are up a little bit.  Credit quality in our portfolio has declined a little bit, but nothing as severe as what we’ve experienced in downturns in the past, and I think that really is a testament to the sophistication of the business people that operate farms today.”

Knisely tells Brownfield most farmers have watched their pennies, managed their costs, and worked with their lenders to be in the best financial position possible.  He says farmers should have an ongoing discussion with their financial advisers during good times and tough times to take advantage of programs and low interest rates.