2010 Brings Prospect of Better Days for Agriculture
 As we move forward in 2010, the big question on all of our minds is: Will this year be better than last year? Without a doubt, we all hope so.
Last year was a difficult one for many producers in our area. The hardest hit industries have been dairy, nursery and cattle. A global economic recession, coupled with adverse weather, high input costs and low commodity prices, created a perfect storm of negative circumstances.
We recognize that this environment has created hardship for many of our customers, and it has had a negative impact on the association, as well. After years of enjoying a positive lending environment and consistently solid earnings and loan volume, our progress slowed significantly last year, and we face a large increase in adverse loans.
It was a good thing that, after more than 75 years in the business, we had experience weathering the ups and downs in the economy. We held steady, thanks in large part to the solid, conservative lending decisions by our board. Loan underwriting standards have been tightened and operational improvements have been implemented to position AgriLand to successfully emerge from this crisis. The cooperative business model upon which Farm Credit is founded also proved to be resilient during tough times.
Thankfully, several months into 2010, the situation shows signs of improvement, although the recovery has been sluggish. Industries that rely on grain prices, such as livestock feeing operations, dairies and ethanol, suffered from a tight financial squeeze caused by extremely high corn prices last year. Now, input costs have stabilized at manageable levels, and market prices have increased, bringing some much-needed relief for many producers. Pork, cattle, poultry and ethanol producers are looking up right now. Unfortunately, much of this relief will come at the expense of grain producers, but commodity prices should also remain at profitable levels.
The situation has improved slightly for dairy producers, too. For a while, the price of milk was lower than the cost of production. Under those conditions, even the best dairy producers could not turn a profit. Fortunately, milk prices are on the rise, so there appears to be some improvement in the dairy industry, although is has been slower than we hoped, and it will be months before that improvement is fully realized.
People in agriculture know all about cycles and seasons. While times are harder now than they have been in many years, we will come out of this. AgriLand will remain a reliable source of financing, and will be there for agricultural producers who grow food and fiber for America and the world. As always, we thank you for your business and will strive to meet all of your rural financing needs. We hope that 2010 will be a better year for both AgriLand and for each of our customers.
Sincerely,
Roger Brist
Chief Executive Officer
AgriLand Farm Credit
903.593.0151 |
