Midwest Dairy Loan Portfolios Strengthen

August 6, 2013 12:23 AM
 

Dairy farms in the mid-section of the country have, with the exceptions to the rule not withstanding, strengthened their financial balance sheets back to health.

"For the most part, our dairy loans look strong," says Bill York, CEO of AgriBank. His dairy loan clients cover 15 states, from Ohio to Wyoming and from the Canadian border to Arkansas.

"A lot of our customers have locked in interest rates," he says, in anticipation of rising lending costs as the general economy gains strength and U.S. Federal Reserve backs away from its "monetary easing" policies. "The cost of financing will eventually go up—the question is when and how far."

Many of AgriBank’s customers have already locked in their real estate loans for 25 years and their equipment loans for five. Annual operating money costs, however, remain at or near historic low interest rates.

As farms recover, York says there is renewed interest in upgrading facilities and financing new expansions. These have ranged from new, state-of-the-art robotic milking facilities to grass intensive operations.

Some sixty percent of AgriBanks dairy customers grow most or all of their feed. So forage quantity, quality and cost have been the biggest issue over the past 18 months. But again, with third crop alfalfa now in the silo or the mow, most farms feed situation has improved dramatically.

There is plenty of uncertainty ahead, however, as Congress struggles to pass a farm bill and immigration reform. Because so many of AgriBank’s clients grow their feed, the crop insurance portion of the farm bill is critical. "Crop insurance just makes sense. It’s important to our customers, and it’s important to our portfolio to provide stability and lower risk," York says.

For more information on AgriBank, click here

 

 

 

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