Farmer Mac Exclusive: Community Banks On The Decline Since 1980s

January 30, 2017 12:00 PM

Community banks across America are disappearing at astonishing rates due to pressure from the rising costs of doing business.

In an AgDay exclusive, stockholder-owned lending company Farmer Mac is releasing the results of its study on the health of the farm economy.

The lender says more than 10,000 community banks have ceased to exist since 1984, largely due to failure, mergers and acquisitions.

Farmer Mac economists are quick to point out that many of these banks were smaller with a limited number of employees and were gobbled up by larger banks.

The benefit of community banks, in rural communities, are their emphasis on what they call “relationship banking,” which is important in supporting small businesses, like farmers.

However, rising costs like increased regulations and compliance, as well as greater capital requirements are constraining these smaller banks to the point of forcing some out.

Farmer Mac also measures crops based on production environments and prices. It says right now, the only crop looking at higher prices is citrus, while fruit and nut growers continue to face plenty of headwinds.

“About a year ago, the nut industry saw some major declines in prices for their commodities,” said Curt Covington, senior vice president for Farmer Mac.

Covington says it’s a different story for the stone fruits, like peaches and nectarines. Consolidation of that industry is largely driven by retailers demanding quality fruits.

This early exclusive from Farmer Mac’s “The Feed” will be posted Feb. 6. To receive the winter edition of “The Feed,” subscribe by clicking here

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Spell Check

Bridger, MT
1/30/2017 04:33 PM

  Started with the CRP Program. Decimated tractor dealers in small towns, ag supply stores, etc,etc. Now no need for a bank. Get bigger or go broke. Sounds very familiar to farmers.

Senior PA Dairy Farmer
Westfield, PA
1/30/2017 08:03 PM

  Glens's right. No surprise here for those of us who have lived through all the agricultural consolidation and upheaval that began in the '80's. Our own government aided and abetted the elimination of all things "local" and traditional in our American rural communities to advance their "New World Order" of global "markets" and that includes banking and access to "capital." The beneficiaries? Corporations of every stripe, their fellow travelers, and the speculator class are all part of the "special interests" who lobbied for these policy changes and have prospered while hundreds of thousands of family farmers have been driven out of business with the attending collapse of our once vibrant and independent local rural communities---and our banks. Hopefully, Trump the populist will reverse these policies to revitalize rural America and "Make America Great Again!"

Dassel, MN
1/30/2017 10:47 PM

  Glen and PA Dairy are right. Our local small town bank can only have a maximum debt of $300,000 per farmer. In this day and age that is only very small farms and very small debt farms. It seems as if the government wants only very large farms and more globalization.


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