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.