Consolidation has been a big topic in agriculture during the last several years, primarily as it relates to some of the largest businesses in the Ag sector. However, some of the community banks that lend money directly to farmers have begun to consolidate their businesses too. Nathan Kauffman Vice President of the Omaha, NE, branch of the Federal Reserve Bank of Kansas City, said banks are doing their best to address the challenges agriculture is facing.

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“A lot of these financial institutions have been proactive in trying to address what these issues have been in agriculture. This year has been challenging in a lot of different ways, but a lot of these institutions, banks specifically, have needed to find ways of trying to address what were growing risks over the past three-to-five years, so this included many difficult conversations; certainly, some institutions are better-placed than others. Some of that has to do with which commodities they may be exposed to, relative to some others.”

Kauffman added bankers continue to work on serving specific segments of farm country that have been hit hard by a variety of challenges.

“The dairy industry has been going through, or had been going through, several consecutive years of challenges and increasing numbers of bankruptcies, so certainly, institutions that might have been exposed to those economic challenges were a bit more vulnerable, and you do see that in other parts of our district as well. Certainly, also owning to some extent, just based on the relative sizes of some of these financial institutions as well. I would say that it’s necessarily one-size-fits-all as it relates to agricultural lending; a lot have, I think, positioned themselves relatively well despite some of the financial challenges.”

Kauffman spoke during the recent Ag Outlook Forum.

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