Ag Bankers Have Reason For Optimism

While many in the farm and even non-farm community feel the Ag economy is not in a good place, Ag bankers are not necessarily in that camp.  Those in attendance of this year’s American Bankers Association National Ag Bankers Conference, had an upbeat mood when it comes to the farm economy.  The ABA and Farmer Mac conducted a nationwide survey of farm bankers, looking at the outlook of their customers.  Jim Chessen, chief economist at the ABA, said that survey found nearly 60% of bankers expect their local farmers to be profitable into 2020.

“So, it’s a class half full.  That says OK, it’s not bad, and it’s consistent with what it’s been in previous years.  But the flip side says there’s a lot that will not be profitable next year.”

He was quick to note that we are still in a farm economy downturn, with trade disputes and weather creating problems nationwide.  So, what makes the Ag bankers optimistic?

“Bankers are made to serve their community and provide the credit they they need, and they know the Ag economy very well.  In fact, we’ve seen differences with what we define as Ag banks, where they really have a concentration in Ag loans, versus other banks that make, you know, some farm loans but don’t have the concentration, the performance is better for the farm bank.”

Chessen said while there are many positives from the banker’s perspective, many dark clouds remain.  He noted credit quality will be an issue for several years, there’s greater competition for fewer loans.  And as in years, past, retirement and consolidation questions across the industry remain.

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