beginning to generate a number of concerns in the banking sector with respect to loan availability, costs of funds and creditworthiness of borrowers and is leading to increased collateral requirements and reduced loan maturities (Henderson, 2009). This is all the more so the case as farmland values are the main source of collateral and these started to decline in the fourth quarter of 2008. If the recession lingers and agricultural prices weaken further, asset values such as land may begin to decline, and the credit markets for agriculture tighten further. For many EU countries no significant declines in credit availability were signalled as of the fourth quarter of 2008. According to farm co-operative associations such as Copa-Cogeca in Europe as well as those of individual countries, credit conditions for the agriculture sector are relatively robust, compared to other sectors of the economy. Producers in most major agricultural co-operatives have no difficulty in obtaining bank credit at least for domestic activities. In this case, legal contracts using output as collateral back up the funding arrangements. This is because it is easy, relatively speaking, to recoup funding or the product when the contracts are between firms in the same country. Collateral requirements have been increasing and standards for allocating credit have however tightened substantially since the beginning of the year. This evaluation needs to be nuanced by country and by sector situations as there may be substantial variations among them. Due to the tight credit situation, many agri-co-operatives are putting a hold on investments in additional processing and storage facilities. Though no figures were given, the changes in decisions were noted to be substantial. Banks were judged often to be overly cautious some of the respondents suggested. This confirms what banks themselves say about their credit allocation decisions - avoid or minimise risk. Agricultural Policies in OECD Countries: Monitoring and Evaluation 2009 suggests that regardless of the evolution of the volume of credit to the agri-food sector, lenders are expected to require higher levels of collateral for a given loan. However for the moment the view held is „there are good reasons to argue that the agricultural sector in most OECD countries is in a good position to confront this crisis, both relative to the past and relative to other sectors (OECD 2009b). Non-OECD perspectives According to producer associations, traders and banks in Argentina, credit availability for cereals, oilseeds and wine is not an issue as in general the industries self-finance their operations. However, due to low prices and conflicts over government policies, traders as well as certain downstream agri-food firms are experiencing difficulties in acquiring necessary inputs since farmers are reluctant to sell their output and only as needed to meet expenses. Credit constraints are, however, severe in the dairy sector and this is having serious financial consequences on firms. It is unclear whether this is a direct consequence of the global financial crisis. Tight credit for farmers last fall in Brazil forced the government to step in to ensure that funds are available for the planting season, even though only about a third of agricultural credit originates from banks. The government increased the amount of demand deposits that banks must lend to the agricultural sector from 25-30%, temporarily. In Chile, the fruit producer associations do not have credit availability problems at present. However, there is much uncertainty and concern for future demand given the economic recession in their principal trading partners, the EU and the US. A similar situation was reported by some producer groups in South Africa. In most developing countries the use of bank loans in agriculture is not common. When loans are given they are for very limited time periods with strict selection criteria. In certain regions, loans from input suppliers and traders are used by small and medium farmers. However, if input suppliers are also
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