22
USA TODAY SPECIAL EDITION
BUSINESS
PHOTO ILLUSTRATION: AMIRA MARTIN; GETTY IMAGES
Funding the Future As agricultural markets change, new banking programs emerge to finance farming By Deanna Fox
W
HEN THE HOG MARKET
weakened more than a decade ago, Ruth Ready knew that she and her husband, Sid, would have to take drastic measures to keep their 500-acre farm in Scribner, Neb. To convert the farm from hog to mostly corn and soybean production, the Readys took out extended operational notes and equipment loans to accommodate the changes in production — a huge economic factor to keep the farm successful. “We have worked with local bank lend-
ers and the Farm Service Agency (FSA),” Ruth said. As an office of the USDA, the FSA provides loans with government standardized interest rates. Ruth also found funding from her regional cooperative, but added that lending also came from the financial arms of equipment companies. “Name a manufacturer and it’s got a lending arm,” advised Ruth, who took advantage of low interest rates offered by CNH Capital and John Deere Financial to purchase farming equipment. Although these emerging funding sources are increasingly popular, farms are still utilizing traditional lending
sources. “Most farms are still being financed by small, local, rural community banks,” said Brady Brewer, a professor in the agriculture and applied economics department at the University of Georgia, adding that one noticeable change has come from vendor financing programs. Over the past 10 years, Brewer said that at least 20 percent of all agricultural loans issued in the U.S. come from vendor financing, whether equipment, infrastructure or other material vendors. By volume, Brewer said those loans account for 15 percent of the $388.9 billion in farm CONTINUE D
$50K THE AMOUNT IN LOANS THE FARM SERVICE AGENCY PROVIDES WITH REDUCED DOCUMENTATION REQUIREMENTS