In the News - Banks Investing in Farm Loans

Dow Jones Newswire recently published an article exploring reasons bankers are willing to invest in agriculture and offering advice for producers who may be facing high startup or input costs for their operations. Check out the excerpt below, then click over to the full story (posted online through Fox Business) through the link below.

Agricultural Lending a Bright Spot as Food Producers Need Funds
Released by Dow Jones Newswires

    While economic uncertainty is threatening to slow business expansion and loan demand, the     banks that begin reporting third-quarter earnings later this week will likely reveal at least one     sector where borrowing is on the upswing: food producers.

    Rising prices for corn, soybeans and other agricultural commodities are increasing the     financing needs of food-related businesses, including meat producers, grain merchants and
    makers of breakfast cereals, according to bankers.

    The drought that plagued large swaths of the U.S. heartland this summer resulted in another     sharp increase in the price of corn and other commodities. Further, "there is already talk of a     drought next year," which could make it difficult to rebuild corn supply and push prices down,
    says Elizabeth Hund, an agricultural banker at U.S. Bancorp (USB) in Minneapolis.

    "It's one thing if I have to buy $8 corn [per bushel] for a few months" as a grain merchant or     meat producer, says Ms. Hund, who runs lending to millers, grain merchants and food
    companies with $500 million or more in revenue. "But if I have to pay $8 for corn for the
    foreseeable future, that changes the business model."

Read more at Fox Business: http://www.foxbusiness.com/news/2012/10/11/agricultural-lending-bright-spot-as-food-producers-need-funds/#ixzz29ZPr35jL