Home / News / Business news / Ag sector a safe haven from financial crisis...so far

Ag sector a safe haven from financial crisis...so far

Agriculture.com Staff 10/11/2008 @ 10:44am

Is agriculture going to be hurt by the financial crisis?

So far, no. But we're not out of some very scary woods yet, either.

That, in essence, is how Neil Harl sees it.

If anyone in the country understands how a banking crisis can affect farmers, it's Harl.

Harl, a retired agricultural economist and law professor from Iowa State University, helped craft a federal bailout that prevented the collapse of the Farm Credit System and stopped the farm debt crisis of the 1980s from hurting farmers even more than it did. Today's economic environment isn't the same.

"The small country banks and the Farm Credit System haven't yet encountered problems," Harl said in a telephone interview from his home in Denver, Colorado, this week.

But he's not certain how long that relative calm will continue if the current financial panic continues.

"I think it depends on how long it lasts before we get stability, and therefore how deep it gets," he says.

He's worried about some community banks that invested in stock in Fannie Mae and Freddie Mac, now worthless. And he's worried about a slowing economy's effect on farmers' biggest asset, land.

"Land values will start to fall if this continues very long. That is a destabilizing force in agriculture," Harl says.

Is agriculture going to be hurt by the financial crisis?

Right now, though, some of the nation's biggest and some of its smallest ag lenders appear strong. In fact, some are buying or shoring up weaker members of the financial industry.

Unlike banks, the Farm Credit System raises capital for lending by selling bonds.

Small banks, too, remain active competitors in the market for agricultural loans.

Although the farm sector of the nation’s economy seems to be a bright spot, not everyone has shared in the higher income experienced by grain farmers.

CancelPost Comment
MORE FROM AGRICULTURE.COM STAFF more +

Farm and ranch risk management resources By: 07/07/2010 @ 9:10am Government resources USDA Risk Management Agency Download free insurance program and…

Major types of crop insurance policies By: 07/07/2010 @ 9:10am Crop insurance for major field crops comes in two types: yield-based coverage that pays an…

Marketing 101 - Are options the right tool… By: 07/07/2010 @ 9:10am "If you are looking for a low risk way to protect yourself against prices moving either higher or…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Cool Tools Christmas Edition: Craftsman Two-in-One