If you found this blog by way of Financial Partner magazine, welcome!
The president's column in the Fall 2008 issue of Financial Partner magazine was titled "A Farm Debt Crisis?" In it I compared the financial health of the Farm Credit System today with that of the 1980s, when a Federal bailout was required. The column included System financial results through the first quarter of 2008. I promised to write about the System's second quarter results here on the blog.
The System continued to grow in the second quarter. Loan volume increased by 6% in the second quarter, after an increase of 7% in the first quarter. Loan volume in the first half of 2008 increased by 13%, as compared to 16% for the year in 2007 (and also 16% in 2006).
Commodity prices have fallen slightly since mid-July when I wrote my column for the magazine. This should result in less loan growth for the Farm Credit System, and perhaps even a decrease in loan volume.
Loan quality remains excellent with only 0.55% of loans considered high risk at 6/30/08, up slightly from 0.53% at 3/31/08 and 0.43% at 12/31/07. This ratio was 14% in 1985 and peaked at a whopping 26% in 1986. For reference, we consider 2% or less as the standard for this ratio.
The magazine column was an update to a series of blog posts last spring, also titled "A farm debt crisis?" You can find those blog posts in the archives for April, or here: part 1, part 2, part 3.
The Farm Credit System is in good shape. The same cannot be said of other Government Sponsored Enterprises (GSEs). I wrote about this last week: part 1, part 2.
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