Farm credit crunch easing now, but next fall could be tough

With only a few weeks left before spring planting in the Midwest, a little sunshine has broken through on the farm financial front. It now appears that fewer farmers will be denied credit than originally expected. Earlier projections that 8 to 15 percent would be refused have been revised. Many Midwest economists and bankers now put the figure at no higher than 5 percent, on average.

The averages, however, can be somewhat misleading. ``There's this tremendous variability from one county to the next,'' says Ross Korves, research economist with the American Farm Bureau Federation.

Uncertainty reigns among those farmers who have yet to arrange credit.

``I'm getting kind of anxious to know whether I'll be planting,'' says Jay Mosher, a farmer from Milo, Iowa.

``Nobody knows,'' adds Donald Hawn, who operates a large farm in Keithsburg, Ill. His application for a federally guaranteed loan is still pending. ``A week from this Friday, I should be in the field,'' he says.

The credit crunch has been eased temporarily by the Farmers Home Administration and the Federal Reserve System, which have made more loan money available than was originally expected. Now, a number of bankers and farmers are saying the real crunch won't come until this fall.

``Everyone is ignoring the problem, because they think there is something [positive] that will come,'' says Vince Rossiter Sr., chairman of the Bank of Hartington, a $30 million agricultural bank in northeast Nebraska. But ``it's going to be worse next fall.''

In some cases rural bankers are not reappraising downward the assets of their farm customers, says Weldon Barton, agricultural representative of the Independent Bankers Association of America.

In some instances, lenders are telling farmers they will have to get credit somewhere else after this year.

The crisis has strained longstanding ties between local banker and farmer.

``We will never be the same when we walk into a bank,'' says one farm wife, uncertain about getting financing this spring. ``None of us will.''