BOISE — The wide diversity of crops grown in many parts of the Northwest has helped farmers in the region weather low crop prices, and while farm debt levels are high, most producers still have relatively clean balance sheets.
Those were the main points made by several agricultural lenders and an agricultural economist asked about the state of the region’s farm economy.
Farm margins in southwestern Idaho are much narrower than they were four years ago but so many crops are grown in the area that “there are still opportunities for our farmers and ranchers,” said Andy Beitia, Washington Trust Bank’s president in Idaho’s Treasure Valley area.
“Some crops in the Treasure Valley have been able to do very well,” he said. “There is enough diversification of crops that there are still opportunities for people.”
There are always pockets of challenge when the nation’s farm economy is in a down cycle but “the environment throughout the Northwest in agriculture is generally good,” said Blair Wilson, Northwest Farm Credit Services Idaho president.
“Idaho, Washington and Oregon have a tremendous amount of crop diversity compared with the Midwest” and that provides ample opportunities for producers to find crops to plant that will help them remain profitable, Wilson said.
“We’re not going through a cycle that is any different from any other cycle we’ve gone through in agriculture,” Wilson said. “There are some commodities facing challenges and others that are doing well and farmers are in a pretty good position....”
Brad Flodin, Washington Trust’s vice president of commercial lending in North Idaho and Eastern Washington, said the bank is not seeing an increase in farm foreclosures in the region.
There has been a dent in profitability related to overall low crop prices, “But it hasn’t been to the point where we’re talking about foreclosures,” he said. ”Our growers have found a way to navigate through those challenges (of overall low crop prices) and do quite well.”
While farm debt levels are historically high, balance sheets are good, said University of Idaho agricultural economist Garth Taylor.
“Farm debt is higher now than it was during the 1980s farm crisis but we have really clean balance sheets,” he said.
The big difference between now and the 1980s farm crisis is interest rates are much lower and real estate values have held steady, Wilson said.
“Farmers are by and large in a much better financial position than they were in the ’80s,” he said.
Today’s interest rates are markedly lower than they were in the 1980s and a result, “the cost of (farmers’) operating funds is dramatically different than what it was in the ’80s,” Beitia said.
Farm asset values are holding at near record highs and there is no exit of lenders willing to lend to farmers, said Charles McElligott, managing director of business development for Rabo AgriFinance in Oregon, Washington and Montana.
“The diversity of crops in the Northwest has been a benefit to agriculture in the Northwest,” he said. “When something is down, something else is up.”