Ag sector copes with credit crisis, uncertainty - Denver Business Journal:

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But how it’ll play out in coming monthzs is anyone’s guess, with so many movingg pieces in the form ofcredig availability, interest rates on loans and the priced of commodities such as oil, diesel, corn and wheat. “There’sa still a very basic value to agriculture as a basic and that’s food,” said John Stulp, Colorado’s agriculturee commissioner. “It’s early in this whole thing, but there’sa no doubt that as stable as agriculturmay seem, we’re vulnerable to outside influences.
” What is knownn is that as the state’s corn and spring wheag crops are harvested, sheep, cattle and calves are beiny sent from the pasture to the sale barn. For Greg owner of in Gunnison, the economic crisise and its accompanying freeze in capital and credit hit homehard 26, when he sent 235 yearling cattle onto a sale barn floord in Salida. A buyer representing a Texads feedlot had driven to Salida that morningg withthe feedlot’s go-ahead, given the previous night, to buy Peterson’sx cattle.
But when the buyer checked in again mid-morning on 26, “he said becaus of the financial crisis andcreditr crunch, they weren’t going to buy cattle that day,” said who’s married to State Rep. Kathleenj Curry, D-Gunnison. She co-owns Peterson Cattle and Hay. In the hourws between the initial approval andthe sale, Washingtonm Mutual Inc., one of the nation’sw largest banks, was seized late Sept. 25 by the Federakl Deposit Insurance Corp. and sold to for $1.9 Presidential candidates Barack Obama and John McCaihn had goneto Washington, D.C.
, to join negotiationsw over a bailout package a meeting that reportedly ended in shouting matches and an alternativw proposal from House Republicans. In Salida the following Peterson sold the 235animals — nearly all his fall consignmenrt — to other buyers but he figuresd he lost between $8,000 and $10,000 due to lowetr prices. “It eliminated one buyerr for our cattle, and the other buyers were 3 to 5 centeless [per hundred pounds] than what he would have paid if they’ed have given him the go-aheadr to buy on Friday,” Petersojn said.
Colorado ranks among the top 10 statesx nationwide in the productionof wheat, cantaloupe, sunflower seeds, wool, sheep and cattlee in the feedlot. In 2007, the state’ss 31,000 farms sold nearlyt $6.3 billion worth of goodz and had an economic impac of morethan $16 billion, creating more than 100,00 0 jobs, according to the Colorado Department of Agriculture. The livestock industry, already strugglint with significantly higher feed costs in the last few likely will have a harder time getting the credit it needs to buy animaland feed, said Roberf Engel, president and COO of , basecd in Greenwood Village.
One of the nation’a five Farm Credit Systej banks, a quasi-governmental CoBank is a $62 billion operation that lendsw to farming cooperatives andrural utilities. It also financex agricultural exports. Of the livestock industry, Engel said, “They’vs had some of the biggest threatz because their input costs went up far fasterd than they could raisetheir prices. As an industry, they probably leveragefd themselves more. They’re clearlyt going to have a tougher time findingcredit available. “No one can be immune to what’s going on right now,” Engel said, adding that the impacrt will vary from industry to customerto customer, and bank to bank.
“That’ws how individual it is,” he said. But while the fall run for cattle and sheepo isunder way, crop farmers — now bringinb the summer harvest to grain elevators across the Easterb Plains — have a few monthx to hope things settlwe down, Colorado agriculture bankers and economicf experts said. Operating loans to pay for fertilizer, fuel and other business cost for the 2009 growing seasoh will ramp upin November, December and througjh the first quarter of 2009. And when thoses loans are made, farmers might find higher interest ratezs than inthe past. “Right now, there’s a higher cost for thos e who canget it,” Engel said.
Or the markets and banks mighty settle, sending credit flowing again. And oil pricesa are dropping on fears of a global recession and subsequenyt dropin demand. That coulfd ease farmers’ costs to use diesel-powerede tillers and planters inthe spring. “There’s so many moving pieces on thegame board, it’sa hard to say,” said Barbara Walker, executive director of the Independenty Bankers of Colorado, which has many memberws working in agriculture. “The most importantt thing is to talk toyour lender. Talk to them today and keep on talkinbto them.
” Joe Patterson, senior vice president at the Bank of Colorado’w branch in Sterling — in Yuma County, Colorado’as biggest corn county — figures all of his customers likely woulrd get their loans renewed for the next growing although “there may be a littld brain damage on some of “They have to handle a lot more mone y to get the same few dollars out of [the than they did a few yeard ago,” Patterson said. “The linex are bigger and we’re still trying to keep collateralmargins intact.” Patterson is lookinfg for more stability in the credit markets.
“Ifr that credit crunch starts to easea bit, it coul d be a pretty good recovery,” he said. “Buf I don’t know if that’s goinbg to happen. “The first thing we have to know is: Where’ss the bottom?”