Sources and Uses of Funds in Agriculture

Abstract

W HEN ONE CONSIDERS the sources of funds in agriculture, those of us in the business of providing the funds through credit institutions immediately remember the credit crunch of 1966-67-when there was genuine concern as to whether funds would be available, at any price. As it turned out, credit demands were met but under restrictive terms for awhile. A good example of restriction was the time limitation placed on loan commitmentsthe borrower could have the funds today but not necessarily next week. Today we have a different situation. price has become the dominant factor, but there seems to be little question that funds will be available for agriculture. Perhaps the emphasis on food, and the cost of food, has made America realize that financing the farmer is a sound investment. Speaking to the Southern Farm Forum in Memphis earlier this year, Glenn G. Browne, General Partner, Quincey and Co., New York City (and former fiscal agent for the Farm Credit Banks), said: The investors and savers of this country-although presently complaining about high food prices-nevertheless, historically have looked upon agriculture as a prime place to put their money. At a price, to be sure-but this is always the case in a free enterprise system where competition is the name of the game. Thus, if historically there has been faith in agriculture as a viable industry, then perhaps 1966-67 was an exceptional situation that ought not to trouble our forward thinking. Mr. Browne also stated: It is my own personal view, based on experience with the resourcefulness and ingenuity of the American farmer, that future problems will lie not in the output side of agriculture but with inputs such as machinery, fertilizer, storage, and transportation facilities, and with various kinds of energy. I distinctly do not place financial or farm credit resources, if you will, in the category of potential shortage. On what basis are America's investors willing to pledge their savings to agriculture? In addition to their concern for adequate supplies of food and fiber, at reasonable prices, the investors have only to look at the financial structure of agriculture to recognize the soundness of the industry. According to figures published by the United States Department of Agriculture, on January 1, 1974, the balance sheet of U. S. AgricultUire showed: