Every old rule is new again

The current farm economy is difficult enough, but agricultural lending officers in small rural banks are also worrying about whether commercial banking's deregulation will leave them less competitive. Agribankers are also wondering when the recovery will find rural US, how long it will last, and how much longer some weak farm and agribusiness credits can afford to wait for it. Comfortable rules and practices of agricultural (ag) lending are changing. During the last 15 years, the more liberal lending practices have resulted in a more prudent track record, because inflation has encouraged liberal borrowing for capital expansion and certain governmental safety nets have made the aggressive farm borrower appear more creditworthy. Some key factors that will affect tomorrow's ag environment include interest rates, export prospects, farm income, land values and inflation, leverage, government policy, technology, and number of farms.