Farm income expectations lowered

Shriveling. Wilting. Withering.

The adjectives that have become so familiar in descriptions of the 2012 drought apply also to the results of the most recent survey of banker attitudes toward farm income in Nebraska and surrounding states.

“Farm Income Expectations Shrivel Amid Drought” said the headline on Wednesday’s update on agricultural credit conditions from the Federal Reserve Bank of Kansas City.

As recently as the end of June, feedback from a majority of 241 banks in the Kansas City district pointed to higher incomes in 2012 than in 2011. “But going forward,” said Jason Henderson in a follow-up interview, “more bankers expect farm incomes to be below year-ago levels.”

Banker responses to the Omaha-based Henderson, a Federal Reserve economist, come from Nebraska, Kansas, Oklahoma, Colorado, Wyoming and parts of Missouri and New Mexico.

A state-by-state index suggests the biggest attitude adjustments are at Nebraska banks. But Henderson said that particular agricultural indicator needs to be kept in context.

“It’s kind of like coming down from the top of a mountain,” he said. “Last year was a very good year on the crop side, so we’re coming down from an extremely high level.”

That’s less true of the livestock sector. And as the deepening drought affects bank customers, it’s hard to tell how many of those who can’t count on crop insurance, irrigation or federal disaster relief will be making a controlled descent and how many will be in free fall.

Sought out earlier Wednesday, Clark Lehr of First Nebraska Bank in Columbus and Steve Ausdemore of the Citizens State Bank in Wisner said livestock-oriented operations are especially vulnerable to a downturn.

First Nebraska serves 11 communities in eastern Nebraska and Citizens State has 11 in Nebraska and Kansas.

“It’s tough for all livestock people right now,” said Ausdemore, whose bank also is among the top 100 agricultural lenders in the United States and whose headquarters is in Cuming County, one of the state’s most prominent cattle-feeding settings.

“Corn is a major feed component,” he added, “and the ripple of high-priced corn is less ethanol being produced.”

That, in turn, means less distillers grain, the byproduct of ethanol production, to substitute for corn in cattle rations.

“This is a hiccup and a big hiccup in the trend” toward agricultural prosperity, he said.

Lehr said many crop producers might fare better than in 2011, taking into account insurance, irrigation and corn and soybean prices rising toward record territory.

“I worry more about, from the livestock end, the impact not only this year, but the impact going forward,” he said.

Another cause for concern in both feedlots and among cow-calf producers is short supplies of hay. A year ago, Nebraska was a major hay supplier to cattle operations in Texas, Oklahoma and western Kansas.

“That’s the big dilemma we’re faced with,” said Lehr, “where to come up with roughage.”

Also on Wednesday, Secretary of Agriculture Tom Vilsack announced that another 172 counties nationwide, including Lancaster County in Nebraska, had qualified as primary disaster areas.

That makes farmers in those counties eligible to apply for emergency disaster loans.

Also on the latest list in Nebraska are Cass, Douglas, Fillmore, Otoe, Saline, Sarpy, Seward and Washington counties.

Mark Wilke, farm loan chief in Lincoln for the federal Farm Service Agency, said it’s too soon to say how many drought victims will apply for loans at 2.25 percent interest.

“I know county offices are reporting some inquiries, so I believe there will be more intensified interest in the program,” Wilke said.

As an indication of how things change from year to year, some of the hay available for purchase Wednesday on the Hay Hotline, a service of the Nebraska Department of Agriculture, is being offered by Joe Betancourt of Santa Fe, Texas.

“It’s the opposite of what we had last year,” Betancourt said from his ranch near Houston and the Gulf Coast.

A year ago in his area, “there was no hay,” he said, “and a lot of people were charging so much money for hay it was not worth feeding it to the cattle.”

Now the very unusual situation of a drought along the coast has receded and he’s able to sell hundreds of bales to the harder-pressed for $40-50 a bale.

He saw prices as high as $160 last year. At that level, “The math don’t work,” Betancourt said. “To me that’s price gouging.”

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Reach Art Hovey at 402-473-7223 or at ahovey@journalstar.com


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