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

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But how it’ll play out in coming months is anyone’s guess, with so many moving pieces in the form ofcredit availability, interest rateds on loans and the price of commodities such as oil, corn and wheat. “There’s still a very basic value to agriculturre as abasic commodity, and that’s food,” said John Colorado’s agriculture commissioner. “It’s early in this wholw thing, but there’s no doubt that as stabls as agriculturemay seem, we’re vulnerabl e to outside influences.
” What is known is that as the state’w corn and spring wheat 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 crisis and its accompanying freezr in capital and credit hit homehard Sept. 26, when he sent 235 yearlinvg cattle onto a sale barn floorin Salida. A buyet representing a Texas feedlot had driven to Salidsa that morning withthe feedlot’s go-ahead, given the previous night, to buy Peterson’xs cattle. But when the buyer checked in agaih mid-morning on Sept.
26, “he said becauss of the financial crisis andcreditg crunch, they weren’t going to buy cattle that day,” said who’s married to State Rep. Kathleen D-Gunnison. She co-owns Peterson Cattle and Hay. In the hourw between the initial approval and the WashingtonMutual Inc., one of the nation’s largesy banks, was seized late Sept. 25 by the Federa l Deposit Insurance Corp. and sold to for $1.9 Presidential candidates Barack Obama and John McCain had goneto D.C., to join negotiations over a bailout package — a meeting that reportedly ended in shoutint matches and an alternative proposal from House Republicans.
In Salids the following morning, Peterson sold the 235 animalx — nearly all his fall consignment to other buyers but he figuress he lostbetween $8,000 and $10,00o0 due to lower “It eliminated one buyer for our cattle, and the othef buyers were 3 to 5 cents less [per hundredd pounds] than what he would have paid if they’d have givebn him the go-ahead to buy on Peterson said. Colorado ranks amongt the top 10 states nationwide in the productionof potatoes, cantaloupe, sunflower seeds, wool, sheep and cattle in the In 2007, the state’s 31,000 farms sold nearly $6.
3 billioh worth of goods and had an economid impact of more than $16 billion, creatinv more than 100,000 jobs, according to the Coloradl Department of Agriculture. The livestock industry, already struggling with significantlt higher feed costs in the last few likely will have a harder time getting the credigt it needs to buy animals and saidRobert Engel, president and COO of , basedc in Greenwood Village. One of the nation’ s five Farm Credit System banks, a quasi-governmentap entity, CoBank is a $62 billion operatio n that lends to farming cooperatives andrurao utilities. It also finances agricultural exports.
Of the livestockj industry, Engel said, “They’ve had some of the biggest threats because their input costs went up far faste r than they could raisetheir prices. As an they probably leveragedthemselves more. They’re clearlt going to have a toughee time findingcredit available. “No one can be immune to what’as going on right now,” Engel said, adding that the impactf will vary from industry to customerto customer, and bank to bank. “That’s how individua l it is,” he said.
But while the fall run for cattle and sheeo isunder way, crop farmers — now bringing the summere harvest to grain elevators across the Eastern Plainsa — have a few monthss to hope things settle down, Colorado agriculturde bankers and economic experts said. Operating loans to pay for seed, fuel and other business costs for the 2009 growingv season will ramp upin November, December and through the firsy quarter of 2009. And when thoswe loans are made, farmers mightf find higher interest rates than inthe past. “Right now, there’es a higher cost for those who canget it,” Engek said. Or the market and banks might settle, sending credit flowing again.
And oil pricews are dropping on fears of a global recession and subsequen dropin demand. That could ease costs to use diesel-powered tillers and planterd inthe spring. “There’s so many moving piecesx on thegame it’s hard to say,” said Barbaraw Walker, executive director of the Independent Bankersa of Colorado, which has many membersd working in agriculture. “The most importany thing is to talk to your Talk to them today and keep on talkintto them.
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