Demand for operating credit is up somewhat this spring, but lenders say they can help most farmers looking for larger loans.
But next spring may be a different story.
“We know ’99 is not going to be a good year for the grain industry,” said Barry Smith, regional manager of agricultural lending for CIBC.
“I’m more concerned about the coming year,” said John Nicolson, manager of agricultural services with the Toronto-Dominion Bank.
“It’s going to be very hard to make a dollar, it really is.”
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Nicolson expects farmers’ working capital position will further deteriorate in 1999, and advised them to keep costs as low as possible this year.
“Protect your working capital like it’s gold,” said Nicolson.
Depending on what they produced and when they sold it, many farmers had a good year in 1998 and are in a comfortable working capital position, the lenders said.
John Murphy, vice-president of agricultural banking for the Royal Bank, said most clients’ operating loans will stay the same as they were last year. He said the bank hasn’t seen an overall increased demand for operating loans this spring.
But farmers who relied on hogs or cereals, or were hit with too much rain or other yield-reducing problems, have seen their working capital deteriorate.
Art Budd, manager of lending services with Credit Union Central in Manitoba, said he is seeing more farmers with negative working capital.
Budd said credit unions are working with some clients to restructure their debt and last year’s operating loans to free up working capital for this growing season.
Nicolson said some clients may have larger lines of credit than last year. But in more than 95 percent of cases, the bank will be able to accommodate farmers’ working capital needs.
Smith said the CIBC is sitting down with all its customers to review their operating loans and make arrangements for the coming year.
“We’re doing our damndest to work with people through this, and I think our competitors are too.”
