10/30/08 Wheat growers and tight credit

Farm and Ranch October 30, 2008 With dim prospects for higher prices on the near horizon, some northwest wheat growers may be forced to sell their crop at less than break-even prices. That assessment comes from Douglas Young, a Washington State University agricultural economist. Young: "If they borrowed money to establish the crop that was harvested in fall of 2008 and they need to repay that loan, I think banks will be less likely to stretch out loans and refinance than they were before the financial crisis." The price for soft white wheat plummeted from $15.12 to $4.70 per bushel between mid-January and mid-October, a 68-percent decline. And the USDA says current prices are about two to three dollars below the cost of production for a bushel of wheat. Young says well capitalized growers can break even at $4.50 cent wheat but he says generally producers are back in the old cost-price squeeze compared to where they were in 2007 and the early months of 2008. While most of the financial institutions farmers rely on for loans have not been affected in a large way by the crisis on Wall Street, the financial situation is making it tougher for some farmers to qualify for loans they need. Young says two things are going to be key for farmers to get credit; collateral and how wise they have been in their marketing decisions. I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.