Farm loan foreclosures expected for next five years, bankers say

“As a result of weak farm income and low agriculture commodity prices, approximately 9.5% of bank CEOs expect farm loan foreclosures to pose the greatest threat to banking operations over the next five years,” said Ernie Goss, Jack A. MacAllister chair in regional economics at Creighton University’s Heider college of business, according to a press release.  The farmland and ranchland-price index for October slipped to 39.3 from 39.6 in September. This is the 47th straight month the index has fallen below growth-neutral 50.0, the press release stated.Bankers were asked to compare current spot prices for a bushel of corn to break even. Only 2.4% of bankers indicated that prices between $3.50 and $3.75 were above breakeven. Approximately 45.2% reported current spot prices were below breakeven.Jeffrey Gerhart, president and chairman of the Bank of Newman Grove in Newman Grove, Nebraska, says the break-even prices vary from farmer to farmer. “It depends upon the debt carried by the farmer. It’s all about their cash flow,” Gerhart stated in the Creighton RMI press release.