K-State Ag Today: Here's hoping history does not repeat itself
5:36 p.m. Thursday, October 9, 2008
This is K-State Ag Today, I'm Jeff Wichman.
Loose lending practices, followed by an avalanche of repossessions and foreclosures, an industry in crisis. It's new territory for Wall Street and the mortgage industry, but American agriculture has been here before. Allen Featherstone, a professor of agricultural economics at Kansas State University, doesn't expect the ag sector to do a time warp.
"If you look at where we are now, the credit terms have not loosened, like they did in the 1970s, and also the interest rates are much lower. Instead of paying double-digit interest rates, we're in the, maybe 8% range, something like that. And so, from that perspective, the sector is in a relatively safer position than it was in 1979," Featherstone said. "Commercial banks in mid-America have been spared from the effects of the housing decline, but there are other potential risks in the months ahead. In the Midwest, most of our commercial banks have been insulated from what is going on with regards to the housing market meltdown. So, the main factors that will affect the commercial banking sector in the Midwest would be a slowdown in the economy where economic activity would start to decrease, or perhaps if the system got so stretched for liquidity that they could not get that liquidity. But currently, the financial health of the banks in the Midwest is fairly strong."
You can find more information at your local extension office, or on our web site, at KStateAgToday.org. For K-State Ag Today, I'm Jeff Wichman.
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