Perspectives

Perspectives
This past couple of weeks I have been lecturing at Bankers Schools and attending classes while in between my teaching assignments. Some interesting perspectives have been gained in formal and informal conversations with the bankers:

• Many more bank examiners who regulate and provide oversight on ag lender portfolios are attending the Ag Lending sessions. This is usually a sign that you will see a tightening of credit to agricultural borrowers. The second implication is that you will see an increase in financial information requirements when ag borrowers apply for loans.
• The second trend I observed is that there are greater rate differentials being charged for higher risk vs. lower risk loans. Many banks are increasing the rate as much as 300 to 400 points, or 3 to 4 percent. This covers their risk for loan losses and the cost for time in servicing the riskier credit.
• Third, more lenders at the schools had less than five years of ag lending experience and this included the examiners as well. Expect to take more time to educate your agrilender if you have a rookie.

Killer Toys Watch!!!
I had the lenders discuss some of the business and non-business killer toys they observed either on the balance sheet or when conducting a farm inspection. I will give you more on that next week.

Economy Watch
A key economic indicator to watch in the next 6 months is unemployment. We are currently in a growth recession. Should unemployment reach 5.0 percent and creep toward 5.5 percent then we have a higher probability of a recession.

If you read my article in Soybean Digest titled "The Global Playing Field" in March on Global Competitiveness, I indicated that South America would have to demonstrate political and financial stability to be a competitor. Argentinean financial problems could lead to political challenges.

You can search for that story on soybean digest.com using the "Browse Back Issues" feature and looking in March 2001 or use the "search" feature and type in the title, Global Playing Field, or author, Dave Kohl.

Travel
Business travelers on airlines are way down and are reflected in profits by airlines. The big airlines brought it upon themselves with poor customer service and outrageous ticket prices for the business traveler compared to the casual flyer or the vacationer.

Sports Perspective
Barry Bonds is back at it again but can he sustain the pace like McGwire in August and September?

HBO Special (When It Was a Game)
Great special on HBO about baseball in the 60’s. Names like Mantle, Aaron, Mays, Koufax, Gibson. These were great times that out younger generation unfortunately have missed.

I know I promised a report on Wisconsin! That is still coming.

Final Note

What does April, August, and Arizona mean to you?

My e-mail address is: sullylab@vt.edu

Editors' note: Dave Kohl, Soybean Digest Trends Editor, is an ag economist at Virginia Tech. He currently is on sabbatical and working with the Royal Bank of Canada.

To see Dave Kohl's previous road warrior adventures click here

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