1st Quarter 2005
Agribusiness and Finance
David M. Kohl, Guest Editor
David M. Kohl and John B. Penson, Jr.
The agricultural lending market providing loans to US farmers and ranchers has been undergoing a rather rapid transformation in the last ten years. It took the proposed sale of the Farm Credit Services of America, a large association in the Farm Credit System, to the Dutch bank Rabobank to underscore how significant these changes could be. Although this sale ultimately fell through, it left in its wake a number of issues facing the Farm Credit System and agricultural lenders in general. The new international accords on banking, known as the Basel Capital Accords (Basel II), represent another force likely to cause change in agricultural lending. This theme focuses on these forces as well as other factors adding to an increasingly complex environment for agricultural lenders. This theme concludes with a long-term look at how the market might evolve by the year 2020.
Danny A. Klinefelter and John B. Penson, Jr.
This paper initially discusses the drivers of change in agricultural lending markets from the perspective of their customer base. As farms become larger and more complex, agricultural lenders will need to keep abreast of the broader set of markets, contractual and ownership arrangements, and a host of credit and portfolio risk management issues.
Neil E. Harl
It is necessary to understand the underpinnings and uniqueness of the Farm Credit System as a lender to agriculture in light of the attempted purchase of a part of this lending cooperative. This includes its special tax-exempt status and the exit fee a Farm Credit System entity being sold must pay out of unallocated surplus.
Michael Boehlje and Allan Gray
A changing competitor landscape and changes in their traditional customer base will challenge the Farm Credit System. These challenges include the efficiency of its capitalization and limits placed on ability to diversify its portfolio.
Robert W. Jolly and Josh D. Roe
This paper describes the players in the proposed sale of an association in the Farm Credit System to Rabobank, the nature of the offer, and some of the unanswered questions that arose as a result of this proposed sale.
Maureen Kilkenny and Robert W. Jolly
The question raised by the title of this article is motivated by the recent bid by Rabobank to become a major lender in the western region of the Corn Belt. This paper examines the competitiveness of this all-important market to farmers and ranchers, including its distance from urban competitors. Price discrimination and barriers to entry may result in credit rationing to farmers and ranchers.
Roger Ginder
The questions raised in the title over the failed sale of a large association in the Farm Credit System are the focus of this article. One of the major issues dealt with is who has a legitimate legal claim to the unallocated surplus of an association in the Farm Credit System if it is sold.
Ani L. Katchova and Peter J. Barry
An overview of the capital accords adopted by the global banking community will affect the calculation of individual bank capital requirements which are expected to go into effect by the end of 2006. These accords include alternatives for measuring credit risk and operational risk.
David M. Kohl and Alicia M. Morris
The final paper in this theme takes a long-term look at what agricultural lending could look like by the year 2020. This includes continued consolidation in the farm sector and in the Farm Credit System. The paper characterizes different segments of participants in agriculture, including the super commodity/agribusiness operation, that will likely be highly geographically diversified.

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