Palmer, Alaska
Editor.
Advertising
Porothy M. Bell
June Knoff
Published once a week at Palmer, Alaskfi? for the Matanuska Valley Farmers' Coopera
ting Association for the purpose of giving news of the Associations' work, problems,
and accomplishments.
SUBSCRIPTION RATS $1.75
$1.00 for six mohths
10i a copy
what is sound farm 'credit?
Taken Fron the Cooperative Digest
Farners as a group are In very good financial condition today. Their total assets,
while down sone fron a year ago, aacunt to sane 122 billion, which Is nore tjran
double their assets In 1940. Proprietors' equities In the faming business - -
and farming Is a business - - amounted to $110 billion the first of this year,
which Is two and one-half times larger than In 1940. Farners' financial assets are
at near record levels. They have $19 billion In cash, bank deposits, and Govern
ment bonds. The total fern diobt, Including nertgages, "non-real-estate debt and
debt to the Connodlty Credit Corporation, Is Just under $12 billion. The ratio of
total debt to total assets Is about 1 tc 10. Their liquid financial assets are one
and one half times their total debt.
• * *•
Of course all farners are not In the sane excellent financial condition. There are
many young farners who are Just getting into farnlng; there are farners who are lo
cated on unecononic units', there are farmers who have had crop failures and other
reverses. These groups of farmers have not been able to accumulate large equities
In their farnlng business. Many of then hrve a rather large debt ratio to total
assets.
We hage had. a period cf years when the trend of both fern production and fam prices
have been definitely upward, when farn costs were going up slower than prices. This
was especially sc during the years of the war and Just after the war. Farners as
a whole took advantage of their Improve^' lnccoe situation to increase their hold
ings of cash and tc reduce their r’ebts.
DECLINING PRICES
We hsve now reached a period where farn prices are declining from their peaks,
where it is net always possible to find markets for all that can be produced.
Pern production costs are not declining as auch as fare commodity prices. The
trends of recent years have been reversed. Farn net lncone was down fron a peak of
$18 billion In 1947 to about $14 billion In 1949 and Is estlnated to be about $12
billion for this year. This Is a decline of cne-thlrd In net farn lnccne from the
peak In 1947.
As a result, we have seen sone Increase In the total farn debt. There has been a
nuch greater Increase In the short-tern debt than there has been In the mortgage
debt. However, the debt situation Is still In a very manageable condition. It Is
only In areas where farmers have had unusual reverses caused, usually by weather or
Insects or crop diseases that wo have heard of farmers who cannot meet maturity
dates on their debts and who are asking for extensions. The farm mortgage .debt Is
still well below what It was In 1940 and Is only a little ever half of the S and.
one-half billion farm mortgage debt of 1930. It was over $9 billion In 1925.
Perm costs increased, for a number of years at a slower rate than did prices of farm
products. Farm costs also have declined less from the peak than have farm prices.
Costs als reached a rather high level. Production expenses amounted, to over $18
billion In 1948, which Is mere than the gross farm Income for any year prior to
1942. In addition to production costs, farmers have large amounts of capital Inves
ted In real estate, livestock, machinery and motor vehicles, crops stored on and off
the farm, and In household equipment. In fact, the physical nssats of farmers were
valued at about $100 billion January 1, this year. Farming Is a big business meas
ured either In terns of volume of production, In dollars, or In people engaged, in
the business. It Is a business that Is Important to the entire economy of the coun
try.
While farmers have large equity In the business they still require large amounts cf
borrowed funds with which tc cadry on the business. Credit Is a tool Just like any
other farm tool. Farmers must be Just as skillful In the use of credit as they are
In the use of machinery or the management of a dairy or beef herd or the management
cf the land If they are to make a success of their faming business. If we are to
have sound credit In the years ahead, farmers must understand capital requirements
for faming under various conditions.