15 July 2008 17:23 [Source: ICIS news]
SAN ANTONIO, Texas (ICIS news)--Rising costs of fertilizer and other input were challenging the credit profile of the US agricultural industry, but banks were still willing to lend given the positive outlook for grain values, a credit specialist said on Tuesday.
"We have got an industry that's in for a pretty good ride," said Mark Thompson, vice president of the agriculture finance division of farm services firm John Deere. "Banks are interested in lending to this industry."
The significant amount of private-sector lending available to US farmers was a good sign, especially against the backdrop of the difficulties in the broader credit market that were rooted in the sub-prime mortgage crisis, Thompson told the Southwest Fertilizer Conference in San Antonio.
Fertilizer suppliers and distributors have been concerned about the ability of the agriculture industry to finance input costs, which have shot up significantly.
Thompson said the total debt-to-asset ratio of the ?xml:namespace>
On the other hand, input costs have tracked rises in grain prices over the past few years, but have not come down during the dips, creating a structural shift in the farm credit picture, he said.
The ethanol industry's margins have been on a downward trend but it can survive, Thompson said.
If all the planned plants were to be built, excess ethanol capacity would hit around 33% of potential production in 2008, up from 20% in 2007 and 10% in 2006, he said.
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