Farmers, ranchers, bankers eye sky

Drive by a bank that specializes in agricultural loans and you might see its officers outside looking up at the sky.

“Just like everybody else, were wistfully watching the clouds go by,´ said Fred Bauer, president of the Farmers Bank in Ault. “The next month or so is crucial. What precipitation we get now is going to determine the season.”

After years of drought conditions, the prospect for this summers agricultural loans is dependent on the whims of Mother Nature.

Bauers bank has about 60 percent of its money in ag loans.

“The reservoirs are in better shape than they were last year, but were still in desperate need of water,” he said.

Dryland farmers who depend on irrigation are at the greatest risk. But their wheat, cotton and milo crops are not the only ag products facing potential ruin from drought. Ranchers are struggling with poor grazing land and high feed prices, and dairy farmers are hoping to sell milk at prices high enough to offset the high cost of feed.

2002 was worst year so far

“In 2002, ranchers had to sell off part of their herds in order to survive,” Bauer said. “They bought back some last year, but it they have to cut back again that could really put them at risk.”

In June of 2002, Agriculture Secretary Ann M. Veneman designated 60 counties in Colorado as drought disaster areas, making Colorado farmers and ranchers immediately eligible for USDA emergency farm loans due to losses caused by drought that year.

Thanks to a massive March snowstorm, farmers faired better in 2003.

Banks like Bauers do what they can to extend loans during dry times and other acts of nature.

“Our directors are all ag-related people,” Bauer said. “They know that often inability to make a payment has nothing to do with a persons management abilitythat often its all about Mother Nature.

“A guy could have a great crop and along comes a hail storm and its all gone.”

Bauer has a great amount of respect for farmers.

“Farming isnt for the timid,” he said. “It seems like it always rains five minutes too late.”

As Spring 2004 unfolds, things are looking bleak, according to the latest National Drought Summary written by Brad Rippey of the U.S. Department of Agriculture In the summary he writes:

“From eastern Colorado and western Kansas northward into Montana, effects of long- and short-term precipitation deficits were becoming more apparent as warmth triggered winter wheat and pastures to break dormancy. Information released by USDAs National Agricultural Statistics Service on March 21 indicated that 60 percent of the winter wheat and 51 percent of the rangeland and pastures in Colorado were rated in very poor to poor condition.

“Mostly dry weather accompanied an early-season heat wave across the West. Grand Junction, Colorado (81 degrees F on March 20), tied a monthly record initially established on March 19, 1907 and tied again on March 26, 1971.

“Western pastures and rangeland continued to reflect the effects of long-term drought. According to a weekly report issued by the USDAs Natural Resources Conservation Service on March 22, “snow water content decreased by 15 to 35 percent in nearly every Western basin except in Washington and the northern Rockies.

“Problems related to premature melting of Western snow packs include, but are not limited to, the following:

1) Many Western river systems are managed based on historical timing and volume of streamflow peaks. In some instances, an early snowmelt season may require special operations to meet environmental, municipal, recreational, and agricultural needs. For basins without reservoirs, premature melting means that streams may crest earlier than normal and recede to summer baseflow levels earlier, leaving less water available during the warm season.

2) Drought is deeply entrenched across the West, except in the Pacific Coast region. As a result, there is already a natural competition for melting snow between drought-lowered reservoirs and drought-parched soils. In addition, March warmth and winds are causing some of the snow to be lost directly to the atmosphere by sublimation. On top of that, above-normal temperatures are causing trees, grasses, and other vegetation to begin growing at an earlier-than-normal date, promoting an additional drain on already limited soil moisture reserves.”

Drought concerns everyone

“Its very difficult to say how ag overall is doing because it is so diverse,´ said Ray Christensen, executive vice president of the Colorado Farm Bureau. “Of course, the drought concerns all of us because ag depends more on water that any other segment of the economy.”

Christensen describes the past couple of years as “frustrating, because Mother Nature wont cooperate.”

“All we ask of lending institutions is that they hang in there with us for as long as they can,” he said. “Agriculture is very dependent on capital.”

Barbara Walker is executive director of the Independent bankers of Colorado, a group that works very closely with the agricultural community. She said moisture is the variable that will ultimately tell this years ag finance story.

“At this juncture we are continuing to watch the forecast,” Walker said. “There are crops out there in desperate need. Our banks have always worked with borrowers to the greatest extent possible and we will continue to do so.”

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