whats happening in the farmland market?, page-2

Finance clamp hits farmers as costs increase
Rachel Donkin, The West Australian March 28, 2012, 6:14 am

More WA farmers are struggling to secure finance this season as banks seek to balance their books after a good year and second-tier lenders disappear from the market.

In a memo to members this month, industry lobby group WAFarmers said it had "become aware of the relative difficulty in members obtaining ongoing seasonal finance for this financial year" despite a record grain harvest and strong prices for wool and sheep meat.

It comes as farmers face the double-whammy of higher input costs and lower than expected returns from the 2011-12 harvest thanks to a sharp fall in prices during the growing season. Industry groups say farm debts have also risen to alarming levels after several years of drought.

Rural Financial Counselling Service of WA chief executive Chris Wheatcroft said the organisation had seen a near-doubling in referrals this year.

"There is definitely a greater level of stress among the rural community," he said. "Properties aren't selling very easily, so land prices (are) declining and … people with significant debt haven't been able to reclaim their position over the past few years.

"Add to that people who are now entering that (distressed position) and we're seeing a significant increase in both the number of people coming to us and the difficulty with which their cases present."

The departure of so-called "second-tier" lenders such as Elders and Landmark, which had provided part of an individual farmer's finance and spread risk for banks, had exacerbated the situation, Mr Wheatcroft said. Both companies offloaded their lending businesses in 2010.

But banking sources said the late rains that delayed the start of harvest meant many farmers were still drawing up budgets for the upcoming season.
Mr Wheatcroft said the WA Department of Agriculture and Food offered "farm resilience workshops" aimed at helping farmers rebuild their financial management skills.

http://au.news.yahoo.com/thewest/business/a/-/wa/13282621/finance-clamp-hits-farmers-as-costs-increase/