The term liquidity crisis used to refer to drought conditions on the farm. For the rural banker, the liquidity question is particularly stressing. Deposits are tough to come by in areas where population is dying off, and many of the farmers who still need credit are having trouble making ends meet.
Government officials are keenly aware of the situation.
Government payments make it possible for farmers to repay loans, but such aid won t do any good if the local bank doesn t have the funds to lend in the first place. Ag bankers are increasingly turning to unconventional sources of funding. The experts say guarantee programs, aggie bonds and the secondary markets are fast becoming standard tools for many agricultural lenders. Ill. We need to be out there with something that s cost beneficial. By turning to alternative lending sources, rural banks get the help they need as well as maintain relationships with their customers.