By ED MERRIMAN

Baker City Herald

There’s a growing array of government-backed loan programs offered through Old West Federal Credit Union, where loans to farmers, ranchers and forest owners showed record growth in 2009.

“We are one of the largest users of farm loan guarantee funds for the state of Oregon,” said Ken Olson, president and CEO of West Federal Credit Union, which has branches in Baker City and six other Eastern Oregon cities.

Many of the guaranteed loan programs available through Old West are administered by USDA Farm Service Agency county offices, including the one in Baker City.

“Out of our total loan portfolio, about 30 to 35 percent is related to ag,” Olson said. “That is a growing part of the credit union’s business. Last year was one of our largest years ever for origination ag financing.”

Nathan Wilson, farm loan officer with the Farm Service Agency’s Baker City office, said any FDIC-insured bank is eligible to participate in government-backed farm loan programs.

Old West, Banner Bank and Commercial Bank handle the bulk of

government-backed loans available through the FSA office in Baker

County, Wilson said.

Farm Credit Services also handles government-backed loans, and a few

farmers and ranchers in some parts of Baker County have gotten FSA

loans through Intermountain Bank in Payette, Idaho, and at Zions Bank

in Weiser, Idaho.

“The area banks and credit unions have been good lending partners through the guaranteed program,” Wilson said.

He said the sluggish economy and low cattle and crop prices the past

two years triggered increased demand for government-backed farm and

ranch loan.

“With the guaranteed loans, the banks provide the loans and we provide

the guarantee – we like to call it insurance – so if there is a

failure, we cover it,” Wilson said.

Farm loans backed by FSA help young farmers get started, and help

experienced farmers get through the rough times when cash flow falls

short of what’s needed to qualify for a traditional bank loan, Wilson

said.

Olson said growth in guaranteed agricultural loans has been strongest

at Old West’s Baker City branch over the past two years, and he credits

Deryl Leggett, who brought many years of experience in agricultural

lending to Old West when he joined the credit union as a senior loan

officer.

Leggett said the beginning farmer low-interest loan program is one of the more popular types.

“For beginning farmers, there are some very attractive packages to get

beginning farmers and ranchers on the land,” Leggett said.”We are

pretty much tailor made for the ag community.”

Beginning farmer loan programs are available at interest rates on a

sliding scale as low as 3 percent, and repayment can be extended up to

40 years, he said.

“When someone comes in with a loan request, if it is tailored towards

the typical Oregon farm or ranch, chances are we can get it done,”

Leggett said.

Wilson said in working with Old West and area banks, FSA has helped a lot of farmers get started.

He noted, too, that farmers needn’t be young to qualify for beginning farmer loans.

“We categorize a beginning farmer as someone who has less than 10 years

of experience in farming or ranching, regardless of age,” he said.

While the overall goals of guaranteed loan programs are to help farmers

get started and continue farming through recessions, Wilson said banks

and credit unions providing the loans also benefit because the FSA

guarantees up to 90 percent of the loan amount, so there’s very little

risk to the lenders.

Olson said USDA loan programs are available at Old West for short- or

long- term loans for everything from seasonal or annual operating

loans, buying feeder cattle, feed, seed and chemicals, equipment and

labor costs to plant grow and harvest crops, as well as real estate

loans to buy land or build farm homes, barns and other structures.

“We partner up with Pacific Inter-mountain Mortgage to do Farmer Mac

loans for long-term real estate financing for ag operations,” Olson

said.

He expects 2010 to be another tough year for many segments of the

agricultural industry in Baker County, due to low commodity prices

coinciding with rising prices for fuel, fertilizer and other

necessities.

However, Olson said he knows farmers and ranchers in Baker County and

elsewhere in Eastern Oregon have survived hard times in the past.

“I think the industry is resilient, and we have some tough operators out there who will make it through,” Olson said.

Wilson said that in addition to guaranteed loans and the beginning

farmer program, FSA and area banks work together to provide ag

operating loans and direct loans to experienced producers who have the

successful track record, cash flow and assets to qualify.

“For a direct operating loan they need to have been an owner, manager

or operator of a farm business for at least one entire production

cycle, and it must have been accomplished in the last five years,”

Wilson said.

Direct real estate loans for agricultural producers are also available

to producers with three years experience within the last 10 years,

provided they produce sound operating plans, with good repayment

ability and collateral, Wilson said.

Agriculture is an industry where borrowers need to develop personal

relationships with lenders who understand the cyclical nature of the

business, Olson said.

“The most important thing for a farmer or rancher is to talk to

somebody local, with experience in agricultural lending,” he said.

“When a farmer’s tractor breaks down in the middle of harvest season,

with thunder clouds rolling in, he doesn’t need an 800 number to call

somebody on the East Coast. He needs to talk to somebody now who the

urgency of the situation.”

Leggett said he spends a lot of time attending meetings of ag groups

such as the Baker County Livestock Association and the Baker County

Private Woodlands Association to stay abreast of the government

regulation, tax increases, fees and other issues people involved in

agriculture are dealing with.

He also points out that the credit union is unique in that it is member

owned, and is loaning out money deposited by local members to local

borrowers, whether its for the purchase of a new sofa, car or a new

house, to a business wanting to expand or add inventory downtown, or to

farms, ranches, woodland owners or other agribusinesses, such as

equipment dealers, feed stores and hardware stores.