Potential Loan Losses of Farmers and Lenders

Agricultural lenders could potentially lose $6--$8 billion on farm operator loans in 1987-88. By 1989, $20 billion, or 10 percent of all farm loans outstanding m the early 1980's, will likely have been written off by lenders. By the end of 1987, 70-80 percent of all lender loan losses will probably have been taken. This means 75 percent of the farm debt crisis will have been worked through by the end of 1987. Land and commodity prices are projected to generally stabilize. If they do not lenders face a new round of loan losses in 1989-90, as currently solvent and/or recovering farmers find their balance sheets and earnings statements eroding under new financial pressures