AGRICULTURAL LOAN OFFICERS' ROLES IN COOPERATIVE INVESTMENT IN NORTH DAKOTA

We surveyed agricultural loan officers and their supervisors in North Dakota to learn what factors influenced the decision to make loans to farmers investing in new agricultural cooperatives. We found that the Farm Credit Services and other large institutions made a disproportionately large share of the loans. Furthermore, institutions with minimal equity, but with low levels of non-current loans and a high return on equity, were more likely than others to make the loans. Experienced agricultural loan officers and those who attended a cooperative's information meeting or reviewed the business plan were more likely to make loans. Loan officers granted loans to applicants who met conservative lending criteria. The decision was not based on the loan officer's attitudes toward cooperatives. Attitudes of loan officers toward cooperatives were generally positive. Most negative attitudes were expressed about the price of the stock, and the delivery contracts required by the cooperatives. Finally, loan officers believed cooperative stock was a risky investment, inferior to stock and mutual funds as stand alone investments