Northwest Farm Credit Services, of Spokane, has reported third-quarter net income of $29.9 million, compared with $39 million in the year-earlier quarter.

Through the first nine months of this year, earnings were $65.6 million, compared with $97.9 million in the first three quarters of 2008.

"Northwest FCS continues to have solid earnings; however, with the extended downturn for several commodities, we have continued to build our allowance for loan loss," President and CEO Jay Penick says. The federally chartered ag-lending cooperative set aside almost $70 million for loan losses during the first nine months of 2009, compared with $7.8 million in the year-earlier period.

After "a really tough 2009," dairy farmers are finally starting to see light at the end of the tunnel, with prices edging up, which should give lenders enough confidence to work with them through a difficult period, Penick says. With the exception of cherries that were harvested early, cherries this year were small, and the market for small cherries wasn't good, he says.

Apple growers have a pretty solid outlook, with many getting through an early freeze all right, and large quantities of last year's harvest being cleared through the supply pipeline more quickly than anticipated, Penick says. The early freeze likely has reduced this year's crop below 100 million boxes, and he says, "The crop is easy to move when it goes below 100 million boxes. The price should stay acceptable."

Wheat growers had an OK year only because of crop insurance and need the global economy to improve to boost demand, Penick says. "We're starting to grow inventories in wheat," which can be a problem, he says.

He says the outlook is beginning to improve at least somewhat in protein industries, principally in poultry and beef.

Northwest Farm Credit's total capital increased to $1.18 billion as of Sept. 30, up 3.9 percent from a year earlier, and net loans grew to $8.2 billion, up from $7.8 billion. Its net interest income through the first nine months grew to $166.3 million, up from $139.3 million, but return on average assets fell to 1.1 percent from 1.78 percent.

"Northwest FCS is in a strong position to work with customers who are experiencing stress due to marginal crops, unusually low prices, and high input costs," Penick says.