Thanks to improved conditions for agriculture in the Pacific Northwest, Northwest Farm Credit Services posted much higher earnings of $30.8 million in the third quarter, up 48 percent from $20.8 million in the year-earlier period.


Through the first nine months, net income jumped to $90.8 million, compared with $65 million through the first nine months of 2005, the federally chartered Spokane ag-lending cooperative says.


Itll be an excellent year, President and CEO Jay Penick says. There is a direct correlation between the conditions affecting agriculture and the way our portfolio performs.


Penick cautions, though, that Farm Credits earnings also were boosted by a reduction in the amount of money it has set aside to cover loan losses. Penick says that reduction was made because the conditions for credit and for agriculture in the Northwest have improved over the last two years, particularly in the potato industry.


Earlier this year, before the run-up in fuel prices abated, farmers were highly concerned about the future because so many things they use are energy-related, including chemicals, fertilizer, and fuel, Penick says. Producers still are feeling the effects of cost increases, and thats particularly true of dairy farmers, who have seen their operating costs shoot up by $1.50 for each gallon of milk they produce, while milk prices have slid this year, Penick says.


That industry right now is struggling, he says.


Wheat growers, though, have benefited substantially from improved prices, he says.


That is very encouraging for the wheat industry, Penick says. Their costs have increased, but they havent had that bump in prices in the previous two years.


The higher prices should offset lower yields, which have hit Eastern Washington wheat growers particularly because it got dry late after generous rainfall early in the growing season, Penick says. Still, he says, With the increase in wheat prices, things are going to be looking better for wheat farmers this winter than they have for the last couple of years.


He adds, Overall, agriculture in the Northwest isnt faring too badly. If you look at agriculture over the past 10 years, different commodities have had ups and downs. Weve been pretty fortunate in that we havent had a general downturn in agriculture.


Northwest Farm Credit Services, which provides financing and related services to farmers, ranchers, agribusinesses, and others in Washington, Oregon, Idaho, Montana, and Alaska, increased its loan portfolio by 15.7 percent, to $5.8 billion, as of Sept. 30. The associations total capital increased 6.7 percent, to $960.3 million, as of the end of the quarter.


Contact Richard Ripley at (509) 344-1261 or via e-mail at [email protected].