Research Progress Report 336 April, 1968

Poultry Credit Policy of Indiana Financial Institutions
Roscoe N. Rush and Lee F. Schrader
Department of Agricultural Economics

Summary
Financial institutions in the major poultry producing areas of Indiana were interviewed to determine the nature of their poultry credit policies. The study focused on differences between the credit policy for poultry and other agricultural production. It also examined the background and poultry production knowledge of the loan officers and their views of contract production and future growth of the poultry industry in their area. Banks, Production Credit Associations 1, a Farm Bureau credit union and a Federal Land Bank were included in the analysis. Data were obtained primarily by personal interviews with loan officers of the cooperating financial institutions in Kosciusko, Elkhart, Dubois, Daviess, Washington, and Harrison counties.

In August, 1966, the twenty-five institutions included in the study represented $138,457,000 in loans outstanding, an average of $5,538,000. Of this amount, 31 per cent was for agricultural purposes and 5 per cent was specifically for poultry. Of the agricultural loans, 18.7 per cent of the bank loans, 21.0 per cent of the PCA loans, and 6.8 per cent of the other institutions loans were for poultry enterprises.

Poultry loans tended to be larger than other agricultural loans for both long and short-term. Poultry loans by PCA's averaged larger than bank loans for poultry. The use of collateral for operating capital poultry loans is more general than for other agricultural loans. Both collateral and cosigner security were used more often by PCA's than by banks. PCA's had the highest true annual interest rates. Many of the poultry loans, generally for egg production, were on a monthly repayment basis, while other agricultural loans were often on a simi-annual basis. Loans for turkey, broiler, and duck production were often on a "when birds are sold" repayment plan.

Less than half the loan officers had definite guidelines for poultry production costs and efficiency. Those with definite guidelines had a higher percentage of their loans in poultry than those without definite guidelines. Using the relationship of poultry loans to total agricultural loans as a measure of aggressiveness in poultry credit, one may conclude that those institutions with a loan officer using definite guidelines, thus more knowledge of the poultry industry, were more aggressive in acquiring poultry loans. About 64 per cent of the loan officers felt that

1 Five county officers involving four different associations were interviewed.

PURDUE UNIVERSITY • Agricultural Experiment Station • Lafayette, Indiana