Northwest Farm Credit Services, of Spokane, has announced first-quarter earnings of $25.2 million, up sharply from $20 million in the year-earlier quarter.


The federally-chartered ag-lending cooperative says its 2006 first-quarter net income far exceeded expectations.


Northwest FCS loan activity was very strong in 2006s first quarter, with earnings ending $6.56 million better than our business plan, President and CEO Jay Penick says. The cooperatives net loans exceeded $5 billion as of March 31, up from $4.4 billion a year earlier for a gain of 13 percent.


The institution, which provides financing and related services to farmers, agribusinesses, and others in Washington, Oregon, Idaho, Montana, and Alaska, had total capital of $911 million at the end of the first quarter, up 6.6 percent from a year earlier. Return on average assets improved to 1.9 percent from 1.7 percent a year earlier.


Farm Credits non-accrual loans, or loans on which the lender isnt earning interest, equaled 0.94 percent of its loan portfolio in the first quarter, down from 1.24 percent a year earlier.


With 12,000 members and more than 40 offices, Farm Credit Services serves a wide swath of the farm economy in its five-state region, and its operations provide one indication of how agriculture is doing in that area.


Penick says that in the Inland Northwest, the outlook for the wheat industry, which produces a crop that sells within a narrow price range, is a concern to him.


We were able to make it through 2005 because of the bumper crop, he says, adding that for wheat growers, the key to 2006 will be producing a large crop again and getting that crop to market at reasonable shipping cost.


Rising fuel prices are hurting growers, but overall energy costs are hurting them more, because they figure strongly into the production of fertilizer and chemicals, Penick says.


I think the margins that had been there in the better (Inland Northwest wheat) operations could disappear because of costs, he says.


Growers of other commodities are buffered to a degree because their products are a little more reactive to price than wheat is, Penick says.


Cattle is in pretty good shape; the fruit industry is holding its own; potatoes bounced back some in 2005 and should improve again in 2006, he says. Drought conditions present in 2005 have subsided across much of the region that Farm Credit Services serves, Penick says. There are, however, several areas in eastern Idaho and midwestern Montana which havent received adequate moisture this winter.


Contact Richard Ripley at (509) 344-1261 or via e-mail at editor@spokanejournal.com.