Freeze Puts Squeeze on Citrus Growers; Florida Farm Loan Woes Echo Midwest: Farm Credit Service Expects Defaults; Commercial Banks at Lesser Risk

Article excerpt

TAMPA, Fla. -- Far away from the troubled grain farmers in the Midwest, Florida citrus growers are facing the same threats of foreclosures and liquidations.

Ravaged by an almost unprecedented fourth freeze in the last five years, many growers in the state will be unable to make loan payments this year and will be forced out of business, industry officials believe. And while banks in the area do not expect to be hit as hard as their counterparts in the Midwest, lending institutions will not be immune to the fallout from the freeze.

While its icy blue glaze has long since melted away, the freeze that blanketed Florida in January continues to haunt the state farm and citrus industry. The growers and farmers watched helplessly as the January cold front swept across their lands, severely damaging crops and killing trees.

While an official said a freeze as intense as the one in January generally occurs "once in 100 years," Florida has suffered through two since Christmas 1983, and four in the last five years.

"The last two freezes have been devastating to the citrus industry," said James Beck, president of the Central Florida Farm Credit Service.

Not only did the citrus growers lose their 1985 crops, but they also may have lost their trees and much of the value of their investment. With the tree loss, they have nothing with which to secure new financing. A canker disease has wiped out many of the tree seedling as well, making replanting impossible for some.

Mr. Beck and other industry lenders expect a higher default rate on their loans, as well as more foreclosures. He said some farmers will put their property up for sale and move on.

While industry cooperative are the prime lenders for the growers, commercial banks also may feel the eventual pinch of the freezes as well.

Southeast Banking Corp. and NCNB seedling as well, making replanting impossible for some.

Mr. Beck and other industry lenders expect a higher default rate on their loans, as well as more foreclosures. He said some farmers will put their property up for sale and move on.

While industry cooperative are the prime lenders for the growers, commercial banks also may feel the eventual pinch of the freezes as well.

Southeast Banking Corp. and NCNB Corp. have made a number of citrus and farm loans. Officials of both companies said they do not expect a sharp increase in defaults.

"So far we have not see any defaults," NCNB spokesman Jim Chandler said. He said the company had "limited exposure" to the citrus industry and was "working with customers who have payment problems."

Other Florida bankers echo the contention that their loan portfolios will not be affected severely by the problems in citrus industry. Few banks make long-term, fixed-rate loans on groves. Instead, they generally make smaller, short-term loans designed to tide the growers over when they are cash-short.

"The majority of our loans are short-term," said William Klich, a senior vice president of Southeast Bank in Tampa, which has lent about $25 million to growers and citrus processors. "They are mostly seasonal things like providing growers with the money to hire pickers at the time the crop has to be harvested, so we haven't been hurt directly."

But bankers say their companies will be affected in an indirect way. David Class, executive vice president of the Bank of Pasco County, said his bank does not have many loans to citrus growers. But many of its customers rely on the industry nonetheless.

"A lot of our customers are employees in the grove," Mr. Class said. "They will probably have some trouble making their pauments on car loans and things like that because of the problems in the industry."

Mr. Class said merchants in the area will also be hurt because many rely on citrus workers for their business. That too will affect the bank. …