ARCHER, Neb.-The ongoing and prolonged drought across much of the Midwestern U.S. has credit unions keeping a wary eye on potential risks that may develop.

According to the National Crop Insurance Services, a trade association for crop insurers, 60% of the nation is in "some state of drought" as July nears its end, and it will take months for the full extent of the damage to be known. Though August rains may yet save crops, adjusters are out assessing damage in many areas. Among those watching the drought situation is ProAg, a provider of crop insurance that is a unit of CUNA Mutual and is the sixth largest crop insurer in the country. "ProAg is monitoring all regions and crops that have been affected to provide adequate claims service and better understand the overall financial impact," said CUNA Mutual spokesperson Rick Uhlmann.

'Fortunate, So Far'

Dan Poppe, CEO of $66.7-million Archer Cooperative CU said he feels "fortunate, so far," because the farmers his CU works with have irrigated corn fields. The unirrigated corn fields in other parts of Nebraska are looking at possible yields ranging from 20% to 0% of normal, he said. "Even with the irrigated fields, the operating costs are very high due to the cost of fuel to run the irrigating wells," he explained. "The primary concern is some of those irrigation wells are starting to run dry, and some community wells are going dry... So you could see farmers getting a fuel bill that is $100,000 higher than normal, but still getting their water shut off, which would result in lower yields."

The "good news" is the price per bushel for corn is high in the current market, Poppe added, but the price isn't locked in until harvest. When Poppe took over as CEO one year ago, he said his first step was to encourage farmers to put together a written marketing plan, to know break-even point and to watch expenses. The CU has a mission of helping farmers understand the risk "and we have been trying to limit risk for the last year, which we think will help us get through this."

"We let our members know we are available if they need help putting a marketing plan together, or if they need help with cash flow," he said. "Our lending staff primarily grew up on farms or understand farming, so we work on the emotional side, as well."

The CU has been actively contacting its members to let them know money is available for additional fuel and how to take advantage of the current high market prices.

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