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Ag Banking/Rural America

Farmers’ Confidence Falling as Agricultural Financial Conditions Worsen

October 2 — Agricultural producer sentiment dropped to its lowest level since October 2016 as producers expressed concern over worsening farm financial conditions, according to the latest Purdue University/CME Group Ag Economy Barometer reading. The September barometer reading was 114, down 15 points since August.

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Majority of Rural Bank CEOs Are Reporting Negative Tariff Impacts

September 20 — The Creighton University Rural Mainstreet Index climbed above growth neutral in September for an eighth straight month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy. The overall index declined to 51.5 from 54.8 in August. (The index ranges between 1 and 100 with 50.0 representing growth neutral.)

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Thinking Ahead: 5 Things to Do This Fall for Smoother Renewals Next Year

By Tim Ohlde

For most ag lenders, renewal season has wrapped up. After catching your breath, spend some time positioning yourself for next year. I’d recommend the following:

1. Talk to your borrower – Farmers like to see you in places other than your office. Farm visits are still a great way to connect with them on their terms when there aren’t any paperwork pressures to get in the way of communication. Go ride in the combine, have coffee early some morning after they finish chores, or make an effort to be visible at your county fair.

2. Stay on top of national and international ag news – Tariffs and trade discussions as well as the farm bill are hot topics right now, but next month it might be something new. Now is the time to digest information about how the larger economy, plus the weather, may impact prices going forward. Encourage your producers to stay abreast of this information as well. Fall is a great time to host a customer education session.

3. Speaking of prices, check on your customer’s marketing positions and plans – There are several steps to successfully implementing a marketing strategy. If you have borrowers who are new to marketing, check in with them. There is a temptation to not follow through with the plan or to only cover a small portion of their yield. Ask to review their plan as they move toward harvest. Encourage them to stick with the plan and discourage making frequent adjustments. They aren’t day trading, they are mitigating risk through marketing.

4. See how closely projections are matching reality – Quarterly variance testing is another great way to stay connected before renewal time. When you compare the cash flow you prepared last January with how things are actually going in July, you have an opportunity to make adjustments and have more background information before next January. As Dr. Gordon Livingston, MD, said, “If the map doesn’t agree with the ground, the map is wrong.” Now is the time to recognize that the projection isn’t holding up.

5. Go beyond an annual balance sheet – Another conversation starter might be requesting and preparing an interim financial statement. This wouldn’t be a fit for all borrowers, but for those in expansion mode, who considered selling or repurposing assets, or with extremely tight margins, it is a solid mid-year step. Pay close attention to working capital and payables as well as changes in total assets. Also monitor any new credit not affiliated with your bank.

This is the season for preparing, and that groundwork pays dividends. It reminds me of topdressing wheat in Kansas. Harvest seems like a long way in the future when you take this key step to impact yield. Likewise, with renewal season, position yourselves early for the best results.

 

Tim Ohlde is CEO of Country Banker Systems and CEO of Elk State Bank in Clyde, Kan. For more information, visit www.countrybanker.com. 

Changing Perceptions of the Land Market

By Steve Bruere

The land market has been incredibly resilient as we have transitioned from $6 corn into a lower commodity price environment. Land values have held up well, even as rental rates have declined and farmer profitability has diminished. There are many reasons for the strength in the land market, including lower return expectations, lack of inventory of farms for sale and continued interest from both farmers and investors.

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Succession Planning

Who will take over the farm — and do they even want to?

By Mark K. Phillips

Nine trillion dollars in household wealth and assets is expected to land in the laps of Gen Xers and millennials within the next 10 years. Are they ready?

What about the transfer of business ownership? Are the Gen Xers and millennials among us primed to take over the family venture? Do they even want to?

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