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Ag Banking/Rural America

The Newly Legalized Hemp Industry

Opportunities arise for farmers and ag lenders from the 2018 farm bill.

By Whitt Steineker and Jared Batte

Hemp, one of the nation’s oldest and most versatile crops, is poised for a resurgence following the passage of the 2018 farm bill. That legislation codifies the distinction between hemp and marijuana and removes hemp from the scope of the Controlled Substances Act. This should be a welcome development for agricultural lenders — who have largely avoided any association with hemp for decades — as it will allow them to access a now-legal industry that is expected to generate billions of dollars of potential deposits in the next few years.

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Farmonomics: Educating Young Ag Producers Creates Better Customers Down the Road

By Alaina Webster, Managing Editor

“I’m always amazed — a lot of kids come out of college, and they don’t understand balance sheets, income statements, cash flows, sensitivity analyses like they should, and it’s like, you’re going to run a business that depends on that stuff.”

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Measuring Repayment Capacity

For future expansion, the average replacement margin must be positive.

By Michael Langemeier

Repayment capacity measures include capital debt repayment capacity, capital debt repayment margin, replacement margin, term debt and capital lease coverage ratio, and replacement coverage ratio (Farm Financial Standards Council). These items address a farm’s ability to repay operating loans and to cover the current portion of principal and interest due on noncurrent loans such as a machinery, building or land loan.

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Rural Economy Impacts Farmers’ Mental Health

A strong majority of farmers and farmworkers say financial issues, farm or business problems and fear of losing the farm impact farmers’ mental health, according to a new national Morning Consult research poll.

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Farm Lending Rises to $108 Billion in 2018

U.S. farm banks increased agricultural lending by 5.3 percent, or $5.5 billion, to $108 billion in 2018, according to the American Bankers Association’s annual Farm Bank Performance Report. The report — an analysis by ABA’s economic research team based on FDIC data — examines the performance of the nation’s 1,772 banks that specialize in agricultural lending. ABA defines farm banks as banks whose ration of domestic farm loans to total domestic loans is greater than or equal to the industry average.

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