Whether they are dairymen, crop farmers, livestock producers or agribusiness operations, most borrowers go to their bank once a year to renew their operating lines for the upcoming season.  Most years this process comes off without any major hitches.  But what happens if they experienced losses for the past season or maybe a couple of seasons?  Now the process becomes more difficult. The bank who is providing operating financing is now unwilling to move forward without some serious changes being made. ... Continue reading

Some farmers made money the old-fashioned way — from operations — in 2020, while others showed profit from the consequences of this strange year.

Direct payments through programs like the Coronavirus Food Assistance Program (CFAP) could mask underlying issues within farm businesses and have implications for ag lending and farm balance sheets into the new year. Here are four things to watch as we move into the new year, namely some strategies and tactics to help ensure your operation rema... Continue reading

You have all heard the expression “You Never Get a Second Change to Make a First Impression.” It has been attributed to Oscar Wilde and Will Rogers, although nobody really knows for sure.  Studies show a person will form their first impression somewhere between seven seconds and two minutes.

A few ways mentioned to achieve this are:

With its many production and marketing variables, agriculture is a volatile marketplace and has been for decades. That’s no surprise to farmers, ranchers and others in agribusiness who have weathered past cycles…including the experienced ag lenders and finance specialists at Conterra Ag Capital.

Right now, that volatility has never been greater. It’s causing some of the world’s largest financial institutions to re-examine industry investment positions and financing of even some of the la... Continue reading

Everyone likes to talk about interest rates, especially when considering borrowing money.  If it is for a home mortgage or a refinance of a farming operation, the conversation is usually about the same.  When is the best time to lock-in an interest rate?  The short answer is: when they are lowest … right?

This starts the discussion as to how do I know when rates are the lowest?  This is where it gets complicated, as lending sources are likely working off rate diff... Continue reading

At some point in your ag business career you are likely to seek long-term financing for your operation.  Reasons may vary from purchase money to refinance existing debt to freeing up working capital. Whatever the reason, the process is very similar.  Your term long-lender may be different from your bank in many ways, but the one thing that is very similar is the need for quality financial information.  Keep in mind you are likely a new customer to your long-term lender. They do not have the borrowing histo... Continue reading

The term Succession Planning is not new to those in the business of agriculture.  While an important part of any operation, many farmers and ranchers fail to pay close attention to the process.  Succession planning requires considerable upfront preparation and plan maintenance to keep moving in a productive direction.  Many resources are available, as this issue is important to any type of business, especially when adult children are brought into the business.

It’s not... Continue reading

Ag lending has evolved in how ag credit is delivered and who is delivering that credit.  Both agricultural operations and institutions that lend into agriculture have seen dramatic consolidation. The number of ag lending institutions have dwindled considerably in the last 20 years.

Often farmers and ranchers who have experienced stress and may need some sort of restructure have been asked by their lender to find other financing. Borrowers frequently question if it would be good consolidation to have all farm debt with one... Continue reading

Just like so much in our lives, the agricultural lending sector will see a lot of change — some of it permanent — as society resumes what becomes the new normal coming out of the COVID-19 pandemic.

The pandemic has caused many financial operations to slow considerably or stop altogether as stay-at-home orders and other necessary measures were implemented to help prevent the virus from spreading. Appraisers weren’t able to travel to properties to do their jobs, and some insurance companies were unable to write policies an... Continue reading

Three-step process helps ensure long-term financial viability for farms and ranches.

Not all alternative ag lenders are created equal. Alternative lending is something of a catch-all for institutions that use non-traditional strategies and mechanisms to help farmers and ranchers cover their financial obligations to sustain their operations. Some of those strategies can actually cause more strain in the long term while others are more geared toward continued financial viability well into the f... Continue reading

Every spring there’s a sea of tractors out planting the fall crop.  During this time there is usually one thing on a farmer’s mind: getting the crop out on time.  Although, this is the perfect time for farmers to be thinking ahead on how they can help their lender.  How you may wonder? Let’s discuss a few things to do during planting season that will proactively help you and your ag lender.

1.    ... Continue reading

Farmers and ranchers across the United States have felt the pressure of declining margins over the past few years. With declining margins, proactive conversations with your ag lender become essential for the financial health of any operation. Conversations about annual projections, capital purchases, debt structure, and operating expenses should happen early in the year to allow time for adequate financial planning.  At times these conversations can feel overwhelming yet having the right tools in place and understand... Continue reading

A frequent question from borrowers, especially first-time borrowers, is why the lender needs so much information?  It may seem like a lot and somewhat unnecessary from the borrower’s perspective, but the lender wouldn’t be asking if the information wasn’t critical somewhere in the application, approval, documentation or closing process.  Everybody answers to someone, lenders included, so proper analysis and documentation is paramount for the borrower’s protection as well as the lender’s.

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Surface water supplies and weather conditions in California lack predictability. Over time the snowpack in the Sierra Nevada mountain range has shown a boom and bust pattern. The one constant historically relied upon by agricultural operations, and those financing them, was groundwater, either as a primary or supplemental supply. Entire operations may have depended on 100 percent groundwater, and that method was not considered high-risk.

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Farmers and ranchers aren’t immune to the angst surrounding the rapidly evolving COVID-19 pandemic and the protective measures intended to prevent the virus’ spread. But “social distancing” is nothing new for many people in agriculture given the nature of the day-to-day work of operating a farm or ranch. Farmers, ranchers and agricultural workers are doing everything they can to maintain life and work as “normal.” It’s easier to socially distance in rural America.

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Most lenders have in place Business Continuity Plans, but COVID-19 has put them to the test, with varying results.  With many states enacting stay at home orders to protect the health of their residents, what remains for many lenders is to move off-site the support functions, consistent with their Business Continuity Plan. 

That said, loan-making involves the application and supporting financial information flowing in a timely and secure manner, much of which is dependent on th... Continue reading

With COVID-19 causing disruptions throughout the US economy, farmers and ranchers are experiencing a wide range of side effects.  While parts of Rural America have some insulation, certain sectors and areas have seen greater impacts.  Low oil prices and reduced demand for fuel, as travel has slowed, is wreaking havoc on the ethanol industry, which has a trickle-down effect on corn prices in areas supported by ethanol production.  Operating on tight margins, many farmers rely on off-... Continue reading

Challenging economic times often create financial opportunities. The Federal Reserve recently lowered the federal funds rate to near zero and eliminated reserve requirements, as it seeks to stimulate the economy and eliminate bank liquidity concerns as recession looms.  Reassessing our farm and personal financial positions, specifically our debt structures and costs, must be a fundamental response to the rapidly changing economic environment. But does a lower funds rate mean you will benefit from refinancing assets lik... Continue reading

Nut crops favor very warm climates, and this climate limitation concentrates most of the production to the far western states.  There are commonalities among the various nut crops, but there are also come big differences.

Let’s explore what a real estate lender might be looking for when considering a loan request for collateral containing nut crops:

1.    Climate/Collateral Locatio... Continue reading

Many in the U.S. dairy industry have been through well-documented struggles in recent years. Some say dairy industry challenges are causing massive structural changes and edging out family farmers. Multigenerational dairy farms are indeed shuttering around the country as consolidation and market pressure force difficult and sometimes painful decisions when further expansion or diversification aren’t viable options. Whether it’s a natural evolution of the dairy marketplace or a consequence of industry changes, it’s a painf... Continue reading