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

The landscape of the modern woman in agriculture has made quite a transformation.  Women are taking their seat at the table as decision makers, CEOs, partners, farm owners, and it is not stopping there.  Women are looking to curate a solid platform to ensure agriculture remains relevant while ensuring the truth about agriculture is accurately told.  This has led to the Women in Ag (WIA) initiative which provides tools, resources, and training to women.  WIA, is providing the space needed to create indu... Continue reading

The Western U.S. differs from the rest of the country in many ways.  The West, especially California, is one of the most productive places in the world in terms of food production.  California alone produces more than 400 different commodities in part to the climate, topography, and availability of water through the complex systems of delivery.  It is important lenders analyze every deal individually, recognizing there are different strengths and weaknesses with each borrower.  What do lenders look for?<... Continue reading

In the more temperate climates of the West, there are millions of acres of permanent crops.  Nut crops, vineyards and tree fruit dot the landscape everywhere you look.  What will real estate lenders be looking for?

When you’ve gone to your operating lender and they, for various reasons, have decided not to loan on your real state, then you will need to seek out an experienced long term ag real estate lender.  They will, of course, be analyzing your cash flow capabilities, but the... Continue reading

The last month of 2019 saw signs that there is life in the ag economy. But some of that life isn't fundamental to the ag marketplace and could throw a wrench in 2020 farm financial planning, making it of utmost importance to stay focused on sound, fundamental decision-making and not get distracted by things like trade wars and resulting farm payments.

Multiple reports toward the end of 2019 indicated the year was wrapping up with improved financial performance and resulting sentiment in... Continue reading

With last week's release of the latest Beige Book, the summary of commentary on current economic conditions in each of the nation's 12 Federal Reserve districts, Fed officials painted a picture of gradual financial attrition for ag producers in each district. But the data may not paint the full picture of the impact of declining markets. Loan delinquency, machinery financing and the ongoing trade dispute are three big factors to watch in the near future as ag producers wrap up 2019 production. 

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Farmers are eternal optimists, and rightfully so. Raising a crop takes a lot of hope. Planting a seed in the ground, tending it for months — through sometimes impossibly challenging weather and environmental conditions — and expecting a bountiful crop takes both a diverse skillset as well as the right mentality. Optimism is almost a pre-requisite for being a successful farmer.

But when times are tight and markets strain revenue potential, this mentality sometimes can be harmful. Sure, ti... Continue reading

Financial awareness and adaptability are important to ag lenders.

In a challenging marketplace like the one grain farmers have faced in the last few years, expanding an operation by adding acres can be tough, especially for young or less-established farmers. Even when markets are more bullish, competition can keep some buyers on the sideline when a nearby 40-, 80- or quarter-section of land becomes available.

No matter the dynami... Continue reading

Planning ahead is a critical component of any successful ag venture, from the smallest farm to the largest agribusiness. Though it’s important to think ahead in the short-term to help guide effective day-to-day work and decision-making, it’s even more imperative to plan for the long-term success of a farm or ag business.

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It’s a simple three-digit number that can make a difference worth thousands of dollars in how you finance and manage your ag operation. Knowing your credit score is important; but even more critical is knowing how you can improve it. Improving your score can help in the long run so finance charges don’t add up and erode the revenue potential of your farm or ranch.

A credit score speaks to the management of both your business and your pers... Continue reading

It’s a common refrain among too many farmers and ranchers today: “We know we need an estate plan, but we don’t have it yet. We’ll get to it one of these days.”

Often, “one of these days” never arrives, then an abrupt, unplanned change happens — a farm patriarch or matriarch passes away, a family divide develops, or the next generation steers away from taking the reins of the farm — and suddenly, you have a major problem. Changing family and business dynamics means you’re going to have to ma... Continue reading