This past month, I addressed my 30th consecutive American Bankers Agricultural conference. Wow, the agrilending field and the world has changed over the past 30 years. My first conference in Nashville was with over 2,000 lenders – ESPN and USA Today did not exist yet. Farmland prices were running in high gear, with expansion in global food markets because of strong developing countries economies. Oil prices were erratic and high and government was seen as dysfunctional. Does that scenario sound like today?
Changes have occurred in my 30 years. We now have financial standards, ratios and benchmark comparisons. Many of you are granted credit by computerized scoring systems that identify risk. Over 40% of people conduct business with an agrilender online or through e-mail.
At the time of my first conference, there were few female agrilenders. Now, over half of my training classes at lending schools are female.
The industry weathered a farm crisis in the 1980s, where old-school cash-flow and profit analysis were critical and made us better managers. Currently, agriculture has moved back to the financial trap of the 1980s.
Moving to the future within 10 years, two-thirds of the current lenders, as well as farmers, could potentially retire thus creating a large transition issue.
Water will replace oil as the major resource links to profits and sustainability. Yes, community banks will exist along with farm credit and FSA. However, many new players such as international entities, or even Wal-Mart, may become your new agrilender.
Editor’s note: Dave Kohl, The Corn And Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at email@example.com.