As a preliminary assignment for a recent Advanced Agricultural Lenders School in Omaha, NE, I asked the lenders to discuss their best experience as an ag lender.
Many indicated that their greatest fulfillment comes from working with young farmers and ranchers. One mentioned that he enjoys teaching the young producers how to complete the proper financial information, watching them become more prepared each year, actually using the data to make decisions, and watching them achieve their goals.
Another mentioned that he enjoys working and meeting with the clients from December to March during renewal season and watching their financial and business progress. At these meetings they establish goals together and then review the goals of the past year.
At this year’s school, risk-management and marketing fundamentals were stressed so lenders could assist their customers in these areas. One ag lender stated that he explained some of the marketing fundamentals so the customer could take advantage of forward contracting and options. The result was the producer was able to forward contract half of the crop, cover all costs of the operation, plus lock in a profit. He still had the other half of the crop that he was able to sell at a profit.
Another lender discussed taking a lemon and turning it into lemonade. This was a distressed loan customer with issues relating to the depressed milk economy and crop losses. Together they put together numerous scenarios including selling beef cattle and liquidating machinery. The bottom line was that customer sold unproductive land and machinery. He cut his debt in half and reduced debt service by two-thirds. The customer’s outlook is now bright and he has increased self worth along with the net worth.
Finally, I hear this all the time – and the story surfaced again at this year’s school. After a loan was denied, the customer came back to thank the lender years later after an initial heated response.
Yes, your lender is more than an order taker and may enjoy assisting customers as a problem solver. However, in all cases it takes work on both sides to have a positive outcome.
Editor’s note: Dave Kohl, Corn & 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 firstname.lastname@example.org.