Just Show Me Where to Sign
At a recent banker’s school an ag lender indicated a spouse, in this case a female, came by to sign a note for a farm mortgage and operating loan renewal. Her comments were, “Show me where to sign because I just want to get this over with and get out of here.”
Folks, this attitude and method of dealing with the ag lender are a sure sign of potential disaster. This spouse doesn’t realize that when she signs on the bottom line, she shares responsibility for the total financial obligations of the farm business. Too often spouses don’t realize the total amount of debt and length of the financial obligation. They become so disconnected from the business they lack an understanding of the conditions and variables that can result in potential financial failure in the loan agreement. Sometimes this can saddle them financially for the rest of their lives.
Lenders have been telling me that they are observing two types of spouses from a financial point of view: Those who appreciate the lender explaining the financial agreements, position and trends; and those who are naïve or just don’t have an interest in where their livelihood comes from.
As agriculture moves into an era of tighter cash flows and profits, it will be imperative for spouses to be a team. Others will be in for a big surprise if financial default should occur.
- Whenever the price of a barrel of oil increases by $10, gas and diesel fuel increases by $.25 per gallon!
- Three ethanol plants are coming into production per month. By the end of the year, this increases to nine per month!
The Road Warrior of Agriculture
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Editors' 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.
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