Farm Progress

The Interview

Four questions may give a glimpse of what is happening in the agriculture economy.

David Kohl, Contributing Writer, Farm Futures

March 2, 2017

2 Min Read

Recently, a software professional interviewed me asking several questions about the economic state of agriculture; both lending and production.  His questions hit on four major areas that each provides a specific perspective in the industry.  Let’s take a look at a few of his questions. 

What are the major concerns for agricultural lenders nationwide?

First, many agricultural lenders are concerned about the status of profits and cash flow.  Several lenders indicated their customers are in the third year of marginal or negative profits. As a result, lenders are monitoring working capital reserves, and core or excess equity in land values.

 Next, lenders are concerned about the loss of institutional memory with the retirement of the most experienced agricultural loan staff.   Whether it is FSA, Farm Credit Associations or banks, the industry’s transition to millennial generation agricultural lenders is in full force.  Training in finances and communications are both top priorities for institutions and this new lender base. 

Finally, transparency and accurate financial information is critical. Lenders continue to see an increase in fraudulent activity including unreported liabilities and disappearing assets.   As a lender, this is one of the most concerning occurrences as no amount of adjustments or plans will improve a dishonest character. 

What are the major economic concerns for producers nationwide?

Across the country, producers want to know how long the current economic reset will continue.   Many producers actively seek information for improvement in their businesses. Seminar attendances have been very high over the past several months with engaged and attentive audiences.  Priority topics at conferences include tools and techniques for better marketing and risk management, ways to improve financial management, and driving efficiency. 

Another major concern for producers is how to stay viable. Many are just trying to make it through another year.  A majority of producers have either employed or are considering selling excess machinery, giving up rented ground that is not economically advantageous, or selling land.   For some, business liquidation or a buy-out are attractive options.   Yet, others are using the reset as an opportunity to start and grow the business.

As for the rest of the interview questions, stay tuned…

About the Author

David Kohl

Contributing Writer, Farm Futures

Dr. Dave Kohl is an academic Hall of Famer in the College of Agriculture at Virginia Tech, Blacksburg, Va. Dr. Kohl has keen insight into the agriculture industry gained through extensive travel, research, and involvement in ag businesses. He has traveled over 10 million miles; conducted more than 7,000 presentations; and published more than 2,500 articles in his career. Dr. Kohl’s wisdom and engagement with all levels of the industry provide a unique perspective into future trends.

Subscribe to receive top agriculture news
Be informed daily with these free e-newsletters

You May Also Like