Views from West Texas
The other day I was in Amarillo, TX, to address the 85th Annual Texas Agricultural Bankers Conference. I also was facilitator of a farm/ranch panel. The following are some perspectives from the grain and cattle producers and a manager of one of the larger feedlots in that area of the country.
First, as one of the older producers explained to the group, West Texas’ strategic advantages have been:
A)Its water source
B)Highly fertile soils
With advantage A and C above being challenged by the current economy, some corn and grain producers are shifting to cotton, which uses less water. Methods of tillage are being rapidly changed to conserve water and energy. Concern particularly centered on the availability of water in the region for the long run.
The cattle feeder was strongly opposed to the closing of the Canadian border to beef. He indicated that to secure foreign markets we need a North American approach to marketing our livestock as opposed to a U.S. program. The industry is so integrated in Mexico, Canada and the U.S. that the only way to build confidence in the Asian region is to brand North America.
It was surprising that the panel made little comment concerning farm government payments. They have basically put them behind and are taking a proactive approach to managing.
Two of the panel members had a written strategic plan. They found these plans provide their business focus, better communications particularly with spouses and partners, and a more defined method of objective decision making.
All three panelists desired a lender that was the decision maker, rather than having one that hunts or markets the customer and an additional credit analyst who just analyzes the financials. All three indicated that loss of loan officer was the major reason why they left their previous lender, and bank mergers also influenced their lender decision.
- When the panelists were asked who their major global competitors were, China topped the list.
- Total cost of corn production for one producer was $2.58 total cost, and 62 cents per pound in cotton production.
- All three panelists had been visited by their lender’s competition at least three times in the past year.
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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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