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Corn+Soybean Digest

Views from Agricultural Lenders- Part I

Let us stop the Road Warrior tour in Mankato, MN, located south of the Twin Cities. I had the opportunity to speak at the FINPACK Conference for lenders. What was unique was the ability with technology to get the pulse of 80-plus attendees on various subjects of agriculture. Bob Craven, the director, and his team were certainly able to add significant amounts of interest and energy with this new angle, with the push of a clicker. Participants pushed clickers to instantly answer questions regarding key agriculture issues.

Outlook on land values
Participants were asked what their outlook was on land values in the next 12-24 months in their area, which represented a six state area. Fifty-five percent indicated that values would increase by 10-24%, however none felt more bullish at 25% or above. Thirty-one percent were less bullish estimating 1-9% over the period. Concerning the bears, 14% indicated that land values would remain about the same or decline.

Financial crisis in agriculture
Participants were then asked if there were a financial crisis in agriculture, what would be the most likely cause. A rise in interest rates greater than 3% was selected by 30%. A 30% decline in land values was selected by an equal amount of participants. An increase in operating costs of 30% or more was clicked by 25% of the group. Surprisingly, only 11% of the conference felt that a collapse of alternative energy would create a financial crisis.

My question: what would happen if all four occurred to create the perfect storm?

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 sullylab@vt.edu.

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