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Opinion: Lenders need to know what happens on the farm

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If there is another industry more affected by weather than agriculture, I would like to know what it is.

Agriculturalists, both locally and nationally, have faced significant challenges in recent years, most of which can be traced back to weather patterns. I can’t remember a soggier 18 months than what we’ve just experienced – not that I want the rain to stop, just maybe ease up a smidge. Plus, it’s been awhile since summer really felt like a hot summer.

Nothing about the weather has been easy: Missouri farmers are struggling to get crops planted and harvested in fields that haven’t had a chance to dry up, ranchers are battling pneumonia in calves due to wet and cool weather, and hay harvests have been poor as the next system rolls in before it has a chance to dry. To make things even more difficult, many can’t get fertilizer out to fields, crops or pastures without leaving deep ruts or getting equipment stuck.

Lender relationships
For farmers, times like these emphasize the importance of having a solid relationship with a lender. It’s easy, when times are good, to forget that. The annual inspections, tax returns, financial statements and other requests that come with this can feel like a hassle when they’re not an immediate priority.

But maintaining that relationship can be a true lifeline. As a bank lender and cattle producer, I can relate to both sides. Financial partners don’t just want to use up valuable time, though. They want to build a back-and-forth relationship with customers, and these requests, while necessary, also are tools to help achieve that rapport.

Reviewing financial statements and annual tax returns, analyzing cash flow and calculating net worth growth helps a lender guide ag customers in the right direction when making decisions. A lender wants to make sure the farm can survive every year, not just the good years. Knowing the average input costs each year, and the average yields and gains, can help them predict what kinds of increases and decreases the farm can withstand. Knowing their customer’s history can help them both prepare for a bad year, because if there’s one constant in agriculture, it’s that no two years are the same.

And those farm visits?

They aren’t just to ensure that collateral is being cared for properly. They give lenders a chance to talk to customers on their own turf. It’s something else entirely to see the long hours and the fruits of that labor in person. A visit lets the lender see firsthand how requested funding has improved the farm and enhanced its operating cycle. Viewing the farm in operation together can give rise to conversations that won’t happen in an office setting. It provides a personal view of the operation, rather than seeing just numbers on a page, and it brings a sense of shared responsibility to make the farm work for everyone involved.

Nature concerns
I recently had a conversation with an ag-industry expert about the general attitude between banking and agribusinesses in the wake of the economic fallout from a decade ago.

Like any industry, I told him, every company, farm and individual is unique and must be examined on a case-by-case basis. Some customers have the golden touch, able to get into fields on time and sell crops and market calves with perfect timing. But many farmers are claiming preventive planting on some or all of their fields. They’ve been forced to watch crops drown, seen sickness run through the herd and, when it comes time to sell, don’t have enough to even cover input costs, let alone living expenses.

While predicting the weather is hard, strengthening the lender-farmer relationship is not.

It’s one of many tools available to farmers and, like any other, the best results come with time and experience. With an established connection and open communication, both parties can understand the goals and work toward them no matter what Mother Nature has in store.

Jessica Allan is an assistant vice president and agricultural lending relationship manager with Guaranty Bank in Neosho and Carthage. Her family maintains a livestock herd in southwest Missouri. She can be reached at


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