by Ken Root
Agriculture, no matter the commodity produced, is a cyclical business. Right now, milk prices are below the cost of production, pork and beef prices are at thin margins and grain farmers, depending on their debt and overhead are at or below break even.
The goal is to survive until better times come and bring profit back to your enterprise, but how to do that?
Farm lenders feel the pinch when growers are losing money. An eroding customer base and especially non performing loans make life tough for them too.
An Berg, is Assistant Vice President of Badgerland Financial, said there are some things farmers should be doing to give themselves the best chance of making it through these tough times. “A great thing they should be doing is proactively communicating with their lender. By being proactive it can help us evaluate their financial situation, and look at some options and ideas, so we can work together to get through these times.”
The thought of visiting with a lender during tough times can be intimidating for farmers, but Berg said it’s important to realize that lenders want to make sure farmers stay in business, which is a win-win deal for both parties. “We don’t want the meeting to be scary. We want to have good, open communication. The farmers are so important to us, so we really want to have an honest discussion, to look at options we may have for them.”
Berg also talks about what farmers should bring with them to the meeting. One of the biggest things lenders can help with is finding ways to lower the cost of production. “When we are looking at the cost of production, we look at things we can tweak moving forward to lower that. Or we look at ways to increase the income generated.”
She added it’s important to take a look at what farmers are doing today and maybe make some changes to the business plan in order to make sure the farmers stay in business for the long haul.