The No. 1 secret of strong farms probably won’t surprise you. But the fact that operations place varying degrees of importance in this factor suggests there’s room for improvement across agriculture.
“The stronger the financial data, the stronger the operation,” explains Nick Stokes, senior vice president and managing director at Rabo AgriFinance. He spoke Tuesday, Jan. 24, at Top Producer’s first-ever risk-management workshop held on the eve of the 2017 Top Producer Seminar.
In Stokes’ view, top farmers can be distinguished from good borrowers for several reasons, including:
They value their relationship with their lender.
They have a clear vision for their business.
They take pride in the ownership of their organization.
They are generationally focused.
Stokes encourages producers to think of their operations not as farms but as businesses. That mindset can help them ensure all financial data points are in order before meeting with their lending partner.
“Have the information to make the decision to grasp ahold of” profitability when commodity-marketing opportunities present themselves, Stokes says.
Income statements, for example, should include details such as:
- Gross income
- Operating expenses
- Family living
- Cash flow and debt-service requirements
The less risk your operation poses to a lender, the better. “If I have good data, you’ll get a quicker answer and get a better rate,” Stokes says. “We are minimizing risk with high-quality information and financial statements.” A personal relationship can further expedite the process when your lender knows there is a higher certainty you will execute on your financial projections compared to other borrowers.
“If you’re not using your banker as a tool, you’re missing out,” Stokes says.
To read more coverage of the 2017 Top Producer Seminar, visit topproducerseminar.com.
Thank you to the sponsors of the 2017 Top Producer Seminar!
Premier Sponsors: Advance Trading; BASF; Bayer; Beck’s; Cargill; Case IH; Channel; CropZilla; Dow AgroSciences; DuPont Pioneer; ESN; FarmersEdge; Farmers Business Network; John Deere; K-Coe ISOM; Soybean Premiums; Top Third Ag Marketing; Verdesian.
Co-Sponsors: AgYield; CliftonLarsonAllen; Gulke Group; Rabo AgriFinance; Zaner Ag Hedge.
Supporting Sponsors: Alltech; BMO Harris Bank; Transition Point Business Advisors