The No. 1 Secret of Strong Farm Operations

January 25, 2017 07:14 AM
 
Producers learn about risk management during a pre-conference workshop held Tuesday, Jan. 24, 2017, on the eve of Top Producer Seminar in Chicago.

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

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Comments

 
Spell Check

Farmer32
Grand Forks, ND
1/27/2017 12:35 PM
 

  It's a good article but its stating the facts. Be good to your lender in the good times he should stay with you in the bad times. Unless it's Bremer Bank. Rabo, Agcountry, CHS are lending companies that farmers should be using not your local bank that gets all excited bc of a cash flow problem which 50% + have and low working capital that a farmer has after a few bad years. Making a farmer sell land is the worse thing in this economy Good luck in 2017

 
 
C.K
bad axe, MI
1/26/2017 07:00 AM
 

  I'f Nixon wouldn't have gone off the gold standard in 1973, the farmer wouldn't have to be boat loaded with debt. Before that you could buy a farm on credit pay it off in 10 to 15 years, raise a big family and make a good living . Now every man, women and child share of the 68 trillion of credit market debt is $200,000.00 in this country. The farmer all he is doing is making a good living for the lenders in this country and hasn't figured that out yet. So this article saying you need to do a better job of making the lender a good living.

 
 

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