Don't Throw Your Lender Under the Bus

August 25, 2015 12:00 PM
Don't Throw Your Lender Under the Bus

Experienced farmers recall the immense destruction wrought by skyrocketing interest rates in the 1980s. Young farmers, conversely, don't have that context for making decisions, but they should nonetheless be careful to forge lasting ties with financial partners in the months ahead, experts say.

Based on his experiences, producer R.D. Wolheter of Wolcotville, Ind., advises young producers to work hard and not overextend themselves. He stresses the value of building relationships with lenders, retailers and other trusted professionals, even if it means paying slightly more for something you need.

“I’ve always been taught that you don’t want to jump from one lender to another just because you get a one-quarter of a point lower rate,” he says. As an example, Wolheter purchases some inputs early to take advantage of discounts, but he only does that after talking through the price with his retailer to ensure it’s comfortable for both parties. This year, he already has purchased some potash, and he’ll keep an eye on nitrogen prices heading into harvest.

Continue to foster those relationships, and don’t shy away from difficult conversations with landlords, bankers and accountants, says Mike Boehlje, ag economist, Purdue University. Keep honing management skills through webinars and educational material provided by universities and Extension.

Document your strategy in writing and have a packet of paperwork prepared for your advisory team in the run-up to the loan review period that typically begins in December and continues through February.

More harvest planning advice

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Spell Check

Western, NE
8/25/2015 08:58 PM

  A lot of today's lenders weren't around in the 80's. I had a troubled asset specialist with Farm Credit tell me once when we were discussing the bankruptcy of a customer in common that most of FCS's current loan officers were "selling money" and didn't care whether the customer survived or not. I suspect that statement has a bigger ring of truth to it than not. It's time to sharpen the pencil. 2016 is going to be the year when the least cost operator has a better chance of survival than the "top of the line" farmer with the top of the line expenses.


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