What is top of farmers’ minds as they manage their business today? John Steeves, head of rural banking for Rabobank, says in his recent on-farm visits, he sums it up as three things:
- Cost structure: continued high inputs, particularly equipment
- Availability of quality labor
- Uncertainty in the market: access to foreign markets, tariffs and cross border supply chains
“Uncertainty is the only certainty,” he says. “In times of volatility, I always say cash is king. I would encourage farmers and ranchers to kind of focus on the cash position or access to cash and liquidity, whether that be liquidity on operating lines, or cash on the side. Whatever your case might be, it’s about how to help absorb potential unforeseen shocks and potential short term losses if they occur.”
Steeves points to Rabo analysis showing for the foreseeable future a 75% chance corn will remain under $5 and a 75% chance soybeans will remain under $11.
“This is creating challenges for our farming clients, for sure,” Steeves says. “This year more than ever, farmers should put a particular focus on cash flow and liquidity, set up for long term success and set up for any unforeseen shocks.”
When looking at the general farm lending landscape, Steeves says farm businesses are ready to face those challenges.
“Farmers and ranchers are good at this—have a plan, plan to manage your business, and hedge your risk,” he says. “I classify it as still good liquidity in the market, which is great for farmers, whether it be on the G&O side, cattle and other animal proteins. I think there’s still good access to capital, which is great. At the same time, we have heard rumblings in the market that some of our some lenders are pulling back.”
Steeves says now is a good time for farmers to engage with their banker and financial relationships.
“Review your plan with your financial partner, and actively engage in discussions about what the opportunities are,” he says.
Steeves shares more on the Top Producer Podcast with Paul Neiffer:
