While the markets have hit wallets hard, there might be opportunity brimming next season. Thanks to Payment Protection Program (PPP) loans, many rural banks are sitting on large sums of cash with which farmers can invest back into their operations.
“The banking system is absolutely flush with cash,” says Tommy Grisafi, with Advance Trading. “The way that happened is all the PPP loans—whether it’s the local Lutheran Church that got it, the farmer with MFP, crop insurance payments coming in, the ag community banks are just smiling.
“If you know anyone who’s qualified to receive a loan, they have so much money right now.”
Interest rates are incredibly low, too. The Federal Funds Rate is at zero, he adds. So, all you have to watch is what the bank needs to charge—interest is how they make money. You could see interest 4% and lower.
While there’s opportunity to access capital, consider where you can improve your operation. Maybe there’s a grain bin that’s needed to be replaced for years, maybe it’s time to finally add a leg to your grain site, perhaps you could improve your fields with irrigation or drain tile?
“Why not invest the money?” Grisafi says. He’s seeing an incredible amount of drain tile installed where he lives in North Dakota. For many farmers, they’ve experienced two years in a row of flooding that leads to prevent plant or low yield that results in insurance claims. Drain tile could put some power back in those farmers’ hands for the next several decades.
Assess your access to capital, explore the options with greatest return on investment, and get your plan together to invest your farm into the future.
