Operating Loans

Lenders Want More Transparency

Meeting with your lender should focus on how to attain your operation's goals in a financially responsible way. (DTN/Progressive Farmer photo by Tom Dodge)

"Whatever we can do to help that rural producer we are going to do," said Casey Cook, senior relationship manager with Capital Farm Credit.

Cook told DTN a few things lenders will be looking for as financial planning gets underway for 2017. Top of the list...cattle producers need to be "open and honest" with lenders. They will want to know if producers have experienced economic pressures like 2016 before in their career. For those younger or beginning producers navigating treacherous market conditions, Cook says a few things can make all the difference when meeting with lenders.

"We want to do everything we can to help them be profitable and prosperous," he said. "If we know their goals we can better align with what we are doing." He stresses goal setting can help producers plan for the financial future of their operations.

"How can we get you there safely? Let's not get you over-leveraged. Let's figure out that pattern of consistent growth to get you there," Cook explains.

The senior relationship manager also points out having a written risk management plan in place can give lenders reassurance about the financial position of operators. Those plans can include futures contracts or equity.

Cook said the younger and upcoming generation of cattle producers is well-equipped to handle the challenges of a beef operation. He noted a tendency to seek out advice and information to make good management decisions concerning finances, herd management, pasture management and marketing decisions.

"The challenge we have is capital requirements," Cook said, referring to younger producers. He recommended partnering with family members or a neighboring producer looking to retire to help meet those requirements.

"There's a lot of wealth in that baby boomer generation that is just now coming available to be passed on," he said. "We need to be creative with this younger generation, but also be safe with them."

Cook said Capital Farm Credit offers a program called NextGen that focuses on helping young producers get their operations running. He recommends checking with local Farm Credit associations for similar programs.

"It's geared to take a look at that next generation and what can we do for a young producer," he said. "It's not a one-size-fits-all solution. We know we're in a tough market situation, the benefit of Farm Credit is agriculture is all we do."