Credit Squeeze is Hitting Farmers Now
It seemed for several months that the credit squeeze was passing farmers by. However, lately I have ready several acticles about the credit squeeze hitting farms and farmers now. Frontier Bank in Colorado specialized in loaning to farmers and it went under a couple of months back. Most of these farmers using the bank were either unable to get loans with other banks, or their credit lines were shrunk so much, it was same as not having a loan. The Ag Department is trying to help these farmers, but it may be a case of too little too late.
I think it is imperative that you communicate as much as you can with your bankers. Even if times are looking a little tight, discuss it with him or her. A good banker understands that the business cycle (even the farming business cycle). Keep your budget up to date and let them know any bad news immediately.
If you are a corn or bean farmer, the pricing for your crop for the new year should enable you to make a profit. I would suggest start locking in part of the profit. This will make you and your banker sleep easier. If you are a dairy farmer, determine how long you can continue to lose money at the current pricing. If it is less than a year, consider selling the herd while it still has value.
Remember, the most important part of farming is what you can do now and in the future. What happened in the past is done and can not change. A good manager realizes that and will focus on what makes the most sense now and tomorrow.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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