Low commodity prices can affect farmers years into the future. 

Farmers are expected to feel a drop in farm income in 2023, caused by a mixture of many factors. One important factor is a drop in total cash receipts for a majority of farm commodities. Unpredictable weather, trade abroad, and economic sentiment can all play a role in determining a farm’s profit—and they’re all outside of a farmer’s control. When uncertainty strikes, many farmers must rely upon a lending partner to be able to plant again for the next season.   

The Challenge 

An operator who runs a fruit tree orchard wanted to expand their operation by planting around 50 acres of new trees, replanting 120 acres, and grafting 200 acres of existing orchards. But they encountered a problem with finding a lending partner who could suit their needs. They needed assistance finding the capital to cover their operating and expansion costs. 

To make matters more complicated, they had an existing operating loan with a challenging structure. The loan limited their ability to access the capital they needed, and they were concerned they might not have enough to cover costs.  

The Solution 

The operator reached out to AgAmerica, who quickly reviewed their financials to pinpoint their operational strengths. From this analysis, we were able to create a custom loan package that gave them the capital they required to expand their orchard. The first loan was an interest-only five-year $48MM refinance of one of their existing loans. The second was another interest-only five-year loan secured by assets the orchard was acquiring, providing them with an additional $10MM. 

This still left the operating loan as a possible challenge in the future. To solve this, AgAmerica added a $2MM Revolving Line of Credit (RLOC) to the custom package. This provided a safety net in case they ever found themselves lacking capital during harvest season with the option to not use the funds should their operating loan suffice.