In uncertain times, farmers and ranchers who are proactive about their financial situation are more apt to be able to play offense when the tides shift and new opportunities emerge. Liquidity is essential in maintaining the success of an agricultural operation but can prove difficult to obtain when you find yourself overleveraged and unable to stay ahead of a heavy debt load.
At the start of 2020, sentiment among American farmers was generally optimistic. The first phase of the U.S.-China trade agreement was underway with the U.S.-Mexico-Canada agreement right behind it. Farmer sentiment reached a record high in February and Secretary Perdue stated that Market Facilitation Program (MFP) payments would likely not be needed this year.
From labor shortages to volatility in commodity futures, the global impact of COVID-19 on U.S. agriculture has surfaced, but much remains clouded with uncertainty.
AgAmerica CEO and President, Brian Philpot, recently discussed the changing economic landscape in agriculture from a financial perspective with the voices of the Global Ag Network, Delaney Howell and Mike Pearson. Below are some highlights from the podcast, including how to build working capital to cover input expenses through ongoing uncertainty.
COVID-19 in the past month has uprooted millions of people across the nation affecting the way they live their lives and provide for their families. As the nation’s economy shakes with closures of non-essential businesses, lack of consumer spending and school closures playing a significant role in this, planning for the future of your farm operation when interest rates are low has never been more important.
Cash flow is the gross annual income a farm is able to generate throughout the course of a year. Understanding cash flow allows farmers to better assess the working capital in their operation.
A SWOT analysis is an advantageous strategy when considering any possible changes to a farm operation. It can also be used to assess past successes and failures while creating future goals. A SWOT analysis organizes thoughts, brainstorms, evaluates and compares potential ideas to bring in additional revenue for a farming or ranching operation. It has the unique ability to show gaps within a business model and highlight possible solutions to existing problems.
So, you’ve been approved for a loan. You’ve done everything you needed to do—provided all the necessary information and worked with the lender to agree upon terms for your land loan. As you transition into this final stage of securing the loan, you might be wondering what happens next. The closing period is a very important time, both for you as a borrower and for the lenders themselves. There are several factors that can affect how long it takes to close on a land purchase, so understanding what to expect during the loan closing stage is important.
There are many reasons that you may need a farm loan. Perhaps you want to expand your operation by purchasing more land, or maybe you need to invest in new technology to optimize your production capabilities. Whatever the case may be, it’s likely that at some point your operation will need more working capital to sustain the fast-pace demand of food production.
According to the U.S. Department of Agriculture (USDA), farm debt will hit a record high of $416 billion by the end of 2019. Farmers are leaning on lenders now more than ever, not just during the hard times, but to finance new opportunities like farm expansions, equipment updates, and more. So why are farmers choosing alternative lending companies to help open these doors?
