Ag Trends & Opportunities
BY: Julie M. Johnson
A piece of equipment breaks down in the height of harvest time, but nobody has parts in stock and shipping is slow. New equipment is hard to find – or simply impossible – and used equipment prices are sky high. As the window to harvest is closing, these become real stresses for farmers.
Locally sourced meat has become a popular alternative to eating out, but consumers are feeling frustrated that there is less meat available. Unfortunately, meat processing plants are full, creating delays. Part of the problem stems from processing plant shutdowns and employee shortages due to COVID-19.
It may feel like there is no way to get out of this cycle. One possible solution may surprise you: develop a relationship with your local ag lender.
How Your Bank Can Help
A community bank like State Bank of Cross Plains always takes circumstances into consideration. Similar to when we supported area farmers and ag businesses through the Paycheck Protection Program process, we recognize the current crisis for what it is and believe you are a good business partner in an unpredictable situation.
Thanks to countless volunteer hours at county and state fairs, providing support for groups like 4-H, FFA, and the Farm Bureau, as well as participating in a variety of local community events, we are in tune with what’s important to our customers. In fact, many of our ag lenders and crop insurance specialists are still active in the ag industry at home.
A community bank ag lender can let you know about the latest government programs available to farmers. Programs are constantly changing and there are deadlines to apply. For instance, last year we assisted or alerted our ag clients of various programs, including:
- ARC & PLC Program payments (received October or November)
- CFAP-1 and CFAP-2 payments (received June, August, September – December)
- MFP payments (received January or February)
- Wisconsin Farm Support Program (received July or August)
- PPP (two phases that required application through a financial institution)
Many customers assume that financial support is not available when times are tough. On the contrary, we want to see you succeed and can often suggest opportunities you may not be aware of. Stay in touch with your ag lender throughout the year and consider us part of your strategic planning team.
Tap Into a Wealth of Ag Experience
The ag specialists at State Bank of Cross Plains have developed a wealth of knowledge and experience in the industry through personal experience and/or working with a wide variety of farmers, suppliers, and ag vendors throughout the years. We have seen different farming styles that enable us to share information that might be helpful.
The more we understand your specific needs, the more ideas we can offer for your consideration, such as:
- Cash Flow. There are ways to manage cash flow to make everything else work more smoothly. Is the cash flow issue new or something that has been building over the years? Our in-depth knowledge of ag lending can help determine if it’s time to open a line of credit or simply change the terms of your existing LOC to match the reality of current circumstances.
- Financial Assistance. Are you taking advantage of government programs like the ones mentioned above?
- Crop Insurance. Does your policy fit your need? Since the premium for crop insurance is fixed, the real benefit comes from talking to experts who understand your operation and can find the best fit.
- Product Review. Commodity prices are increasing, but so are input costs. Talk to an agronomist and seed salesman to understand how to get the maximum yield from your specific soil and adjust your 2022 crop plans accordingly.
- Examine Your Land Use. Review all of your acreage for pieces of land that may not be serving you. Do an analysis by farm to make sure each piece is profitable. If a landlord is increasing rent, does is still make sense to farm that field.
Consider your banker one of the experts you rely on for industry information. Use all the tools available in your toolbox.
Apply Best Business Practices
While a family farm often feels like a labor of love and legacy, it is also a business at its core. If you are struggling to manage the farm as the effects of the pandemic drag on, perhaps look at your farm solely from the business side:
- Strategic Planning. It is never too early to think about next year. It is time to be proactive about what may be coming. Financially successful corporations review and rebalance their debt portfolios regularly. We will sit down with you in your shop, your office, or at your kitchen table to review your current situation and talk about options and opportunities for next year or for future years.
- Automation. Employee shortages are affecting everyone! Have you investigated ways to automate a system that you’re having trouble staffing? Talk to your lender about available loan programs.
- Discounts. Review all your vendor contracts for potential discounts, such as paying in advance or signing long-term deals.
- Tax Advantages. Talk to your accountant about any upcoming sales or purchases. If you anticipate a need to purchase equipment in the next few years, there may be benefits to making the purchase during a specific fiscal year. Same scenario for any anticipated sales of land or equipment. The difference in tax benefits could be substantial. A joint meeting with your accountant and lender is never a bad idea. We can work together to assist you in achieving your future goals.
- Create a Succession Plan. The event of the last year has prompted many people to consider retirement more seriously. What is your plan for selling or passing along your farm or ag business to the next generation? We have resources to help you through the process.
If you would like help reviewing your financial options and setting a course for success in 2022, contact your ag lender at State Bank of Cross Plains today.