Midwest Farm Credit lenders reported in a recent poll that commodity prices were the greatest challenge currently facing customers. Senior lenders from 17 Farm Credit Associations said they are responding to this difficulty by offering services that restructure the finical situations of their customers. A new AgriThought report also examines the farm economy and offers lenders support in helping farmers navigate the challenges.
Results showed 69.1 percent chose commodity prices as the top challenge. Approximately 10 percent selected input costs, followed by credit availability and adverse weather effects.
When asked about the support they are providing to help farmers face these challenges, 86.7 percent said rebalancing borrower debt to bolster working capital and/or reduce principal payment requirements and 73.3 percent said refinancing credit to take advantage of current interest rates. Both answers reflect the changing financial landscape for commodity prices and how lenders are working with customers to help them maintain their financial health. Other responses included consulting on crop insurance and other risk management solutions (80 percent), counseling regarding future operating plans (63.3 percent), and marketing and hedging strategies (50 percent).
“The focus has been on commodity prices—in the minds of many producers, if the price of corn were $4.50 per bushel vs. $3.50 per bushel, a lot of problems would be solved,” Jerry Lehnertz, senior vice president of Credit at AgriBank and author of the AgriThought report said. “However, hope—thinking that things might be better next year—is not a plan. Farmers and lenders need to work together to take proactive steps to succeed through today’s environment.”