Credit availability in today's industry
Dealing with volatility in agricultural markets and how to access credit availability was one of the topics discussed at the 20th Anniversary of Cattlemen’s College held in conjunction with the 2013 National Cattlemen’s Beef Association Convention and Trade Show, Tampa, FL, Feb 6 -9. Bob Campbell, senior vice president with Farm Credit Services, Lincoln, NE, was a member of a panel of financial specialists addressing this topic. Campbell oversees the financial team in Nebraska and Wyoming and networks with Farm Credit Service offices nationwide.
The seminar focused on credit availability in the beef industry and what it takes to access credit and how important it is for producers to understand their breakevens because of the volatility of the marketplace. The general theme presented by the financial panel was there is plenty of credit available, but producers will have to be able to manage risk and develop a very solid business plan around their risk.
Some key components for a business plan include:
1. The ability to articulate the operation’s business model.
2. Know the accomplishments of the operation.
3. How the producer can manage their risk around accomplishments and goals.
For example, the cow/calf producer needs to ask: Do I buy all my hay or do I raise all my hay? They need to also have a backup plan in place, in case things don’t work out or follow the typical pattern.
The panel discussed several points those in attendance could take home and put into practice, especially following a year of widespread drought, volatile markets, and high input costs in many regions of the country. It’s in these volatile times, Campbell emphasized, that knowing one’s breakeven is critical. Unfortunately, he said there is still a vast majority of producers who can’t articulate their breakevens, whether its corn, cattle, or another enterprise, and it is important producers get to this point so that they can be more viable in volatile times.
Succession planning and taking the proper steps to transition a farm to the next generation was also discussed by the panel.
Questions that were asked by the panel and audience included:
1. How do veteran producers team up with the younger generation and let the older generation out?
2. How does this transition take place in this current agricultural climate?
3. How does it occur smoothly? Campbell suggests there are many professionals in the agricultural community equipped to help farm families go through these transitions, from lending agency to lawyers to other specialists, and farm families should take advantage of these services where available. There are a lot of emotions in succession planning and the main thing is to get those involved to start talking, he said. — South Dakota State University