A new poll of senior leaders from Midwest Farm Credit lenders shows commodity prices as the greatest challenge facing their customers. Farm Credit lenders are responding to this by providing services to restructure the financial situations of their customers. In a new "AgriThought" report, Jerry Lehnertz, senior vice president of Credit at AgriBank, examined the challenging farm economy and how lenders are helping farmers navigate it.
The poll’s results showed that 69.1% of senior credit and risk officers from the 17 Farm Credit Assn. institutions in the AgriBank district selected commodity prices as the top challenge, followed by input costs, credit availability and adverse weather effects.
When asked about the support they are providing to help farmers face these challenges, 86.7% said they are rebalancing borrower debt to bolster working capital and/or reduce principal payment requirements and 73.3% 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, AgriBank said.Other responses included consulting on crop insurance and other risk management solutions (80%), counseling regarding future operating plans (63.3%) and marketing and hedging strategies (50%).
Lehnertz's report provides a midyear outlook for the agricultural economy in which he discusses the effects of the changing economy on farmers and what lenders are doing to help them cope with it.
“The focus has been on commodity prices: In the minds of many producers, if the price of corn were $4.50/bu. versus $3.50/bu., a lot of problems would be solved,” Lehnertz 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.”
The poll, which was conducted the week of July 11, and the report both will be unveiled at the Ag Media Summit this week in St. Louis, Mo.