Lean on Your Ag Lender as Your “Financial Mentor”
Recent years have brought many challenges to farmers in the Midwest. Although production has been high, commodity prices have remained low. Trade negotiations with China have added more strain on an already struggling industry.
Agricultural lenders are familiar with all of these issues and can help area farmers overcome the obstacles they face in today’s economy. They can act as your financial mentor, offering guidance when you have to make difficult decisions.
The issues facing today’s farmers create many reasons to worry, but it is not time to panic. Farmers need to work with lenders, input suppliers, agronomists and marketing specialists to position their businesses to take advantage when the economy improves.
5 Tips for Farmers in Difficult Times
While dealing with a tough economy can be stressful, it is important that area farmers are not intimated by the short-term outlook of the industry.
Following are five tips that can help during challenging times:
- Reduce debt. Properly structuring debt is crucial. You may need to consider selling off capital assets or repositioning short-term debt where possible.
- Reduce expenses. Until the economy improves, it is important to look for ways to cut down production costs. Any measures you can take to reduce the cost of seed, chemicals or rent will better position you for success.
- Adjust living expenses. Changes you can make to personal expenses can have a positive effect on your business. Look for ways you can reduce or eliminate expenses until things improve.
- Create a marketing plan. Look for opportunities to expand your customer base and for ways to set your farm apart from your competition. Hire a professional who can help you create a marketing plan that will open up new opportunities.
- Talk to your lender. Maintaining communication with your lender is critical. Make sure to schedule an appointment to discuss financial concerns as early as possible. He or she may be able to suggest alternatives you have not considered.
Source: Tips provided by the Iowa Bankers Association.