January 26, 2018
In a recent question-and-answer session at a conference for agricultural lenders, one participant asked what I am observing in other areas of the country. Specifically, this lender wanted to know about the trends in the lending, production and agribusiness industries.
First, in regards to the agricultural finance industry, there is a mass exodus of the baby boom generation who got their start during the farm crisis of the 1980s. It seems like every meeting I meet another experienced lender who wishes me well before exiting the industry. Recently, at the American Bankers Association National Conference, less than 15 percent of those in attendance had experience from the 1980s.
It is likely that one’s new agricultural lender will not come from a farm background, nor will that young lender have been educated at an agricultural school. Today’s emerging lenders are well trained in finance, accounting and technology, but a foundational understanding of agriculture will be much more rare than in the past. This imposes a heightened responsibility for both lenders and producers to bridge the gap and practice good communication. Hopefully, entering agricultural lenders will make a quick study out of agricultural businesses as well as the industry. And today’s producers will be required to produce quality financials as well as an understanding of business management.
For farmers, attendance at educational programs is down, but the acres and livestock numbers represented are consistent, if not increased. This is likely to continue as we see consolidation, but these engaged producers are also bringing spouses, partners and members of the younger generation. Additionally, in both lender and producer conferences, more females are in attendance, which continues to be an accelerating trend since the last decade.
In regards to agribusinesses, there is also significant consolidation. Of course, as larger companies buy smaller businesses, there may be a limited amount of input suppliers. This trend is particularly noticeable in the Midwest as well as in isolated spots on both Coasts.
There is no doubt that the landscape of agriculture is in transition and the lender is right to monitor changes in different areas. This is reminiscent of previous times including the 1920s and ’30s, the ’60s and ’70s, and of course, the farm-crisis years. Stay tuned as agriculture is most certainly in a cycle for the history books.