Wednesday brought another monetary announcement from the Federal Reserve. They elected to skip a June rate hike, but there may be two additional hikes this year. Although higher interest rates are having an impact, one Indiana banker says many farmers are well positioned at the midway point of 2023.
“A lot of folks have more liquidity, maybe not using their operating lines as much as what they used to,” says Jeff Rodibaugh, Sr. VP and Chief Agricultural Lending Officer at First Farmers Bank and Trust. “With that they’re maybe not as impacted with the rising interest rate environments, as folks have renewed their lines of credit so this spring they found that obviously the prime rate has moved up and doubled year over year. That can be quite a shock to the system but I think at least in a standpoint where folks maybe have more deposits and more liquidity than what they would have had in years past to deal with the high interest rates.”
Rodibaugh says be aware that borrowed money could be around double this year from what it was in previous years.
“As folks consider when they’re going to market the grain this year, they need to consider if they are going to use a grain inventory note or if they’re going to borrow money to hold that grain,” says Rodibaugh. “They need to make sure they’re aware of that the national prime rate currently being around that eight and a quarter, obviously a baseline that folks are going to vary from as far as what they’re going to pay for their interest cost ultimately, the carrying cost of that grain.”
He adds a multi-year approach is what is needed within a farm operation to focus on the long-term goals of that farm.
“With the 35 lenders we’ve got on our team, many of them first generation off the farm, a few of them farm on the side as well, you know we take that consistent approach.”
Rodibaugh told HAT that just as you plan for the next generation to takeover your farm, First Farmers Bank and Trust is doing the same within their own business.
“We continue to build on our team. We’ve added experience lenders on the edges of our footprint because they look at our team and recognize that we’ve not only got a lot of experience on our team but we’ve also been making it a real priority to hire what we view as top notch next generation lenders, so we’re prepared for the generational planning that our farmers and our producers are doing.”
Learn more at the First Farmers Bank and Trust website.
