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Ag Lenders Preparing for Tough 2019

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Ag Lenders Preparing for Tough 2019

Ag lenders are preparing for a tough 2019 as well as farmers. Purdue Ag Econ Professor Brady Brewer told attendees at the Purdue Top Farmer Conference the results of a survey given to ag lenders.

“What the lenders are saying is that they have some farmers that are doing alright, and they have some farmers that they’re worrying about. Overall, their loan portfolio is pretty stable, but just given the decreasing commodity prices and some of the trade issues, they’re worried about repayment capacity moving forward here to 2019.”

Brewer said that the most common response from the survey was that lenders are looking for a plan for 2019. Even if that plan includes a loss on the year.

“Bankers understand that the farmer may even plan on a loss in a given year depending on the commodities that they’re in and the prices and other circumstances. But knowing how they’re going to get through that, and how from a cash flow perspective, how they’ll survive that is what the bank is going to be looking for.”

Tim Tobias, Sr. VP and Agribusiness Banker from the First Bank of Berne in Northeast Indiana agrees.

“As much detail as they can give us, the better. The more thought that they put in to where they think they’re going to maybe be in 2019… We expect budgets to be very tight. Commodity prices are somewhat down. We have come off of, at least in our local area, really good yields this past year. We’re very appreciative of the government assistance that has been provided. That’s going to help out a lot with the year-end numbers. 2019 is going to look a little tough I got a feeling.”

Tobias told me at the Fort Wayne Farm Show that despite recent tough years for farmers, they’re still optimistic about the future of agriculture and still want to be in the business.

“Agriculture has always been a cyclical business, and when you’re so dependent on Mother Nature you’ve got to just sit back and wait at times and see what comes about. Yes, there’s opportunity here. There’s opportunity here for the existing farmers. There’s opportunity for the young farmers as well.”

The Fort Wayne Farm Show runs today (Wednesday) until 8pm and tomorrow (Thursday) until 4.