This is the fourth and final blog in our Credit Crunch in Farm Country series. To start from the beginning, go to Part One – The Lay Of The Land.
The Outlook for 2020
As a credit expert, Leroy Startz has one piece of advice he offers over all others: When it comes to getting financing lined up, the earlier the better.
To experts like him that means that the earlier you get financed the more likely you are to take advantage of opportunities that can positively affect the bottom line—like input discounts and possibly better deals on land rent if paid early.
“Generally speaking, those discounts are only provided to farmers pre-planting season,” Startz stresses. “If a farmer can get seed, chemicals, etc. and pay for them in advance, the distributor is likely going to give them a discount. That’s something you’d want to take advantage of.”
From general input discounts to measurable efficiencies, it’s clear how using an innovative lender like ARM could help an operator get ahead of the game:
“Perhaps landowners would be willing to give operators a little bit of a discount if I can deliver it earlier than what was expected or scheduled. If we can help the producer line up the capital he needs for the 2020 crop year well in advance, that allows them to take advantage of those discounts, and that’s huge. It might be the difference between making a margin and not making a margin. “
Do those recommendations translate into hard advice? Leroy Startz says yes:
“That’s the best advice I could give. Don’t wait to finance, and then give away those discounts. But of course, to get them, you have to get the capital lined up. You need to factor in the crop insurance into the equation as well. ARM can help you maximize the crop loan amount by having the right crop insurance coverage.”
The credit crunch in farm country is real, and it’s not going anywhere. The shifts Leroy Startz discussed are only going to continue to be the trend. From land ownership to capital control, all aspects are continuously evolving. However, lending models are catching up, and there are more solutions than ever to fund an operation. Now more than ever it’s apparent that farmers need innovators like Ag Resource Management to help them fill these gaps. It’s also apparent that those who do, will see real advantages in 2020 and beyond.