Everyone in agriculture is ready to say goodbye to 2019 and ring in 2020. To say 2019 has been challenging for agriculture is certainly an understatement. The farm economy has weathered many challenges over the past five years or so. With farm income down and net worth decreasing in many cases, working capital will continue to erode, especially in areas where we saw higher than average prevented plant acres. Crop insurance can help many farmers, but it may not solve all the challenges farmer’s balance sheets have faced over the last five years.
The unique lending process of Ag Resource Management (ARM) looks at a farming operation’s finances on a year-by-year basis. When we consider working with a farmer, we pay attention to what that farmer plans to plant from a crop mix perspective that year and allow that crop to stand on its own. We only look forward, taking a fresh approach in the marketplace.
Historically, financial institutions take a three-year average of balance sheets, tax returns and earnings and use that information to support their commitment for the following year. That traditional approach works well for banks. ARM typically partners with banks and distributors to take on riskier pieces of business. So, banks continue their long-term relationships, managing real estate loans and equipment term debt, while ARM manages the operating loan.
Keeping Farmers Farming
Every farm situation is different, and many financial challenges arise through no fault of the farmer. Our mission is to create a financial loan package designed around the planting intentions for the upcoming crop year, based around a detailed budget, production history and crop insurance — all while securing the loan with the growing crop.
After identifying a financing solution, ARM sets up a systematic process to help manage risk. We help the farmer acquire the right amount of crop insurance, spend capital on the inputs needed to get the highest potential yield and then pay the loan when the crop is harvested. This in-depth involvement in the operation increases the chance of success. We help manage some of the operation’s detail, so farmers can continue to do what they do best.
As a resilient group of people, farmers find ways to make farming work year-in and year-out. Bankers appreciate opportunities to offer additional value and options to their clients. ARM supports both of these groups, offering a solution that allows financial institutions and distributors to keep lending and farmers to keep farming.
Contact your nearest Area Manager for more information.