Credit availability to operate in today’s beef industry

Farm Forum

Dealing with volatility in agricultural markets and how to access credit availability was one of the topics discussed at the 20th Anniversary of Cattlemen’s College held in conjunction with the 2013 National Cattlemen’s Beef Association Convention and Trade Show, Tampa, Fla., Feb 6 -9th. Bob Campbell, Senior Vice President with Farm Credit Services, Lincoln, Neb., was a member of a panel of financial specialists addressing this topic. Campbell oversees the financial team in Nebraska and Wyoming and networks with Farm Credit Service offices nationwide.

Campbell said the seminar focused on credit availability in the beef industry and what it takes to access credit and how important it is for producers to understand their breakevens, now, more than ever before, because of all the volatility in the marketplace. The general theme presented by the financial panel was there is plenty of credit available, but producers will have to be able to manage risk and develop a very solid business plan around their risk.

Some key components for a business plan include:

1. The ability to articulate the business model of the farming or ranching operation.

2. Know what are the accomplishments of the operation.

3. How can the producer manage their risk around the accomplishments and goals of the operation.

For example as a cow calf producer, a producer needs to ask the question: Do I buy all my hay or do I raise all my hay? They need to also have a back-up plan in place, in case things don’t work out or follow the typical pattern. The best example of this is another year of drought or shifts in input costs.

The panel discussed several points those in attendance could take home and put into practice especially following a year of wide spread drought, volatile markets, and high input costs in many regions of the country including South Dakota. It’s in these volatile times, Campbell emphasizes, that one of the most important things a producer should know is their breakeven. Unfortunately, he said there is still a vast majority of producers who can’t articulate their breakevens whether its corn, cattle, or another enterprise and it is important producers get to this point so that they can be more viable in volatile times.

Succession planning and taking the proper steps to transition a farm to the next generation was also discussed by the panel.

Questions that were asked by the panel and audience included:

1. How do veteran producers team up with the younger generation of producers and let the older generation out?

2. How does this transition take place in this current agricultural climate?

3. How does it occur smoothly?

Campbell suggests there are many professionals in the agricultural community equipped to help farm families go through these transitions from your lending agency, to lawyers, to other specialists and farm families should take advantage of these services available. There are a lot of emotions in succession planning and the main thing is to get those involved to start talking, he said.