# Farmers and Lenders



## Vol (Jul 5, 2009)

Do you have a agriculturally educated banker? If not, you could be making the farmer/lender relationship very tough on yourself.

Regards, Mike

http://www.agweb.com...s_with_lenders/


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## swmnhay (Jun 13, 2008)

PCA,Federal Land Bank,Farm Credit Services and now Agstar.

I started with them in mid 70's.They couldn't borrow you enough $ in late 70's early 80's."Buy land they don't make no more"Times were good they would borrow you as much $ as you wanted then some.Things turned sour,interest went to 18%. Corn was sub $2 as low as .95 and beans were sub $5 as low as 3.85 IIRC.

They turned the other way they wouldn't work with alot of people.More so the smaller operators.After talking them in to expanding a few yrs before now they were foreclosing on them.Unless you were deemed to large to fail and was givin a write off to keep you going.These guys were the more aggresive guys bidding up rent and buying high priced land.New houses,tar driveways,vacation all winter.

They will borrow you $ to no end again.I wonder if we are in for a repeat.Or is it different this time?LOL









Small town banks tended to work with most guys threw the 80's.FDIC closed some,for another round of forclosers or writeoffs,so the new bank would take them.

Well anyway the people that pd their bills and the banks back are now being out bid again for rent or land from the smae people that were wrote off or filed bankruptcy in the 80's.


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## Vol (Jul 5, 2009)

Yep, thats life....moral of the story....life ain't fair....but who said it would be? Neither a borrower or lender be....who said that?? Ben Franklin?? Life... is mostly do without if you are unable to get an occasional loan.

Regards, Mike


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## steve in IN (Sep 30, 2009)

My banker (who has done things for me in the past when others wont) is dead set against hay and cattle. The problem is that is where I am headed. Bankers have a tedency to loan to people with alot of family backing behind them. The bankers around here love corn and soybeans. I wonder what they will think when grain prices ( and they will just look at history) fall. I am starting to plant more hay and expand my cattle herd while grain prices are at thier highs. I do not want to expand again after prices have fallen. Did that before and paid dearly for it.


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## Vol (Jul 5, 2009)

That is great logic Steve....your right about bankers not lending for hay operations here also....bankers here will lend for cattle especially if you have some history, but they are much more hesistant than with grains. Lots of cattle in TN....#2 commodity.

Regards, Mike


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## steve in IN (Sep 30, 2009)

I have the history with cattle. Have been raising them for over 15 years this time. He forgets that a trailer load of feeders almost always make my mortgage payment. Had an oppurtunity to buy 30 bred heifers to calve in September 12 for 750 each and all he could say was " What if the calves all die?". Fat cows are now worth 1200. I guess hes not a math major. So I have been trading hay for bred cows. Some from MO. They have no feed but dont want to sell whole herd. Some also from MI. Same story there. The bankers around here are turning thier backs on the dairies. They cant understand why they cant pay thier bills with 21 dollar milk. Its pretty simple why when you have $8 corn and $500 meal and they are paying $200 plus a ton for hay. Meanwhile the "New Young Tigers" are signing thier names as fast as the can for irrigation and equipment. When this collapses then the bankers will blame all of us and make us pay for this with stricter lending rules and regs. Sorry if this seems like a rant but alot of my hay goes to dairies and it makes me sick with where this industry is going.


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## swmnhay (Jun 13, 2008)

The Young Tigers of the 80's are at it again.Or their sons.After banckruptcies and write offs of them times they are flying high.After getting their debts reduced who wouldn't be.While the rest of us struggled to pay the bills.Now the same ones are buying high priced land and running all new eqiupment again.

The reason some bankers frown on hay prodution is because alot is sold privetly and its harder for the banker to collect the $ then if you sold grain at the elevator.I ran into this when i tool on anther 250 acres of alfalfa.They didn't think the hay itself was good colateral after just getting hooked from another hay guy with a bankruptcy.The hay and the $ dissapeared in that case.


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## Chessiedog (Jul 24, 2009)

swmnhay said:


> the reason some bankers frown on hay prodution is because alot is sold privetly and its harder for the banker to collect the $ then if you sold grain at the elevator.I ran into this when i tool on anther 250 acres of alfalfa.They didn't think the hay itself was good colateral after just getting hooked from another hay guy with a bankruptcy.The hay and the $ dissapeared in that case.


Your right about the hay , the bankers can't send out a lean from on you to evey tom,dickand harry , like they can to grain elevators and commercial livestock buyers like United Producers inc. They don't like it so well ,when some one can cut you a check without their name on it too .. HA ha


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## swmnhay (Jun 13, 2008)

Chessiedog said:


> Your right about the hay , the bankers can't send out a lean from on you to evey tom,dickand harry , like they can to grain elevators and commercial livestock buyers like United Producers inc. They don't like it so well ,when some one can cut you a check without their name on it too .. HA ha


They would not take $250K in hay as collateral,so i had to back it up with land.But a Young Tiger can get all the $ he wants to bid up land for corn & beans.


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## steve in IN (Sep 30, 2009)

The lien thing is pure BS. Thier problem is when one bad apple sticks them then the rest of us honest dummies have to pay the price. I was informed today that my bank no longer uses the ag lenders for the loan committee. They all agree to submit the loan to a group downtown and then they decide to make the loan or not. Inventory on hand as grain,hay or livestock is not used for zeroing out the loan as in the past. Loan must be zeroed before they will even consider a renewal.


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## Teslan (Aug 20, 2011)

Interesting topic. Thanks to some good water share sales in the early 2000s of water we hardly use, we don't have any debt at all. I've never operated with farm debt. But there is a 160 acre farm available for sale for $1.4 million. I could immediately sell some water rights off of it for about $300,000 and it would still be a very productive farm. It would barely cash flow with hay. I haven't even looked or asked around about loans for it so I have no idea what the down payment requirements are. It's over priced and should really sell for about 1.1 million, but the owner is an ass and probably wouldn't take anything less. Which is why it hasn't sold in 3 years. So I could go through all the hassle of getting approval for the loan only to find the owner isn't realistic in pricing,but without loan pre approval my offer wouldn't mean as much. I'm a Realtor also so I would make pretty good commission on it representing myself. Or lowering the price. Where would be the best place to start asking about loans? I'm an agent that really just deals in town properties which are easier to get loans for as there are many sources.. I'm pretty sure I'm not considered as a beginning farmer. Then there is the possibility of working for 20 years for free to make that farm payment. We have a Farm Credit Services or whatever they are called now about 15 minutes away from me.


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## swmnhay (Jun 13, 2008)

Farm credit services is the lender of choice for most famers here.They have the best rates and are easiest to get a loan from.

On the other hand when things turned bad in the 80's they were total asses!


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## Vol (Jul 5, 2009)

Teslan says, " Then there is the possibility of working for 20 years for free to make that farm payment."....you could look at it that way or look at it as investing in your future.....retirement plan.....as SS for many is looking very bleak. I would expect it to increase invalue at least 3 times over 20 years.

Regards, Mike


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## Teslan (Aug 20, 2011)

Yes I have thought of it that way as retirement. I'm not sure the land would appreciate that much, but the water still will. Which is another thing to consider. I would expect in 20 years the water to be worth even more then it is now.


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