After three straight years of low prices, some farmers will need to sell land to correct their net working capital positions.
After three straight years of low prices, some farmers will need to sell land to correct their net working capital positions.

US Agriculture’s Brian Wise says most of the land his firm buys is the result of a farmer-operator bringing it to his attention.

“The operator has a landlord who is retiring or passed away, and they’re trying to secure the land and keep working it,” he explains.

Now, after three years of low prices, Wise anticipates more farmers will need to sell land outright to correct their net working capital positions.

“In some cases, they won’t be able to sell enough to correct their financial statement,” he says.

That’s when retailers could find themselves caught in possible financial fallout.

Wise, who has 30 years of agribusiness banking experience, advises retailers to evaluate their farmer accounts now before heading to the field this spring to identify anyone who was slow to pay in 2016.

“Be prepared to ask tough questions about their ability to pay you this year,” he says. “In some cases, you may want permission to talk with the farmer’s banker to confirm his line of credit’s going to be ready.

“Having been a banker, I know how this process goes,” he adds. “The bank won’t have the farmer’s credit ready until March 15, and the retailer has to get going two days later.”

This content was part of a longer story about Wall Street investments in farm land. Click here to read that story. 

Your farmer-customers have read a story in the January issue of Top Producer, AgPro’s sister publication, about how to work with investment companies and form strong partnerships. Titled “Your Farmland Investor Cheat Sheet,” the article features five firms who share how their portfolios are structured and what they expect of the farmers they hire. Click here to read and see the table detailing the firms’ portfolios.