Behind the Desk: What Lenders Are Thinking

Do you ever wish you could read your lender’s mind? I recently attended the Emerging Issues in Agricultural Lending conference in Columbia, Mo. After a few minutes of being in the room, I overheard snippets of conversations around prevent plant, a tough loan renewal cycle and the bleak financial picture.

Ag lenders have a unique and valuable perspective on what’s happening across farm country. They, like their farmer customers, are navigating both familiar and uncharted waters. 

The majority of the lenders were from Missouri, but eight states were represented. The group was pretty evenly split between lenders in the Farm Credit system and those representing community or commercial ag lending institutes.

As part of the event, the 80 ag lenders in attendance shared their thoughts to a series of electronic and unanimous poll questions. Here are the answers to just a few of those questions. (Not all answers will add up to 100%, since not all lenders answered every question.)

Overall, given the economy, trade situation, weather and our farmer’s financial position, I think: 
A. There is some financial stress, but our portfolio is solid, and I sleep well at night.: 57%
B. Really starting to see financial stress and more liquidations coming in our areas.: 35%
C. Same old, same old. Been here, done that.: 5%
D. I’m really worried, looking for another job.: 2%

Two years from now, I expect our borrowers’ financial situations to:
A. Worsen: 32%
B. Stay the same: 49%
C. Improve: 17%

Biggest threat on the horizon I see is:
A. Losing world markets through trade wars: 59%
B. Recession coming: 27%
C. African Swine Fever: 7%
D. Inflation coming back: 5% 
E. Interest rates rising: 2%

Biggest growth opportunity I see on the horizon is:
A. Loaning money to growing farmers: 55%
B. Value-added, niche markets: 30%
C. Contract livestock production: 9%
D. Industrial hemp: 6%

The farm financial slump is different from the 80s because:
A. Interest rates are not rising: 50%
B. Farmers are not as indebted: 11%
C. Donald Trump is in the White House: 9% 
D. I don’t know, I wasn’t even born in the 80s: 30%
 

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