Academic journal article ABA Banking Journal

How to Compete with Farm Credit-And Win: Top Tips from Ag Lenders: Leverage Farmer Mac, Provide Value-Added with Free Financial Analysis and Lead with Fixed-Rate Products

Academic journal article ABA Banking Journal

How to Compete with Farm Credit-And Win: Top Tips from Ag Lenders: Leverage Farmer Mac, Provide Value-Added with Free Financial Analysis and Lead with Fixed-Rate Products

Article excerpt

In most circles, the words "knock, knock" are considered a set-up for a mildly amusing bit of humor. In rural America, however, they represent the sound of intense competition, specifically from tax-advantaged Farm Credit System lenders. "They are knocking on doors all the time," says TJ Wilson, market president for Morrill & Janes Bank and Trust Company, based in Hiawatha, Kan.

How ag and rural banks can respond to Farm Credit System competition was a key focus at the 2015 ABA National Agricultural Bankers Conference in Kansas City, Mo. While ABA and the banking industry and allied groups are highlighting examples of unfair Farm Credit System competition and mission overreach with efforts like ReformFarmCredit.org, ag bankers provided examples of how their institutions are fighting back--and maintaining and growing valuable customer relationships--in the face of a tilted competitive playing field.

One strategy: be flexible and use an array of Farmer Mac products to provide competitive rates and manage risks. (ABA, through its Corporation for American Banking subsidiary, endorses Farmer Mac's secondary market programs, and members enjoy preferred rates.) David Buman, a former Farmer Mac employee who is now SVP at TS Ag Finance in Treynor, Iowa, provided examples of how his bank, which is new to Farmer Mac, is working with ag borrowers. Key to competing with the FCS is keeping an always-sharpened pencil handy. "Some examples [of loans] you see are real skinny, but we need to get the business," he says.

Wilson adds that the goal of his ag lending team is "to put the customer into a good product and a good position. …

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