Magazine article American Banker

Ag Bankers Should Help Educate Farmers about Marketing, Consultant Says

Magazine article American Banker

Ag Bankers Should Help Educate Farmers about Marketing, Consultant Says

Article excerpt

CLAYTON, Mo. -- Problems in the way farmers are marketing their crops could cause a sharp reduction in the number of agricultural banks in next decade, according to an expert.

At best, ag banks aren't earning as much as they could because farmers are taking unaccounted-for risks on crop prices, said Randy Allen, president of RWA Financial Services, Austin, Tex.

The problem is, farmers wait to sell crops in hopes of higher prices that don't materialize, Mr. Allen said. The practice of managing the risk of fluctuations in crop prices is almost nonexistent in the underwriting of ag loans.

Farmers are "controlled by their fear in marketing," he said. If they sell, they fear the price will go up; and if they don't sell, they fear it will go down. "So, they're locked into doing nothing?'

Almost no U.S. farmers have a marketing plan, he said. Plus, bankers don't yet require such plans for loans.'

"This is the worst year of farm marketing I've seen in my life," said Mr. Allen, who led an ag banking session at the recent annual convention of the Community Bankers Association of Illinois in this St. Louis suburb.

Banker Herbert Siegert knows farm customers who didn't sell their crops when prices were good because they bet they would go even higher.

"You can call it poor management, but I think they were gambling - and they gambled wrong," said the chairman of $57 million-asset First National Bank of Pana. Then "they come back in and need more money. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.