Magazine article American Banker

Group Seeking to Bring More Farmers into Line on Financial Reporting

Magazine article American Banker

Group Seeking to Bring More Farmers into Line on Financial Reporting

Article excerpt

Texas banker Jay Godwin learned the hard way the necessity of getting more standardized financial reporting from his farm customers.

"As an agricultural bank president, I saw firsthand the lack of complete and uniform reporting by so many of the producers," said Mr. Godwin, who heads $41 million-asset First State Bank of Canadian. "There was so much variation in the type of reporting and so many ratios of financial success."

That's why he became involved in a group that recently released the latest version of financial reporting guidelines for farmers spelling out what to report and how to calculate it.

Some farmers and lenders already use some of the guidelines, but the Farm Financial Standards Council wants more to adopt them.

"Basically, it is going to allow us to look at the financial statements of all of our customers from a common perspective," said Michael Weasel, vice president, agricultural services, in the Springfield, Ohio, office of $20 billion-asset Huntington National Bank.

"Most other industries have had those kind of standards in place and agriculture hasn't," said Mr. Weasel, who has been involved in the effort.

The quest for standardized definitions and calculations for farm performance was born during the farm crisis of the 1980s. Farm failures in that decade revealed that reporting standards were woefully insufficient and wildly inconsistent from customer to customer.

Efforts to improve the standards led to a vast array of different methods and programs, and comparisons remained difficult. …

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