Financing to Fit a Changing Game
June 05, 2008
By Mark Kubesh, AgQuest Business Relationship Manager
As ag suppliers ask retailers, and ultimately farmers, to share their price risk, the rules are changing in the financial arena as well. It’s not unusual now for producers to be financing portions of three crop seasons. You may, for example, have an inventory loan out on the 2007 crop yet to be delivered, a 2008 operating line in place and being funded, and already prepaid for fertilizer for the 2009 crop.
Where prepayment used to be primarily a tax tool, it is rapidly becoming a planning necessity. Scarce inputs require everyone to lock in supplies—and prices—in order to establish a profitable marketing target. This is a time of great potential for farmers, due to high commodity values. High potential also means high risk, as the sheer amount of money it takes to do business grows rapidly.
Our challenge at AgQuest Financial is to refine our programs to meet those changing timelines and financial requirements so that they fit what our producers need. We’ve been working hard at this, and plan to introduce a program to address the new challenges of ag financing by mid-summer.
We encourage all of our producers to keep doing the things that help the bottom line, no matter where prices are headed—utilize crop insurance to manage risks, know your costs, and have a marketing plan in place. We’ll work to provide the financing you need to make that plan a reality.