News

A change in farm lending

The head of rural North America for Rabo AgriFinance says the depressed farm economy has forced farmers to reevaluate how they look at their bottom line. 

Curt Hudnutt says producers need to know what it costs to produce each unit.  “Whether it is bushels of soybeans or it’s pounds of production in the animal protein sector, it doesn’t matter what your unit is,” he says.  “But understanding your cost of production and then knowing what your balance sheet looks like.”

He tells Brownfield fully understanding balance sheets is important.  It helps producers know if their operation can survive if they have to lock in prices for a loss.   “A lot of producers are actually in a position where they can sustain losses over a period of time if they manage them appropriately and the liquidity is there,” he says.  “Soybeans and corn are a different story.  We’ve blown through the liquidity in that area and we’re digging into some equity now.”

Hudnutt says while it may sound counter-intuitive, the tougher farm economy can create an easier lending environment because it is easier to identify the operations that are run well.

AUDIO: Curt Hudnutt, Rabo AgriFinance