This week I was an instructor at the Southeastern Agricultural Lenders School at Clemson, South Carolina. There were 29 agrilenders in attendance, and this was the 19th annual school.
I asked the lenders where they felt agrilenders and agriculture were stuck in old paradigms. Their first response was that many bankers and lenders were doing asset-based lending with no regards to cash flow and profits. With land values being strong and continuing to increase, it is very easy to make a loan based on asset or collateral value. However, cash flow and profits pay those loans back.
Some of the lenders commented that agrilenders are viewing the ratios and financial underwriting standards from a traditional view. They discussed that we need new standards for the emerging value-added and vertically integrated agriculture. This may be my next project!
New Farm Bill
My position on the new farm bill is that it is not visionary and sets American agriculture back at least 10 years. U.S. producers will continue to operate in a bubble for the next six years. I agree we need some level of government support for safety and security, but not at the level outlined in the new bill.
If we are not careful, the current position of this administration could lead to a protectionist stand, whether its agriculture, timber, steel or equipment and tariffs. This has dangerous implications for the economy as a whole.
Prof Moves House!
In my spare time, my boys and I like to assist our neighbors, the McPherson Brothers, in house moving.
Our recent adventure involved a three-story, 75-ton home. Our mission was to move it across a railroad track, up a hill, across Liberty University’s campus, and then over a four-lane highway. After five hours of work and two miles later, we made it to our destination. It is amazing how such a large house can be picked up and moved.
By the way, the house was moved for Dr. Jerry Falwell of the Old Time Gospel Hour! We made the program and got to meet Dr. Falwell as well!
My e-mail address is:[email protected]
Editors' note: Dave Kohl, Soybean Digest Trends Editor, is an ag economist at Virginia Tech. He recently completed a sabbatical working with the Royal Bank of Canada. He is now back at Virginia Tech with his academic appointment, which is teaching, extension, and applied research.
To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.
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