Ag-LOC Renewal Season Best Practices: BTC Bank VP & Local Farmer Shares Insight

At BTC bank, our ag lending pros understand that nature and external market influences can be wildly unpredictable. Depend on our industry experts to guide your financial decisions, ensuring your legacy can withstand any potential storm.

Zach Grossman - V.P. at our Carrollton branch - is a fourth-generation farmer from the small, tight-knit community of Tina, MO. He graduated from Tina-Avalon High School, followed by attendance at the University of Missouri, where he earned a degree in Ag Systems Management. Since the day he was old enough to walk - and work - Zach has been involved with the family farm, raising corn, soybeans, and wheat, while keeping a commercial beef cow herd as well. When not at his desk helping local farmers achieve their financial goals, Zach's in the field pursuing his second full-time job alongside his dad and younger brother.

Zach undoubtedly pours just as much energy into his lending practices as he does his farming pursuits. So, he's getting candid with our followers about the best ag-line-of-credit renewal patterns to ensure everyone has the most successful year possible in such an unpredictable climate.

As we head into the busy season for ag line-of-credit renewals, I want to point out some areas of focus that I encourage all farmers and lenders to consider going into 2023.

Promising Grain & Livestock Market Trends Should Continue

Last year was very satisfactory for many producers in our trade area; with good yields and prices, it made for a profitable 2022. Heading into 2023, we still see strong markets on grain and continually improving livestock markets as well. One key difference between those two sectors that I see currently is the fact that some considerable “outside influences” are affecting our grain markets (the War in Ukraine being the largest). Worldly circumstances like wars and political action are purely out of our control. So, it's hard to say which way markets will swing until we know what happens across the globe in the months to come. On the livestock side, the age-old supply and demand fundamentals that we always count on happening are driving its market upswing.

Farmers care well know as eternal optimists, and there's nothing wrong with that!

Keep a Cautiously Optimistic Outlook

Farmers are well-known as eternal optimists, and there’s nothing wrong with that! You absolutely must have a positive mindset to thrive and survive in an ag-based industry. However, my advice, especially for my row-crop producers, is to be “cautiously optimistic” and not necessarily count on prices staying or being right where they are a year from now. As history points out, for every upswing in the market, there’s always a downswing looming ahead. I encourage all of my producers to be very detailed when putting together their upcoming cash-flow worksheets. Give yourself a "shock test” using lower grain prices than we see now. That way, you can clearly determine if you'd still “pass the test” in a less-desirable scenario.

Details Matter - Always Go the Extra Mile in Your Record-Keeping

As I mentioned before, always know your cost of production and be as detailed as possible when putting your cash flow numbers together. It is not a stretch to say that you need to know where every dollar is going in your operation. In the world we live in now, it seems that everything we touch is constantly going up in price. So, don't be too conservative when figuring costs (including interest). As I've always stressed to my customers: I’d rather over-estimate on expenses and under-estimate on income and then hope I am wrong as opposed to the other way around.

Pay Attention to What Works for Your Farm

In Missouri, it’s no secret that the weather can change on a dime. But essentially, there’s much more than the weather that varies in this great state. From one end to the other, you can find vastly different topography and soil types, among other factors. My advice is to know what works for you and your farm operation. Learn from past generations if you can and pay attention to what practices have historically worked for the layout of your farm. Your land might be much different than your next-door neighbor’s. Keep an open mind and always strive to improve, but don’t get caught up in what the “other guys” are doing. Focus on your farm and your farm only.

As far as dealing with inflation and interest rates, I can say that I take a lot of pride in the fact that we work hard to get the best rates that we possibly can for our customers here at BTC. Many things factor into our lending process, but the bottom line is we will always work to compete. To continue counteracting rising interest rates, keep yourself in a good cash position and avoid any unnecessary borrowing.

With over $1 billion in assets, BTC Bank has the financial strength to offer competitive rates and generous financing on various agriculture loans and lines of credit.

No matter what stage of the farming journey you're in - from beginner to multi-million-dollar business owner and everything in between - BTC Bank can provide a range of services to meet your goals, including:

Find a BTC lender – like Zach – near you to ensure the legacy you've worked hard to build can thrive for generations with Missouri's most trusted ag bank.