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Will There Be Enough Credit To Support Ag Growth?

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KeithKane

Agriculture needs good soil, good climate, and good people in order to thrive and survive. But, increasingly, it also needs a good source of credit to fund farming operations. Keith Lane, with Farm Credit Services of Mid-America, says one of the reasons the farm economy has been doing better than most of the rest of the economy is the good source of credit it has, “The growth we have seen in the agriculture sector is due in large part to the good access we have had to credit.”  He told HAT many players have helped bring this about, “Certainly the Farm Credit System has played a major role, but many local and regional banks have also participated in making credit and capital available to farmers.” He added, since 2008, new investors have had to be found to purchase the bonds needed to provide a good source of credit for agriculture. He said, absent that source of capital, the agriculture landscape would look much different today.

 

Will There Be Enough Credit To Support Ag Growth?

But with the increasing prices of land, equipment and input costs, will there be enough credit going forward to continue to keep agriculture growing? Lane says yes, “In the future, particularly, the larger operations are going to have to get creative in accessing capital, and they are going to have to do a much better job of financial analysis and record keeping in order to attract that capital.”

 

But the way farmers go about getting credit is changing. In many cases, farmers are seeing capital investments from outside of the family farm, but Lane says this does not make farming operations any less of a family farm, “You may lose a little of the Norman Rockwell view of the family farm, but today it is a business and needs to be treated like a business.” He said there is a lot of capital that is required to run a farm, rent the land, and buy the inputs, so you have approach it as a business; but, in most cases, it is still a family running the farm and owning the farm.  He said 90% of FCS customers are family-run farms even if they do have outside investors.  Lane noted that there are a growing number of investors who want to invest in a farming operation but do not have the skills to run a farm and that there are a growing number of operations that have outside investors that are not involved in farming the land.