Before the Miss: Using Data to Lead Through Agricultural Uncertainty
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What is the current state of the agricultural lending market and why does it matter now?
You're listening to the Forward Thinking Podcast, powered by FCCS. Tune in for information and inspiration in the areas of leadership, strategic talent management, governance, and risk management, featuring industry experts and thought leaders with forward thinking interviews and discussions.
Today's conversation hits at the heart of what many lenders are feeling, but not always saying out loud. The pressure on farmers right now is real and increasing. That pressure is showing up on lenders' balance sheets. The question is no longer if risk will surface, but when and how prepared we are to see it coming. So, how do you know how to protect your portfolio before a borrower mill? Is a payment? How do you lead through uncertainty without waiting for the warning signs to become problems? That's what we're unpacking today. Welcome to the Forward Thinking Podcast. I'm your host, Stephanie Barton, Senior Vice President of Marketing and Communications for FCCS, and I'm joined by Cameron Burford, Managing Director of SAS for Growers Edge, also past key partner.
Cameron brings a unique perspective on how l how data, land intelligence, and proactive risk management can help lenders move from reactive to resilient. Welcome to the podcast, Cameron.
Yeah, thanks for having me.
I'm glad to have you here. This is a topic we haven't covered on the podcast in the past, this specific type of resilience and um be instead of being reactive. So let's start by grounding us in what's happening right now. So, from your perspective, what are you seeing in the ag lending market and why should farm credit leaders be paying close attention in this moment?
Absolutely. And I do come from a more of a unique perspective as well, because my family farm, uh third generation out of Fresno, California, is a longtime farm credit borrower. So um it's been a pleasure coming from one side of the coin, the borrowing side, to really getting intimately familiar with all the work and magic that needs to happen on the lending side from the farm credit perspective. So it's been It's been quite uh it's been quite a pleasure for me. And Right now I don't think it's any secret. It's it's um it's tough, right? It's um no matter Who you're talking to, what region across the US you're talking to, we're in a pretty strong down cycle. I would say some regions are deeper into the cycle than others.
And That really positions farm credit, I think, in a strong position ironically given the farm credit mission, which is to be there for borrowers, uh, in the down times and in the good times. And it's that commitment that can position farm credits to come out of the cycle stronger uh than one would anticipate. And this cycle that we're in, I think there's two main indicators from USDA that are really highlighting that like you had mentioned that we're we're in it pretty deep here. And one of those indicators is USDA forecasts working capital to be down just over nine percent this year for farmers. And fewer than half of the producers out there are projected to be profitable in twenty twenty six, which is
the lowest we've seen for a number of years since twenty twenty. And what that means is farmers they have less cash to absorb another bad season. Less room to lock in inputs at favorable prices. And many times what we're hearing right now is harder questions on what gets planted or if anything gets planted at all. So that's um yeah, some some hard times out there right now.
It's hard to imagine that even being said, but it's a it's certainly a fact. Let's go a little bit of a level deeper. How does a drop in farmland values begin to put the lender at risk even before the borrower misses a single payment?
Yeah, absolutely. Uh the borrower their balance sheet is essentially the farm credit collateral coverage. And when land values start deteriorating, the loan to value equation starts being really really not favorable to anyone involved. And this matters even when borrowers are paying on time and in full. Just like a quick example here, if you have a real estate loan at sixty five percent L T V when the price per acre was at fourteen thousand, then
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Chapters
7 chapters
1
What is the current state of the agricultural lending market and why does it matter now?
0:03–6:45
2
How are falling farmland values creating hidden risk for lenders before a borrower misses a payment?
6:45–12:26
3
What are adverse assets and workout scenarios and why are they costly for farm‑credit organizations?
12:26–17:55
4
What lessons can Midwest lenders learn from California’s recent farm‑credit bankruptcies?
17:55–22:17
5
How does a reactive risk‑management approach affect costs and borrower relationships?
22:17–24:54
6
What role does land‑intelligence and collateral data play in assessing portfolio health?
24:54–28:38
7
How can lenders build a proactive risk‑management culture that drives growth?
28:38–28:48