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For nearly 100 years Farm Credit has been assigned the
responsibility of providing “staying power” to agriculture by serving as a
dependable and constructive source of capital and financial services to farm
families – in good times and bad.
This “staying power” is most evident when a crisis hits the
financial sector, as it did in 2008, diminishing the lending capacity of many
financial institutions and causing lines of credit to be reduced or
eliminated. Through it all, Farm Credit was there without disruption to
its ongoing commitment to members and Illinois agriculture.
For the past 10 years most agricultural risks taken were
rewarded and decisions to leverage financial statements well-warranted. It was
the opportunity of a lifetime to bring family members back into the farming
operation. Many members increased their net worth and working capital during
the super-cycle of strong farm earnings, which allowed them to prepare for this
new reality that is beginning to set in. Commodity prices have fallen while
input costs, land prices, and cash rents remain high. These factors are
creating tight margins, to say the least.
Volatility in agriculture is not unusual. With today’s
world economy greatly affecting U.S. agriculture, it is more volatile than ever.
The recent reduction in the cash grain margins has changed the game; decisions
today will be more critical than those during the super-cycle, requiring a new
level of expertise and trust between a borrower and lender.
These times call for a lender with “staying power” and the
capability to provide constructive credit which allows operators to achieve
their goals while maintaining a positive cash flow. This doesn’t necessarily mean
a restructuring or rolling of debt, because a return to considerably higher
commodity prices would be required to survive if this rolling of debt does not
result in a positive cash flow.
Farm Credit Illinois has a core purpose of Helping
Farm Families Succeed. Working together can minimize the impact
of the low margins and maximize your ability to take advantage of opportunities
both today and when higher margins return.
Having honest, open, and timely communication with your
loan officer and engaging in crucial conversations to explore action-oriented
solutions may help strengthen the financial foundations of your farming
operation. By reacting to the current margins and making adjustments today,
more difficult decisions can be avoided in the future.
Of course, being concerned and nervous when confronted with
tight or negative margins is a normal reaction. As a cooperative, FCI is
committed to members’ success and looks forward to working with individual
operations to provide the support and information needed to alleviate concerns
and assist in making the best decisions.
As Farm Credit celebrates its centennial, FCI employees are
proud to serve members and carry the flag for all of those who came before us. A
truly amazing cooperative was built by the dedicated members serving on the
board of directors, the passionate Farm Credit staff, and our loyal
member-borrowers over the past century. Today, we remain focused on Helping Farm Families Succeed. FCI has
worked side-by-side with generations of families to provide the necessary
capital to fund the production that has led to amazing success and a rewarding
way of life. We look forward to the next 100 years, and to being here in both
the good and challenging times. Staying power; it is a truly remarkable gift.
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©2017 Farm Credit Illinois, ACA
Equal Opportunity Employer and Equal Credit Opportunity Lender