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Grain and Farm Supply Lending

Grain and Farm Supply Lending. Dave DeVos Sr. VP Agribusiness Finance AgCountry Farm Credit Services. AgCountry Background. AgCountry FCS and FCS of Grand Forks merged January 1 st 2008 Manage over $4.0 billion in assets Strong capital position Commitment to Agriculture

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Grain and Farm Supply Lending

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  1. Grain and Farm Supply Lending Dave DeVos Sr. VP Agribusiness Finance AgCountry Farm Credit Services

  2. AgCountry Background • AgCountry FCS and FCS of Grand Forks merged January 1st 2008 • Manage over $4.0 billion in assets • Strong capital position • Commitment to Agriculture • Our Primary Focus is Producer and Agribusiness lending

  3. Grain Elevators and Farm Supply Ethanol Commercial Dairy Producers Potatoes/Potato Processors Edible Beans Ag Processors Farm Equipment Dealerships Sugar Agribusiness Industries

  4. AgCountry’s Grain Portfolio • Finance over 30 Grain and Farm supply accounts • Over $250 million in commitments • Experienced Staff of Lenders and Analysts • Committed to the Industry • Seeking Future Opportunities

  5. Grain and Farm Supply Credit:What Lenders Look For • Local Earnings • Conservative Market Positions • Capacity and Handle • Earnings Trend • Strong Working Capital • Acceptable Capital Position • Adequate Risk Management Policies

  6. Lenders 2008 Recap • HUGE increase in borrowing needs • Higher advance rates on revolving credit (90-95%+) • Strong local earnings for those who effectively managed price risks • Increased Handle

  7. Lenders 2008 Recap cont. • Trucking / Drying rate increases • Unprecedented Commodity Price Volatility • The “new era in Ag” came and went • More credit syndications • Risk policies tested both on price increases and decreases

  8. Challenges Lenders See Today • Volatile Prices • Grains, Fertilizer, and Petroleum • Prices moved more in a week than the entire previous year • One wrong position wiped out years of earnings • Continued need for minimal open commodity positions • Fertilizer positions and contract enforcement

  9. Financing in a Changing Landscape • Mergers and Consolidations with Financial Stress • Ethanol’s impact on Regional Markets • More Joint Ventures and LLC • Agronomy Services • Shuttle Loaders • Petroleum • “Mega” Fertilizer Plants

  10. 2009 and Beyond • Higher Risk – Potential Higher Reward • Greater need for contracts and payments from producers and buyers (counter party risk) • Need for reliable lenders who understand market conditions and their ramifications • Increased Competition with higher price volatility • Disciplined Risk Management policies with monitoring covering more commodities • Potential higher interest rates and fees

  11. Questions? Dave DeVos AgCountry FCS dave.devos@agcountry.com 701-499-2590

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