When today’s farmer approaches a lender, the questions he is asked are different from the ones his father got.
Brian Field, founder and president of agriculture real estate lender Harvest Capital, is much more interested in the structure of a balance sheet.
“When we get somebody coming in we ask, ‘Is your balance sheet actually balanced as far as the level of debt goes?’” Field said. “That’s a different question from what our dads got asked back in the ’70s, which was ‘Are you leveraged enough?’
“What we’re saying is: If you’re using capital markets-type debt, are you using it to where, as agriculture changes, as your operation changes, you are protected against downturns, whether in the market or, more importantly, Mother Nature?”
Steve Terjeson, executive vice president and chief lending officer for Citizens Bank, oversees 15 branches across the Willamette Valley of Oregon.
“About a quarter of our business is agriculture-related,” Terjeson said.
The bank lands money for agriculture real estate, operating lines of credit and equipment loans, and is a full-service bank.
“That is one of our niches. Everything from loans to deposit to merchant accounts and other banking services, including cash management,” he said.
“Our other niches are agribusiness and small business,” Terjeson said. “We cater to both because they fit right into the type of relationship-making that we are proud of. If you don’t have a close relationship, things could get out of hand before you even know it. They need to trust us to be around and we need to trust them to manage their business.”
Brent Fetsch is Oregon president of Northwest Farm Credit Services. Among the benefits of cooperative ownership, he said, is the existence of customer advisory groups at each of their 11 Oregon offices. This kind of engagement gives them insight into local culture and afforded them a front row seat to the recovery of many operations hit particularly hard by the housing crisis following 2008.
In their favor are well over 220 different commodities Oregon farmers grow.
“Our customers have various options and I just think that’s a treasure,” Fetsch said. “One need only to look at the trajectory of world population to feel pretty good about the increasing demand for food, but it won’t be a straight line. Agriculture has generally enjoyed a very good run in recent years. However, we are seeing signals of a down cycle in many commodities.”
Keeping a sense of perspective is an anchor in the storm-tossed existence that is farming.
“I marvel at the progress farmers and ranchers have made,” Fetsch said. “Look at the yields off just about any crop on the same number of acres; the efficiency with which they’re able to use irrigation water and so on … when you look back 25 years to today the production increases are remarkable.”