Timothy ButtkeThe WBA Agricultural Bankers Conference was held April 11-12 at the Kalahari Resort and Conference Center, and by all accounts, it was a rousing success. Around 150 bankers and affiliated individuals attended the event, which included informative presentations from a wide variety of sources and viewpoints. Day one started with a Washington Update presentation from Ed Elfmann, senior vice president of agricultural and rural banking policy for the American Bankers Association. Dr. Jason Henderson, associate dean and director of Purdue Extension, provided a presentation on positioning agriculture for future profitability. The dairy market situation and outlook was the theme of the University of Minnesota’s Dr. Marin Bozic’s engaging session, which was followed by an interesting producer panel that brought perspectives from a modern dairy operation, an organic dairy, and a fledgling start-up farm. Day two was highlighted by Dr. Matt Roberts, managing director of the Kernmantle Group, who covered the global market in 2018 and beyond, as well as some much-needed positive news about ag markets. The conference wrapped up with nationally recognized speaker Andrew McCrea, who presented an uplifting look at revitalizing our rural communities and towns.

As we near the spring planting season of 2018, it’s clear that our agricultural clients probably won’t be setting any records for profitability. Working capital appears to be an especially critical issue, as much of the industry’s liquidity has been drained over the past three years. Most commodity prices remain stable but somewhat lower than average, with any small rallies quickly being offset by reports indicating further bearish news. In most cases, it comes down to an issue of supply and demand. Farmers are very good at producing food, and when conditions are right, they invariably produce more than what can be consumed or traded. For the dairy industry, the recent squabble with our three leading trading partners (Canada, China, and Mexico) has created even more market instability. Let’s hope that we resolve our differences with these countries soon, or the economic impact will be quite dramatic to an already weakened area.

For agricultural bankers, the current economic climate has certainly created some challenges. Western Wisconsin led the nation in farm bankruptcies in 2017, and that trend may very well continue into this year. Our customers look to their bankers for sound, accurate advice, and the best thing that we can do is to be as forthright as possible with them about their situation. One of the things I learned at the start of my banking career is to not apply macroeconomic principles to a micro-economic situation: in other words, look at each deal individually by identifying its’ strengths and weaknesses, then make decisions based off of that. Some well-managed farms are better able to adapt to changing economic conditions than others, and some farms are simply in a better position financially to weather the storm. One of the basic tenants of capitalism is that the strong will survive, and that can be a cruel lesson to learn. Many farmers will survive and thrive in the long run, and Wisconsin ag bankers will be there for them as well. 

Buttke serves as the Chair of the WBA Agricultural Bankers Section Board of Directors. He is vice president - commercial & agricultural banking at Nicolet National Bank, Wausau.