Recent days and months have been filled with difficult conversations between ag bankers and their clients. Farmers of all stripes have been struggling for months, while banks large and small are trying to figure out how best to continue to serve them. In many cases, it can be difficult to see how some of these farm businesses are going to come out the other side and return to profitability and (dare I say) bankability.
Farmers are longing to get back to profitability and feeling good about their life's work. But what if coming out the other side is not in the cards for one of your farm clients? What if the bank has done all that can be done? What if an unforeseen opportunity (such as an interested buyer or other employment) appears and leads the farmer to contemplate life after farming? What if, on a personal and family level, they're just plain tired of the battle?
What happens when a combination of simple math, outside forces, and soul-searching leads a farmer to make the decision to leave the business? That is a question that can be filled with emotion, pain, or even something near heresy.
Many of our farmers have spent decades working hard, running a successful business, and earning their way to a balance sheet that is full of equity and wealth. Taking the next logical step to sell some assets and/or leave the business should be regarded as nothing but opportunity: an opportunity to "cash in" and reap the rewards of their commitment; opportunity to have flexibility going into the next stage of life; and perhaps best of all, an opportunity to help the next generation of farmers, be it as an advisor to their own family or providing another young farmer with a chance to get started.
One thing it is NOT is a failure... but for a farmer going through this transition, that may be very difficult to see. Encouragement from someone they know and trust can make a difference.
In this situation, farmers will need someone to help them through the decision-making process. They will need someone with experience and connections in the local farm community to help facilitate some of their transactions. They will need personal support, and they will definitely need the understanding ear of a person they trust. Hopefully, their local ag banker dutifully and happily filled those roles through the years that they were farming… it should be our goal to make sure that they can continue to trust us and our banks to support them during and after this most difficult transition.
Towns is senior vice president, agricultural lending at DMB Community Bank, DeForest and a member of the 2018-2019 WBA Agricultural Bankers Section Board.