By Darla Sikora, Citizens State Bank of Loyal
Greetings fellow Ag Bankers! As another year sprints to a close, it’s only natural to reflect on the changes of the past few years. In our line of work, we don’t have to look back very far to see the monumental changes in the world of agriculture. Take farm numbers for example. Focusing on dairy agriculture, as we tend to do here in Wisconsin, according to the National Agricultural Statistics Service we had about 25,000 dairy farms in 1995, with 9,304 as of January 2017. As of September 2022, the Wisconsin Agricultural Statistics Service data indicates we now have about 6,300 dairy farms or a decrease by nearly a third in the past five years. Coupled with Wisconsin’s continued dairy productivity, our farming landscape changes in a myriad of ways.
Honing in on 2022, in addition to our customers dealing with significant increases in farm operating costs, interest rates began to rise at a rapid pace. Before March, the last Fed Funds Rate increases were in 2017 and 2018 and those were 25 basis point increases, nothing like the four 75 basis point surges (among others) in 2022. Perhaps this is why our jobs never get boring! Every year and every new season we have different circumstances to deal with because our customers have different circumstances to deal with. I recall listening to Dr. David Kohl at an ag banking seminar a number of years ago as he told us that in order to be good at our jobs, we not only need to know our jobs, but we also need to know what our customers face in their farm businesses. That relationship between us and the farms we serve is what makes Ag Banking a rather unique career. Our customers need to know that we understand their situations and challenges so that we can work with them to find the banking products and programs that best fit their farming styles, needs, goals, and objectives.
In part, to continue to be successful, in some ways, farms are changing. Those that are flexible, open to new opportunities, technologies, and practices, and in general are adaptable perhaps stand a better chance for future success. This doesn’t mean that everything on the farm, or elsewhere, should change. From the banking perspective for example, analyzing credits using the old 5 or 6 C’s of credit still makes a ton of sense. Also not wavering too far outside important and useful farm financial numbers and ratios remains sensible for both bank and farm.
The year is nearly finished and a new one is on the horizon. More hours of sunlight will be welcomed and nearly everyone I know eagerly anticipates springtime with new ideas and possibilities. As you gather with family and friends throughout the holiday season, be sure to include plenty of Wisconsin agriculture’s finest in your celebrations! From cheese to egg nog, from cranberries to beef, and hot cocoa made with whole milk, what’s not to love about Wisconsin’s agricultural products! We bid a fond farewell to 2022 and cheers to us all in the New Year!
Darla Sikora is senior vice president of agricultural banking with Citizens State Bank of Loyal. Sikora also currently serves as the Past Chair of the WBA Agricultural Bankers Section Board of Directors.