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From the Fields: Recap From the 2023 ABA Agricultural Bankers Conference

By Chris Schneider

This November, about a dozen ag bankers from Wisconsin and I made the trek to Oklahoma City for the 71st annual American Bankers Association (ABA) Agricultural Bankers Conference. This year, the number one message was getting the ACRE Act through Congress to help the American farmer. This act, which would create a tax exemption on ag loans and rural home mortgages, will aid in saving approximately $1.15 billion in ag loan interest and will reach 17,000 local communities across the country.

In attendance at this year’s event was Congressman Glenn “GT” Thompson (R–PA), who chairs the House Committee on Agriculture. During his opening session, GT offered updates on agricultural policies including the Farm Bill and shared what bankers need to know going into 2024. My impression of him was that he is committed to helping the American farmer and local communities.

Interest rate discussion was no surprise due to the past 12 months of increases. While many were questioning whether we will see it rise more, stay stable, or flatten out some, we will have to see if — as usual — the election year brings with it some softening of rates. I’m not sure if we will see the low rates of past years again in future.

Representatives from the ABA and Farmer Mac shared with attendees the results of the 2023 ABA/Farmer Mac Agricultural Bankers Survey. A few of the top and notable themes from this past year have been interest rate volatility, lender competition, credit quality, increased regulator burden, and weak loan demand.

In just the first day of the conference, attendees gained insight into food spending trends (a shocking 51% is spent on food outside of the house), student loan debt, legal cannabis, and more. Throughout the rest of the event, topics including new technologies and artificial intelligence (AI) and ESG trends and the sustainability especially the ag community. To me, the greatest take away from this year’s event was that in order to have successful farmers, ag bankers should be prepared to aid them in strengthening their ag IQ. By understanding the cost of production, strengthening their balance sheet, developing a marketing plan, and utilizing technology to set next level, we can help our clients do all the little things even better.

Schneider is vice president – senior ag banking officer at Nicolet National Bank in Manitowoc. Schneider also serves as Past Chair of the 2023–2024 WBA Agricultural Bankers Section Board of Directors.

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Farmers Are Cautious but Optimistic for 2024

Ag bankers reflect on 2023; prepare for the year ahead

By Hannah Flanders

Agricultural bankers in Wisconsin described 2023 as a year of highs and lows. As expected, it was difficult for Wisconsin farmers to beat the success of the last several years.

In 2021, farmers in Wisconsin were well-positioned for success. Ideal conditions for growing, increased receipts across the board, and lower expenditures than the national average set the stage for record profits in 2022. However, as 2023 unfolded, so too did a number of challenges causing farmers across the state to feel the pressure.

“There were times earlier in the year that I was certainly feeling more like a therapist than a banker,” notes Kevin Konkol, vice president – agricultural/business banking at First State Bank in New London. “However, agriculture runs in cycles. Farmers are aware that every one or two good years are followed by several years of headwinds; that’s where we’re at right now.”

Across the state, ag bankers are still seeing the strength carried over from the last several years, but deterioration is expected into the new year as farmers slowly begin pulling back.

One of the primary challenges that loomed large was the surge in interest rates, which reached over 500 basis points. Though relatively close to the historic average of between 6% and 7%, ag bankers note that many younger-generation farmers are experiencing sticker shock.

“Much of the older generation of farmers have seen rates hit 18% or 19%,” highlights Konkol. “This generation, on the other hand, has never seen prices so high.”

Jenny Jereczek, Security Financial Bank – Durand market president and director of ag banking, notes that while local farmers are cautious but optimistic for the year ahead, how rates will continue into the new year is the question on everyone’s mind. “When the U.S. dollar rises in value, our commodity prices and exports decrease. Coming off several great years, farmers still have relatively strong balance sheets but are seeking new ways to optimize and retain their margins in times of uncertainty.”

It’s up in the air whether current rates are here to stay. . . at least for the foreseeable future. In September 2023, the New York Times reported that Fed officials believed that rate hikes were close to the end and that the economy has seemed to settle into its long-term trajectory.

Whatever the prediction, ag bankers note that commodity prices remain a top concern for many farmers looking ahead.

This year, milk prices dropped from near-record levels to below $14 per hundredweight but have slightly rebounded since the summer. Compared to last year’s average of nearly $7 per bushel of corn, farmers saw prices hovering around the $5 mark.

However, a record-breaking 18% increase in cattle and beef prices from the year prior is expected to offset some of the headache.

“The main concern I’m hearing from farmers is cash flow; they’re all wondering where it will come from,” says Bank of Brodhead’s Assistant Vice President – Ag and Commercial Lending Adam Sommer.

Cody Kirschbaum, vice president – ag relationship manager at Peoples State Bank, Prairie du Chien, elaborates, “As term loans and operating lines of credit come upon renewal, many are experiencing the cost to borrow nearly doubling compared to 2022. This is expected to significantly affect the cash flow of an operation.”

The U.S. Department of Agriculture forecasts that net farm income will decrease by nearly 23% from the year prior. This alarming projection comes just as the cost to borrow increases and production expenses are forecasted to surpass a staggering $458 Billion.

In an effort for Wisconsin farmers to sustain the longevity of their farms, ag bankers each suggest that farmers, in partnership with their lenders, should closely monitor trends in foreign trade and input costs that often dictate U.S. market movements.

“In the last several years, farmers have gotten better at budgeting and understanding how they are able to mitigate risk to retain their margin. By following current events, farmers are able to create a game plan, and with the help of their lender, stick to it. In a volatile market, opportunities — whether it be diversifying or risk mitigations tools — are still available,” notes Jereczek.

However, it is important that producers utilize available resources and tools to help make the best educated decision possible for their specific operation.

“One size doesn’t necessarily fit all, so the playbook may look a bit different from farm to farm depending on the operation,” states Kirschbaum.

Unlike many areas where farmers are experiencing a decrease in returns, experts point out that farmland values throughout the Midwest — including Wisconsin — have remained robust. According to the Federal Reserve Bank of Chicago, farmland values in Wisconsin increased by 8% since 2022, reflecting the strong financial conditions of the past few years.

Of course, being in Wisconsin, weather conditions also played a pivotal role for farmers this year. More than 80% of Wisconsin experienced moderate to severe drought conditions right at the start of the 2023 growing season.

“Farms in the area are doing well considering the spotty rain we encountered this year,” notes Jereczek. “However, final yields for the fall harvest are yet to be determined.”

With the ongoing conflict in Ukraine — a major grain exporter — and the probability of droughts across the U.S. impacting crop yields, lower supplies are expected to impact the availability and cost of feed as well as exports abroad.

Like most sectors, the ag community is also concerned with consolidation, rapid innovation, and generational transitions.

“For many, this last year has really emphasized what variables we should be paying attention to moving forward, alongside the importance of risk mitigation and margin management,” highlights Kirschbaum. “In a quickly evolving economy and society, ag bankers need to be prepared. As trusted advisors and confidants, our role is to help our clients prepare for both the expected and the unexpected.”

The last several years have been a rollercoaster for Wisconsin’s agricultural sector, but experts agree that farmers throughout the state are well-prepared to tackle the uncertainties and opportunities that lie ahead.

“They’re a resilient bunch,” emphasized Sommer.

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From the Fields: Leading to Prosperity

By Nicholas Felder

I’ve been reading Capitalism in America (2018) by former Federal Reserve Chairman Alan Greenspan and Adrian Wooldridge and it actually surprised me about the size and scope of many of the economic growths our young country has had. It’s a good read if you have the time (nearly 600 pages), but long story short, nearly all of the periods of economic prosperity in the U.S. have been driven by businesses leaders looking to change their industries by taking a new or good idea and making it better. This initially causes chaos, but generally results in a rebirth of prosperity. All of these periods were generally led by a single person or a host of individuals whose expertise and knowledge were relied upon to lead the charge.

Opportunities that I’ve been asked to review over the last 12 months include vertical integrations, horizontal acquisitions, repair versus replace, and R&D to either create new business lines or add value to existing ones; creative destruction in its finest. Requests for liquidity have been minimal due to the profitability of most operations and the governmental assistance of others. These opportunities came from some of the most unlikely operators: some with little experience in the new ventures and some attempting to pivot back into old business lines to adjust to the new post-COVID economy. My job, like all of yours, isn’t to tell people if the opportunity will succeed or fail, but to be an advisor and assessor of risk and how that risk might be mitigated by our customer or prospect.

SBA, USDA, FSA loan and guaranty programs are all time-tested vehicles for reducing repayment risk. Energy efficiency grants through energy providers or the USDA’s REAP grant can be a ton of paperwork that may need professional grant writers or facility auditors to complete but may provide significant equity capital that may reduce collateral risk and reduce debt service requirements. Guarantors, individually or corporate, may reduce the performance risk through guarantee of payment or addition of collateral. But how many of us in our peer group adequately assess the operational or human risk? I know that I sometimes glaze over the need to ask: “Who’s the next person up if you can’t perform your duties tomorrow?” or “When you look to cash out and retire in 3–5 years, do you have an identified buyer or plan?” We assume the president or CEO will be there for the long haul.

Within that same 12 months, I’ve had a business owner be diagnosed with brain cancer; I’ve had a farmer look to encourage a more owner-like mentality by bringing a non-familial key employee into ownership through a stock bonus/gift (where there’s limited next-generation prospects); I’ve had a grain farmer look to add efficiencies and add value to the product he sells through expansion during the current near-recessionary period. All these high-level business owners exhibit an “executive mindset no matter the size of the operation” which is a key success factor of Dr. David Kohl of Virginia Tech. All of these owners are in the trenches every day turning wrenches, driving equipment, handling materials, handling the HR duties, and purchasing raw materials. However, they take time to step back to assess the long-term consequences of decisions that are or will be made on the long-term viability of the business. When they call to discuss an idea, it is often the 100th iteration they’ve assessed and the likelihood of success is very high (which makes my job a little easier).

Recessionary periods weed out the weakly capitalized, those with lean cashflow, and those who don’t take those steps back to see the whole picture before making those trajectory-altering decisions. The word “recession” seems to have only negative connotations within the general public, but so does “spring cleaning” in my own home. Both are a means of reset, renewal, and setting the stage for an anticipated revival. In banking, recessions often tighten credit standards and the need to dot all the I’s and cross all the T’s that often get glazed over during times of good fortune — including the assessment of human capital in business. I’m unsure that the current soft landing will establish these resets, but I encourage all the bankers in the industry to do a little spring cleaning of your processes and procedures and ask a few more hard or maybe uncomfortable questions to ourselves and our customers with the premise of better service and being a stronger advisor.

Have a great fall season!

Felder is vice president – commercial and agricultural banking at MidWestOne Bank in Lancaster. Felder also serves on the 2023–2024 WBA Agricultural Bankers Section Board of Directors.

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From the Fields: Fall Transitions

By Steven Thomas, BMO

Transitioning from summer to fall brings with it the excitement of the fall sports seasons. Friday night football, volleyball games, and cross country meets. A new quarterback in Green Bay. New leaders for Wisconsin Badger Football. New schools, new classes, new students, and new routines for parents, children, and teachers as they get back to school.

Transition is the name of the game for our household as my wife and I prepare for empty nesting. It certainly feels strange after 10 years of having an Onalaska High School student in our household. Our oldest has entered his third year in the financial training program with Ecolab in Houston, TX. Our middle child graduated UW–Madison and has transitioned to working on her Masters at Winona State for Athletic Training. Our youngest heads to the collegiate ranks to study Sports Psychology and has been aggressively working on preparing for the UW–La Crosse Track and Field team. We are excited about the career advancement and experiences the future holds for them.

Fall also presents expectations for harvest and transitioning from the growing season to harvest push. Drought conditions have persisted across the Midwest in varying degrees. In my travels from western Iowa, southern Minnesota, and southern Wisconsin corn, soybean, and alfalfa fields look to be in pretty good condition with fourth crop hay giving more substantial yields than many second and third cuttings. Most of the wheat is harvested. Pollination for corn appears to have been successful with many getting prepared for corn silage harvest. It is advisable to be checking moistures regularly as drought stressed corn looks to be drying down and nearing harvest targets. Weather conditions in late August and early September with temps approaching triple digits will certainly accelerate harvest timing.

For those of us who like to eat, the U.S. Agriculture industry will be transitioning this year as our elected officials are in negotiations toward the development of the new 2023 Farm Bill. The new rendition is due on September 30. Wisconsin 3rd District Congressman Derrick Van Orden hosted a listening session last week in La Crosse with U.S. House of Representatives Ag Committee Chairman G.T. Thompson and Sen. Ron Johnson fielding questions and listening to comments from representatives of the agricultural community. Agriculture is the number one industry in 49 of 50 states, despite having an ever-diminishing number of producers actively involved in production. Hawaii is the only state where ag is not number one due to their tourism industry. Rep. Van Orden expressed that agriculture and food security are key to national security and that discussions on the new farm bill are critical in this legislative session.

Over 300 people attended and those offering comments expressed questions and thoughts on a wide variety of topics. Primary areas of interest included milk pricing and revisions to the milk marketing orders and producer price differentials. Dairy Margin Coverage and Crop insurance programs were mentioned with Chairman Thompson expressing continued support for the funding and potential expansion of these successful programs

Negotiation on trade agreements were raised with Mexico, Canada, and China being major trading partners. The war in Ukraine was mentioned for the world and national impact. Proposition 12 and its potential impact on interstate trade. Border policy and related impacts on the labor force. Other topics included biofuels, organic certification standards, foreign land ownership, autonomous agriculture, dairy supply management, cannabis regulations, conservation programs, and farm ownership transitions.

Thompson, Van Orden, and the rest of the Ag Committee will be working to develop a bipartisan bill supporting our number one industry. They are continuing to collect verbal and written comments. If you have feedback, I encourage you to reach out to your state or U.S. representatives or Rep. Van Orden at 202-225-5506.

For this ag transition, Chairman Thompson expressed appreciation for everyone attending and quipped that “if you are not at the table, you are on the menu.” He welcomed the input received and is certainly a champion for agriculture at the federal level.

Make your voice heard and enjoy your transitions this fall.

Thomas is vice president – commercial relationship manager at BMO in Onalaska. Thomas also serves as a member of the 2023–2024 WBA Agricultural Bankers Section Board of Directors.

Photo courtesy of Christy Besonen, East Wisconsin Savings Bank

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From the Fields: Milk Pricing Through the FMMO

Jeff Wilke

By Jeff Wilke, Bank First

In the early 1900s, chaotic fluid-milk pricing, dealers who squeezed dairy farmers on prices, and overall unfavorable economic conditions left farmers with low prices and chaotic markets. To combat this, the federal government established the Federal Milk Marketing Order (FMMO) system in the 1930s.

FMMOs establish provisions under which dairy processors (milk handlers) buy fresh milk from dairy farmers who supply a marketing area (there are 11 marketing order geographic areas in the U.S.) Under FMMO regulations, the USDA establishes a minimum milk price, and dairy processors are required to pay at least this minimum price to producers.

The two main features of the FMMO system are classified pricing and pooling of milk. The FMMO system recognizes four different classes of milk: Class I (fluid milk), Class II (soft products such as yogurt and ice cream), Class III (cheese — what most of Wisconsin milk is processed for), and Class IV (butter and milk powder). Milk handlers report all milk receipts by end use. The FMMO then values this “pool” of milk receipts through formulas to compute milk class and milk component (butterfat, protein, and other solids in milk) values. Milk handlers pay producers at least the weighted-average of all class uses, known as a “uniform” or “blended” price.

Class I fluid milk usually receives the highest minimum price under the FMMO system. This helps to encourage the movement of milk from milk-surplus areas into milk-deficit areas, and ensures a sufficient supply of fluid milk to meet heavy demand (i.e. — during the school year). By pricing surplus milk (milk in excess of fluid needs) at a lower price than fluid milk, classified pricing prevents such supplies from depressing the price of milk to dairy farmers to the point where the supply may become endangered. The minimum prices aim to protect milk producers from severe price reductions that might occur during times of milk surplus.

FMMO pricing formulas have not been significantly updated since they were first implemented in 2000. But with significant industry changes occurring since 2000 — milk composition, product manufacturing costs, costs of transporting milk, plant closures, and shifts in milk production areas — proposals are being reviewed to help modernize the FMMO system for today’s dairy industry. 38 proposals by 12 different industry organizations have been submitted to the USDA as of the June 14 deadline. As of the writing of this article, the USDA is deciding on whether to hold a FMMO hearing for the proposed changes. If there is a hearing, it will start on August 23.

Wilke is vice president – business and agricultural banker at Bank First in Denmark. Wilke also serves as the 2023–2024 vice chair of the WBA Agricultural Bankers Section Board of Directors.

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From the Fields: Finding All the Puzzle Pieces

By Craig Rogan, Nicolet National Bank

Welcome to June 2023, an almost 360-degree turn on milk prices when compared to a year ago. In June 2022, we had a class III settling price of $24.33 per CWT. As of June 27, 2023 current class III milk price is $14.92 per CWT, a decrease of $9.41 per CWT. The current class III milk price may have your customers thinking like Chicken Little. Surprisingly, when everything may seem out of control, farmers may have more control than they think.

A jigsaw puzzle has hundreds — sometimes thousands — of pieces to complete. Unlike a puzzle that has the image on the box, farmers must create their own picture of profitability. There are tools available to complete this picture to maintain positive margins and profitability. To protect income prices DRP and LGM insurance, straight contracts through milk plant or commodity broker and DMC through USDA are pieces that can be used. If feed and capacity are available in existing facilities, adding cows can create additional efficiencies and income to minimize the decrease in milk income. Farmers create pieces to protect their expenses through contracting mineral, fuel, seed, pre-paid feed, and fertilizer, to name just a few. Selling unused equipment or land also can be utilized as pieces to create their puzzle. A hedging account may be necessary from their bank to utilize and create pieces if the farm qualifies. The puzzle pieces create a complete picture when a farm is open to the market and margins are naturally profitable. These pieces or tools become more valuable in a decreasing income environment like we are seeing today.

A farm open to the market where income continues to decline greater than expenses could find its puzzle pieces in disarray. In this scenario a farm may have a significant portion of their expenses locked in — just like the larger blue connected area of this puzzle. Income could be compared to the smaller colorful section in the middle — a lesser percentage is locked in than expenses; therefore, not protecting the full margin, only a portion. A significant number of stray pieces remain that are needed to complete this puzzle.

The completed picture of profitability is what we all strive for with the operations we work with. Continue to be an integral piece of the puzzle to complete their image. At times you will be needed to set the corner pieces to get the puzzle started, but ultimately the farming operations will need to take the time and effort to complete the puzzle and remain profitable.

Rogan is vice president – agricultural banking officer at Nicolet National Bank in Stevens Point. Rogan also serves as the 2023–2024 Chair of the WBA Agricultural Bankers Section Board of Directors.

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From the Fields: A Rare Breed

By Darla Sikora, Citizens State Bank of Loyal

Greetings fellow ag bankers! In this, my final contribution to From the Fields, I’d like to write a bit about us. By “us” I mean the very small percentage of the population who are ag bankers. Each of us has our own story as for how we ended up in ag banking. For myself, I have been an ag banker for 21 years. I am as fervent today as I was when I started at Citizens State Bank of Loyal that I am in this job not because of banking but because of agriculture. In fact, when I was hired, I didn’t know the difference between a balance sheet and a cash flow! “But you know agriculture,” is what my boss at the time (Gary Sipiorski) replied, and as they say, the rest is history.

One of the very best things about attending the WBA Agircultual Bankers Conference every April is being with individuals from around the state who do what we do. Since there are so few of us, we don’t often get to chat with those who know exactly what we face daily in our jobs. We have a connection with our colleagues on account of the common ground we share, facing similar circumstances and challenges, whether in the field or in the bank; the good and the bad. The information presented by a great line-up of speakers and exhibitors is reason enough to attend the conference, but equally, if not even more important, is networking at the conference with our colleagues from other banks.

Photo of Apollo provided by Darla Sikora

Beyond that, I have had the added privilege of serving on the WBA Ag Section Board for seven years. That brought even more opportunities to learn from others as we communicated thoughts, ideas, and opinions on any number of topics at our meetings and gatherings. We deal with a lot of big stuff in our jobs. As a customer once said, ag bankers have a degree of control on the “purse strings” of many multi-million-dollar ag businesses throughout the state. It’s no secret that fact alone can bring about many levels of stress. Learning from others who have been in similar situations has been a real godsend. Our team of Wisconsin ag bankers not only is willing to share its wisdom, knowledge and experiences, but it also has the ability to do so with a bigger perspective than we can do as individuals. The sense of humor that often accompanies a conversation is a boon as well!

Of course, I can never say enough about Lori Kalscheuer, WBA director – education and our Ag Section liaison. Kalscheuer and her team are the glue that keeps our Ag Section together, focused and organized! Not only is June Dairy Month, but it’s also the start of a new year of membership in the Ag Section. I hope you find as much value in this group as I do. There is no doubt of its merit in helping us to be the best ag bankers we can be for Wisconsin’s agriculture. Thank you for allowing me to serve on the Ag Section Board. I look forward to reading all the future From the Fields and to seeing all of you, a rare breed as we are, at next year’s WBA Agricultural Bankers Conference!

Sikora is senior vice president of agricultural banking with Citizens State Bank of Loyal. Sikora also previously served as the Past Chair of the WBA Agricultural Bankers Section Board of Directors.

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Wis. Bank CEOs Weigh In on Economic Outlook

WBA releases results of Bank CEO Economic Conditions Survey 

In the Wisconsin Bankers Association’s biannual Economic Conditions Survey of Wisconsin bank CEOs, nearly three quarters of respondents rated Wisconsin’s current economic health as “excellent” or “good.” These most recent survey results show some easing of inflation and recession concerns; 86% of respondents predict inflation to fall or stay about the same over the next six months, compared to 76% of respondents in the prior survey conducted at the end of 2022. Pessimism is fading as only 48% of respondents predict the economy to worsen over the next six months, compared to 72% of respondents at the close of 2022. 

“Wisconsin bank CEOs have unique knowledge of their local market dynamics, given their economic expertise along with their relationships with businesses, community organizations, families, and individuals in their areas,” said WBA President and CEO Rose Oswald Poels. “With a mild recession predicted for the remainder of the year, bankers continue to serve as trusted partners in helping community members weather challenges and achieve their financial goals.“ 
 
Among the economic bright spots cited by CEOs in the survey were high employment and wages, demand for goods and services, strong industries — summer tourism, construction, agriculture, and manufacturing — and in-migration from the Twin Cities and Chicago. Top economic concerns reported by bank CEOs were inflation and labor — particularly in service-related industries, deposit growth, and compressing interest rate margins. 

 
The mid-year 2023 survey was conducted May 16–31 with 66 respondents. Sums may not equal 100 percent due to rounding. Below is a breakdown of the survey questions and responses.

How would you rate the current health of the Wisconsin economy. . .  Mid-Year 2023 End-of-Year 2022  Mid-Year 2022 
Excellent 5% 6% 7%
Good 68% 69% 64%
Fair 27% 24% 29%
Poor 0% 1% 0%
In the next six months, do you expect the Wisconsin economy to. . . 
Grow 0% 0% 2%
Weaken 48% 72% 63%
Stay the same 52% 28% 36%
Over the next six months, do you expect inflation to. . . 
Rise 14% 24% 50%
Fall 44% 51% 22%
Stay about the same 42% 25% 28%
How likely would you say a recession is in the next six months? 
Very unlikely 0% 0% 4%
Unlikely 5% 3% 16%
Neutral 24% 10% 20%
Likely 56% 62% 45%
Very likely 15% 25% 16%
Rate the current demand in the following categories: 
Business Loans 
Excellent 6% 3% 2%
Good 44% 44% 48%
Fair 48% 46% 48%
Poor 2% 7% 2%
Commercial Real Estate Loans 
Excellent 11% 6% 7%
Good 33% 34% 52%
Fair 50% 53% 36%
Poor 6% 7% 5%
Residential Real Estate Loans 
Excellent 5% 4% 2%
Good 14% 7% 20%
Fair 50% 33% 50%
Poor 31% 55% 29%
Agricultural Loans 
Excellent 0% 3% 2%
Good 41% 23% 37%
Fair 50% 60% 51%
Poor 9% 13% 10%
Deposit 
Excellent 3% 3% 5%
Good 17% 44% 55%
Fair 58% 44% 38%
Poor 23% 9% 2%
In the next six months, do you anticipate the demand for the following categories will. . . 
Business Loans 
Grow 6% 8% 11%
Weaken 50% 56% 48%
Stay the same 44% 35% 41%
Commercial Real Estate Loans 
Grow 9% 1% 13%
Weaken 56% 63% 48%
Stay the same 35% 35% 39%
Residential Real Estate Loans 
Grow 13% 6% 4%
Weaken 25% 54% 63%
Stay the same 62% 41% 34%
Agricultural Loans 
Grow 12% 15% 6%
Weaken 32% 38% 31%
Stay the same 56% 48% 63%
Deposit 
Grow 17% 13% 11%
Weaken 31% 38% 36%
Stay the same 52% 49% 53%
In the next six months, are the businesses in your bank’s market area likely to. . . 
Hire employees 25% 17% 31%
Maintain current staffing levels 69% 71% 61%
Lay off employees 6% 11% 7%
In the next six months, is your bank likely to. . . 
Hire employees 23% 23% 34%
Maintain current staffing levels 74% 73% 63%
Lay off employees 3% 4% 4%
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From the Fields: Join Us at the 2023 WBA Agricultural Bankers Conference

By Craig Rogan

Spring is here, meaning the Wisconsin Bankers Association’s (WBA) Agricultural Bankers Conference is just around the corner on April 13–14 at the Kalahari Convention Center, Wisconsin Dells. These days are spent reconnecting with fellow ag bankers, sharing experiences from throughout the last year, and acquiring new and updated knowledge to propel our industry into the future. We will welcome many new ag lending professionals to our industry at this conference as well.

Whether you are new to the Ag Banking Conference or a seasoned pro, there’s always something to be learned; however, some things never change; making sound credit and risk decisions should still be at the forefront of your day-to-day analysis, assessing farm’s management practices today to ensure viability and long-term success remains a crucial piece of the puzzle.

We again welcome Dr. David Kohl, a professor emeritus at Virginia Tech who holds a Ph.D. in Agricultural Economics from Cornell University. Dr. Kohl’s solid agricultural knowledge, paired with his ongoing research and experience, makes him a true ag expert.

The months of April and May leave many farmers focused on when the fields will be dry enough to plant. Eric R. Snodgrass is the Director of Undergraduate Studies for the Department of Atmospheric Sciences at the University of Illinois at Urbana-Champaign. As an educator and engaging speaker, he will discuss if current and projected weather conditions may allow for a rapid jumpstart on this year’s growing season. With his guidance, we will examine the global weather outlook and what this could mean for potential yields outside of the U.S. as well as what role weather plays in affecting grain commodity prices.

Wisconsin is going strong in the dairy industry with nearly 1.27 million cows and 6116 dairy farms across the state. UW-Madison Dairy Markets and Policy Outreach Specialist Leonard Polzin will be speaking and updating us on all things dairy in Wisconsin.

This highlights just a few of the highly esteemed speakers that we are honored to host at this year’s Agricultural Banking Conference. I look forward to seeing you in the Dells! If you haven’t registered but would still like to attend please visit wisbank.com/ag to register today.

Rogan is vice president – ag banking officer at Nicolet National Bank, Stevens Point, and vice chair of the 2022–2023 WBA Agricultural Bankers Section.

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From The Fields: Expect Turbulence

By Nicholas Felder

“Ladies and gentlemen please make sure your seat belt is securely fastened and your seat backs and tray tables are in their full upright position.” As many of us know, these instructions are for the safety and soundness of all those aboard commercial aircraft during what might not be a perfect landing. Well, we might all want to heed that advice and reiterate that to all our customers as soon as possible.

As of the date of this article, the American grain producer is facing $6.60 corn (which oscillated from $4.85 to $7.60 down to $5.65 now $6.60) and $13.94 soybeans (same $12.50, then $15.85, then $12.85, then $14.75, now $13.94) which isn’t all bad! However, all the pilots (and the passengers alike) who are flying across the 2022 crop year aren’t exactly sure where the runway is located and in what condition it stands. As they peer down towards harvest and post-harvest, they must deal with a dense layer of fog comprised of inflation, a strengthening dollar, global unrest, weather, mid-cycle fall elections, and the USDA’s export sales reporting system that went down just as these markets couldn’t get any more volatile. Basis spreads between new and old crops are leading the charge to what looks like a pre-harvest rally. However, the Dow and S&P markets are falling precipitously, leading some experts to believe a demand drag on domestic use is the next big hurdle for the 2022 and 2023 crop marketing cycles. Sell now or later? And, if that wasn’t enough, producers and lenders looking at the 2023 growing/feeding/milking year are facing decisions on things like fertilizer and chemical pricing, even before the ’22 crop really starts to turn away from its summer green. Can we really achieve a “soft landing” of any fashion in this environment? It’s the question both farmers and politicians are struggling to answer.

Change and interruption are inevitable in a global and electronic economy. Too many hands in the pot waiting to grab their “fair share,” while people and animals across the globe fight to find their next meal. However, preparation and a good commodity marketing offense is the best defense for headwinds of the nature noted above. It really all begins with cash flows that are created well before final planting decisions made. Then, regularly updating the living, breathing document as itemized expenses change or planting and crop maintenance is completed so it can be an accurate tool to price whatever commodity being produced. These strategies don’t have to be complex; just planned and emotionless. Nickels saved through discipline and, many times, luck create opportunities to land as softly as anyone is able in today’s environment. A producer can’t farm next year if he doesn’t make it through this year.

We all know that equity may be the key to growth, but liquidity is the key to longevity. As we transition into the autumn harvest season, your fellow banking professionals ask that you be that trusted advisor who is slightly risk averse, but supportive of growth and profitable ventures. There is still money to be made and balance sheets will improve if producers are intentional in their actions and lenders the same. The sky can be prevented from falling if we work together!

Thank you all for your service to the industry, diligence and support of America’s producers, and presence within your local communities. Wishing all a safe harvest season!

Nicholas Felder is vice president, commercial and ag banking, with MidWestOne Bank in Lancaster. Felder currently serves on the WBA Ag Section Board of Directors.

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