As I am writing this article, we are right in the middle of tax season. It’s the time of year many of us begin receiving letters from our lenders requesting copies of our tax returns and other financial statements. Being on both sides of the desk, I know I’m not our customers’ favorite person this time of year. Not only are they being pressured by their CPA to have their return (or extension) filed by the deadline, they are receiving a letter from me requesting a copy of that information. I can understand the hassle of one more thing to do, especially in the midst of planting time. I also know that having that information to your lender when it is completed is nothing but a win-win. Your lender has a fully up-to-date file which allows them to make a decision quicker and easier when you have a request in the future. Keeping a customer’s file up-to-date also allows us to know best how to help you should the conditions in our industry change.
One of the 5 C’s of credit we look at when considering a customer’s request is conditions – referring to the industry, its history, future predictions and current status. This includes the impact other industries, cultures and nations have on the specific agricultural industry we are looking at. Let’s take a look at the cattle industry. What impacts do the drought in Australia, transportation infrastructure in Brazil, expansion of PEDv in Canada and Mexico, and the growth of the middle class in China have on the price of cattle and expansion of the national herd here in the United States? What impacts do our own drought swings, political debates over antibiotics and so-called “ag-gag” laws, crop planting reports and ever increasing cattle prices have on the U.S. cattle industry on the whole? We could ask the same line of questions in regard to the corn, soybean, swine, poultry markets, etc.
As responsible agricultural lenders and analysts, part of our job requirement is to stay up-to-date on the changes within and without our industry. Doing so enables us to help you make decisions when those changes begin to affect your own operation. No one of us has a crystal ball and the industry can be as volatile as the Ozarks weather at times, but by keeping current on the industry and being able to apply a little common sense, we can do our best to help you make the best decision for your farm/ranch. And tying back to earlier, having a current financial record on file for your operation – whether it be tax returns, self-prepared or CPA prepared statements – enables us to help you in decision making that is much faster and easier.
