Ag bankers discuss opportunities in current challenges

Margot Mohsberg for Progressive Dairyman

The 57th annual American Bankers Association National Agricultural Bankers Conference was held Nov. 15-18, 2009, in San Antonio, Texas. Among the 425 attendees and 34 exhibitors were representatives from the dairy industry, experts on counter party risk management, economists and university researchers with expertise in remaining marketable in difficult times.

Bankers came from as far away as Australia to attend the four-day conference, which consisted of 37 sessions about current issues such as reinforcing the basics of credit, determining the stability of your bank and the big economic picture, a panel discussion featuring four nationally recognized economists.

Bert Ely, a nationally known banking expert, also released a new research report about the Farm Credit System that called for Congress to consider merging the Federal Housing Finance Agency (FHFA) and the Farm Credit Administration (FCA).

Conference presentations and highlights
• Larry Martin, a world-renowned expert on agricultural trade from Ontario, Canada, reviewed how North American agriculture can compete in a world that is increasingly deleveraging and delaminating international trade agreements that recently seemed to make sense, but now are suspect by individual nations.

• Dr. Keith Leggett, an economist for ABA, led a panel discussion with three other economists from across the country as they reconstructed what went on in the industry over the past 12 months and what agricultural bankers can expect in the future. According to the group, while the agricultural sector has performed better than the economy at large, it has not been immune from the worst recession since the Great Depression. Food expenditures, both for stay at home and away from home, are down in 2009. Even after the recession is over, it is likely in the next year that consumer expenditures of beef, pork, poultry, and dairy products will decline further. Ultimately, the pace of recovery in the agricultural sector will depend on how quickly U.S. consumer demand rebounds and the world’s demand for U.S. agricultural exports.

• Mary Keough Ledman, a dairy economist from Illinois, provided an outlook for the industry for 2010. She said more record prices are likely on the horizon because of an international demand for dairy proteins and carbohydrates.

• David M. Kohl, a professor of agricultural and applied economics at Virginia Tech, led a panel of agricultural bankers from small and large banks across the country as they shared their best practices. According to the panelists, there are many profitable dairy farm operators in the industry today and lenders should avoid the “herd mentality” with these borrowers. They also said communication with stakeholders both inside the bank and outside is key; a failure to communicate the good and the bad is a failure to confront changing circumstances facing borrowers and banks.

• Robert Jolly, a professor at Iowa State University, shared his tips for what young lenders need to do in order to be more valuable in the industry. According to Jolly, the forecast for growth in the number of ag loan officers is mixed, with some saying it will decline while others saying it will grow due to the growth of commercial and industrial loan growth. He said lenders can make themselves more marketable by improving and promoting their skills in problem solving, verbal and written communication, teamwork, computer literacy and farm background, which nearly 80 percent or more supervisors say is essential. Nearly 60 percent of supervisors are looking for a lender with a bachelor’s degree in ag business and economics, but less than half are looking for a bachelor’s degree in business or finance. Only one-third said experience in commercial lending was essential. PD