Retailers: Dealing With A Credit Crunch

As the nation’s financial system ground to a halt in 2008, most banks and lending institutions were still willing to extend credit to the ag market due to record commodity prices and increased yields. But according to Dave Sparks, regional manager for the commercial agribusiness group for CoBank, that was so last year.

“We are in a huge transition stage right now,” said Sparks, speaking at the annual Mid America CropLife Association meeting. “Nothing is the same as it was one year ago.”

Jeff Eggleston, general manager for Hintzsche Fertilizer, agrees. “We have not made any adjustments in the things we’ve done due to the financial crisis in the U.S.,” Eggleston says. “I guess my concern is how does this lack of available credit affect our customers on gaining operating lines of credit and us extending credit to them.”

Most industry insiders have this same concern, that banks and lending institutions will be extremely reluctant to do business with agriculture. “The average margin for retailers is so dependent on a number of factors that aren’t constant from year to year,” says Dan Kennedy, general manager for Ritter Crop Services. “There are going to be a lot of banks that won’t want to the risk of the uncertainty of growers spending and commodity prices staying high.”

Still, there is a note of hope. According to Ken Feaster, vice president for First National Bank of Omaha, ag credit will be hard to get in 2010, but not impossible. “Companies will need three things to get the credit,” says Feaster. “Liquidity, capital/equity, and a credible business plan.” He adds that seekers of ag credit should expect “100 more questions” from their lending institutions than in the past.

Leave a Reply

2 comments on “Retailers: Dealing With A Credit Crunch

  1. It is important for Banks to determine whether retailers are in a crunch because of market conditions or bad business practices. Extending credit to weak entities could put banks in the same position they were when they loaned to prospective homeowners who didn’t really qualify.

    Retailers need to understand the need for prudent management practices. Retailers will also need to review their current credit relationships with growers and make certain that they aren’t putting their operation at risk by extending financing to poorly managed operations. A strong portfolio of customers should help to justify credit and a weak customer base along with a cash-poor balance sheet will undoubtedly cause problems for some retail operations.

  2. It is important for Banks to determine whether retailers are in a crunch because of market conditions or bad business practices. Extending credit to weak entities could put banks in the same position they were when they loaned to prospective homeowners who didn’t really qualify.

    Retailers need to understand the need for prudent management practices. Retailers will also need to review their current credit relationships with growers and make certain that they aren’t putting their operation at risk by extending financing to poorly managed operations. A strong portfolio of customers should help to justify credit and a weak customer base along with a cash-poor balance sheet will undoubtedly cause problems for some retail operations.

CropLife 100 Stories

Dry and Liquid Plant
CropLife 100CropLife 100 Map
May 24, 2016
The new CropLife 100 map shows the locations of each of the headquarters of the 2015 CropLife 100 retailers. The interactive Read More
ASMARK Retailers LIVE! Tour 2016 Group shot The Andersons
CropLife 100The Andersons Rejects Unsolicited Proposal From HC2
May 19, 2016
The Andersons, Inc. has announced that its Board of Directors has rejected two non-binding, highly conditional, unsolicited proposals from HC2 Read More
BAICOR
CropLife 100BRANDT Acquires Utah Specialty Fertilizer Company
April 28, 2016
BRANDT, a leading agriculture retailer and manufacturer of specialty ag products, has acquired a majority interest in BAICOR, L.C. BAICOR, Read More
Crop InputsWinField US, Southern States Ink Crop Input Agreement
April 20, 2016
WinField US (WinField United Suppliers) and Southern States Cooperative have signed a letter of intent to enter into a supply agreement Read More
Trending Articles
Soybean Plant closeup
Industry NewsMonsanto Rejects Bayer Bid; Open To More Talks
May 25, 2016
Monsanto Co, the world’s largest seed company, turned down Bayer AG’s $62 billion acquisition bid as “incomplete and financially inadequate” Read More
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Monsanto Luling Plant
Crop InputsReport: Bayer Eyeing Monsanto For Possible Mega-Merger
May 16, 2016
Bayer AG is exploring a potential bid for U.S. competitor Monsanto Co. in a deal that would create the world’s Read More
Aerial Drone
Precision AgA Deeper Dive Into The Future Of Precision Ag
May 9, 2016
For about two decades now, through the good and the bad times, the ups and the downs inherent in agriculture, Read More
Palmer amaranth in soybean stubble
HerbicidesWSSA: Billions In Potential Economic Losses From Uncontrolled Weeds
May 4, 2016
What losses would corn and soybean growers experience if they were forced to eliminate herbicides and other control techniques from Read More
Eric SfiligojReasons For Hope In Commodity Prices
May 2, 2016
For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would Read More
Latest News
FertilizerSimplot Introduces Fused-Safe Ammonium Sulfate Nitrate …
May 31, 2016
The J. R. Simplot Co.’s new FŪSN fertilizer is now commercially available to growers. Simplot uses advanced technology to fuse Read More
Growmark FS Outlet
StewardshipGROWMARK Recognizes Crop Specialists For Advocating Sus…
May 31, 2016
Five crop specialists who have excelled in engaging farmers in sustainable best management practices are the recipients of the GROWMARK Read More
Fertilizer Dealer Supply
UncategorizedFertilizer Dealer Supply Joins GVM
May 31, 2016
GVM has added Fertilizer Dealer Supply (FDS) to its growing network of Mako dealers. “I met Mark Anderson some 20 years Read More
Crop InputsRepar Registers New Biopesticide With U.S. EPA
May 31, 2016
Repar Corp., with headquarters in Silver Spring, MD, has developed Homobrassinolide 0.1%, a new generation plant growth promoter containing homobrassinolide, Read More
Industry NewsAligned Ag Distributors Names New VP Market Development
May 31, 2016
Aligned Ag Distributors LLC announced this morning the appointment of Tim Krueger to the position of VP Market Development. Krueger Read More
FertilizerCreating The Proper Environment For Yield Increases Wit…
May 31, 2016
Finely tuned nutrient management plans are helping farmers throughout the U.S. improve nutrient use efficiency, increase return on investment (ROI) Read More
Industry NewsJ.R. Simplot Names New Wholesale Agriculture Sales Vice…
May 31, 2016
Doug Stone will be joining the J. R. Simplot Co. as vice president, Wholesale Agricultural Sales within the Simplot AgriBusiness Read More
Adjuvants loading
AdjuvantsISAA 2016 Highlights Adjuvant Trends
May 31, 2016
Adjuvants can significantly improve the performance of crop protection products. Farmers and formulators enhance the efficacy of sprays by using Read More
Monsanto Luling Plant
Eric SfiligojWhat’s Next For Monsanto?
May 31, 2016
For the folks at Monsanto’s headquarters in St. Louis, MO, it has been an eventful few weeks. Back on May Read More
Craig Houin Sunrise Cooperative iPad
Precision AgState Of Precision Ag 2016: Gut Check Time For Value
May 31, 2016
There’s no denying that precision technologies and practices are more vibrant than ever. Equipment manufacturers have fine-tuned the hardware for Read More
ManagementWashington Visit and Bayer/Monsanto Deal Update
May 26, 2016
Editors Paul Schrimpf and Eric Sfiligoj discusses a recent trip to DC and the latest news on the proposed pairing Read More
Fertilizer closeup in hand
Industry NewsVerdesian: Striking A Balance Between Yield & ROI
May 26, 2016
Finely tuned nutrient management plans are helping farmers throughout the U.S. improve nutrient use efficiency, increase return on investment (ROI) Read More
Crop InputsLand O’Lakes Announces Minnesota Water Quality Pa…
May 25, 2016
Governor Mark Dayton and Land O’Lakes, Inc. President and CEO Chris Policinski today announced a new public-private partnership to protect Read More
Soybean Plant closeup
Industry NewsMonsanto Rejects Bayer Bid; Open To More Talks
May 25, 2016
Monsanto Co, the world’s largest seed company, turned down Bayer AG’s $62 billion acquisition bid as “incomplete and financially inadequate” Read More
Corn close up
Crop InputsArysta LifeScience Establishes Global Headquarters In R…
May 25, 2016
Arysta LifeScience has announced plans to relocate its global headquarters from West Palm Beach, FL, to Cary, NC, over the Read More
fertilizer blending and storage, Top 100
BlendersCHS Dakota Expansion Features AGCO’s GSI InterSys…
May 25, 2016
The continued growth of precision agriculture has increased farmer use of customized fertilizer blends best-suited for their soil conditions. Several Read More
ManagementAgriculture 3.5: A Bumpy Road Ahead
May 24, 2016
You may have read my article a few years ago on Agriculture 3.0, which is a term I coined to Read More
Topcon’s X30 display with CropSpec sensors
EquipmentGPS Autosteer Systems: Product Updates From Precision A…
May 24, 2016
Throughout 2015 GPS Steering solutions continued to evolve from what was once an after-market add on, to today’s cab where Read More