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Angus Productions Inc.
Copyright © 2011
Angus Productions Inc.

Financing in the Age of Uncertainty

Cattlemen need to help their banker understand their operation.
by Kindra Gordon for Angus Productions Inc.

Back to the Angus Beef Bulletin EXTRA

DENVER (Feb. 2, 2011) — Communication is the foundation to building a better relationship with your ag lender, emphasized Rod Alt and Jud Jesske during their Cattlemen’s College presentation to attendees at the Cattle Industry Convention Feb. 2 in Denver. Based in Amarillo, Texas, Alt specializes in loans to the ag sector as a loan officer with Wells-Fargo. Jesske is vice president of ag business finance for Farm Credit Services of America and is based in Omaha, Neb.


“We are in the business of loaning money, and we want to help your operation succeed,” Jesske said. But to do that, he added, “You need to help your lender understand your operation. Nobody can present or tell your story better than you.”


Rod Alt & Jud Jesske

Rod Alt and Jud Jesske emphasized the need for producers to educate their bankers to give them a better understanding of the business.

Specifically, when you meet with your lender, know your numbers, the duo recommended. “Whether you want to maintain your operation or expand, to ensure you continue to have access to credit in coming years, the better and more often that you can share your financial performance with your banker, the stronger [the] relationship you will build,” explained Jesske.


Alt said, “Accurate financial statements with accrual-based numbers, projections, or any peer analysis of comparable nearby operations are all good information. The more information you bring your lender, the easier and faster they can make a decision.”


If you are planning to expand your operation or to change an enterprise, Jesske and Alt added, it’s important to also develop a business plan and then explain to the banker how these changes will affect your operation.


“Your banker wants to know if the expansion makes sense, how it will impact labor and equipment needs, and what the projections are for profit and loss,” said Alt.


“We want an honest assessment," he added. "Even if you show a loss in the first or second year, we want to see that. We recognize that the cattle cycle is cyclical. We understand that and so your projections must be realistic.”


Additional considerations this duo emphasized in working with lenders included:

In closing, Alt and Jesske shared optimism for the future, stating that they anticipate a lot of available credit and rapid growth in the ag sector. Alt emphasized that it will be the creditworthy clients who have built relationships with their lenders who will have access to that capital.


Jesske concluded, “Cattlemen who can demonstrate an intimate knowledge of their financial position, have a track record of producing profits, and operate with honesty and integrity will continue to have access to credit in the future.”






Editor’s Note: The above article was written under contract or by staff of Angus Productions Inc. (API). It may not be reprinted without express permission of API. To request reprint permision, contact the editor at 816-383-5200.


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