Resource Center

Expert Insights
  Busey named one of America's Financial Leaders by Forbes
Expert Insights

Risk Management in Midst of Agriculture Industry Challenges

Our team evaluated challenges the agriculture industry would face over the next five years in 2013. As we near the mid-way mark, it seems we have more questions than answers.

  • Commodity prices dropped over the last couple of years; how low will they go?
  • How will places like China and Brazil impact the market going forward?
  • And what about farmland values? Why haven’t they dropped at the same rate as grain prices?

The first two questions involve possible future events and make up some risk that we face going forward. While we might not have all of the answers now, we can prepare for the possibilities. To start, let’s answer the last question regarding farmland values.

Over the last couple of years, the number of farms for sale has dropped more than the number of buyers. These buyers have generally been farmers with available cash to invest in the growth of their operations. Investors looking to add a long-term asset to the portfolio are also staying in the farmland market. With that in mind, the demand for farmland is still strong as the supply has decreased. Farmland continues to serve many groups as a viable long-term investment, adding another layer to a diversified portfolio.

Cash and capital are paramount when it comes to farmland. Equity in real estate is an important source of net worth for many farmers. Buyers’ purchasing power grew significantly over the past four years. This power and responsibility didn’t come without its fair share of hard lessons. Many buyers were products of the “land crisis” generation during the late 70’s and 80’s.

During the land crisis, farmers borrowed a significant amount of money to purchase land and lenders financed those purchases. A great deal of emphasis was placed on the borrower’s net worth and less on liquidity; however, much of that net worth was tied into long-term assets including equipment and land. Once land values dropped, net worth eroded quickly. The fact that many of these loans had variable interest rates didn’t help the situation. Consequently, many borrowers faced great difficulty in meeting debt obligations and some found themselves simply unable to make payments.

Now, as lenders work with borrowers on financing farm operations, working capital and liquidity dominate the discussion. Having this available cash is one of the best ways to protect yourself for difficult economic times and it can create opportunities for taking advantage of the good times. Cash and savings provide owners with options, even when we feel like we need to batten down the hatches. Farmers with good working capital positions can continue to be creative in how they position their operation for positive long-term returns. Growers in that situation can feel confident that their risk management strategy is on the right path.

How is your risk management strategy? Are you prepared for the volatile grain markets? Do you feel comfortable navigating through the economic transitions over the next five years? There will always be a great deal of uncertainty in agriculture with more questions than answers. Two things are certain: change is inevitable and no matter what the future holds, Busey Ag Services will be here to guide you every step of the way. With over 145 years of farm management experience, we will develop a sound risk management plan in order to make the most of your farmland investment for the next five years and beyond.

Back to School

  • Rated 5-Star "Superior" by Bauer Financial
  • Better Business Bureau Accredited Business
  • Certified Green Business by the Illinois Green Business Association
  • Norton Secured; powered by VeriSign
  • Website powered by Digital Insight
  • Surcharge-free access at any MoneyPass network ATM
  • Equal Housing Lender
  • Member FDIC

 

 

 

 

 

 

 

With five lines of business—personal, mortgage, commercial, cash management and wealth management—working together as One Busey, we can meet all your financial needs with confidence. Customers who partner with us are rewarded with the Busey Advantage—regional capabilities and local priorities. It's a commitment that has stood the test of time.

On the personal side, Busey Bank promises to make your banking hassle free with smart personal checking and savings accounts, convenient online banking and mobile banking solutions and consumer loans. Whether you are ready to buy your first home or simply want to refinance the one you currently own, our practical homemortgages, participation in a wide range of special loan programs and in-house mortgage expertise mean your home loan is tailored to your individual needs.

From opening your first business checking account or loan to creating a strong succession plan, Busey can help you manage your growing business. Our business banking, lending and cash management solutions give you the tools you need to keep your business successful and nimble. Our participation in a wide variety of specialized programs and in-house credit expertise allow us to tailor commercial lending packages to your unique situation and make faster credit decisions. Busey knows that cash flow is the lifeblood of a business—whether you need help with receivables, payables, liquidity, fraud protection or information reporting, we can customize your cash management solution to your growing business' needs.

You've earned it. We'll grow it. Busey Wealth Management provides asset management, investment and fiduciary services to individuals, businesses and foundations. We build a team of local professionals around your needs to establish the best strategy for your situation. We work closely with you to develop a personal, comprehensive plan that will help you meet your goals and objectives through each phase of the wealth management process.

Innovative Banking. Simplified.

It's your money, and you should be able to access your accounts whether you're out shopping or out of the country.

Busey makes it easy to securely manage your finances whenever you want, wherever you are.

Personal BankingLearn More

First home. Or dream home.

There's no place like it.

Busey promises to find the home financing that's best for you - whether you're just starting out, tired of renting or purchasing your dream home.

MortgageLearn More

A top partner for your bottom line.

You've worked hard to realize your dream of opening a business.

Busey promises to partner with you so you don't have to handle difficult decisions alone.

Business BankingLearn More

You earn it. We'll grow it.

After years of hard work, you want to see your efforts pay off - literally.

Busey promises to make your money work for you.

Wealth ManagementLearn More

Our customers are our neighbors.

When it comes to navigating your unique financial journey, you want a partner who understands who you are, where you came from and where you are headed.

Busey promises expert advice to guide you through every important financial decision.

Resource CenterLearn More

Our roots run deep.

With roots that trace back more than 145 years, our professional farm managers are entrusted to care and maximize value for landowners controlling a combined 100,000+ acres of prime farmland in Illinois.

Ag ServicesLearn More

A top partner for your bottom line.

You've worked hard to realize your dream of opening a business.

We'll build a relationship with you so you don't have to handle these difficult financial decisions alone.

Learn More

Your Dream. Our Promise.

You have big dreams.

Busey promises to help you realize those dreams.

The Busey PromiseLearn More