Farming financials: Where does a young rancher even start?


For a young or beginning rancher, just figuring out the financing can be downright frightening. But Casey Cook, Senior Relationship Manager, Farm Credit says it doesn’t have to be. The next generation needs to start with a well-thought-out plan and needs to ask a lot of questions.

“Agriculture is highly capital intensive and so it’s tough. I’m not going to lie,” Cook said. “It’s tough for young producers to get into the business so they need to have a plan. The best thing they can do to put a plan together and ask several mentors about it, ask family, ask friends about it, and then come to a banker with a heart for teaching and a passion for really working with these young producers and let that lender also help them vet that plan.”

Cook said one of the most important things a young farmer or rancher need to think about is the use of debt.

“The use of debt can be really good but it can also crush an early enterprise,” Cook said. “There is the right amount of debt for every operation and sometimes these young individuals are looking to rely too heavily on debt and when you really get into the plan, they are never going to get out from under it because the scale is not going to work for them.”

Cook encourages the next generation to find a sponsor, whether that be a community person, a parent, or another relative that can help with the free use of equipment, possibly co-sign a note, or offer a reduced rate on land rent.

And once that plan is in place, Cook says don’t forget about the weather.

“These young producers always need to consider the weather. What is their stocking rate on that piece of land going to be on a good year or a dry year and they need to be able to flex and move according to what Mother Nature gives them,” Cook said. “We can control a lot of variables, we can control interest rates, we can control hedging programs, we can control feed programs … we don’t control the weather.”

The key is to be flexible with the plan and keep communicating with your sponsors.

“As these young producers look to get in the market, they put a plan together, be ready to adapt that plan,” Cook said. “Pay attention, market factors change, weather patterns change, global trade changes, tax laws change. Be ready to pull that plan back out and adapt it quickly. Go back to those mentors and lenders and get that advice and ask when this happened to you, how did you make that change.”

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