Conservative Approach and Cash are Top Survival Traits
LAKELAND, FL – At the start of 2020, sentiment among American farmers was generally optimistic. The first phase of the U.S.-China trade agreement was underway with the U.S.-Mexico-Canada agreement right behind it and farmer sentiment reached a record high in February as Agriculture Secretary Sonny Perdue stated that Market Facilitation Program (MFP) payments would likely not be needed this year. Then a global pandemic came along and flipped those projections upside down. According to AgAmerica Lending CEO Brian Philpot, optimism is slowly beginning to return as farmers reassess the financial structure of their operations and adjust their business plans to compensate for factors that could drastically impact their 2020 profitability. He says that the five major factors that farmers are monitoring include: farm labor shortages; strained global trade; food supply chain disruptions; decline in farm income; and limited government aid. Farmers are responding in two notable ways, Philpot explains. First, they are taking a conservative approach knowing that now is not the time for any drastic changes. Second, he says having cash on hand to stay operational is crucial in times of economic upheaval. “Cash is king right now. Look at your balance sheet and if you don’t have what you feel like is enough potential working capital, talk to your lender about your line of credit. Think ahead rather than wait until the last minute and hope. Plan for it, right now. Farmers have to have cash on hand and available credit to weather the storm.”
(SOURCE: AgAmerica Lending)