It’s no secret that farmers are going through a tough time. Being an ag lender and relationship banker means supporting them during difficult moments, encouraging them not to lose hope and finding ways to help solve today’s problems so they can keep producing crops that are essential to our economy and our lives.
Understanding Reality & Finding Opportunity
Commodity prices are some of the lowest we’ve seen in a decade, and expenses are some of the highest. Farmers are getting squeezed on both ends. The current federal Farm Bill, passed in 2018, includes target prices for row crops from 2012. While soybeans sold for more than $15 a bushel a few years ago, they now trade below $10 a bushel. Rice prices are down more than 25% compared to a few years ago, and the University of Arkansas Extension Service’s budget projects a loss for rice crops this year.
This spring, flooding from heavy rain and storms left at least $78.93 million in crop-related flood damage in Arkansas, according to the University of Arkansas System Division of Agriculture. Many farmers took crop insurance payouts this year because wet weather kept them from planting.
It’s times like these that having a good relationship and open communication with your banker can be beneficial to farmers. Lenders understand that agriculture can be a boom-or-bust situation depending on the cycles of supply and demand.
When we talk with producers, we want to see that they’re being proactive about the current challenges. We want to know what steps they are taking to reduce their expenses or market their crops more effectively. Because we have worked closely with them, we know if they have the expertise to weather this period. However, we also know that to do that, they must have a plan.
These conversations help us connect farmers with financing solutions during difficult times. For example, we have seen crop loans from 2024 that extend into 2025 because there wasn’t enough farming income to pay them off. We work with farmers to find ways to cut costs, preserve credit and restructure assets to cover their carryover expenses.
Sometimes, solutions can be quite simple, like repairing existing equipment instead of buying replacements, or diversifying to grow a more profitable crop. In some cases, it might involve exploring Farm Service Agency assistance programs with an FSA lending specialist. If an older farmer has reached the point that they want to retire, we can help them develop a succession plan that includes advice from their attorney, financial planner and tax adviser.
Looking Ahead
Growing up in Poinsett County, the largest rice-producing county in the country, I saw that if your parents were farmers, the children usually took over the farm when they retired. Now, the younger generation is moving away from farming. By next year, the average age of farmers will likely be over 60.
Farming is a very capital-intensive business. We need to find ways to support young farmers. That could come through new lending programs, offering tax incentives to older farmers who sell land or equipment to younger farmers, or collaborating with Arkansas State University’s College of Agriculture to promote USDA assistance programs to students. If we don’t find creative ways to support the next generation of farmers, there won’t be enough farmers to work the existing land.
I am encouraged by the work of Arkansas’ U.S. Sen. John Boozman, chairman of the Senate Committee on Agriculture, Nutrition and Forestry, on a new federal Farm Bill. An updated comprehensive policy package can help provide the crucial support needed to stabilize farm incomes and ensure reliable food supply.
Lenders understand that farmers can’t control commodity prices any more than they can control Mother Nature or Father Time. Remember, communication is essential. The most important thing right now is to reach out to us and let us know where you stand so we can work together to find ways to help you continue producing.
Joe Verser is the commercial loan manager, SVP for Arvest Bank in Jonesboro. The opinions expressed are those of the author.