Blog   Economic Outlook

August Outlook by the Numbers

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Do you have questions on the housing market, labor market and interest rates? Check out UMB Investment Management team’s August 2017 Outlook by the Numbers for a quick snapshot on these and other economic drivers.

Also, be sure to review the following videos, articles and interviews for more market and wealth management information…

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*Bloomberg Radio with Pimm Fox and Lisa Abramowicz (audio): UMB’s Mathews: People Conflated Trump Bump With Earnings Rally ‡

*CNBC (video): Tech leadership names will likely rotate

*BloombergMaybe ETFs Aren’t the Reason You Can’t Find Any Stocks to Buy

*CNBC (video): Avoid the Political Distractions

*Ingram’s Magazine: Gray Expectations

*Colorado Biz Magazine: How to Stay Cool as Markets Heat Up

Interested in learning more about our Private Wealth Management division? See what we mean when we say, “Your story. Our focus.

Follow UMB‡ on LinkedIn to stay informed of the latest economic trends.

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


UMB Financial Corporation (Nasdaq: UMBF) is a diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors.



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Are We Facing an Ag Crisis Like the 1980s?

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Our agribusiness team has been working with clients in this industry for more than 100 years. So, when we heard rumblings of a potential ag crisis like the one we faced in the 1980s, we wanted to share our insights and research with customers.

Turns out, our customers weren’t the only ones interested in this news. You can read more below for our thoughts or check out some recent media coverage on NPR’s Marketplace, the ABA Banking Journal and Missouri Farmer Today. One thing is certain: Today’s current agriculture climate is a challenge, but comparing it to the 1980’s farm crisis would be a mistake. Let’s take a walk back through history for a refresher.

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The 1980’s farm crisis was born out of the early 1970’s grain boom. Demand for nearly all grains took off in the early ‘70s as several international crops failed and geopolitical conditions made U.S. grain much more valuable.

By 1973, real farm income had reached a record high of $92.1 billion (nationally), nearly double what it was just three years earlier. Exports of U.S. agriculture products grew dramatically in the 1970s as rising incomes and liquidity in developing nations created strong demand.

In 1970, exports contributed only $6.7 billion or 11 percent of the grain produced in the U.S. By 1979, this number had jumped to $31.9 billion and was more than 22 percent of the grain raised in the U.S. that year.

Things were going so well for the American farmer that even Robert Bergland, U.S. ag secretary at the time, commented in 1980 that, “The era of chronic overproduction… is over.”

The equation that followed was simple:

  • Higher grain prices + more available credit = much higher land prices.

The boom eventually went bust, in perhaps one of the most difficult periods in the history of American agriculture. In 1981, there was only one ag bank failure among the 10 bank failures in the U.S.; by 1985, things had become so difficult that the 62 ag bank failures that year accounted for more than half of the bank failures in the U.S.

It may be unbelievable to read this today, but the prime rate averaged 15.3 percent in 1980. Higher interest rates almost automatically drove land prices down by the inherently lower value of the earnings that the land produced. If an investor could receive 13 percent on a CD in the bank, why consider purchasing farm land?

Also, export demand fell precipitously as the U.S. dollar strengthened considerably. In 1981, U.S. ag exports totaled $44 billion and then fell dramatically to $26 billion in 1986. Land values increased every single year from 1970 through 1981, but gross income per acre actually had several year-to-year decreases. Astonishingly, when land prices finally peaked in 1981, returns on investment for corn and soybeans were only one third of what they had been in 1973. Land was a laggard in terms of decline but eventually succumbed to the industry downturn.

Without question, the greatest assailant on the agriculture sector in the mid-1980s farm crisis, was the skyrocketing interest rate situation that devastated cash flows, credit availability and asset values. By comparison, today’s prime rate has been stalled at or below 4 percent for the better part of a decade. Clearly, interest rates are much more favorable for the farm sector today than in the crisis of the 1980s. This is the single greatest and most important difference between the two environments.

Another key distinction to understand when comparing the 1980s to the current environment is the recent trends and current expectations regarding

inflation. The consumer price index (CPI) took off in the early 1970s and the Federal Reserve struggled mightily to tame the beast of rampant inflation. Its only real tool to effectively combat inflation turned out to be much higher interest rates. Today’s CPI is completely dissimilar when compared to that of the 1970s and the early 1980s. As long as inflation remains subdued, rates may moderately increase, but will be nothing like the rates seen in the 1980s.

The recent ag economy has shown signs of stress including much lower grain prices, declining values for land and equipment, and modestly increasing interest rates. Lower net farm income, oversupply, and rising rates are akin to both the current environment and the 1980s. On the other hand, significant differences can be pointed to:

  1. A current prime rate of 4 percent is very manageable.
  2. Aggregate farm debt in terms of overall leverage is significantly less than it was on the cusp of the last big down turn.
  3. Federal crop insurance and other support programs have been bolstered over the past 35 years and provide meaningful support.

These similarities should cause all of us involved in agriculture to carefully make decisions and double our efforts in working together to ensure satisfactory outcomes. It is important to remember the history of our industry so we can all try to maneuver the current times and pave a way forward. By really understanding the similarities and differences of the 1980’s farm crisis to the challenges we are facing today, we can better prepare, understand and plan for the road ahead.

Our Agribusiness Division serves all areas of agriculture, including producersprocessors, suppliers and manufacturers of equipment and goods, throughout a 12-state area.

Learn more about what ag means to UMB and see some of our clients in action.

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

 


UMB Financial Corporation (Nasdaq: UMBF) is a diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors.



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Monthly Media Update – July

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NPR discusses the fears of a emerging farm crisis with our ag division, CNBC Powerlunch and Bloomberg Radio talk to UMB’s CIO, our Colorado Springs community bank president supports the city’s downtown redevelopment, and why hospitals are spending millions of dollars developing electronic health records are a few media coverage highlights from July.

Stay informed on industry trends and noteworthy company news by visiting our UMB in the News section on umb.com, which is updated weekly for timely viewing.

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UMB Financial Corporation (Nasdaq: UMBF) is a diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors.



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Market Minutes: Earnings, Tech Stocks and Valuations

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Chief Investment Officer KC Mathews recently shared his thoughts on current market conditions with Bloomberg and CNBC. Review the below media highlights to learn more about items he’s watching.

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*Bloomberg Radio with Pimm Fox and Lisa Abramowicz (audio): UMB’s Mathews: People Conflated Trump Bump With Earnings Rally ‡

*CNBC (video): Tech leadership names will likely rotate

*Bloomberg: Maybe ETFs Aren’t the Reason You Can’t Find Any Stocks to Buy

Also, read KC’s recent economic articles, which give more detailed information on where we’ve been and where we’re headed.

Follow UMB‡ and KC Mathews‡ on LinkedIn to stay informed of the latest economic trends.

Interested in learning more about our Private Wealth Management division? See what we mean when we say, “Your story is our focus.


UMB Financial Corporation (Nasdaq: UMBF) is a diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors.



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July Outlook by the Numbers

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Do you have questions on the housing market, labor market and interest rates? Check out UMB Investment Management team’s July 2017 Outlook by the Numbers for a quick snapshot on these and other economic drivers.

Also, be sure to review the following articles for more market and wealth management information…

Continue Reading

Follow UMB‡ on LinkedIn to stay informed of the latest economic trends.

 Interested in learning more about our Private Wealth Management division? See what we mean when we say, “Your story is our focus.


UMB Financial Corporation (Nasdaq: UMBF) is a diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors.



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Corporate Earnings and Fidget Spinners

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What do corporate profits and fidget spinners have in common?

Happiness.

While parents may never understand fidget spinners, kids sure love them. Trendy toys make kids happy, even if we don’t understand the intrigue. While we expect fidget spinner fascination to wane and follow the path of prior fads, such as the pet rock, Furbys and silly bands, we expect the opposite of corporate earnings.

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We believe corporate earnings are moving to trend status and have the staying power to grow for the next eight quarters. And this will translate to happiness in the market. Stock markets do well when corporate earnings are stronger than expected, as earnings are the lifeblood of the market.

July 10 marks the unofficial start to second quarter earnings season, and we expect earnings growth momentum to continue based on the following data.

Shift from Earnings Recession to Earnings Expansion

Beginning in the fourth quarter of 2014, corporate earnings evaporated, starting an earnings recession that lasted until the third quarter of 2016 when earnings finally posted a slightly positive gain.

The first quarter of 2017 recorded strong earnings growth of 17.8 percent and sales growth of 8.5 percent. Wage inflation, commodity costs, margins, and share repurchases boosted (and will continue to boost) earnings growth.

Additionally, easy year-over-year comparisons helped these numbers, as earnings declined 5.0 percent last year during the same time period.

(Click to Enlarge)

Industries We’re Watching

Technology and finance sectors are expected to have the highest growth rates among all S&P 500 sectors.

  • Strong demand for cloud-based services and cell phones are leading growth for technology.
  • In the finance sector, the recent increase in interest rates bode well for banks as expanding margins can make more profit on the money they lend out relative to their interest paid on deposits such as checking/savings accounts. Additionally, higher rates should help offset weaker than expected loan growth trends.

Key Drivers: A Look Ahead

Sustainable corporate earnings growth is driven by economic activity and GDP growth, and corporate earnings are highly correlated. Economic global growth continues to improve, with China and Europe’s economic data showing signs of green shoots, and we see a pick-up in domestic growth as well.

We expect second quarter earnings to increase eight percent and revenue growth to grow four percent.

Timing the Earnings Tailwind

The promise of fiscal stimulus is a tailwind for corporate earnings. Tax reform, reduced regulation and infrastructure spending have the potential to increase earnings by 10 to 15 percent.

However, there are two issues with fiscal stimulus. The first is timing—how quickly will things develop? Given current conditions, it appears this will be a 2018 event.

Secondly, fiscal stimulus has a short-term impact on economies and markets. Historically, when you are late in an economic cycle like we are now, fiscal stimulus is effective for only four or five quarters.

Therefore, while potential fiscal stimulus is positive for the long-term, investors will have to exercise some patience and understand that they may be shorter-lived when they are realized.

The Broader View

We have a positive view on the economy and expect GDP to grow at 2.2 percent in 2017. Over time, S&P 500 revenue growth has had a multiplier of 1.5 times GDP growth. This GDP multiplier, plus an expected rebound in oil, supports our 5 percent revenue growth for 2017.

All things considered, we believe the next few quarters of corporate earnings are going to be a trend that will bode well for the markets. Meanwhile, children will continue to play with their fidget spinners – or the next greatest fad – and everyone will be happy.

Follow UMB‡ and KC Mathews‡ on LinkedIn to stay informed of the latest economic trends.

Interested in learning more about our Private Wealth Management division? See what we mean when we say, “Your story is our focus.

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


K.C. Mathews is executive vice president and chief investment officer, Mr. Mathews is responsible for the development, execution and oversight of UMB’s investment strategy. He is chairman of the Trust Investment, Asset Allocation and Trust Policy Committees. Mr. Mathews earned a bachelor’s degree from the University of Minnesota and a master’s degree in business administration from the University of Notre Dame. Mr. Mathews attended the ABA National Trust School at Northwestern University and is a Chartered Financial Analyst and member of the CFA Institute.

Will Reese is a senior securities analyst for the Private Wealth Management division at UMB. He has an Bachelor of Science degree in psychology from the University of Kansas and a Master of Business Administration degree with an emphasis in finance from Avila University. In his role, Will monitors and maintains departmental equity working lists, recommends stocks for external clients, and provides equity research and analysis for internal customers.




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Reality TV vs. reality — America is watching

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Reality TV has become popular, to say the least. Apparently we enjoy watching people be voted off islands, on the hunt for love and get fired on national television. Included in this group is our new president, who was the host of The Apprentice for a number of years.

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However, since the January inauguration, President Donald Trump is now faced with reality, which does not include retakes, professional editing and an audience who enjoys both failure and success.

But, his new job does include balancing an active audience’s perceptions and actual reality, particularly as it relates to the economy and some of his key initiatives.

Paradigm Shift

Trump has suggested a paradigm shift by stimulating economic growth through fiscal policy and government spending, rather than relying on monetary policy and lower interest rates. While economic fundamentals have been improving for several quarters, contributing to positive public perception, Trump’s proposed fiscal policy stimulus will have a relatively minor impact on long-term economic growth.

The empirical evidence suggests that when the economy is at full employment, any fiscal policy stimulus will have a temporary impact on growth, four to six quarters at best. In reality, fiscal policy stimulus does one thing on a long-term basis – it increases the national debt.

Tax Cuts

The president, along with others such as Treasury Secretary Steven Mnuchin, has suggested tax cuts will pay for themselves by boosting economic growth. Yet, there is no evidence to support this idea. Rather, historical reality suggests cutting taxes will increase the federal debt burden.

Former President Ronald Reagan in the early 1980s and former President George W. Bush in the early 2000s both cut taxes, yet there is little evidence that economic activity improved.  However, we do know the national debt mushroomed in both cases.

Repatriation of Foreign Profits

Believe it or not we have been here before. In 2004, the American Jobs Creation Act was passed. Part of the plan covered the repatriation of overseas profits at a reduced rate of 5.25 percent. In 2004, five companies, primarily pharmaceutical, dominated the almost $1 trillion foreign profit stockpile.

Only one-third of the total cash came back to the U.S. Most of the money went to repairing corporate balance sheets and rewarding shareholders with share repurchases. $18 billion did go into the U.S. Treasury’s coffer. The Congressional Research Service, a nonpartisan think tank, said the program was an ineffective means of increasing economic growth.

Today, the reality is that a small number of technology companies dominate the $2.5 trillion cash balances overseas. If offered a tax reprieve on repatriating foreign profits, history tells us the same behaviors will result—higher dividends and more share repurchases, which, I believe, will not materially impact the economy.

Multiplier Effect

The multiplier effect is a phenomenon where given a change in a particular input, such as government spending, a larger change in an output occurs, such as gross domestic product (GDP).

We are about to see a paradigm shift in the U.S.—moving from monetary policy stimulus (interest rates) to fiscal policy stimulus (government spending).

The million dollar question is, “Will it promote economic growth?” The Congressional Budget Office provides historical analysis on the efficacy of fiscal spending. The multipliers show that any form of increased government spending would have a higher multiplier effect than any form of tax cuts.

Economic Reality

There are two primary drivers of long-term economic growth, labor force growth rate and productive gains. Labor force growth rate in the U.S. is approximately 1.2 percent. Non-farm productivity year-over-year growth is 1.1 percent. Add them together, and you have a 2.3 percent trend GDP over the next few years. We could realize one or two quarters of 3.0 percent or greater GDP, but it’s not sustainable.

However, this is not a doomsday conclusion. If we do experience trend GDP between 2.0 and 2.5 percent, it will allow companies to grow revenues and earnings. This in turn will support higher stock prices.

Political Process Reality

Trump’s term has really just begun. And what many reality television enthusiasts, and the president himself, may be finding out is that reality TV can be fun to watch, but the reality of the political process may not be.

Follow UMB‡ and KC Mathews‡ on LinkedIn to stay informed of the latest economic trends. Read other recent commentary on umb.com.

Interested in learning more about our Private Wealth Management division? See what we mean when we say, “Your story is our focus.


K.C. Mathews joined UMB in 2002. As executive vice president and chief investment officer, Mr. Mathews is responsible for the development, execution and oversight of UMB’s investment strategy. He is chairman of the Trust Investment, Asset Allocation and Trust Policy Committees. Mr. Mathews has more than 20 years of diverse experience in the investment industry. Prior to joining UMB, he served as vice president and manager of the portfolio management group at Bank of Oklahoma for nine years. Mr. Mathews earned a bachelor’s degree from the University of Minnesota and a master’s degree in business administration from the University of Notre Dame. Mr. Mathews attended the ABA National Trust School at Northwestern University and is a Chartered Financial Analyst and member of the CFA Institute. He is past president of the Kansas City CFA Society and a past president of the Oklahoma Society of Financial Analysts.



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Market Minutes with KC Mathews

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Chief Investment Officer KC Mathews recently completed a two-day media briefing in New York City, where he shared his thoughts on current market conditions as well as information on his 2017 forecast with CNBC, CNN Money, and Bloomberg Radio. Listen to the brief podcast and read the articles below to learn more about what KC is expecting to see over the course of the year.

Also, read KC’s recent economic articles, which give more detailed information on where we’ve been and where we’re headed.

Follow UMB and KC Mathews on LinkedIn to stay informed of the latest economic trends.

Interested in learning more about our Private Wealth Management division? See what we mean when we say, “Your story is our focus.

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

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UMB Financial Corporation (Nasdaq: UMBF) is a diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors.



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UMB Insights: How Will Senior Housing Look in 2037?

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Millennials may be all the rage these days, but Baby Boomers are still making an enormous impact on the U.S. economy, particularly in the senior housing market. By 2050, the population of individuals aged 65 or older will grow from 40 to 89 million, an increase of 120 percent.

And as Americans age, where and how they will live becomes a more pressing issue – an issue that will have a significant impact on the economy, construction industry and banking sector over the next 20 years.

Where will Boomers live?

Although staying in their homes is almost universally preferred among Baby Boomers, many aging Americans will transition to multi-housing developments that provide some assistance and allow them to live as independently as possible. Others, especially those with medical disabilities, will seek housing in environments that provide more intensive nursing support and other assistance.

The average age of a resident in a senior housing facility is in the ’80s. With the leading edge of Baby Boomers just now turning 70, the need for additional senior housing units is expected to accelerate over the next few decades. In fact, between 2015 and 2020, all 50 states forecast growth in the number of 75-year-old+ households. The increase in senior housing will come from sectors such as Alzheimer’s and Memory Care facilities, independent living centers, assisted living facilities, skilled nursing facilities, continuing care retirement communities, home health care and hospice care.

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What will their housing look like?

It is a common rule of thumb in the industry that Baby Boomers will typically choose a newer, more modern and home-like facility versus an older institutional facility. Therefore, the industry has moved from an institutional feel to a more home-like atmosphere, including eliminating long hallways and nursing stations and replacing them with single rooms, private baths, large rehab spaces, smaller cafeterias, snack bars, beauty salons, theater rooms and much more. As a result, when new competition hits the market and consumers choose with their feet, it becomes much harder for older facilities to maintain the occupancy levels needed to ensure financial success.

How will their preferences affect the economy?

So, what does this mean for the general economy? It means that there are significant opportunities for contractors, developers and lenders that are experienced in senior housing to help owners modernize existing facilities or build new housing options for seniors. Construction for many new facilities is already underway or in the approval phases and financing continues to be readily available for developers and operators in this sector.

What are the risks?

On the flip side of this successful outlook, there are concerns and challenges that need to be monitored and addressed. Even though the senior housing industry is one of the fastest growing segments in the U.S. economy and there are many desirable lending and development opportunities, builders, developers and lenders must effectively mitigate the risks inherent in the industry.

Characteristics of the long-term care business require that successful participants maintain industry-specific knowledge and utilize best practices for each project. For the benefit of all parties involved, it is important that everyone tied to senior housing projects remain prudent and evaluate all risk related to each project. Doing so will mean a stronger economy with more housing options available for Baby Boomers of all ages.


Richard Ziegner is executive vice president and director of healthcare banking at UMB Bank where he is responsible for leading the bank’s efforts in the healthcare sector and providing capital and financial solutions to healthcare providers. He graduated from the University of Arizona in Tucson, Ariz. with a Bachelor of Science degree in finance and earned his Master of Business Administration degree from Northern Arizona University in Flagstaff, Ariz.



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How to Prepare for Ag Challenges in 2017

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For those in the ag business, it’s no secret that 2015 and 2016 were challenging years. And 2017 is looking like it might follow suit. In an industry known for its optimism, you could be hard-pressed to find anyone overly positive about what lies ahead this year.

Producers, in particular, are going to face more challenges in 2017 given the current commodity prices and over supply of crops. In light of those challenges, here are a few steps they can take to prepare for 2017 and beyond.

1. Know Your Numbers: As lenders work with you to project what the next year will look like, it will help to be prepared with key data points, including:

  • Planting intentions – Know your acres, crop type and fertilizer application plans
  • Working capital needs – Know what is changing and ways to improve working capital
  • Break-even analysis – Know your input costs, conservative bushel projections and sales triggers
  • Expense management – Know what specific changes are being made in your operation to endure lower prices and what further trimming can be done
  • Balance sheet basics – Have a good understanding of your current amount of working capital, overall debt-to-equity ratio and value of unencumbered real estate
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2. Be a Tough Negotiator: With the significant price changes in the grain complex, those who sell to farmers are having a harder time making the next sale. This means you have an opportunity to attain better prices when you spend money.

  • Cash rents – In general, landowners will need to make some concessions on cash rents. Be willing to negotiate but not afraid to walk away if the math doesn’t work for you at renewal time.
  • Equipment – There are definitely deals to be had on used iron, but only do what makes sense for your operation. Also, aggressive lease terms are being offered and in many cases may lower cost, or improve cash flow, throughout your operation.
  • Basic purchases – Those who sell you crop insurance, seed, fertilizer, chemical, parts, equipment and more will need to know that farmers are carefully weighing each purchase. Loyalty to such suppliers is wonderful but it is also okay to encourage competition for your spending dollars.

3. Sell Items that Aren’t Contributing: The truth is there are some things that just need to go. Whether it is a poor piece of land that isn’t producing, a tractor that might not be essential or a trailer that is collecting dust, take stock of what you have and determine what needs to go.

During this period in which some producers will have limited working capital and struggle to service debt, it is imperative to critically examine your assets. Working capital and liquidity have become – and will continue to be – critically important in the coming years. Any asset sale that bolsters your liquidity position will improve your ability to endure the current commodity prices and thriving as we look forward to better days.


Lance Albin is vice president, agribusiness commercial lending officer at UMB Bank and has more than nine years of experience in agriculture financing. He has a master’s degree in business administration from Fort Hays State University. UMB Bank is one of the Top 25 Farm Lenders in the United States serving farmers/ranchers, producers, processors, manufacturers and dealers throughout the Midwest and Mississippi Delta regions.



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