Independent Banker - September 2023 - 51
call or sit down at their computers, "
he says.
Having up-to-the-minute
information is more than a
convenience; it's critical for sound
decision-making.
" Knowing where farmers are at
with an operating loan matters, " says
Magenheim. " Do I need to sell my
grain this week? Or can I wait three
weeks for a better price? And when
can I buy a new piece of equipment? "
WEIGHING TECH CAPITAL LOANS
In southern Minnesota, dairy
farmers are embracing technology.
With precision dairy, it's possible
to measure everything from a cow's
body temperature to daily milk
output and even to get ahead of
disease outbreaks, explains Tait Berg,
senior agricultural coordinator for the
Federal Reserve Bank of Minneapolis.
Ditto, he says, for ranchers, who
are now placing GPS trackers on
cattle to create virtual or geofencing
boundaries that can be defined via
iPad or computer. " [Checking and]
fixing fences is labor intensive and
tedious, " he says, " so if the cost of the
technology comes down, the ROI for
that innovation could be very good. "
While technology is reshaping
everything from traditional farming
to ranching and fishing, Travis A.
Werley, senior vice president and
agricultural relationship manager
at $7.6 billion-asset Tompkins
Community Bank, which is based
in Pennsylvania and New York,
notes that " row cropping has been
at the forefront of technology
in agriculture. "
One seismic change in rowcrop
technology is machines that
singulate seed. Instead of dumping
seed in rows, as grain drills do,
these newcomers place each
seed individually.
Further down the road, farms could
be worked by robots and autonomous
tractors, predicts Magenheim.
Although these technologies may
not be fully commercialized for a few
more years, he urges bankers to get
on board early, supporting changes
to come.
Today, he notes, farmers are
borrowing to pay workers, and labor
costs come with a raft of risks. " If
you're lending for farmers to buy a
machine, " he says, " you lower the risk
factors and there's an asset. [Capital
investments] make a lot of sense from
a lending standpoint. "
Matthew Nankivel, assistant vice
president at the Minneapolis Fed,
agrees that rapidly rising labor costs
are accelerating how farmers embrace
technology. " The economics, " he says,
" are pushing people to adopt the
latest technology more quickly. "
" Farmers need
to know where
they're at in the
loan process,
[in] real time,
without having
to make a call or
sit down at their
computers. "
-Aaron Magenheim,
AgTech Insight
GROWING UP
Another important development
for bankers to watch is vertical
farming, or the practice of growing
crops indoors in stacked layers.
" Vertical farming is incredibly
capital intensive, and so new
entrants need more money to use
those technologies, " says Farmer
Mac's Tackach.
On the other hand, this type of
farming can be done 24/7, yearround,
and is not subject to the
Ready for new ag loan customers?
Ag technology isn't the only thing that's changing.
Loan seekers are, too.
" There are a lot of farms being sold to institutional
investors and private equity. With that, the customer
base is changing, " says Aaron Magenheim, CEO
and founder of AgTech Insight, an agriculture
technology consulting firm in Salinas, Calif. " The
500- or 1,000-acre farmer that's been in the
community for three generations is selling his farm
to a large institution that may come back to the
small community bank to get operating loans for a
year or two, but then move on. "
Retaining these new customers requires work, but
it's hardly an impossible dream.
" If you don't have good online banking, if
customers have to walk in and sign papers to get a
loan, none of that's going to work for new investor
types buying these properties, " says Magenheim. " If
you have the right tools available, though, there's a
real good chance you can keep the business. "
independentbanker.org // 51
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Independent Banker - September 2023
Table of Contents for the Digital Edition of Independent Banker - September 2023
Contents
Independent Banker - September 2023 - Cover1
Independent Banker - September 2023 - Cover2
Independent Banker - September 2023 - Contents
Independent Banker - September 2023 - 2
Independent Banker - September 2023 - 3
Independent Banker - September 2023 - 4
Independent Banker - September 2023 - 5
Independent Banker - September 2023 - 6
Independent Banker - September 2023 - 7
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