Financial Management

How Agriculture’s Next Generation of Innovators Can Build Financial Acumen Now

Wed, 10 Dec 2025 15:13:43 GMT

Beginning farmers and the next generation in agriculture face significant hurdles, including the high cost of capital and limited access to land. Technology is allowing the older generation to stay in business longer, too, creating a difficult environment to bring people into farming.

As senior vice president of business development at Farm Credit Services of America, Jason Edleman is focused on helping young producers and beginning farmers develop stronger financial skills so they can make better and more informed business decisions on the farm.

“One of the ways we are doing this is by setting up our lending officers to also serve as coaches for about four years with a group of about 50 to 60 customers,” Edleman explains. “From balance sheet training to cash flow lessons to understanding your family’s living expenses, their goal is to help customers through one-on-one coaching and classroom-style lessons to hone basic skill sets that will help them be financially responsible.”

He says it’s surprising how many people would guess they live for about $35,000 a year when in reality it’s likely closer to $120,000 a year.

“As lenders, we think about these things all the time,” Edleman says. “But for a beginning farmer or young producer, those skills take time to develop.”

Empowering Risk-Takers with Financial Understanding

He is excited about the next generation in agriculture as they bring a lot of different skill sets to the industry that are new and exciting. They’re also very creative in how they’re going to market, too.

“Their adaption to technology and how they learn and grasp information is so much different,” Edleman says. “I use the example of how my son (who is not a farmer) learns. He watches a 3-minute YouTube video, and then he goes and does it. His generation is not afraid to tackle stuff, but they just need some access points to learn.”

Farm Credit Services of America (FCS America) wants to help fill those learning gaps, he adds. FCS America is doing that through its Starting Gate program designed to empower and develop the future of agriculture by providing young and beginning farmers with personalized coaching in agricultural finance. Participants work with FCS America professionals to build skills in budgeting, financial planning and risk management, creating a strong foundation for their business goals.

(Farm Credit Services of America)

For more than 20 years, they have been hosting the Side X Side Conference for producers 35 years of age or under or farmers who have been farming less than 10 years. It features educational sessions, inspirational speakers and networking opportunities all geared to help producers better understand the financial side of the business.

“We recognize the challenges our producers are having and believe this program and hands-on coaching can have a generational impact,” Edleman says. “Years ago, we realized from a financial acumen standpoint, a majority of producers can’t put their balance sheets together on their own and don’t have a good understanding of how a cash flow can help them in their operation’s decisions.”

He admits farmers may be good at the “napkin math,” and usually have all the numbers in their head. However, this doesn’t always translate when they tell their story to a lender and may not fully encapsulate all of their expenses.

“The more successful farmers understand financials – cost production, cash flows, balance sheet trends and what it means to their income statement – the better decisions they can make about the risks they can take,” he adds.

One of the best parts of the events is the networking that takes place.

“The boards in the back of the room are a great tool to build relationships,” he explains. “We challenge producers to put things on the board they are looking for. Maybe it’s a connection point on how to sell something, or maybe they need hay. Ultimately, they end up sharing ideas and sharing numbers.”

Several peer-to-peer groups have formed because of these conferences and now regularly meet to share ideas, best practices and build relationships, Edleman says.

Navigating Income Diversification and Side Hustles

Whether the new generation wants to add a second business or not, most have to find a way to dive into other sources of income such as contract finishing, hunting, spraying or trucking businesses.

“We’re seeing about 44% of young or beginning farmers have a side job whereas a traditional farmer probably is only closer to 36%,” he notes.

As lenders, Edleman says their goal is to help producers. Close communication and a greater financial acumen help producers better prepare for the unknowns in farming.

“I think this young group really shines because they’re not afraid to try new things,” he adds. “From drone technology to how they use AI to make decisions, they’re grasping things more quickly. I think that’s been a good thing as it creates other sources of income that these operations can leverage as well.”

Early Engagement and Succession Planning

For the “coaches” at Farm Credit Services of America, the extra one-on-one time allows them to really get to know their clients and bring up hard topics of conversation like succession planning.

“Personally, I don’t think any of us want to work on estate planning and think about the inevitable,” he says. “We’re trying to engage conversation around the fact that life doesn’t always shake out like we think. The more we can prepare people to think about these tough topics earlier, the better. We can’t change the direction of what that looks like, but we can continue to influence communication.”

Although coaching young and beginning producers one-on-one is where Starting Gate financial officers spend more of their time, Edleman says many are also branching out to teach classes and present on financial topics at technical schools and land grant universities.

“We’re spending more time engaging future farmers earlier,” he says.

At one technical school in South Dakota, lenders do mock interviews with students. They aren’t interviews to practice landing a job, however. They are interviews to practice seeing your lender for the first time.

“Where are young producers at when mom and dad go to see the lender? They’re at home doing chores,” Edleman says. “Their professors and our coaches help them apply for their first loan or learn what to ask during an interview. It’s a simple thing, but it’s a huge thing when you think about where they’re at in their journey.”

How to Get a Loan Approval: A Banker's Point of View

Tue, 18 Nov 2025 20:28:26 GMT

For most farmers, the next big project on the operation starts with a conversation with your banke, and being fully prepared before you walk into that meeting can significantly increase your chances of getting a loan approval.

Curtis Gerrits, senior lending specialist at Compeer Financial, has spent years helping producers get the financing they need. During a recent Professional Dairy Producers webinar, he shares what truly makes a loan application stand out and how farmers can set themselves up for a smoother approval process.

Get Your Financial House in Order
When preparing for a loan, Gerrits emphasizes lenders look first at clear and complete financial documentation. The process begins with the fundamentals.

“Some of the documents that are top of mind are your profit and loss statement,” he says. “Don’t just stick with the current year. Try to have access to the last three years.”

A profit and loss statement not only establishes whether a business is profitable but also helps lenders understand how the farm manages revenue and expenses over time. Gerrits encourages farmers to follow this with a current balance sheet that breaks down assets and liabilities in detail.

This balance sheet should include livestock numbers, acres owned and leased and a complete equipment list with updated values. Together, these documents paint a picture of financial health and management discipline.

For long-term planning, Gerrits stresses the importance of forward-looking projections.

“Probably one of the last things is to have a detailed projection,” he adds. “What is the business plan, and how is this going to impact your business?”

These projections help both the producer and the lender understand how an expansion, land purchase or capital improvement will affect cash flow and operational stability in the years ahead.

Details Matter
Gerrits says one of the most common pitfalls he sees is overlooking the finer points of financial reporting. Accurate and transparent records build trust and demonstrate professionalism, giving lenders greater confidence in the producer’s decision-making capacity.

“The attention to detail is probably a key thing that maybe gets overlooked from time to time,” he explains.

A lender needs to see exactly what makes up the operation’s income. This could include crop sales, livestock sales, custom work, direct-to-consumer revenue or any other streams that support the business. Clear categorization helps verify performance and gives lenders a better understanding of how the farm is managed.

Build a Strong Relationship
Beyond the numbers, Gerrits stresses the importance of working with a lender who understands the realities of farming. A loan officer familiar with agriculture can better interpret financial statements, spot trends and anticipate challenges.

“Working with a loan officer that understands your day-to-day is really important,” he says. “Having that good relationship where you can bounce ideas off of one another is a really great thing.

Gerrits also encourages producers to bring their lender onto the farm. Sometimes a walk-through can communicate more than a financial packet ever could.

“Put your boots on and take a walk through the barns and show them what you are doing and why the loan application that you are requesting is important,” he says.

Seeing the animals, the facilities and the workflow helps lenders fully understand the operation’s strengths and opportunities, and it gives them greater clarity when evaluating a loan request.

Be Honest About Tough Years
Producers should not shy away from acknowledging difficult financial periods or reporting losses on taxes. Gerrits reassures farmers that losses do not automatically disqualify them from financing.

“Do not get too hung up on the losses out there,” he explains.

A balance sheet can often show how those losses are supported or offset by strong assets, such as land, livestock or equipment equity. What matters most is transparency and context. And demonstrating that you have a plan to manage challenges and leverage your assets can build confidence with your lender.

Plan for the Future
Constant communication with your loan officer can make a big difference in the approval process. Gerrits says checking in periodically, even with a quick touch base, helps avoid surprises.

“Maybe you’ve already talked about: ‘Hey, in a couple of months we might have something come in, and I’m going to have a request for an operating line of credit,’” he says. “That way it’s already in the back of the loan officer’s mind, and they can start preparing or gathering the right information.”

A little preparation can also greatly speed up the loan process. Gerrits recommends giving your loan officer about one month of lead time before funds are needed, along with complete financial documents.

“At the end of the year, we’ll see some borrowers who need to borrow money to do some prepaids to help their tax situation,” he says. “It’s hard to turn things around because a lot of folks are coming in at the last hour. If you give them a month’s lead time with all of the information pertinent, all the financials and balance sheets, that will just help expedite it.”

Looking further ahead, Gerrits encourages producers to think generationally and begin planning for succession well before retirement becomes imminent.

“It is never too early to start a succession plan,” he says.

Early planning gives the next generation clarity about future roles and expectations, helping them prepare financially and personally for the responsibilities that lie ahead.

Own Your Numbers
Ultimately, Gerrits believes successful borrowers take responsibility for knowing and understanding every aspect of their financial position.

“Know your numbers first,” he says. “Don’t just rely on your loan officer to tell you how you are doing.”

Throughout the loan process, preparation and transparency go a long way. Clear financials, attention to detail and regular communication help your lender understand your goals, while on-farm conversations and honest discussions build trust. Being organized, consistent and informed does more than streamline an application, it helps you make better decisions, catch issues early and keep the operation moving in the right direction.

The Best Time to Start Your Retirement Plan

Mon, 09 Jun 2025 19:59:08 GMT

Farmers historically have struggled to invest money in anything other than their farm operation. However, by investing in retirement plans including an IRA, a farmer can more easily save up for retirement and make the transfer to the next generation much easier.

The power of compounding is the financial seventh wonder of the world. Based on your annual investment return, you can determine how quickly your investment will double by dividing it into 72. For example, if you average 3% on your money, it will take 24 years to double. However, if you can earn 8%, then it only takes nine years.

The younger you start to invest, even small sums, the more money you will have at retirement. Let’s compare the results of placing $10,000 into a retirement account at either age 20 or 40.

The farmer who does this at age 40 and then pulls the money out at age 70 will have $100,627. However, the farmer who starts at age 20 will have $469,016, and if they can earn 10%, will have $1,173,909.

The cost of maintaining a solo 401k plan is very inexpensive and married couples can set aside at least $14,000 into an IRA each year. The fees on those accounts are minimal and you can make sure to invest in low-cost ETFs or mutual funds. High-cost funds could quickly reduce your returns substantially.

Most of the earnings will result in the last 10 years, so the sooner you get started, the more funds you will accumulate.

Risk Protection Benefits
There’s another big reason to make this investment. Funds in a retirement plan are fully exempt from bankruptcy, and we all know farming can be a very risky business. The full exemption does not apply to IRAs, but the amount that is exempt is fairly large.

This amount gets updated every three years. On April 1, 2025, the exemption amount was raised from $1,512,350 to $1,711.975 through March 31, 2028.

Most farmers have IRAs less than this amount, so it’s likely they will have a full exclusion if bankruptcy was to occur. Amounts rolled over from a 401k plan or other retirement account, including earnings associated on that account, are fully exempt.

In some states, IRAs are fully exempt or at least partially exempt.

The bottom line is to invest in an IRA or retirement plan. I hope you never need the protection, but it is a good insurance policy.

Advice From a Rural Banker: How to Navigate Today’s Uncertainty

Thu, 15 May 2025 14:27:41 GMT

What is top of farmers’ minds as they manage their business today? John Steeves, head of rural banking for Rabobank, says in his recent on-farm visits, he sums it up as three things:

Cost structure: continued high inputs, particularly equipment
Availability of quality labor
Uncertainty in the market: access to foreign markets, tariffs and cross border supply chains

“Uncertainty is the only certainty,” he says. “In times of volatility, I always say cash is king. I would encourage farmers and ranchers to kind of focus on the cash position or access to cash and liquidity, whether that be liquidity on operating lines, or cash on the side. Whatever your case might be, it’s about how to help absorb potential unforeseen shocks and potential short term losses if they occur.”

Steeves points to Rabo analysis showing for the foreseeable future a 75% chance corn will remain under $5 and a 75% chance soybeans will remain under $11.

“This is creating challenges for our farming clients, for sure,” Steeves says. “This year more than ever, farmers should put a particular focus on cash flow and liquidity, set up for long term success and set up for any unforeseen shocks.”

When looking at the general farm lending landscape, Steeves says farm businesses are ready to face those challenges.

“Farmers and ranchers are good at this—have a plan, plan to manage your business, and hedge your risk,” he says. “I classify it as still good liquidity in the market, which is great for farmers, whether it be on the G&O side, cattle and other animal proteins. I think there’s still good access to capital, which is great. At the same time, we have heard rumblings in the market that some of our some lenders are pulling back.”

Steeves says now is a good time for farmers to engage with their banker and financial relationships.

“Review your plan with your financial partner, and actively engage in discussions about what the opportunities are,” he says.

Steeves shares more on the Top Producer Podcast with Paul Neiffer:

Secure Your Farm’s Legacy: Virtual Succession Workshop for Teams

Tue, 15 Oct 2024 16:07:03 GMT

The organizers of The DIRRT Project are ready to help farms tackle their toughest family business issues.

With both in-person attendance (in Des Moines) and for the first time ever a fully integrated online option, the upcoming event takes place Dec. 2 to 4.

The in-person event is led by experts with personalized facilitation.

The live stream offers real-time participation with the ability to ask questions and join discussions.

Register at www.thedirttproject.com

Who should attend? If any of these four challenges sound familiar, The DIRTT Project aims to help you and provide clarity.

1. “We don’t know where to start.”

“Succession planning feels overwhelming and deciding who will take over the family farm or ranch seems impossible,” says Rena Striegel, of Transition Point Advivors, who organizes the event.

2. “We have personality conflicts and dysfunction.”

“Family dynamics can be complicated, especially when it comes to discussing the future of the business,” Striegel says. “Tensions can run high, making it difficult to have productive conversations.”

3. “We’re afraid to talk about it because we don’t want to create conflict.”

Strigel says it’s common for succession planning can stir up emotions, and stakeholders may be avoiding the conversation to prevent disagreements within the family.

4. “We’ve started before, and it didn’t work.”

“Maybe you’ve tried to have these conversations in the past, but things fell apart, or decisions were never fully made. You’re left feeling stuck and unsure how to move forward,” Striegel says.

The DIRTT Project is a hands-on workshop specifically designed to help agricultural families work through the complexities of farm and ranch succession planning.

“Our program addresses not only the logistical and financial aspects of succession but also the emotional and relational challenges that come with passing the torch to the next generation,” Striegel says.

Attendees can expect to:

Create a Clear Succession Plan
Resolve Family Tensions
Encourage Honest Conversations

“The DIRRT Project is different than other farm and ranch succession planning,” Strigel says. “It doesn’t have to be overwhelming.”

She says every program is structured to give attendees the following takeaways:

Immediate Impact
Customized Solutions
Expert Guidance
Proven Results