Three Keys to Financial Survival in a Drought
LOUISVILLE, KY, Jul. 16, 2012 – While it is too early to assess the full extent of losses caused by the current drought, officials at Farm Credit Mid-America urge growers in Indiana, Ohio, Kentucky and Tennessee t0 contact their lenders and crop insurance advisors now to discuss short- and long-term drought effects on their operations.
“Farmers in our four-state area are facing drought conditions with the potential to surpass those experienced in 1988,” says Phil Kimmel, senior vice president-credit, Farm Credit. “Fortunately, the farm economy has generally been favorable for the last three years, so many farmers, especially those producing grain, have built liquidity and solvency, which will help them endure current conditions. But each farmer’s situation is different. That’s why at Farm Credit we focus on working with each customer to identify strategic scenarios that will help manage through the crisis without derailing future plans.”
Use Crop Insurance Effectively
Crop insurance is a financial tool many farmers use to help weather adverse conditions, but claims must be handled correctly, advises Tom Sloma, vice president-crop insurance, Farm Credit. According to data from the Federal Crop Insurance Corporation (FCIC) Risk Management Agency, approximately 75 percent of planted acres in the four-state area are covered by some form of crop insurance. Crop insurance advisors at Farm Credit Mid-America remind growers to file claims with crop insurance agents before destroying crops. “Growers really need to talk to their agents prior to mowing, chopping, destroying or discing their crops,” says Sloma. “Failing to do so may cause delays or complications with the claims process.”
Consider Long-Term Effects on your Business
While grain farmers in the region are bearing the brunt of insufficient rainfall now, Kimmel expects livestock and poultry producers to feel the drought’s effects later this year in the form of higher feed costs and poor-quality hay and other forage crops. “The drought will severely affect both volume and quality of forage dairy producers put in their silos. Beef producers will likely struggle with maintaining pastures for grazing going into fall, which can hurt stands next spring. In the future, these producers will have to determine how much they can afford to pay for hay and forage. In some cases, they may have to make tough decisions, including liquidating some or all of their cattle, to survive financially.”
Choose a Lender Who Can Give You Individual Attention
Regardless of the situation, Kimmel emphasizes the importance of having a lending partner who understands the big picture and will give each farming operation individual attention. “Farm Credit has served rural America for almost a century. We’ve been through weather challenges before and we have the resources, experience and tools to help our customers weather financial storms.”
About Farm Credit Services of Mid-America, ACA
Farm Credit Services of Mid-America, ACA, is an $ 18.3 billion financial services cooperative serving more than 95,000 growers, agribusinesses and rural residents in Indiana, Ohio, Kentucky and Tennessee. The association provides loans for all farm and rural living purposes including real estate, operating equipment and housing and related services such as crop insurance, and vehicle, equipment and building leases. For more information about Farm Credit, call 1-800-444-FARM or visit them on the web at www.e-farmcredit.com.