At a recent agriculture lending conference I was asked, “Why should an agricultural lender stay in the profession?” With much of the agriculture industry in the seventh year of the economic reset, the financial and emotional toll is mounting in many areas of the country. This challenging economic environment is prompting many agricultural lenders to consider whether they should continue in the profession and may be deterring some aspiring young people from entering the field.
Agriculture lending is in a major transition that can be described as the “barbell effect.” The baby boomer lenders, management teams and directors on boards are accelerating retirement at an increasing rate. For those experienced agricultural lenders contemplating retirement, strong equity markets and memories of the 1980’s farm crisis and its impact on their lives are at the top of their minds.
At the other end of the barbell is a large group of new agricultural lenders with less than five years of experience. Some are not from farm and ranch backgrounds and many have never directly faced difficult economic times, even though their parents may have gone through the financial crisis of 2009.
In between these two groups is a smaller group of Generation X lenders with 10 to 20 years of agriculture lending experience. This part of the barbell is thin and these individuals are often overwhelmed with responsibilities put onto them by retiring baby boomers.
Why should any of these groups stay in agriculture lending? First, there is plenty of opportunity for growth and advancement. As the baby boomer lenders retire, growth may not mean “climbing the corporate ladder” but projects and new assignments for career stimulation.
Next, agriculture lending allows one to work with an industry that is largely honest and ethical. The opportunity to meet with customers at their businesses or join them at an educational seminar can put some motivation to everyday work.
Another benefit of being an agricultural lender is that you are working with customers where one size does not fit all and there are many ways to be successful. Agricultural lenders are not “cookie-cutter” lenders who just depend on a credit score.
Agricultural lenders often have the opportunity to see the growth of their customers’ businesses, which can be rewarding. Many agricultural lenders are part of a trusted advisory team. These teams often provide benchmarking analysis and this information can go a long way in improving their customers’ businesses.
Agricultural lenders often have farm operations in addition to full-time employment. As a lender, they get broad exposure to many operations and practices that can be beneficial to their own operations.
Remember, you build your best and most loyal relationships during the tough times when agriculture lending is more than just numbers and a low interest rate.
Dr. Kohl is Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship in the Department of Agricultural and Applied Economics at Virginia Polytechnic Institute and State University. Dr. Kohl has traveled over 8 million miles throughout his professional career and has conducted more than 6,000 workshops and seminars for agricultural groups such as bankers, Farm Credit, FSA, and regulators, as well as producer and agribusiness groups. He has published four books and over 1,300 articles on financial and business-related topics in journals, extension, and other popular publications.