Pub. 5 2016 Issue 3

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 20 T HE KANSAS AG BANKERS Conference was held for the last time at the Kansas State University Alumni Center on March 9-10, 2016. The attendance of 276 bankers exceeded previous KBA records and according to Dr. David Kohl, the Kansas Ag Bankers Conference is the largest in the nation. The 2017 conference will be held at the Hilton Garden Inn in Manhattan to better accommodate the growing numbers. Dr. David Kohl opened the conference discussing the global reset that the agriculture industry is experiencing. Reminding the group that good times don’t last forever and neither do bad times, Kohl stressed that there will be many opportunities to succeed over the next 5 years but there will be even more opportunities to fail. Producers need to take advantage of opportunities and minimize mistakes. Lenders will build a reputation with their customer base during this time. He explained that half of the emerging nations that drove up commodity prices in the boom are now in a recession. The slowing of these nations with their own quantitative easing policies coupled with the strong dollar is driving down imports and further driving down commodity prices. Looking toward current economic trends he described the “house of cards” in Europe. The debt that Greece has incurred affects the U.S. because the French and German banks that have financed that debt have taken large loans from the big banks in the United States. He continued his world watch by pointing out key points in China, Russia and Japan as well. Dr. Kohl believes that big data will have a larger impact on the agriculture industry going forward because millennials will want to know where their food is coming from and companies will be willing to pay for the information if the producer collects it. Kohl spent a significant portion of his time sharing examples for lenders to be able to screen for negative margins as producers will expend reserves and capital with low returns on yield. He warned that the strong equity growth cycle we just went through created complacency and producers will need to reduce personal expenses moving forward. A panel of producers was moderated by Dr. Kohl. The panel included Kyle Cott, Cott Family Farms, Clay Center; Darwin Ediger, Ediger Farms, Meade; Brian Mitchell, Mitchell Farms, Elkhart; and Brian Vulgamore, Vulgamore Family Farms, Scott City. The discussion included candid comments on growth and productivity in the midst of rising costs and decreasing returns. The panel was varied in ownership vs. rental of ground and how much custom crop they produced. Pat Keating, President and CEO, Keating Associates, Inc., Discussed the problems that are making it more difficult to keep the family farm in the family. He explained that high land prices are harmful for the family farm because siblings that aren’t on the farm want to sell. High land prices have also created an issue for operations as they sit on huge net worth but no cash flow. Regulators are increasingly looking for cash flow for suitable ability to repay the loan. Keating discussed tools that can be used to manage the business plan and create a decision matrix. He also discussed considerations for estate planning with wills and trusts. Jack McCall provided comic relief to the stressful ag environment we are experiencing. Topics included personal communication, maintaining organization in a fast paced environment and taking time to recharge. Darrell Holaday was high energy in his grain outlook presentation as he described the negative economic impact the agriculture industry will feel if the trade deals that Donald Trump is campaigning on come to pass. He discussed the quantitative easing policies that Brazil and other countries are now using has devalued their currency making commodity pricing look the same as 2012. This creates the appearance that their soybean acres are at record levels. Holaday stated that it looks like federal policies will lean away from subsidies. In the case of ethanol, subsides aren’t needed because it is still the cheapest way to increase the octane level in fuel. China and emerging countries are investing directly into their own grain markets to support pricing. They have record amounts of course grain, wheat and corn on hand with increased efficiency and the grain bins are full. This along with the strong dollar has taken a bigger hit on U.S. exports. The low carb diet changes have also resulted in lower use of flour per capita. He stressed Pictured left to right are Tim Smith, Levi Ochsner, Brendon Gross, and Mikel Hadachek, all from Astra Bank. KBA KANSAS AG BANKERS CONFERENCE Pictured left to right are KBA President Chuck Stones, KBA Chairman Bob Leftwich, Impact Bank, Wellington, Kansas Secretary of Agriculture Jackie McClaskey, KAB President Doug Ray, Stockton National Bank, Norton and Marvin Anliker, American State Bank & Trust Co., Garden City.