Ag Conference Portrays Possible and Probable Futures

Veteran banker Ed Tubbs received ABA's annual Frank Bruning award for service to the ag lending industry during the recent ABA/Canadian Bankers Association North American Agricultural Finance Conference in October. In accepting the award, Tubbs reflected on how drastically the business has changed since his start in the late 1950s. Tubbs remarked that back when he and a handful of other farm representatives, as calling officers were then called, began actually visiting the farms of borrowers, their presence was often resented. The farmers considered them snoops who were there primarily to count the cattle. With a grin, Tubbs told of farmers who would borrow enough head from others to fill out what they had told the bank they had. One farmer even went so far as to bring in a borrowed truckload of calves, thinking that Tubbs wouldn't notice. The farm-raised banker well knew, however, that the cows the farmer was supposed to have on hand would be grown well past that tender stage. It's been fascinating watching this business evolve, said Tubbs, who has been followed by two generations of family members in his Iowa banking company. Changing rural landscape A theme of the conference, held in Winnipeg, Can., this year, was put into words by speaker Brian Hayward, chief executive officer of United Grain Growers Ltd., Winnipeg, Manitoba. Farming as a way of life, he said, is giving way to an attitude of as a business. The farmer who will survive in the future will be one who looks for increasingly sophisticated farming and financial management techniques. Often it was pointed out that simply continuing to produce generic commodities will be a losing proposition for many farmers, as larger and larger farms are put together. Larger producers will generate efficiencies of scale that smaller operations will find difficult or impossible to match, especially when commodity prices are low. It was widely held that the successful smaller farmer of the future will look for opportunities to grow crops for specific users or types of users, rather than for the general market. Often this will be according to the terms of contracts with end users, who may even provide inputs and financing to those producers who are willing to ally with their firms. One farmer who spoke at the meeting has taken this school of thought to an extreme that amazed some bankers. Bert Lowry, Neepawa, Manitoba, turned a commodity-style into a diverse mix of many types of crops. These ranged from rapeseed and wheat to such atypical crops as canary seed, coriander, caraway seeds, clover and timothy grass, and even hemp. Lowry tracked his returns versus costs in every case and found some of his experiments more successful than others. Demonstrating his findings using a detailed table, Lowry joked, as he quickly pulled the overhead from the screen, that sharing his research with so many bankers would increase the number of smarter competitors he would face when they brought his ideas back to the bankers' customers. Caraway seed produced the best profit per acre, far ahead of old favorites like spring wheat, though Lowry noted that spice markets could be very volatile. While there was some concern regarding the genetically modified organism, or GMO, issue, more typically speakers considered the current controversies over these crops in Europe and elsewhere to be a passing thing. Indeed, ag futurist Dr. David Kohl told listeners that he believes that agriculture and medicine will increasingly converge. Farmers will sometimes find success in growing nutraceuticals, plants that are genetically enhanced to produce medications or traits that make them more suitable to consumers with certain medical problems. One example he raised was crops that could be more readily used by diabetics. Lenders, Kohl said, will increasingly find themselves financing such specialized farming, moving further away from financing commodity farming. …

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