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A Lender’s Perspective on Managing Risk. Ryan D. Castle, Ag Industry Specialist Adam G. Hartmann, Sr. Ag Industry Specialist Wells Fargo Bank, N.A. December 2013. Bank’s Role in Your Operation. Part of Your ‘Team’ Banker Agronomist Farm Business Instructor Grain Merchandiser
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A Lender’s Perspective on Managing Risk Ryan D. Castle, Ag Industry Specialist Adam G. Hartmann, Sr. Ag Industry Specialist Wells Fargo Bank, N.A. December 2013
Bank’s Role in Your Operation • Part of Your ‘Team’ • Banker • Agronomist • Farm Business Instructor • Grain Merchandiser • Responsibilities • Managing/Mitigating Risk vs. Avoiding Risk • Interest Rates • Where are Rates Headed?
The Lender’s Perspective:Inputs & Outputs • Input Costs: Cost of Production • Rent Increases • Seed Cost • Fertilizer/Chemical Costs • What is your Cost Of Production? • Outputs: When to Sell • Developing a Sound Marketing Plan • Does your Lender Understand Your Marketing Plan?
Mitigating Risk: Tools of the Trade • What Should Lenders Look For? • Marketing Plan: Grain Contracts • Cash Contracts • HTA’s • Futures • Options • Crop/Hail Insurance • Determining the Appropriate Type/Coverage Level • Example: • 2013 Spring MPCI Corn Price: $5.65/bu • Fall Harvest Price: $4.39/bu • 185APH x 85% RP Coverage: $888.46/ac in coverage • 175bu/ac harvest w/Harvest Price: $768.25/ac • Indemnity Payment: $120.21/ac
Global Impact:Who’s in the Driver’s Seat? Shanghai1990 Shanghai 2010
Questions? • Ryan Castle • Regional Ag Industry Specialist • Ryan.D.Castle@wellsfargo.com • PH. (507) 316-8109 (Cell) • Adam Hartmann • Regional Senior Ag Industry Specialist • Adam.G.Hartmann@wellsfargo.com • PH. (507) 951-5417 (Cell)