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Nebraska beef lenders discuss economic conditions
Nebraska Ag Connection - 09/21/2023

Representatives from eight agricultural lenders in Nebraska recently met to discuss current economic conditions and lending perspectives compared to four years ago. The lenders provided many insightful comments, with four main points emerging:

Drought impacts: Drought has had a large impact on Nebraska, and its effects are still lingering. Cattle prices are high, but the drought has demonstrated the need for good drought management and insurance plans.

Economic challenges: Increases in inflation and interest rates are posing challenges to many producers, making it more difficult to get into the business and making the risk involved higher.

Cash flow management: Cash flow management is extremely important, as working capital is significantly higher than normal. However, coupled with inflation, this has led to significantly higher family living expenditures.

Beginning farmer barriers: Beginning farmer barriers continue to be a problem, with most lenders saying that young producers must have family support to get started. High investment costs and operating expenses mean young people need someone to help them make it work.

Other topics that came up in the conversation included the trend toward larger, more specialized farms, the shortage of labor, and whether lending has changed. All lenders seemed to agree that the cash flow lender is much more common now than the equity lender.

The research reported in this article was supported by the Foundation for Food and Agriculture Research and the Beef Systems Initiative at the Institute of Agricultural and Natural Resources, University of Nebraska-Lincoln.

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