Bank on This

December is a natural time for reflection.

So is retirement.

Texas and Southwestern Cattle Raisers Association (TSCRA) Director Van Baize, Bowie, knows something about both. Baize, who retired this summer after 35 years as an agricultural lender, opened up about the future of the industry, what challenges lie ahead and what’s better now than it was when he started.

He says while a lot has changed since he entered the business, some things never will. Namely? The importance of the agricultural lending institution to the cattleman.

“Ag lending will always be a large part of the agricultural industry,” Baize says, adding that access to loans is one reason the industry has been able to advance so much in the last half-century.

Every year, ranchers and farmers are doing more with less. For example, it takes less than half the land to produce our meat, dairy and poultry supply as it did 50 years ago. And with less than 2 percent of the population feeding the nation, those few have higher input costs requiring more cash flow.

Structural changes
Baize says one change he’s seen that has had a big impact on agricultural lending is a trend of fewer traditional family ranching operations and more families merging and forming a corporate structure to operate.

“From a banking aspect, the challenge of that is getting all those elements together to perfect the lien, getting the corporate documents, the personal guarantees of who’s liable and what percentage are they liable,” Baize explains. “That’s creating a problem whereas in the past you were just making a loan to John Doe.”

Filling a void
He says one of the greatest challenges ahead for the ag lending industry will be finding enough qualified individuals with an agricultural background to fill the number of positions required.

“Unless you have a background in the industry, it is difficult to understand the production cycle and challenges faced by producers along the way,” Baize says. “A good ag lender needs a basic understanding of these challenges to service the needs of their customers.”

“Bank on This” is excerpted from the December 2017 issue of The Cattleman magazine. Join today to start your subscription.