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If 2009-2010 is 2014-2015 here it is...
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NE Ridger
Posted 2/27/2015 11:48 (#4418147 - in reply to #4416902)
Subject: RE: A little off topic but .... Operating loans?


EC Nebraska
1234 - 2/26/2015 21:32

This is a little off-topic but I had a conversation today with a ag analysis futures broker-trader type fellow who outlined a 93 million corn acre scenario based on high '14 bean acres to high '15 corn acres and the additional incentive that the current new crop corn bean price ratio provides. His argument was that high rents and new machinery payments will obligate Midwestern grain farmers to plant more corn in order to cash flow.
Now, here I have some of you fellows telling me that use of operating loans are widely used by Midwestern grain producers. If that is the case this would lead to the conclusion that such producers have high expenses, high debt and no cash that they are already operating on the edge.
I would like to know how many Midwestern grain producers borrow a significant amount for operating loans? Do 25% borrow 50% of the needed money, 50% borrow 50% or more?


No one seems to be really answering your question. It appears that most operations use an operating loan but that says nothing about how big that operating loan is. I'd guess less than 25% around here borrow 50% or more of their operating capital each season but the majority probably do have a line of credit they use for cash flow reasons. That doesn't mean anyone is operating on edge financially.


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