3 Important Things To Remember During A Drought To Protect Your Farm Financing

Thanks to the drought that is devastating farms this year

, you and your farm financing may be headed for trouble later. It is still too soon to fully determine what the extent of the damage will be, but reports are showing that this is one of the worst droughts that has hit the Midwest in decades. Some even fear that the devastation to the crops from drought will possibly match what was seen in the 1930s.

One farm lending company, Farm Credit Services of Mid-America, believe that this drought will at least surpass what was experienced in 1988. Because of the extent of the devastation to farms, it is important that you talk to your crop insurance agent and farm financing company about how this drought will affect you now and later down the road. Phil Kimmel, the senior vice president of credit for Farm Credit stated, "Fortunately, the farm economy has generally been favorable for the last three years, so many farmers, especially those producing grain, have built liquidity and solvency, which will help them endure current conditions. But each farmer's situation is different. That's why at Farm Credit we focus on working with each customer to identify strategic scenarios that will help manage through the crisis without derailing future plans."

Step 1: Use Crop Insurance Correctly to Protect Your Farm Financing and Livelihood

Many farmers use crop insurance as an important, financial tool to protect them and their farm financing when the weather plays havoc on crops. Per data from the Federal Crop Insurance Corporation (FCIC) Management Agency, in just the states of Indiana, Kentucky, Tennessee and Ohio about 75% of the acreage planted with crops are protected in one way or another by crop insurance. However, it is very important that that claims be handled correctly.

Farm Credit Mid-America's crop insurance advisors always remind their clients that they need to talk to their crop insurance agents before they destroy their crops. If they chop, mow, disc or destroy their crops too soon they could make the claims process more complicated and longer than it normally would be.

Step 2: Take Into Account the Long-Term Effects on Your Farm Financing and Business

Even though it is just the grain farmers that are currently being affected by the drought, most experts agree that this will have a trickle-down effect to livestock producers. The drought will decrease the quality of the forage crops and hay that are fed to the farm animals, as well as increase the price of feed that is purchased.

Per Phil Kimmel, "The drought will severely affect both volume and quality of forage dairy producers put in their silos. Beef producers will likely struggle with maintaining pastures for grazing going into fall, which can hurt stands next spring. In the future, these producers will have to determine how much they can afford to pay for hay and forage. In some cases, they may have to make tough decisions, including liquidating some or all of their cattle, to survive financially."

Step 3: Select a Farm Financing Lender Who Cares About Your Individual Situation

There are many farm financing companies out there to choose from, but some of these companies forget that each customer is in individual situation and not just a statistic from a group. This is why it is very important to choose a farm financing partner that will give your business the individual attention it needs. Without this individual attention, your farm financing partner won't be able to truly meet your needs to make your business successful, or survive bad situations like the current drought.

Copyright (c) 2012 Farm Credit Services of Mid-America

by: Darren Lynn

POST COMMENT

Improve Immune System - Natural Probiotics Can Help* Sending The Best Signal For The Market With Model Revitalization Hire Cabs In Chandigarh Laptop Screen Repair Springhill Care Group: Morsi As Democratic Egypts Leader Problems With Pipes That Plumbing Technicians In Perth Manage Get To Know Your Machine Your Value Added Sunshine Coast Optometrist Choosing The Perfect Trade Show Display For The Best Results What Is A Land Trust? How Can It Protect Me? Important Tips For B2b Lead Nurturing Kinesiology Tape Snn Raj Serenity : Premium Lifestyle Amenities