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Lender says expanding dairy farms is harder now
A dairy financial consultant says it is more challenging for dairy farmers to expand now.
Matthew Lange with Compeer Financial says lenders have to look at everything much closer now. “Some of the investments that we might normally be willing to make right up front, we have to do a little bit more analysis on to say whether it’s really going to have the return (on investment) that we think it’s going to have.”
Farmers that want to expand can no longer simply draw up plans, go to the lenders, and start building like they did a few years ago. Lange says producers need to know they have a market for that extra milk. “Processors have really shored up a lot of how much milk is coming into their plants, and producers aren’t able to just kind of expand like they’ve have in the past without really communicating and coming up with a plan with their processors.”
Lange says the type of lending has shifted from more operating loans before 2018 to a desire to more physical projects now if the materials are available and at the right price. He says many farmers are still holding back on pursuing new facilities or equipment while they pay down debt.
