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Are you preparing for the next downturn?
A commodities financial expert recommends tempering growth plans this year in favor of a balanced approach.
Curt Covington, Senior Director of Institutional Credit with AgAmerica, tells Brownfield he expects dairy farmers to finally have a strong working capital position after several erratic years of milk prices.
“Maintaining that liquidity in a go forward basis is going to be very, very important,” he says.
For farmers able to find general contractor, Covington says the astronomical increase in construction costs this year has tempered facility improvement plans that might have been in the works.
“Lumber, steel, and those input costs I think have kind of put these farmers a little bit on their heels,” he shares.
Covington says the astronomical increase in construction costs this year, for those able to find general contractor, has also tempered facility improvement plans that might have been in the works.
“Interest rates go up one or two percent, that has a significant impact on their operating margins, its also going to have a significant impact on their ability to finance their real estate,” he says.
He’s encouraging farmers to get their operating debts paid down to better prepare for the next downturn and temper acquisitions to prepare for a possible reduction in margins next year.
