The Right Conversations

By Brian Zimmerschied

This spring, Missouri received record amounts of rain. As the rain fell, many farmers’ stress raised as quickly as the rivers and streams around them. Dealing with the uncertainty of Mother Nature is nothing new for seasoned producers, but when farmers can’t farm during key periods, it has a way of putting people on edge.

A friend of mine once told me, “If you surround yourself with good people, getting through hard times will be easier.” This message comes to mind as we witness farmers dealing with extreme weather conditions, delayed planting, uncertainty with key global trading partners and continued tightening margins on the farm.

Brian Zimmerschied

Having grown up on a family farm in the 1980s and having worked in the field of agriculture lending for over 25 years, I understand the stress that comes with production agriculture. I also understand surrounding yourself with the right team of people is key, but the next step, which is critical during years such as this one, is having the right conversations with that team.

The “right team” might look different for each operation. In a broad context, this team of experts could include stakeholders (family or non-family owners of the business), production experts, marketing experts, risk management experts and ag lenders. A farms’ team of experts should include people who genuinely care about the operation and bring a level of expertise and skill that add value to the operation. Although each farm’s team may be different, the conversations that a producer needs to have with the team are more consistent.

As a borrower-owned cooperative, we have these conversations frequently with our member-owners because one of our top priorities is the success of the farmers we serve. In order to be fully prepared to weather this storm, we would encourage producers to have these “right conversations” with more of their team this year, and earlier than normal.

So what are those conversations and how do they look different in 2019?

1. Establish where the operation is – right now.

Understanding the present financial position of the farm is key to making any decisions going forward. For most operators, this is done at year-end. In 2019, we would advise farmers experiencing stress to update financial statements and the cash flow sooner rather than later to be able to identify where the operation is currently, where it is headed and what changes need to be considered.

During that information gathering, an operator should be able to identify what they know now, what information they do not yet know but can reasonably estimate and what information they cannot yet estimate. Once this information is gathered, it should be immediately discussed with stakeholders (family and others who have an interest in the operation). The stakeholders should be informed of the operation’s current financial status, what the updated projections are for the year, and what impact that may have on things such as short and long-term business goals and family living.

The lender, and possibly other team members such as accountants, should be brought up to speed. These team members should genuinely care about the operation and will bring valuable insight from their area of expertise that can aid in making upcoming decisions. The relationship with the lender specifically will be strengthened and more valuable when it’s clearly established that communication will be open and frequent. An ag lender who works with multiple operations going through similar challenges may be able to identify areas of concern and areas of opportunity that were missed by the operator.

2. How is the operation managing risk?

Operators often discuss the risk management plan of the operation at the start of a new season. Most operators will have this discussion with their risk management experts, their lender and their stakeholders.

In 2019, it may be necessary to revisit the farm’s risk management plan. After the current financial position is identified and anticipated margins are more accurately estimated, the level of risk the farm can carry may be better identified. Although some risk management tools such as crop insurance cannot be altered, it is still crucial that producers understand how their elected coverage options will come into play. Additionally, marketing plans will need to be analyzed with the context of the current and updated projected positions of the farm.

Again, all stakeholders need to be brought up to speed on what risk management tools are in place and what changes, if any, can be made to the initial strategy. In addition to stakeholders, producers should be having early conversations with crop insurance agents, marketing experts, and the lender to ensure all opportunities and concerns were identified.

3. What are the goals of the operation?

For some farms in 2019, the short-term goals will need to be re-established. It’s unlikely that many operators based their 2019 business goals on the current situation in Missouri. This means it’s time to take a hard look at what the farm can reasonably accomplish between now and year-end. Additionally, the impact from 2019 and prior years may force some farms to revisit intermediate and long-term goals.

For those operations experiencing stress, stakeholders should be brought into the conversation to help review the goals for the operation and the family and identify what changes need to be made in the near and long term. Sharing these goals with their lender and other team members is important to ensure the input received from those experts is in line with where the operator and stakeholders are trying to go.

This year will likely be one talked about for a while. The conversations laid out above shouldn’t just be reserved for off-the-chart years like 2019, although they are more crucial in years such as this. A good relationship, open and frequent, two-way communication with stakeholders and organizing the team of experts is valuable to every operation.

In the midst of challenging conditions, don’t lose sight of long term goals and objectives. And don’t lose sight of the words of wisdom my friend once shared with me, “If you surround yourself with good people, getting through hard times will be easier.”

To learn more, contact your local FCS Financial office at 1-800-444-3276 or visit

Brian Zimmerschied currently serves as the Vice President, Ag and Business with FCS Financial, a Farm Credit cooperative. He grew up on a diversified family farm in Pettis County and graduated from the University of Central Missouri with a bachelors degree in agriculture economics. He is a graduate of ALOT Class 7, participated in the Graduate Institute of Cooperative Leadership, and has been serving FCS Financial member-owners for over 26 years.

Find the rest of the issue here.