southeast nebraska | white shadow - 2/8/2025 11:46
I sit on a bank board of a huge ag lending bank, and we are not seeing that at all. Balance sheets are still very strong because we have seen very little erosion of machinery and land values. Working Capital is down quite a bit, but loan volumes have not risen that much in 2024. 2023 crop year wasn't all that pretty, especially for the guy that rents a high majority of land and didn't forward contract and rode his grain inventories to July and August----but we will need 3-4 more years of this to see many liquidations. In my opinion. Bright spot in enterprise analysis is the cow/calf guy. Cost of inventory was hard on the feed lot guy, especially if his turns were out of balance with the market.
I don't have any money borrowed from anyone on anything. So I am out of my depth here talking about your balance sheets and feel free to correct me when i am being stupid.
My question is, isn't there a big difference between being able to pay for stuff and not go bankrupt and having "little erosion of machinery and land values". Those two things make you rich on paper but do very little for paying bills. Well unless you want to dig a bigger hole by borrowing even MORE money on those "assets". So can't someone be paper rich and still be going broke by not being able to pay the month to month bills. Or does all anyone care about is the ability to keep borrowing more and more money. Seems like that isn't a prudent way to go about stuff. What am I not getting here.
It's not like you can go into the grocery store and say "well hey, I don't need to pay cash for any of this stuff, I can just put it on my card so nooooooooooo problem" and have that work forever.
Feel free to explain it to me like I am a 5th grader because I just have no idea how this all looks to be a good idea to the people who do that. I get why bankers like it, that is easy to see.
Edited by piperfarmer 2/8/2025 13:36
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Am I broke and don't know it.
