Western Grower & Shipper 2018 11Nov-Dec

As mentioned, Littlefield and Farm Credit is concerned about the labor situation in California. Costs are going up and access to labor can be a challenge. A borrower has to have a clear plan for harvesting those crops before getting money to plant them. Water concerns play just as important a role. A borrower for crop production needs to have access to water as well as a backup plan. Littlefield said farmers do come to the table well prepared, but it is also the role of the lending institution to analyze the opportunities and steer the borrower, for example, to a crop with less water demands if water supply is an issue. Turning back to some of the global issues, Cardoza said the issues surrounding potential trade wars and tariffs appears to be more impactful to the protein and grain sectors of agriculture. He does not believe the fruit and vegetable sector, as a whole, will be impacted greatly. Of course, exports are very important for some crops but domestic sales still make up the lion’s share for the vast majority of specialty crops. One major exception is the nut category. Littlefield said almonds and pistachios could see some market disruption if other countries increase tariffs on those two export-centric crops. But looking at the big picture, he believes that the Trump Administration’s effort to get better trade deals could be very beneficial to agriculture. Another issue the bankers tackled was the high cost of land in California. Littlefield said a lot of land is currently being sold at prices that will not allow the crop on that land to service the debt. He said this is a major issue for new or younger farmers trying to

establish themselves. For more established farmers with a larger asset base, the calculation is less critical as the loan on new land can be serviced by the production from a larger portfolio of land. Cardoza said that is a challenge for new farmers. He added that it is very difficult to get into the business without a leg up from a previous generation of farmers. Speaking of which, he noted that a major issue today is a company’s succession plan. Many farmers, he said, do not have a succession plan because they have no one following them into the business. “The kids don’t want to come back to the farm after college. We always look at that. We have to.” Both lending institutions for this story did stress their commitment to agriculture and that they are very proactive lenders in the sector. “That’s all we do,” Littlefield said of Farm Credit, noting that investing in new farmers is the company’s recipe for future success. Recently, he said, younger farms are finding a foothold with smaller operations such as micro-farms, urban farming and farm- to-table operations. “We have programs (for new farmers) below market rate to help,” he said. Cardoza revealed that Bank of the West is the third largest ag lender in the United States and devotes a larger percentage of its assets to the sector than its competitors in the commercial banking business. “We are a $70 billion bank and we have $7.2 billion committed to the industry. That’s 10 percent of our assets. No one else comes close.” As such, he said the bank’s exposure is high “and we have to be very good at what we do.”

With 850 attorneys practicing in major locations throughout the U.S. and Puerto Rico, Jackson Lewis provides the resources to address every aspect of the employer/employee relationship. *Proudly working with Western Growers, agricultural and distribution industries for years Jonathan A. Siegel 200 Spectrum Center Drive, Suite 500 Irvine, CA 92618 949-885-1362 Jonathan.Siegel@jacksonlewis.com jacksonlewis.com




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