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Agrimarketing : September 2008
COVER STORY MAKING CREDIT PARTOF THE OFFERING By Lynn Henderson, Editorial Director Providing credit to complete the sale is not exactly a new idea for marketers. In fact, history reports that to sell just his third plow, John Deerehad to provide the necessary financing, which was quite a hardship for the blacksmith who was cash-strapped, himself. Today,interest costs on the borrowed capital required by U.S. farmers totals nearly $16 billion annually, typically representing their seventh largest expense. The latest USDA data shows that Commercial Banksprovide approximately 42% of ag producers’ credit, the Farm Credit System holds 33%, and others, including insurance companies, family members and suppliers provide the balance. So, to provide an update for agri-marketers on this essential ingredient in the successful sales recipe, we invited several leading ag credit providers, who have special programs designed for agribusinesses, to provide an update on their products and services. CNH CAPITAL Racine, WI by David Swigart, Manager Ag Financial Solutions After sunshine and water, a steady line of credit is essential to a success- ful farming business. That is why CNH Capital is teaming up with farm supply stores and equip- ment dealerships nationwide, to offer three innov- ative ag input financing plans to help farmers pay for tomor- row’s crop today. Swigart It’s called CNH Capital Ag Resource — a competitive and flexi- ble input financing program that is now available through an expanding list of progressive regional crop input retailers, along with a number of Case IH dealerships. CNH Capital offers the following input financing options: • Ag Resource provides financing for all products and services sold by the crop input retailer. Secured by a first lien on the crop, and with crop insurance required, Ag Resource offers financing starting at $50,000 and up. • Ag Resource Plus covers the full range of crop inputs sold through participating crop input retailers plus other crop production 28 AgriMarketing ¦ September 2008 expenses including rent, labor, and other general operating costs, start- ing at $50,000 and up. Collateral requirements include the crop and a broader range of farm assets excluding real estate. Farmers typically will choose Ag Resource to better capture discounts for early order, bulk purchases and other incentives at the point of sale. Inputs include seed, fertilizer, crop protection chemicals, custom appli- cation services, crop scouting ser- vices, fuel and lubricants. Because Ag Resource financing is based on a crop year, additional loans can be executed prior to set- tling current loans. For example, farmers who already have financing in place for the 2008 crop year can start a separate line to finance the 2009 inputs they want to secure on an early-order basis. In addition, CNH Capital can finance sums beyond the capability of many local lending sources. Farmers also appreciate dealing with their crop input retailer or Case IH dealership, where a business relationship already exists. We’ve seen the value of it through the long- standing relationships that our Case IH equipment dealerships have with their customers. Now farmers can enjoy similar working relationships with their crop input retailers. With more than 50 years in the farm lending business, CNH Capital understands that no two farm opera- tions are exactly alike. That is why we work hard to understand each customer’s specific financing needs. Ultimately, it comes down to finding the best way to make each customer more productive and profitable. FARM CREDIT SERVICES OF AMERICA Omaha, NE by Marshall Hansen Sr. VP/Agribusiness Finance www.fcsamerica.com Farm Credit Services of America provides credit for all types of agri- cultural-related enterprises. We’re experts in the field, with a long-term com- mitment to agri- culture and commercial spe- cialists who know how to work through the details. Our sig- nificant lending Hansen capacity and competitive cost of capi- tal mean we can provide diverse loan packages for any size of business. Our agribusiness customers range from the large-scale individual producer to multi-national corporate enterprises through most every facet of the food chain — meats and pro- tein, dairy, timber, wine, grain mar- keting, processing and milling, man- ufacturing, seed, chemical, fertilizer, ethanol and more — across the U.S. Not far from the fields and live- stock facilities are the processing, man- ufacturing and distribution plants that transform the raw products of agricul- ture into packaged foods, fuel, con- sumer and industrial goods. It is here in these diverse, capital- intensive commercial and coopera- tive enterprises where you’ll find the financial expertise of our agribusi- ness team — financing those who process the products of agriculture as well as those who produce them. In general, these relationships exhibit one or more commercial factors including complex transaction docu- mentation and ownership structure (such as co-ops or limited liability enti- ties), integrated and/or large-scale commercial production, processing
CAMA 2008 Canada