Dave’s view
David Janish, CEO
As we near the end of 2015, it appears
once again that your financial
cooperative will have another solid
year. As I write this, there is still almost
an entire month to go before year
end, but the preliminary information
indicates a year of solid earnings,
moderate growth, a continued strong
capital position, and very acceptable
credit quality.
In many key performance areas,
the association is ahead of business
plan for 2015. The business plan
was developed a year ago and it was
anticipated that we would see stress
appear in the loan portfolio due to
lower crop prices. While the lower
crop prices did appear, strong yields
in 2014 delayed some of the impact
on borrower financial positions that
we anticipated. The livestock segment,
especially cattle, enjoyed strong prices
which resulted in good performance
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HEARTBEAT | WINTER 2015
in this portion of the portfolio in
2015.
As we look towards 2016 and
beyond, it appears that the next
several years may be more challenging
for crop producers. The outlook from
a variety of sources consistently
forecast depressed prices, “sticky”
input costs, and a less favorable global
economic environment (e.g. a strong
dollar). Many forecasters believe an
environment of lower commodity
prices and higher ending stocks will
persist for the next several years.
Livestock producers, especially
cow-calf, have fared relatively well
over the past few years. However,
the old adage “the best cure for high
prices is high prices” continues to
hold true and we would expect some
retracement in prices. Changes in
consumer preferences and the impact
of the strong dollar will likely affect
this segment as well.
As you know forecasts are
someone’s best educated guess.
Weather,
economic
policy,
regulations, and many other
factors greatly influence results in
agriculture. However, as we plan
for the future I believe we have to
anticipate an environment that will
be less favorable than the recent past.
Obviously a less favorable
environment may challenge producers
and the association. The success
of the association is a reflection
of the success of our members.
Likewise as our members encounter
challenges, that will be reflected by
the association as well. We anticipate
that we will see some decline in credit
quality over the next few years due
to the anticipated challenges ahead.
During this time it will be important
to have open, honest and transparent
communications. Having a long-term
plan and a willingness to make the
changes necessary for longer-term
viability will be key factors during this
t