Helping Farmers Facing Financial Squeeze

YEAGER: There's a new way to stay connected and know what's happening with Market to Market. When you subscribe to Market Insider, one email and a lot of information awaits you. Go to marktomarket.org and subscribe to Market Insider.

YEAGER: Agriculture Financial Consultant sounds like a big title, but that's exactly what Kallie Turner does now. She was with USDA and the FSA program. She helped write loans. She helped farmers who came in looking for loans to keep their farm going. But then her job was eliminated as part of the DOJ's cuts. And so now she's hung out her own shingle, and she's allowing farmers on places like this one or this one or that one that you see behind me.

YEAGER: If you're watching us here on YouTube on the M2M podcast, I'm Paul Yeager, by the way. Thanks for joining us. But what Kallie does is help you look at your operation — where are some areas where you have some outlays that are just too much, where are some areas where maybe you could put your focus, and what loans are out there for you to continue that path?

YEAGER: She's a Missouri native, went to school in the state, works in the state, farms in the state. So that's the conversation we're going to have. We're going to talk about labor challenges, crop insurance, as well as interest rates and loans. That's today's installment of the MTM podcast. Again, I'm Paul Yeager. New episodes of this podcast come out each and every Tuesday. We'd love for you to be with us, so hit subscribe and we'll deliver it in either video or audio form, whichever one you prefer. Wherever you get your podcast, you can listen. If you just like to watch, that's fine too. Thank you. Now let's get to Kallie. Are you a Missouri native?

TURNER: Yes, I'm a Missouri native through and through.

YEAGER: Where from?

TURNER: I'm from southeast Missouri, Cape Girardeau area. That's where my family had a farming operation many decades ago. I still had an interest in that, and then I went to Mizzou and got an ag degree from their school. Then I graduated and started working for USDA right out of college.

YEAGER: When you say agriculture — was the degree more on the ag econ side or something different?

TURNER: I actually had an interest in veterinary science, and I figured out that organic chem and the higher-level math classes were just not my thing. So I pivoted to ag business with an animal science concentration. I still got to take all the hands-on classes with the livestock and everything at the farm. I think it was a blessing, actually, instead of me trying to go to vet school and going down the wrong path.

YEAGER: Not everybody looks good in the long sleeve of plastic on some of the things you have to do in vet school.

TURNER: That's true, but I am AI-certified, so I got that. My last year of college — yeah. It's funny because when I used to tell someone "I'm AI-certified," they were thinking artificial intelligence. I'd say, no, this is AI before the AI we're talking about now. It's a funny conversation, especially for people that aren't around it. When you explain what AI certification is, there are some people who are surprised.

YEAGER: Right — agriculture was doing AI before it was what we now know it as today. When you made the move to USDA, was that a D.C. job or somewhere based other than Washington?

TURNER: It was local, at the county office level. I started at the Boot Hill office in Dexter. That was a lot of row crop operations — larger farms. You'd see rice, cotton, soybeans, corn, a little bit of everything there. Then I started in the farm loan program and began moving around the state as promotions opened up. I went into a farm loan officer position and then a farm loan manager position. A lot of my time was spent in southwest Missouri and the western part of the state, so I had a lot of cattle operations there. I also worked a little with poultry integrators and hog farms — seeing a little bit of everything.

YEAGER: And when you say working with — what does that exactly mean?

TURNER: I was doing loans for those types of operations. I would go through the application with them, or maybe it was an existing customer that needed servicing — something popped up and I'd help them. When I was a program technician — that was the entry-level job I had in Dexter — I was doing farm records and acreage reports for those farmers. I also did a little bit of GIS mapping work, which was fun. I enjoyed that work.

YEAGER: The average person that came in for a government loan — large, small, medium-sized operations? Who were you dealing with mostly?

TURNER: Mostly your family-size farms. That's kind of what FSA tries to target — beginning farmers or people that have maybe hit a bump in the road financially. Maybe they've had something at a bank and now they're needing an alternative solution for financing. We were seeing startup farms, smaller size. I've done farms with 20 head of cattle, and I've done somebody farming 2,000 acres. It varies a lot. Missouri is very diverse in terms of agriculture operations.

YEAGER: And not just in terms of one is pigs, one is cattle — I get what you're saying about the varied size because we often talk about how the neighbor isn't necessarily always your equal, because their situation is completely different. And I'm guessing no two loans were the same.

TURNER: No. In training we would always say there's no cookie-cutter loan — there's not going to be a loan that's the same way. You just have to adapt and learn that everybody's going to have nuances about their operation, their business, and their financial situation.

YEAGER: What year did you start with USDA? I'm just trying to set the stage of which administration you were working under.

TURNER: It was the tail end of 2016 — when the Obama administration was going out and the Trump first term was coming in.

YEAGER: And then Trump Two comes through and you ended up on the DOJ side of things. What was your initial reaction at that moment?

TURNER: I think like we always are aware of when an administration changes — and it doesn't matter what party you are or where your views are politically — there are always changes that come with an administration. They want to change some policies or they have different priorities for Farm Service Agency. So I wasn't totally alarmed at the beginning. But then we started getting emails saying they wouldn't guarantee our future employment, and they started offering the deferred resignation program. There were two rounds of that, and there was also a retirement option if you were eligible. I thought about it a lot, and I really didn't decide I was fully ready until the second round of DRP came around. I just felt like I was in a position where I couldn't really help people anymore — I felt limited.

TURNER: That last year at FSA, I took a position as an urban county executive director in Saint Louis. It was a pilot program I was building from scratch. The focus was to get folks in urban areas acquainted with USDA — small-scale farms, community gardens, nonprofits, people growing vegetables, not commodity crops. The support I felt for that program was kind of waning. It had gone very quiet; we didn't have a lot of communication about the pilot program. I felt like it might be at risk of going by the wayside, and I didn't want to be part of that when it all went down. So I decided that leaving, I could probably do something more effective either on my own or working elsewhere.

YEAGER: As the phrase goes, you made lemonade out of lemons.

TURNER: Yes.

YEAGER: Or do you not think of it that way yet, Kallie?

TURNER: I felt like there was a gap in the needs of farmers that wasn't really being met. My time at FSA really showed me it's not a one-size-fits-all solution. You have people who qualify for a traditional bank loan, and then you have people that are kind of in between — they may still not meet all FSA eligibility requirements. You've got to get creative with financing those people. That's what inspired me to start the consulting business. I can help people navigate the USDA loan application process — whether that's a farmer or even a lender — because FSA has a guaranteed loan program that works closely with lenders to get loans closed. There are a lot more lenders that could be involved in that program, but it's cumbersome and hard to navigate. Bankers kind of shy away because it's very time-consuming and there are all these regulations to follow. That gap is what I wanted to address. There's an avenue for people who need help getting in the door or want the expertise to package a loan but don't have the time to commit to it.

YEAGER: It is a lot for everybody to undertake. Especially — you remember that in your previous spot — someone who's not familiar with how government loans or different types of loans work might just think, "I'm going to a bank for an operating loan." But as you said, not everybody qualifies, and back to what we talked about earlier: no two situations are usually the same.

TURNER: Right.

YEAGER: So when you decide to do this — do you call yourself a consultant? Is that the best way to describe yourself now?

TURNER: Yes. I have a consulting business, so I'm a consultant.

YEAGER: And what's the name of the business?

TURNER: It's Farm Loan Solutions, LLC. You can find me at farmloansolutions.com. I have a contact form on there if you'd like to reach out.

YEAGER: And finding clients — how did that go early on?

TURNER: A lot of it has been word of mouth. There are people I've stayed in touch with over the years, so I've just updated them on what I've been doing. Same with some lenders I used to work with — I've let them know I'm in the industry. As far as farmers, I have a few that found me on LinkedIn. Surprising — I never thought I'd have a farmer reach out on LinkedIn, but it happens. It's been building from there. I take on as much as I can handle at one time because I also work full time for a nonprofit, Missouri Farmers Union.

YEAGER: So you are juggling a bunch of things still?

TURNER: Yes. Every farm person usually has at least three jobs.

YEAGER: Why not? It's diversification — in operation, income, and expenses, all at the same time. All right, Kallie. Let's talk about — we have a mutual connection that put us together here. I know his situation is not unique. Let's just start with when you have an initial conversation with someone who contacts you — walk me through what you do.

TURNER: I usually start with a phone call. We set something up, and I just really want to get an understanding of what they're trying to accomplish and what their situation currently is. If I decide it's something I'm able to do and have the expertise for, we move forward. That could look like financial analysis — maybe looking at their cash flow and seeing if we can get them any help there. We'll also do loan packaging. If I see that somebody needs to be refinanced or maybe have some debt restructured to help free up their cash flow, that's what I'll focus on.

YEAGER: What's the biggest hurdle right now for folks in cash flow?

TURNER: Year over year we're seeing prices go down generally and input costs increasing, and that makes it hard on everybody. If you're trying to get into the cattle market right now or buy replacements, it's not a great time — prices are high. But it's great if you've got a lot of calves to sell. The entry point for farming is basically out of reach for most people, unless you've got a family member or a connection to somebody with land that's fairly reasonable on rent, or you've got a line of equipment you may be inheriting or getting for a better price. It's scary when you think about how we're going to bring that next generation of farmers in when we can't even sustain the farms we have now.

YEAGER: So barriers exist like they always have — land acquisition or availability, equipment, then inputs for the crop itself. That hasn't changed; it's just that the numbers are pretty eye-popping right now. If someone thinks that's what they're going to do and they're going to navigate that mountain of debt, what's step two?

TURNER: You really have to know your own strengths and weaknesses and your business. I know some people who say, "I don't like paperwork or keeping records" — that's fine, but you've got to have somebody on your team who does that. Maybe you focus on the day-to-day farming aspects. And talk to a lender who is all about agriculture. Talk to other farmers and see where the ag-friendly banks are — who are the lenders that are responsive when you need something. That's a big part of the equation, because as a farmer you're going to need access to capital. You may not borrow every year depending on your operation, but at some point you're going to need that relationship with a lender. And try to budget and watch your expenses — easier said than done. You can't control the cost of fertilizer and some inputs. But if you can control some of the other costs, try to do that.

TURNER: A big part of the struggle is we have folks from last crop year who were in a pretty bad position at the end of the year, and now they're starting this year even further behind. I'm actually worried about this fall when some of those notes come due. It's going to be interesting.

YEAGER: Knowing the cost of production is one thing, but when you talk about a commodity — everybody does corn and beans — how do you stand out? How do you make that profitable? Are there operations with a path forward that's maybe different than it was a few years ago?

TURNER: I think we've seen some of that. The beef industry would be an example — more people are doing custom butcher cuts and selling cuts instead of just sending the calf to the sale barn when it reaches a certain weight. Those are value-added products that get you a better price. There's also a lot of opportunity with vegetables. The demand for locally grown produce is only going to increase. Why would we want to import a tomato from Mexico when you can get it grown locally or regionally for the majority of the year? We've got high tunnels and things that can help extend the growing season.

YEAGER: I'm not saying you have to put an official USDA hat back on, but from that perspective — are there lenders willing to write loans for those nontraditional, more experimental types of operations than what a traditional corn, beans, and cattle operator has been?

TURNER: I think there are lenders willing to do that. You've got to have a bank that's a little more open-minded and willing to finance that. A way to prepare yourself for a loan is to have an income projection that is as verifiable as possible. A lender is going to want to see what kind of market price you can get for whatever you're growing or producing. We can pull prices for corn and soybeans and look at auction results for cattle, but the produce side is a little harder to determine because some people sell wholesale, some retail, some at their own shop. If you can get a commitment from a customer — maybe a contract with a grocery store, or a restaurant that wants to buy everything you're going to grow — have a plan for where you're going to go with it. Don't grow something unless you have a place to put it.

YEAGER: So the blind-faith days are gone?

TURNER: Very much so. When you look at the economy overall, people are feeling it — it's not just farming. Banks are going to be more risk-averse in that kind of environment. But I do think if you're an ag lender who is invested in the community, you have a responsibility to help lift those businesses up and support them.

YEAGER: One of the surveys we follow is from Creighton University and Dr. Ernie Goss, and one of the things he does is have conversations with bankers each month and ask how they're feeling. What's been your conversation with bankers, and how willing are they to be writing loans right now? Are they as free-flowing as maybe they once were?

TURNER: I don't think so. There's been some reduction in loan-making activity across the board. We're probably seeing real estate and land purchases slow down just because of prices and the rate environment we're in. I still think lenders are making loans, but maybe not as aggressively as we once were. With the consulting work I do, I sometimes see the worst cases — situations that aren't necessarily on par with the bank. I wouldn't want that to represent the whole ag lending industry. But farmers are feeling it, whether you have a multi-million-dollar gross revenue operation or you're bringing in $10,000 a year. It's tough.

YEAGER: The margins are tight for anybody.

TURNER: Labor is a huge component of that. It's hard to find anybody who wants to work on a farm — or work in general, I suppose. It is tough work on a farm and it's minimum wage, so I understand why we have the labor shortage. But there are a lot of people I know who have had trouble with their H-2A visa workers being able to enter the country this year. Some people are behind by several weeks and they're saying, "We're not going to be able to make this up." They're counting on crops to grow in that cold window as we transition into summer, and some of that time is just lost. Labor is a huge issue.

YEAGER: Huge problem. Because if you can't get the crop in the ground in the spring, there's nothing to harvest in the summer or fall.

TURNER: Exactly.

YEAGER: Okay. I'm not going to say you're naming names here, but — situations that you feel like you've helped navigate to basically live to farm another year, or get another loan. What's been your greatest success story so far, Kallie?

TURNER: I'll keep it generic. I had a client who is a cattle operator. He had some existing loans with a bank that wasn't necessarily ag-friendly, but he had most of his loans there. He got to a position where he was just getting squeezed with cash flow — the payments were eating him alive. He came to me and said, "I don't know what we're going to do. We're thinking about putting the farm up for sale because getting out seems like the only solution." I said, let me look at your financials and see what's going on on paper. I sat down, looked at his tax returns and current cash flow, and then looked at what would happen if we restructured some of this debt. That was a great solution — it basically consolidated everything. He was able to have one payment instead of multiple payments. Some of those were high-interest loans, so consolidating saved him money on interest and spread the payments back out to give him breathing room. He managed the farm well, but the economy and everything going against his business made it hard to survive. That's probably my most proud story — being able to keep him going. We got him set on a path where now he's got breathing room in his cash flow, he can focus on the farming aspect, and they're not going to sell the farm. I kept somebody on the farm.

YEAGER: At what point is it too late to call you, and how early should someone call?

TURNER: You can call me at any point. Even if you're just thinking about wanting to start a farm, I'm happy to look at financials and see if there are budgets or projections that can help model cash flow on paper. If you're someone who's behind and feels like you're about to file bankruptcy, you can still give me a call and I'll be glad to look at your financials. If it's something beyond my scope, I'll let you know right out of the gate and say, "Hey, I think you need to go to somebody else — this is a question for a consulting attorney, or an accountant," or wherever is appropriate.

YEAGER: What's the emotional side of bringing in assistance? Because let's face it, we know how farmers can be proud, and they can get emotional about that.

TURNER: You've got to have an open mindset if you want your business to be successful and you want to continue farming — and potentially pass that on. You've got to have the people on your team that are going to help you get there. It's pretty lonely if you're trying to do it all by yourself. So call in those experts, don't be scared. Go to your FSA office, file the acreage report, do those things. Meet with your banker to get a sense of where you're at financially and take their advice if they're giving you any.

YEAGER: Let's get close to the end on a couple of things. I've looked at what you have done, and I think — how different is it going to be in five years? What's the crystal ball look like for you? Because there are always ebbs and flows, and if we're at a low now, do you anticipate a high? And if there is, how do you consult someone and walk them through a one-to-five-year plan when things might look pretty bleak right now?

TURNER: I think we have to look at how you can diversify your income. Are there things or products your farm can add that you're not doing now? Also consider value-added products — I see a lot of the vegetable producers pivoting to that because they can get a premium for their product. As far as row crop and cattle operations, it's hard to say things are going to be great. But it depends on what we're going to see out of the next farm bill — if it ever passes — and what kinds of programs are going to be there for commodity farmers and for farmers in general. I know folks whose grant funding has been pulled in the last year, and now they're scrambling to keep their operation going. I think if there's a big takeaway from what we've learned in the last year, it's that you can't put all your eggs in one basket — especially with loans or grants. Try to diversify that as much as you can. We've learned that grant funding can be taken away at any time for any reason. I really feel for those operations. How do you plan for your only funding source to be gone?

TURNER: Insurance is a huge challenge for those smaller or more diversified operations. I don't know of anybody that insures them. If any of your listeners or viewers know of insurance options for small-scale farms, I would love to know about it.

YEAGER: So insurance is a hurdle?

TURNER: Yes. You can get crop insurance for commodity crops depending on where you're at — in some counties it's not even offered on certain crops. But those producers deserve that safety net too. We should be supporting them because they're growing food that feeds people, not just items we're trading with other countries or making fuel out of.

YEAGER: Insurance is even troublesome for homeowners in some spots, and that's been a fairly steady line item for the big insurance companies — getting a check from a homeowner. If that's a struggle, I can only imagine what the risk that farming causes does to the large insurance companies. As I look to my right at one of the large insurance company capital cities in the world in Des Moines — not telling. It's more of a comment about the state of insurance, and that's something we're always worried about. And that causes indigestion for everyone, farmers included, because you want that safety net. You are in a very risky occupation right now — not just physically, but financially.

TURNER: I think what's going to be interesting is to see how the crop insurance industry starts dealing with climate change. We're seeing floods, drought — sometimes both in the same year — on a more consistent basis. I worry about whether those companies are going to start dropping coverage because of that.

YEAGER: Sounds like there's going to be no shortage of work here for you, Kallie. A lot of us are going to need some help.

TURNER: Yeah.

YEAGER: All right. I appreciate your time and your insight, and thank you for sharing your story and the work that you have done. Thank you so much.

TURNER: Thank you, Paul.

YEAGER: We are produced at Iowa PBS. Our production supervisor is Sean Ingrassia. His crew is Reid Denker, Kevin Rivers, Julie Knutson, Neal Kyer, and David Feingold. The executive producer of Market to Market is David Miller. I'm Paul Yeager. We'll see you next time.