ROCKY MOUNTAIN HOUSE, Alta. – Waiting until there is no cash, the cupboard is bare and loans are due may not be the best time to visit the banker.
“Do not show up after a loan is due,” said Bill Melaney, manager of ATB Financial Services at Caroline, Alta.
He told a beef producer workshop in Rocky Mountain House that farm lenders realize a single case of bovine spongiform encephalopathy is wreaking havoc in rural communities, but suvival plans can be worked out.
Formerly Alberta Treasury Branch, ATB Financial Services has decided to treat this year as a unique situation with various solutions for individual farms.
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He suggested producers write out their plans and include a detailed outline of what is needed now and in the future. Many have opted to retain cattle over the winter but they must know their costs of production to feed and maintain them. Producers must include personal living expenses.
“Everybody is going to ask for this when you come in,” said Melaney.
The lender will want to see the most recent income tax files. A list of assets and liabilities as well as inventory as of Dec. 31, 2002, are also required.
ATB has opted not to devalue cattle inventories because of this crisis.
“If we valued them down right, your farm would be operating on the negative side,” he said.
Once information is sorted, there are several options ranging from making an interest payment on loans to a full consolidation of all debt this year.
If a producer decides to consolidate all debt, this year’s payment could be skipped. Next year, only one payment is due on the big loan package rather than paying off a series of debts.
But, he cautioned, there have already been several years of drought and producers cannot gamble that next year will be the turnaround.
Producers could opt to spread out their debt with long-term loans.
“Sometimes spreading it out over smaller payments will give you the opportunity to be able to pay this down, or next year pay it out in full.”
Short-term loans for input costs or operating costs over the next year are also available.
Most lenders are cautiously optimistic but realize there are problems, such as dealing with cull cows and bulls.
“We’re not turning anyone away. We want to see the farm succeed,” Melaney said.