When Developing Country Agricultural Bankers Meet USA Counterparts

You Can’t Dream Big Enough” was the theme of the 2013 National Agricultural Bankers Conference hosted by the American Bankers Association (ABA) in Minnesota on November 10-13, 2013. While the four-day conference brought together over 600 U.S. agricultural bankers, the Midwestern winter did not deter bankers from Pakistan, Rwanda, Kenya, Mexico, and Honduras from attending. AgriFin facilitated their visit as a part of its Study Tour Series which is designed to enhance peer-to-peer knowledge exchange among senior banking professionals on agricultural lending.

The goal of the study tour was to provide an opportunity for commercial bankers from developing countries to network with their peers in the United States as well meet internationally renowned experts on agriculture credit. Among the seventeen participants were representatives from key bankers associations interested in building up their support to agricultural banking industry. They came to learn how a mature bankers association, like the ABA, supports its constituency in an important sector of the economy. 


You Can’t Dream Big Enough” was the theme of the 2013 National Agricultural Bankers Conference hosted by the American Bankers Association (ABA) in Minnesota on November 10-13, 2013. While the four-day conference brought together over 600 U.S. agricultural bankers, the Midwestern winter did not deter bankers from Pakistan, Rwanda, Kenya, Mexico, and Honduras from attending. AgriFin facilitated their visit as a part of its Study Tour Series which is designed to enhance peer-to-peer knowledge exchange among senior banking professionals on agricultural lending.

The goal of the study tour was to provide an opportunity for commercial bankers from developing countries to network with their peers in the United States as well meet internationally renowned experts on agriculture credit. Among the seventeen participants were representatives from key bankers associations interested in building up their support to agricultural banking industry. They came to learn how a mature bankers association, like the ABA, supports its constituency in an important sector of the economy. 

Study Tour Approach

The Study tour consisted of two parts: a) national agricultural bankers conference in Minnesota and b) visit to First Dakota National Bank (FDNB) in South Dakota. 

The Conference

The four-day conference gave participants an opportunity to immerse themselves in conference sessions exploring a wide-range of topics. The conference was opened by two keynote speakers from Purdue University in Indiana – Jason Henderson and Brent Gloy –  who spoke about the turning point at which the US agricultural economy currently finds itself and connecting the dots between past booms and the present one.

On the first day, conference sessions explored various topics including: managing agricultural credit concentration; banking in a "boom town"; minimizing portfolio risk and maintaining strong client relationships; using leverage strategies; encouraging next generation farmers; keeping farms in the family; and the new Farm Service Agency (FSA) which directs loans and non-traditional lender programs. Further, general sessions for the day included a lunch session on managing weather risk from Professor S. Elwynn Taylor from Iowa State University, an update on the Farm Credit System and a discussion of US federal farm policy’s link to US farming’s dependence on federal support led by Professor Barry L. Flinchbaugh from Kansas State University.

Photo: Nate Franzen, FDNB (left), Roberto S. Rosas, Banamex (middle),             Photo: FDNB Lobby 
and Ajai Nair, AgriFin (right).  

The second day commenced with commodity sessions, giving participants an up-to-date economic outlook on crops, land values, livestock and crop inputs. This was followed by the first general session of the day from Orion Samuelson on his passion for agriculture and communicating to farmers through the media. The workshops then continued, covering many relevant and interesting topics including what average debt-to-asset ratios –  which were higher in 2010 than 1979  could mean for farmers; the importance of stress testing your portfolio; sharpening of credit analysis skills; the appropriate level of financial reporting that bankers require to adequately support their credit decisions; the importance of global cash flow to identify weak links between multiple entities; establishing a strong field position to cope with unexpected economic turns; and resources that exist to train up next generation bankers and the youth.

Part of the conference program was a dynamic session on the AgriFin initiative facilitated by Nate Franzen, President of the Agricultural Division, FDNB. The session drew a large attendance and generated interest among US bankers about the AgriFin initiative and possible ways for them to contribute to it. The general session of the day was a lunchtime presentation by the Senior Vice President of Archer Daniels Midland (ADM) on global agriculture and how it can expand to meet food, fuel and fiber needs through innovative ideas, investments and new partnerships. The day ended with a panel session on communicating agriculture’s message to the urban audience.

The final morning of the conference included two general sessions given by three gifted communicators, beginning with a global economic outlook from agricultural economist and Senior Vice President at Wells Fargo bank Michael Swanson. Professor Emeritus David M. Kohl then followed up with the current situation in the agriculture sector and how to ensure the future is one of opportunity in farming. The closing session was given by Lance S. Fox, author and mountain climber who inspired the audience to conquer their "Everest".

FDNB Visit

At the heart of this Study Tour was a two-day visit to the FDNB in South Dakota following the ABA conference. Participants learned about the bank’s operations and procedures, underwriting, making credit decisions, collateral and lien perfection, and loan servicing.

After this insight into FDNB, participants visited some of FDNB clients including the Maxwell Hutterian Brethren Inc., a Hutterian community involved in turkey and hog production and manufacturing where they learned about the special community-financing model to accommodate the religious specificities of the Maxwell group. They also paid a visit to the Heine Family Feedlot just across the state line in Nebraska with 12,000 head of cattle before heading to the Yankton Livestock Auction Barn. Participants also visited two family farms –   the Walloch and Sternhagen family farms  to get an idea of “smaller scale” agricultural clients of FDNB. This was in contrast to the scale and operations of the POET research ethanol plant in Scotland, South Dakota which sources much of its corn from local farmers in the surrounding area.

Photo: Heine Family Feedlot, Nebraska

Lessons Learned

One does not have to be an expert in development to know the importance of the local context when designing solutions to address complex issues such as access to agricultural finance. But, there are certain fundamental principles and challenges in agricultural lending that cut across countries and regions. This became quickly obvious to the participants of this study tour who found that there was much to learn from banks in the U.S.

The majority of participants said that they were likely to modify their agricultural operations based on knowledge gained from this study tour and all of those who responded to a post event survey said that they would recommend this type of a study tour to their colleagues.

For representatives of the bankers associations, the study tour reaffirmed the importance of their role as a conduit to bring banks together, and while not able to organize something on the scale of the ABA National Agricultural Bankers Conference, they began to think of more scale-appropriate activities. 

In addition to gaining an intimate view of the FDNB agricultural finance processes and procedures, one of the main lessons learned was the importance of relationship building with borrowers in order to enhance customer services and mitigate risks. Whether it was the investment in FDNB clients in the form of their AgriVisions: Beginning Farmers Program, their valued client services such as travel planning, or the strengthening of their agricultural loan risk management through relationship channels.

An unexpected outcome from the visit was the palpable excitement from the staff, clients, and external partners towards the international group. The FDNB team acknowledged that they they gained as much, if not more, from the visiting group.