Lori Walsh: How are farmers handling the economic downturn and coronavirus crisis? Are there opportunities for farmers in the days ahead? What are the challenges of the upcoming spring planting season? Charles Baron is Co-Founder and Chief Innovation Officer of Farmers Business Network. He joins us now on the phone. Charles Barron, welcome. Thanks for being here.
Charles Baron: Thank you. Great to be here.
Lori Walsh: All right. Big picture right now, everyone is ... This is a major time of disruption. Everybody is worried and afraid, and farmers are human beings who are also worried and afraid. But tell me a little bit about what the current environment means for farmers across the Great Plains.
Charles Baron: Well, I would say, I've been talking to dozens of farmers here this week, all across the country, the Great Plains and the South, ranchers in the West. And I would say by and large folks are pretty positive and proceeding as businesses as usual.
Thus far, for the most part for farmers, the challenges that they face or that the corona epedimic has created in a business environment, have been manageable or typical business risks for a farmer. So lower prices on the corn, hog price is going down. So it's pricing pressure thus far, it hasn't been fundamental supply chain disruption.
So for the most part, every farmer I've talked to, they're obviously very concerned about all the challenges out there, but they're very committed to getting the crop planted and ready to get planting here and in a month and a half or so and able to do so. And so I would say farmers are a pretty robust bunch and are plowing ahead.
Lori Walsh: All right, so a social distancing and isolation and quarantine, that all looks somewhat different when you're a farmer or when you're in rural America. Tell us a little bit about ... Are they concerned about staying healthy and so that they can get the crop in?
Charles Baron: Absolutely, I think they are. I think, farmers will tell you, I've seen some making light of it in a sense saying, social distancing is perfect for when you need to be in a tractor 10 hours a day, [inaudible 00:02:23] planting.
So farmers are already have a little bit of a buffer there built in that the rest of us may not have and benefit from all the space and an acreage on their properties. They are of course worried about health just like anyone, but I think they have some built-in advantages to the nature of the lifestyle that will help them through.
Lori Walsh: All right, so let's talk about what's in demand and as we see the financial picture shift from the federal government, what's happening there?
Charles Baron: Well, the crisis and the challenges in the economy are also creating some big opportunities for firms, in a couple areas. I mean, so on the oil price side, obviously that's had an impact on ethanol and methanol demand, but for farmers wanting to lock in fuel contracts, these are pretty unprecedented times to lock in very low price fuel contracts.
On financing, one big thing here that's been going on is, is the Federal Reserve has lowered rates. That's directly been able to be passed through to certain parts of the farm credit system for farmers who are refinancing or wanting to finance on land and operating lines of credit. And we've seen a just enormous surge of demand from growers across the country for refinancing.
So for example, on land now we're able to offer rates that are below 2%, so 1.86% on our lowest level. And that has ... We've seen in the last week basically, a 25-fold increase in the amount of interest in refinancing from across the country from farmers. So it's really been enormous in terms of, I think farmers looking to take advantage of this. It is a real opportunity for them to take advantage of the savings that are available and many are doing so.
Lori Walsh: So help people do some math here when we talk about the rates going down, and I know what that can mean for farmers as they ... Give us an example or talk some of those numbers so people can make a decision. Is this the thing to do for me right now?
Charles Baron: Well, I think yeah, I think you have to look, if you own land and you're interested in refinancing on it, it can be a great opportunity to take advantage of it. If we look at it in terms of what type of savings might be available there versus 15 months ago, if you'd finance 15 months ago. And the map that in our system is, if you'd finance the typical thousand acre corn, soybeans operation in terms of the typical land value, you might see the interest rates have dropped nearly two points since that time. And that savings would be on an annualized basis, almost $60,000. So there could be very substantial savings out there.
But even if you're financing a much smaller amount of land, even just a few acres or a quarter or so, a typical plot, there's real savings out there and can be a good thing for the farmers to look at right now.
Lori Walsh: When we talk about financing, I think that most farmers understand this, but talk a little bit if you would about avoiding scams and going through trusted sources, because you know, we're hearing stories of people being contacted and offered deals that are not legitimate. So just a few seconds about knowing who you're working with. It's a good reminder for everybody, knowing what email that you're opening.
Charles Baron: That's right. That's right. I think there's, across the board, there's all kinds of things going on right now in terms of companies posing as other companies and those types of scams. But especially in the financial world, make sure you know you're working with an accredited lender or you're working with someone who has accredited partnerships in the farm credit system, whether it's Farmer Mac, with the major providers. Because it is a highly regulated industry and there are only certain players who are able to rate.
So that's a basic set of due diligence that of course everybody should do when they receive any kind of contact or solicitation.
Lori Walsh: Always a good reminder when things are ... people get flustered and worried and panicked. Let's talk a little bit about Farmers Business Network hubs across the nation and South Dakota. Tell me what's new in that area?
Charles Baron: Well, a big thing that we started doing this year is everyone has known FBN is as e-commerce, and we've always ... At the core we're a virtual company. We connect about 10,700 farms around the US and Canada. And we've been able to enable farmers to purchase things like [inaudible 00:07:23] chemicals online, which right now a lot of farmers are doing out of ... had been done out of comfort and convenience and now they're doing also out of safety.
But this year we rolled out over 70 hubs around the United States, and these are local facilities that are warehouses farmers can pick up from. So they can get e-commerce savings but do it in a way where they can pick up locally, and that hub is operated and run by one of FBMs farmer members. So they're directly going into business and working with one of our farming partners around the country.
So we've created a number in South Dakota and we're, of course with all the concerns right now, we are adopting all CDC guidelines on health and safety and sanitation, and making sure that our facilities and our contacts and the way in which farmers pick up product or have product delivered to them, is done in this hygienic and safe a way as possible. So it's really created a great alternative for growers who now can pick up locally but still get all the savings that e-commerce to bring them.
Lori Walsh: All right, let's talk about farmers getting ready for planting now after a late harvest, and we're talking, of course we had our flood outlook, a report earlier in the week. What are some of the things ahead for farmers as they get ready for a new season?
Charles Baron: Well, I think, this is normally the time in which growers are really getting their equipment dialed in and getting their planter ready, and preparing for any spring fertilizer application that they have to do. And I think one of the big things now that I think people are looking at is making sure they have access to all their inputs, everything they needed or were expecting to have delivered.
A big thing for us has been, we've ensured that all the inputs through our system are here. They're in the US, they're in our facilities. So we don't want any supply chain disruptions to farmers, they go to plant. I think we're going to get a lot of support around that in terms of ... Ag is a critical industry, it's a vital industry. Food production will of course continue. So making sure that everyone has access to the products they need. It's really [inaudible 00:09:45].
Make sure they double check all their purchases that they've been doing and make sure what they expect to be showing up, is going to be there. And we're there for them and we're making sure that that can happen now throughout our supply chain.
Lori Walsh: Charles Baron is Co-Founder and Chief Innovation Officer of Farmers Business Network. Charles, thank you so much for being here with us. Stay safe and stay healthy, please.
Charles Baron: You too. Be well.
You can access all of SDPB's COVID-19 coverage at www.sdpb.org/covid