Rabobank Releases Report on Crop Efficiency Driving Future Financial Performance

Report explores outlook for U.S. farmers

St. Louis, Mo. (July 25, 2016) – As U.S. row crop farmers brace themselves for a third year of negative margins, Rabobank believes farmers must lower the costs of operation in order to survive. These findings are part of a new report from the Rabobank Food & Agribusiness Research and Advisory group, which explores the current costs of inputs and land, as well as the projected supply and demand of commodities.

This shift results from the need to adopt efficiency-driven, rather than volume-driven, strategies that can maximize profitability in an environment of structurally lower commodity prices, and high seed and input costs.

“We forecast soybeans, the leading growth commodity, to see consistent export growth in the range of 150 million to 200 million bushels through 2020 (12 percent to 14 percent over the trailing 2015 three-year average), given the continued increase in Chinese animal protein demand,” notes report co-author and Rabobank senior analyst Sterling Liddell.

The report, Farming the Efficient Frontier, finds the next few years will be crucial for farmers’ existence. This is because a couple years of negative income makes it difficult to maintain operating capital and credit.

“This leaves land, the largest single-expense item for producing the crop, as the primary focus for cost reduction. In 2016, we estimate that land for the median Midwestern farm business represents over 47 percent of the crop value,” notes report co-author and Rabobank senior analyst Ken Zuckerberg. 

The report, “Farming the Efficient Frontier: Crop Efficiency, Not Volume, Will Drive Future Financial Performance,” also finds that although the cost of inputs in 2016 have declined in comparison to the cost in 2015, the reduction was not enough to produce positive margins.

“In order to survive and thrive, farmers must adopt strategies that maximize bottom-line profit, rather than a simple focus on crop yield,” says Zuckerberg.

A full copy of “Farming the Efficient Frontier: Crop Efficiency, Not Volume, Will Drive Future Financial Performance,” is available by contacting Sarah Kolell at Rabo AgriFinance or Jessup Wiley at Rabobank, N.A.

CONTACTS: 
FAR Report Requests/Media Inquiries

Sarah Kolell
Rabo AgriFinance
(816) 516-7984
Sarah.Kolell@RaboAg.com

Jessup Wiley
Rabobank, N.A.
(559) 447-7946
Jessup.Wiley@rabobank.com

About Rabo AgriFinance

As a leading financial services provider for agricultural producers and agribusinesses in the United States, Rabo AgriFinance adds value using industry expertise, client-focused solutions, and by creating long-term business relationships. Rabo AgriFinance offers a comprehensive portfolio of services that gives producers the right products to prepare for, and take advantage of, market opportunities. Rabo AgriFinance representatives offer a wide array of financial services and knowledge to help customers realize their ambitions. This comprehensive suite of services includes loans, insurance, input finance and effective risk management products. Rabo AgriFinance is a division of Rabobank Group, the premier bank to the global agriculture industry and one of the world’s largest and safest banks.

About Rabobank, N.A.

Rabobank, N.A. is a California community bank and a leading provider of agricultural financing and full-service banking products to California consumers, businesses, and the agriculture industry. With nearly 120 retail branches, we serve the needs of communities from Redding to the Imperial Valley through a regional structure that promotes local decision-making and active community involvement by our employees.

Rabobank, N.A. is a division of Rabobank Group, the premier lender to the global food and agricultural industry and a financial services leader providing commercial, retail, and agricultural finance solutions in 48 countries around the world. From its century-old roots in the Netherlands, Rabobank has grown into one of the world’s largest and safest banks. www.rabobankamerica.com