Gulledge Land Bank photo
Morgan Gulledge, from left, chief economist, Mississippi Land Bank, Greenwood, Miss.; Calvert (Mrs. Craig) Shideler, Senatobia, Miss.; Matthew Kimbrough, Mississippi Land Bank, Tupelo, Miss; and Craig Shideler, President, Mississippi Land Bank, Senatobia, at the organization’s annual meeting.

Land Bank Chairman: 'Save money, protect equity'

"With commodity prices the way they are, the best advice going forward is, keep it simple," says Abbot Myers, chairman of Mississippi Land Bank.

Down cycles are a fact of life in agriculture, and producers who plan for those downturns are the ones who are best position to survive, Abbott Myers told stockholders at the annual meeting of Mississippi Land Bank.

The Dundee, Miss., rice and grains producer, who is chairman of the board of the Senatobia, Miss.-based agricultural lending operation that is part of the nationwide Farm Credit System, says, “We’re in one of those down cycles now. With commodity prices the way they are, the best advice going forward is, keep it simple.

“My father always told me, ‘If you make a good crop, save some of that money — you’ll need it when things aren’t so good.’ And he has been proven right many times over the years I’ve been farming.

“I think we’re going to need some savings for the next couple of years. Farm overhead, inputs, living expenses, all need to be trimmed wherever we can. Use common sense. Don’t use farm equity to keep up with the Joneses. Hold on to that equity. Plan ahead rather than trying to come from behind. If you get behind, it’s awfully hard to ever catch up.”Bill and Elizabeth Fitts

Bill and Elizabeth Fitts, Byhalia, Miss., were among those attending the annual meeting of Mississippi Land Bank.

Even though the profit potential for most Mid-South crops doesn’t look particularly promising, Myers says farmland prices in the Mississippi Delta haven’t reacted significantly to the downturn. “Not a lot of land is changing hands right now, and prices generally are still high.

“Land prices usually tend to follow commodity prices as they rise or fall. But while commodity prices have gone down, farmland prices are still lagging commodities somewhat. Will land prices drop like they did in the farm depression of the 1980s? I don’t think so. I sure hope they don’t.

LITTLE LAND BEING SOLD

“Not many people are wanting to sell land right now. I personally am a believer in buying land. The old saying is pretty much true that it doesn’t matter whether you rent or buy, you pay for the land you occupy. If you rent land for a long time, you’ve paid for it in rent. If you get a chance to buy it, go and talk to a lender — you’ll be glad you did. I made my first loan with Mississippi Land Bank in 1969, and (he laughs) I’ve been in debt to them ever since.”

Although commodity prices have been down, sometimes below the costs of production, Myers says, landlords are reluctant to reduce rents. “Commodity prices may fall by half, but they don’t want to cut back on their rent income.”

Interest rates, another cost for farmers, “have been so low for so long, there was only one way for them to go — up,” he says, and it is expected that the Federal Reserve will continue periodic small incremental increases in the interest rate.

Mississippi Land Bank, which has nine branches serving counties across the northern part of the state, had a good year in 2016, Myers says. “Growth was up, although not quite as much as we’d have liked because of the stagnant ag economy. Net income was also up over the previous year. Long term lending was up only 1.75 percent, but short term grew by almost 10 percent, which is very good. We are in a very solid operating condition — all of our financial ratios are excellent. If we make a profit, we try to return it to our stockholders through patronage dividends. Since 1996, we’re returned almost $30 million to our stockholders.

“Capital is a tool, just like a tractor or a combine, and it should be used wisely. We have great employees, who are specialists in helping our clients use capital to achieve their goals.”

STRONG FINANCIAL POSITION

Craig Shideler, MLB president, said dividends to stockholders were at a five-year high in 2016, totaling $2.9 million. “Net income was $9.43 million, compared to $8.977 million in 2015. Our permanent capital ratio was 16.2 percent, up from 15.6 percent the previous year.”

Reflecting the ag economy downturn, growth in new money loaned was 1 percent, totaling $119.7 million, compared to 6.5 percent and $155.9 million in 2015. “Our credit quality is outstanding,” Shideler said, with only 0.12 percent of loans rated non-viable at the end of 2016.

“We had a very diverse loan portfolio.” In loans by commodity category, the largest number was for timber tracts, 20.27 percent, followed by soybeans, 18.82 percent; beef cattle (excluding feedlots), 14.30 percent; cotton, 11.15 percent; corn, 8.13 percent; rice, 2.58 percent; and poultry, 5.7 percent. Farm machinery and equipment loans totaled 1.88 percent. Other categories, including hunting, trapping, and game propagation, totaled 17.19 percent. In the Other category, “one of the fastest growing loan areas in recent years has been for aircraft for aerial applicators,” he said.

As part of its community service outreach, Shideler said, MLB continued its program of scholarships to students attending the region’s community colleges and universities. “We’re very proud to help these students reach their educational goals.”

Scholarship recipients in 2016 were Shariss Sneed, Coahoma Community College; Tytiana Wraggs, East Central Community College; Russell Applewhite, Itawamba Community College; Lucy Fyfe, Northwest Community College; Matt Rowland, Northeast Community College; Bryan Herron, Mississippi State University; Siara Durden, University of Mississippi; Olivia Smith, Mississippi University for Women; Sabrina Smith, Delta State University; and Haley Lloyd, Rust College.

 

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