ST. LOUIS – (COMMERCIAL THREAD) – Rabo AgriFinance has announced a new loan product that can make it more financially viable for farmers to seek organic certification on all or part of their farms.
With advice from Pipeline Foods, Rabo AgriFinance has developed a financial framework that gives farmers the flexibility to receive the necessary capital for the initial costs associated with changing production practices. Farmers can schedule repayments when they receive the additional income from the sale of certified organic produce.
The US Department of Agriculture requires a three-year transition period for farmers to certify their land as organic.
“During this period, farmers often experience yield losses compared to conventional production, and they cannot start collecting organic premiums for the production of this land to compensate for the lower yield,” says Shawn Smeins, manager. Deputy of Rabo AgriFinance. “This challenge has created a financial hurdle, especially after several years of tight margins and dwindling cash reserves, for many farmers who might be interested in going organic or expanding their organic footprint. ”
Leaders at Pipeline feeds, a specialty grain supply chain company that operates up and down the supply chain, partnered with Rabo AgriFinance because they saw how difficult the transition can be for farmers.
“Consumers and food companies are asking for organic food and ingredients, but farmers repeatedly hit a wall trying to figure out how they will survive the transition period,” said Eric Jackson, founder and president of Pipeline Foods, which also helps farmers navigate and manage the certification process. “This loan offer is the kind of solution the industry has been waiting for.”
The United States imports 9 to 12 million bushels of organic corn and 12 to 16 million bushels of organic soybeans per year, according to the US Department of Commerce. “These numbers demonstrate that demand has grown faster than domestic production,” said Stephen Nicholson, senior grains and oilseeds analyst at Rabo AgriFinance. He expects demand growth to continue, supporting price premiums, which have settled in a range of 110% to 130% of the price of conventional soybeans and 120% to 150% for the. corn according to estimates by the RaboResearch Food & Agribusiness team at Rabo AgriFinance. .
“The transition to organic production is a diversification strategy that promises increased profitability, more stable markets and an increased likelihood of successful farm handover to the next generation,” said Erin Heitkamp, senior vice president of agriculture and public affairs for Pipeline Foods. “By providing these financial tools, farmers not only see, but are able to pursue the organic opportunity. ”
One of the largest lenders to American farmers and ranchers coast to coast, Rabo AgriFinance partners with leading operations that grow a diverse range of conventional, organic and other specialty crops.
Pipeline Foods is a customer of Wholesale Banking North America (“Rabobank”), a sister company of Rabo AgriFinance. Pipeline Foods is the leading US-based supply chain solutions company focused exclusively on organic, non-GMO, and regenerative food and feed. In September, Rabobank led the renewal and syndication of Pipeline’s green loan. It was defined as such for its contribution to the achievement of global environmental goals, adherence to no-violation principles and adherence to ICMA’s green lending principles and EU standards.
“Working with such innovative pioneers further strengthens our ambition to be a leader in sustainable commodity finance in the United States and around the world,” said Lionel Autret, senior relationship manager at Rabobank Trade and Commodity Finance.
Now, for American farmers, the unique collaboration spanning the food supply chain and the financial industry can help them grow for specialty premiums.
About Rabo AgriFinance
As the leading provider of financial services to agricultural producers and agri-food businesses in the United States, Rabo AgriFinance adds value by utilizing industry expertise, client-focused solutions and 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. This comprehensive range of services includes loans, insurance, input finance and effective risk management products. Rabo AgriFinance is a subsidiary of Rabobank, a leading bank in the global agricultural industry and one of the largest and strongest banks in the world. Rabobank is an equal opportunity provider. To find out more, visit www.RaboAg.com.
The Rabobank Group is a global leader in financial services providing wholesale and retail banking, leasing and real estate services in more than 38 countries around the world. Founded over a century ago, Rabobank is today one of the largest banks in the world with more than $ 660 billion in assets. In the Americas, Rabobank is a leading bank for the food, agri-food and beverage industry, providing industry expertise, strategic advice and tailored financial solutions to clients throughout the food value chain. Further information is available on our website or on our social media platforms, including Twitter and LinkedIn.