Tim Ohlde, president of the Elk State Bank, Clyde, Kan., says there are five things the agricultural lender of the future will need.

1. Have proper accrual financial analysis skills, to help the customer stay profitable and to help the bank stay competitive. Help customers understand that cash income does offer a good enough measure of their profitability.

2. Be high-tech, high-touch. "As bankers, our contact with the customer is far less today than a few years ago," Ohlde says. "Be ready with good products and services."

3. Show emotional intelligence. Know the comfort level of the borrower.

4. Be a life-long learner. "Studies show that age 37 is the average point where either we remain life-long learners or we quit," he says. "Obviously, having knowledge of your industry is a key." That way, a banker may better assist customers in trying situations.

5. Have a working knowledge of commodity marketing and make sure producers have one too. "We have producers who want it and we strongly encourage it. We told our customers in the early 1990s that if they took a one credit-hour course in marketing that's held at the local community college, we'll pay the tuition," Ohlde says. That was the best investment we ever made.

"We had over 50 customers complete the class. Right away, when your customers develop a working knowledge of a subject and they can see the benefits of them, they'll take advantage of them. The topics included forward contracting, options, futures and other hedging techniques."

Ohlde took measurements of 15 producers who took the course and actively used those marketing tools. The losses prevented or gains made over the first four years after taking the class totaled over $1 million. "That may divide out to about $16,000 per year on average per operation. Take that money made over 10 years and compound the interest made on that and it grows."

--Larry Dreiling

Date: 8/25/05