When Ryan Ponwith began helping run his family’s fifth-generation farm in southern Minnesota five years ago, he knew he’d face many obstacles out of his control such as unpredictable weather and volatile commodity markets. While farming has always been a complex and uncertain business, today’s farmers are facing situations they could have never expected ranging from the fallout of a global pandemic and Russia’s recent invasion of Ukraine.

Just last month, the Federal Reserve raised interest rates for the first time since 2018. The Fed warns additional rate hikes are likely to follow in the months to come, as the agency tackles the country’s highest inflation in four decades. Now that interest rates are ticking higher, the cost of borrowing for farmers will increase too.
Now that he has fully taken over the family farm, Ryan is facing these challenges and the potential impacts to his bottom line, head-on. Thankfully, he’s been able to adapt with the help of SECURE™ Financing by WinField United. The program combines our unmatched agronomic data with our retail-owners local expertise to provide farmers with access to attractive, fixed rate-lines of credit for input purchases. Growers just need to fill out a one-page application form to see if their operation qualifies for interest rates as low as 0%.  

​“With so many risk factors as a farmer, it’s a big relief to know no matter how much interest rates fluctuate, I’m locked into that low-cost financing for my inputs,” says Ryan. “That means I can use my working capital to take care of more purchases that have a higher opportunity cost.”

According to the United States Department of Agriculture’s (USDA) 2022 Farm Sector Income Forecast, net farm income is expected to decrease by $5.4 billion (4.5%) from 2021 to $114.7 billion in 2022. A significant portion of the decline is linked to a dramatic decrease in federal pandemic-related disaster assistance to producers. From 2021 to 2022, federal payments through USDA’s pandemic assistance initiatives are expected to decrease $4.4 billion, from $7.8 billion to $3.4 billion. That’s a drop of 56%.

Meanwhile, on the cost side, production expenses are forecasted to jump by $20.1 billion, or 5.1%, reaching $411.6 billion in 2022. That’s the highest production costs farmers have ever faced. To make matters worse, the Russia-Ukraine war is sending fertilizer prices skyrocketing as farmers are getting ready to plant their fields. Higher costs for inputs like fertilizer cause the cost per acre to go up and increase the amount of lending a grower would need.

Jason Nelson is the Business Development & Strategic Planning Manager for WinField United Services, working directly with farmers and retailers to help them take advantage of SECURE Financing. While there are many other financing programs out, Jason says there are several features that sets SECURE apart. For example, most seed competitors have different programs to capture early-season business, such as flexible financing and early-season discounts. However, it’s often one or the other. SECURE financing offers farmers the best of both. Currently, WinField United estimates SECURE financing can save farmers up to *$9 an acre on interest expenses when compared to other offers.

“Ultimately what we’re trying to do is enable the agronomic decision process for both partners,” Jason says. “We’re trying to finance the seed and crop protection inputs to help our retailers differentiate themselves. This also makes our growers’ lives easier because they can work directly with retailers on the products that go on their farms.”

Another key feature of the program is flexible financing terms that allow farmers to make payments on principal in February – after they are done harvesting.

“Many other financing programs demand you pay back your loans in November or December of that year,” Ryan says. “The extra month or two of flexibility is critical for us so we can take advantage of tax savings. Plus, in today’s age with constant supply chain constraints, having those funds in place allows me to buy early and be confident I’ll have the seed and crop protection products I need, when I need them.”  

Ryan says his favorite feature of SECURE is being able to work directly through his local ag retailer instead of a bank.

“I think what makes SECURE so seamless is we’re always working with the same retailer, who knows my goals and understands the needs of my operation,” Ryan says. “I’m not just a number on a bank’s spreadsheet, but I am an owner of a cooperative.”

Through services like SECURE, WinField United is marching ahead together with our owners to deliver new offerings aimed at enhancing the relevance of our locally owned retail network and securing a bright future for the growers of tomorrow.

Interested in enrolling or want to learn more about SECURE? Click here for more information. The deadline to sign up for the 2022 season is April 30.

*The $9/acre savings figure is based on fixed 0% loan vs. standard operating loan at ~5.00% - avg disbursement period of 12 months and spend of $180/acre.