Ask any seasoned farmer or rancher how much the industry has changed in the last 30 years, and they’ll tell you. Prices are more unpredictable. Land, equipment and treatments are more expensive. Thinning profit margins force them to reach for higher yields just to break even. And that “yield reach” requires newer and more expensive technology.
This vicious cycle has led to more debt leverage and higher risk for family operations. On top of that, labor is harder to hire, and the weather seems more volatile than ever. It’s a perfect storm where equity is being burned at a high rate across the entire landscape, and succession rates continue their downward spiral.
There is a movement to overturn this trend by boosting soil health, and thus yields, through natural means rather than chemical treatments. Whether you call it holistic or regenerative agriculture, the practice shows promise for increasing production while lowering input costs.
Producers who are curious about making the switch naturally have a lot of questions, not only about where to start, but also about how to finance such a change. Don Morgan of Starion Bank and Joshua Dukart of Seek First Ranch have the tools and experience to help.
Morgan is a Wyoming native who came to Starion Bank in 2012 as Vice President of Credit Administration. He was promoted to President in 2020, and now in 2022 serves as Starion ’s Chief Executive Officer. Morgan is also a leading voice in regenerative agriculture financing.
Dukart has practiced holistic management since 2008 and on his own family operation since 2016. He holds a degree in Agricultural and Biosystems Engineering from NDSU, is a Certified Educator in Holistic Management, and has spoken about the subject around the US and abroad.
Don Morgan
What are some mindset challenges when transitioning to regenerative agriculture?
First, the mindset needs to move away from simply reacting to financial challenges, and toward goals that focus on quality of life, profitability and operational sustainability.
Second, the mindset shift includes realizing certain truths such as:
- What was done historically isn’t always the best way going forward.
- Soil is the most important asset you will ever have.
- Match the crops and/or livestock to the soil, not the other way around.
- Just because the neighbors are doing it doesn’t mean it’s right for you.
- Profit is more important than size, and profit is driven by the soil.
- Working toward a goal is always better than simply reacting to a string of challenges.
What financial products and services can help them ease that transition?
Producers need a financial partner that understands and supports the transition and is willing to learn the new operation alongside the producer. Finding the right partner is the most important factor. The financial partner can then support the transitioning operation with financial products that match up to the new practices.
Some examples we have introduced here at Starion are: lines of credit timed to the payments from stacked enterprises and not just set to mature in a year; unconventional financing for transition needs like watering systems, fencing systems, rotational grazing systems; products that support long-term soil health like cover cropping systems and are treated like long-term capital investments rather than short-term operating; and, underwriting standards that are supportive of transition practices.
The right financial partner will have expertise and products that meet the needs of all these types of producers – and that’s where Starion Bank really excels.
What does Starion do to help, beyond just the financial products? What do we offer over and above other banks?
We are the first bank in our region to develop two critical components to help the agricultural industry. First, an open mind and a willingness to learn and adapt alongside the industry. Second, a readiness to step out of our comfort zone, take on more risk, and be a leader in this industry revolution..
We openly advocate for regenerative transitions, have developed new financial products to support regenerative producers at each stage of transition, are teaching our bankers right alongside our producer customers, and are making significant investments in the regenerative agriculture space.
We are actively developing new partnerships with agencies and coalitions in this space and are now producing annual Starion Legacy producer schools that cover the four main elements of regenerative agriculture – biological, financial, lifestyle and succession.
Why is Starion producing its own seminars to cover more than just financing? How do soil, lifestyle and succession fit into the overall picture?
At Starion, our mission is to be financial experts that help solve the financial needs of our customers. In the agricultural industry, we see a new set of needs that is going unfulfilled by the banking industry – the support of traditional operations to transition themselves into sustainable, profitable, regenerative enterprises. Our expertise and experience have proven that operators who fully commit to a different mindset – one focused on strategic goals for the operation – and actively employ operational changes to achieve those goals, have a much higher chance of successfully operating not only now but for future generations.
Joshua Dukart
How does regenerative ag help producers overcome challenges?
Adopting a regenerative agriculture mindset does not mean challenges cease to exist. However, this regenerative approach provides tools, techniques, and strategies to handle these challenges to a greater degree. It offers more opportunities and flexibility so you can solve the root causes of problems, not just temporarily address symptoms.
How does regenerative agriculture help our food supply and local economies?
Agriculture will always be critical for providing food. But it can also be the foundation to build strong rural communities and profitable economies, contribute to better health and wellness for families, and create local and regional food and other animal product supply chains.
With regenerative agriculture, not only do these things become possible, but they become a major focus. Much of agriculture and the rest of society is disconnected. Regenerative agriculture aims to reconnect people with their food, communities with their resources, and farmers and ranchers with their soil.
What are the biggest fears traditional producers have about regenerative?
Fear of change. With change comes potential failure, criticism, exposure, and simply finding the mental and emotional energy to do something different when time, money, and resources can be limited.
Resistance to the regenerative approach is often times not knowing what it really involves. Agriculture is threatened and pressured in so many different ways that it is logical for producers to be wary. However, regenerative agriculture is a strategic approach to mitigate and nullify many of these threats.
What’s the one most important thing a current traditional farmer/rancher should know about changing to regenerative.
Focusing on just crop/livestock production, or just revenue creation, or just conservation, or just lifestyle will not create a regenerative and sustainable future for farm and family. Only once we synergistically start pulling all of those things together in a package deal can we provide the future we are looking for.
Can regenerative improve success rates for family operations?
Farms and ranches that have a vision for the future, work towards being regeneratively managed, are profit focused, and emphasize quality of life tend to have greater succession rates than those that follow a different path.
Where we find current generation farm/ ranch managers excited about the improvement of their land, operating in a profitable business, and having time for family and outside the farm/ranch activities, we also tend to find a next generation eager to participate and desire to be a part of the farm/ranch in the future.
LEARN MORE
To learn more about how your operation can benefit from implementing holistic and regenerative practices, contact Starion Bank and speak with our expert agribusiness bankers.
Beginning in Summer 2022, Starion will also produce seminars covering the important elements of regenerative agriculture, beginning with soil health. Look for announcements and sign-up information at starionbank.com.
