Wednesday, February 26, 2020

When it all stacks up

January 30, 2020 by  
Filed under Clodhopper

Bank managers who understand farming are a dying breed. Clodhopper laments their loss.

Everybody seems to have a complaint about banks. They profit at our expense, expect us to take the lion’s share of any risk – and then we have to bail them out when trouble ensues because they are deemed too big to fail.

My old bank manager recently passed away at the comparatively young age of 69. I am unsure whether to refer to him as friend, acquaintance or just as my bank manager. Because if it wasn’t for him, our family farm wouldn’t be where we are today.

His funeral was just before Christmas and although funerals are obviously sad occasions, this particular one upset me more than most. You see Tom – not his real name – was what I call the last of the old-fashioned bank managers.

He served one bank all his working life, starting as a cashier and working his way up to branch manager. He served a wide area, including an array of farming families. Although not from a farming background, he understood agriculture. More importantly, he understood the people involved.

Opportunity and risk

Tom understood the length of time during the year that farms have no income – and the need to have a supportive bank. If it was not for Tom, our farm business would not have been able to expand. It’s as simple as that.

Like most farms, an opportunity arose to purchase some neighbouring land. This was the early 1990s – the time of the MacSharry reforms which aimed to curb agricultural output by reducing financial support to farmers and introducing setaside – taking land out of production.

There was no single farm payment – it hadn’t yet been introduced. Farming, as today, was suffering from a lack of confidence and direction. I approached Tom with reserve and my plan was to try to purchase two bordering fields.

We met and I presented Tom with my projections for the next five years – all of it educated guesswork. As always, he was interested. Never one to mince his words, he also seemed genuinely confused – asking why I hadn’t considered purchasing the whole farm.

Correct decision

Farming wasn’t particularly profitable at the time. Land values were low in this case, about £1,500 for an acre. People’s confidence in farming was at rock bottom. Tom suggested this would limit interest given the current economic climate – giving me a better change of a successful bid.

So the tale unfolded that despite the best efforts of the local land agent to spread rumours of various high offers, the land was purchased for below four figures per acre. Tom had convinced me to be brave – and looking back some 20 plus years later, he was correct.

At the time, neighbouring farmers assumed I had lost the plot by investing in land when farming was struggling. I was beginning to agree with them when, on 16 September 1992, the UK government withdrew the pound from the European exchange rate.

Interest rates were raised from a high of 10% to 12% within a few hours. It was suggested the Prime Minister wanted to go to 15%. But within 24 hours later they were back to 10%. Imagine my thoughts towards my friendly bank manager. I was paying 1% over base and 13% did not appeal.

Today’s young farmers have no idea. They are lucky to have had interest rates stuck so low for such a long time. But having said all that, my bank manager’s encouragement that I should buy and further expand a few years later has proved to be right.

Sad reflection

Without Tom, this would not have been possible. At his recent funeral, there were few mourners other than family and a small number of friends and colleagues. Either people did not know of his untimely death or they could not simply find the time to pay their last respects.

Tom helped numerous farmers and their families. Many of those have become the few farmers who survive now. They all started from small beginnings and Tom guided them with the bank’s support. They should have been grateful.

It is a sad reflection of farmers today – or maybe a sign of the times – that few people consider other people or indeed give them a few hours of their time. Tom would always find time for me and during our annual meetings he seldom mentioned farming.

It was only at the end of the meeting that he asked the same question: Do you wish to keep the same overdraft limit? If so, we will keep the same interest rate and of course waive the fee. He knew how to hang on to good business and make his customers feel valued.

The world is a poorer place for those who fail to show respect. And banks are much worse without people like Tom. I for one will miss him.

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