Seven Things Farming and Banking Have in Common

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While farming and banking may at first conjur two completely different images, the two businesses actually have a lot in common. Here are seven that come to mind.

1. Early to Bed, Early to Rise

Farmers get up early. It’s what they’ve always done and what they’ve always needed to do, because there are so many responsibilities. Of course, today’s farmers have to run their operations and use an impressive array of technology to track, monitor, and control what’s going on. Meanwhile, bankers might not wake up before the crack of dawn as often as farmers, but they might just lose more sleep. The range of banking responsibilities is substantial, from financial management to cybersecurity to customer retention.

2. Risky Businesses

Bankers need to manage risk very carefully. Making a loan that eventually defaults can be devastating to a small bank. That’s why bankers tend to be risk averse. For farmers, they fear planting crops or raising livestock that won’t generate profits. Literally “betting the farm” on some unknown crop would be considered extremely risky.

3. Control Groups

Both farming and banking are businesses with several factors outside of their direct control. With farms, this ranges from the weather to feed or seed prices to the prices they can eventually command when they bring their goods to market. Banks are at the mercy of the Fed rate and the economy in general.

4. A Tight Fit

Farmers have little control over their margins. That’s a function of so many variables in production and then in prices at market. Bankers can only dream of the large margins enjoyed by software vendors, learning to work on interest rate spreads, for example.

5. Patience Pays

A growing season can seem like an eternity for a farmer. Patience is not just a virtue, it’s a necessity. In the financial world, bankers need to reach for their patience while waiting to see if a risky loan will be paid or during extended phases of construction projects.

6. Diversity Rules

Banks diversify their loan portfolios to spread risk around. That way, a few defaults won’t do as much damage as they could otherwise do. In farming, the diversity can be seen in their crop mix or choice of animals to raise.

7. But Seriously, Folks

Farmers and bankers might seem like two uptight types who just dress very differently. The truth is that both bankers and farmers generally have great senses of humor. Laughing and making others laugh helps them get through the tough times. And, let’s face it, it’s good for business.

The Takeaway

While banking and farming might seem to be worlds apart, these two worlds have a lot in common. They also rely on each other for business needs, whether it’s in the farm belt or anywhere else farms are found.