Amelis Long: Welcome back to the Vault, where we unlock stories that matter here at FNBO. I'm Amelis, and I'm so excited to be your host for another great episode today.

This month, we're celebrating something really important to FNBO culture - National Agriculture Month. And as the third largest commercial ag bank in the United States, this is something that is really part of who we are. So, to help us get to know a little bit more about agribusiness, I'm so excited to welcome our expert. Mr. Barry Benson, head of Agribusiness at FNBO, to the podcast today. Welcome. Thank you for being here.

Barry Benson: Yeah, thank you, Amelis. I'm super excited to be here. Appreciate the time.

Amelis Long: First of all, I think we should say happy Ag Month.

Barry Benson: Absolutely. It's the most wonderful time of year.

Amelis Long: I'm excited to learn more about it. Well, Barry, tell me a little bit about some interesting facts in the farm industry.

Barry Benson: That's a great idea, Amelis. Let's first start out with a question on what percentage of U.S. family farms do you think are family-owned and operated?

Amelis Long: Well, first of all, I didn't think you were going to interview me today. Percentage of family-owned farms. Let's say…75?

Barry Benson: That is a great guess, but it's actually around 90%. 90% of U.S. farms are family owned and operated, many of which are their third and fourth generations leading the business. The average farm is producing enough food for 165 people in the United States.

Amelis Long: Wow!

Barry Benson: Yeah, absolutely. Back in around 1960, that number was as low as 25.

Amelis Long: Wow, that's huge. I didn't know that much about farming, let alone family farms. That's amazing.

Barry Benson: Absolutely.

Amelis Long: I feel like you have another question on deck for me.

Barry Benson: Yeah. What do you think would be the most produced farm product in the United States?

Amelis Long: I'd say corn.

Barry Benson: You are exactly right.

Amelis Long: Yes!

Barry Benson: Corn remains king in the United States. Actually, corn is included in around 4,000 items that you'll be able to see at your grocery store, some of which include gum, pop. And, another fun fact, paper is also actually made out of corn byproducts of cornstalks, cobs, and the actual corn husk.

Amelis Long: That I didn't know, but I love pop and gum so I'm all for the corn industry.

Barry Benson: Perfect, you and I both, so absolutely. Corn is also used, the strong product for ethanol. Uh, one that's a little more new, and which says hitting the market too is biodiesel, uh, for the soybean side.

Finally, Amelis, one last question.

Amelis Long: Okay.

Barry Benson: How many states do you think there are where cattle actually outnumber the number of people in that state?

Amelis Long: Okay, so more cows than people. Um, I'd say five states?

Barry Benson: There are about nine, and of the highest ratio of cattle to people would actually be South Dakota would lead that, then Nebraska, and then North Dakota would actually come in number three.

Amelis Long: Okay. Staying strong in the Midwest though.

Barry Benson: Absolutely.

Amelis Long: All right. Well, I feel like it's time for me to start interviewing you after this little game here.

Barry Benson: I liked asking you questions, but sure, go right ahead.

Amelis Long: It was kind of fun to have the roll switch for a little bit.

Well, now that we learned a little bit about cows and people, let's just dive into the cattle industry. What else do we need to know about it?

Barry Benson: Yeah, absolutely. It is interesting times in the cattle industry today. So right now, the U.S. cow population, it has at about a 70-year low. So, we have fewer cows producing the calves that will then eventually end up in the food supply chain.

At the same time, the U.S. consumer has really taken a strong liking to high quality beef. So, the demand for the product is actually increasing at the same time, which ties into the classic supply and demand curve. And so, as there is less supply, then unfortunately, the prices do increase on that.

The reason the cowherd is down, there's a lot of different variables that come into it. The United States has experienced drought in the last three to four years in different spots of the United States where cow numbers typically reign - in the in the south and southwest and a little bit into the north and northwest as well.

And at the same time, a few years ago, grain prices were pretty substantial, and so there was some pasture ground that was for cow-calf and now is potentially in row crop production.

Some of the decline in cow numbers is being offset by dairy cows. So, there's more beef on dairy that is entering the supply chain today. And in addition, cattle used to be finished or harvested at a weight of around 1,200 pounds. Today that is typically around 1,500 to 1,600 pounds. So, it takes fewer animals to actually supply protein for the U.S. consumer. But while that consumer is chasing that high quality product, we are experiencing some increased prices at the store.

Amelis Long: Yeah. I definitely have felt that in the grocery store.

Barry Benson: Yeah, we all have. And so, the U.S. producers and ranchers are trying to increase that, but at this time, it does take a little bit of time. And so, if they go through to increase their herd, they would need to retain heifers. So, if a producer were to retain heifers this year in 2026, uh, those cows or heifers would not actually calve until 2027. And then that calf would actually not even hit the food supply until late '28 or even early '29.

So, I myself am a producer as well and so in my operation, I'm weighing the opportunity cost of being able to sell that heifer this year at a very good price, which would be profitable for me. Do I retain her? Do I put in the extra feed, cost, and labor, to get her to next year to where then she could calve?

Uh, many producers remember 2015 and 2016, coming off one of the other high cycles of the cattle cycle. And unfortunately, at that time, a lot of people retained heifers and then they were actually worth less with a calf than they could have sold as a feeder calf.

So, although the producer is trying their best to truly help the consumer and not pay so much at the store, it will take some time. And uh, but just be rest assured that the U.S. producers are really trying.

Amelis Long: Yeah, that's really good information and it's such a science, right? And I think as a consumer, we just look at the price tag and say, "man, I need a coupon", but it's so important for us to know like how it all really works. And I think also remembering it's a family-owned business, right? And so, all that connectivity is really important for us to understand.

Barry Benson: Yeah. Absolutely. There's a lot of blood, sweat, and tears put into trying to raise that animal to eventually end up at the grocery store for the consumer to purchase.

Amelis Long: Yeah. Yeah, thanks for sharing that, Barry. I want to pivot a little bit. Let's talk about the another part of the agribusiness, which is the, I think you called them row crops, or actually things we're planting in the ground, right?

Barry Benson: Yes, absolutely.

Amelis Long: Yeah, so you were telling me as we were chatting before the podcast that there have, uh, that's been a kind of a tough spot where the prices are not matching the cost that it is to plant. Can you explain that to our audience?

Barry Benson: Sure, absolutely. So, in 2026, it is projected that the input cost - so the cost that the farmer has to pay for the seed, fertilizer, chemical labor to actually get the seed in the ground, to then grow, to be harvested later - is going to be at or near an all-time record high. So that is a little bit of a headwind for our producers.

At the same time, unfortunately, the last few years we've had declining green prices. So that's the price that the farmer is receiving after they harvest the crop and then take it to the elevator or for other food processing. And so, as those two things have crossed, it has been a challenging time over the last few years in row crop.

And so, I mentioned a little bit earlier how I have cattle. have a farming operation. And so, uh, other little interesting fun fact, uh, my dad, his first job out of college before he went back to the family farm, he was an FFA advisor. And so, uh, FFA was very near and dear to my heart and my dad started as a young age. And so, I was an FFA in high school and one of the things of FFAs you learned in FFA Creed. So, one of the things in FFA Creeds is states that, "for I know, the joy and discomforts of agricultural life and hold an inborn fondness for those associations which, even in hours of discouragement, I cannot deny."

So, today's men and women in agriculture are really working hard in row crop to really try to figure out the best way that they are able to lower their cost, control those costs, I should actually say, and then also look to try to market it and opportunities that come available. So, they're really busting out their pencil sharpeners, looking at everything with a fine-tooth comb and really trying their best to figure out how to maintain profitability this year if they can.

It has been challenging so uh at FNBO, we do work with our customers to make sure they do have strong balance sheets, have ample working capital, and their ratios are in line to be able to keep them successful. Unfortunately, after two years, to potentially this could be the third year of being a little bit of a challenge, some of that working capital has eroded. So, we work with them to look to say, okay, fortunately, Ag real estate land values still remain very high, and so is there a way to offset some of that short-term debt into a long-term plan, which makes their cash flow a little bit easier and help keep them in operations to really be successful in the future.

Amelis Long: Wow, Barry, again, I keep coming back to the fun fact you shared at the beginning is 90% multi-generation family businesses, trying to really manage the ups and downs and these intricacies that, as a person that just goes to the grocery store to buy their stuff, you're just not familiar with.

Barry Benson: No, absolutely. There's a lot behind that, and it doesn't show up at the grocery store aisle for a consumer to be able to pick up.

Amelis Long: So, what is something consumers, in addition to understanding how the system works? What else can they do or can they understand about agribusiness so that maybe we're not griping so much of the grocery store?

Barry Benson: Sure. I think for the consumer side, we just want them to know and understand that it does, as I guess, indicated before, it just doesn't just show up in the aisle. There is a lot of things that happen behind that. Everybody is trying to produce the most that they can to provide for the U.S. consumer, as well as around the world. And so, it is a global economy today. So, the production that is happening by the U.S. farmer is not only consumed by the United States but also sent abroad.

And so, uh, we had been operating at a surplus for ag trade over the last number of decades. Unfortunately, a few years ago, that did turn, and so today we actually import more ag products than we export. And that can be due to a lot of different reasons, which I think we're making some progress there. But today is just a little tougher time on the row crop side.

Amelis Long: We've talked a little bit about the consumer side. I kind of want to pivot to the customers that you do support. You've touched on how your team works so closely with your customers to help them plan, not just in the moment, but also long-term. As we look into 2026, what are some things that you want your current customers or potential customers to understand about uh, the market interest rates and things like that?

Barry Benson: Interest rates have been on the down - on the downhill slide here over the last 6 to 18 months. Uh really backtracking all the way to 2020. The rates almost went to zero. Certainly, lower rates than they are today. And then we had a certain time period where they were rapidly increasing at 75 basis points at a time. And so, in order to control inflation, then the Federal Reserve started raising rates, which certainly impacted our customers. And, as we talked about beef earlier with cattle prices being the way that they are, it's really adding up to almost twice the amount of dollars it takes to produce an animal all the way to harvest.

So, with that increased cost, that also increases what their overall interest expense are on those borrowed dollars. So, for every reduction in rates there are, that certainly impacts their operating costs and helps lower their cost of production. And so, at FNBO, we certainly know that ag is cyclical, so there is ups and downs, just like a lot of different industries. Uh, sometimes ag has a little longer headwinds up and sometimes a little faster downturn. But we do know that it just isn't always rainbows and sunshine all the time. And so, when we work with our customers, we do encourage them to maintain strong liquidity, make sure that they are looking out beyond just one year, being able to make changes in their operation to be successful. So everything that they can do in order to, um, efficiently produce a crop, and then look to the markets to be able to say, okay, when there's an opportunity to sell out a profit, let's take advantage of that opportunity, and maybe not just hope that the prices will go higher, but be able to defend and make sure that we're able to produce for years to come.

Amelis Long: Barry, it's really interesting to hear how you and your team proactively work with your farmers and producers. What are some of the solutions that you walk them through as you're doing some of that proactive planning?

Barry Benson: Certainly, right now we're in the middle of renewal season for our row crop producers, and so as we talked about earlier, they are - there is some stress on that portfolio, they are seen declining margins, which are making things a little more challenging. So, as we look at our projected cash flows for 2026, we do have some operators that need to replenish that liquidity and working capital that we were talking about. And so, we look to then look for real estate loans or other items that they're able to offset those short-term operating losses with a longer-term repayment plan, which will then help ease their cash flow going into 2026.

And so, as we talked about earlier, FNBO is the third largest commercial lending bank in the United States, but we offer so many more things than just loans and so we believe in bringing the entire suite to our producers and our customers. And so, we offer top-shelf cash management services. We offer credit cards. Diversified financial services is one of the leading equipment financers in the United States, and actually the number one pivot irrigated insurer in the United States. And so, we offered those types of solutions to also help producers. And then another interesting side note is FNIC, our insurance company, also underwrites around 8% to 10% of insurable acres in the United States. So, there's a lot of different things that we bring to the bank, which makes me super proud and very excited about what we're able to offer to our customers.

So ag is really not something that we do off the side of our desk. It's in our DNA. It's really who we are.

Amelis Long: Yeah, it's definitely part of our culture and I love hearing how that wraparound service is just really happening for those producers and farmers. Obviously, that's a huge piece of who we are and part of the opportunity that we bring to your customers. Let's talk a little bit more about some of those opportunities and the positive outlooks that you see for 2026.

Barry Benson: Sure, yeah, wherever there's challenges, there's always opportunities.

Amelis Long: That's right, yeah.

Barry Benson: So, yeah, as we look at 2026, we've talked about beef and protein, and so there could be a little more grain on those. So, beef, we anticipate that to continue to be really positive for 2026. Uh, the dairy industry, although milk prices are a little more challenging, the beef on Dairy cross calves that we talked about earlier are certainly helping our dairy farmers with their cash flow. Swine is in a very good spot as well. So, the projections for profitability for the swine industry in 2026 looks very positive. Even on the row crop, where there are challenges there, it does allow producers to have some thoughts and is there another niche market that they can try to be able to hit.

Sustainability is certainly a buzzword today. And so, they're looking for ways to be able to capture, maybe that additional marketability, to be able to generate additional revenue for their farm and operations. So, all in all, we continue to be super excited about the opportunities for Ag. Uh, the men and women of the United States farming families have, in tough times, look to sharpen their pencil, figured out what is their best way to generate revenue and leaned into that and always been successful.

Amelis Long: And as a consumer, we're so appreciative that that's what they do.

Barry Benson: And yeah, as a consumer, I'm right there with you for sure.

Amelis Long: Yeah.

Barry Benson: One of the most enjoyable parts of my job and my team's job is to really, when we are working with the family farms, is to be able to sit across the kitchen table from them and really say, "how can the next generation continue on our legacy? How can they grow on our legacy?" And so, that can come in a variety of different avenues for them. Some are looking to increase their livestock production side, some are looking to increase the crop side. And many are really a combination of both. So, the farm maybe was really specialized in beef production, and a son or daughter says, hey, I want to be able to continue on the legacy and grow and so I, but I may look at a different type of, uh, either bringing swine to the operation, bringing poultry to the operation, or maybe even some niche marketing where they will invite neighbors to be able to come out and experience a little bit about production and production agriculture.

And so, a lot of times we say farming is getting your hands dirty, but really farming is so much more today. It's almost a technology company where they're really looking to use modern technology to improve efficiencies, help with their record keeping, help with their overall production, and many times similar to your podcast, we'll have farmers and ranchers that will have their own podcast and be able to share that message out, and that's a way for them to be able to expand their brand and continue on their family legacy.

Amelis Long: Well, as I think about those opportunities, I can think of no better time than to celebrate our farmers and producers by wishing them a happy Agriculture Month. So, what do we need to know about what happens in National Agriculture Month and what are we doing to celebrate here at FNBO?

Barry Benson: So here at FNBO on National Ag Day, actually on March 17th, we'll be serving coffee and donuts to our employees to help them also recognize and share more about the ag stories so they can reach out to the men and women who are producing food, fiber, and fuel for us in the United States as well as the entire globe.

So, at FNBO, and really we encourage everybody to really reach out to those producers. Thank them for all that they do. Food just doesn't show up on the, at the grocery store shelves, and so there's a lot of effort behind that to get that product, which is safe, reliable, and very nutritious.

Amelis Long: Thank you so much, Barry, for walking us through really everything we need to know about agribusiness. And, uh, as I reflect, I always enjoy going to the uh, the employee celebration and taking time to celebrate with your team. Um, but I think this year will be a little even a little more meaningful now that I understand more about agribusiness. So, I think we'll all make a commitment to thank our farmers and producers that we know. Thank you for the great work that your team's doing for our, for all those folks that are helping us, like you said, clothe us, feed us, and keep us fueled, so well, thank you for the time.

Barry Benson: Thank you for giving me an opportunity to share. I'd like to thank the farmers, and all the men and women who provide for us each and every day. Thank you.

Amelis Long: Yeah, absolutely. Big thank you to them. Big thank you to Barry. To learn more about FNBO and our Agribusiness Banking, please visit our website, fnbo.com/agribusiness.

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