In the face of an uptick in farm bankruptcies, farmers should be closely monitoring their balance sheets, the CEO of a national agricultural land lender says.

“They need to make sure defensively they’re covered but also be able to use it in an offensive posture,” said Brian Philpot, CEO of AgAmerica, based in central Florida. “For many people, it’s late to be going to the lender and be sure they have the availability of capital, but if they haven’t done it, they need to.”

When times are “bad or really bad,” cash is king and farmers need access to it, Philpot said.

“Lenders aren’t experts in farming, but farmers aren’t necessarily experts in lending and balance sheet management,” he said.

Philpot recommends farmers contact a lender on a regular basis.

Farm bankruptcy filings rose 8% from June 2019 to June 2020, according to the American Farm Bureau Federation.

Farm bankruptcies have increased by a “significant” percentage, primarily in the Midwest, following a “rough” few years in those areas, Philpot said.

“You think about the Midwest, they’ve had impacts on (soybeans) and weather, Trump’s trade war and then you add to that the impact of COVID,” Philpot told the Capital Press. “There’s significant pressure on the balance sheet, there’s pressure on how do you run an operation not knowing how long this pandemic is going to go.”

The uptick in farm bankruptcies in the last 18 months is something to be concerned about and to watch, Philpot said.

“A farm is a business and if you’re running that business right now, what are those things that are going to help you improve profitability and cash flow?” he said.

Depending on the commodity, the current value of the U.S. dollar in the global marketplace and labor issues, Philpot said the future is “hazy.”

“Until we get a little more clarity on these businesses and the environment they’re in, we’ve got to have a guarded outlook,” he said.

More than $90 billion in net farm income was originally expected this year. That won’t happen, Philpot said. But $32.8 billion from the federal government will help cover some of the loss.

“It is money that is getting into the farm economy, and from what you hear, it may not be the last of what is provided,” he said.

The upcoming presidential election will affect direct payments, trade and continued investment in rural areas, he said.