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Cale Rice returns to F&B Talk and gives a lender’s perspective on financing challenges in the food and agribusiness industry. He discusses the impacts of weather on the supply chain and the prices of sugar and other commodities, the volatility of the marketplace, hedging strategies to cope with market volatility, the impact on pricing in a truly global marketplace, calculating working capital, and the most common financing problems for manufacturers and processors in middle-market agribusiness companies.
“Working with a specialized lender, especially in a volatile industry like agribusiness, we can help understand what is going on with the price cycle, the life cycle, where the business is going, and help determine if this is a normal type of situation for this time of year or if this is an operational issue.”
Cale Rice
In This Episode
2:31 What is the area of the U.S. called “the heartland,” and what does this mean in terms of growing crops and agribusiness?
4:50 Why is there a negative stigma from many investors in the protein sector?
8:56 What is the ongoing impact of recent drought conditions in the Central U.S.?
11:35 How is the weather in the U.S. impacting the dynamics of the sugar supply chain and prices?
16:19 If there is a dramatic price change in the protein and grain sector in the first step of the supply chain, how long does it take for the change to hit the manufacturers and processors in most sectors?
18:25 As a lender, what’s the most unpredictable element in the supply chain or particular sector?
21:10 Are there hedging strategies to deal with agricultural industry risks and price fluctuations?
28:10 How much should manufacturers or processors know about agriculture and input costs?
30:55 How can manufacturers and processors manage market volatility and mitigate the risks of input costs in the food and beverage industry?
36:27 What is the advantage of working with a specialized lender in the volatile food and beverage industry?
37:34 What are the most important financial ratios a lender looks at with food and beverage manufacturers and processors?
39:27 How does a lender calculate working capital?
42:20 Why are businesses with a low working capital requirement more desirable than those that require a lot of working capital to operate?
50:05 What are the most common financing problems for manufacturers and processors?
1:03:07 How does a banker handle consumer unpredictability in product preferences?
Vertical Integration: Expanding a business into different stages of the same industry’s production process, either upstream (backward integration) or downstream (forward integration) in the supply chain.
Horizontal Integration: Expanding a business by acquiring or merging with competitors in the same industry, aiming to increase market share and reduce competition.
Meet Our Guest
Cale Rice
Vice President of Lending of National Bank Holdings (NBH)
Cale Rice is currently a Vice President of Lending in the Food and agribusiness group of National Bank Holdings (NBH). He is responsible for new relationship generation and helps manage their existing client portfolio that covers production livestock, the dairy industry, large-scale farm equipment dealers, sugar mills, row crop farming, and food production across multiple commodity types.
Prior to joining HTFL and NBH, Cale was with a division of Farm Credit in northeast Texas in a similar role. Before that, he spent almost ten years with Dairy Farmers of America working on the milk marketing side of operations, covering all aspects of procurement and operational management across the southwestern U.S. Cale has personal experience with production agriculture in both his studies in college and with his family-owned farming and ranching operation in the Gulf Coast region of Texas.
Cale received his Associate’s degree in Business Administration and Management from Western Oklahoma State College, his Bachelor of Science degree with a double major in Agricultural Economics and Agronomy from Oklahoma Panhandle State University, and his Master’s degree in Agricultural Business and Management from Texas A&M University.
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