Rethinking banking decisions can help farmers, ranchers

A banker can be a farmer and rancher’s best friend or worst enemy. Many depend on the bank for real estate and operating loans and other monetary purposes. It can become a daunting task to keep track of everything, and, for some, it all becomes too much.

But for Mary Jo Irmen, farming without the bank is possible. The North Dakota author, speaker and farm strategist has found her calling helping farmers and ranchers learn her method and learn to live without depending on the bank to fund their farming and ranching endeavors.

“I got into it just by always looking for a better solution of where to have my money,” she said. “I did not like the stock market or believe in the stock market.”

Irmen grew up on a farming and ranching operation, and when she came across the infinite banking concept, she knew agriculture could benefit from it.

“I knew the struggle, and I knew that there is so much control within the banking system there,” she said. “And that what they were doing wasn’t working and it’s just an industry I understood and I had a passion for.”

Early in her career, she began working with people from all walks of life, even being asked to talk business over a round of golf. But that just wasn’t the right fit for her.

“It was nice to just be able to talk about calving and crops,” she said. “All this stuff that I knew, and I could talk about because that’s what I grew up in. That led to writing the book for farmers.”

R. Nelson Nash developed the infinite banking concept, and Irmen said it’s a concept that changes the way people think about money, because “pretty much everything we’ve ever been taught is wrong.”

“We are not taught to think like a banker,” she said. “This concept, really teaches us to put our banker hat on and say, OK if I’m going to borrow money, who do I want to borrow money from? And if there’s going to be a bank, I should own that bank.”

Irmen said it’s really a mind shift for those interested in the concept. The individual can utilize their own money and be in control all of their loans.

“We’ve always been taught you go to the bank,” Irmen said. “And then they’re the ones driving the Cadillacs around town, and they’re the ones with the big beautiful buildings on every corner because they’re making money off of us.”

Irmen said farmers and ranchers should be the ones owning the bank and lending the money. In the concept, the money is stored in a banking system, and that’s where the whole life insurance comes in.

“But it’s really two parts—first we have to get the mindset right that we need to be the banker,” she said. “And then, we need to create that pool of money in a tool that allows us to access it, but still earn interest while we’re doing that at the same time.”

She believes the concept will give farmers and ranchers control of their money. The bank says when they pay, how much and at what rate. They can take the collateral if not satisfied.

“But if you own the bank, and you borrow money from yourself,” she said.

But it also gives them flexibility when there’s a hail event, drought, a bunch of open cows or calves had scours run though and the full payment can’t be made. With her concept, it’s a little more forgiving.

“If you have a bad year, you don’t have to make your full payment because you’re only answering to yourself and you’re in control of that loan,” she said.

The concept is two-fold—one, to have control of the loan and two, when the farmer or rancher dies, there’s a death benefit to pass on for estate planning.

Sign up for HPJ Insights

Our weekly newsletter delivers the latest news straight to your inbox including breaking news, our exclusive columns and much more.

“So if we can pass on some death benefit for the next generation to either take over, or maybe the death benefit is left to the off-the-farm kids,” Irmen said.

Maybe the death benefit is left to the farm kid to buy the other generation out and that person won’t have to go to the bank to borrow money for operating or to buy the off-farm kids out.

“We’re able to pass a farm on,” she said. “And that’s one thing that many people don’t think about.”

She hears story after story of, “well I struggled. I bought it from Dad. Dad bought it from grandpa. It’s just how it is.” She’s not convinced.

“That’s why we’re losing farmers,” she said. “Nobody has the money to keep buying it. When we’re using death benefit to buy it, we’re buying it with discounted dollars.”

Depending on age, $1 of death benefit could be paid for by anywhere between 20 and 50 cents.

“Where else you’re going to do that?” Irmen said. “And that’s at death, but from the whole time you were alive, you got to use the money in that system to buy tractors, buy cows, buy land, whatever it is you want to buy.”

Whole life insurance with a mutual company that pays a dividend is used in the concept. Irmen said life insurance gets a bad rap because there are a lot of bad products out there.

“And the reason why is because a mutual company means you own part of the company. So you share part of the profit,” she said. “Not universal life, not indexed, not variable. Whole life only and the reason why is because of the fact that it is a guaranteed product.”

This gives the owner liquidity and access to the cash value, and nothing is tied to the stock market.

“We have control of what we’re using the money for. We have control of when we’re paying it back. And we have the guaranteed growth,” She said. “We have companies that are well over 100 years old with proven history. They’re good and they know what they’re doing.”

Irmen uses the whole life insurance like a loan—putting money in and borrowing against the cash value. The money, however, never leaves the account.

“So while we’re borrowing the money, our money stays in there continuing to earn uninterrupted compound interest in dividends while we use the life insurance company’s money,” she said. “So we’re leveraging our dollar. Much like leveraging land when we buy the land.”

The land doesn’t just sit, it instead produces a crop or grazing, every single year.

“We’re doing the same thing with the policy,” she said. “And then we have the death benefit.”

The process

Irmen said the first step to changing a farmer or ranchers financial dependence on the bank and working with her in this process is to read her book, Farming Without the Bank. She recommends this not just because she’s selling books, but because there’s a thought process that needs to be understood in order to be successful with this type of change.

“You need to understand that you are the banker,” she said. “And it doesn’t matter if you’re using cash or if you’re going to the bank. A lot of people will say, well I don’t need this Farming Without the Bank thing because I’m using cash. You still lost interest that you could have been earning.”

Irmen said cash is not king. For example, if a farmer saves $50,000 to buy more land, and spends it on said land, and chooses to not pay themselves back, they’re missing out.

“And now, that farmer personally lent money to the farm. But the farm is not having to pay him back. That’s dumb,” she said. “But we’re not taught to think that way. Because we’re taught that we saved money, we’re good. You don’t need to save any more, you got your land.”

Essentially that farmer stole from himself. If that money had been loaned to a friend or associate, interest would be charged and pay back would be expected.

Once the book is read and understood, Irmen meets with clients for an hour and a half consultation, which is free. It helps give her an idea of expenses, income, what the farming operation is like and who’s involved. It can help form the estate plan for parents or siblings who need bought out.

“I need to know everything that’s going on,” she said. “Because if I don’t know, how can I help? Then I can throw some strategies out and show you really like how is it going to work for you.”

Her book includes case studies showing how her method works. Those numbers are just examples. Irmen suggests all farmers and ranchers need to know their own numbers.

“That’s not your situation. Everybody’s situation, everybody’s dynamic, is just a little bit different,” she said. “They’re all the same, to an extent. They’re all struggling. Nobody has money, but every family has their own little nightmare of a system that’s happening.”

Every farm and ranch operator has a different goal. There needs to be a well thought out plan with those involved in the farm or ranch in the meeting, she said—Mom, Dad, children, other family members. Everyone is likely to have a different goal.

“What happens when Mom and Dad die? Well, Mom and Dad don’t care. You’re just going to have to figure it out on your own,” she said. “Well, then we better be planning on how are we going to pay for everything. How are we going to buy the siblings out?”

Or there might be a situation where Mom and Dad have it all planned out and they’re in the meeting with the kids—the whole family is in the meeting.

“Okay, well great, now we can plan,” she said. “But Mom and Dad still think they planned and they didn’t plan. Because the big thing for the estate planning side of it is 99% of the people I see have the wrong kind of life insurance for estate planning or none.”

Sometimes the plan is for the next generation to buy out their siblings, but that’s not really a plan, or as Irmen said, “a plan to go backwards.” There’s so much to talk about in this meeting, but afterwards is where they decide if this is something they can do or not.

“If we can, then we’ll go forward and we’ll start the process of working together,” she said. “If it’s not, then a lot of times, financially, we’re not ready. But they leave the meeting knowing what they need to do to come back.”

At that point some come back in a year or two and work with Irmen, but she’s had other people read the book and never call back because they got enough information out of the book to get where they need to be financially.

“So when they do call, they’re ready,” she said. “The book is really the beginning point, and is the hardest thing for people to understand.”

Irmen said if you think about it, the biggest part of a farm and ranch operation is the money that passes through their hands, but yet they focus on how to feed better, buy chemical or fertilizer cheaper, or what tractors they need.

“They spend all of their time researching and figuring out how to cut costs on that side, but they do not look at how to utilize the money that’s going through their hands more efficiently,” she said. “And there is more money going through their hands than they will ever save on a different fertilizer, chemical.”

All of their “savings” have to work cohesively, as well as their marketing of grain or beef.

“If you’re not looking at all of it, and you’re skipping this piece and this is the biggest piece of it. How are you going to grow?” Irmen said. “Most of today’s farmers and ranchers do not know their numbers. They’re not keeping their books and if you don’t keep your books and run it like a business, how are you going to make sure that that business survives?”

The banker knows the numbers most often, but they’re not the ones out there working. One of the most ignorant things Irmen has ever heard is to buy stuff to avoid taxes.

“I’ve ran the numbers, if you are going to buy something to avoid taxes—in most cases, they’re going to go to the bank to borrow money to buy the very thing that they’re trying to avoid taxes on. Right?” she said. “So now we go to the bank and we give the bank an interest rate. So basically what we saved in taxes we paid an interest to the bank. We didn’t save anything. We just defer the taxes to a different entity over a longer period of time.”

And then when commodity prices fall, producers are concerned they don’t have enough money to make that payment. She hears them say things like “the accountant said I should buy it.” But the producer is the one who ultimately wrote the check and signed on the dotted line.

“If you don’t know your numbers, how do you know if you’re making money?” Irmen said. “You don’t because you’re ignoring the biggest part of your operation and your thought process around money is so broken because the noise of society has told us that we just need to keep working really, really hard.”

And this is what leads many farmers and ranchers to the bank.

“You can’t farm without the bank. I hear that more than anything,” she said. “There’s no way it’s possible. Well there’s no way possible if we keep doing what we’re doing.”

For more about Irmen’s work with farmers and ranchers and her concept visit

Kylene Scott can be reached at 620-227-1804 or [email protected].