Wednesday, June 13, 2018

Annual Meeting Results

It was a busy April, here at Yankee. We held five annual meetings this year, starting on Monday April 9th, with a morning meeting in Chazy, NY then Middlebury, VT in the evening. Tuesday was in Quechee, VT, and we finishing up on Thursday, April 12th with a morning meeting in Newport, VT and the evening in St. Albans. We had an increase in overall attendance which was a welcome sight as 2017 was an eventful year for Yankee and there was much to communicate with members. Each meeting also offered members the opportunity to hear from director candidates, vote for directors in their region, hear from Brenda Frank, CEO and Paul Franklin, Board Chairperson about the state of the Association, and get introduced to a few current members of our FarmStart program,  an alternative to our traditional financing products, specifically designed to assist beginning farmers and cooperatives.

Voting concluded on Thursday evening at the St. Albans meeting. The ballots were counted and the results were announced before the meeting adjourned.

Elected to three year terms on the board of directors were:
Region 1-Craig Giroux
Region 2-Brad Maxwell
Region 3-David Folino


David Folino

Craig Giroux

Brad Maxwell













Congratulations to  Craig, Brad and David and thanks to Anne Lincoln, Mateo Kehler, Clifford Allard and Jane Clifford for participating in the elections as candidates.

Yankee CEO, Brenda Frank reflected on this year's meetings and the coming year.

"It was a tremendous support being able to talk with members over the week. Our team is dedicated to staying focused on the industries we serve while managing the many challenges of the coming year. The rising interest rate environment offers challenges for everyone at Yankee Farm Credit, but we stay committed to returning any additional profit to our members."

Paul Franklin, Board Chairperson commented on the importance of member support to the success of our Association.

"The board of directors is pleased to have such broad support and participation in the Association's annual meetings. The election process is so important to running this organization and we are pleased to welcome Craig and David to the board.

We appreciate your patience as Yankee's staff completes the conversion to new support programs. They offer new efficiencies and services, but also learning challenges and change for all of us. Make sure you look to the staff for any help you need with any of this or other lending issues.

We are proud to have had a successful year reflected in our patronage and look forward to continuing the year servicing our customers with a safe and strong Agricultural Credit Association."

Thank-you to the members that participated, and a special thanks to employees for organizing and running successful meetings. We welcome any feedback about annual meetings. If you have questions or comments, please let us know! You can email your thoughts to our Corporate Secretary, Jim Mills at jmills@yankeefarmcredit.com or call at 800-639-3053.


https://www.yankeefarmcredit.com/products-and-services/farm-start




Thursday, May 17, 2018

Yankee Farm Credit Reports First Quarter Results for 2018

Net Earnings $3.9 Million



Williston, Vermont (May 10, 2018) - Yankee Farm Credit today announced first quarter financial results for 2018. Yankee is a farmer-owned credit cooperative serving Vermont and parts of New York and New Hampshire. Quarterly earnings were up from the prior year, and loan quality remained stable. The Association distributed nearly $6.3 million in patronage refunds to members during the quarter. Yankee’s overall level of capital remains strong.


Q1 Financial Results



Quarterly net income for Yankee was $3.9 million, an increase of $1.6 million from the same period in 2017. Net interest income increased 20 percent, from the same period in 2017, to $4.9 million. Noninterest income increased $470 thousand, primarily due to refunds received from the Farm Credit System Insurance Corporation. Noninterest expense decreased $22 thousand from the same period in 2017.

Loans held by the Association at March 31, 2018 were $500.1 million, down $11.9 million from year-end but $21.2 million higher than March 31, 2017. The loan portfolio continues to be concentrated in the dairy industry, with 48.3 percent of the loans invested in dairy businesses. The second largest concentration is timber, with 11.1 percent of the loan volume at quarter end, with maple being the third largest concentration with 10.4 percent.

Credit quality across Yankee’s loan portfolio remained stable during the quarter and well within the risk-bearing capacity of the Association. At quarter end, 1.3 percent of the Association loans were classified as nonperforming, up 0.4 percent from the end of 2017. There were no loan charge-offs or recoveries in the quarter. The Association’s permanent capital ratio at quarter end was 17.9 percent, down from 18.8 percent at the end of 2017.

The 2017 patronage refunds to members in the amount of nearly $6.3 million was paid 100% in cash on March 22, 2018.


About Yankee



Yankee Farm Credit is a member-owned cooperative that provides loans and financial services to farmers and other rural customers. Yankee is an agricultural credit association (ACA) within the national Farm Credit System. Yankee serves all of Vermont, four counties in New Hampshire (Cheshire, Coos, Grafton and Sullivan) and two counties in New York (Clinton and Essex). For more information about Yankee, visit the Association’s website at YankeeFarmCredit.com. The complete quarterly report is available on the website.


Contact



Pamela Simek
SVP/Chief Financial Officer
(802) 388-9390
PSimek@YankeeFarmCredit.com

Friday, May 11, 2018

Yankee Sponsors Awards Banquet that Kicks Off Loggers Expo


Friday, May 11 - The Northeastern Loggers Association annual awards banquet was held last night in South Burlington as the kickoff event for the two day Logger's Expo. Yankee Farm Credit has sponsored the awards dinner for 13 years. A room full of representatives of the forest products industry coming together to celebrate outstanding contribution from multiple sectors of the forest products industry including education, leadership, trucking, logging and sawmill operations.


Today and tomorrow the Expo is being held at the Champlain Valley fairgrounds in Essex. An impressive display of forestry equipment is on display as well as supporting industry services. Catch Yankee staff at our booth and sign up to win a free Stihl chainsaw.


Congratulations to the award winners:






Friday, April 13, 2018

Cost Control Considerations, Part 3: Specific Cost Control Strategies


Cost control is a major driver of profitability in any business, let alone a dairy business. While cost control may be a recent topic of conversation in relation to where milk prices are at present, it really should be considered and focused on consistently in a well-run business. The key to effective cost control is not necessarily cutting expenses, but rather spending dollars wisely. Over the next several posts, we will share a collection of advice geared toward considerations when aiming to lower your net cost of production. So far we have discussed net cost of production and breakeven milk price, the starting point in managing cost control , and the usefulness of a budget . This week we will cover a few specific cost control strategies.
 

6 Specific Cost Control Strategies

Figuring out where to start might seem overwhelming when managing for costs. The first place that will get the biggest response in the bottom line is the largest expense— on most dairy farms, this is feed. Between purchased feed and growing forages and/or your own grains, this may arguably be the expense area that gets the most attention, and rightfully so. There are many ways to track feed and crop expense. Income-over-feed-cost can give you a good idea of the kind of return you are getting for your feeding investment, especially if you can incorporate component efficiency as well. Employing your nutritionist, feeder, herdsman, and financial manager in tracking this area will help you achieve optimal results.


Beyond converting feed into milk, the following are some tried-and-true strategies to consider for effective cost control. Along with each item are a few examples, but with a little brainstorming I’m sure you and your crew can think of many more:
  1. Review purchasing procedures – Who should authorize purchases and how? How loose is your operation to employees purchasing supplies? Can anyone go to the local hardware store and charge purchases on account or grab stuff off the IBA truck? If ordering items by mail, stop to consider if the part is really needed overnight. Can you inventory some items, order ahead of time, and save on shipping charges?
  2. Review suppliers – Is there a lower cost provider available? Will competitors match prices found elsewhere? This may be a good area to ask employees if they can find alternatives, too.
  3. Negotiate, negotiate, negotiate – It’s been said that everything is up for negotiation and you may be surprised just how much is – especially with terms and contracts. One that I hear many farms working out is a contract with an A.I. company for semen purchasing and/or arm service. Usually it’s a monthly price that covers so many units of specific quality and/or so many breedings. Other possible areas are cash discounts, professional service fees, and many more.
  4. Review policies and other contracts – Have your insurance premiums been going up? Is it possible to review coverage levels or shop around for a better deal? How about your cell phone contract? Is it just me or does it seem like new or higher fees keep slipping in to my bill every few months? Health insurance is another big area to investigate – there should be a “navigator” or someone at your doctor’s office who can help you wade through options or point you to the right direction on a health exchange.
  5. Bulk purchasing – Are there any items that could benefit in savings by purchasing in large quantities and storing? Copper sulfate for foot baths and hoof care has been mentioned often as going up in price recently. Can you buy by the pallet and obtain a bulk discount? How about calf grain – do you buy by the bag or will a small grain bin work?
  6. Repairs – Repairs is a common category that can be manipulated to reflect current cash flow. Putting off maintenance or opting for the cheap way out often happens when cash is tight; however the old adage that an ounce of prevention is worth a pound of cure can be particularly true here. How many times has something happened that you could see coming but didn’t get around to or make plans to avert? That cheap hydraulic oil on special may look like a good deal, but what does it really cost you (or your transmission) running it through your new tractor? While repairs tends to be an area to pinch in low milk price years, too much deferred maintenance can add up. 
These are just a few areas to consider for managing cost control on your dairy farm. Next week we’ll go over a few employee-specific concepts as it relates to cost control.



By: Joanna Lidback, Business Consultant
Email: JLidback@YankeeFarmCredit.com



Friday, March 30, 2018

Cost Control Considerations, Part 2: Budget, Plan, and Monitor




Cost control is a major driver of profitability in any business, let alone a dairy business. While cost control may be a recent topic of conversation in relation to where milk prices are presently, it really should be considered and focused on consistently in a well-run business. The key to effective cost control is not necessarily cutting expenses, but rather spending dollars wisely. Over the next several posts, we will share a collection of advice geared toward considerations when aiming to lower your net cost of production. Last week we discussed the net cost of production and breakeven milk price, the starting point in managing cost control. This week we go over the usefulness of a budget.
 

Budget, plan, and monitor 

Creating an annual budget, reviewing, and updating it periodically can help identify trends early, make adjustments quickly, and plan accordingly. A budget is often compared to a road map that charts a course through the year or some other time period, identifying obstacles along the way. You anticipate what will be coming in as income and what will be going out as expenses, as well as any principal payments or capital replacement needs. It helps when making a plan to accomplish goals you may have, or to satisfy any needs that may arise.
 
When considering cost control, a budget helps to track expenses especially when compared to actual results. This can shine a light on areas that may need more attention. For example, perhaps you discover that insurance premiums have gone up significantly without any other material changes in the business. A call to your insurance agent can help to set things right again, or maybe it’s time to find a new insurer. Another example is bedding cost per cow is up significantly – is it a result of the supplier’s cost increasing or is usage increasing? There are many other examples.
 
A few other reasons to budget as you consider strategies for more effective cost control:
  1. Evaluate performance of specific area
  2. Employee management and/or engagement
  3. Sharpen understanding of operations
  4. Help meet goals
  5. Facilitate discussions
  6. Avoid surprises
  7. Motivate to be creative/use resources more effectively 

“What use is a budget if I’m just going to blow it the next week with some big tractor repair?”

I sometimes hear this objection to creating a budget. Consider making your budget a work-in-progress, updating it when you have new and better information. You could update the budget and make plans for a big tractor repair, adjusting other aspects accordingly. Milk price forecast is another area that changes several times throughout the year – adjusting for these changes can help hone expectations.
 
In the next post, we will discuss several specific cost control strategies.


By: Joanna Lidback, Business Consultant
JLidback@YankeeFarmCredit.com




Thursday, March 29, 2018

Yankee Farm Credit through the Ups and Downs


When profits are up it’s easy to think about what your lender can do for you: finance new equipment, construction of a new building, or help you buy land. When times get a bit more stressful, however, your lender may not be on your radar as someone to turn to for potential help.




It’s important to know that Yankee is here for you both in good times and when things aren’t quite as rosy.
 
If a time comes when finances feel challenging it is important to communicate with your lender and work together to create a plan. We understand the ups and downs of agriculture, and also how much heart and soul our borrowers invest in their businesses. Here are some options that Yankee may be able to so do for you during low periods:
 
  • Work with you to ensure quality financial records in order to accurately analyze balance sheets and income statements
  • Offer up to three hours of free business consultation to get started on a detailed budget 
  • If the current debt load isn’t affordable, help to identify how much debt you can afford and suggest ways to achieve that
  • If we are not able to lend new money, we may still be able to defer principal on the current debt
  • We may be able to re-amortize the loan in order to lengthen the term and reduce payment levels
  • Help preserve net worth


We stand by the Farm Credit System's mission to support rural communities and agriculture with reliable, consistent credit and financial services, today and tomorrow. 
 
For more information on how we can help you, please contact your local branch office by clicking here: YankeeFarmCredit.com/locations




Friday, March 23, 2018

Cost Control Considerations: Part 1




Cost control is a major driver of profitability in any business, let alone a dairy business. While cost control may be a recent topic of conversation in relation to where milk prices are at present, it really should be considered and focused on consistently in a well-run business. The key to effective cost control is not necessarily cutting expenses, but rather spending dollars wisely. Over the next several posts, we will share a collection of advice geared toward considerations when aiming to lower your net cost of production.

Know your cost of production, your breakeven milk price, and the difference between them. 


The first step in knowing where you stand in dairy production economics is knowing your cost of production – but that’s not enough. Your cost of production takes into account operating expenses like, feed, labor, and overhead costs such as interest. It does not, however, include principal payments or capital replacement. And it may or may not include family living expenses. What’s more, sometimes analysts will net non-milk income out against variable expenses, so what you’re left with is a net cost of production – one that can easily be compared against a milk price forecast in order to get an idea of where profit or loss levels will be.

However, cost of production and net cost of production leaves out a very important element, particularly if you have any debt. What you really need to be aware of is how much cash is needed to fully fund the operation, including those non-deductible items like principal payments. Breakeven milk price starts with net cost of production, subtracts depreciation as it is a non-cash item, and adds principal payments. It’s called “breakeven” because it leaves you in an even position cash-wise – not in the negative nor in the positive. Again, comparing the actual milk price and its forecast will give you a good idea of what to expect.

Still, breakeven milk price leaves out capital replacement, which is needed to keep your operation running smoothly for the long term.


You may find that you are burning through cash reserves.


In some cases, you may find that you are “burning” through cash reserves – in some circles, this is known as the “burn rate”. More is going out than coming in. You and your banker may be interested in this number as it is a measure of negative cash flow and what will be required to fund operations until you are in positive cash flow again. This is accomplished by using cash reserves, liquidating unproductive assets, accessing new capital, or deferring principal payments.

Next week we will discuss the usefulness of a budget, or a road map when considering cost control.


By: Joanna Lidback
JLidback@YankeeFarmCredit.com

 

Monday, March 19, 2018

Stop Worrying, Start Planning: Preparing for Estate Planning.

Joanna Lidback, Business Consultant

This article was first run in the March issue of the Miner Institute Farm Report.

It’s a Thursday evening. Chores are done, the bunk’s been covered, and supper was an hour ago. You’ve been thinking about the future while you stare at whatever show is flashing on the television screen – what’s going to happen to the farm? Are the kids ready to take over? Is it time to pass on owning the farm? You know you’re not going to live forever, but how does this all work? How will your living expenses be covered if you no longer operate the business? What exactly will you do in “retirement”? Maybe it’s time to start the discussion.  

Starting the discussion is the first step in estate and succession planning. Estate planning is the process of arranging for the passing on of an estate – your assets (and liabilities). Succession planning is arranging for transferring of management – both daily operations and major decision making. For this article, we’ll focus on preparing for estate planning.

Knowing where you are and how you stand is critical to beginning the estate plan. Advisors, both financial and legal, will be looking for a checklist of information that often includes the following:
  • Family information: Names, ages, and statuses of family members (and whether any are interested in taking over the farm); any other beneficiaries
  • Business information: Form of business, co-owners, and if entity – details of ownership, pertinent documents
  • A list of assets and liabilities: both personal and farm-related
  • Rented real estate acreage essential to the farm – any related lease documents
  • Bank accounts
  • Insurance policies: Life, long-term care
  • Retirement funds
  • Any preliminary estate planning information: Wills, trusts, social security information, etc.

Another step in the processes of starting your estate plan is to consider what you want to get out of the process and/or how you envision life after the plan is in place. Each person involved in the process, usually you and your spouse, should brainstorm a list of goals or objectives to accomplish. Your list may grow or change as you get further along in the process and that’s okay as long as you communicate those changes with everyone involved. Here are a few examples to get you started:
  • Provide for living expenses for both spouses after retirement
  • Retire or “reinvent yourself” at age 65
  • Fully transfer farm assets to son and/or daughter
  • Be able to travel in retirement
  • Minimize estate and any other taxes
  • Quickly pass on assets and ownership responsibilities
  • Be sure farm remains a farm for future generations

There are a few important people to identify that you will be asked about as well. You will need an attorney who can help you make decisions from a legal perspective and to draw up legal documents. You may be asked if you have an executor or personal representative to see that your wishes are carried out, a trustee to manage a trust if you create one, and a guardian if you have minor children or dependents in your care. A financial adviser can help you clarify your objectives and develop alternatives to choose from when putting together a plan to bring to your attorney. He or she can also guide you through implementing the plan and monitoring progress.

Yankee Farm Credit offers business consulting services that can fulfill the role of financial advisor as you venture into this next phase of business planning. Call your local office or check out our website, YankeeFarmCredit.com, to see what we can do for you. Good luck!

Joanna Lidback
JLidback@YankeeFarmCredit.com
(802) 334-8050

Wednesday, February 14, 2018

Tax Changes Affecting Individuals: Part 2

-Kristen Murray,  Financial Services Specialist

If you are a wage earner, by now you may have noticed a decrease in your Federal withholding and a corresponding increase in your net paycheck. This change is the result of newly published withholding charts that reflect reforms to the tax tables for years 2018-2025. Last week, I discussed major changes to credits and deductions that will affect the taxable income of individual taxpayers. The next step in the process of projecting your 2018 tax liability is to apply the new tax tables to your projected taxable income.


Below is a side-by-side comparison that serves as a simple example of the effects of the TCJA.



You will notice that this comparison includes income from a small number of sources. This is for simplicity of demonstration. One major source of income that is missing is business income. I specifically excluded this from the above example so that next week I can dedicate the majority of my post to the effects on business income and more specifically, the section 199A qualified business income (QBI) deduction. Until then, happy calculating and may the TCJA be ever in your favor.


For more information, email FinancialServices@yankeefarmcredit.com or call 1-800-370-3276.

Wednesday, February 7, 2018

Tax Changes Affecting Individuals: Part I

-Kristen Murray,  Financial Services Specialist



If you were following the publicity surrounding the Tax Cuts and Jobs Act (TCJA) prior to its enactment, I expect you heard mention a time or two that it was designed to provide, amongst other things, significant tax relief to middle income earners. So, if you are an individual classified as a middle income earner you are probably asking yourself, “will I benefit”? The answer, as with most things tax related is it depends. There are several factors that require consideration before an individual can determine whether the TCJA will prove adventagous for them. Such condisderations include but are not limited to eligible credits and deductions. What follows is a chart that reviews notable changes to many popular credits and deductions. Something to note, if you generally do not itemize, you may focus your review on the areas in grey.

AGI: Adjusted Gross Income
AMT: Alternative Minimum Tax
MAGI: Modified Adjusted Gross Income

Then and Now: 2017 to 2018
Deductions and Credits
2017 Single
2017 MFJ
2018 Single
2018 MFJ
Standard Deduction
$6,350.00*
$12,700.00*
$12,000.00*
$24,000.00*
Additional Standard Deduction over 65 years of age and/or blind
$1,550.00*
$1,250.00 ea.*
$1,600.00*
$1,300.00 ea.*
Personal Exemptions
$4,050.00**
$4,050.00**
$0.00
$0.00
Itemized Deductions - Medical Expenses
Excess of 7.5% AGI (tax reform retroactive change)
Excess of 7.5% AGI (tax reform retroactive change)
Subject to 7.5% AGI Returns to 10% for 2019
Subject to 7.5% AGI *Returns to 10% for 2019
Itemized Deductions - SALT (state/local property, state/local/foreign income and general sales tax)
Allowed subject to AMT phase-out rules
Allowed subject to AMT phase-out rules
Maximum deduction of $10,000.00, foreign income tax excluded, subject to AMT phase-out rules
Maximum deduction of $10,000.00, foreign income tax excluded, subject to AMT phase-out rules
Itemized Deduction - Mortgage Interest
Interest paid on maximum acquisition indebtedness of $500,000 (including home equity) subject to AMT rules
Interest paid on maximum acquisition indebtedness of $1 million (including home equity) subject to AMT rules
Home equity interest disallowed and maximum acquisition indebtedness reduced to $375,000 for post 12/31/2017 acquisitions, subject to AMT rules
Home equity interest disallowed and maximum acquisition indebtedness reduced to $750, 000 for post 12/31/2017 acquisitions, subject to AMT rules
Itemized Deduction - Miscellaneous subject to 2% AGI
Qualifying expenses allowed
Qualifying expenses allowed
Previously qualified expenses disallowed
Previously qualified expenses disallowed
Child Tax Credit
$1000/qualifying child, subject to income phase-out beginning at MAGI of $75,000
$1000/qualifying child, subject to income phase-out beginning at MAGI of $110,000
$2000/qualifying child, subject to income phase-out beginning at MAGI of $200,000
$2000/qualifying child, subject to income phase-out beginning at MAGI of $400,000
Refundable Portion of Child Tax Credit
Refundable up to $1,000, subject to earned income and other qualifying factors
Refundable up to $1,000, subject to earned income and other qualifying factors
Refundable up to $1,400, subject to earned income and other qualifying factors
Refundable up to $1,400, subject to earned income and other qualifying factors
* Not Subject to AGI Phase Out
 ** Subject to AGI Phase Out


Stayed tuned, as next Wednesday I will review the interaction between such changes and the 2018-2025 tax tables.  It is a lot of information to take in, and (borrowing a line from my Yankee colleague Dan Shepard), “you will require a seat but only use the edge”. Exciting stuff folks!

For more information, email FinancialServices@yankeefarmcredit.com