Yankee Farm Credit Approves Special Cash Patronage

Yankee Farm Credit Approves Special Cash Patronage

Members to receive $1.8 million mid-year patronage

Williston, Vermont (August 24, 2018) The Yankee Farm Credit Board of Directors recently approved the distribution of a mid-year patronage dividend of $1.8 million to their more than 1,400 members who are involved in farming and forestry. This distribution equals a return of approximately 30 bps of the average daily balance on loans.

This special patronage payment is possible because 2018 net income is significantly over budget for the first half of 2018. Several factors contributed to this positive performance in net income, including; an increased focus on portfolio diversification, a steadfast focus on cost controls and one-time payments received from partner organizations. We anticipate the payment will be distributed in the fourth quarter of 2018. This payment is separate from the $6.3 million patronage dividend that was paid in March 2018, which was based on 2017 earnings. The board will review net income at year-end with the anticipation that we will pay normal patronage in addition to this special patronage payment.

Our board's philosophy is that funds, which are not required to safely operate or capitalize our cooperative, should be returned to members. The special, one-time dividend reflects Yankee Farm Credit’s strong financial position, combined with our understanding and appreciation of the economic challenges faced by many of our members. Yankee's strong earnings allow us to continue to grow sustainably, while returning a portion of those earnings to our owner members.

"Kudos go to Yankee's management and staff for their hard work and wise management of our members’ funds, especially during the challenging times of Yankee's IT conversion,” said Paul Franklin, Chairperson of the Board.  “Their hard work resulted in achieving higher returns than necessary to meet Yankee's budgetary needs. Increased revenues combined with one time refunds allows the board to approve this distribution of funds to Yankee's members by a mid-year special patronage."

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 www.yankeefarmcredit.com. The complete quarterly report is available on the website.

Contact

Erika Quick
Marketing Coordinator
802-879-4700
equick@yankeefarmcredit.com

New Hampshire Ag Financiers-Recent Meeting Updates

-Katy Coombs, Loan Officer

On June 7th, I attended the third NH Ag Financiers (NHAF) meeting this year.  We had a representative from SCORE, a volunteer organization made up of retired business executives from major corporations, retired business owners, and subject matter experts that uses its expertise to mentor start-up and existing businesses.  It is a nationwide organization with over 10,000 volunteers.  There are 6 chapters in NH with 100 mentors. This is a free service for the life of the business with the mentors either acting as advisers in a more hands off role or physically getting into the business in one way or another and working with them to improve an identified area such as records, marketing, or human resources.  SCORE has recently partnered with the USDA to try to recruit both farm clients and farm volunteers.  NHAF has identified potential in working with this group to connect them with local farms.  Our next step is to attend a SCORE chapter meeting to talk about what each organization offers their market and how we can work together to best serve our farmers.

In the afternoon, I led a discussion on the dairy industry for the group and some guests.  We discussed the current state of the dairy industry. There was a lot of participation and interest in the discussion. Some good thoughts on possible ways to improve the situation included:

- State branding for products

- Creating new business models

- Comprehensible and accessible training

Major updates from the group were from FSA and UNH Extension. Jeff Holmes, the state director for FSA, discussed the new MPP enrollment and improvements to the program.  Payments should be starting to go out this week to those farms who signed up.  He also discussed the weather emergencies that have kept the FSA offices busy this year including the field damage from the storms from last October (which was covered with snow until recently), flooding and debris in fields and farms, and the confirmed tornado in Sullivan and Merrimack counties last month

Seth Wilner from the UNH Extension talked about the new focuses for Extension going forward.  Their three initiatives for the year are:

1. Benchmarking– farm financial health assessments and making data driven decisions.

2. Farm Transfer and succession planning – three year plans.

3. Women in agriculture – livestock production and business skills.

NHAF is a group that meets four times a year to discuss different ways we can work together to help NH agriculture, whether that means with financing, education, consulting, records, etc.  It is made up of agriculture professionals from around the state and we bring in guest speakers some times to educate us on a particular tool, industry, or area that will allow us to better help our farmers. Members of the group include Farm Credit East, FSA, Community Loan Fund, Land for Good, NH Ag Mediation, rural development, small business association, the NH Commissioner of Agriculture, and representatives from the congresswoman and senators offices.

For more information on the New Hampshire Ag Financiers group, you can email Yankee Farm Credit Loan Officer Katy Coombs at KCoombs@yankeefarmcredit.com

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

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