Thursday, December 24, 2009

Celebrating the Fruits of Local Agriculture

Each Christmas Yankee directors and employees celebrate the diversity of local agriculture with a selection of tasty food products from farmers in Yankee's territory. This year's selection included:

Honey - from Chazy Orchards in Chazy, NY
Eggs - from Pete & Gerry’s Organic Eggs in Monroe, NH
English Muffins and Cheese (either gouda or fresh mozzarella) - from The Bunten Farm in Orford, NH
Maple Brittle - from the Green Mountain Sugarhouse in Ludlow, VT
Apple Maple Wine - from the Putney Mountain Winery in Putney, VT
Maple Candy - from the Parker Family Maple Farm in West Chazy, NY
Farmstead Butter - from the Animal Farm in Orwell, VT
Apple Bread and Raspberry Danish - from Rulfs Orchard in Peru, NY
Fudge - from Sam Mazza’s Farm Market in Colchester, VT
Maple Syrup - from Maple Oak Ridge Farm in Salisbury, VT

We extend our sincere appreciation to all farmers in Yankee's territory for the wonderful bounty from their farms.

Tuesday, December 22, 2009

AgEnhancement Grants

Northeast Farm Credit AgEnhancement awards $31,000 in grants to 17 programs

Grants funded in December 2009:

VT Holstein Young Dairy Leaders Institute, $2,000
NYS All Breeds Convention 2010, $2,000
NOFA NH Organic Farming Conference, $500
Vermont Holstein Show Calf Summit, $1,500
Cornell Dairy Fellows, $5,000
Farmers Market Federation of NY, $1,000
2010 Maine Farmers Market Convention, $1,500
New Jersey Agricultural Leadership Program, $5,000
MA New Entry Sustainable Grass Farming Project, $2,000
Massachusetts Ag in the Classroom, $1,000
Empire State Forest Products Association, $500
NY Holstein Association Spring Dairy Carousel, $1,500
MA Community Involved in Sustaining Agriculture, $1,000
Cape Cod Cranberry Growers Association, $4,000
NH Farm & Community Connection Food Passport, $1,000
NOFA VT Organic Farming Conference, $500
UMASS Student Farmer Program, $1,000

Northeast Farm Credit AgEnhancement is a regional grant program funded by Yankee Farm Credit together with CoBank, First Pioneer Farm Credit, Farm Credit of Western New York and Farm Credit of Maine. Since it's 1996 inception, the program has awarded $1,080,800 through 406 grants.

Click here for more information.

Agricultural Preparedness Stakeholder Meeting

Susan Kelley, senior loan officer from the Middlebury office, attended an Agricultural Preparedness Stakeholder Meeting at the American Legion in Vergennes on December 17th. Dr. Julie Smith of UVM and Dr. Steve Van Wie, veterinary emergency preparedness consultant, provided an update of the research and extension activities designed to enhance Vermont’s ability to prevent, prepare for and respond to a bio-disaster.

The project “Cost and Challenges Associated with Developing and Implementing a Community-Wide Biosecurity Plan” has been selected for funding by the USDA National Institute of Food and Agriculture. This project will work directly with four dairy producers to prepare a cost-benefit analysis of a bio-security plan. Stakeholders will help identify incentives to encourage the implementation of recommend procedures on farms.

The program will stress the importance of contact monitoring on the farm and the risk of disease exposure from outside contacts. “Model” biosecurity operating guidelines and protocols will be developed as an “all hazard” plan.

See also this earlier post on bio-security.

Thursday, December 17, 2009

Financial Records - How good?

Post #4 of 4 in a series of posts about financial records. See the bottom for a list of the 4 posts.

How good do your financial records need to be? How good is good enough?

The answer to that question will vary with the situation. Your loan officer can answer questions about your particular situation. Generally the larger your debts or the tighter your cash flow, the better your financial records need to be. And every borrower should be able to reconcile their checkbook exactly.

We offer a variety of recordkeeping services, both on the farm and in our office. Please contact your local branch office for more information if you are interested.

If your operation is large enough, you might consider employing a financial controller on your staff. We discussed financial controllers in the Fall 2009 issue of Financial Partner magazine (2 MB PDF file).

For some of our largest borrowers, we may require accountant prepared statements. Such operations will probably benefit from a financial controller on staff to work with the external accountant.

This is part of a series of 4 posts on this subject:
Financial Records - Letter to Members
Financial Records - Reconciling
Financial Records - Cash vs. Accrual
Financial Records - How good?

Financial Records - Cash vs. Accrual

Post #3 of 4 in a series of posts about financial records. See the bottom for a list of the 4 posts.

Every set of financial records needs a statement of operations to summarize income and expenses for the period. Often we refer to this as a statement of income and expenses, or simply an income statement.

A key concept to grasp is the difference between cash basis and accrual basis income statements.

A cash basis statement captures just the transactions that went through the checkbook. An accrual basis statement captures all of the cash transactions plus such additional transactions as are necessary to "fairly" present the results of operations.

What do I mean by that? Here are two examples:

Perhaps you sold something this year but will be paid for it next year. On a cash basis, the income will be recorded next year (when paid). On an accrual basis, the income would be recorded this year (when sold).

Perhaps you purchased and paid for extra feed or supplies at the end of the year, but they have not been consumed yet. On a cash basis, the expenses are recorded in the current year (when paid for), but on an accrual basis they would be recorded in a future year (when consumed).

The key concept in accrual accounting is matching up income and expenses in the same period. Expenses should be recorded in the same period as the corresponding income.

As lenders we generally like to look at income statements on both a cash basis and an accrual basis. Cash flow is important because that is what is needed to repay debt. But accrual income is also important because that is what reflects the true profitability of the enterprise.

Most farmers keep their books on a cash basis, because that is the most common basis for filing income tax returns. That is fine; we are used to working with that. We can usually make such accrual adjustments as are needed for our purposes by asking only a few additional questions, as long as we have good beginning and ending balance sheets.

This is part of a series of 4 posts on this subject:
Financial Records - Letter to Members
Financial Records - Reconciling
Financial Records - Cash vs. Accrual
Financial Records - How good?

Financial Records - Reconciling

Post #2 of 4 in a series of posts about financial records. See the bottom for a list of the 4 posts.

An important concept in keeping good financial records is the notion of reconciling. Reconciling involves three things:

- beginning balance sheet
- ending balance sheet
- statements summarizing transactions that occurred in the period between the beginning and ending balance sheets

Transactions in the period between the beginning and ending balance sheets can be summarized in three areas:

- operating transactions (e.g., income and expenses)
- financing transactions (e.g., incurring or repaying debt)
- investing transactions (e.g., acquiring or disposing of capital assets)

The concept of "transaction" includes more than just cash transactions. For example, the purchase of something on credit is a transaction and needs to be entered into your financial records at the time the transaction occurs even if there isn't any exchange of cash at that time.

If you can take your beginning balance sheet, apply the transactions for the period, and come up with your ending balance sheet, then your financial records reconcile.

Having financial records that reconcile does not guarantee that they are correct, but it's a good start. If your financial records do not reconcile, it's certain that there is a mistake somewhere. Either one or both of the balance sheets is incorrect, or there are missing or incorrect transactions in your records.

This is part of a series of 4 posts on this subject:
Financial Records - Letter to Members
Financial Records - Reconciling
Financial Records - Cash vs. Accrual
Financial Records - How good?

Financial Records - Letter to Members

The following letter is being mailed to members with the next monthly billing statement:

December 17, 2009

Dear Member,

I am writing to you about the importance of good financial records.

Farmers and businesses have always needed good financial records to prepare various tax forms. But they also need good financial records for their lender. That’s us. And the world of lending has changed in recent times, resulting in a need for better financial records from borrowers.

Many of you already provide excellent financial records to us. But in some cases we are requiring better financial records from borrowers than we have accepted in the past. This does not mean that we are questioning the borrower’s character. It simply reflects changing standards of business, and represents good business practices.

I encourage you to think about your financial records as something more important than merely a requirement for paying taxes or applying for a loan. I hope you use your financial records to help you make decisions about your business. Where can you grow? Where can you cut costs? Where in your business are you making or losing money? A good set of financial records can help you decide how to make necessary and timely adjustments when financial circumstances change, as they have for many Yankee customers in the past 18 months.

We can help you improve the quality of your financial records for the tax authorities, for your lender, and most importantly for yourself. Please call your local branch office for more information if you are interested in our recordkeeping services.

As your lender, what do we require for financial records? It will vary with the situation, and your loan officer can answer specific questions. But a good place to start is with a good year-end balance sheet. We will shortly be mailing year-end balance sheet templates to most borrowers. I encourage you to complete that template promptly and as accurately as possible, and to call your loan officer if you have any questions.

Thank you for your patronage. Best wishes for the holidays and for the New Year.

Sincerely,

George S. Putnam
President and CEO

P.S. Please visit our blog (yankeeaca.blogspot.com) for more discussion about financial records.

As promised, here are additional blog posts on this subject:
Financial Records - Reconciling
Financial Records - Cash vs. Accrual
Financial Records - How good?

Wednesday, December 16, 2009

Batter on Deck, Are You Warming Up?

Kelly Langmaid, Loan Officer from the Newport office, attended a Farm Transfer Planning meeting on December 3, 2009. Also in attendance was Rocki-Lee DeWitt, Yankee Director. The meeting — titled “Batter on Deck, Are You Warming Up?” — was held in the Poulin Grain Conference Room. A discussion was led by Rick Hermonot, dairy consultant for First Pioneer Farm Credit. Rick walked the group through a discussion about transferring the farm from one generation to the next. He first discussed establishing the reason for wanting to transfer and emphasized that the wrong reasons can have significant consequences. He talked about traits of transfers he has seen that have been successful and those that have been failures. He discussed defining where you are now and what steps to take to get to where you want to be, using a list of helpful transfer tools. The meeting and lunch were sponsored by the Vermont Agency of Agriculture.

Monday, December 14, 2009

Building Relationships That Last Generations

The tag line on our new web site is "Building Relationships That Last Generations." Passing the farm from one generation to the next is often a challenge. Two Yankee directors have recently addressed this issue in the press.

'It's in your blood' (4 MB PDF file) — Board Chairperson Paul Gingue and his sons are among the farm families discussed in this article in the Danville North Star Monthly.

Passing on the pasture — Director and Audit Committee Chairperson Rocki-Lee DeWitt says, "Yes, there are still lenders out there with capital to lend for this kind of business." That would be Yankee Farm Credit! This article in Seven Days discusses the FARMS 2+2 Program at VTC and UVM. Yes, the Andrew Wood featured in the article is the same one we wrote about earlier on this blog (see this post).

BFP Savorvore Section

Every Friday the Burlington Free Press prints a special section about food called "Savorvore." The December 11th edition featured a story about growing sunflowers in Vermont.

There are also stories about ruffed grouse, wine, ginger liqueurs, burgers (lots of stories!), brussels sprouts (sadly only 1 story), and many other foods. If you like cooking or eating, you might enjoy some of these stories. And some of these stories may be related to some of our non-commodity customers or potential customers. After all, what people eat determines what farmers can sell.

Thursday, December 10, 2009

NEK Dairy Farmers Meeting

The NEK Dairy Farmers Group met on November 24th at Walt Gladstone's farm in Bradford, VT. Loan officer Kelly Langmaid from our Newport office submitted this report:

First meeting of the season, beautiful day, tour of the farm by Walt and son Will. Discussed the history of the farm and how they got where they are today. Discussed current issues in the dairy industry including the low milk price, changes they have implemented over the past year due to the low milk price, and foreign labor.

There where 18 people in attendance at the meeting, including the Gladstones. This meeting also invited any farmers from the Orange County area that have expressed interest in starting a similar group in their area.

Meeting and lunch were sponsored by Intervet Schering Plough. Plastic boots were provided by Genex.

Loan officer Morgan Greenwood Rilling from our White River Jct. office also attended the meeting.