Interest rate change January 1, 2016

All Yankee Farm Credit variable interest rates increased by 0.25% on January 1, 2016. This action followed market interest rates. The Federal Reserve increased interest rates by 0.25% at its meeting on December 16, 2015. The prime interest rate immediately followed, increasing from 3.25% to 3.50%.

This is the first general increase in our interest rates since October 1, 2010.

U.S. Rep. Annie Kuster met recently with Yankee Farm Credit director Steve Taylor

 

U.S. Rep. Annie Kuster met recently with Yankee Farm Credit director Steve Taylor of Meriden, N.H., to discuss current matters of concern to the agricultural and the forestry sectors of New Hampshire Congressional District 2, most of which is served by Yankee Farm Credit. Rep. Kuster’s assignments in Washington include membership on the House Committee on Agriculture.

 

 

 

 

 

Five Short Term Strategies for Surviving Poor Cash Flow

by Joanna Lidback


Economists are indicating that recovery from low milk prices this year will be slow in coming and indeed may get worse before getting better. The first defense in making it through a down cycle is knowing your net cost of production and/or your breakeven milk price. When you have a solid grasp of where you stand financially, you’ll know more precisely how much cash will be needed to keep up.

The net cost of production is the amount you need to cover expenses, (including depreciation and family needs) less any non-milk income, expressed as dollars per cwt. Breakeven milk price hones in even further on cash, including cash operating expenses, debt payments and family needs, less non-milk income.

If you find you need to generate cash, consider these strategies:

1. Cut expenses
When it comes to cutting expenses, everything needs to be on the chopping block. There are generally two ways to cut expenses: cut back on current levels and defer certain expenses. Further, start with your biggest expenses. Review your feed ration with the nutritionist. Evaluate labor efficiency – cut hours if necessary. For deferment, prioritize capital repairs and put off non-essential fixes.

2. Accelerate/supplement income

Not everyone has to go get a part-time job, but there may be other sources of income that could be tapped. Beef prices remain elevated slightly. Can you continue a higher-than-normal cull rate? Do you have timber? What does your forest management plan allow? Was it a good crop year? Any extra crops? Any custom work available? Do you have any outstanding receivables that you could pursue payment on?

3. Finance previous capital purchases made out of cash flow

Last year was a great year. Many farms were able to replace or add new machinery, equipment or vehicles right out of the checkbook. Consider reimbursing those funds from an existing line of credit if one is in place or perhaps you can work with your loan officer to write a new loan. Another option is a “lease buy-back,” where again you reimburse funds spent in the current or previous year and finance via a lease.

4. Request deferral or debt restructuring

Take a look at your debt structure. What is your blended capital debt term? Is there room to consider restructuring your loans? A deferral of principal payments might be a consideration, however this method should be used sparingly. A conversation with your loan officer may go a long way.

5. Sell unproductive assets

What’s sitting out in the yard that isn’t getting you the return you need or expect for investment? Especially if it’s just sitting there, it’s not only costing you overhead, but potentially the opportunity cost of those funds being tied up in the equipment that may be more useful somewhere else.

Milk price volatility is nothing new in the dairy business. While it has increased dramatically over the past ten years, so has the potential for profits with record high milk prices. Recall from the last newsletter, “Financial success for dairy managers can often be traced to how well one uses the profits from a good milk price year to help them in a year with low milk prices.” While we are in the down cycle now, keep this in mind for when the roller coaster goes up.


This article was originally published in the Fall 2015 Association Insider of Yankee Farm Credit, ACA.

Developing the Next Generation - Transition Planning

by Liz Bayne

The skills needed to manage the successful agricultural businesses of today are not gained overnight.  Some skills are gained in school, some with “on the job training” and others through the “school of hard knocks.”

Most of our farm businesses have developed and grown over the lifetime of the older generation now running the business. They started small (at least by today’s standards) and developed their management skills as the business grew. Now, as the older generation is looking toward slowing down and transitioning to the next generation, the challenge is to transfer all the management skills learned in a lifetime to the next generation.

The best succession plans start early and allow a  gradual transition, slowly and continually providing opportunities for the next generation to develop the skills they will need to take over the business. At the same time, this transition allows the older generation to evaluate the potential successors; grooming and developing them based on their desire to take over the business, and their aptitude and skills to continue its growth and prosperity.

In working with farm businesses, I find that production oriented skills are often well taught, with the younger generation learning a great deal from their parents. They are also eager to embrace new technologies on the farm. The area that is often less emphasized is the financial management of the business. I would argue that this should be the most important skill transferred to the next generation. If the farm is well managed financially and is profitable, then there is a great deal of flexibility available for both the older and younger generation. If the financial management skills are not part of this transition, the farm can find itself limited and strained in other areas as well.

Following is a short list of ideas. The goal is to have the financial training start early and to be consistent with it. You can shift more and more responsibility over time. This will ensure that the younger generation has the skills necessary when it is time for them to take over the farm.

Some ideas for transferring financial management skills:

1)   Have regular meetings and discuss the farm’s finances.
2)   Involve the younger generation in the day-to-day process of paying the bills and managing the records.
3)   Allow the younger generation to take part in decision making, such as the purchase of equipment. Discuss your thought process and the pros and cons of the purchase. Have the younger generation do a partial budget on the purchase and present it to you.
4)   Talk about your goals for the farm - short,intermediate, and long term. Prepare a budget as a team to test your goals and then measure the success.
5)   Have the younger generation sit in on a financing discussion with your lender.
6)   Have the younger generation attend farm meetings with you - especially meetings where farm finances are discussed.
7)   Let the younger generation suggest and carry out a change on the farm. Have them present a plan and then be accountable for the results. This is a great learning tool.

Yankee’s consulting program works with farm businesses on transition planning, budgeting, estate and business planning, entity selection and tax planning.  f you would like to know more, please contact me at elizabeth.bayne@yankeeaca.com, or 800-370-3276, or Joanna Lidback at
joanna.lidback@yankeeaca.com, or 800-370-2738.


Originally printed in the summer 2015 Association Insider of Yankee Farm Credit, ACA.

Farm Credit 100, Fresh Perspectives Nominations

Calling for Nominations

Yankee Farm Credit, ACA is searching for nominees from Vermont, Clinton and Essex County New York, Cheshire, Coos, Grafton and Sullivan County New Hampshire for Farm Credit 100 Fresh Perspectives.

Farm Credit has been supporting rural communities and agriculture for 100 years, and to celebrate the promise and potential of the industries we support we’re on a quest to identify the individuals who are shaping the future of rural communities and agriculture. Farm Credit 100 Fresh Perspectives is a nationwide search to identify and honor 100 visionaries in agriculture and rural enterprise— while commemorating our centennial milestone. —Our experience over the last century gives us insight into how the future is shaped.  Yankee Farm Credit, ACA knows that there are individuals in our region who are extremely deserving of such an honor.

Please consider helping a Yankee Farm Credit region leader achieve this national recognition by sharing information about the search with your friends, family and colleagues. We are happy to connect you with a Farm Credit representative to discuss the Farm Credit 100 Fresh Perspectives, as well as the Farm Credit centennial overall. You can also visit farmcredit100.com for additional information.

The deadline is fast approaching, December 18^th 2015, so please if someone you know or know of deserves to be recognized, don’t hesitate to complete a nomination.

Many thanks,

Yankee Farm Credit, Staff and Directors

Promotion - Morgan Rilling

I am pleased to announce that Morgan Rilling has been promoted to Assistant Vice President/Branch Manager in our White River Junction office. She has served as Interim Branch Manager since August 1st.

Morgan began her Farm Credit career in 2004 working as a part-time employee in the Williston office while attending the University of Vermont. Following her graduation in 2005 she became a full-time employee, serving in the White River Junction office. Morgan started as a credit analyst/FRS assistant, became a loan officer in 2006, and credit operations coordinator in 2012. Morgan’s experience in both credit and administrative roles will serve the Association well.

Morgan holds an Associates Degree from Vermont Technical College in Agribusiness Management and Technology and a Bachelors Degree from the University of Vermont in Agricultural and Resource Entrepreneurship.

Please join me in congratulating Morgan on her new position!

Q3 Financial Results

Yankee’s third quarter financial results are now available and we can announce that we had another good quarter. In the third quarter we saw favorable net interest income, along with higher amounts in other income from the same quarter last year. The balance sheet shows that loans held by the Association were down slightly from year-end, but up from the previous quarter.

Quarterly net income for Yankee was $2.5 million, an increase of $100 thousand over the same period in 2014. The most significant factors driving the increase were favorable net interest income and other income as compared to the same period last year.

For the first nine months of 2015, net income was $8.3 million, an increase of $1.4 million from 2014. There was a negative provision for credit losses of $691 thousand through the third quarter of 2015, as compared to a provision of $661 during the same period of 2014. Other income increased $502 thousand, primarily due to an increase in income from fees for financial services and in patronage refunds from CoBank, ACB.

Loans held by the Association at September 30, 2015 were $432.2 million, down 0.3 percent from year end but up 2.1 percent from June 30, 2015. The loan portfolio continues to be concentrated in the dairy industry with 49 percent of loans invested in dairy businesses. The second largest concentration is timber, with 14 percent of loan volume at quarter end.

Credit quality across Yankee’s loan portfolio remained strong during the quarter and well within the risk-bearing capacity of the Association. At quarter-end 0.5 percent of the Association loans were classified as nonperforming, 0.1 percent improved from the previous quarter and from year end. This statistic was 0.2 percent improved from the same period in 2014. There were no loan charge-offs or recoveries in the quarter. The Association’s capital position remains strong.

Click here for the full quarterly Report to Shareholders and here for the quarterly financial news release.

Career Opportunities

Are you passionate about agriculture and want to be involved with supporting local farm businesses to ensure their success? If yes, please consider joining our Yankee team! We are a leading provider of credit and financial services to the agricultural community in Vermont, western NH and the Champlain Valley of NY.

We currently have two positions open:

• Office Assistant - Middlebury, VT
• Credit Analyst - St. Albans, VT

For a more detailed job description, please visit our website at www.yankeeaca.com.

To be considered for this position, please send a cover letter and resume to: Ruchel St. Hilaire, Yankee Farm Credit, P.O. Box 467, Williston, VT 05495 or e-mail.

Yankee Farm Credit offers a full, comprehensive benefits package.
EO/AA Employer- M/F/D/V

Yankee's Consulting Service: Value You Can Use

Farm Credit’s mission is to support rural communities and agriculture with reliable and consistent credit and financial services. Yankee's business consulting services aids in this mission by offering services that include multiple ways to help improve your results or adapt to change within and outside your business. Our consultants have the opportunity to work with other teams within Yankee, such as our financial recordkeeping and tax services, to be as efficient and effective as possible. Our focus is delivering value you can use, whether the fee is is hourly or project based.

Our consulting services cover a wide variety of needs: business planning, business organization, budget tools, financial and operational analysis, investment analysis, feasibility studies, benchmarking programs, dairy business analysis, profit team meetings, appraisal consulting, conservation easement planning, complex entity tax planning, estate planning, farm transfer and succession planning, and much more!

If you have any questions about how our consultants could help you please do not hesitate to contact Liz Bayne, 802-295-3670, Elizabeth.Bayne@YankeeACA.com or Joanna Lidback, 802-334-8050, Joanna.Lidback@YankeeACA.com.

 

Liz Bayne

Joanna Lidback



 



2015 New England Green Pastures Award Banquet

On September ​18th, Tullando Farm from Orford, NH and Keewaydin Farm from Stowe, VT were honored at the New England Green Pastures Program’s annual banquet. The farms were chosen as the 2015 Dairy Farm of the Year in their respective states. The objective of the New England Green Pastures Program is: "To encourage a more prosperous dairy industry in New England, especially through the growing, harvesting, storage, and feeding of quality forage to attain excellence in herd production using economic management of all farm resources." Kelly Richardson, Loan Officer from the Derby branch, Liz Bayne, Business Consultant in the White River Junction office, and Jesse Taft, a Credit Analyst also from the White River office, represented Yankee at the award ceremony. 

The New England Green Pastures Committee chooses an “Outstanding Dairy Farm of the Year” from each of the New England states, and celebrates the winners at its annual awards banquet held at the Storrowton Tavern on the grounds of the “Big E” (the Eastern States Exposition) in West Springfield, Massachusetts. Though originally started in 1947 as a challenge to find New England’s best pastureland, the aim of the Green Pastures Program has shifted over the years. Today, the goal of the program is to promote dairy farming in New England by highlighting and honoring outstanding farms. Every year the program’s review committee awards the “Dairy Farm of the Year” to an exceptional dairy farm from each of New England’s six states. Farms considered for the award are judged on a “total management” basis which includes a performance analysis of a farm’s production and financial performance, as well as the farm family’s personal contribution to the agricultural community.

The banquet began with an invocation by Carol Hodgdon, a Green Pastures Committee Vice Chair. Victoria Maloch, a Future Farmers of America (FFA) National Officer and student at the University of Arkansas, served as the banquet’s guest speaker. She challenged the six Green Pastures award winners to stay engaged with the next generation, and to pass along knowledge and give guidance to the younger people who are interested in agriculture.

The winners were presented with an award (an engraved silver milk pitcher) and were asked to give a short presentation about their farming operating, their history, and what they consider to be the “secrets of their success.”

The Tullar Family of Tullando Farm, Orford, NH

 

Tullando Farm was heavily represented at the banquet. Three generations of the Tullar family were in attendance, including Rendell Tullar, who led the farm’s presentation. The Tullar’s showed the audience a promotional video that was made by Granite State Dairy Promotion. The video showed the ins-and-outs of the operation at Tullando, with particular focus on the farm’s robotic milking setup and the family’s collective effort to stay current with the dairy industry and to adapt accordingly. Tullando Farm was founded in 1956 by Rendell Tullar’s parents, George and Barbara, who combined their respective surnames, Tullar and Anderson, to create the farm’s distinctive name. Tullando milks 500 Holsteins and crops around 500 acres of corn, 100 acres of alfafa, and 100 acres of grass.

L to R: Tony Kitsos, UVM Extension; Claire and Les Pike of Keewaydin Farm, Stowe, VT

 

Keewaydin Farm was represented by Les and Claire Pike, who operate the farm with their children, Suzi and Dan Pike. Les’ grandparents bought the farm in 1921, and the farm has been operated by the Pike family ever since. They gave an in depth presentation about their farm complete with a slideshow of photographs. The Pikes emphasized the need for a farm to “find its identity,” describing how they worked backward from an operation that was heavily diversified in the 1970’s with a sugarbush and farm stand to the more streamlined and straightforward present day farm, which focuses solely on finding better and more efficient ways to milk their herd of 141 registered Jerseys. Keewaydin has a rolling herd average of 15,485 pounds of milk, 5.1% butterfat, and 3.9% protein. Since 2010, the Pikes have operated an anaerobic methane digester, which supplements electricity on the farm. The also reuse the solids for bedding, which is uncommon on a farm of their size. Keewaydin is the first Lamoille County farm to receive the Green Pastures Dairy of the Year award.

Other winners included Sidehill Farm (Hawley, MA), an organic dairy farm and yogurt producer; Twinbrook Farm (Minot, ME), a 150 cow dairy that recently navigated a generational transfer; Cottrell Homestead (N.W. Kingston, RI), a “Rhody Fresh” producer; and Beriah Lewis Farm (N. Stonington, CT), an 8^th generation dairy farm that was founded in 1791 and has been in continuous operation ever since.

Yankee would like to congratulate Tullando Farm and Keewaydin Farm on their Dairy of the Year recognition and for their continued excellence in the field of dairy farming!