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Ag Finance Boot Camp 2020

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Our Farm Futures Ag Finance Boot Camp will help you Master the Business of Agriculture. Join us January 20 at the Marriott Hotel and Conference Center in Coralville, Iowa, for our one-day workshop packed with sessions presented by savvy ag finance experts and lenders.

Big Picture Topics:

  • How accrual transactions affect income statements
  • How to measure business performance using ratio analysis
  • How to find and use financial resources to improve your business performance
  • How to get what you want when working with lenders and accountants

Get the schedule/agenda here.
Register here.

Certified Crop Adviser Approved CEU Credits: Applied for.

The Farm Futures Ag Finance Boot Camp will help you boost your financial recordkeeping skills for improved farm business management.

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Board Notes

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Is it REALLY Going to be 2020?

It seems almost impossible that the next calendar year will be 2020! Why, it was just a few short months ago when everyone was concerned about Y2K and what it was going to mean ot the world…computers were going to stop computing…airplanes were going to quit flying…the world was going to end because nothing was programmed to NOT INCLUDE 19 as the century on calendars and dates.

But somehow we have all made it through and in the blink of an eye we are into the second decade of this new century.

Welcome New Members….

We have one new member since the last directory was published, so to save you time looking him up, his information is shown below. Austin is also listed in the new directory which is being released at the same time as this Board Notes. These are members who have come on the Council Team since September. You might drop him a note or give a call if you have the time to do so.

White, Austin
Accounting
Wipflie
777 East Main, Suite 201
Bozeman, MT 59715
406-586-2386
austin.white@wipfli.com

 Farm Futures Ag Finance Boot Camp 2020

This will be held at the Coralville Marriott Hotel and Conference Center, Iowa City, IA on January 22. It directly precedes the Business Summit which will be held the two days after. Our own Paul Neiffer and Curt Covington will be carrying the brunt of the day-long event and if you’ve not been to a Boot Camp before, I encourage you to attend the January edition. Here are some links to go to for the program, agenda and registration information. Note that if you register before the END OF NOVEMBER you can save on your registration fees.

Find out more here.

Get the schedule/agenda here.

Register here.

New Guidelines Out January 1

The Technical Committee has announced that it will have revisions made to the Financial Guidelines document and will be releasing a revised edition as of January 1. As a member of the Council you will automatically be sent a pdf of the new document when it is released. There will also be a shorter document outlining what is changed and that will accompany the new Guidelines.

Are We Missing Your Picture?

Being sent to all members at the same time as this Board Notes is the latest membership directory. Please look through it and see if you have any colleagues near where you are. You should notice that the breadth of the Council is expanding as we grow more diverse in the geographic area we cover.

But are we missing your photo in the roster? It’s always nice to put a picture along side a name, especially in a group as intimate as we are in size. If we don’t have a photo of you, please send me a jpg or other photo so we can add it to the next directory, which will likely come out after the first of the year. Please, though…make it a high-rez shot of at least 200 dpi so we have something to work with that will show you as the good looking person that you are!! Please….NO 72 dpi screen captures downloaded from a web site!!

Congratulations to Council President Keith Raynor and his organization

TRP CPAs, PLLC is joining forces with McFadyen & Sumner, CPAs PA by combining the two firms into one. They chose to combine the firms to create a truly next-generation accounting firm. The new firm name will be TRP Sumner, PLLC once the merger becomes effective on January 1, 2020 and will make them one of the 500 largest CPA firms in the nation.

Add Cowboy Boots to your Christmas List…

Start planning now to come to the 2020 FFSC Annual Conference which will be held July 26- 31 in Amarillo, Texas!

That wraps it up for now. Happy Thanksgiving.

Carroll Merry
Administrator, FFSC
cmerry@countryside-marketing.com
262-253-6902

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Annual Conference Photo Summary

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As the rains and high humidity gave way on Tuesday, drier and much more comfortable air settled in over the Raleigh/Durham area July 24th and stayed the rest of the week making the climate for the 2019 FFSC Annual Conference downright comfortable.

Want to know what you missed? Just take a look at our summary of the event (with lots of photos, too) right here.

And here’s more of what some attendees had to say…

My husband attended with me and he was very impressed with everything. Thanks for including the guests.”

 

Met a lot of people committed to improving farm health.”

 

I was pleased to see the engagement by the attendees with the speakers.”

 

The speaker on hemp had a lot more boots on the ground knowledge than I expected.”

 

Had more opportunities to interact one-on-one with some FFSC members I did not know well before.”

 

I like that FFSC moves this around the country and highlights regional ag in the region that is hosting the conference.”

 

Enjoy sitting in on the various committees. I’ve attended three conferences and this was the best conference yet.. largely due to the slate of general session presentations.”

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Raynor Heads Farm Financial Standards Council

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Keith Raynor, CPA, a partner with TRP CPAs, Dunn, NC, seated, is elected new president of the Farm Financial Standards Council. He is surrounded by the new leadership team at the Council. Standing, from left, are: Brenda Duckworth, CPA, FFSC Vice President; Todd Doehring, Immediate Past President; and Bill Rutter, Secretary/Treasurer. Duckworth is controller at AgriVision Farm Management in Hartley, TX. Doehring is a director at Centrec Consulting, Savoy, IL, and Rutter is senior vice president and Chief Credit Officer for MidAtlantic Farm Credit, Westminster, MD.

The team was elected at the Council’s annual meeting held in Raleigh. NC July 26.

You can read about committee director realignments that happened at the meeting here.

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Committee / Director Realignments for Council

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With the change in leadership at the Farm Financial Standards Council there have also been realignments in some committee chair activities.

Shane Eloe, Dickinson & Clark CPAs, moves into the co-chair position for the Marketing Committee, a position he will share withDavid Olsen, Compeer Financial. Eloe replaces Brenda Duckworth, CPA, AgriVision Farm Management, who is now vice president of the Council.

Joe Kessie, Lake City Bank, is named co-chair of the FFSC Finance Committee, sharing responsibilities with Mark Compton, Compton Accounting. Kessie replaces Scotty Elston, Ag Texas Farm Credit Services, who retires from the position after many years of service.

The Technical Committee will continue under the leadership of Jeff Bushey, Nietzke and Faupel, PC and Alan Miller, retired Purdue University professor.

Responsibilities for the Membership Committee will continue to be shared by Grace Richardson, Freed Maxick CPAs and Thomas Groppel, a farmer from Jerseyville, IL.

Pauline Van Nurden, Center for Farm Financial Management, St. Paul, MN is elected to a 3-year term as a Director with the Council. She replaces Bill Rutter, MidAtlantic Farm Credit who is elected Secretary/Treasurer. Rutter will continue as the Farm Credit System representative on the leadership team. Angela Chesley, Van Bruggen/Vande Vegte, PC, is elected to a second 3-year term as a Director.

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FFSC Conference: Nothing Could Be Finer

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Join us July 24-26 in Raleigh, North Carolina, for our annual conference!

Nothing Could Be Finer than to be in Carolina in the Morning

The words of Gus Kahn in a song first published in 1922 as “Carolina in the Morning” will serve as our mantra for the 2019 Farm Financial Standards Council Conference.

The Farm Financial Standards Council will take a closeup and intimate look at some of the influencers affecting the ag industry and ag financial reporting, both locally and nationally, when it gathers in Raleigh-Durham, North Carolina. Not only is Raleigh-Durham home of North Carolina State University with its ag financial training and education center, it is also the site of the Research Triangle Park, the largest research park in the United States with the 3 points of the RTP being the research university North Carolina State University, Duke University and the University of North Carolina at Chapel Hill. As well, the Triangle, as its more loosely known, is home to the world’s best college basketball and the annual World of Blue Grass Conference each September, the International Bluegrass Music Associations annual showcase and awards show.

Here are some highlights:

  • Wednesday Committee Meetings (always open to anyone interested in joining in)
  • An overview of regional agriculture and some of the extreme pressures being felt
  • Land is Your Legacy…..the challenges in transitioning farm ownership
  • Lease Accounting – taking a deep dive into a difficult subject
  • The Hemp revolution….it’s not just ditch weed anymore
  • Agriculture under attack …. It’s happening HERE!
  • The 2018 Farm Bill…did anything really change?
  • Mixing Fin Tech with Ag Tech…..Oil and Water?
  • Great Opportunities for Networking
  • Unique free time entertainment that can ONLY BE FOUND in Carolina…

Get more information by downloading this file. (If you prefer to register via mail instead of online, there’s a registration form included in the downloadable document.)

FFSC 2019 Annual Conference Registration

Register for the 2018 conference in Champaign, Illinois.
  • If bringing a guest, what name should be on their badge?
  • Registration fee includes materials, receptions, breaks, lunches, Thursday evening dinner, and Friday local ag tour.
  • Includes 7/25 reception, 7/26 dinner, 7/27 lunch.
  • $0.00
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Measuring Repayment Capacity and Farm Growth Potential

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by Michael Langemeier, Associate Director, Center for Commercial Agriculture

(Excerpt reprinted by permission of the author and Ag Banking Magazine. Find the full article here.)

Introduction

Repayment capacity measures include capital debt repayment capacity, capital debt repayment margin, replacement margin, term debt and capital lease coverage ratio, and replacement coverage ratio (Farm Financial Standards Council). Capital debt repayment capacity, capital debt repayment margin, and the term debt and capital lease coverage ratio address a farm’s ability to repay operating loans and to cover the current portion of principal and interest due on noncurrent loans such as a machinery, building, or land loan. The replacement margin and the replacement margin coverage ratio enable borrowers and lenders to evaluate whether a farm has sufficient funds to repay term debt and replace assets. For a farm to grow, it is essential that the replacement margin be large enough to repay term debt, replace assets, and purchase new assets, and that the replacement coverage ratio be greater than one. This article defines and illustrates the use of key repayment capacity measures.

Definitions

The capital debt repayment margin is computed by subtracting interest expense on term debt, principal on term debt and capital leases, and unpaid operating debt from prior periods from capital debt repayment capacity (accrual net farm income, off-farm income, interest expense on term debt, and depreciation minus family living expenses and income and self-employment taxes). The capital debt repayment margin enables borrowers and lenders to evaluate the ability of a farm to generate the necessary funds to repay the current portion of term or noncurrent debt. For this to happen, accrual net farm income, off-farm income, and depreciation have to be large enough to cover family living expenses, income and self- employment taxes, principal and interest on term debt, and unpaid operating debt from prior periods. It is important to note that the appropriate margin will vary among farms, and depends on the size of the farm and the type of enterprises produced.

The term debt and capital lease coverage ratio is closely related to the capital debt repayment margin. To compute this ratio, divide capital debt repayment capacity by principal and interest on term debt. A ratio greater than one indicates that the farm has enough funds to cover principal and interest on term debt.

The replacement margin and the replacement margin coverage ratio take the analysis one step further. The replacement margin is computed by subtracting cash used for capital replacement from the capital debt repayment margin. This measure enables a borrower to evaluate a farm’s ability to repay term debt and replace assets. It can also be used to evaluate a farm’s ability to acquire additional assets. Cash used for capital replacement can be measured using actual capital purchases (more specifically the portion of capital purchases that need to be paid for in the first year) or depreciation. The idea behind using depreciation is straightforward. Depreciation represents wear and tear, and obsolesce of machinery and buildings. Over the long-run, a farm needs to be able to replace machinery that is wearing out, to be able to afford new technology, and to be able to expand. We typically recommend using depreciation plus another 10 to 20 percent of depreciation as the farm’s measure of cash used for capital replacement to account for wear and tear on depreciable assets and farm growth. This amount will likely not be covered every year. However, over the long-run, it is essential that the replacement margin be positive. Without a positive replacement margin, a farm will not be able to fully replace depreciable assets or grow. Like the capital debt repayment margin, the replacement margin varies by farm size and type.

The replacement margin coverage ratio is closely related to the replacement margin. To compute this ratio, divide capital debt repayment capacity by the sum of principal and interest on term debt, unpaid operating debt in prior periods, and cash used for capital replacement. If the replacement margin coverage ratio is greater than one, the farm has sufficient funds to repay term debt and replace assets.

Find the full article at Ag Banking magazine’s Bank News website.

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Article: Purdue Ag Barometer Report

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Reprinted by permission of the Purdue University Center for Commercial Agriculture

In April, the Purdue University/CME Group Ag Economy Barometer recorded the fourth largest one-month drop since data collection began in October 2015. The barometer, which is a sentiment index based on a monthly survey of 400 agricultural producers across the U.S., declined 18 points to a reading of 115, down from 133 in March.

This month’s decline in the barometer was driven by worsening perceptions of both current economic conditions and weaker expectations for the future. The Index of Current Conditions fell 21 points to a reading of 99, and the Index of Future Expectations declined 16 points to a reading of 123.

This month producers also expressed caution about making large investments in their farming operations. In the April survey, when asked whether they feel now is a “good time” or “bad time” to make large farm investments, only 22 percent of farmers stated it was a “good time” while 74 percent stated it was a “bad time.” That combination pushed the Large Farm Investment Index down 9 points compared to March.

Producers also expressed less optimism regarding prospects for resolution of the on-going soybean trade dispute with China. On the April survey, only 28 percent of respondents felt that the dispute would be resolved before July 1, down from 45 percent in March. However, 71 percent still feel the dispute will ultimately be resolved in a way that benefits U.S. agriculture. In a separate question, when asked whether they felt that the U.S. should rejoin the Trans-Pacific Partnership (TPP), 47 percent were favorable, 28 percent were not in favor, and 25 percent stated they were uncertain.

Since January, there has been an increase in survey respondents indicating they have concerns about commodity prices. As a result, we’ve been asking additional questions related to commodity prices in order to understand producers’ perspectives on the future direction of corn and soybean futures prices. For the past four months, those results have been compared with futures and options market-based probability estimates to determine whether there is a significant difference in sentiment between the producers and futures and options market participants. Early findings indicate producers have consistently been more pessimistic compared to those who participate directly in the futures and options markets. Moreover, producers became relatively more pessimistic over the course of the winter and early spring. This increasingly pessimistic view of corn and soybean prices may be playing a role in the reduction in barometer sentiment as well as the recent drop in both the Index of Current Conditions and the Index of Future Expectations.

Read the full April Ag Economy Barometer Report which is linked to the following address: https://purdue.ag/barometerreport. The report includes insights into producer’s year-over-year attitudes toward farmland values and a breakdown of the comparison between producers and futures market participants regarding the future direction of corn and soybean futures. The site also offers additional resources, such as past reports, charts and survey methodology, and a form to sign up for monthly barometer email updates and webinars. Each month I also provide a video overview of results from the barometer survey. That video can be viewed either directly on the Ag Economy Barometer’s website or on the Center’s YouTube channel at https://purdue.ag/barometervideo.

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Board Notes – January 2019

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This ‘n’ That from the Council

Your Council has been busy. Council members hit the new year running with presentation to groups in Wisconsin and Iowa all in the past few weeks.

On January 9 Brad Guse, Senor VP with BMO Harris in Arpin, WI was joined by BMO Managing Director Sam Miller, Appleton WI at a special program, Supporting Farmers During Challenging Times held in Kiel, WI.

The program was sponsored by the University of Wisconsin Extension. An audience of well over 100 came from a four-county region to hear the presentations. The two discussed the critical need for helping farmers realize the importance of organizing their financial records and being completely open and honest in their relationship with their lender. Council Administrator Carroll Merry attended and managed the FFSC trade show display. He also gave the audience an overview of the Council and the resources it has to offer.

On January 23 Past Council President Paul Neiffer, a principle with CliftonLarsonAllen, Yakima, WA, in photo at right was joined by past Council Director Curt Covington, Executive Vice President at FarmerMac, Washington, DC, in photo below, at the Farm Futures Ag Financial Boot Camp program in Coralville, IA. Over 170 farmers defied winter storms to attend the one-day event. Neiffer and Covington did the

heavy lifting in terms of presentations at the gathering. Again, the need for good financial record keeping was stressed along with the need to maintain completely open lines of communications with lenders. Administrator Carroll Merry also talked about the evolution of the Council and the resources it offers.

 

2019 Annual Meeting

Council Vice President Keith Raynor, principle at TRP CPAs, Dunn, NC is wrapping up details on the program for the Annual Conference which will be held July 24 – 26 at the DoubleTree by Hilton, Raleigh Durham Airport at Research Triangle Park near Durham, NC.

Keith’s program will include an up close look at NC agriculture, how anti-animal agriculture groups are working to get rid of the pork industry, as well as a ‘deep dive’ into some accounting issues that are important to the Council….AND MORE! Details on the entire program will be coming out very soon, but in the meantime please mark your calendars and plan on attending.

Yes, many of us are snow-covered now and somehow getting along with very frigid temperatures, but Keith promises there will be no snow in sight when we are there in July and it should be too early for hurricane season.

New Membership Directory

The most current listing of Council Members is in the membership directory that accompanied the email version of this newsletter.. We dropped a few members last summer at renewal time and that was expected….but we have added many new names, so look through the Directory and see if any of our new colleagues are near you. If you don’t have a copy, let us know and we’ll send you one.

Send us a Photo of Yourself

We would very much like to have more member photos in the directory….if you have a recent color head and shoulders photo of yourself that you would like to share with other Council Members, please send it my way and we’ll add it to the next directory

Some Changes in the Directory

We have included the roster of our Corporate Partners in a listing at the back of the Directory as well as the names of our new Imeritus Lifetime members.

New Guidelines Out January 1

An updated version of the Financial Guidelines for Agriculture was sent to you on January 1. If you did not receive your pdf copy, please let me know and we’ll try to find out why.

Share your thoughts about the Council

One of the keys to attracting new, and even retaining current members, is the sharing of your thoughts regarding your experience/relationship with the Council…we are always looking for comments from members that can be used to promote membership. Have you met colleagues from across the country? Found participation in one of the committees to be rewarding personally and/or professionally? And if you have a complaint or other concern that should be shared with the leadership, we want those as well!!

Think Spring !!

Carroll Merry
Administrator, FFSC
cmerry@countryside-marketing.com
262-253-6902

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