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FFSC Conference: Nothing Could Be Finer

June 19, 2019 by David Leave a Comment

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.)

Filed Under: Conferences, Featured, News

Measuring Repayment Capacity and Farm Growth Potential

May 24, 2019 by David Leave a Comment

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.

Filed Under: Featured, News, Resources

Article: Purdue Ag Barometer Report

May 8, 2019 by David Leave a Comment

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.

Filed Under: Featured, News, Resources

Join Us at the National Farm Business Management Conference

May 7, 2019 by David Leave a Comment

The FFSC is proud to be a sponsor of the National Farm Business Management Conference! We’d love to have you join us in Sheboygan, Wisconsin, from June 9-13.

You can find an agenda here, and you can register online here. Information about lodging at the beautiful Blue Harbor Resort and Conference Center is here.

Filed Under: Conferences, Featured, News

Board Notes – January 2019

January 25, 2019 by David Leave a Comment

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

Filed Under: Featured, News

Boot Camp Welcomes More Than 100 Producers

January 23, 2019 by David Leave a Comment

More than 100 producers from across the United States (and one from Canada) joined us for our Farm Futures Boot Camp event in Coralville, Iowa.

Former FFSC President Paul Neiffer, a principal with CliftonLarsonAllen, LLP kicks off a day of presentations at the Farm Futures Boot Camp January 23 in Coralville, IA.
FarmerMac EVP Curt Covington addresses the Farm Futures Boot Camp in Coralville, IA. He focused his presentation on the importance of benchmarking and the role of recordkeeping citing the resources and examples that are available through the Farm Financial Standards Council.

Filed Under: Featured, News

Farm Financial Standards Council Releases Updated Financial Guidelines for Agriculture Document

January 23, 2019 by David Leave a Comment

An updated version of the Financial Guidelines for Agriculture has been released by the Farm Financial Standards Council. With a January 2019 issue date, this 272-page edition replaces other versions of the document that have been in circulation since 1991. The most recent prior update was done in 2017.

Order the new version here.

“The members of the Technical Committee work very hard to keep the Guidelines relevant,” says Todd Doehring, Centrec Consulting Group, Savoy, IL, current president of the Council. “This has included changes to one of the case farms to reflecting changes in farm size, commodity yields, and prices as well as other inputs to the practical examples that make up so much of the document. In this case, we have integrated new pronouncements on Generally Accepted Accounting Practices (GAAP) in the treatment of deferred income taxes as well as terminology changes as market values is replaced with net realizable value with respect to inventory values.”

He says the most noticeable changes is a new case farm in Appendix A. This one is based on a Kansas farm business.

“It is our goal to take accounting principles and apply them to realistic farm production scenarios. It is especially helpful when users of the Guidelines can identify with the examples that are in the case farms in the document,” Doehring explains.

The purpose of the Guidelines is to help produce standardized financial statements of farm and ranch operations. It is available as a downloadable PDF here. The cost is $30 each for the Financial Guidelines for Agriculture as well as the Management Accounting Guidelines. Another document, An Implementation Guide, is available as a download at no charge. This is designed for those individuals without an accounting degree to better understand how to make the maximum use of the information in the Guidelines.

The Council evolved from the financial crisis of the 1980s and is an all-volunteer organization of farmers and ranchers, accountants, finance and tax professionals, academics, lenders, consultants, and organizations which produce agricultural finance software. Membership on the Council is open to anyone who has an interest in managing agricultural finances. There are currently over 150 members from all across the U.S.

Filed Under: Featured, News, Resources

FFSC Board Notes

September 4, 2018 by David Leave a Comment

This is the first Board Notes we’ve sent since March, so you have not been missing issues, we’ve just not been preparing and sending any. With all the activity going on with the summer meeting, membership renewals, etc., it’s been hectic.

New Council Leadership

Todd Doehring, second from left, heads up the new FFSC leadership team elected at the Council’s annual meeting held July 27 in Champaign, IL. Doehring is a director with Centrec Consulting Group, Savoy, IL. Other members of the leadership group are, from left: Jan Bitter, Immediate Past president, vice president at Farm Credit East, Homer, NY; Keith Raynor, Vice President, principal with TRP CPAs, Dunn, NC; and, Brenda Duckworth, Secretary/Treasurer, farm staff accountant with AgriVision Farm Management, Hartley, TX. Board members elected at the meeting are: Jonathan Shepherd, University of Kentucky; Bill Rutter, MidAtlantic Farm Credit, Westminster, MD; Deena Brown, CGB Agri Finance Services, Louisville, KY; Angela Chesley, Van Bruggen/Vande Vegle, PC, Rock Valley, IA; Kathy Reinhardt, Reinhardt Farms, Seaton, IL; and, Lyle Anderson, Rabo AgriFinance, Billings, MT.

 

Thank You, Jan

New FFSC President Todd Doehring presents a special commemorative president’s gavel to Outgoing President Jan Bitter. Prior to being elected Council President in 2017, Bitter served as Vice President and Secretary/Treasurer of the Council as well as on numerous committees. As Vice President she chaired the 2017 Annual Conference which was held in Syracuse, NY.

New Directory Coming Very Soon

The new Council Membership Directory will be coming to you very shortly. This will be updated with the current membership roster and complete contact information on the new leadership group. We are awaiting photos of some of the officers, committee members and directors and will then get it out to all.

We’d Like to See Your Face

It’s always great to know who you are communicating with and an easy way to make that happen with your Council Colleagues is to send us a head-and-shoulders photo of yourself and we’ll add it to the directory. Color jpgs work best, of course. Just send along something you have — does not have to be formal or in a business suit or dress. Will need by Friday, Sept. 7 to make this edition. 250-ppi jpgs are just fine. Please…no low-rez…you will NOT like the way you look.

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!!

Are you Actively Involved with the Council?

When we discussed changing the dues at the Council last year there was concern about membership retention….would the dues get to be too high? What benefits of membership could we offer that would make people really want to stay members of the Council? Our experience has been that those who are actively involved with the happenings of the Council take on an ownership role with the organization. They are not just sitting back and waiting for something to happen….they are MAKING things happen and they develop an enthusiasm that becomes contagious.

Are you missing this spark? Contact any one of our committee chairs and ask them how you can become more involved. And COME TO THE ANNUAL MEETING! Everyone who attends this event has a great time and meets colleagues from across the nation, literally. If you have other possible benefits to membership, let us know. We don’t pretend to know all the ways to make belonging to an organization

2019 Annual Meeting

Mark your calendars now for the 2019 FFSC Annual Meeting. It will be held July 24 – 26 at the DoubleTree by Hilton, Raleigh Durham Airport at Research Triangle Park near Durham, NC.

Going to the ABA Ag Bankers Conference?

This will be in Omaha November 11 – 14 and the Council will be there. If you are attending, stop by our booth in the Exhibit Hall and say ‘hi.’ More information on the conference and registration is on the Council Web site.

That’s probably enough for now.

Watch for your new directory (Send us your photo today!!), and don’t be a stranger… stay in touch and let us know how the Council is a part, however small, of your professional life…….

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

Filed Under: Featured, News

Join the Council in Omaha!

September 4, 2018 by David Leave a Comment

Many members of the FFSC will be at the ABA National Agricultural Bankers Conference in Omaha November 11-14. You can join us by registering here.

Information from the conference organizers:

The Ag Banking landscape is evolving, and sustaining a successful connection to your customers and communities is more important than ever. How do you find your ground in an environment of ever-changing customer expectations, economic factors and risks?

Join us to learn about opportunities to position you and your customers for future success, network with colleagues and experts and gain unique perspectives into the world of agricultural banking. 

Filed Under: Conferences, Featured, News

Todd Doehring Heads New FFSC Leadership Team

July 30, 2018 by David Leave a Comment

Todd Doehring, second from left, heads up the new FFSC leadership team elected at the Council’s annual meeting held July 27 in Champaign, IL. Doehring is a director with Centrec Consulting Group, Savoy, IL. Other members of the leadership group are, from left: Jan Bitter, Immediate Past president, vice president at Farm Credit East, Homer, NY; Keith Raynor, Vice President, principal with TRP CPAs, Dunn, NC; and, Brenda Duckworth, Secretary/Treasurer, farm staff accountant with AgriVision Farm Management, Hartley, TX.

Filed Under: Conferences, Featured, News

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