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Ag news from SFB


Keep up with whats happening at SFB and in the surrounding community. We care about making a difference.

Buying New vs Used Farm Equipment

Thursday, October 3

As commodity prices continue to stress profit margins for producers, thorough analysis of equipment purchases is a must. This means producers should ask a lot more questions, both of themselves and of the dealers with whom they work to purchase new or used machinery. Factors to consider prior to a purchase:

In most cases, new equipment is more reliable than used equipment. Consider the cost of breakdowns not only in regards to cost of parts and labor, but also the cost of down time and the potential results to quality of the harvest.

Latest Technology
For those who value the high-tech equipment, buying new will allow for continual upgrades to the latest technology. This could mean trading more frequently. If you are financing your purchase, you may be trading prior to the completion of the financing contract. Considerations should be made to adjust the terms if possible to avoid negative trade equity.

Used equipment on the other hand typically comes with a lower cost and many times one can still find models with low hours and often times with high-end functionality.

Length of Use
Used equipment is often times a more economical choice for the seasonally-needed pieces. Determine whether an item can be owned for less than the cost of renting or leasing on a short-term basis. If you choose to own, consider whether the equipment could be rented/leased to another producer to help cover the cost of ownership.

Consider depreciation, insurance and repairs. Determining the cost of ownership can be difficult. This article from the Iowa State University Extension offers good insight to estimating the cost of ownership.

Are You Ready for Winter

Thursday, October 3

With the Farmer's Almanac predicting this winter to mirror last winter's snow fall, producers may want to take some extra time to evaluate structural integrity and insurance coverage yet this fall before the snow flies.

While you may not have experienced a collapse last winter, the soundness of your farm buildings may have been compromised with the excess snow load we experienced.  Carefully assess the roof components for existing cracks or breaks. There may be an opportunity to reinforce these components and avoid a more costly repair later or worse, loss of livestock or use of equipment. 

Now also is the time to review your farm insurance coverage. Your agent would likely welcome the opportunity to discuss your policy and how you can minimize risk of loss to your operation. Take some time to review not only deductibles but whether your policy is written to cover the following:

  1. Collapse due to snow load and/or wind.
  2. Loss of production due to structural failure.
  3. Loss of contents - fans, animals, equipment, waterers, stalls and other fixtures.
  4. Structural age restrictions - Is the building too old to be covered?
  5. Modification of structures - If you add a lean-to or other addition, is the original structure covered?
  6. Type of coverage:

    * Actual cash value
    * Replacement cost value
    * Functional replacement value

Special thanks to Carl Duley of Buffalo County UW-Extension for presenting the information on insurance considerations recently at the Farm Building Structural Failures Workshop.

Why It is More Important Than Ever for Ag Producers to Create a Marketing Plan

Friday, July 12

Between the sustained lows in commodity prices and recent volatility with international trade, many agriculture producers are left feeling as if they are at the mercy of the marketplace and have little control over what they receive for their commodities.

That is why it is more critical than ever that producers develop and execute a marketing plan, according to Cathy Asher, a relationship manager for Security Financial Bank (SFB) in Durand. Asher, who specializes in agri-business lending, provided a few tips for farmers to consider when developing an operation's marketing plan. They included:

  1. Understand Your Operation's Break-Event Cost
    "Once you know this cost, you can remove the emotion from deciding when to sell," Asher said. "Your lender would be happy to assist you with calculating your break-even costs or there are several online tools available to assist you with performing the calculation. The key to arriving at an accurate break-even cost is to use complete and current financial information." 

  2. Include Pricing Objectives
    Pricing objectives should consider market rallies and incorporate both futures and current pricing, she said.  

  1. Set a Marketing Timeline
    "Your timeline should consider the seasonality of production and supply," Asher said. "In other words, examine when you usually see more product in the marketplace, which would generally mean lower prices for your commodities." 

  1. Consider Marketing Tools
    There are several tools available to assist growers with marketing, thereby limiting price risk to the operation. These tools include (but are not limited to) basis and hedge-to-arrive contracts, puts and calls. These tools can be used in conjunction with SFB's in-house risk management tools of Multi-Peril Crop Insurance (which includes revenue protection coverage) as well as Dairy Revenue Protection. 

  1. Reasons for Your Strategy
    "Don't forget to include the reasoning behind your strategy," Asher cautioned. "This final component of your plan should be included to reduce second-guessing that can sometimes come with decision making." 
  1. It's Time to Execute!
    "Execution of the marketing plan is critically important.  You may not perfect your marketing plan for the first cycle.  Just as with production agriculture, there are tweaks that can and may need to be made from year to year," she said. "What is certain is that you will have an improved understanding of your farm's marketing gaps and will identify opportunities for growth."

Additional marketing resources for both crop and dairy producers to assist with developing their marketing plans are available at the following sites:

Protecting Your Farm from Activitists

Friday, June 28

Farm security is not always top of mind for producers; however, activists will go to great lengths to portray production agriculture negatively, ranging from gaining employment with the intent to record misleading videos, trespassing and holding large-scale protests at farms.

Here are few tips to help to protect your farm from unwanted negative attention:

1)      Monitor Who Enters the Premises - Anyone entering your farm should have a valid reason for doing so. For those whom you do not recognize, question their reasons for entering and do not let them wander the premises unattended. Pay attention to strange vehicles and get license plate numbers if available.

2)      Carefully Evaluate Inquires and Information Requests - Gather as much information as possible about who is requesting the information. Do not be afraid to question the reason for the inquiry. A response in writing will provide a paper trail of what information was given to outside parties.

3)      Hiring Tips - Ask for applicant's previous farm experience and follow-up with former employers and references.  During the interview, watch for answers that seem overly rehearsed or include incorrect usage of farm terminology. Search applicant's social media profile and look for questionable content or connections to activist organizations. Provide training and oversight to make sure employees are following a pre-established standard for animal care.

What's the Difference Between DMC and DRP?

Wednesday, April 3

The main difference between Dairy Margin Coverage (DMC) and Dairy Revenue Protection (DRP) is that DMC offers a margin protection between milk price and feed prices, while DRP protects you if milk prices decline. With DMC, if both milk price and feed prices go down equally and you are outside the selected margin, there is no payment. Whereas with DRP, if at the end of the insured quarter the actual milk revenue is below the revenue guarantee, the insured will receive an indemnity payment for the difference between the actual revenue and the guaranteed revenue, times by the share and the protection factor. 

Dairy Revenue Protection can be used in combination with Dairy Margin Coverage, but they are available through different sources. DMC is available only at your FSA office, whereas DRP  insurance must be purchased through an insurance agent. 

Security Financial Bank has two experienced crop insurance agents that can provide you with more detail and the protection offered by DRP. For more information and to protect yourself against further declines in the milk price, see Mark or Jenny at Security Financial Bank at 715.672.4237.

What You Need to Know about the New Dairy Margin Coverage Program

Thursday, March 28

With margins remaining tight for dairy farmers, seeking out all available opportunities to support cash flow is extremely important. The new Dairy Margin Coverage (DMC) program authorized in the 2018 Farm Bill has an increased "margin" threshold to $9.50/cwt, which replaces the $8/cwt limit under the Margin Protection Program. Coverage can range from five percent to 95 percent of a farm's milk production history, but can only be covered in five percent increments.

Two tiers also were created with the new DMC:

  1. Tier 1 coverage is the first five million pounds of production covered by a farm.
  2. Tier 2 coverage remains capped at $8/cwt.

Farmers can choose to sign up for DMC coverage for just 2019, or they can make a one-time election to sign up for coverage through 2023 at the same coverage levels and be eligible to receive a 25 percent discount on the premiums.

The USDA has already released the actual margin price for January, which was $7.99/cwt. How does the payment work? Here's an example if the $9.50/cwt election was chosen:

                                                    Election Chosen                                $9.50/cwt
                                                -   Actual Margin Price                    -   $7.99/cwt
                                                    Payment Issued                               $1.51/cwt

DMC signup is scheduled to begin on June 17th at your local FSA Office. (To find your local office, a directory is available here.)  This means payment amounts for up to the first five months of the year may already be known when sign-up begins.

The 2018 Farm Bill also removed the restriction on participation in both the DMC and the LGM (Livestock Gross Margin) program. The Dairy Revenue Production (DRP) Insurance product also is available and can be used in combination with the before mentioned products. To find out more about DRP, contact Jenny Jereczek or Mark Chilson at our Durand office at 715-672-4237.

Producers should become familiar with these products and implement as appropriate.

Multi-Peril Crop Insurance Can Help Protect You

Monday, January 14

With all the uncertainties in farming today, Security Financial Bank can provide you with multi-peril crop insurance to protect yourself from a wide range of perils. This crop insurance can provide revenue protection against losses due to both yield or price decreases. The licensed crop insurance agents at Security Financial Bank have many years of experience helping farmers manage the risks in their farms' cropping operation with the use of multi-peril crop insurance and crop hail insurance. We can offer individual plans, as well as area plans.

Want to learn more about it? Contact Mark Chilson or Jenny Jereczek at Security Financial Bank or call 888.254.0615 for all your crop insurance needs.

SFB is an Equal Opportunity Provider.

Will Your Bank Be There for You?

Monday, January 14

Security Financial Bank (SFB) has supported farmers for almost 90 years - since the bank started in Durand, WI in 1934. Today, farmers are 25 percent of SFB's customer base. Throughout our history, the farm community has been a big part of who we are; and though the industry continues to experience economic difficulty, we hope to have the agricultural community continue to be a significant part of our future.

A question probably going through many farmers' minds is whether their bank will be there for them when they have a financial need. The answer to this question lies largely in the relationship that the farmer has with their advisors. During times of struggle, the honest communication between the bank and the farmer is most important. Part of the bank's role is to help a client solve problems, much like a doctor does when a patient is ill. To do so, the customer should welcome questions from the bank, so that a proper diagnosis occurs. These questions should lead to deep discovery on various issues and provide answers on cash flow, collateral and what may happen in the future, given different scenarios. It is also valuable to have the customer meet together with both the bank and accountant. When this occurs, better solutions to problems result.

At the end of the day, the bank and the farmer are partners. In any partnership, especially when there are challenges, honest communication is key. We value your business and look forward to continuing our relationship into the New Year.

Why You Should be BQA Certified

Monday, January 14

Beef packers are beginning to require all producers from whom they purchase livestock be BQA (Beef Quality Assurance) certified. BQA is a national program that raises consumer confidence through offering proper management techniques and a commitment to quality within every segment of the beef industry.

The certification can be completed easily online at www.bqa.org free of charge by simply watching a short video, answering pertinent questions and printing your certificate. Some packers have set their requirement date for January 1, 2019. It is expected eventually all packers will require this certification to accept livestock at their plants in the near future. The certification can be submitted to the marketing firm you use at any point prior to shipping livestock and will be retained in their file.

SFB is an Equal Opportunity Provider. 

Do Low Milk Prices Have You in the Dumps?

Monday, January 14

We may have a solution to help ease the problem!

Dairy Revenue Protection (DRP) is an area-based revenue product that is designed to insure against unexpected declines in the quarterly revenue from milk sales relative to a guaranteed coverage level. The quarterly insurance periods cover a three-month period and can be sold up to five quarters, with the exception of the last sales period.

What does this mean? If milk prices drop below your guaranteed coverage level, the insurance will cover the difference and limit your risk.

There are two pricing options available for each endorsement. The expected revenue is based on futures prices for milk and dairy commodities and the amount of covered milk production elected by the dairy producer. The covered milk production is indexed to the state or region where the dairy producer is located.  DRP is approved for sale in all 50 states. 

Contact Mark Chilson or Jenny Jereczek, our licensed insurance agents at Security Financial Bank, at 888.254.0615 for more details and to sign up for this highly subsidized milk insurance product.


SFB is an Equal Opportunity Provider.


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