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A Positive Perspective: Current Happenings on the Family Farm
Thursday, March 26
Last Saturday night, I helped with chores and milked cows on a family farm near where I live. It was a welcome break from my everyday life. With the current shut downs, school closings and social distancing to avoid spreading this unfathomable COVID-19 virus, it quite frankly seemed like the only activity that was acceptable.
In addition to my role at the bank, I am a hobby farmer. While I have my own chores at times with crops to plant and harvest and a few animals sprinkled around, there is nothing like doing work on a working dairy farm to keep me grounded and provide stress relief. I honestly enjoy the tasks as it makes me feel connected and more informed about the everyday struggles and rewards of being on the farm. I probably should add a disclaimer that the farmers' place that I was at might argue that "help" is not the right word, but for my lack of breaking anything (which has happened once or twice), it is the word that I will use.
As we went about the farm chores, there were many comments regarding everything from memes that were viewed on social media over the last couple of days to the state of the global markets and speculation about what and where would be affected next. While we were all aware of different messages on the news, the farm chores still needed to be done, and it made me feel good to be a part of it.
During unprecedented time like this, it's important that we remind ourselves of the positive things that are going on in our life and take care of what we can control. There are many ways to look at the bright side of what is happening around the farm, such as a new calf being born - because we all know how cute they can be. Even in the midst of markets, we can find things like fuel for spring planting at prices I didn't think we would see return. And before I get hate mail, I do know the correlation between corn prices and fuel cost. I just chose to focus on the upside of the low fuel price.
So many farms were built around the family farm concept. With schools not in session at this time, it leads to an extra chance for those who have kids or even grandkids to help around the farm. Additionally, there may be friends that are willing to help if they suddenly find themselves with extra time. And with all those extra hands, you just might have a chance to complete that project that has been on your to do list but you never seemed to have the time or help to accomplish.
A short time spent on all of the day's chores reminds me that if we look hard enough, we can find good in any situation. And in the meantime, we continue to focus on our daily farm chores and relish the extra time and help.
Randy Ptacek has been an ag lender since 2004. Before his career in finance, he spent many years in agronomy and crop production. In addition to banking, Randy also raises hay, corn, soybeans and a few stears. He can be reached at SFB's Ladysmith office at 715-609-1508 or at email@example.com.
What Does COVID-19 Mean for 2020 Planting Season?
Tuesday, March 24
As spring approaches, producers may be wondering how the COVID-19 virus and the recent Safer at Home order may impact their operation. There are a number of factors to consider to effectively manage through this period of uncertainty depending on your business enterprise.
First, we know that based on Emergency Order #12 issued by the State of Wisconsin Department of Health Services, part 13C, that production agriculture, farm and agriculture equipment, supplies and repair services are exempt from this order. While businesses that fall under this umbrella are exempt, all citizens/employees are required to maintain social distancing with those individuals not residing within their household. This is imperative not only to prevent the spread of the disease but also to insure appropriate staffing levels for your farm business. The work still needs to be done; let's do our best to keep our distance, maintain our health and reduce the impact to our operations during a season of long days with less than ideal sleep.
A second concern with this virus is what the impact might be to your operation in timeliness of delivery of product or services. As it stands currently, Safer at Home will be in effect until Friday, April 24th. Based on weather conditions in our area, growers may very well be actively completing field prep in anticipation of planting during that time frame. Communication with your vendors and service providers is critical. A phone call to discuss expectations on both sides will reduce stress and assist with planning for completion of other tasks should you need to wait for product. At this time, it does not appear that COVID has had a direct impact on supply or pricing. A call to your supplier can confirm this and hopefully provide you with peace of mind.
To view the entire Emergency Order #12, CLICK HERE.
Tips to Prepare for a Better Year
Friday, January 3
Many have welcomed 2020 with open arms and are glad to see 2019 in the rear view mirror. 2019 certainly had it challenges! We had significant cold and snow in February and March leading to building collapses, a cool wet spring resulting in late planting, and a record year for prevent plant acres. Fall harvest did not come without its own challenges from wet fields to wet crops. Throw in global trade disputes and continual changes in technology, it is no wonder that many farmers were left feeling overwhelmed.
The New Year brings opportunities to learn and grow from all of the experiences of 2019. Taking the time to review your challenges experienced in 2019 and planning for 2020 can help reduce stress and help us feel more prepared. Here are a few ideas:
1. Develop viable plans and options for the future.
• Preparing projections and cash flows will allow you to scenario-plan and anticipate possible curve-balls.
• Monitoring actual performance with the plan also can allow for pro-active steps vs being reactionary.
• Creating a plan can aid in looking for ways to be efficient and competitive.
2. Mitigate risks when possible.
• Utilizing insurance is one way to mitigate the risk of loss. An example would be DRP for milk and MPCI for crops.
• Marketing/contracting prices - know your operation's cost of production and look to limit the downside risk.
3. Stay current with industry trends and take advantage of educational opportunities.
• Consider how precision tools may increase your ability to be efficient, reduce costs, and reduce your operation's impact on the environment.
• Consider advances in cow comfort and nutrition and how these changes could impact your bottom line.
• Be willing to try new methods. Not every new process, piece of technology or trend will work for every operation. However, continuing to do the same old thing because it is what we have always done could be the demise of your operation. Having an open mind and being willing to consider new methods is important.
What Does 2020 Look like for Farming - Hope for Improvement or More of the Same?
Friday, January 3
While most of us would like to have a crystal ball and be in a position to capture the market swings, we all know no one can totally predict agricultural futures with any certainty. The buzz seems to be "cautiously optimistic" for much of the ag industry for the year ahead. As of now we, are sitting on low commodity prices since about 2014. That means we have had nearly five consecutive years of low prices on most commodities, which this in itself hopefully means it's time for a turnaround!
Most of the focus for cautious optimism in the year ahead revolves around trade markets. Progress on the trade agreements of the USMCA (U.S. Mexico Canada) trade deal, an expected phase one of the trade deal with China and the US-Japan trade deal all boast well for possible upswings in demand for our export market. While these seem to provide hope of a more positive year, best practice for producers is to utilize risk management strategies that can reduce losses or provide protection in times of volatile markets and unpredictable weathers.
Chippewa Valley Ag Conference to be held January 16
Tuesday, November 26
Local agriculture producers are encouraged to attend the Chippewa Valley Ag Conference, which will be held from 9:30 a.m. to 3:15 p.m. on Thursday, January 16 at Chippewa Valley Technical College's Energy Education Center, 4000 Campus Road in Eau Claire. The full-day conference will feature two keynote addresses and 16 different breakout sessions on a variety of topics specifically designed for area ag operations.
"For growers in our area, 2019 has been a challenging year. Weather and global trade have created uncertainties and new challenges for our producers," indicated Jenny Jereczek, Security Financial Bank (SFB) Ag Department manager. "Our vision for this conference is to provide growers with information and resources to address those uncertainties. Our goal is that growers are left feeling empowered and reenergized to focus on the future of their operations."
Chippewa Valley Technical College (CVTC) and SFB have worked together to coordinate this first-time event.
"Chippewa Valley Technical College Farm Business Program's mission is to support our local farm businesses," said Mark Denk, farm business instructor for CVTC. "This conference is an excellent opportunity for ag producers to come and take part in an educational experience that will help their bottom line."
The conference will kickoff with a keynote address on The Positive Power of Servant Leadership by Tom Thibodeau of Viterbo University. Carl Babler of Atten Babler Commodities will provide a lunch keynote on Marketing Your Commodities in a Global Market.
Throughout the day, attendees also will have the opportunity to attend three separate breakout sessions. Topics include:
- Agricultural Credit Risk from a Regulatory Perspective by Jay Branger of the Office of the Comptroller of the Currency (OCC)
- Tools to Mitigate Risk by Gene Grimsley, Marthie Crouzer and Randy Vogt of NAU Country
- Agricultural Lease Agreements by John Leary, Ruder Ware
- Tax Cuts and Jobs Act; What We Know Now by Pat Erickson, CliftonLarsonAllen
- Generating Field Level Return on Investment (ROI) Maps and Using this Tool to Manage Profitability by Mike Christenson of Countryside Cooperative
- Converting from a Dairy to Beef Cattle in Wisconsin by Dr. Amy Radunz of Purina Animal Nutrition
- Doing Something with Price by Chris Atten of Atten Babler Commodities
- Know Your Numbers by Cathy Asher of Security Financial Bank and Mark Denk of Chippewa Valley Technical College (CVTC)
- Dairy Nutrition by Sheldon Betzold and Mike Wachtendonk, Countryside Cooperative
- Debt Protection by Maria Ocrant of Cincinnati Life Insurance Companies
- Estate Planning for Ag Producers 101 by Linda Danielson of Ruder Ware
- A Gateway to Global Markets by Katy Sinnott of WEDC and Mark Rhoda-Reis of WI Dept. of Ag, Trade and Consumer Protection
- Growing Opportunities and Challenges with Industrial Hemp by Jerry Clark of UW-Madison Extension
- Utilizing Dairy Data to Drive Success by Taliah Danzinger of AgSource/Valley Ag Software
- Need Equipment? Exploring the Benefits of Buying vs. Leasing by Representatives from Ag Direct and CNH Capital
- Peer Group Panels facilitated by Mark Denk, CVTC
Cost to attend is only $20 per person and includes lunch, both keynote sessions and three different breakout sessions. To register, visit https://cvagconference.eventbrite.com. Registration deadline is January 9, 2020, but attendees are encouraged to register early as space is limited.
To download a conference brochure with detailed description of each breakout session, CLICK HERE. For more information or questions, contact Becky Seelen, SFB marketing director, at 715-930-7030.
The conference is being presented by Chippewa Valley Technical College and Security Financial Bank along with CliftonLarsonAllen, Countryside Cooperative and Ruder Ware.
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.
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:
- Collapse due to snow load and/or wind.
- Loss of production due to structural failure.
- Loss of contents - fans, animals, equipment, waterers, stalls and other fixtures.
- Structural age restrictions - Is the building too old to be covered?
- Modification of structures - If you add a lean-to or other addition, is the original structure covered?
- 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:
- 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."
- Include Pricing Objectives
Pricing objectives should consider market rallies and incorporate both futures and current pricing, she said.
- 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."
- 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.
- 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."
- 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:
- Tier 1 coverage is the first five million pounds of production covered by a farm.
- 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.
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.
SFB is an Equal Opportunity Provider.