Putting cows on the front page since 1885.
Putting cows on the front page since 1885.
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An interview with Jeff Moser, Farm Credit Leasing What is a lease, when can leases be used, and how do they work? A leasing company allows the use of an item that they own, meaning the leasing company, while you pay a periodic lease or rental payment. In essence, you only pay for the use of the equipment or other items rather than paying a principal and interest payment on the loan. Leases are offered on a variety of items. Typically, people think of a lease on a tractor, combine or other piece of equipment. But leases are also available on...
An interview with John Black, Farm Credit Business Consultant Transition planning is an important topic for farmers because a family business can have an emotional impact on the family structure. It’s hard to separate business and family in any type of family business. Essentially, the farm is the family’s way of life. As a consultant, I meet with families, look at the numbers and the situation in a non-emotional manner. What do you find are stumbling blocks for families developing a farm transition plan? 1. Financial position. Whether it...
Pennsylvania’s agriculture industry has a new resource available to help farmers. The PA Agriculture Mentor Program includes five mentors with extensive agricultural backgrounds to assist beginning farmers, agribusiness entrepreneurs and farmers in troubleshooting new strategies and ideas for their farm businesses. Spearheaded by a group of Pennsylvania agricultural organizations with an interest in the future of agriculture, the program leverages SCORE, a 501(c)(3) nonprofit organization and resource partner of the U.S. Small Business D...
In this month’s Farm Credit Corner, we interview Emily Helman, AgChoice Customer Service Specialist, to learn about unsolicited mail following a loan closure. Why do customers experience an uptick in unsolicited mail and calls following a loan closing or refinance? Let me start by saying that AgChoice does not sell or distribute borrowers’ information. However, many companies such as those offering home warranties, refinances or mortgage protection insurance, will find information from public records or buy information from one of the cre...
Budgeting is purposefully reviewing and estimating our costs, income and overall cash operations for your farm or your business. If you're new to budgets, January is a great time to begin the process. We frequently reference a whole or partial budget. A whole budget considers the whole farm including every single income item to every single expense to loan or check that's moving through the business. Conversely, a partial budget examines a specific area instead of the whole operation. As an...
Each holiday season a difficult choice confronts shoppers: celebrate with a real tree or an artificial tree? Nathan Meiser, AgChoice loan officer who has worked in the forest products industry for many years, shares why a real Christmas tree is the natural choice. What are the benefits to using a real Christmas tree instead of an artificial tree? The main benefit is that real trees positively contribute to the environment from the time they're planted until after the holiday season when they're...
One of the largest hurdles of purchasing a farm or rural property is a lender's down payment requirement. AgChoice Farm Credit lender Katie Epstein shares why down payments are important. In simple terms, what is a down payment and what are the typical requirements from a lender? A down payment is the amount of cash that a buyer puts towards a transaction. Don't confuse a down payment with the deposit, often a component when you enter into a sales agreement. The deposit is a nominal amount,...
This fall, during the busy harvest season, you may find yourself sharing the roadway with various forms of farm equipment. America’s rural roadways are often not equipped for accelerated speeds and can present several safety hazards, especially to those in a hurry. Here are a few safety tips to keep in mind that will help prevent incidents on our rural roadways and allow for everyone to make it home safely. 1. Be Prepared: Knowing that this time of year may require you to share the road and take additional time to get where you are going, p...
Starting a farm can be daunting. What tips can you share for beginning farmers? First and foremost, I recommend beginning farmers connect to others. In some cases, a beginning farmer may be part of a family operation, so they already have a network. I encourage all beginning farmers to find a mentor. It doesn’t need to be anything formal. It might be a relationship with another farmer in the area. A beginning farmer can learn from other farmers and share ideas for feedback. If the beginning farmer doesn’t have farming experience, gaining tha...
Rising real estate prices are all over the news, with reports of homes selling well above asking prices. A similar phenomenon is happening to farmland and timberland tracts, impacting many farmers and forest products operators. Record high lumber prices are also causing challenges across the state, especially with construction projects. Overview To understand the reason for these rising costs, look to supply and demand. For buyers participating in today's real estate market, expect to pay more...
This month, Nick Pease, chief appraiser with AgChoice Farm Credit, discusses appraisals and their role in the land buying process. Why are appraisals important and why are they needed for a loan? By definition, an appraisal is an opinion of value that is credible and worthy of belief. Appraisals are completed by a state-certified appraiser, either generally- or residentially-certified, who fulfill the proper certification requirements set by the state and appraisal qualifications board. Appraisals are most commonly used for mortgage lending,...
After you've identified your future home site, you can begin planning for your home construction. Choose a reputable builder – There are many options for home construction and many different builders. Some builders offer turnkey contracts, while others offer contracts that are more open to interpretation. Contracts that don't address all aspects of construction can create additional costs and headaches during construction, especially if some items weren't considered upfront. Think about cost o...
With the latest Pandemic Relief Bill, signed into law on Dec. 27, 2020, sole-proprietor farmers gained an opportunity to participate or revise an existing loan in the Small Business Administration's (SBA) Paycheck Protection Program (PPP). This article will primarily focus on a program change that affects the self-employed earnings portion of the PPP loan calculation, opening an opportunity for many farmers without payroll costs on their 2019 Schedule F, and/or did not have a profit on their...
What is a prepayment penalty, and how does someone know if they have a prepayment penalty condition on their loan? A prepayment penalty is a clause in the mortgage contract that states the lender may assess a penalty if the borrower significantly pays down or pays off the mortgage before the term of the loan. Typically, prepayment penalties occur during the beginning of the loan and also during a time when interest rate is fixed for a set period. There’s often a section in the signed note that l...
No matter the name – profit team, management team, succession team, troubleshooting team – the team approach to investigating and solving farm problems has many benefits. Advantages remain whether the team includes external trusted advisors, internal farm members or a combination of both. A team approach brings multiple ideas and voices to the table. Team member selection inherently places expertise at the table. Are you dealing with a crop issue? Your crop consultant will be a key player. Do...
Is it a good approach to buy land now and later build a home on the property? Our team answers that common question and offers advice if a property purchase is in your future. Many people ask the question if they should buy land now to build their home later, or if they should just wait and do both at once. What guidance do you give potential borrowers when they ask you this question? It’s really up to the potential borrower about what works best for them – either buying the land now and building in the future, or doing both at once. There are...
Every year, thousands of aspiring farmers pursue their dreams of running their own agricultural enterprises. Agriculture supports one out of every 10 jobs in Pennsylvania. According to the 2017 Ag Census, the U.S. saw more than half a million beginning farmers raising crops and livestock across the country, meaning that approximately a quarter of all American farmers have spent less than 10 years in the industry. In Pennsylvania, agriculture plays an important role in our culture and economy and...
Special thanks to Michigan State University Extension for these helpful tips as we all manage through challenging times. There are many factors in agriculture that farmers have no control over. Beyond the uncertainty of the weather, destructive crises such as the COVID-19 pandemic and short-term incidents such as machinery breaking down or accidents can and do occur. One powerful factor that we always have the opportunity to control, however, is our mindset. Farmers and those within the...
On March 18, 2020, and March 20, 2020, the Department of Treasury and the IRS issued Notices 2020-17 and 2020-18 effectively postponing the due date for both filing Federal income tax returns and making tax payments (associated with that filing) from April 15, 2020, until July 15, 2020. This is automatic, and there is no need to file an extension if you file by July 15, 2020. In response to questions about the deadlines, we're sharing clarifying facts from the IRS and state of Pennsylvania....
Land is an asset that generally holds value and appreciates over time. While your land investment grows, you can enjoy its many unique benefits. In Pennsylvania, land provides investment opportunities, hunting, recreation, farming or perhaps acreage for building a home with a big backyard. If you're ready to invest in land, do you know how to take the next step? Should you pay cash or finance? Paying cash for raw land is a great way to be competitive with your offer and save money in the...
As we settle into January, we often reflect back on yet another year and our many blessings. We might also contemplate that if only we had 20-20 hindsight, we would have made better decisions the previous year. Agriculture is constantly changing and unfortunately, we do not have the luxury of 20-20 hindsight. Agriculture is an inherently risky business. Some risks are everyday business risks; some risks are brought on by natural disasters. Farmers need to regularly manage for financial,...
Budgets are a valuable tool to help manage our financials and make decisions for the future. However, building a budget, whether it is for your home, farm or business, can be daunting. As our thoughts turn to the new year, why not make budgeting a goal for 2020? We recommend these tips to make the budgeting process easier. Start by looking at the big picture. Consider all of your sources of income and associated expenses. Try sorting your income and expenses into major categories and then fill i...
Cash flow is a critical financial measure for business managers and lenders. Understanding how and when money is earned and spent is one of the best methods to spot potential problems in a business, and to plan how to address them. Analyzing cash flow is one way that lenders determine the feasibility of financing a new venture. It is common for new businesses to struggle with cash flow as upfront capital purchases are made and markets are established. In addition, many businesses with seasonal s...
Identity theft is defined as all crimes against individuals where personal and financial data is illegally obtained by fraud or deception, usually for financial gain. Once identity thieves steal your data, some things they can do include: • Apply for credit cards or loans in your name • Withdraw funds from your bank account • Use your social security number to steal your tax refund There are many tools at your disposal for recognizing there is a problem. Read credit card and bank statements,...
Land, as an investment, has physical characteristics that distinguishes it from all other assets. Those characteristics include the following: 1. Land is unique in location – You may have heard it said the three things that affect real estate values are location, location and location. Value based on location is affected by physical characteristics of the property and on the socioeconomic characteristics of the surrounding area. The following is an example of a physical characteristic. Fifty y...
The borrower-lender relationship is an important one, especially if you're in the agricultural industry. As you are looking for financing for that next tractor, piece of property or home on acreage, consider these qualities in a lender: 1. Understanding of your business – Lenders that understand the ins-and-outs of your business will help you to evaluate your options, allowing you to select the best decision for your operation. 2. Long-term presence in agriculture – Your lender should be comm...
Do you ever wonder how your peers are doing? Are they controlling their input costs better than you? Do they have greater outputs per unit? How do their gross margins compare? We all strive to have successful operations. No matter if you have a large dairy operation or small vegetable business, the five keys to profitability for any business are: 1. Volume – amount of product produced on a per unit basis 2. Efficiency – gross margin of your business 3. Overhead – capacity of your business 4. Ind...
Land, as an investment, has physical characteristics that distinguishes it from all other assets. Those characteristics include the following. Land is unique in location You may have heard it said the three things that affect real estate values are location, location and location. Value based on location is affected by physical characteristics of the property and on the socioeconomic characteristics of the surrounding area. The following is an example of a physical characteristic. Fifty years...
By ASHLEY HICKS AgChoice Loan Officer Everyone has insurance – either you buy it from an insurance company or you insure yourself. When you self-insure, you are taking all of the risk. In today’s economic climate, that may not be the best risk management strategy. Why buy crop insurance? You can’t control the weather and, although the seed and chemical companies have come a long way in performance, the only thing that can guarantee a yield, or indemnity in place of a yield, is crop insurance. It will help you survive a disaster and retur...
What is all the hype about on Dairy Revenue Protection or Dairy-RP? What does this product offer for protection and how does this program work? Innovation, such as Dairy-RP, is often born through desperate times. Developed by the American Farm Bureau Federation, the Dairy-RP product enters the dairy industry at a critical point for producers. As we begin the fourth year of a depressed market, we realize that we need to take action to protect our individual farm gate from the fluctuating prices...
