17 minute read
Improving for the Future
ROSENDALE, Wis. – When farming is a major part of your family history, cultivating a legacy is just as important as raising livestock or crops. For Dan Zimmerman, that means passing the farm down in even better condition than when he took over in an effort to give the next generation a successful start.
Zimmerman and his brother took over the family’s 2,700-acre soybean, corn and winter wheat farm after their father passed away 37 years ago. Their dad was a hard worker who made many improvements on the farm, even when times were tough. It’s a legacy Zimmerman is working to continue, in more than just farming.
Like many farmers, Zimmerman, who serves on Compeer Financial’s Board of Directors, has weathered all kinds of challenges during his decades in the fields – most recently with historic spring planting delays, concerns about local impacts of global trade and challenging commodity prices. But he says hard work, perseverance and an intense dedication to his farm and its future will help overcome such difficulties.
“My dad always said if you work hard, you can enjoy the fruits of that labor – but you have to work hard first,” Zimmerman said. “If you have a true faith in something, I believe you will persevere. It’s not easy. There will be a lot of sacrifices and it takes dedication and hard work, but it’s worth it.” Zimmerman’s farming roots in the Rosendale area date back to 1850. Today, he and his brother are one of three generations working on the farm – their 87-year-old mother assists with the books and a nephew also joined the operation. The family has adapted and innovated over the years – improving farming processes, embracing technology, creating efficiencies – each generation making it better for the next.
“We’re always experimenting and regularly trying something new,” Zimmerman added. “About 15 years ago we tested strip tilling, a conservation practice we’ve adopted because we can do almost twice as much with a smaller tractor, which saves fuel and a lot of time. And we’ve found we have less erosion, which means less damage to the land.”
During the past 35 years, Compeer Financial has supported Zimmerman and the innovations and advancements the family has made on the farm. Their financial officer, John Goode, has seen the family through many new concepts and enhancements over the years.
“When we say we want to do something, John is on board and finds ways to support us,” Zimmerman noted. “We have a great partnership. He’ll even meet us right in the field to get everything done. It’s really what makes Compeer stand out.” Making things better for the next generation goes beyond the farm fields for Zimmerman. He’s committed to making a difference in the community as well, having served on both his church council and local school board. And the Zimmerman family set up a scholarship fund in honor of their father, providing financial resources to local FFA students heading to college. Zimmerman is further shaping the future of agriculture by serving on Compeer Financial’s Board of Directors, guiding the organization as it works to champion the hopes and dreams of rural America and serve its member-owners.
“If you think about it, we’re just borrowing this land for the short time that we’re on this earth,” he said. “It’s of great importance to me and our family to leave the land and the farm better than we got it.
“It should be a goal of every farmer to appreciate the natural resources we have, to invest in our communities and to leave everything we touch better than we found it,” Zimmerman said.
Above: Zimmerman’s farm has a federal elevator license. He buys grain from local farmers or stores and dries it for them. Opposite page: After wet weather delayed planting, Zimmerman checks over equipment in anticipation of dryer conditions and getting back in the field.
DAN ZIMMERMAN
Rosendale, Wis.
• Family includes wife Kelli, four grown daughters and three grown stepchildren • Grain farmer who operates 2,700 acres with his brother
• Elected to the board in 2015 • Serves on Compeer Financial’s
Board Enterprise Risk and
Corporate Giving committees
By Matt Lange, Compeer Financial Dairy Specialist (This is an excerpt from an article originally published in Progressive Dairyman.)
Cost of production (COP) is one of the most important metrics in evaluating a dairy operation’s financial status. It determines whether your operating margin is positive or negative.
When discussing COP, people typically refer to cash flow and include purchased feed, labor, principal and interest payments, and any cash capital purchases. While cash flow is important, this approach fails to consider the value created in forage production or heifer rearing and doesn’t include any unpaid bills on your accounts payables list or depreciation on assets. To get a clearer picture, COP should be viewed from an accrual standpoint.
FEED COSTS
Feed costs per cwt = (forage feed cost + grains + supplements) per cwt.
The largest cost for any dairy is feed, including purchased and homeraised feeds. Placing a market value on forages, including haylage, corn silage and grain, will help determine total feed cost. For Midwest dairy producers, Compeer Dairy Consulting uses these values for 2018: • Corn silage – $34.40 per ton at 35 percent dry matter (DM); • Haylage – $66.80 per ton at 40 percent DM; and • Corn – $3.30 per bushel.
LABOR COSTS
Labor costs per cwt = (hired labor expense + owners’ draws) per cwt. Labor costs include wages, payroll taxes, workers’ compensation and benefits paid to employees; as well as salaries and benefits paid to owners (including wages shown as draws). In the Compeer Dairy Consulting benchmark, 2018 total labor cost averaged about $3.21 per cwt. Some operations in the top 25 percent for net income were below $2.80 per cwt on an energy-corrected basis.
NET HERD REPLACEMENT COST
Net herd replacement cost (NHRC) per cwt = [(total number of cull cows + dead cows) x $1,700 – cull cow income] per cwt. NHRC is the number of animals leaving your herd (cull, dairy sale or death) multiplied by their balance sheet value (typically $1,700 per head, less any cull cow revenue). The 2018 Compeer average was $1.40 per cwt; herds in the top 25 percent averaged $1.34 per cwt on an energycorrected basis.
OTHER PRODUCTION AND OVERHEAD COSTS
Other production costs are dairy related expenses covering animal health, bedding, breeding, and supplies. Overhead expenses like administrative, fuel, insurance, marketing, repairs and utilities are added together as well as any individual farm specific custom expenses, seed, chemicals, and fertilizers. Generally, other production comprises $2 to $2.20 per cwt. in cost while “overhead” generally is in the range of $5.75 to $6.75 per cwt.
FINAL PHASE
In the final phase of calculating COP, it’s important to deduct all other revenue not related to milk and cull cow income. The two major sources of accrual earnings are: • Crop production – The value of all crops grown in the calendar year, not necessarily what was sold. Crop revenues may be in the range of $3 to $3.50 per cwt, but it depends on the operation. • Heifer appreciation – The increased value of heifers as they age. It’s important to show increased value to offset the heifer raising cost invested for the same time period. Generally, this is approximately $64 per month per heifer. So in a given 12-month cycle, one heifer will increase in value by $768, recorded as earnings.
A lot goes into accurately calculating your COP and, while operational expenses will vary from farm to farm, driving down COP is the most long-term, sustainable method to achieve dairy financial success. As you complete your financials, take time with your lender, a consultant or adviser to help calculate your COP and assess where you stand and – more importantly – where opportunities lie to improve the bottom line.
EXAMPLE MIDWEST DAIRY HERD
Milk shipped per day: 72,000 lbs
(720 cwt)
CAPITAL COSTS
Capital costs are composed of depreciation, interest and leases. They have risen nearly 40 cents per cwt for the average dairy over the last three years, predominantly due to increases in interest expense. This is due to a shortage of liquidity, leading to increased borrowing to finance operating expenses and compounded with increasing interest rates. Additionally, this expense has become quasifixed as operating losses become termed out over five to seven years in most cases.
Herd Size: 1,000
Heifers: 800
Milking: 880
Farm Name: Total Pounds Energy-Corrected Milk** Shipped in Year:
Line Item How to Calculate
A Supplements
B Grains
C Forages
D Feed Total Total purchased feed including payables Total inventoried dry corn x $3.30/bu. @ 85% dm equivalent 2017 haylage @ 40% DM = $46.50/ton 2018 haylage @ 40% DM = $66.80/ton 2017 & 2018 corn silage @ 35% DM = $34.40/ton
(Take lines A + B + C) / cwt shipped
E Hired Labor
F Owner Draws & Family Living Expense
G Labor Total
H Herd Replacement Expense I Cull Cow Income Wages, workers’ compensation insurance, state and federal taxes, other benefits
Draws, benefits, insurance, etc.
(Take lines E + F)/ cwt shipped
(Culls + deads) x $1,700
Enter cull cow income
J Net Herd Replacement Cost Total (Take line H – line I) / cwt shipped
K Depreciation (Machinery) Take machinery value on balance sheet x 12%
L Depreciation (Buildings) Take buildings value on balance sheet x 5% M Interest Expense N Leases Total interest expense for year Total equipment lease payments for year
O Capital Costs Total (Take lines K + L + M + N) / cwt shipped
P Animal Health, Bedding, Breeding, Supplies Add all dairy supporting expenses
Q Other Production Total Take line P / cwt shipped
Administration, fuel, insurance, marketing, repairs, utilities S Seed, Chemical, Fertilizer, Land Rent
T Overhead Total
U Crop Production
V Heifer Appreciation
W Other Non-dairy Income Add all farm-related expenses
Add all agronomy-related expenses
(Take line R + S) / cwt shipped
2018 dry corn x $3.30/bu. @ 85% dm equivalent 2018 corn silage @ 35% DM = $34.40/ton 2018 haylage @ 40% DM = $66.80/ton $64 x (Total heifers - loss of heifers) x 12 months in inventory for a herd with stead state heifer inventory All other non-dairy income including patronage, government receipts, custom work income, rental income and interest income
X Less Other Income (Take line U + V + W ) / cwt shipped
Y Whole Farm Cost of Production (Add lines D, G, J, O, Q & T), then subtract line X Your Herd's Values
Example Herd* Based on 262,800 cwt of milk shipped in year
$1,445,400
$149,796
$614,952
$8.41
$735,840
$105,120
$3.20
$569,500
$195,750
$1.42
$210,000
$187,500 $325,000 $0
$2.75
$525,000
$2.00
$328,500
$1,314,000
$6.25
$880,380
$552,960
$302,220
$6.60
$17.43
HELPING BUILD THE FUTURE During College and Beyond
At Compeer Financial, it’s important to us to have a solid process to ensure we hire the most qualified interns who have the potential to become full-time team members. By creating a talent pool of young professionals fully prepared to help us achieve our mission to enrich agriculture and rural America, we are better positioned to meet the needs of the business and our clients well into the future.
SUMMER AND SCHOOL-YEAR INTERNSHIPS
Throughout the entire year, we have over 50 interns employed with us, selected from over 500 applicants. Some work part time during the school year, and this summer we have 36 full-time interns employed with Compeer across 12 office locations in Illinois, Minnesota and Wisconsin. Our 2019 interns represent 25 colleges and universities.
Compeer’s Internship Program gives interns opportunities to contribute to our success, while also developing skills for their future endeavors. Through this program, students have the opportunity to network and learn about the entire organization and gain transferable skills for their professional career. Most importantly, interns can have a direct impact on enriching the future of agriculture and rural America.
FINANCIAL ASSOCIATE PROGRAM UNIVERSITY CAREER FAIRS
Compeer Financial representatives will be at the following university career fairs during the fall of 2019: Illinois State University – Agriculture – Normal Minnesota State University – Mankato South Dakota State University – CAFES – Brookings University of Illinois – ACES + LAS Career Fair University of Minnesota – CFANS – Twin Cities University of Wisconsin – River Falls University of Wisconsin – Madison University of Wisconsin – Platteville University of Wisconsin – Accounting – Whitewater
Our interns often become the future of Compeer Financial, which is very apparent through our Financial Associate Program. Over the last two years we have hired 24 entry-level financial associates, of which 16 of those hires were former interns.
High-quality talent is hard to come by. The Financial Associate Program establishes a foundation for the organization to build our talent for the future of Compeer from the ground up. This entry-level program is open to recent college grads as well as those who may have more limited work experience.
The 12- to 18-month entry-level program prepares the new team member for a position as a Financial Officer, Insurance Officer, Credit Officer or Certified Appraiser. When turnover occurs, often through retirements the Financial Associate Program provides a smooth transition, as the financial associates are ready to step into the position and hit the ground running to meet the needs of our clients.
Amy Schroepfer
Sr. Market Insights Analyst 2008-2009 Marketing Intern 8 years of service For more information on internships or the Financial Associate Program, please visit compeer.com/CollegeRelations.
“The values definitely haven’t changed from when I was an intern to now — we continue to champion the culture of rural America and you can really feel it when we’re working with the different farmers and businesses that Compeer supports. One of the most impactful things I do on a regular basis is work with the financials of hospitals and nursing homes in rural areas. It’s great to see the impact these institutions have on the health of rural communities and know that Compeer is able to support them.”
Ben Larson
Associate Credit Officer 2016 Crop Insurance Intern 1 year of service
“Through my internship and career journey at Compeer Financial, I’ve recognized the incredible work ethic of those in rural America. It’s amazing how innovative our clients are; they trust themselves and the land they care for, while always finding a way to make things work. My father is a Compeer client, and, as a kid, I had the chance to meet his loan officer. That experience helped me realize I wanted to work for Compeer and help people like me, my dad and others who call rural America home.”
Cameron Rowe
Financial Officer 2016 Crop Insurance Intern 1 year of service “Although I started as a loan accounting intern, I was able to gain experiences throughout the finance department. Interns add real value because they help the organization find strong team members early in their careers. Because of the cyclical nature of the work, interns help pick up the extra workload during the busy times. It’s a win-win for the student and Compeer Financial. The student gains real-life work experience and the Compeer team gains a balanced workload and an opportunity to acquire a full-time team member.”
Brittanie Koch
Reporting Analyst 2006-2007 Loan Accounting Intern 10 years of service
Emerging Markets TECHNOLOGY GRANT
Compeer Financial® is offering grants up to $500 for:
• Technology purchases related to your farm operation • Registration fees for farm-related conferences or workshops • Technical assistance
ELIGIBILITY
• Must be a Compeer Financial EMERGING MARKETS client • Must reside within Compeer Financial’s 144-county territory • Must not have previously received a Beginning with Compeer
Financial grant or a Beginning with Badgerland grant • Must provide proof of purchase for an eligible expense
FOR MORE DETAILS & TO APPLY ONLINE:
compeer.com/TechGrant
Sign up for our Emerging Markets e-newsletter!
Get expert, timely information direct to your inbox. Visit compeer.com/Emerging to sign up today!
BOARD OF DIRECTOR ELECTION BALLOTS DUE OCTOBER 3
The Compeer Financial Board of Directors election is quickly approaching. Here are a few things to keep in mind:
• Ballots are anticipated to hit mailboxes early-September.
• Visit us at Compeer.com/
Elections to learn more about the candidates.
• For each eligible ballot cast in the 2019 Compeer Financial Board of Director Elections, the Compeer Financial Fund for Rural America will make a $5 donation to AgrAbility. The organization’s mission is to enhance quality of life for farmers, ranchers, and other agricultural workers with disabilities, so that they, their families, and their communities continue to succeed in rural
America.
• Up to $10,000 per state will be donated for a total donation of up to $30,000.
• Ballots must be received by October 3.
SAVE THE DATE FOR THESE UPCOMING EVENTS
GrainVantage Meetings 2019
Gain insights into marketplace projections, global issues for the year ahead and Compeer Financial’s top priorities. You will also learn strategies to manage risk during times of volatility and uncertainty. Mark your calendar for one of our seven location offerings. Additional details to come!
• December 2 – Eau Claire, Wis. • December 3 – Rochester, Minn. • December 5 – Worthington, Minn. • December 6 – Mankato, Minn. • December 9 – Madison, Wis. • December 10 – Utica, Ill. • December 11 – Macomb, Ill.
Resilient Farms Conference 2019 (Partnering with UW-Extension)
This one-day conference is aimed to provide inspiration and concrete decision-making tips and resources for farmers who know they need to add revenue streams but aren’t sure where or how to begin evaluating ideas. • December 12 – Wisconsin Dells, Wis. • Option to attend virtually at select Compeer office locations will also be available. • More details to follow.
UPCOMING GRANT DEADLINES
EMERGENCY
RESPONSE
Emergency Response Equipment Grant
Application Period: August 1-31 Compeer Financial’s Emergency Response Equipment Grant Program supports rural communities in our service area by funding emergency response equipment for volunteer fire, rescue and ambulance departments.
Farmers Market – Organization Grant
Application Period: October 1-November 15 Compeer Financial’s Farmers Market – Organization Grant helps organizations enhance services to consumers and vendors, benefiting all those utilizing the market.
Farmers Market – Vendor Grant
Application Period: October 1-November 15 Compeer Financial’s Farmers Market – Vendor Grant supports farmers with marketing or technology advancements, including branding development, website creation or mobile payment technology products or fees. Applicants must be a client of Compeer Financial.
HOLIDAY HOURS
Compeer Financial offices will be CLOSED in celebration of the upcoming holiday:
Labor Day (September 2)
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Sign up for our e-Newsletters and have them sent right to your inbox. Visit Compeer.com to enroll.
Our place is RIGHT HERE PROVIDING HOME MORTGAGE EXPERTISE.
At Compeer Financial®, we live and work in the same rural communities and small towns you do. We’re your friends, neighbors and fellow volunteers. Although our cooperative has grown, we’re still your local home mortgage financial partner, ready to help you achieve your goals. Because serving rural America is where we belong.
#CHAMPIONRURAL
Visit us at compeer.com/homefinancing or call (844) 426-6733 to learn more.
2600 Jenny Wren Trail PO Box 810 Sun Prairie, WI 53590
Your loan. YOUR WAY.
As a farmer, many variables impact your bottom line. Add stability and flexibilty to your balance sheet with Compeer Financial®. Together, we can tailor financing to fit your needs, manage your interest rate risk and position your business for long-term success.
LONG-TERM, FIXED RATES PROVIDE STABILITY
• Lock in rates for up to 30 years • Set payments every month or year
