spotlight WINTER 2016
DIANA CLARK ON CHANGES IN THE ALMOND INDUSTRY Page 6
ACHIEVING SUCCESS AS A YOUNG, BEGINNING, AND SMALL FARMER Page 12
NAVIGATING ECONOMIC WHITE WATERS Page 16
Farm Credit West | Winter 2016
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Spotlight 3
President’s Message
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Financial Highlights
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2016 Interest Payments
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Local Advisory Committees
6
Conversation with Diana Clark
9 –11
WHO WE ARE One of the West’s leading agricultural lenders, Farm Credit West and its wholly owned subsidiaries are cooperatively-owned lending institutions providing financial services to farmers, ranchers, and agribusinesses. Our offices are located in Arizona, California’s Central Coast, Imperial Valley, South San Joaquin Valley, and Sacramento Valley.
SPOTLIGHT is produced for the customers, employees and friends of Farm Credit West. Comments and story ideas can be submitted by email to the Marketing Department at marketing@farmcreditwest.com.
Community Center
BOARD OF DIRECTORS
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Holiday Schedule
Chairman of the Board Joey Airoso............................................. Pixley, CA
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Achieving Success as a Young, Beginning, and Small Farmer
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Protecting your Financial Identify from Cybercrime
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2017/18 Scholarship Applications
Vice Chair of the Board Sureena B. Thiara.............................Yuba City, CA Robert Amarel, Jr.............................Yuba City, CA Teresa Castanias.................................... Dixon, CA Mark A. Cook..................................... Willcox, AZ Gregory O. (Butch) Dias, Jr..................Visalia, CA
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Navigating the Economic White Waters
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Events Calendar
J. Dick Eastman................................... Powell, WY Catherine Fanucchi........................ Bakersfield, CA Douglas C. Filipponi...........................Creston, CA
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Farm Credit West’s 2020 Vision
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Territory and Office Locations
Adam B. Firestone..............................Buellton, CA Craig C. Gnos........................................ Davis, CA Robert N. Hansen..............................Hanford, CA Blake Harlan...................................Woodland, CA
MISSION STATEMENT Farm Credit West will ensure THE CUSTOMER COMES FIRST by providing superior service at competitive rates, in a timely, professional, and ethical manner, and by delivering a meaningful return on equity through our patronage program.
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SPOTLIGHT | Winter 2016
Colin Mellon.......................................... Yuma, AZ Barry Powell..................................Sacramento, CA Brian Talley..............................Arroyo Grande, CA
PRESIDENT’S MESSAGE Mark Littlefield, CEO
Committed to Meeting the Demands of the Future Throughout 2016, Farm Credit West celebrated our 100 year anniversary. Over the last twelve months, our Association has joined with others in the Farm Credit System to reflect on our legacy, rooted in an exclusive focus on agriculture, expert staff, competitive rates, and our belief in the power of relationships over transactions. Together, these building blocks create the
continue to provide you with the best
risks that come with increased use of
foundation of Farm Credit West, working
customer service around.
technology. As a part of this effort, Farm
together to fulfill our mission that THE CUSTOMER COMES FIRST.
Credit West is making available to our
At the forefront of our discussions to
customers training programs, advice, and
explore innovation are opportunities to
quarterly security tips from expert sources.
As we celebrate this monumental
leverage existing technology that will
anniversary, Farm Credit West remains
allow our loan officers to conduct more
committed to meeting the demands
business at your operations, having all the
of the future. We are actively exploring
information they require available at their
opportunities that will increase our value
fingertips. This shift has and will continue
to you, our customer/owners. As each
to allow our staff to remain efficient
In 2017, Farm Credit West will continue
new opportunity presents itself, we
and maximize their knowledge of your
to evaluate new ways to add value to
carefully examine the potential impact,
operation, providing you with greater value
our Mission and corporate purpose.
asking the question, “does it add value to
and the best service possible to meet the
We understand that to maintain a fiscally
our relationship with you, our customer/
demands of the future.
sound organization, provide the best
owner?” With this as our focus, we are pursuing new innovation and tools in technology to increase efficiencies in our communications with you. To participate in our new communication tools, I encourage each of you to create a myFCW account on farmcreditwest.com. We believe that by actively employing innovation we can
By regularly communicating best cybersecurity practices, together we can reduce the likelihood and negative impacts of attacks in the future.
customer service around, and retain
However, as the use of technology
an expert staff, Farm Credit West must
increases, so does the risk for fraud.
leverage technology and carefully evaluate
To combat malicious activities, Farm Credit West is investing in tools to mitigate rising threats. These efforts range from tightening internal controls to educating our customers and staff on the potential
new innovations. As a result, we are actively pursuing options that will add value to you, our customers. This can be Continued on page 8
Farm Credit West | Winter 2016
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Financial Highlights Farm Credit West reported net income of $159 million for the first nine months of 2016. These year-to-date earnings are ahead of our business plan targets. During the first nine months of 2016, our average earning assets and capital levels increased and we strengthened our allowance for loan losses.
18.1% $5,991
$6,323
$6,722
$7,627
$9,116
2012
2013
2014
2015
9/30/16
19.9%
20.4%
18.8%
20.2%
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Sep. 30, 2012 2013 2014 2015 2016 Members’ Equity as a % of Total Assets
Average Earning Assets Average earning assets increased $1.5 billion, or 19.5%, during the first nine months of the year. The full impact of the Southwest merger and significant loan growth during 2015 was recognized in the average earning assets calculations during 2016. Additionally, Farm Credit West is experiencing
In the first nine months of 2016, total members’ equity increased $204 million, primarily due to the net income of $159 million and an increase in the preferred stock balance of $50 million. Partially offsetting net income during the year were preferred stock dividends of $6 million.
steady loan growth in 2016.
0.55% $156
$96
$72
$120
$157
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Sep. 30, 2012 2013 2014 2015 2016
0.54%
0.53%
0.50%
0.61%
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Sep. 30, 2012 2013 2014 2015 2016 Allowance for Loan Losses as a % of Loans
Nonearning Assets (in millions)
Our allowance for loan losses totaled $57 million (0.61% of
Nonearning assets (nonaccrual loans plus other property
with 0.50% of loan principal and interest at December 31,
owned) increased by $37 million or 30.8% to $157 million at September 30, 2016. The increase was primarily due to a $39 million increase in nonaccrual loan volume as a result of stress in certain loans in our portfolio. The other property owned balance decreased by $2 million.
loan principal and interest) at September 30, 2016, compared 2015. The allowance is our best estimate of the amount of probable losses existing in our loan portfolio as of each balance sheet date. We determine the allowance based on a regular evaluation of the loan portfolio, which generally considers recent historic charge-off experience and is adjusted for other relevant economic factors.
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SPOTLIGHT | Winter 2016
Local Advisory Committees At Farm Credit West, we were founded on — and remain committed to — high standards of integrity, ethical decision making and sound internal controls. Farm Credit West is directed and controlled by a fifteen-member Board of Directors. Thirteen are customers, elected by customers. Two Directors are appointed by the Board and participate in these meetings. The Association is managed by a seven-member senior management team.
2016 Interest Payments
Providing advice and feedback to the Board of Directors
To help you achieve your tax planning objectives, we would like to remind you of your Association’s year-end procedures regarding interest paid on IRS Form 1098. For payments, the date received is the determining factor.
which provides broader representation than the Board itself
• Payments received by the Association on or before 2:00 p.m. on December 30, 2016 will be reported as 2016 interest paid. • Payments received after that date and time, whether or not they were mailed in 2016, will not be reported as 2016 interest paid. • Payments received after 2:00 p.m. on December 30, 2016 will be processed on the following business day.
and Management Team are members of the Local Advisory Committees (LAC) organized across all Farm Credit West’s territory. The Local Advisor Program is essentially another organizational tier between the Board and the stockholder can with its limited numbers. • It provides an ongoing basis for maintaining and enhancing grassroots feedback from stockholders; • it can serve as a training ground for future directors; • and it is scalable, allowing the Association to continue
to grow.
Two to four times a year, select Board members and the CEO meet with the local advisors from each area. Updates are provided on the Association’s operating results, and feedback is sought with respect to how the Association is performing in each region, ways we can improve, proposed new programs, etc. If you have ideas on how to improve the way Farm Credit West operates, contact your loan officer with your feedback today.
Consult your tax advisor regarding the deductibility of payments in transit. For payments made from your Future Payment Funds account, the date applied is the determining factor. If your tax-planning objectives are better met by having the interest portion of your January 1, 2017 installment reported as 2016 interest paid, you must register an early transfer of Funds Held to pay your installment in 2016. Written requests for early transfer must be received by the Association by December 28, 2016.
Farm Credit West | Winter 2016
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Meet Diana Clark General Manager, Central Valley Almond Association
While many practices in agriculture remain unchanged over the last 100 years, the industry continues to pursue and embrace technology focused on improving efficiencies and maximizing profits. Striking the correct balance between these two extremes can be difficult for many; specifically, identifying and practicing technology-dependent growing methods while honoring the legacy of the operation To explore this conversation further, we
cooperative almond huller. As almond
met up with Diana Clark, General Manager
acreage was increasing in the McFarland,
of the Central Valley Almond Association
California area, they knew there was
(CVAA), to discuss changes in the almond
going to be a need for almond hulling.
industry over the last 50 years. She spoke
Because the local almond growers were
candidly with us on how she has structured
also cotton growers and members of the
CVAA to remain relevant, building a
McFarland Cooperative Gin founded in
stable platform to grow over the next
1938, they approached the cotton gin
several decades.
for management and employees. The
FCW: Tell us about the Central Valley Almond Association.
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SPOTLIGHT | Winter 2016
original almond huller was built on property owned by the cotton gin and leased to the almond huller. As acreage grew, there
DC: In 1971, Dale Snell and Frank Clement,
was a need for an additional almond huller
two almond growers who embraced the
and the decision was made to build a
cooperative business model, began talking
second plant. Today, Central Valley Almond
about the establishment of a grower
Association is a third generation almond
huller/sheller with the addition of a third plant built in
our history, CVAA is diligent in its exploration before
2009 with financing secured through Farm Credit West.
entering into any contractual agreement.
As almond acreage continued to increase and cotton acreage declined, CVAA’s Board of Directors made the decision to separate from the cotton gin in 1998. With their management and employees in place, CVAA has grown to the business it is today. FCW: What goals do you strive for in the day-to-day operation of CVAA?
DC: On a day-to-day basis, CVAA strives to excel in grower service. Central Valley Almond Association’s mission is to provide the membership with high quality almond hulling and shelling that produces a product that generates maximum premiums. CVAA will always operate the facility for quality first, knowing many growers are not diversified and realizing they are entrusting CVAA with their livelihood. Delivering a crop to a facility that is known for producing high quality almond hulling and shelling is paramount for all of our growers. FCW: How does CVAA manage risk? Are there
FCW: How has Farm Credit played a role in the development of CVAA?
DC: CVAA has always believed in Farm Credit for
their financing. CVAA looked to Farm Credit West
areas you feel are unexplored in this arena?
for their financing needs when they started exploring
DC: In the mid 1990s, CVAA entered into a venture
has been the best financial relationship I have ever
producing a product made from the almond shell
the construction of a new facility. Farm Credit West had the opportunity of experiencing. FCW: Tell us
a little about
For myself, working for a cooperative, has been rewarding and a natural fit.
yourself. What has been your biggest learning curve? DC: As a female
in a management position, the opportunity to
comparable to a Duraflame firelog that ended up being a financial misstep on the part of the organization. This was largely due in part to the lack of a feasibility study. After spending years working our way out of the loss, any large capital expenditure is first explored through a feasibility study. Due to
work in an industry that is predominately male, has presented its opportunities and disadvantages. Through the years, the industry has embraced me and allowed me the opportunity to be the first female to serve on the Almond Hullers and Processors Board of Continued on next page
Farm Credit West | Winter 2016
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Directors, and their first female chairperson. I strongly feel that I have made a positive impact on the industry and made strides for
FCW: What do you believe almond producers in California must do to best weather challenging
other females in the almond industry.
economic times of the future?
FCW: What changes have you seen in
DC: Although it is difficult to control
your lifetime as it relates to farming?
cost, I believe the use of solar would
DC: When I first started in the industry,
who would be pumping from their wells
everything was flood irrigated. At
harvest, the growers would turn the water off and the trees would stress to the point of defoliation which was greatly impacting the next year’s crop. I believe the greatest change I have seen in farming is the implementation of the watering systems that allow the growers to water between varieties, keeping the trees free from stress and decreasing the negative impact on the next year’s crop. Not only are the growers producing larger yields but they are using less water.
be advantageous to the almond grower due to a lack of surface water. It is important for growers to partner with associations who can give them a voice in Sacramento. Knowing it is difficult enough
President’s Message cont. from page 2
to farm with nature’s challenges; it is even
a challenging line. However, as we
more daunting to adhere to regulations being placed on them without their voices being heard. In summation, it takes a strong team to
At Farm Credit West, we are a
needs to be involved in the industry to
important it is to hire intelligent people
DC: I feel the greatest challenge the
optimize the returns to the membership
the ability to get surface water. California has to be more resourceful and diligent in our capacity to store water in all years, below normal, normal, and above normal rain years. Governmental regulations will also hinder the growers’ ability to farm. The costs will only continue to increase in the years ahead.
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SPOTLIGHT | Winter 2016
together we can accomplish the task
engaged Board of Directors. Management
will face in the next ten years?
south end of the San Joaquin Valley, is
agriculture industry, I am certain that at hand.
broaden the perspective of the operation.
almond industry will face, especially in the
pursuing excellence in supporting the
build a solid cooperative. It starts with an
FCW: In your opinion, what are the
biggest challenges the almond industry
build on our 100 years of experience
Management also has to understand how and empower them. It takes a team to whether it be their primary product or by the marketing of by-products. For myself, working for a cooperative has
true member-owned cooperative. We remain committed to returning earnings to our members through an active patronage program while pursuing innovative solutions in technology to maintain our solid record of excellent customer service. With roots 100 years old, it is our objective to honor our past while remaining
been rewarding and a natural fit. I have
committed to future progress.
always enjoyed working for what is best for
Farm Credit West’s staff and Board
the whole, be it my birth family, immediate family, or our CVAA family.
of Directors thank you for your business and continued support. We wish you a very happy Holiday season and prosperous New Year.
Feeding our Local Communities Farm Credit West staff in Woodland, CA join with others to glean a tomato field for the Yolo County Food Bank.
Farm Credit West recognizes the vital role that local food banks play in our communities. We understand not only at the corporate level, but also on an individual basis. In fact, Farm Credit West staff throughout our Association regularly contributes volunteer hours to glean crops. Earlier this fall, several teams from Farm Credit West and Farm Credit Services
Southwest joined together to glean
local community, and takes great pride
crops that would have otherwise wasted
in helping those less fortunate.
in the field. In Yolo County, California, staff from our Woodland branch gleaned 1,091 pounds of tomatoes that were later distributed to local residents as part
At a corporate level, Farm Credit West is committed to financially supporting these organizations as well. In fact, in 2016
of a rural food delivery program. In the weeks prior to Halloween, Farm Credit West staff joined with other volunteers to harvest pumpkins. In Arizona, Farm Credit West staff volunteered to glean grapefruit trees earlier this year. Due to a quarantine, the St. Mary’s Food Bank was unable
Farm Credit West joined with CoBank to
to accept private donations of Arizona
donate more than $35,000 to help food
citrus. As a result, any citrus received
banks meet the ever growing needs of their
was required to be picked by their
community. These funds will be used to
volunteers. Through their efforts, 4,247
maintain and grow their operations, making
pounds of grapefruit were gathered. It
great strides that no family goes hungry in
is through activities such as these that
their community.
Farm Credit West connects with our
Farm Credit West | Winter 2016
9
Community Center The SLO Farm Bureau regularly refer agriculturalists to Farm Credit West for assistance in matters related to farm financing and other areas where individuals and farm operators need deep experience and broad understanding of agriculture. In turn, Farm Credit West staff supports the Farm Bureau as volunteers at events and assists members and business partners in coordinating SLO Farm Bureau projects. We are deeply honored by this award and look forward to working with the SLO Farm Bureau
Children play on a tractor exhibit at the Santa Maria Discovery Museum
for many years to come.
Farm Credit Donates $10,000 to Local Non-Profits
Farm Credit West 2016 SLO Business of the Year
Junior Livestock Auctions
Farm Credit West and CoBank collectively
The San Luis Obispo County (SLO) Farm
donated $10,000 to local non-profit
Bureau recognized Farm Credit West
agriculture seriously. In addition to
organizations that have a solid track-record
as the 2016 Business of the Year at
of demonstrated commitment to their
their annual meeting this fall. This award
communities. Earlier this year, Farm Credit
was distributed for the first time this
West was pleased to award funds to the
year, recognizing a SLO Farm Bureau
Santa Maria Discovery Museum and the
member or partner that has exemplified
Kings Fair Foundation.
outstanding support of the agriculture
In 2016, the Santa Maria Discovery Museum celebrated their 20th year as the only children’s museum in Santa Barbara County. With the donated funds, the Museum plans to create new exhibits featuring local agriculture; specifically, a Farm to Table exhibit and a Science of Farming exhibit. The Kings Fair Foundation plans to use the donated funds to maintain and improve the Kings County Fairgrounds, including the livestock barns and exterior and interior paint of the fair buildings.
industry. This award
we take investing in the future of our college scholarship program and our support of the FFA, Farm Credit West visits Junior Livestock Auctions throughout Arizona, California, and Nevada to purchase or add-on to animals for sale. In 2016, Farm Credit West took an active role in over 30
not only acknowledges Farm Credit West’s support of local agriculture operations in the course of its day-to-day operations, but also our service in the community that strengthens farming, ranching and viticulture. Throughout the years, Farm Credit
If you have a recommendation for an
West has enjoyed
organization in your community that
a close relationship
would be an ideal candidate for this
with SLO Farm
award in 2017, please contact your
Bureau members
loan officer.
and Directors.
10 SPOTLIGHT | Winter 2016
As a member-owned lending institution,
Farm Credit West staff from Templeton with Dan Sutton, President of the SLO Farm Bureau (far right)
Community Center 2016 – 2017 Holiday Schedule Christmas Day Monday, December 26 u
New Years Day Friday, January 1, 2017 u
Martin Luther King, Jr. Day Monday, January 16, 2017 u
4-H student shows her lamb at a FCW sponsored junior livestock auction.
President’s Day Monday, February 20, 2017
Junior Livestock Auctions throughout
American AgCredit, Colusa-Glenn Farm
our territory.
Credit, Fresno Madera Farm Credit,
u
Golden State Farm Credit, Yosemite
Memorial Day
Most recently, Farm Credit West staff was present at the 2016 California Mid-State Fair Junior Livestock Auction in Paso Robles. At this event, there were 817 lots
Farm Credit, and CoBank) to sponsor
Monday, May 29, 2017
the California FFA at their upcoming
u
Blue and Gold Gala.
Independence Day
sold with gross proceeds exceeding $2.0
The Gala, to be held on Wednesday,
million. Farm Credit West purchased all
February 22, 2017 at the FFA Center in
Tuesday, July 4, 2017
or part of 10 animals of children related
Galt, is a celebratory event, focusing on
u
to Farm Credit West customers and add-
students’ achievements, the extraordinary
ons for 21 animals.
growth the California FFA has realized over
Farm Credit Invests in California FFA Farm Credit West is passionate about engaging youth with the agriculture industry. As such, we are extremely pleased to play an integral part in continuing support of the California FFA. Earlier this fall, we announced our partnership through the Farm Credit Marketing Alliance (including
Labor Day
the past 10 years, and highlight the role
Monday, September 4, 2017
the agriculture industry plays in ensuring
u
the future of agricultural education.
Columbus Day
This sponsorship is just part of Farm
Monday, October 9, 2017
Credit’s ongoing commitment to the
u
84,000 members of the California FFA.
Thanksgiving Day
Through this partnership, Farm Credit West is assisting in the development of a much-needed sign in front of the California FFA Center, the headquarters for FFA state operations, as well sponsoring proficiency awards and the leadership development continuum, which serves over 14,000
Thursday, November 23, 2017 u
Christmas Day Monday, December 25, 2017
students annually.
Farm Credit West | Winter 2016 11
Achieving Success as a Young, Beginning, and Small Farmer Farming and ranching has always been hard. But breaking in as a young farmer or rancher can be nearly impossible. Capital, land and healthcare are all major obstacles in today’s economy, and the competition is fierce. The need for young, beginning, and small (YBS) farming/ranching is increasing as the average age of an American farmer is 57. With almost onequarter of all farmers expected to retire in the next twenty years, greater focus, creativity and resources are required to keep America farming.
The Issues:
Land Availability Purchasing or leasing land to farm on is equally as challenging. Across the country, climbing land prices and competition with the development market have made
Capital
it increasingly difficult
Farm and ranch real estate is more
they can afford. Over the
expensive than ever. Average land prices have doubled in the last ten years leaving many farmers unable to pay for their land using just their profits. Increased debt from student loans is also making it difficult for young people to access the credit and capital needed. On top of all of that, three quarters of new farmers don’t come from farm backgrounds, meaning they won’t inherit
for farmers to find land last decade the average cost of farm real estate has more than doubled. Approximately 70% of the nation’s farmland will turn over in the next 20 years. The right steps need to be taken to ensure that the next generation is equipped to handle the transition, and that the farmers and ranchers have access to the land for generations to come.
family land. Capital is the top obstacle
Healthcare
for YBS growers to overcome.
About three in four farmers are selfemployed, so they don’t have access to employee-sponsored health insurance.
12 SPOTLIGHT | Winter 2016
Matt McCue and Lily Schneider of Shooting Star CSA survey their fields in Fairfield, CA
Tight profit margins tempt many into
By providing our farmers and ranchers
including YBS customers. Farm
skipping coverage altogether. In a 2011
with educational and leadership training
Ownership loans can provide access to
survey it was discovered that healthcare
opportunities, financial management
land and capital. Operating loans can
ranked as the third largest obstacle to
seminars and a knowledge base from
assist beginning farmers in becoming
new farmers, just after access to capital
their banker’s perspective, Farm Credit
prosperous and competitive by helping
and land. Newer programs like the
West can assist young agricultural
to pay normal operating costs, open
Affordable Care Act are a solid option
operators to succeed.
doors to new markets and marketing
for farmers like this, especially in small operations with one or two laborers. However, this also creates new burdens on larger operations. It is estimated that meeting the law’s minimum health plan adds about $1 per hour, per field hand. This can add to the already steep price of doing business.
How Farm Credit West Can Help
I look to Farm Credit’s support of us as an investment to beginning farmers and young people in general. Matt McCue, Shooting Star CSA
Farm Credit West recognizes that preserving the future of agriculture means making sure young farmers, ranchers and agribusiness people have a strong business background and financial knowledge base which allows them to successfully manage their operation, now and in the future.
Farm Credit West also partners with
opportunities, assist with diversifying
Valley Small Business Development
operations, and so much more. Through
Corporation and the USDA Farm Service
the Microloan programs, beginning
Agency. These agencies assist Farm
farmers and ranchers have an important
Credit West with financing requests that
source of financial assistance during the
are slightly out of scope occasionally
start-up years.
Farm Credit West | Winter 2016 13
TECH WATCH
Protecting your Financial Identity from Cybercrime By Michael Levin, CEO / Founder of the Center for Information Security Awareness Almost every day in the news
• Never send personally identifiable information or credit
we hear about the rapid growth
of cybercrime involving hacking, computer viruses, and identity theft, including the impact they have on everyone. When you see the countless ways that cybercrime can hurt your financial identity, then maybe you’ll begin
card numbers via email
We sometimes like to believe that the Internet is a safe place just because we try to avoid risky Internet sites or web use. However, threats can come from the most unsuspected sources, which is why it’s important that all information taken off the Internet should be considered suspect until confirmed otherwise by separate information from another source.
to understand why it’s so important to do everything
Wireless internet devices, including mobile smartphones,
you can to minimize this risk and vulnerability.
watches and wearable fitness bands are constantly exchanging
Let’s look at the risk of using the Internet:
data across different internet-based systems. Many users are
Malicious software, or malware, is a term used to describe many closely related threats such as computer
unaware of how many different online applications or accounts they have open at a given time, and on which device.
threat. Malware can be used to disrupt networks and
Safe device management entails a three-part process:
communications, steal data, forward spam, commit identity
First, protect your device before you connect. Know your
theft, or any number of other malicious and costly tasks.
device’s wireless features such as Wi-Fi, Bluetooth, NFC,
viruses, Trojans, spyware, and bots, and is a constant
Identity theft is also on the rise, and is now one of our fastest growing crimes. Claiming millions of victims and costing billions of dollars each year.
location tracking, and media sharing. Each of these can be a potential breach point if left unsecured. Second, connect safely. Avoid connecting to free public Wi-Fi networks. Cybercriminals often create fraudulent free Wi-Fi networks
Email is the best way to deliver viruses and other malware
that can be used to steal information and plant malware on
because the cyber criminals rely on your predictable
any device that connects. Third and finally, practice safe
behavior to open the infected emails and unleash the
usage once you connect. Be aware of where your data
infection on your computer.
resides. What data is stored on your physical device? Is it
When dealing with email every day we need to change our behavior and consider the following recommendations: • Slow down when dealing with email • Stop automatically clicking on every email and
attachment you receive!
being shared via the Cloud? If so, how often does it refresh, and who has been granted access rights? Are the settings sharing your data? Remember, we are all connected in the Internet of Things world. Our online activities have the potential to not just affect our families and colleagues, but also the broader
• When you see a suspicious email you are not sure of,
digital communities we encounter every day. Criminals are
now relying increasingly on ways to hack your devices.
don’t click — research
• Ignore spam and delete
Each of us plays a responsible part in cybercrime prevention
• Watch out every day for phishing email scams
through ongoing awareness and best practices to secure
14 SPOTLIGHT | Winter 2016
the Internet of Things.
2017/18 Scholarship Applications Now Available Farm Credit West is committed to supporting the role of education in agriculture’s future. For the past 22 years Farm Credit West has provided scholarships to 202 scholars and committed over $737,000 to this program. Scholarship applications are due
The application and guidelines can be
an entering or current college student
under Community Support. For those
enrolled in agricultural programs and
renewing scholarships, please submit final
exhibit academic excellence by achieving
college transcripts to Farm Credit West
a GPA of 2.7 or higher. They must also
by July 1, 2017. If you have any questions
be a customer of Farm Credit West or the
about the scholarship program please
spouse or dependent of a Farm Credit
email scholarships@farmcreditwest.com.
February 15, 2017. Applicants must be
found at www.farmcreditwest.com
West customer.
2016 Renewing Scholarship Winners: Bridget Adam, Santa Maria, CA Justin Adam, Santa Maria, CA Maggie Boneso, San Miguel, CA Aaron Brown, Hanford, CA Remington Campbell, Brawley, CA* Gavin Chohan, Yuba City, CA Ethan Driver, Knights Landing, CA Kristen Droogh, Lemoore, CA Austin Fernandes, Tulare, CA Lauren Friend, Tulare, CA Alyssa Galhano, Visalia, CA Matthew Geis, Bakersfield, CA Mitchell Harry, Elk Grove, CA Emily Herzog, Winterhaven, CA* Mazie Jameson, Visalia, CA Audra Jones, Orland, CA
Kayla Kerr, Buckeye, AZ* Kaycee Larios, Holtville, CA* Thomas Larson, Hanford, CA Cole Martin, Tulare, CA Sydney Parsley, Buckeye, AZ* Elizabeth Parsons, Bakersfield, CA Rumyn Purewal, Yuba City, CA Garrett Rasmussen, Dixon, CA Allison Schindler, Buckeye, AZ* Rajvir Sohal, Yuba City, CA Theresa Sweeney, Visalia, CA Kaitlin Swickard, Susanville, CA Navreen Thandi, Clovis, CA Erin VanGrouw, Visalia, CA Hannah Wilson, Clarksburg, CA Madeline Wisecarver, Hanford, CA *Recipient of previously received FFA Scholarship
Farm Credit West | Winter 2016 15
Navigating the Economic White Waters By Dr. David M. Kohl
percent. One of the most significant is cash rent land agreements. Businesses with top profitability, on average, pay $50 less per acre in cash rents when compared to businesses in the lowest profitability level. Next, many producers have strategically identified savings in input costs. The decline in this year’s fertilizer and energy costs are definitely a relief for many. In diversified operations, some producers are managing and utilizing manure in different ways to reduce cost and increase efficiency of use. However, in economic white waters, the astute navigator is careful not to cut the wrong costs. For example, a lender recently shared with me that one of his producers eliminated crop insurance to reduce expenses. After a line of hailstorms pounded the area like class 5 rapids, the economic fortunes of the business were turned upside down. Focusing on the right costs to cut is vital. In fact, careful and strategic cuts in inputs costs can increase profitability by up to $50 per acre. One adjustment area for many producers is family living costs. Because this impacts the entire family, it may be wise to involve everyone in budget development.
Today’s agricultural economic conditions are similar to a white water rafting experience. With varying levels of difficulty, surprises
Knowing your cost of production is an important part of executing a marketing and risk management plan.
around most corners and changing flows, a good plan, level-headed teammates and of course, an experienced guide
What adjustments have producers made
are critical for a successful journey. For
for this leg of the journey? Cost-cutting
producers, adjustments must be made
is priority number one; both fixed and
to circumvent obstacles and challenges,
variable costs. The Center for Farm
while still positioning the business to
Financial Management’s analysis of
capitalize on opportunities and forward
FINBIN data shows several differences
movement. Innovation and creative
between businesses in the top 20 percent
thinking will be critical tools for the journey.
of profitability and those in the lowest 20
16 SPOTLIGHT | Winter 2016
Many producers started the process of writing a check each month from the business to the family for living costs. Top-level producers have cut family costs in the range of $20 to $50 per acre. This is particularly helpful for those that accumulated expense excesses during the recent commodity super cycle.
On the other side of the equation, many producers committed to a marketing and risk management plan to capture their window of profit. It requires discipline and rigor but while others wait for the biggest profit possible, good managers take incremental profit all along. Often, those that waited
Events Calendar January 6 – 11: American Farm Bureau Annual Convention & IdeAg Trade Show, Sacramento, CA
as the high point never materialized. However, knowing
January 24 – 26: Unified Wine and Grape Symposium, Sacramento, CA
your cost of production is an important part of executing
January 26 – 28: CA Holstein Convention, Fresno, CA
for maximum profit were forced to sell at much lower prices
a marketing and risk management plan. The profit margin is definitely there for those satisfied with incremental gains, rather than one large pay off. In livestock operations, the price of feed is considerably less than even a few years ago. Some producers are using manure as their most valuable product, particularly with suppressed commodity prices. Others have cut investment costs by scaling back on equipment purchases. Of course, with machinery, a balance between older and newer is required to maintain maximum efficiency long-term. Another practice of the most profitable businesses is outside counsel. Top producers utilize a team of advisors including crop and livestock consultants, lenders, mentors, peers, and other professionals. This method challenges thinking, encourages innovation and breaks the status quo. It is an investment, but
February 1 – 3: Cattle Industry Convention and NCBA Trade show, Nashville, TN February 7 – 9: Colusa Farm Show, Colusa, CA February 8 – 9: CA League of Food Processors, Sacramento, CA February 14 – 17: World Ag Expo, Tulare, CA February 22 – 24: American Pistachio Growers Conference, Palm Desert, CA February 22 – 24: FCW Young Farmer and Rancher Institute, Avila Beach, CA February 22 – 23: Harvest Dinner, Yuma, AZ February 23 – 25: Young Farmer & Rancher Conference, Modesto, CA
one that can increase profitability as well as sustainability.
February 23 – 25: NAIDC Western Region Dairy Challenge, Location TBD
Much like navigating a winding and rushing river, today’s
February 28 – March 3: AgSafe Conference, Monterey, CA
economic raft must be equipped with the right practices and
March 2: California Citrus Mutual Showcase, Visalia, CA
people. Steering through economic white waters is laden with challenges, but can also make way into a rewarding opportunity.
March 5 – 8: CA Small Farm Conference, Location TBD
obstacles can be the recipe for success in today’s churning
March 7 – 9: Pinal 40 — Arizona Ag Experience, Maricopa, AZ
and swirling economic white waters.
March 13 – 15: Women of the Vine Symposium, Napa, CA
Innovative and proactive solutions along with anticipation of
March (Day TBD): Western United Dairymen Annual Convention, Modesto, CA
Customer Appreciation Dinners Save the Date for your local Customer Appreciation Dinner, invitation to follow. • Yuma and Imperial Branches — March 21 • Rural Arizona Safford Branch — March 22 • Tempe Branch — March 23 • Woodland and Yuba City Branches — March 28 • Ventura and Carpinteria Branches — March 29 • Templeton and Santa Maria Branches — March 30 • Kern Branch — April 5 • Dinuba, Hanford, and Tulare Branches — April 6
Farm Credit West | Winter 2016 17
Farm Credit West’s 2020 Vision At Farm Credit West, we are always striving to build a stronger, fiscally sound, and highly valuable organization for our customers/owners. From now through 2020, our management team is identifying and leveraging technology that will enable customers to conduct business with Farm Credit West electronically.
Our Vision Over the next four years, Farm Credit West is looking for ways to use technology to improve our customer experience. We have identified three target areas: • Customer/Stockholder Communication
Focus on customer needs by
leveraging new technology and
innovation. • Underwriting/ Loan Officer Mobility
Provide tools necessary to increase
the value of Farm Credit West staff
time on-site at customer/stockholder
operations. • Business Growth
Utilize technology to pursue new
business opportunities and develop a
comprehensive marketing program.
At Farm Credit West, our management team is identifying ways to lean into technology for efficiency and survival. We are committed to reducing transaction and business complexity for our customers without compromising security or internal controls. As we enter our next 100 years of business, we are continuing to focus on effectively managing growth opportunities for long-term stability. While pursuing the goals of our 2020 Vision, we are remaining true to our core principles: • Provide competitive rates • Pay a robust and predictable patronage
• Deliver unprecedented service in
18 SPOTLIGHT | Winter 2016
person and on-line
Territory and Office Locations Administrative Office 1478 Stone Point Drive Suite 450 Roseville, CA 95661 916.780.1166 Capital Markets 1446 Spring Street Suite 201 Paso Robles, CA 93446 805.237.0998
Yuba City Woodland
ÂŤ Roseville
Farm Credit West Administrative Office
Carpinteria 1135 Eugenia Place Suite A Carpinteria, CA 93013 805.684.8771
Dinuba
Hanford
Tulare Capital Markets Templeton Kern County Santa Maria
Dinuba 940 W. El Monte Way Dinuba, CA 93618 559.591.9378
Carpinteria Ventura
Hanford
Santa Maria
1111 W. Lacey Boulevard Hanford, CA 93230 559.584.2681
1178 Tama Lane Santa Maria, CA 93455 805.922.7991
Imperial Valley
Tempe
485 Business Park Way Imperial, CA 92251 760.355.0291
3003 S. Fair Lane Tempe, AZ 85282 602.431.4100
Kern County
Templeton
Ventura
Yuba City
19628 Industry Parkway Drive Bakersfield, CA 93308 661.399.7360
175 Cow Meadow Place Paso Robles, CA 93446 805.434.3665
2031 Knoll Drive Ventura, CA 93003 805.477.1020
900 Tharp Road Yuba City, CA 95993 530.671.1420
Rural Arizona Safford
Tulare
Woodland
Yuma
1120 S. 20th Avenue Safford, AZ 85546 928.348.9571
200 E. Cartmill Avenue Tulare, CA 93274 559.684.1478
440 Pioneer Avenue Woodland, CA 95776 530.666.3333
2490 S. 5th Avenue Yuma, AZ 85364 928.344.3200
Tempe Imperial Valley Yuma
Rural Arizona Safford
Farm Credit West | Winter 2016 19
1478 Stone Point Drive Suite 450 Roseville, CA 95661
Wishing You a Year of Abundance
20 SPOTLIGHT | Winter 2016