Winter 2016 Farm Credit West Spotlight Magazine

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

1

Spotlight 3

President’s Message

4

Financial Highlights

5

2016 Interest Payments

5

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

11

Holiday Schedule

Chairman of the Board Joey Airoso............................................. Pixley, CA

12

Achieving Success as a Young, Beginning, and Small Farmer

14

Protecting your Financial Identify from Cybercrime

15

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

16

Navigating the Economic White Waters

17

Events Calendar

J. Dick Eastman................................... Powell, WY Catherine Fanucchi........................ Bakersfield, CA Douglas C. Filipponi...........................Creston, CA

18

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