spotlight The Small and Beginning Farmer Issue
SUMMER 2022
Small but Mighty
Two Farm Credit West Customers Are Making a Big Impact with a Small Operation PAG E 6
CANDID CONVERSATIONS
GUEST ARTICLE
Developing a Business Plan
Riding Out the Storm
PAG E 18
PAG E 2 0
Spotlight SUMMER 2022
3 President’s Message 4
Customer Announcements
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2022 Holiday Calendar
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2022 – 2023 Scholarship Recipients
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Feature Story: Small but Mighty
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rom the Farmer’s Kitchen: F Whole-Grain Matzo
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Community Center
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Dr. Kohl’s Corner: Managing the Economic Shockwaves
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andid Conversations: C Developing a Business Plan
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.
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 and California’s Central Coast, Imperial Valley, South San Joaquin Valley and Sacramento Valley.
Board of Directors Chair of the Board Douglas C. Filipponi. . . . . . . . . . . . Creston, CA Vice Chair of the Board Mark A. Cook. . . . . . . . . . . . . . . . . . Willcox, AZ Joey Airoso . . . . . . . . . . . . . . . . . . . . . Pixley, CA Robert Amarel, Jr. . . . . . . . . . . . . Yuba City, CA Teresa Castanias. . . . . . . . . . . . . . . . . Ivins, UT Catherine Fanucchi . . . . . . . . . Bakersfield, CA
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Guest Article: Riding Out the Storm
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Tech Watch: Building Roadblocks Against Fraudsters
23 Territory and Office Locations
Craig C. Gnos. . . . . . . . . . . . . . . . . . . . Davis, CA Robert N. Hansen. . . . . . . . . . . . . Hanford, CA Blake Harlan. . . . . . . . . . . . . . . . . Woodland, CA Tom Ikeda . . . . . . . . . . . . . . Arroyo Grande, CA Colin Mellon. . . . . . . . . . . . . . . . . . . . . Yuma, AZ Mark Osterkamp. . . . . . . . . . . . . . . Brawley, CA Barry Powell. . . . . . . . . . . . . . . Sacramento, CA Brian Talley. . . . . . . . . . . . . Arroyo Grande, CA Sureena S. Bains Thiara . . . . . . Yuba City, CA
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.
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Spotlight
SUMMER 2022
President’s Message MARK LITTLEFIELD, CEO
The Path Forward
Finding Innovative Solutions Today for Tomorrow’s Challenges Despite optimism that 2022 would be uneventful, the news headlines have been active. Environmental factors, geo-political events, market changes, rising inflation and increases in interest rates by the Federal Reserve have dominated the news cycles throughout the new year. And yet, the world still needs food, fiber and fuel. Agriculture producers in Arizona and California continue their work to deliver high-quality products around the globe, finding creative methods to do so when necessary. At Farm Credit West, we know that some of the most innovative ideas come during the most challenging times. Our staff takes the time to understand you and your operation, crafting tailored solutions that fit your business exactly when you need it. This collaborative environment is essential to our success. For over 105 years, our customers have been at the heart and soul of our business. As we look to the future, and the uncertainty that it may bring, your Board of Directors and Management Team are continually evaluating ways to bolster the strength of the Association. This forwardthinking perspective gives our customer-owners great confidence that this Association will be a stable, reliable source of credit for many years to come. It was with this mindset that the Board of Directors unanimously agreed earlier this year to sign a letter
of intent to merge with Northwest Farm Credit Services. Both associations share a customer-focused culture and have a long history of demonstrating a deep commitment to their local communities. Both associations are successful and have partnered together for many years to jointly finance customers, serve rural home markets and collaborate with operational functions. By joining our two associations, we can be strategically positioned to address the continual changes in the marketplace, ultimately providing greater value to you, our customers-owners. Throughout the remainder of 2022, both associations will take the necessary steps to seek approval from our district bank, CoBank, and our regulator, the Farm Credit Administration. Once obtained, we will distribute a merger proposal to our customer-stockholders for a vote this fall. The merged association is anticipated to begin operations on January 1, 2023. While we are taking steps to prepare for the future, our Association has not forgotten about the needs of today. In this issue, you will read how Farm Credit West is supporting these needs, as we work with growers just getting started and those who have been farming for generations. As we continue to work toward finding creative solutions to your business needs, we are prepared for and look forward to tackling the challenges ahead. ■
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CUSTOMER ANNOUNCEMENTS
Board of Directors Update Congratulations to Doug Filipponi and Mark Cook, who were recently appointed to Chair and Vice-Chair of the Farm Credit West Board of Directors. Thank you to Sureena S. Bains-Thiara for her service as Chair of the Board since 2019.
Doug Filipponi
Mark Cook
Sureena S. Bains-Thiara
2022
Farm Credit West and Northwest Farm Credit Services Announce Merger Plans Farm Credit West is pleased to announce that we are pursuing a merger with Northwest Farm Credit Services. Both associations have signed a letter of intent. Following review and approval by the associations’ regulator, the Farm Credit Administration, the merger proposal will be presented to customer-stockholders of both associations for their approval in the fall. The merged association is expected to begin operations January 1, 2023, under leadership of Farm Credit West President and CEO Mark Littlefield and a management team selected from both associations.
Holiday Calendar (Farm Credit West offices are closed)
Juneteenth National Independence Day Observance Monday, June 20, 2022
Independence Day Monday, July 4, 2022
Labor Day
Monday, September 5, 2022
Columbus Day
Monday, October 10, 2022
Veterans Day
Friday, November 11, 2022
Thanksgiving Day
Thursday, November 24, 2022
Christmas Day Observance Monday, December 26, 2022
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Congratulations
2022–2023 Scholarship Recipients!
Recipients of the Farm Credit West college scholarships have demonstrated dedication and significant contributions to their local agricultural communities. Each student will receive a $1,500 scholarship toward their higher education for the 2022–2023 school year. This scholarship is renewable for up to three years, totaling $6,000, given recipients maintain academic excellence and eligibility requirements. Applications for next year will be accepted starting in December 2022 after fall/winter grades become available to students. Scan the QR code to find more information about eligibility and requirements on our website. Farm Credit West is pleased to provide financial resources to help students achieve their academic goals. These impressive young people are the future of agriculture and we are proud to recognize and support the next generation of farmers and ranchers.
Our 2022-2023
SCHOLARSHIP RECIPIENTS
Hanford, CA
Biology
Hannah Bains
Brooke White
Agricultural Business
Genetics & Biotechnology
Cody Domingos
Jenna Naumann
Agricultural Business
Animal Science/ Pre-Veterinarian
Isabel Regalado
Ashley Cardot
Biology/Animal Sciences
Computer Science
Delainee Fernandes
Conrad Gingg
Agricultural Business/Accounting
Dairy Science
Shyanna Ward
Laura Schletewitz
Experience Industry Management
Agricultural Business
Frank Fernandes
Gweneth d’Artenay
Ag System Management
Agricultural Business
Yuba City, CA
Paso Robles, CA
Calipatria, CA
Tulare, CA
Since the program’s inception 28 years ago, Farm Credit West has provided scholarships to 283 scholars and committed $1,069,000 to this program.
Mary Rosa
Hanford, CA
Tulare, CA
Cochise, AZ
Newbury Park, CA
Fresno, CA
Reiver Falls, WI
Reedley, CA
Coalinga, CA
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F E AT U R E S T O RY
SMALL BUT
MIGHTY
Two Farm Credit West customers are proving they don’t have to have large operations — or even come from a farming background — to make a big impact on their communities. BY SARAH KEARBEY PHOTOGRAPHY BY NATE CASTILLO
FILLING THE GAP Reconnecting Growers with Their
F
or David Kaisel, milling grain is about more than making fresh, flavorful and nutritious flours.
For the beginning farmer and businessman, it’s about reconnecting growers with local consumers, improving his community through education and advocacy, and sparking a return to locally produced and consumed agricultural goods.
Communities Through Local Flour
David owns and operates Capay Mills in rural Capay Valley, California, about 40 miles northwest of Sacramento. There, in a facility in town, he transforms locally grown heirloom grains into fresh, distinctive flours using an artisanal stone mill. When he started his business in 2015, his goal was to give growers in his area a place to process their rotationally Continued on next page
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grown grains. Until the 1950s, California was the thirdlargest producer of wheat in the country. But as wheat processing consolidated, and the cost of land rose, growing grains as a commodity greatly diminished in the Golden State. “I wanted to start a small mill that would feature grains by local growers, ideally who are growing them in rotation with other crops the way they always had,” he says. “I knew farmers who were growing heirloom and specialty grains, but no longer had the infrastructure to process them at a small scale. That was the gap I was most interested in filling.” While most commercial mills require truckloads of grain to process, David can serve farmers growing as little as several hundred pounds of grain in rotation with their other crops. He works with local growers to produce heirloom crops that thrive in the area and produce unique flavors and textures.
In contrast to his industry counterparts, where milling one million pounds a day is a matter of course, David currently mills around 150 pounds per hour — on equipment rated for 300 pounds per hour. He is on a mission to expand his milling capacity to approximately 1,000 pounds per hour with help from a loan from Farm Credit West. David grew up working with food and in restaurants, but until recently had no formal agricultural training. He found support at the Center for Land Based Learning in nearby Woodland, California. There, he participated in the Center’s California Farm Academy and Farm Business Incubator programs, gaining a foundation for modern sustainable farming and building relationships with growers in the area. One of those relationships is with Tim Mueller of Riverdog Farm in Capay Valley. An organic farmer producing yearround vegetables along with hogs, sheep, meat, birds and eggs, Tim has worked closely with David for several years growing native heirloom grains in rotation with his crops. Tim said David’s model of processing locally grown grain for human consumption reflects their shared ethos as place-based farmers.
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Cereals remain somewhere around 60% of the calories we eat worldwide (including rice, wheat, millet and sorghum). And yet with our globalized markets, we know the least about it. DAVID KAISEL | OWNER, CAPAY MILLS
“Feeding [grain] to the animals is fine, but if we get even 5% of it to people, it’s great,” he said. “It also fits in with all the restaurants we work with — they’re excited about it.” Along with his mission to support local agriculture by making grain a viable crop for California growers, David is passionate about educating others about the role that local mills can play in communities. In 1870, there was one flour mill for every 1,400 people in the U.S., he explains. Today, there is just one for nearly two million people. On a scale that massive, not only is the identity of the grains unknown to consumers, but the final product changes drastically. To preserve freshness for shipping across the country, commodity mills use rollers, removing the components of the grain — bran and germ — which contain lipids and cause the flour to spoil within a few weeks. Those components are also what give flour flavor, texture and nutrients. “People taste bread baked with our flour and say they can’t believe it tastes so distinctive,” David says. “Cereals remain somewhere around 60% of the calories we eat worldwide (including rice, wheat, millet and sorghum). And yet with our globalized markets, we know the least about it.” Continued on page 10
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F R O M T H E FA R M E R’ S K I T C H E N
By creating a sustainable local grain and flour economy, David hopes to reconnect producers and consumers in the area and spark conversations on place, culture, sustainability and the environment. Demand for his products has steadily increased, and he currently sells his flours to bakeries and restaurants in Sacramento and the Bay Area, and at farmers’ markets around Northern California. For now, he is focused on expanding his business into a regional milling facility, and achieving economies of scale, particularly with labor costs. Along with the loan from Farm Credit West, he raised more than $100,000 in two weeks through a crowd-funding effort — “the fastest raise-to-target the platform had seen to date,” he adds. The funding will go toward ordering fulfillment software and building a larger mill with the capacity to process 750-1,000 tons per year and contract with area farmers to grow unique grains above market rates.
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What makes farming such an appealing endeavor is how much of a community there is and how much everyone helps each other. DAVID KAISEL | OWNER, CAPAY MILLS
“What makes farming such an appealing endeavor is how much of a community there is and how much everyone helps each other,” David muses. “It’s a lot of work and hard to get it off the ground, but when I see how much enthusiasm and interest there is out there for retailers, chefs and restaurants — when they realize how different this is from what we’ve been eating for the last 150 years — it’s very satisfying.” Learn more about Capay Mills at capaymills.com.
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Whole-Grain Matzo Recipe courtesy of David Kaisel, owner of Capay Mills. Adapted from Mark Bittman’s New York Times Olive Oil Matzo recipe. I NG R ED I EN TS 2 cups (260g) flour — 200g Capay Mills Sonora heirloom white wheat flour and 60g Capay Mills whole-grain (dark) rye flour ½ tsp. kosher salt ⅓ cup high quality extra virgin olive oil ½ cup water sea salt (optional) D I R ECT I O N S STEP 1 Preheat your oven to 500º. If you have
a pizza stone, use it.
Put flour and salt in a food processor fitted with a steel blade. Pulse a few times to mix. In a separate bowl, whisk the oil and water together, and then add to the flour with the processor running. Process until the dough forms a smooth ball that doesn’t stick to the blade or bowl and isn’t sticky to the touch. You may have to add a smidge of water to get it to cohere. STEP 2 Cut the dough into 12 equal portions.
Roll into balls about the size of a small clementine, and then flatten into a disc. You should cover the discs with a kitchen towel so they don’t dry out too much while you’re working. Roll out 1 ball on a wellfloured board until it is so thin you can basically see through it.
STEP 3 Put each matzo on an ungreased baking sheet and sprinkle with the sea salt. They cook very quickly — no more than 2-3 minutes per side, until bubbly and turning brown. Flip to the other side, and cook for another minute or so keeping a close eye on the bread. If you have a gas cooktop, you can pull them out before they become fully browned and finish by putting them directly over the flames for those nice burnt bumps that make matzo so good. Repeat the process for the remaining dough, letting the matzo cool before eating.
TURNING THE TIDE
Making a Difference Through Sustainable Winemaking
N
estled in beautiful Santa Ynez Valley, about 10 miles off California’s central coast, Alisa Jacobson’s wine-grape vineyards are unique from the surrounding ones: One vineyard is certified organic and the other, sustainable.
The distinctions are important to Alisa, who goes by AJ and who has been interested in sustainable farming since she was a young girl. “After the last couple years of the pandemic, people are craving lifestyle changes,” she says. “I see a trend toward making sure we’re living more sustainably and health consciously and understanding the food we’re eating.” A winemaker by training, AJ started her wine label, Turning Tide, in 2020 with the help of a loan from Farm Credit West. After a distinguished career
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I see a trend toward making sure we’re living more sustainably and health consciously and understanding the food we’re eating. ALISA JACOBSON OWNER, TURNING TIDE
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with Joel Gott Wines, in which she helped raise the visibility of the label, AJ decided she was ready to showcase some of the organic and sustainable vineyards she’d come across during her career, in addition to growing her own. “I wanted to make wines from special sites I felt deserved a little more show,” she explains. “I also wanted to work on smaller blends, and ‘get my hands dirty’ again.” Turning Tide wines focus on grapes from cooler ocean regions, which slow the ripening process and result in lower-alcohol wines. AJ believes that this allows the unique facets of the wine to shine. From her two vineyards and several others she works with in California and Oregon, she makes several varietals, including Chardonnay, Pinot Noir, a Grenache-based red blend, a Chenin Blanc-based white blend, Sauvignon Blanc, and Picpoul de Pinet. She also has a Cabernet under a label called “AJ.” She has been interested in sustainability from a young age. Growing up in the Sacramento-San Joaquin BayDelta area, she watched as the nutrient-rich farmland around her was converted to housing and the impact that had on the natural environment, including water
In addition to avoiding pesticides and herbicides and growing in areas with ample rainfall, AJ bottles her wine in lightweight recycled glass and uses compostable labels.
resources. Since then, she has made it her mission through her work as a winemaker to both create wine in a sustainable manner and educate others on the importance of sustainable farming. In addition to avoiding pesticides and herbicides and growing in areas with ample rainfall, AJ bottles her wine in lightweight recycled glass and uses compostable labels. The lightweight bottles reduce the number of trucks needed to ship her wine. She’s also committed to the principles of regenerative agriculture — farming in a way that captures carbon. “We need to change the way we think about how we’re farming and living in order to mitigate the effects of climate change,” she says. Before she moved to the Central Coast, AJ was a resident of Santa Rosa in northern California for 20 years, where she frequently experienced the threat of wildfires. To help her industry understand the impact that these fires can have on vineyards and growing, today she advocates for funding and research in hopes that more can be understood about how to deal with smoke exposure in vineyards. One of those ways may be establishing chemical baseline markers.
“Crop insuring definitely helps, but it’s not a business model,” she says. “We have to ask ourselves how much risk we want to take.” Despite the risks, when it came to starting her business, AJ says the biggest challenge she faced was a need for capital. But with Farm Credit West helping to streamline the loan process, she was able to secure funds for operating expenses, purchasing grapes, glass and packaging. For anyone considering starting an agricultural business, she has words of encouragement. “There’s no better time to start than the present,” she says. “The environment seems a little scary, but if the market is doing well, like wine, take the leap and follow your passion.” Since she began a year ago, Turning Tide wines have been well received, sales have been strong, and she recently started working with a distributor. “Wine is great because people really respond when they enjoy it,” she says. “It’s fun to see people enjoy something that you created and curated.” ■ Learn more about Turning Tide Wines at turningtidewines.com.
Farm Credit West’s Micro-Loan Program Meeting Beginning and Small Farmers Where They Are
“Young and beginning farmers are crucial to the sustainability and long-term success of the agricultural community and rural towns in Farm Credit West’s territory. The Association’s Micro-Loan program is a fantastic tool for individuals who’ve demonstrated a strong work ethic and high character to access the credit they need, turning their dreams into reality.” DAN CLAWSON, CHIEF CREDIT OFFICER
Introduced in 2021, the Association’s Micro-Loan program meets beginning and small farmers where they are by offering moderate flexibility and unique credit options aimed at supporting their future success. If approved, qualified borrowers can receive a loan or lease up to $75,000, to be used as working capital or for other operating needs, equipment purchases, or even as a down-payment for certain other loans, like FSA, VA or other government-sponsored programs. Farm Credit West staff meets with the prospective customer, working with them to build a unique solution that fits their needs. As the stories on these pages tell, this customized loan program can help kick-start micro-loan candidates into a successful career in agriculture that might otherwise be unavailable to them. ▶ To learn more about Farm Credit West’s Micro-Loan program, contact your local branch.
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COMMUNITY CENTER
Farm Credit West Sponsors Western Classic Junior Dairy Show SINCE 2012, the Western Classic Junior Dairy Show has hosted hundreds of junior exhibitors, ages 5-21 from all over the Central Valley. This multi-day event has grown into the largest junior dairy cattle show in California. Participants show their cattle, attend various clinics and make new friends with others who are passionate about agriculture and the dairy industry. This year, the event hosted its 10th anniversary show, located for the first time in the Farm Credit Dairy Pavilion at the International Agri-Center in Tulare. Over 200 kids participated, showing 300 heads of cattle. Farm Credit West Vice President and Lead Chairperson of the event, Lauren Evangelo reflected, “Our 10th Annual show was a great success. It was wonderful to have dairy enthusiasts all together again.” This event is facilitated by local volunteers and supported by businesses and individuals in the community. Educational opportunities, like the Western Classic Junior Dairy Show, that excite the next generation of farmers, are important to the future of the agricultural industry. Farm Credit West is proud to be the event sponsor of the 2022 show and looks forward to many more in the future.
AT RIGHT : Farm Credit West Staff Member Brittany Black attends the Western Classic with her family. This was Brittany’s daughter’s first time competing in the show.
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YF&R Club Enjoys Industry Tours Sponsored by Farm Credit West Student members of Hancock College’s Young Farmers and Ranchers Club attended a series of industry tours sponsored by Farm Credit West. Over several days, students saw agriculture in action and learned firsthand about various commodities in California. First, the students learned about agricultural water supplies at the Semitropic Water Storage District and Kern County Water Agency Banks. Then they visited a nearly closed loop dairy farm and saw new calves and learned about methane digesters. The group finished their tours with a visit to Setton Farms, the largest pistachio processing facility in the world. This was the first industry tour trip for these students since this program was canceled in 2020. Farm Credit West is happy to support these local educational opportunities for future agricultural leaders and is looking forward to supporting adventures like these for many years to come. PICTURED: Young Farmer Rancher Club members learn about different aspects of agriculture during their multi-day industry tour.
Farm Credit West Participates in Forum Focused on Young, Beginning and Small Farmers
Imperial Staff Shares Wisdom During Ag Careers Explorer Recently, Bill Collins, Senior Vice President and Daniel Litz, Vice President in the Farm Credit West Imperial office, participated in the El Centro FFA Ag Careers Explorer Q&A in partnership with Farm Smart and University of California: Desert Research and Extension Center. FFA students joined the Ag Careers Explorer information session virtually to learn from Bill and Daniel about their positions at Farm Credit West and what led them to choose a career in the agribusiness field. Both staff members shared about their background, education and words of wisdom.
To watch the recording, scan the QR code.
Farm Credit West attended Farm Credit Administration’s first annual National Forum on Serving Young, Beginning and Small Farmers and Ranchers held in Fort Collins, Colorado. Farm Credit associations from all over the United States gathered to share ideas on how to support customers who are starting their farming journey and different ways to build on current programs. Leaders from Colorado State University, USDA and the Farm Service Agency also attended to share their perspectives and provide valuable information. We look forward to building on these conversations and what the future will hold for young, beginning and small agricultural producers in our chartered territory. To read more about Farm Credit Association’s efforts to strengthen service to these individuals, please visit fca.gov/bank-oversight/ young-beginning-and-small-farmer-lending.
ABOVE: Daniel Litz (left) and Bill Collins (right) answer questions from FFA students.
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D R . KO H L’ S C O R N E R
Managing the Economic
SHOCKWAVES By Dr. David M. Kohl
Who remembers that a little over two years ago oil prices were negative? Fast-forward to today, and we are seeing triple-digit prices with daily fluctuations in double digits that send chills through businesses and consumers. The ripple of energy prices can be felt through the agriculture industry with increased prices for fertilizer, sprays, transportation and any input that is directly or indirectly tied to the energy industry. Next, global markets are being impacted by sanctions, weather and possible supply chain disruptions resulting from global conflicts and political ideology. Some demographics, such as the baby boomer and veteran generations, indicate that these times are very reminiscent of the late 1970s. During that period, inflation was in double digits with stagnant economic growth, otherwise known as stagflation. Land was the investment of choice in the agriculture industry. Markets were uncertain as world leaders used agriculture trade in negotiations between government and military strategy. In terms of managing businesses then and now, let’s dust off some of the strategies that have stood the test of time as the economic shockwaves come fast and furious.
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As global threats intensify, taking ownership of your business finances is priority number one. Whether operating a business or personal household, financial liquidity is often the chokepoint. The ability to generate working capital and turn it into cash that meets short-term obligations is essential. Does your balance sheet have a current ratio above 2:1? Is your working capital 25% or more of business expenses? Is your working capital above 200% or 2:1 of your total principal and interest payments on term debt? While cash in the bank earns very little interest in the current marketplace, it brings peace of mind, the ability to pivot and block adversity, and the power to take advantage of opportunities that may have immeasurable value. Modesty concerning debt level is another priority. Financial leverage without the backup of the aforementioned working capital can be very punishing to a business when sharp, adverse economic cycles occur. Young farmers and ranchers as well as growing businesses often have larger amounts of debt, which requires other factors to offset the risk of debt. If your debt to asset ratio is above 50%, strong operating efficiencies, production cost control, and a marketing and risk management program are critical. Modest family living withdrawals and occasionally cutting back on some costs during adverse economic cycles will be a priority, despite inflating personal expenses. Similar to the economic cycle marked by high inflation in the late 1970s, the ability to adapt, innovate and plan will be a premium strategy. Assessing alternatives for inputs or diversification of
Similar to the economic cycle marked by high inflation in the late 1970s, the ability to adapt, innovate and plan will be a premium strategy.
enterprises in a changing domestic and global marketplace must be considered. A plan, with backups, is critical in a very fluid economic environment where a decade worth of change occurs in a matter of weeks. Farm and ranch businesses that managed through the inflationary years of the 1970s, followed by the farm crisis era of the 1980s, were very resilient. They were focused, agile, and sought new ways to navigate the economic shockwaves. These managers were open to education and help from support networks such as lenders, advisory groups, and mentorship for financial and emotional balance. Similar attributes will be important when navigating the shockwaves in today’s volatile economic environment. ■
Dr. David Kohl energizes agricultural lenders, producers and business professionals with his keen insight into the agricultural industry through extensive travel, research and networking around the globe. He is a Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship at Virginia Tech, Blacksburg, VA. Dr. Kohl has traveled nearly 10 million miles in his career and conducted over 7,000 workshops and seminars for a variety of agricultural audiences. Dr. Kohl’s personal involvement with agriculture provides a unique perspective into the future trends of the agricultural industry and economy.
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C A N D I D C O N V E R S AT I O N S
DEVELOPING A BUSINESS PLAN Laying Groundwork for the Future By David Rocha, Senior Vice President, Tulare County
B
eginning a career in agriculture is an exciting journey. There is a lot to learn — like the intricacies of the crop, weather and soil. Getting your hands dirty at an existing agricultural operation is a great place to start learning, and as your knowledge grows over time, you may be ready to make the leap and start your own business venture. This is where real-world experience meets thoughtful planning and can be captured in an important document — a business plan. At Farm Credit West, this is the first document we look at when considering a new loan to beginning farmers.
S
A
R
T
Specific
Measurable
Achievable
Relevant
Time-bound
State exactly what you want to accomplish (Who, What, Where, Why)
How will you demonstrate and evaluate the extent to which the goal has been met?
Is your goal challenging, but within your scope?
How does the goal tie into your key responsibilities?
Set one or more target dates. Include deadlines, dates and frequency.
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M
The purpose of a business plan is to identify a strategic roadmap for your business and articulate your vision. It does not need to be overly complicated — oftentimes an overview of 1-2 pages can be enough. The best business plans include the operation’s production targets, cost estimates — like labor and equipment — and a sustainable revenue model. It also outlines the long-term goals and objectives of the operation. At first glance goals and objectives may seem identical, but there are some key differences. Goals are broad, abstract and difficult to measure and need to be complemented by a set of SMART objectives. SMART stands for: specific, measurable, achievable, relevant and time-bound.
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The plan should also demonstrate an understanding of market trends and potential risks for future years. This information can be found at research institutions like the University of California, Davis, who publish annual cost studies on various commodities. Your local Farm Service Agency (FSA) offices can also assist with previous published reports and analyses. You may also check with the commodity board or association for your crop. We encourage new farmers to seek mentors and others in the agricultural industry to review the draft business plan and offer suggestions. Nothing beats candid feedback from experts who have been in the industry for decades and weathered market fluctuations. These individuals will provide a wealth of knowledge from an outside perspective that is less familiar with the day-to-day operations of your business. Once your plan is finalized, visit a local Farm Credit West office to begin the lending process. Our experienced staff will guide you through the journey and review your business plan, budget, credit history, financial statements and tax returns. We also take into consideration your field experience and understanding of market trends. By establishing an open dialogue and trusted relationship with your lender in the early stages of your business, you will have a contact to reach out to as your business progresses and someone you can lean on in good times and bad.
By establishing an open dialogue and trusted relationship with your lender in the early stages of your business, you will have a contact to reach out to as your business progresses and someone you can lean on in good times and bad. As you continue along the path as a new farmer, consider becoming active in your community and attending industry events. Meeting others who are on the same journey as you or established in their farming operation can lead to greater opportunities and information sharing. UC Cooperative Extension, local farm bureau and other agricultural associations provide ample networking opportunities and educational seminars and are great resources to explore. Remember, every operation in agriculture started with a new and beginning farmer. If you do your research, have the tenacity to keep going and develop trusted partners along the way, you will find the pathway to success. ■
David Rocha has served as Senior Vice President — Portfolio Manager for Tulare County 1 portfolio since March 2020 and has been with Farm Credit West for 12 years. David was previously Sr. VP Operations in Tulare overseeing Equipment Finance, Loan Documentation and Collateral Services departments in Tulare and before that was a Vice President — Loan Officer in the Tulare Dairy portfolio. David earned a Bachelor of Science from Cal Poly San Luis Obispo and a Master of Business Administration from Penn State University. He is also a member of the Farm Credit Council Young, Beginning and Small Farmer Workgroup.
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GUEST ARTICLE: Jon Kennedy and Marc Ehlers
Riding Out the Storm How to Manage Rising Costs and Economic Uncertainty in the Wake of the Pandemic By Sarah Kearbey
Many Farm Credit West customers have spent the last several years pivoting their business plans in response to unprecedented shifts in global markets and supply chains related to the COVID-19 pandemic. Today, producers are experiencing a new set of challenges in the form of rising interest rates, soaring gasoline and fertilizer prices, and rapidly increasing inflation, among others. To help customers navigate these uncertain times, we gathered insight from two pillars of the Farm Credit West management team: Jon Kennedy, Senior Vice President for the Tulare Branch in Central California; and Marc Ehlers, Regional Vice President for the Southwest Region in Tempe, Arizona. Each shared both universal wisdom and perspectives unique to their regions. For Marc, one of the most important things for growers to do is know what their costs are and secondly, to have solid, realistic contracts. He suggests growers
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talk to their peers and compare costs, and look down the line at their business. “If you’re in pistachios — a long-term crop — are you going to be able to handle them in 10 years?” he said. “Ask yourself what it would cost you to grow and whether there is a more cost-effective way to get the same result.” He also recommends looking at hard costs like equipment and labor. Old tractors are convenient, but may cost a lot more to run than newer, more efficient models.
Similarly, growers should be analyzing their labor costs, and considering investing in more cost-effective solutions. To that end, some dairies in Central California are converting old barns to a rotary milking parlor, which requires just three or four workers to milk instead of a half a dozen or more, Jon says. For him, maintaining relationships with loyal buyers and suppliers as well as a consistent product is a key business strategy during these uncertain times.
“In times like these, the really good operations continually try to get better, rather than sitting on their laurels,” Jon said. “Like Farm Credit West, they’re always trying to improve what they do.” Both Jon and Marc agree that hedging in the futures market can provide producers with an opportunity to guarantee a sale. “If you can lock in a price in the market that allows you to make money, you may miss out on the highs, but you are at least guaranteed a sale,” Jon said. That kind of certainty may be more valuable in times like these than the chance of making a large profit. “It’s kind of like insurance,” he said. “There are costs to those contracts, but if you have a lot of debt and don’t have the capacity to ride through the tough times, hedging can be a useful tool for you.” Looking at other ways to reduce expenses and increase profits, both suggested producers look at investing in water infrastructure and efficiencies. Farm Credit West’s Irrigation Stewardship Loan and Lease Program can provide affordable access to funds aimed at improving or replacing irrigation systems and wells, resulting in significant savings on both water and energy costs. In the same vein, the Association’s Solar Leasing Program may be a good option for customers dealing with high power costs. With energy costs becoming very challenging in California, saving through a solar array can make a major difference in profitability, Jon says. “If you’re in California and you have a solar array, it may be time to put in a second one,”
Maintaining relationships with loyal buyers and suppliers as well as a consistent product is a key business strategy during these uncertain times.
he said. “Ask yourself where the biggest bang for your buck on capital would be.” With interest rates rising to levels not seen since the last century, growers have to calculate how much debt they think they’ll have in the future and how high they think rates will go, Marc says. “You have to figure out your risk tolerance,” he said. “Can you afford for interest rates to increase 4% to 5%? “If you’re farming, you are already in a business with uncontrollable risks,” he continued. “Try to eliminate as much risk as you can and figure out how to guarantee a profit.” Ultimately, Marc says, growers should be analyzing their relationships and contacts closely, and making sure their buyers are viable. “If you’re buying fertilizer and it seems too reasonable, maybe check again — you don’t want to end up paying twice for it,” he said. “Know your risks. Do everything you can to mitigate them.”
to cut corners during tough times, but rather get creative in looking for ways to increase profitability. For dairies, he says, adding a biomethane digester can help reduce methane emissions as well as offer access to substantial government incentives, grants and an additional income stream. Almond growers can offer a line of salted or seasoned almonds, and dairies can offer products through a creamery that yield more profits, such as yogurt and flavored milk. Harris Farms is a great example of an operation that successfully built a private label on high quality, distinctive beef. He admits there’s risk: these kinds of offerings often require an investment in technology, labor and equipment. But the payoff can be great. “High-quality products made to a high standard and shipped well, get a better premium,” he said. “Quality over time is a benefit in a tough market — people will buy it and pay more for consistency.” ■
For Jon, now is an ideal time for customers to think about diversifying their offerings and providing higher yield products. He encourages growers to resist the temptation
Marc Ehlers has worked in the financial services industry for over 35 years, primarily servicing the dairy industry throughout the United States. Marc currently serves as Regional Vice President for Farm Credit West, prior to which he served as Chief Lending Officer for Farm Credit Services Southwest and managed the San Joaquin Valley Region for Bank of the West, a subsidiary of BNPP.
Jonathan Kennedy is one of two dairy portfolio managers located in the Tulare Regional Office of Farm Credit West. He has been in this position since April 2011. Jonathan has been employed by Farm Credit West, and its predecessor Associations since June of 1989 working in the Bakersfield, Wasco, Tipton, Visalia and Tulare offices starting as a loan officer and working his way up to his current position. Jonathan attended California Polytechnic State University in San Luis Obispo, California and obtained a B.S. degree in Agricultural Management in June 1989.
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Building Roadblocks Against Fraudsters Securing Your Credit Reports By David Guilmette | Farm Credit West Chief Information Security Officer
Nowadays, cyber criminals need only a few pieces of your personal information to drive your current credit identity into chaos. With only a driver’s license and social security number, these fraudsters can steal your identity and open lines of credit with credit card companies, leaving you with massive amounts of debt. In a study done by fintech research company Javelin, the 2021 Identity Fraud Study estimates that identity fraud costs Americans a total of $56 billion, with 49 million consumers (about twice the population of Texas) being victims of cybercrime.
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Credit freezes and locks are similar in that they block others from viewing your credit history but differ slightly. A credit freeze is always free, although it may take a few more steps to thaw your reports when the time comes. A lock can cost money, usually a month-to-month subscription fee for around $24.99, but the process to unlock can be simpler.
HOW TO FREEZE OR LOCK YOUR CREDIT REPORTS Contact each of the three credit bureaus separately: EXPERIAN
Considering these staggering numbers, it is important to take all necessary precautions to put traffic cones around your financial footprint and force these criminals to take a detour. A key step you can take to prevent identity theft is to freeze or lock your credit reports.
Experian’s Security Center can be found at Experian.com or call 888-EXPERIAN.
A credit report lists your bill payment history, debt and other personal financial information. These reports are held by three national credit bureaus: Experian, Equifax and TransUnion. When you apply for a loan at a trusted financial institution, like Farm Credit West, this information may be useful to your lender to supplement their analysis prior to determining approval of your request. However, when a credit report is frozen or locked, no one can access your report or open a new account, unless you take the steps to thaw or unlock them. If you do implement a freeze or lock on your credit, be sure to take proactive steps to thaw or unlock it prior to applying for a loan to avoid unnecessary delays due to your lender not being able to access your credit history.
Visit the TransUnion.com portal to make an account.
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EQUIFAX
Create an account at Equifax.com.
TRANSUNION
When freezing, the bureaus will provide you with a PIN that you can use to thaw your credit when you need to. If you choose to lock your reports, you may be able to download an app that will enable you to unlock your report with just the click of a button on your mobile device. All freezes and locks remain active until you ask the bureaus to remove them.
By taking the appropriate measures to secure your credit reports, you are further protecting your financial information from fraud, keeping you on the road toward a protected identity. ■
Territory and Office Locations Yuba City Woodland
Rocklin
Farm Credit West Administrative Office
Hanford
Dinuba Tulare
Templeton Kern County Santa Maria Ventura
Tempe Imperial Valley Yuma
Rural Arizona/ Safford
ADMINISTRATIVE OFFICE 3755 Atherton Road Rocklin, CA 95765 916.780.1166
KERN COUNTY 19628 Industry Parkway Drive Bakersfield, CA 93308 661.399.7360
DINUBA 940 W. El Monte Way Dinuba, CA 93618 559.591.9378
RURAL ARIZONA / SAFFORD 1120 S. 20th Avenue Safford, AZ 85546 928.348.9571
TEMPLETON 175 Cow Meadow Place Paso Robles, CA 93446 805.434.3665
WOODLAND 440 Pioneer Avenue Woodland, CA 95776 530.666.3333
HANFORD 1111 W. Lacey Boulevard Hanford, CA 93230 559.584.2681
SANTA MARIA 1178 Tama Lane Santa Maria, CA 93455 805.922.7991
TULARE 200 E. Cartmill Avenue Tulare, CA 93274 559.684.1478
YUBA CITY 1800 Lassen Boulevard Yuba City, CA 95993 530.671.1420
IMPERIAL VALLEY 485 Business Park Way Imperial, CA 92251 760.355.0291
TEMPE 3003 S. Fair Lane Tempe, AZ 85282 602.431.4100
VENTURA 2031 Knoll Drive Ventura, CA 93003 805.477.1020
YUMA 2490 S. 5th Avenue Yuma, AZ 85364 928.344.3200
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3755 Atherton Road Rocklin, CA 95765
Solar Financing NOW IS THE TIME TO INVEST IN SOLAR INFRASTRUCTURE.
At Farm Credit West, we offer competitive solar financing that will help you keep costs low and maximize your returns. Contact a FCW Loan Officer today to explore your options. Financing Program Features: • Loan and lease options available •
Fixed purchase option at the end of a lease
•
Project financing during construction
Call 800.909.5050 FarmCreditWest.com
COMMITTED. EXPERIENCED. TRUSTED.
