loans | Field 2 Field

September 28, 2022September 28, 2022

Ag economic conditions strong, but for how long?

Ag economic conditions are still quite strong in 2022, but how long will that last? Nate Kaufman, vice president and Omaha bank executive for the Federal Reserve Bank of Kansas City, spoke during the recent Agricultural Outlook Forum in Kansas City. He told the audience during a presentation that incomes are still in good shape.

“Economic conditions in agriculture are remarkably strong. And I want to start here because this is not something I would have said probably two-and-a-half years ago. And I think it is an important place to start just because of how significantly different conditions are today relative to what we might have said back then. Incomes are incredibly high. We’ve seen commodity prices pick up, and yes, there are very high input costs that are leading to some concerns, but generally speaking, economic conditions in agriculture, with some caveats, are quite strong.”

Land values are a good example of the strength of the ag economic conditions.

“Land values, for example, are about 25 to 30 percent higher than what we might have seen before the pandemic. That was a time that land values had been declining the first couple of months of the pandemic, and it was maybe thought that we would see further declines, but here we are a couple of years later and seeing that conditions are much stronger. Before the pandemic, we worried about gradual increases in loan defaults. We looked at bankruptcy rates, we looked at other things that we thought there was going to be more financial stress and not less going forward. And the reality is that loan delinquencies are at one of their all-time lows, working capital levels are very high, and producers are generally in a strong position. And so, we’re seeing again from a financial picture things are rather strong there too.”

Despite the current strength of the ag economy, analysts expect slower economic growth next year.

‘Six percent growth in 2021 and 2022, that number is expected to be less than one percent, and there are concerns about economic growth in 2023. The second one is inflationary pressure. For those 10 years that we spent in the longest economic expansion on record after the financial crisis, inflation was generally less than two percent. And the Federal Reserve, as many of you may know, has a goal for inflation at two percent. We’re at eight percent, and that’s significantly higher than two. There are concerns about what inflationary pressures might do concerning some of the costs that have been mentioned.”

The other significant headwind is the interest rate.

The last one that I’ll mention then is interest rates. At the end of 2020. If you were to look at some of the projections that Federal Reserve officials would have suggested would be appropriate interest rate policy for 2022, many would have indicated that rates were likely to still be approximately zero by the end of this year. Instead, we’re in a different environment. And this is in large part because of inflation, where we’re now seeing interest rates closer to four to four-and-a-half percent by the end of this year.”

The Ag Outlook Forum was sponsored by the Ag Business Council of Kansas City and Agri-Pulse.

September 24, 2021September 24, 2021

Banks worry about funding mechanism in Infrastructure Package

Banks across America would like to let you know about a small provision in the massive 3.5 trillion-dollar infrastructure package trying to make its way through Congress and get to the president’s desk. That’s a big piece of legislation to pay for, and one way that Democrats behind the bill want to fund it involves the IRS and your bank accounts. All of the bank accounts.

Paul Merski is the Executive Vice President of Congressional Relations and Strategy for the Independent Community Bankers of America. He said one way the administration wants to foot the bill for the infrastructure legislation is “horrible.”

“They would have the IRS look into everyone’s bank account transactions,” Merski said. “The legislation will force all banks to report on any transaction going into or out of an account worth 600 dollars or more. What it means is every account in America will then get monitored by the IRS as banks are forced to send in your information.”

To generate revenue like legislators envision to help pay the cost, Merski said the IRS will basically be assuming that most everyone in America is a “tax cheat.” It’s going to involve banks across the country sending in large amounts of information to the IRS, who will then have to sort through all of it to figure out what’s happening in each account.

The accounts in question include savings accounts, checking accounts, business accounts, personal and business loans, cash transactions, and even international transactions. To find any potential infractions, the IRS would be looking for a needle in a haystack.

“What we’re fearful of is this idea is going to cause a lot of false audits, a lot of false positives, and a lot of white noise,” he said. “The IRS will then be able to subpoena additional information on people’s accounts, to freeze people’s accounts, to garnish people’s accounts if there’s a dispute with the IRS.

“It’s crazy,” Merski added. “They pretend that they are going after millionaires and billionaires, and our question is, why then, do they need everyone’s account transactions sent to the IRS? The last thing we need is to be sending more information and more data to the IRS.”

This is especially concerning for rural bankers. He points out that community banks do 80 percent of all the agricultural lending in the nation, as well as over 50 percent of all the small business lending. They want customers to know that if this goes through, those banks are going to have to report all of your financial transactions, even loan information, to the IRS.

The Independent Community Banks of America are concerned about the privacy of bank accounts across the country.

“We’re worried that our customers don’t know what’s happening with this proposal,” Merski said. “We want you to know it’s not the bank’s idea to be sending all this information to the IRS. It’s the IRS, the Treasury Department, and the administration demanding that the banks report all these transactions.”

He says the typical small business owner, farmer, or rancher has to know about this idea and understand what’s happening in Washington, D.C. They also want farmers, ranchers, and small business owners to weigh in on the topic.

“If this is something that concerns you like it concerns our community bankers, you need to contact your congressmen and senators,” Merski said. “This is overkill: This is a dragnet, and this is the IRS looking to profile people based on their transactions.

“This is a stop-and-frisk against average Americans,” he added. “It’s going to add a lot of cost and compliance burdens against both bankers and the general public.”

April 3, 2019April 3, 2019

USDA makes important updates to farmers.gov website

Agriculture Secretary Sonny Perdue announced says the U.S. Department of Agriculture (USDA) launched two new features on farmers.gov to help customers manage their farm loans, as well as navigate the application process for H2A visas.

“Customer service is our top priority at USDA,” he says. “These new features will help our customers as they manage their farm loans and navigate the H-2A temporary agricultural visa program. In my travels across the country, I have consistently heard people tell us to use more technology to deliver programs at USDA. As we adopt new technology, we are introducing simple yet innovative approaches to support our farmers, ranchers, producers, and foresters. After all, they support the nation every day. It’s my goal to make USDA the most effective, most efficient, most customer-focused department in the entire federal government. Farmers.gov is a big step in that direction.”

In 2018, Secretary Perdue unveiled farmers.gov, a dynamic, mobile-friendly public website combined with an authenticated portal where customers will be able to apply for programs, process transactions and manage accounts.

Navigating the H-2A Visa Process:

Focused on education and smaller owner-operators, this farmers.gov H-2A Phase I release includes an H-2A Visa Program page and interactive checklist tool. It includes application requirements, fees, forms, and a timeline built around a farmer’s hiring needs.

You may view the video at this following link: youtu.be/E-TXREaZhnI

The H-2A Visa Program – also known as the temporary agricultural workers program – helps American farmers fill employment gaps by hiring workers from other countries. The U.S. Department of Labor, U.S. Citizenship and Immigration Services, U.S. Department of State, and state workforce agencies each manage parts of the H-2A Visa Program independently, with separate websites and complex business applications.

Over the next several months, USDA will collaborate further with the U.S. Department of Labor on farmers.gov H-2A Phase II. It’s a streamlined H-2A Visa Program application form, regulations, and digital application process that moves producers seamlessly from farmers.gov website to farmers.gov portal, and then to U.S. Department of Labor’s IT systems.

Managing Farm Loans Online:

The self-service website now enables agricultural producers to view loan information, history and payments.

Customers can access the “My Financial Information” feature by desktop computer, tablet or phone. They can now view:

loan information;
interest payments for the current calendar year (including year-to-date interest paid for the past five years);
loan advance and payment history;
paid-in-full and restructured loans; and
account alerts giving borrowers important notifications regarding their loans.

To access their information, producers will need a USDA eAuth account to login into farmers.gov. After obtaining an eAuth account, producers should visit farmers.gov and sign into the site’s authenticated portal via the “Sign In / Sign Up” link at the top right of the website.

Currently, only producers doing business as individuals can view information. Entities, such as an LLC or Trust, or producers doing business on behalf of another customer cannot access the portal at this time. However that will change in the future.

Google Chrome, Mozilla Firefox or Microsoft Edge are the recommended browsers to access the feature.

About farmers.gov:

USDA is building farmers.gov for farmers, by farmers. Future self-service features available through the farmers.gov portal will help producers find the right loan programs for their business and submit loan documents to their service center.

With feedback from customers and field employees who serve those customers, farmers.gov delivers farmer-focused features to deliver the greatest immediate value to America’s agricultural producers – helping farmers and ranchers do right, and feed everyone.

January 23, 2019January 23, 2019

Farm Service Agency offices will reopen

U.S. Secretary of Agriculture Sonny Perdue says all Farm Service Agency (FSA) offices nationwide will soon reopen to provide additional administrative services to farmers and ranchers during the government shutdown. Certain FSA offices have been providing limited services for existing loans and tax documents since January 17, and will continue to do so through January 23. Starting on Thursday, January 24, all FSA offices will open and offer a longer list of services they’ll offer to farmers.

Additionally, Secretary Perdue announced that the deadline to apply for the Market Facilitation Program has been extended to February 14. The program is designed to help American farmers hurt by retaliatory tariffs. Other program deadlines may be modified and will be announced as they are addressed.

“At President Trump’s direction, we have been working to alleviate the effects of the lapse in federal funding as best we can, and we are happy to announce the reopening of FSA offices for certain services,” Perdue said. “The FSA provides vital support for farmers and ranchers and they count on those services being available. We want to offer as much assistance as possible until the partial government shutdown is resolved.”

The U.S. Department of Agriculture has temporarily recalled all of the more than 9,700 FSA employees. Offices will be open from 8 am to 4:30 pm weekdays, beginning January 24. President Trump has already signed legislation that guarantees employees will receive all backpay missed during the shutdown.

For the first two full weeks under this operating plan (January 28 through February 1 and February 4 through February 8), FSA offices will be open Mondays through Fridays. After that, offices will be open Tuesdays, Wednesdays, and Thursdays, if needed, to provide the additional administrative services. That schedule will be in effect until the government shutdown ends and full funding is restored

Agricultural producers who have business with the agency can contact their FSA service center to make an appointment.

Farm service Agency offices will be able to provide a list of critical services to farmers, which are listed below. The offices are allowed to do so, because failure to perform these services would harm funded programs. FSA staff will work on the following transactions:

Market Facilitation Program.
Marketing Assistance Loans.
Release of collateral warehouse receipts.
Direct and Guaranteed Farm Operating Loans, and Emergency Loans.
Service existing Conservation Reserve Program contracts.
Sugar Price Support Loans.
Dairy Margin Protection Program.
Agricultural Risk Coverage and Price Loss Coverage.
Livestock Forage Disaster.
Emergency Assistance Livestock, Honey Bees, and Farm-raised Fish Program.
Livestock Indemnity Program.
Noninsured Crop Disaster Assistance Program.
Tree Assistance Program.
Remaining Wildfires and Hurricanes Indemnity Program payments for applications already processed.

Transactions that will not be available include, but are not limited to:

New Conservation Reserve Program contracts.
New Direct and Guaranteed Farm Ownership Loans.
Farm Storage Facility Loan Program.
New or in-process Wildfires and Hurricanes Indemnity Program applications.
Emergency Conservation Program.
Emergency Forest Rehabilitation Program.
Biomass Crop Assistance Program.
Grassroots Source Water Protection Program.

With the Office of Management and Budget, USDA reviewed all of its funding accounts that are not impacted by the lapse in appropriation. After the reviewal process, USDA was able to except more employees. Those accounts that are not impacted by the lapse in appropriation include mandatory, multiyear, and no year discretionary funding including FY 2018 Farm Bill activities.

August 29, 2018August 30, 2018

GoFundMe Miracle for Wisconsin Dairy Family

Dale and Karen Cihlar of Algoma, Wisconsin, can vouch firsthand about just how tough things are in the American dairy industry right now. Low milk prices are making it difficult for American producers to get the loan capital they need to stay in operation. The Cihlars were literally down to their last option for more operating money when they turned to crowdfunding through the GoFundMe website. Down to their last chance, they saw a miracle happen.

“Milk prices were down, and we had lost some cattle,” said Karen Cihlar. “We also had a big payment due on our manure storage facility. My husband (Dale) went to some loan officers, looking for a $35,000 loan for livestock because we were down in numbers. We also wanted to pay off a little debt. The bankers told us they weren’t loaning money to dairy farmers at the present time because of low projected milk futures prices.”

“When we asked the loan officers what to do, a lot of them said walk away,” she recalled. “I told Dale that just wasn’t an option. We have six or seven years in this business, everything is paid for, and the farm is ours. No, we weren’t going to walk away. We gotta fight.”

She had noticed in previous weeks that there were other farmers with campaigns on GoFundMe. Karen asked Dale if it was something he wanted to try, and he said “no.” He didn’t want other people to know what’s going on in their business.

“I said ‘if we have to pull a U-Haul up to the house and load up, they’re going to know our business,’” she recalled. “The last loan officer we went to said, ‘do what you have to do and don’t worry about what anyone thinks because they’re not in your shoes.’ That night, Dale told me ‘no to GoFundMe one more time. However, I really felt we should try it.

“I went over to our daughter’s house for some help and we did it,” she added. “We started getting donations right away.

Here’s the rest of the story:

In case you were wondering? The campaign was for the exact amount the family was turned down for; $35,000. The five-month campaign has raised over $90,300! Amazing!