Episode 88: Empowering the Next Generation Through YBS

Main Topics Covered

1. Importance of YBS: Emphasizing the significance of supporting young, beginning, and small farmers as the next generation in the farming industry.
2. Partnerships and Programs: Discussion on various programs like FSA participation loans, AG Start program, Ohio Ag Link, and grain facility loans that aid YBS farmers.
3. Educational Initiatives: Highlighting Ag Credit's role in providing education and resources, including the Emerge conference, to help farmers improve their operations.
4. Challenges for YBS Farmers: Addressing barriers such as land accessibility and high input costs, and offering solutions like reduced interest rates through Ag Link.
5. Ag Credit's Role: Focus on being a relationship lender, providing personalized support and solutions to farmers during both prosperous and challenging times.

 

Transcription

Speaker 1 (00:08):Welcome to AgCredit Said It, your go-to podcast for insights on farm finance and maximizing your return on investment. Join us as we talk to industry leaders, financial experts, and area farmers, bringing you skillful advice and strategies to grow your farm's financial future AgCredit Said It where farm finance goes beyond the balance sheet.

Kendra Heffelfinger (00:38):Welcome back to AgCredit Said It, where this season we're looking at return on investment. I'm guest host Kendra Hefflefinger and I am excited to have our panel with us today. I have with us our Young Beginning and small Farmer advisory group from AgCredit. And with that I have Zach Maag, senior account officer out of our Ottawa office, Cora Willeke account Officer out of our Mount Gilead office, and Brent Orians, our senior account officer out of Bucyrus. So welcome.

Zac Maag (01:05):Thanks for having us.

Kendra Heffelfinger (01:06):I'm glad you guys are here today. I know you guys just came off a big planning session, getting ready for some things, young beginning Farmer related. And with that we'd really like to talk today about some of those programs that are out there for what we call YBS, those Young Beginning and Small Farmers in the Farm Credit System. So with that, let's go ahead and start talking about why we look at YBS. So with that, why is young beginning and small emphasis so important for us at AgCredit?

Cora Willeke (01:37):Yeah, it's absolutely for us here, it's really the next generation of farmers coming in that we're trying to help bring them into the operation. So it's very important to us. So we have some programs that help bring the next generation in.

Zac Maag (01:53):We always want to keep the farming industry going. So for us to be here to help the beginning, the small, the young, that's our main priority.

Kendra Heffelfinger (02:03):That's great. And part of that is not just what we do internally with AgCredit, which we'll get to in a little bit with some of the programs and product lines that we have, but part of it is how we partner with others in the industry to bring that value add, to bring that education even to bring other loan products or participation pieces. And I know Zach, out of your Ottawa office, you have a really good working relationship with the Farm Service Agency and those farm loan managers with their participation loans. Can you tell us a little bit about that and how YBS could benefit from those?

Zac Maag (02:36):Yeah. FSA has been a great partner with AgCredit. FSA has a couple of programs that beginner farmers can participate in. The first one is the down payment program. It helps you buy your first piece of ground with minimum down payment. They look for a 5% down payment and then AgCredit and FSA come in and do some joint financing with them. FSA offers a low interest rate to help them get started. The second option would be a 50 50 program with no down payment. Again, it's to help those beginning farmers to get started. Again, FSA has low interest rates on their program, so it's definitely a beneficial to those young beginning farmers.

Kendra Heffelfinger (03:19):Nice. So with that, obviously work with AgCredit, work with you as an account officer in the office there, but then you also bring that farm loan manager in from FSA. So essentially they'd have two different loans, but you would help coordinate that and even help with the application process.

Zac Maag (03:34):Yeah, usually the first meeting is just with me and then we can bring in the FSA loan officer in and be a separate application with FSA and complete different underwriting with FSA. But again, we're great partners together and we work great together. So it's a smooth process.

Kendra Heffelfinger (03:53):Good. In addition to participating, we have in-house loans that we can do for those geared towards young and beginning. Corey, you want to talk a little bit about those programs and what those look like?

Cora Willeke (04:05):Absolutely. So our Ag Start program is our young beginning small farmer program. Our young is defined as 35 years or younger, small being 350,000 or less of gross income, farm income and beginning being 10 years or less of experience. So that's kind of how our Ag Start program is defined. But with that Ag Start program, we do work with FSA, we have some lower down payments with that program.

Kendra Heffelfinger (04:37):Good. And there's other programs that are out there as well that young beginning and even small operations can capitalize on that may not necessarily be an ag credit loan, but once again, we're partnering with other agencies to do that. A couple of examples of that would be Ohio Ag Link program. I know we had the treasurer of the state of Ohio on a podcast here a month or two ago and talked a great deal about that program and how that works. But just to recap that, Brent, you want to share that AG Link program and what it can do for our young beginning?

Brent Orians (05:08):So yeah, as Kendra said, the program's a great program. What it does is allows us to effectively lower your interest rates on your operating loans. And it's really easy for us to do basically just sign one piece of paper. You do that once a year and we can save two, two and a half percent on your operating interest year over year. Plus you get patronage on top of that like you did in the past.

Cora Willeke (05:29):To add to that, there's no fee, no additional fee for us to do that link loan to get you a lower rate.

Kendra Heffelfinger (05:38):And it's really something that state of Ohio's really backed when the treasurer is on. He talked about the financing that the state of Ohio has said is very important and very key to that program. And it used to be a little bit shorter terms, it used to be a little less dollars to it, but they really enhanced that in the last two to three and it's really been beneficial for more operations than it was in the past. And so it sounds like the state of Ohio is going to continue that program and it's going to maintain the robust nature that it is today. So like Brent said, it's a very easy process. It's application process that we handle through our office at each of the Ag credit branches. And it's information that typically if you're already an Ag Credit member, we have. And so that even simplifies it more. But if you want more information on that really just to reach out to your local office and the account officer and they can help you with that. A couple other programs, I know Grain Facility Loans and eqp are other opportunities that we tend to partner with agencies and help applicants with. I know Brent, you've got some background in those grain facility loans. What does that look like?

Brent Orians (06:51):So yeah, FSA, they offer their farm storage facility loans and basically it's a program that FSA puts on that allows you to construct a bin or other storage facilities. It doesn't have to be a grain bin, it can be refrigeration units like Hay storage Barns, those kinds of things for reduced interest costs. So we partner a lot with FSA on those kinds of things to basically a lot of times they don't pay those until the end of the application until that's built. So sometimes you have to have that bridge of getting it built in the financing there. So we'll come in, we'll finance it on the front end and then FSA will come in on the back end and pay it off getting you that lower interest rate.

Kendra Heffelfinger (07:31):Yeah, another great program that's out there. And that one's not just young beginning, that's for any operation that can qualify based on that facility need. EQP is another participation piece that we can do those bridges for Zach experience that you might have with eqp, have you worked with NRCS at all on those?

Zac Maag (07:52):Yeah, we did a couple in our office. It's a program out there that helps the farmer purchase a piece of equipment for eligible applications and then in turn they get some of the interest back that they paid. So again, it helps 'em update or expand their equipment line while saving some money over the life of the loan.

Kendra Heffelfinger (08:19):Yeah, equipment and if I remember right, manure storage facilities, those are also things that qualify for the EQUIP program. So once again, it's a matter of if we can't do it in-house ag credit's looking for other sources to help their members. Along with that, it's not just about lending money as an institution, we also want to help those young beginning and small farmers troubleshoot ideas, be that sounding board. What are some other ways that we help our members at Ag Credit

Cora Willeke (08:54):One way would note mods. We monitor rates, they go down, we give you a call and we lower your interest rate for a small fee.

Brent Orians (09:05):Another is education. We do a lot to try and get as much information out to our guys as possible. That way they can take that back to the farm, they can update their practices, look at different pieces of equipment, stuff like that that is going to help them bring back more bushels per acre, bring back more dollars per acre that's really going to help grow their operation and keep it going for the next year, 10 years, 50 years. And

Zac Maag (09:30):Just how we started the podcast was you talked about US planning for Emerge. That's a big weekend for us where we bring in a couple hundred members in and we educate 'em there through the weekend

Kendra Heffelfinger (09:44):And Emerge experience has a lot of different topics and as we look towards the 2026 event scheduled, I believe for March, as we look at that diverse topics, again everywhere from looking at technology, looking at marketing opportunities, what could members look forward to at that event?

Brent Orians (10:07):One of the big things is, yeah, the succession planning, just getting an idea, getting the first thoughts in your head as far as what are we going to do with mom and dad's farm? How is this going to go down to the next generation to US siblings? We're going to start getting those ideas to the forefront of your mind. That way you can develop an effective plan, make things as smooth as possible because every situation is different and we all know that each one's going to have its own set of difficulties.

Kendra Heffelfinger (10:34):And along with that, not just the education opportunities but those kinds of conversations, you as an account Officer Brent, you're having with those customers on a routine basis to help them through that process. What are some other ways that we offer programming and education to help members through things like that?

Zac Maag (10:53):I was going to make a comment on Emerge. It's not only building the account officer and member relationship, it's the networking they get out of the Emerge conference. It's farmer to farmer relationships they built. It's the same YBS member that in one county can have with a farmer in the other county.

Cora Willeke (11:15):And to add to that, there'll be some sessions on niche markets, grain outlooks, economic outlooks as well.

Kendra Heffelfinger (11:23):Sounds like a pretty robust agenda that's going to happen next spring. In the meantime, what are some other things that members could expect from ag credit, from education resources, those value add pieces, what are some other things that you guys do on a daily basis with members?

Brent Orians (11:41):I mean just sitting down and going through those financials with them, going through those numbers, seeing what they did a year ago, two years ago and how that looks to today. And also planning out can we look at purchasing 80 acres this year? Can we look at purchasing that new planner? That's one way. And just talking with your account officer, we see a lot of different stuff out there. And so just talking with your account officer and seeing running things by them asking what are maybe other guys doing that we could be is a viable resource for you.

Zac Maag (12:12):Yeah, we always talk about year end balance sheets. We can always take a look at midyear. If prices drop a dollar, what does that look like for my operation? Or hopefully if prices jump a dollar, what can I do? Hopefully

Kendra Heffelfinger (12:29):Part of that is just understanding the operations well enough that you can have those conversations. And I think that's something that AgCredit does to set itself apart. Part of it is the communication link, right? Making sure you have good communication and that's for any size operation that doesn't have to be that young beginning or even small operation. Good communication between a lender and a customer for us. And from the farmer's perspective, having that good communication back from the account officers. So those what if scenarios can be run through so you have that dialogue. So when you go to the accountant, what questions to ask when you come back from the accountant, what can I do with that information with ag credit? So those are all key pieces that you guys do on a pretty routine basis.

Cora Willeke (13:13):Absolutely. And our credit analysts are great at looking into the finer details of the numbers, looking at those tax returns with the eagle eye.

Kendra Heffelfinger (13:25):With that, there seems to be a lot of programs that are out there. There's a lot of resources available and ag credit's at the forefront of reaching that market and really trying to work so that there is that next generation as a cooperative, we have to continue to look at that next generation and move forward because if they succeed, we succeed as operations. That's kind of what we hang our hat on With that. Let's talk just a little bit about as we're looking at crop season here, as we're looking at the timeframe of a year, we're going to go ahead and look at summer 2025. Any challenges that you see for those young beginning farmers as we move forward? Obviously economy but grain markets, what else are they challenged with? Maybe different than a mature operation?

Brent Orians (14:15):Some of those barriers to our young beginning small farmers. I mean one thing that I could think of off the top of my head is like accessibility land. There's not much out there and there's not much moving around. And when there is that cost of that ground is going higher every day,

Zac Maag (14:31):Well along with the increasing ground prices, inputs don't get any cheaper. So back to the solution of that with the ag link with the state Ohio with reduced interest rate on your operating. So that's one solution we can offer those YBS members for the higher input costs.

Kendra Heffelfinger (14:48):AgCredit being a solution driven organization, things like the Ag Link, grain inventory loans. As we look at those tax implications when you meet with your accountant post-harvest, those types of things are just that piece that Ag Credit can bring to the table and help our members with that. There's a whole plethora of products and terms that we have available and it's really structured for that one-on-one engagement with those operations so that we make sure we have the right fit for that operation. And Young Beginning obviously have challenges that are a little bit different than mature operations and that significantly changes what that loan product may be that we would offer. And so as we look to the future and as we wrap up the ROI season of AgCredit Said It, it's important to understand that that return on investment is going to look different for everyone. And having the knowledge of that operation and understanding them completely helps us determine how they can best increase that return on investment. And so with that, I really appreciate the time and effort that you guys have been putting into our young beginning and small farmer programs and appreciate the time and effort that you guys give back to the members of our cooperative.

Zac Maag (16:02):It's a challenge getting started in the farm industry. I would say AgCredit's here to partner up with anyone we can to get those YBS members, get 'em started on the right foot.

Brent Orians (16:15):Yeah, we value ourselves as a relationship lender. We're going to be with you through the good times and the bad.

Cora Willeke (16:21):Absolutely. We want to be your partner in the good times and bad.

Kendra Heffelfinger (16:25):Well, I appreciate you guys' time today and with that, this is another edition of AgCredit. Said it and you can catch us the next time on podcast on any of those listening platforms that you prefer.

Speaker 1 (16:41):Thank you for listening to AgCredit. Said It. Be sure to subscribe in your favorite podcast app or join us through our website at AgCredit.net so you never miss an episode.