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Episode 50: Four Farm-Related Resolutions to Steal in the New Year

January 1, 2024

Here are four farm-related New Year resolutions to steal for your farm operation:

Libby’s Resolution: Succession Planning

Libby kicks things off with a friendly nudge for farmers to make it a goal to tackle those succession and transition planning conversations. These conversations can be daunting, but Libby and the AgCredit team are on a mission to make these topics as approachable as the family dinner table. Listen back to Episode 27 with attorney and research specialist Robert Moore as he explains the importance of long-term planning.

Additionally, Libby encourages farmers to make it a goal to find an accountant, an attorney, and a lender to build what she refers to as a “board of professional advisors.” She says having these professionals in your back pocket can be a game-changer in guiding and supporting your business decisions.

Matt’s Resolution: Financial Record Keeping

According to Matt, diving into your financials isn’t just a once-a-year thing. Instead, he encourages farmers to keep their financials up-to-date throughout the year. Because, when you’re eyeing that shiny new piece of equipment or considering the next piece of farmland, you want to know where you stand.

Matt also emphasizes the importance of year-end balance sheets, referring to a chat with credit analyst Joel Althauser about why they’re the secret sauce for growth in any ag business. And speaking of year-end, Matt stresses that farmers shouldn’t wait until the end of the year to tackle those financials. Start early and start fresh on January 1st.

Brenna’s Resolution: Intentional Farming

For Brenna, looking back is just as crucial as planning ahead. For 2024, her goal is to be more intentional, whether it’s on the personal, work, or farm operation side of things. She taps into the idea that, as a young farmer, it’s easy to dive into the “doing” without really thinking about the “why”. Brenna challenges fellow farmers to think about their intentions in everything they do on the farm.

For those starting out, Brenna suggests looking into diversification, like keeping trucks on the road or venturing into contract barns for added income, and getting involved and engaged. Whether it’s joining an organization or networking at events, Brenna stresses the value of finding a mentor and the power of networking. She points to Episode 20 with Zippy Duvall, president of the American Farm Bureau, for inspiration.

Phil’s Resolution: Insuring the Farm

Phil is all about wearing his business hat alongside his farmer hat in the new year. His resolution: insurance and risk management. While maybe not the most exciting resolution, Phil dives into the nitty-gritty, urging farmers to connect with their insurance agents and review coverage amounts, recognizing that inflation can impact these amounts. Thinking of Episode 9 with Luke Lichtensteiger, Phil particularly encourages farmers to look into an umbrella policy to bring peace of mind into the new year.

As the calendar flips to January 1st, Phil also advises farmers to be ready for the “full-go” crop insurance time. While March 15th might feel distant, meeting with your crop insurance agent early and getting that checked off the list will mean less hassle come spring.

So, for all farmers out there, it’s time to grab that business hat and start planning for the year ahead. These four farm-related resolutions from the AgCredit Said It hosts are great goals to take into the new year.

Here’s a glance at this episode:

[00:28] Phil announces an episode milestone for the podcast and introduces the theme of this particular episode – resolutions for farmers to consider in the new year.
[01:38] Libby shares her farm resolution emphasizing the importance of succession and transition planning, as well as updating legal documents such as wills.
[06:43] Matt shares his resolution for the new year highlighting the importance of year-end financials and record-keeping.
[10:27] Brenna shares her goal for the new year, which includes being more intentional in farming operations, including diversifying the operation and getting involved in industry organizations.
[14:49] Phil shares his resolution suggestion, which revolves around insurance, urging farmers to review their coverage amounts, shop around for the best rates, and consider additional policies.
[20:49] The hosts discuss the importance of building a board of professionals for guidance and support in making business decisions.

Resources mentioned in this episode:

Share questions and topic ideas with us:

Email podcast@agcredit.net

Transcription

Transcription

Voiceover (00:08):

Welcome to AgCredit Said It. In each episode, our hosts sit down with experts from all parts of the agriculture industry to bring you insights and must-have information on all things from farming to finances and everything in between.

Phil Young (00:28):

All right, welcome back to another episode of AgCredit Said It. This is Phil Young and man, we are excited for this golden episode. You heard that right. 50 episodes, our golden episode. We're excited to be here with you. We decided to bring the whole gang back together. So here with me are Matt Adams, Libby Wixtead, and Brenna Finnegan. Good to see each of you.

Libby Wixtead (00:48):

It's so great to be with you all again and I cannot believe that this is our 50th episode.

Matt Adams (00:56):

We talk about experiences, Phil, and what a great experience this has been. So far, bringing just a multitude of topics and guest speakers to our listeners.

Brenna Finnegan (01:05):

Year-end is the perfect time to look back and celebrate success like this being our 50th episode, but it's also the time to look forward to the opportunities the new year can bring.

Phil Young (01:17):

That's right, Brenna. Everyone sets resolutions for the new year. Depending on who you listen to or who you watch, there seems to be a top 10 list for everything out there. So we thought, why not jump on the bandwagon and have us share our top resolutions or suggestions for the area farmers and farm owners. So Libby, why don't you get us started? What are your resolutions?

Libby Wixtead (01:38):

Yeah, so my farm resolution that I have been suggesting and having a conversation with with a lot of my farmers has been succession and transition planning and also just visiting your legal work. So one of the first things I will say is if you haven't updated your will in a while, or if you are a young couple and you have young children and you don't have a will, that's something that you guys would, I hope all of you have a will or especially if you guys have kids and have it updated. I know my parents had gone back in the past year here and did some updates on theirs. So one of the other things with transition planning is I've gotten, people are always like, “Yep, yep, we got to do it. We got to do it.” Right? You guys have heard that same story from your customers?

Brenna Finnegan (02:33):

Yep. Yeah, I know, I know, I know, right?

Libby Wixtead (02:36):

Yeah. We'll get to it this year, this year and then it's like five years later than they do it. So I've had the conversation with a lot of my customers of, well, mom and dad don't want to talk about it. They think I'm driving them into the grave. Well, that's not what we're doing. This is preparing them for retirement. This is looking at a lot of long-term care. I know Matt and I had talked with Robert more about long-term care and the implications that could have on a farming operation. So you want to listen back to that episode, but that's some of the positives. And some of the tips that I have for my customers is if you don't know where to start, it's okay. A lot of people don't know that Nationwide has Land As Your Legacy, and that is a great program to go through just to figure out kind of what you want to do.

(03:27):

They can collect your information and they have a great group of professionals that can give you recommendations. And so that's the first thing that I tell a lot of people. And then if you don't have an attorney, find one. You can ask. I don't know if you guys have your recommendations close to you guys in your office, but we have ours. I know insurance agents have theirs, accountants, there's several accountants, if you work with them, they have their certain people that they like you to use because they work really well together. And also meet with your accountant, and meet with your attorney. It's so easy to not make that phone call. Have you guys heard that one? Oh, I'm going to call him next week, right?

Brenna Finnegan (04:08):

Yep.

Libby Wixtead (04:09):

Yeah. And then that never happens. So that's the first step that I would have any of our listeners do, is just make the call, set up the appointment, set dates of when you want to get things done, kind of like a goal planning with that. I know it sounds kind of silly, to make the phone call, but we all get busy and we all are like, I think Ryan Conklin has said it before, nobody wants to call the attorney. Everybody wants to call their lender because they need money, but they never want to call their attorney.

Brenna Finnegan (04:35):

But it always costs money. That's at least what my parents always say, that costs me more money every time I call them. It's like, well, yeah, but.

Libby Wixtead (04:43):

But that's why you can kind of set things up ahead of time before you do call them to save you time and money with that, start that conversation, and then make sure you do meet with your accountant also, just so your attorney and your accountant are on the same page. The best conversations and the best meetings that I've had with my customers are sitting down at the table where all of us are there and we all can kind of hash out and help our customers come to the right idea or recommendation for them. Ultimately, it's up to you to make the decision. So once you have those meetings, decide what you want to do and then follow through with it. Following through with it means you actually have to go and sign all of the paperwork.

(05:26):

I know we've had a couple of situations where people have done it, but they never set anything actually in place of actually signing the paperwork, or there have been stories, family stories of nobody signed the will, so there is no will, right? That's an awful thing. So get that plan in place, decide on it and then execute it. But then also have that conversation with your family. That conversation with the family or the next payer that's coming on, or even if the farming partner, your child, if they know what's going on, but then the other ones don't, that creates a lot of issues at the end. I know I've had sat across the table and have encouraged many of my older customers to have that conversation with their family and then that's really helped them to be able to diffuse any family issues that happen after they pass away or anything like that. Everybody seems to still talk to each other after that grandparent or parent has passed on. So those are my tips. Matt, what is your resolution and your tips for the next year?

Matt Adams (06:43):

Well, thanks Libby, and I'll tell you before I get to my resolution, I just want to ask you, what do you guys look forward to at the end of the year? What is the first thing on your mind that I should be doing? I know Phil is probably eating all the Christmas cookies and stuff like that, but what is your guys' go-to thing at the end of the year?

Phil Young (07:00):

That's funny because that's exactly what I was going to say, Matt, so.

Libby Wixtead (07:11):

Mine is a massage. We were just talking about that.

Matt Adams (07:12):

Well, I tell you. So we look at stuff for the year and my resolution has always got to be looking at our year-end financials and our planning and why is that important? Why is any financials important in a business, especially like ours in agriculture? So I'll refer back to I'd say the early days of the AgCredit Said It podcast, episode four, we sat down with our head credit analyst, Joel Althauser. We talked about year-end balance sheets, and why they're important. As your lender, we need that information to help you better grow your operation. So that's one thing that all of our operations, I wanted to be looking at.

(07:53):

Year-end financials don't need to be thought about right at the end of the year. We should really be looking at these in a full 12-month timeframe. We need to keep things updated. What does that do? It helps us know where we're at in the operation. That's key to any type of growth. It also helps us as your lender. When you sit down across the desk from your loan officer, we're talking about that next tractor, we're talking about maybe the next farm coming up for rent or maybe the next farm purchase. Where are we at? How's it going to look? When we look at this stuff, a lot of our purchases now, they're not short-term purchases. We're talking expensive assets and we're talking some longer term money. So how does that look over the course of the operation when we look at 5, 10, 15, 20 plus years on some of this stuff? What else does that do? By helping with the year-end financials and helping your lender help you make the best decision for that operation.

(08:54):

Also, it goes back to mitigating that risk for the operation. We sat down with Barry Ward on episode 26. We talked about mitigating risk, both big and small operations. So when you look at that, having those updated year-end financials, working with your lender, planning for the future, mitigating risks, knowing what years, maybe I should sit on stuff a little bit or Hey, looks like a good year to expand. We're sitting all right. So that's really some of the big things, and that's where we come into as the lenders I think too, gang, is we're here to help the members. We're here to work with them, and coach them, and we're almost financial planners to a point. We take that information and we want to know what the future is for the operation, what are the long-term goals, and then we can help try and make those. I say we might be a little bit of dream makers. We can help make their dreams come true.

(09:51):

So that's what I look at as far as the resolution, I think should be on everybody's top list this year to try and like I said, don't wait until the end of the year either to work on your year-end financials. Start your 2024 financials, January one, start a spreadsheet, start marking stuff down because in the long run it is going to help that business and it never hurts to be able to take a snapshot day by day to let you know where you're at. So Brenna, that was mine. What are you looking at for a resolution?

Brenna Finnegan (10:27):

Well, obviously we always want to look back at things or whatever and kind of reflect on ourselves and what we've done. And like you mentioned, the growth of our operations and things like that. I think going forward into 2024, which is so weird to say by the way, I think my goal would probably to be a little bit more intentional, whether that's on the personal side, work side, or my farm operation itself. And as a young beginning small farmer, I think people step away and they just do rather than thinking of what's their purpose or why they're doing it, what's their intention with all of their workings on the farm and all that kind of stuff. So if you're starting out, I would think of ways to diversify your operation. There could be something that you're good at or you're missing out on, capitalizing on that talent or that ability.

(11:25):

I mean, it could be as easy as keeping trucks on the road, doing backhauls, stone hauling, and dirt work. With livestock, it could be expanding to do contract barns and then using the byproduct from them to help reduce your own personal expenses and to sell it off for additional farm income. So thinking of outside the box, and I think we've had a couple of episodes in regards to that, so. And what I'm referencing right now is episode 20, which is actually the first episode in season one with Zippy Duvall, and he is the president of the American Farm Bureau, and what better person to get advice from on any of this stuff. A few other things that I would probably encompass with that would be getting involved and engaged, whether that's in the Farm Bureau, state committees, or networking. For our members, we have our Emerge Experience coming up here in the spring.

(12:27):

So just kind of getting involved, getting that networking opportunity, and once again, using that experience to be intentional with your own operation. Another thing that actually Zippy mentions is taking care of yourself. You really need to look at yourself as an asset to the operation. Like Matt, you mentioned the balance sheet and updating it and staying consistent with it on an annual basis. And that's the same with you as the owner and the operator of the farm. You are an asset, it's just not written down. So if you're not functioning just like a piece of equipment, if it's not functioning, nothing's getting done. So you kind of got to take care of yourself personally and once again, be intentional with yourself, whether that's making doctor's appointments or whatever it may be, going to the gym if you need to, but taking care of yourself just as if you were another piece of equipment.

(13:31):

It kind of sounds like it's, I don't want to say downplaying it a little bit, but you are the most important piece of equipment. You're at the top of that tier. So taking care of yourself is by far, in my opinion, probably number one. And then of course, still going back to finding a mentor and going back to that networking opportunity. I mean, those people that have done this for a long time, or you're wondering how they got into that or what different type of avenue did they take. People want to share their information. I mean, maybe not financial or personal or whatnot, but if it's somebody asking about the farm, nine times out of 10, your farmer's going to start oh, yeah and just kind of go from there and take off with the conversation.

(14:24):

I mean, we all have had those conversations with each other, even with our own operations. So it's just something to keep in mind and taking all of that information from all of these sources and taking that intentional action within yourself, I suppose. So that's kind of where I'm at with mine anyway. So Phil, what's yours?

Phil Young (14:49):

Yeah, my resolution, it's been interesting to listen to all of you guys kind of share what your resolutions are. Mine kind of revolves around, same with yours as kind of putting maybe a business hat on. I think all of our resolutions kind of revolve around wearing your business hat versus maybe not so much your farmer hat. And so your farmer hat is really, you're trying to focus on increasing yields, you're trying to develop the best farming practices, but I think you need to also put on your business hat. So Libby, you talked about succession planning, that's thinking with your business hat on. And Matt, you talked about financial record keeping, that's having your business hat on as well as your farming hat. And then Brenna, you talked about just kind of getting involved, staying knowledgeable in the industry. That's also kind of having your business hat. Mine is not as exciting, but mine is talking about insurance and risk management. So that's also having your business hat on and kind of thinking of your operation not only as a farming operation but as a business operation.

(15:52):

So how to hedge against things that happen to you on the farm, liability issues, crop insurance, health insurance, all those things, so obviously the big one is your property and casualty insurance, so your homeowner's insurance, farm policies that cover your buildings, anything like that. My advice is to kind of connect with your agent, and review your coverage amounts. We had a conversation with somebody I think two years ago and multiple borrowers of mine talked about the fact that inflation has kind of hit, and so stuff has gone up even from two years ago. Those coverage amounts could be out of date. It just costs a lot more money to replace a building if it gets hit by a tornado or a storm. So sit down with your agent, and ask where you're at on those coverage amounts. I know it's not the most exciting topic, but it's something that you definitely need to look at.

(16:49):

Kind of along with that is to shop around. There are a lot of agencies that are kind of, they're more brokers than they are representing one just insurance carrier. So meet with a broker. They represent and then can handle a lot of different insurance companies. So they can shop around and try to get the best price for you. Maybe that'll save you some dollars and also increase your coverage. The other side of this too is like in episode nine Luke Lichtensteiger talked about the importance of an umbrella policy, and how to control liability with an umbrella policy. This is actually something that I just signed up for last year. I got talking with my insurance agent and we were kind of renewing my homeowner's policy as well as my auto policy, kind of going over those amounts. And I remember what Luke said during that episode and I was like, "You know what? I'm going to ask about an umbrella policy and how much this is." And he's like, "Yeah." He's like, "We can add that on no problem."

(17:42):

It was actually, I think I got a million dollars worth of coverage and it was insanely cheap for what you think a million dollars of coverage is. It's not that much, but it does help me sleep better at night knowing that I have that much more coverage if a mistake happens or something like that, so. But worth that conversation with them to ask that and just, you never want to find out after the fact you're not covered on something. You want to have those conversations early. So a farm umbrella policy is a great way to kind of hedge your bets there. What happens starting January one is the other side of insurance, it's crop insurance, and that is a full-go timeline. I know the deadline for that is March 15th. So meet with your crop insurance agent, and have your information ready for them. Review last year's coverage. It's kind of, I know a lot of insurance, crop insurance agents that they're starting January 1st, they're full go, meeting with three or four people a day going over their coverage, trying to get them signed up and meet that deadline by March 15th.

(18:40):

So if they call you, be available, get that checked off your list because that's one less thing you got to worry about this winter. And then when springtime comes, you can focus on getting equipment ready versus trying to wrangle a meeting with your crop insurance agent. You can get that checked off your list. And then the other side of insurance is obviously your health insurance. I know that I've got some friends who don't have commercial insurance, they don't have a spouse who works an off-farm job. And so their insurance coverage is through just a network. And unfortunately in those situations, it's very expensive to do.

(19:14):

Seems like every year I talk to those people and they're like, my premiums went up 20, 30%. And it just seems like that market, if it's not an employee-sponsored or employer-sponsored insurance, it gets expensive and it increases a lot every year. I know somebody who partnered with the Ohio Farm Bureau, they actually have health insurance coverage that you can work with through them if you're a member of the Ohio Farm Bureau. And I think it reduced their premiums by, I want to say it was like 40%. And so it's been a huge savings for them and they haven't had any reduction in coverage.

(19:49):

So shop around for health insurance if you can. There's a lot of different options. And so Ohio Farm Bureau offers a great product. So my resolution, it's not an exciting one, but it's checking out your insurance, checking all those boxes, having those conversations. And like Libby said, you just need to make the phone call, shoot the email off to your agent, and just get that conversation started. They're the subject matter expert and so listen to what they have to say. You shouldn't have to read through 80 pages of an insurance policy, let them bullet point it for you and make sure that you have the right coverage and the right amounts for where you're at.

Brenna Finnegan (20:22):

I actually just had that conversation with somebody two days ago and we were talking, he owns a farm-related business and he's the sole provider for his family. So income insurance was one thing that I brought up and he's like, I never thought about that. Well, if something happens to you, you still need income, right? So insurance covers it for you. So I think that's a good one.

Libby Wixtead (20:49):

So what I was going to bring up, Phil, is it sounds like with everything that we've been talking about from mine with an attorney, accountant to you, an insurance agent from Brenna to mentor, and from Matt to your lender is find a board of directors, a board of professionals that you can rely on to drive your operation to where you want to take it. I think that's really, really important. And with all of the resolutions that we have, I think that's really key.

(21:22):

And I think anybody from any point in your operation, if you don't have that board of professionals that you can trust and rely on to help you make business decisions or even just to help you meet your goals, that's your resolution this year, is to get all these professionals that you can trust and work together. And then kind of going off of mine too, I just wanted to point out with any changes that you make, if you're making entity changes or if there are any changes, and like Brenna was talking about diversifying your operation, you need to make sure that you contact everybody, all of those board of professionals. I think every one of us had touched on that, and that's just something to point out to, I guess maybe add to mine, but then add to everything else that everybody else had said. We all want to know if you're making changes to your operation.

Matt Adams (22:16):

Oh yeah, Libby, I think that's a great point. One thing I look at this too, guys and all of our listeners out there, we look at all these as tools and we're always a means to an end result. Means to an end, you always hear them say. So what is our means to an end here? Is to be profitable hopefully at the end of this. By us taking all these tools, working with, and I'll say work with your lender. That's probably key number one, because it's kind of where we get started. Everything else will fall in place. You find a lender, and that's where some of our programs at AgCredit I feel probably make us stand out a little more than others just because of how we've designed these, because we understand the challenges that our members are facing. So as that means to an end and we hope a very profitable end for both our member and the association.

Phil Young (23:01):

Well guys, this brings us to the conclusion of our 50th episode, and what a way to end one year and to start another.

Brenna Finnegan (23:08):

Yeah, let's kick it off with resolutions that end up turning into goals and then obviously you end up creating your plan around it. So it's a great way to start off the new year.

Matt Adams (23:17):

That's right, Brenna. And putting those plans on paper helps us stick to it. Those goals become opportunities which can lead to overall success.

Libby Wixtead (23:25):

From all of us at AgCredit, we want to wish our listeners a safe and happy new year. Stay tuned for the next episode of AgCredit Said It where host Matt Adams sits down with Bruce Clevenger and Eric Richer with the Ohio State University Extension Program to talk about the new Farm On program and the positive tax implications it can have for your operation. Be sure to tune in. See you guys next time.

Voiceover (23:55):

Thank you for listening to AgCredit Said It. Be sure to subscribe so you never miss an episode. While you are there, leave us a review to help others find the show. Let's talk ag in between episodes. Follow us on Facebook, Twitter, and Instagram @AgCredit. For more tips and resources, visit agcredit.net.