Celebrate National Ag Day with These Financial Tips for Farmers

National Ag Day 2015

National Ag Day is March 18 and the American Bankers Association (ABA) has provided some financial tips to the next generation of America’s farmers and ranchers. Unlike established farmers, young and beginning farmers may need to learn the basics of creating business relationships and what goes into making financial decisions.

When speaking to a banker, young and beginning farmers should keep the following in mind:

  1. Sweat the small stuff. Keeping accurate and detailed records encourages both short-term and long-term financial planning. Not only does it help you stay organized and make better management decisions, it makes it easier for your lender to assess your financial situation.
  2. Develop a business and marketing plan. You will work smarter and improve your odds when you focus and organize your goals.
  3. Evaluate your capital investments for profitability and payback. Keeping track of how long it will take to generate enough cash flows from a capital investment to justify the investment will help you make better financial decisions for the future.
  4. Know your costs. When you consider your cost of living and expenditures, including depreciation and family living, you’ll have a better understanding of your overall financial situation. Your local banker can provide guidelines to monitor your financial ratios.
  5. Decide on what type of operation you want to run. New farmers and ranchers should either be very efficient, low-cost producers or should add value that someone else will pay for.
  6. Consider supplementing your operation with off-farm income until your operation is large enough to employ you profitably full-time.
  7. Consider renting farm equipment or custom hiring instead of purchasing.
  8. Shop around. Getting price quotes on supplies such as feed, fertilizer and fuel can uncover lower cost sources. Your research might get you a discount from a local, preferred supplier that gives excellent service. Make sure product quality is part of your evaluation.
  9. Ask your banker about how to get access to state and federal credit enhancement programs. Some banks also offer special benefits for first-time schedule F tax filers.
  10. When in doubt, ask for help and guidance from someone you trust–an experienced farmer or rancher, a trusted adviser or your local banker. You don’t have to make these important financial decisions alone.

National Ag Day, now in its 42nd year, is organized by the Agriculture Council of America.


Information provided by the American Bankers Association

Common Questions on the New Farm Program


There have literally been hundreds of farm program information meetings held in the Upper Midwest in recent months, as well print and online articles, spreadsheets, etc., on enrollment in the new farm program.

However, even with all the information available to farm operators and landowners, there are still some recurring questions that seem to keep coming up.

The following are some of the more common, ongoing questions related to sign-up for the new farm program:

Question #1–what are the dates and timelines for enrollment in the new farm program?

The sign-up process for the new farm program at local FSA offices will take place in a three-step process:

Step #1–Now until February 27, 2015: Landowners make final decisions on updating FSA payment yields, and reallocating crop base acres on each FSA farm unit.

Step #2–Now until March 31, 2015: Producers complete the farm program choice on each farm unit, and potentially on each eligible crop. Farm program choices include the Price Loss Coverage (PLC), Agricultural Risk Coverage-County (ARC-CO), or Agricultural Risk Coverage-Individual Coverage (ARC-IC) programs.

Step #3–Mid-April to Summer 2015: Producers enroll in the 2014 and 2015 farm program simultaneously. Even though the farm program choice (listed earlier) is for five years (2014-2018), producers will still be required to make annual enrollment into the farm program at local FSA offices.

Question #2 –who makes the final enrollment choice for the new farm program?

All decisions at local FSA offices on updating FSA program yields and reallocating crop base acres for each FSA farm unit require at least one landowner signature. If a producer is an owner/operator, they could make the decision on that FSA farm unit. However, it is advisable to communicate with all landowners on a FSA farm unit regarding the base acre and payment-yield decision that is chosen, since this decision will be in place for five years (2014-2018).

Producers will make the final, 5-year farm program choice between PLC, ARC-CO, and ARC-IC for the 2014-2018 crop years on each FSA farm unit.

Landowners with crop share rental agreements are considered producers by FSA and must agree with the farm program choice on a farm unit.

Landlords with cash rental agreements will not be required to sign-off on the farm program decision. In cases, where there is a switch of producers from 2014 to 2015, the producer listed at the FSA office on the farm unit at the time of farm program sign-up would make the program choice.

Question #3–what if no choice is made for the updating payment yields, base-acre reallocation, or the farm program option?

If no choice is made for updating FSA payment yields or base acre reallocation, the existing crop-base acres and CC payment yields on a FSA farm unit, as of 2013, will remain in place for 2014-2018.

If no farm program choice is made by the sign-up deadline, the farm unit will be enrolled in the PLC program for 2015-2018, and there will be no farm program payments for the 2014 crop year. Depending on the crop, farm location, and farm program choice, this could be a very costly mistake.

Question #4–why is it important to update FSA payment yields if I am enrolling in ARC-CO?

FSA payment yields for all eligible crops will be used for payment calculations for the new PLC program, but not for the ARC-CO or ARC-IC program options. Even if plans are to choose the ARC-CO or ARC-IC program option, it may still be a wise choice to update the FSA program yields for eligible program crops on FSA farm units where there is an advantage, as these updated yields may be carried forward for future farm programs beyond 2018. The opportunity to update FSA payment yields has not been made available since 2002, and if the program yields were not updated in 2002 (counter-cyclical program), the current payment yields are the “direct payment yields,” which date back to the early 1980s, and may be even lower than the current county “plug yields” for some crops.

Question #5–when and why are “plug yields” used?

A substitute yield or “plug yield” (equal to 75 percent of the county average yield between 2008-2012) will be used in any year that the actual farm yield for a given crop falls below “plug-yield” level, as well as in any year in which a crop was raised, when there is no yield data available.

The county “plug yields” are available from the USDA FSA farm program website, and automatically are entered in to the official FSA payment yield update spreadsheet.

Question #6–what documentation is required to update FSA payment yields?

The FSA form titled: “Price Loss Coverage (PLC) Yield Worksheet” (CCC-859) is used as a worksheet for potentially updating FSA payment yields. On Form CCC-859, the crop yield for each year (2008-2012) that a particular eligible crop was raised is listed. Only the years that the crop was raised on a particular farm unit are considered for the yield update.

For example, if corn was raised in only three of the years, then those years are used in calculations. If crop insurance (RMA) data is from more than one FSA farm unit, the data will need to be prorated accordingly for the CCC-859 forms.

FSA offices will not be verifying the yield data on Form CCC-859. However, the yields reported on that Form will be subject to FSA spot checks at a later date.

Acceptable records for yield verification during “spot checks” will include RMA data that is used for crop insurance APH calculations, production evidence for grain sold or placed in commercial storage, on-farm grain storage records, livestock feeding records, and/or FSA loan records.

Question #7–why is base acre reallocation important?

All farm program payments for the new PLC and ARC-CO programs will be calculated on crop base acres, rather than on a year-to-year planted crop-acre basis.

The last time that crop base acres could be updated was in 2002, and it is possible that the updated crop base acres could continue beyond the current farm program.

The choice is to either keep the existing crop base acres (as of 2013), or to update crop base acres to the ratio of average of planted crop acres on a FSA farm unit from 2009-2012.

Total reallocated crop base acres for 2014-2018 cannot exceed the total crop-base acres that existed in 2013 farm program.

Landowners and producers should have received a listing of existing crop base acres, and the reported planted acres for 2009-2012 from the FSA in late July or early August.

Prevented-planted acres that were properly reported will count as planted acres for base acre reallocation.

Question #8–do I always want to reallocate my crop base acres?

Not necessarily. In some cases, the existing crop base acres may be more desirable than the reallocated base acres, such as in cases where the existing crop base has more corn base acres than the reallocated crop base.

Or possibly, there may be some higher value commodity crops that have a higher likelihood of farm program payments in the next five years (2014-2018), which may be eliminated through base acre reallocation.

Remember: Farm program payments for PLC and ARC-CO are determined by base acres, not planted acres, and you do not have to raise a crop in a given year in order to be eligible for potential farm program payments.

Question #9–is it advisable to maximize my corn base acres in all situations?

Many Midwest farm operators planted higher levels corn from 2009-2012, so there may be an opportunity to increase corn base acres on some FSA farm units.

In most areas of the Midwest, corn base acres tend to offer higher maximum payment potential, and greater payment likelihood (in 2014, and possibly in 2015) than other crops. However, the program payment levels and likelihood of payments may be different in other areas of the U.S., which have lower corn yield levels, or may have other alternative program crops to consider.

Question #10–how are MYA prices calculated?

The “market-year average” (MYA) price for a given crop year is used to calculate any potential payments for the PLC, ARC-CO, and ARC-IC programs. The historical MYA prices are also used to determine the benchmark revenues for both the ARC-CO and ARC-IC program options.

The MYA price for a given commodity is not based on the Chicago Board of Trade commodity prices, or any specific local or terminal grain prices. The MYA price is the 12-month national average price for a commodity, based on the average market price received at the first point of sale by farm operators across the U.S.

The USDA National Agricultural Statistics Service collects grain sales data on a monthly basis, which is then weighted at the end of the year, based on the volume of bushels sold in each month.

The 12-month marketing year for corn and soybeans begins on September 1 in the year that a crop is harvested, and continues until August 31 the following year. For wheat, oats, barley, and small grain crops, the 12-month marketing year begins on June 1 in the year of harvest, and continues until May 31 the following year.

Question #11–where can I find updated MYA price information?

USDA publishes monthly and season average estimated market prices for various commodities, which are available on the FSA farm program website. These average prices are also updated each month in the USDA Supply and Demand Report, which is usually released around the middle of each month. Some universities also update projected MYA prices on a monthly basis for selected crops. Kansas State University offers one of the best monthly updates of MYA prices for corn, soybeans, and wheat. The web site is at: www.agmanager.info/crops/insurance/risk_mgt.

Question #12–why do some experts recommend ARC-CO and others recommend PLC?  

There are several reasons for the difference in recommendations between ARC-CO and PLC for corn and soybeans. The biggest reason is probably future MYA price expectations, along with declining payment potential in future years with ARC-CO in scenarios with lower price expectations. If the average MYA price for corn from 2015-2018 is consistently below about $3.20 per bushel, total PLC payments for 2014-2018 for many Midwest corn producers could likely exceed total ARC-CO payments.

The situation is similar with soybeans, if the MYA price from 2015-2018 is below about $7.20 per bushel.

However, one must remember that there are no PLC payments for corn, if the MYA price is $3.70 per bushel or higher, or for soybeans, if the MYA price is $8.40 per bushel or higher.

In most counties in the southern two-thirds of Minnesota, and adjoining areas of other states, the 2014 ARC-CO payment for corn will be near the maximum payment level for the county ($60-$80 per corn-base acre in many counties), if the 2014 average county yield was at or below the benchmark county yield.

There is also very good 2014 ARC-CO payment potential for soybeans in most Minnesota counties. The ARC-CO payment potential for corn and soybeans in 2014 may not be as favorable in some areas of Iowa, Illinois, Indiana, etc. that experienced extremely high county average corn and soybean yields in 2014.

Payment potential with ARC-CO for both corn and soybeans for the 2015 crop year is also very good, due to the fact that the 2014 benchmark MYA prices of $5.29 per bushel for corn and $12.27 per bushel for soybeans will likely be in place again in 2015.

Question #13–what are situations where ARC-IC might work?

Producers that select the ARC-IC program option must include all eligible farm program crops on a FSA farm unit (2014-2018), with no option for either the PLC or ARC-CO programs on specific crops.

The ARC-IC program operates very similar to the ARC-CO program, but is based on farm-level crop yields, rather than county-average yields. The biggest difference is potential payments in the ARC-IC program are made on only 65 percent of crop base acres, as compared to 85 percent of base acres with the ARC-CO program. Due to this difference, and different calculation methods with ARC-IC than ARC-CO, average farm-level yields probably need to be 25-30 percent higher than comparable ARC-CO yields to consider ARC-IC enrollment.

Question #14–what are the payment limits for the new farm program?

The payment limit for the new farm program is $125,000 per eligible individual for all proceeds from the PLC, ARC-CO, and ARC-IC programs, as well as from LDPs or gains on CCC loans. If there is more than one eligible payment entity for farm program payments, then the payment limit would increase accordingly. For example, if a husband and wife are both eligible, they would have a total payment limit of $250,000. Excluding LDPs and CCC loan gains, it would require approximately 2,500 crop base acres to reach the $125,000 payment limit at an average farm program payment level of $50 per base acre, and about 1,667 base acres to reach the limit at an average payment level of $75 per base acre.

Question #15–What are some strategies to address payment limit concerns?

Some corn and soybean producers with payment limit concerns are varying their farm program choices a bit more. They are putting some farms in ARC-CO to optimize payment potential for 2014 and 2015, when ARC-CO payments are likely to be higher, and putting some farms in PLC, in order to have more price protection in later years (2016-2018). This allows them to capture some of the benefits of both the ARC-CO program and PLC program, without sacrificing significant payment potential. Also, with PLC, farm operators can opt for the supplemental crop option (SCO) (crop insurance alternative), which is not subject to farm program payment limits. Enrollment in the SCO insurance option is done an annual basis through crop insurance agents.

Question #16 — What are the best resources for farm program information?

The USDA Farm Service Agency (FSA) has created a web site with up-to-date information and resources on base acre reallocation, updating payment yields, “plug yields”, ARC-CO yields, updated MYS prices, etc.

The web site is at: www.fsa.usda.gov/arc-plc.

Several land-grant universities have developed spreadsheets and decision tools, in cooperation with FSA, to assist producers and landowners with their farm program decisions. Following are some good web sites for the farm program information, spreadsheets, and other resources:

U of Illinois Farm Bill Toolbox


Kansas State U Ag Manager Web Site


U of Missouri Food & Ag Policy Center


Article courtesy of the Independent Community Bankers of Minnesota

Minnesota Bankers Association Honors Citizens Bank Minnesota


EDEN PRAIRIE, MN – January 22, 2015 – The Minnesota Bankers Association (MBA) recently recognized twenty-one Minnesota banks for their community involvement. Citizens Bank Minnesota was one of twenty-one banks honored for their community involvement. Citizens employees volunteered over 1127 hours on behalf of their bank for organizations such as American Cancer Society, United Way Day of Caring, Adopt-a-Family, Junior Achievement, National Teach Children to Save Day, local school programs, churches and non-profits. Citizens is also proud of being awarded top fundraising team for the American Cancer Society’s Brown County Relay for Life event raising $17,329.70. Citizens continues to support local businesses through its Go Local initiative that encourages its employees to shop locally first for all their purchases.

MBA CEO/President Joe Witt congratulated the recipients and stated “Minnesota banks are the heart and soul of their communities. In addition to providing the capital that helps communities grow and thrive, the banking industry’s record of supporting local programs is simply unmatched. No other industry gives more time, talent and resources back into Minnesota’s communities.”

The Minnesota Bankers Association is the state’s largest trade association devoted exclusively to the representation of commercial banks. The MBA was founded in 1889 and represents 95% of Minnesota’s chartered banks. The MBA is proud to support our member banks as they work to ensure vital communities throughout the state. For more information, please visit our website at www.minnbankers.com.

Citizens Bank Minnesota is pleased to announce the following promotions:

986857 Citizens 075Julia Baumgartner, Senior Vice President

Baumgartner joined Citizens in 1991 as a Vice President and Commercial Loan Officer. She graduated Summa Cum Laude from Kansas State University with a B.S. degree in Finance as well as a B.A. in Spanish. She is also a graduate of the Commercial Lending School at the University of Oklahoma and the Graduate School of Banking at the University of Wisconsin.

986857 Citizens 033Tim Hoscheit, Senior Vice President

Hoscheit joined Citizens in 1986 as an Agricultural Loan Officer and was promoted to Vice President in 1991. He is a graduate of Western Wisconsin Technical College with an Associate Degree in Finance. He is also a graduate of the Graduate School of Banking at the University of Colorado.

Baumgartner and Hoscheit will be assuming senior management roles in the bank previously performed by Bill Brennan, who will be retiring in the spring.

2014 Holiday Random Acts of Kindness

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Citizens Bank Minnesota employees were excited to be able to help out families in need again this Holiday Season by doing Holiday Random Acts of Kindness for the second year in a row!  Our main office in New Ulm and our three branch locations all adopted an area family, with our Lafayette office also bringing gifts to the area nursing home.  Money was donated by employees, and also raised through a bake sale and free-will donation luncheons, bringing in over $1,450.00. The bank then made a match donation of $1,300.00 – making it possible to donate $2,750.00 in gifts for these families!

Shopping was done and numerous household items, clothing, groceries and toys were bought. Employees took pride in wrapping everything up in colorful paper and bows, wanting to make the Holidays as special and memorable as they could for the families, especially the children.

We were happy to help these families who would have had an otherwise difficult time purchasing the needed items themselves.  It was also a great way to remember what the Holidays are about! “Only by giving are you able to receive more than you already have.” – Jim Rohn

By: Sarah Seifert, Marketing Assistant

xmas shopping 009 Armful of Love gifts 2014 013

6 Ways to Avoid Holiday Shopping Scams


In the wake of recent data breaches, shoppers should be on high alert while purchasing their presents this holiday season.

“Though millions of credit and debit card purchases are made safely each day, it’s important that consumers remain vigilant in protecting their personal information,” said Frank Keating, president and CEO of the American Bankers Association.

ABA offers the following tips to help consumer keep their information safe whether shopping in the store or online:

  • Monitor your account. Use online and mobile banking to keep an eye on your transactions, especially during the holidays. Notify the bank right away if there’s any fraudulent activity.
  • Beware of phishing scams. During the holidays, criminals will create a fake email for a deal that’s too good to be true. If you click on any links within the email, you may be downloading malware onto your computer or you may be asked for payment information that could lead to fraud.
  • Limit large sums of cash. Even though we’ve seen financial crime migrate from physical to cyber, customers should be careful not to carry around large sums of cash when shopping. A bank will make you whole if there’s fraud against your account. If cash is stolen, your money is gone.
  • Secure your internet connection. If shopping online, make sure you do so from a password protected Wi-Fi network. Never access online banking from a public Wi-Fi network.
  • Shop safely. Before making an online purchase, make sure the website uses secure technology. When you are at the checkout screen, verify that the web address begins with https. Also, check to see if a tiny locked padlock symbol appears on the page.
  • Read the site’s privacy policies. Though long and complex, privacy policies tell you how the site protects the personal information it collects. If you don’t see or understand a site’s privacy policy, consider doing business elsewhere.

For more information on protecting your money – as well as a variety of other personal finance tips and resources – visit aba.com/consumers.

Article courtesy of American Bankers Association

Shop Local!

Go Local 8

At the Chamber, we love seeing the antics of Citizens Bank staff as they do “cash mobs” and other events that promote the “Shopping Local” message.  I like to say, “when you can, get what you can, in New Ulm!”  Obviously there are purchases that need to be made elsewhere or online, but one of our Chamber priorities is to promote what is available in New Ulm.  From groceries to gifts, cars to carnations, we enjoy a solid retail environment on a daily basis.  We are also a retail destination for people from other communities and guests or visitors who are coming to participate in our festivals and see our attractions.

One of the ways the Chamber promotes shopping in New Ulm is through the Chamber Dollars program.  Chamber Dollars can be purchased at the Chamber Office at 1 N. Minnesota and can be used or redeemed at over 300 businesses in New Ulm that are Chamber Members.  They are available in denominations of $5, $10, $20 & $25 and there is no activation fee or additional cost to the person buying the Chamber Dollar.  Also, the program is designed so that there is no additional cost to the businesses to participate.  Chamber Dollars make great gifts for the holidays for spouses and service providers.  Area employers like to use them as customer appreciation or to recognize employee effort.  Every year, approximately $150,000 in Chamber Dollars is circulated through New Ulm businesses.   If you haven’t ever bought or used one, please stop in at the Chamber and we’ll help you see how easy it can be!

Upcoming New Ulm Happenings!

New Ulm has a long tradition of hosting fun events for women during the first two weekends of November – otherwise known as the “Shopping Opener”.  2014 will be the 11th year of the Annual New Ulm Women’s Expo and Craft Fair on Saturday, November 8 at Jefferson Elementary School. This event has free admission and over 100 vendors are participating.  The GnomeMade Artisian & Vintage Market (November 7-8) is hosted in 17 historic locations or artisan homes in New Ulm.   Other events include retail store open houses, music at the Grand Kabaret and plenty of eats at our local restaurants.  For more information go to the www.newulm.com website or call us at the Chamber.  We are gathering more information about the activities as we get closer to the date.

Just a few short weeks later, New Ulm’s Parade of Lights will be Friday, November 29. This family holiday tradition includes 60 units decked out in holiday lights and features the arrival of “you know who” to New Ulm. Start time is 6pm and the parade goes from 4th South and Minnesota to 4th North and Minnesota Streets in New Ulm’s historic downtown.  See you there!

By: Audra Shaneman

President & CEO New Ulm Chamber


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