Friday, February 27, 2009

CoBank/NECC Meeting

CoBank and the Northeast Cooperative Council (NECC) held a joint meeting in Albany, NY on February 25-26. CoBank held its Northeast Customer Meeting. The NECC held its annual Cooperative Leaders Forum. The theme for this year's forum was Cooperating in Turbulent Times.

Bob Engel, CoBank's President and CEO, discussed CoBank's financial results for 2008. Net income was a record $533 million. The patronage distribution was $314 million, or 59% of net income. CoBank ended the year with $61 billion in assets and excellent credit quality, with 98.4% of loans in the top two categories for credit quality.

New York Commission of Agriculture Pat Hooker addressed the attendees, as did a variety of interesting and informative speakers. (Click here for a press release describing the agenda.) Over 120 northeast cooperative leaders attended the meeting, including eight directors and managers from Yankee.

UPDATE 3/11/09: Speaker presentations from the NECC meeting are posted here. Guest speaker presentations from the CoBank meeting are posted here.

Statehouse Dairy Reception

Senior Vice President Ken Buzzell attended the annual Dairy Reception hosted by Green Mountain Dairy Farmers Cooperative Federation, Inc. at the Vermont Statehouse on Wednesday, February 25th. The reception is an opportunity for dairy farmers and dairy industry representative to meet with legislators to let them know about issues concerning the dairy industry.

Leon Graves of Dairy Marketing Services spoke on behalf of the Federation stressing the importance of preserving the financial strength of dairy farms and the infrastructure of the dairy industry. Governor Jim Douglas spoke on the importance of dairy to the economy of the state both from direct dollars, the tourist trade and preserving the rural landscape. The most important part of the reception was the one-on-one conversations between legislators, dairy farmers and dairy industry representatives making them aware of the challenges being faced.

St. Albans Co-op Annual Meeting

Congratulations to the St. Albans Cooperative Creamery, Inc., which held its 90th annual meeting on Saturday, February 21st. Vermont Secretary of Agriculture Roger Allbee was among the people who addressed the attendees. Co-op leaders, industry experts and staff representatives of Sen. Patrick Leahy, Sen. Bernie Sanders and Rep. Peter Welch also spoke.

Several vendors set up booths at this meeting each year, including Yankee's Shantel Thomas. Shantel enjoys talking with farmers about the risk management benefits of crop insurance. If you have questions about crop insurance, please e-mail Shantel or call her in our St. Albans office at 802-524-2938 or 800-545-1097.

UPDATE 3/23/09: The St. Albans Co-op newsletter dated March 25, 2009 has a good discussion of the annual meeting, including pictures. See pp. 6-7.

Wednesday, February 18, 2009

Vermont Farm Show

The 2009 Vermont Farm Show was held January 27-29 at the Barre Civic Center. Many exhibitors were on hand, including Yankee Farm Credit. Senior Vice President Ken Buzzell and Vice President Jeff Temple, pictured here, were among the many Yankee staff attending the farm show.

Tuesday, February 17, 2009

Dairy Farmer Appreciation Day

We would like to thank Jay Peak Resort, in Jay, VT for hosting the 2009 Dairy Farmer Appreciation Day on Friday 1/30/08. This was the 21st anniversary of this incredible event which gives busy Vermont dairy farmers a chance to play on the mountain during their slowest time of the year. Each Vermont dairy farm has the opportunity to take advantage of discounted rental equipment, free lessons and up to three complimentary lift passes. An après-ski party is held following the day on the slopes and fun events are held throughout the day. If you missed it this year, mark you calendars for next January! It is a great chance to enjoy what the Vermont winter has to offer. For more information please check out the Jay Peak website.

Are you the pig or the chicken?

Andrew Meyer asked the audience this question during his keynote address at NOFA Vermont's 27th Annual Winter Conference: "Are you the pig or the chicken?" He was asking if people were committed (to the theme of the conference) or if they just had a passing interest, and he was analogizing to what he called the "Ham and Egg Healthy Food System Breakfast." Andrew explained that the pig was committed, while the chicken just had a passing interest. That got a good laugh.

I found myself wondering what the ancient Greeks would have thought about this question. (Surely the ancient Greeks were organic?) The ancient Greeks believed that humans occupied a specific place in the world, above the animals but below the gods. The ancient Greek maxim to "Know Thyself" is advice to remember that we are humans, neither animals nor gods. Come to think of it, only humans ask interesting questions such as: "Are you the pig or the chicken?"

NOFA-VT Winter Conference

NOFA Vermont's 27th Annual Winter Conference was held Feb. 14-15 at Vermont Technical College in Randoph. As usual, it was well attended. The theme of the conference was "Grow it Here! Innovations Toward Local Food Sovereignty."

The keynote speaker on Saturday was Andrew Meyer of Hardwick, who talked about "The Hardwick Agricultural Revolution." Several new agricultural developments have occurred in recent years, or are underway, in Hardwick and surrounding communities. Andrew talked about: The Center for an Agricultural Economy, Highfields Institute, High Mowing Seeds, Pete's Greens, North Hardwick Dairy, Vermont Soy, Jasper Hill Farm, Vermont Food Venture Center (moving from Fairfax to Hardwick in 2009), Bonnieview Farm, Vermont Natural Coatings, Claire's Restaurant and the Buffalo Mountain Food Co-op.

This New York Times article from last October summarizes these developments in Hardwick.

Andrew talked about the importance of local food sovereignty, and also the importance of exporting food to urban areas to bring money back to the rural economy.

See this post for additional comments.

NEDLT Meeting

The Northeast Dairy Leadership Team met in Binghamton, NY on February 2-3.

Most of the discussion centered on balancing issues. The northeast U.S. has a higher Class I utilization than other parts of the country, which is usually viewed as a strength for the region's farmers. The Federal Milk Marketing Order System ensures that Class I (i.e., fluid) buyers of milk get what they want when they want it. This leaves buyers of the other classes of milk (i.e., for manufacturing) subject to significant swings in the volume of milk available to them. Click here for links to the presentations. For a summary of the balancing issues from the perspective of a buyer of non-Class I milk, see slide 21 in the presentation by Joe Simmons of Kraft Foods.

Also presenting at the meeting was Gary Snider, a farm business consultant for Farm Credit of Western New York. Gary talked about how farmers can survive increasingly volatile markets, drawing on his experience working with about 30 large dairy farms in western New York.

Farm Credit Fellows - NYC Trip

The annual Farm Credit Fellows trip to New York City took place on Jan. 25-27. A total of 21 students from UVM, Cornell University and the University of Maine participated:

Kelly Langmaid, a loan officer from Yankee's Newport office, also went on the trip. Kelly is responsible for coordinating aspects of the Fellows Program (see this post). She reported that: "Wall Street is a different place now compared to what it was just 4 years ago when I attended the trip as a student!"

The group toured the Federal Reserve Bank of New York, New York Mercantile Exchange and Museum of American Finance. They visited with executives from Rabobank and the Federal Farm Credit Banks Funding Corporation. The Funding Corporation is the entity within the Farm Credit System that sells System debt through a group of dealers on Wall Street. The group also visited Ground Zero and Times Square.

Several Fellows on the NYC trip spent a week in Yankee branch offices last year: Andrew Birch, Coral Kent-Dennis, Asa Manning, Andrew Wood and Daniel Lyons.

Leading the UVM students were Professors Charles Ferreira and Marian Fritz.

Letter to Members

The following letter is being mailed to members with the next monthly billing statement:

February 11, 2009

Dear Member,

I am pleased to write to you about three improvements in our operations:
  • Patronage dividends this year will total $2,790,000. As usual, they will be paid on or about March 25th. New this year, those payments will be made electronically for customers who have signed up for electronic funds transfer as of December 31, 2008. No more waiting for that check to clear through your bank. This affects almost half of Yankee’s membership. If you have not yet signed up for electronic funds transfer, you may wish to consider this option. It is free, easy and convenient. Please contact your local branch to enroll.
The next two improvements relate to voting members at Annual Meeting:
  • Starting this year, the voter checklist at Annual Meeting in April will consist of voting members as of the last day of February. In other words, the last day of February is the “date of record” for the purpose of voting at Annual Meeting. If you pay out your loan after the end of February, you will still be able to vote at Annual Meeting this year. New voting members after the end of February will not be able to vote at Annual Meeting this year. This change will allow us to do a better job maintaining the voter checklist.

  • The last change relates to nominations for director from the floor. Previously nominations from the floor were allowed only at the first meeting in each region. Starting this year, nominations from the floor will be allowed only at the first meeting, without regard to region. The old method allowed for the possibility that a nomination from the floor might not occur until the last meeting. In that event, members who attended the first three meetings would not have known about the nomination from the floor, and the nominee would not have been able to seek the votes of members from his/her region who attended a meeting outside their region. This year the first meeting takes place in St. Albans on April 6th. Any nominations from the floor would have to be made at that meeting.
The Annual Meeting Information Statement will be mailed in March. I look forward to seeing many of you at the Annual Meetings in April.

Sincerely,

George S. Putnam
President and CEO

2009 Director Nominees

The Nominating Committee has nominated the following individuals for director:

Region 1:
Rocklyn ("Rocky") Giroux, Plattsburgh, NY
Clark W. Hinsdale, III, Charlotte, VT

Region 2:
Louise Calderwood, Craftsbury, VT
Paul Gingue, Waterford, VT

Region 3:
Paul Harlow, Westminster, VT
Stephen Taylor, Meriden, NH

One director from each region will be elected at Annual Meetings which will be held April 6-16, 2009.

New procedures apply this year concerning a "cut off" date for the voter checklist and nominations from the floor. See this letter to members for details.

2008 Patronage Refund

The Board of Directors has approved a patronage refund for 2008 of $2,790,000. The 2008 patronage refund is 1.00% of average member loans held by the Association and 61% of net income. In comparison, the 2007 patronage refund was 52% of net income. The 2008 patronage refund will be paid 100% in cash.

Payment of the patronage refund is contingent upon satisfactory completion of the 2008 audit and the Association's receipt of its 2008 patronage refund from CoBank. Both conditions are expected to be satisfied in March, and payment of the 2008 patronage refund is tentatively scheduled for March 25, 2009.

New this year, payment will be made electronically via ACH for customers who were signed up for electronic funds transfer as of December 31, 2008. The plan for ACH customers is to mail the statement on March 25 (the same date the checks are mailed) and initiate the ACH transaction on March 26. Most ACH customers should receive the funds in their bank account on March 27.

Friday, February 13, 2009

Conservation Easements and the OPAV

Conservation easements have long been a part of the agricultural real estate scene in Vermont. They essentially strip away development rights from a property, while allowing continued agricultural use. These easements often have additional restrictions on allowable uses of the property and a fairly recent twist is the option to purchase at agricultural value, the “OPAV.” The OPAV gives the easement holder (usually the Vermont Land Trust and co-holders) the option to purchase the property for an agricultural value if the owner wishes to sell to property to anyone other than a family member or bona fide farmer. This is an additional encumbrance on the property which impacts its value.

It is important to be able to accurately value these properties since most new easements now being written contain the OPAV provision. This has obvious implications for Yankee when OPAV encumbered properties are offered as mortgage collateral. As noted, OPAV easements are a recent innovation and determining the value of an OPAV encumbered property is particularly difficult because of an insufficient number of arm’s length market sales.

Geoff Yates, VP and Director of Appraisal Services for Yankee, together with his appraisal team, recently undertook a study of selected OPAV encumbered property sales in an attempt to understand market reaction to the OPAV. Geoff and his team worked with Ethan Parke of the Vermont Housing and Conservation Board, the lead funding agency for easement purchases. The study involved extensive field work and a considerable amount of analysis.

Geoff presented the results of the study at a seminar for appraisers in Montpelier during December. Present were many of the leading agricultural appraisers in Vermont, most of whom do contract appraisal work for Yankee. A good discussion ensued and the opportunity for the group to interact with each other and with staff from the Vermont Housing and Conservation Board, Vermont Agency of Agriculture, Vermont Land Trust and Upper Valley Land Trust was invaluable.

Thursday, February 5, 2009

Northeast Dairy Challenge

On January 22nd and 29th, Mike Farmer and Marie Guay spent a total of 8 hours working with Advanced Dairy Management students at Miner Institute in Chazy, NY. Mike is a vice president in Yankee's St. Albans office and Marie is a senior loan officer in the Chazy office.

This program is part of the training for the Northeast Dairy Challenge. The program reviews a farm business consultant's role in working with a farm family dealing with estate planning, management issues and long term planning. Mike and Marie used material developed just for this class that evaluates 3 years of financial information, some production information, and family background. Issues discussed included retirement planning, budgeting, break even analysis and gross margin analysis. Good farm records are stressed.

This is the fourth year that Mike and Marie have participated in this program. See this older post for last year's program.

UNH Cooperative Extension Meeting

On January 22nd Shantel Thomas attended a UNH Cooperative Extension meeting for organic growers. Shantel is Yankee's crop insurance agent, working out of the St. Albans office. She made a presentation explaining the different types of crop insurance available to organic growers. Approximately 50 people attended, 40 of which were farmers. The majority of growers present were vegetable and corn grain producers. Shantel gave each producer a copy of her PowerPoint presentation. For further information about crop insurance please contact Shantel.

Dairy Science at UVM

In the past month Ken Buzzell, senior vice president from Yankee's Newport office, attended three meetings hosted by the Vermont Feed Dealers and Manufacturers Association (VFDMA). The VFDMA was asked by Interim Dean Dr. Tom Vogleman and Associate Dean Dr. Mike Vayda of the UVM College of Agriculture and Life Sciences to convene a group of dairy stakeholders to act as a “Think Tank” for developing an outside (the University) view on how to advance dairy science at UVM. Other attendees included representatives of the feed industry, feed consultants, educators and dairy farmers.

The group discussed prioritizing the research needed to advance the competitiveness and uniqueness of Vermont's dairy industry and also formed a plan for the funding, staffing and operation of a new UVM dairy research farm equipped to meet the industry’s research needs and provide UVM with a platform to become a global leader in dairy research. The results of these discussions will be presented to the University administration for their consideration.

Wednesday, February 4, 2009

Census of Agriculture

The U.S. Census of Agriculture is updated every five years, and the 2007 Census was released today. Quick links:

Start here

State profiles for:
Vermont
New Hampshire
New York

Data is available at the county level.

Tuesday, February 3, 2009

New Microloan Fund

On January 15th Morgan Rilling, loan officer from Yankee's White River Junction office, attended a workshop for the new Microloan Fund for New England Farmers. The Microloan Fund is a joint project of Strolling of the Heifers and The Carrot Project. It will be administered by Chittenden Bank. The Microloan Fund was created to address the difficulty that some New England farmers have faced in obtaining credit. (See this earlier post.) The Microloan Fund will offer loans in amounts of $1,000 to $10,000, with a primary focus on small to mid sized operations that use sustainable or organic methods.

The purpose of the workshop was to promote the program and to answer questions that potential applicants may have. Morgan gave a presentation on the 5 C's of credit and when credit is appropriate for businesses. Morgan is serving on the loan committee that will be reviewing the applications.

For more information about the Microloan Fund please contact Dorothy Saput.

Monday, February 2, 2009

Inflation

The financial world changed last fall, as I have noted in earlier posts. The economy is still feeling the aftershocks of the fall of Fannie, Freddie, Lehman Brothers and other financial institutions.

One statistic that recently caught my eye is inflation. This graph shows inflation as measured by the Consumer Price Index (CPI) for every year since Yankee was formed in 1995:

Inflation fell off a cliff in 2008! The highest inflation in the period 1995-2007 was 4.1% in 2007. Inflation continued at a high level in the first part of 2008 with monthly year-over-year inflation reaching a peak of 5.6% in July. But the world changed shortly after that, and we have now seen five consecutive months of deflation. Inflation for calendar year 2008 was a miniscule 0.1%. This is the lowest yearly inflation rate since 1954. Many economists are predicting that we will soon see monthly year-over-year deflation, perhaps with the January CPI numbers which are scheduled to be released February 20th.

This is a profound change from earlier in my career when there were 30 months in the years 1979-81 that the year-over-year inflation rate was greater than 10%, reaching a peak of 14.8% in March 1980. (Calendar year inflation rates for that period were: 1979 - 13.3%; 1980 - 12.5%; 1981 - 8.9%.)

Inflation affects interest rates. Interest rates are presently very low (see this earlier post), whereas they were high in 1979-1981. Prime peaked at 21.5% (!!) in December 1980. Prime is presently 3.25%. The last time prime was this low was in October 1955.

My source of data is FRED, an economic database maintained by the Federal Reserve Bank of St. Louis. FRED has CPI data going back to 1913. In that period, there were 158 months of negative year-over-year inflation, almost 14% of the time. The country has survived this before. But the last time was in August 1955, so most people now living have not experienced deflation in their lifetime.

NOTE: CPI data in this post is CPI-U not seasonally adjusted. More historical data is available for CPI-U not seasonally adjusted (back to 1913) than for CPI-U seasonally adjusted (back to 1947).

UPDATE 2/20/09: The CPI rose 0.4% in January, after falling for five consecutive months. The year-over-year increase was 0.0%. While not showing deflation, this is the first time since August 1955 that we have not had inflation.

UPDATE 4/15/09: The year-over-year change for February (released a month ago) was +0.2%. No deflation yet. But the year-over-year change for March (released today) was -0.4%. Now this statistic shows deflation for the first time since August 1955.

UPDATE 5/15/09: The year-over-year change for April was -0.7%, so the deflation in March was not a one-month fluke.