farm credit view - summer 2012
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I N T H I S I S S U E
2 INTERESTing TImESTom Tracy, Senior Vice President, Operations
3 CROP INSuRaNCE NEwS Drought Discussion meetings
Gary Kopp, Regional Sales manager
4 NEwS fROm ThE fIElD New employees, milestones, retirements
and upcoming events
5 CuSTOmER SPOTlIGhT Create family memories at Eckert’s
6 mEalS IN ThE fIElD September 17-21
Register for a free meal for you, your family,
friends and neighbors!
FARM CREDIT view
The market for
farmland in Farm
Credit Services of
Illinois’ sixty county
Farm Credit Services
of Illinois territory
remains strong at mid year. Land values are
monitored using a 20 farm benchmark ap-
praisal system which is updated during the
first six months of each year.
The updates for 2012 show a continuation
of a developing trend over the past several
years with an average increase of 22.2%
compared to an 18.9% increase in 2011. All
20 benchmark farms showed an increase in
value. As always, the market for agricultural
real estate is extremely location specific;
however some general observations can
be made. Values of Class A land were up
15.6% with Class B increasing on aver-
age by 24.7%. Class C land varies widely
throughout the territory but on average was
up 22.9%. It appears that although inves-
tors are still in the market, a majority of land
is being purchased by local farmers.
The current drought conditions being felt in
a large portion of our territory do not seem
to be reflected in these values however;
the long term effect the drought will have
is yet to be determined. Drought conditions
appear to be worse in the southern portion
of the territory but are generally fair to poor
Farmland Market ConditionsBy Kent Reid, Chief Appraiser
throughout the sixty counties. On the bright
side, commodity prices remain strong and inter-
est rates are historically low.
SummeR eDITION 2012 • NEwS & hIGhlIGhTS fROm faRm CREDIT SERVICES Of Ill INOIS
2
INTERESTing TimesBy Tom Tracy, Senior Vice President, Operations
We hear a lot of discussion
these days about interest
rates. Most often the
reference is about floating
rates – specifically the
prime rate of interest which
is based on the federal funds rate set by the
Federal Open Market Committee (FOMC). For
the purpose of this discussion, let’s focus on the
outlook for floating rates. We’ll tackle longer
duration rates next time. Specifically, let’s focus
on the prime rate and examine an abbreviated
version of the most recent statement from the
FOMC: “The Committee decided to keep the
target range for the federal funds rate at 0
to 1/4 percent and currently anticipates that
economic conditions--including low rates of
resource utilization and a subdued outlook for
inflation over the medium run--are likely to
warrant exceptionally low levels for the federal
funds rate at least through late 2014.”
In the U.S., the prime rate runs about 300 basis
points (that’s a fancy way of saying 3%; a basis
point is 1/100th of a percentage point) above
the federal funds rate. Simply put: federal funds
rate + 3 % = prime rate. The current prime rate
is 3.25%. Most discussion today indicates the
FOMC is saying they will leave rates alone until
2014!
Effectively, they are saying the prime rate is
going to stay put until 2014. That, however, is
not entirely what the FOMC statement says.
The statement says they “currently anticipate”
the factors dictating this accommodative
policy will persist until late 2014. They even
tell us what factors they
are watching: resource
utilization and inflation. So
if we see significant upward
movement in these factors,
it would seem the FOMC
would be well within the
guidance they have given
us to increase the discount
rate. This will effectively
increase the prime rate prior
to “late 2014.” How much
has the Federal funds rate
stayed put over the years?
The rate has moved frequently and – in many
years – significantly. Above is a graph showing
the degree of change in the prime rate by
calendar year for roughly the past 40 years. Take
note that there were nine occasions in which the
prime rate changed 300 basis points or more
within one calendar period. This would represent
a near doubling of the rate today. There were
just five years in which the rate did not move;
four of those are the most recent years.
The futures market tells us the prime rate is
anticipated to remain relatively low. From the
perspective of an agricultural/farm business
owner, there appears to be a reduced need to
be concerned with short term interest rate shifts
within the next 24 calendar months. However,
the FOMC guidance of “late 2014” appears
to allow increases in rates that should warrant
some degree of consideration. This is especially
true If you are in the position of having floating
rate debt used for the purchase of a longer lived
asset and you do not anticipate paying off that
debt in the near term.
In the intermediate term of three to five years,
it appears there will be an increased need for
concern with movement in floating rates. These
rates may still be low by historical standards, but
they may move significantly on a relative basis
and overtake many of the current intermediate
and possibly even longer term fixed rates being
offered by Farm Credit today.
It may be an appropriate time, over the next
three to five years, to consider fixing interest
rates on all, or a portion, of your debt being
used to finance longer lived assets such as land
and equipment. It will cost you more in the short
term but potentially will save you much more in
the long term.
Contact your local Farm Credit office for more
information on interest rates and the loan
products available to help keep your farming
operation running smoothly.
3
Drought Discussion Meetings helD
Area producers flocked to twelve Drought
Discussion meetings held throughout July
by Farm Credit Services of Illinois. Cory
Mitchell, Farm Credit’s director of related
services stated, “It is good to see the active
participation by policyholders and their
eagerness to learn about handling crop
insurance claims as a result of the 2012
drought.” Crop insurance payments made to
producers are expected to far exceed any other
claim year in crop insurance history; nearly all
policies are expected to file a claim this year.
Already, 2012 is being compared with 1988,
1983, 1954, and 1930’s crop disasters.
Farm Credit crop insurance staff led these
discussions and presented attendees with
information on what to expect, what to do,
and what not to do to ensure producers
receive the full benefit of their 2012 crop
insurance coverage. Highlights included:
1. Turn in your harvest claim. If you think
you will have a loss, call your local Farm
Credit office.
2. Do not destroy the crop; do not bale,
chop, or graze it without getting a
company adjuster to appraise the crop
first. Call your Farm Credit office before
you take any destructive action with
your crop.
3. An adjuster must measure any leftover
2011 grain if you plan to store new
2012 grain in the same bin. Call your
local Farm Credit office to arrange for a
measurement before harvest.
4. Keep good harvest records for
each line of corn and soybeans on
your policy. Load records, combine
monitor information, scale records, bin
measurements, and settlement sheets
will all be very important in working your
possible claim. Identify each unit or farm
name on each piece of information.
5. Before claims over $200,000 per crop/
per county can be paid, RMA requires a
three year APH review to be completed
by the company. If your claim potentially
exceeds that, you may do this before
harvest and speed up the final payment
of your claim. Call your local Farm Credit
office if you want to do this early.
6. For tax purposes, producers need to
determine if claim proceeds will be paid
in 2012 or in 2013? Call your local
Farm Credit office to further discuss
your options.
7. Call your local Farm Credit office
immediately if you suspect Aflatoxin in
your corn. Samples must be taken by a
company adjuster BEFORE the grain goes
into the bin or other storage facility.
If the rains come, there is still hope for the
soybean crop, however; in most areas, the corn
is either done or done for. Everyone will agree
choosing to protect your 2012 crop with crop
insurance will be one of the best decisions
you have made this year. Your crop insurance
specialist at Farm Credit can answer any
ongoing questions you have.
Crop Insurance News & UpdatesBy Gary Kopp, Crop Insurance Training Coordinator
Crop Insurance News
4
Field News
Important Dates
Kaitlin SmithParis
FCS Team MilestonesA special salute to employees reaching milestones in their years of service
5 YearsAlicia Sandidge
Jacksonville
mark Your Calendar
35 Yearsmark Weber
Highland
5 YearsDerek Stayton
Taylorville
With a combined years of services of 34
years, Don Schuette, Vice President of
Lending in Carlinville regional office and
Carol Stoll, Sales and Services Specialist in
Red Bud regional office retired from Farm
Credit. Don retired as of May 31, 2012 and
Carol will retire on August 31, 2012. We
congratulate Don and Carol and thank them
for their dedicated service to Farm Credit.
Retired EmployeesCongratulations to Don Schuette and Carol Stoll!
Welcome Aboardmeet the newest staff members at regional offices
• August 7 - Red Bud Office Customer Appreciation Dinner Ag Bldg. - Scheve Park, Mascoutah, IL 4:30 PM - 7:00 PM
• August 8 - Carlinville Office Customer Appreciation Dinner Elks Lodge, Carlinville, IL 5:30 PM - 7:30 PM
• August 9 - Highland Office Customer Appreciation Dinner Highland KC Hall, Highland, IL 5:00 PM - 7:30 PM
• August 9 - Shelbyville Office Customer Appreciation Dinner 4-H Center Bldg. - Shelbyville, IL 4:30 PM - 6:30 PM
• August 9 - All Offices Drought Discussion Northfield Center, Springfield, IL 10:00 AM - Lunch to follow
• August 13 - Lawrenceville Office Customer Appreciation Dinner Trace Inn, Red Hills State Park, Sumner, IL 5:00 PM - 8:00 PM
• August 14 - Red Bud Office Customer Appreciation Dinner St. John’s Lutheran School, Red Bud, IL 4:30 PM - 7:00 PM
• August 16 - Highland Office Customer Appreciation Dinner Addieville Community Club, Addieville, IL 5:00 PM - 7:30 PM
• August 16 - Shelbyville Office Customer Appreciation Dinner DeMars Center located in Peterson Park, Mattoon, IL 5:30 PM - 7:00 PM
• September 3 - Labor Day Offices Closed
• September 30 - Crop Insurance Sales Closing Date—Wheat
• October 31 - Crop Insurance Final Planting Date—Wheat
• November 1 - Crop Insurance Premiums Due—Corn, Bean and Grain Sorghum
Paula Keehner Paris
Ashley BramletHarrisburg
10 YearsNancy Allison
Red Bud
Carol StollRed Bud
Don SchuetteCarlinville
5 Yearsmark Kabatmt.Vernon
1100 Farm Credit Drive
mahomet, IL 61853
www.fcsillinois.com
Meals in FieldSeptember 17 - 21, 2012 — Register Today!
Feeding farmers who feed us; that is only
part of the Meals in the Field program. Since
2001, Farm Credit Services of Illinois has been
delivering meals and safety tips to farmers.
Each year, Farm Credit serves around 1,100
farmers on 110 farm visits. Farm Credit
firmly believes that educating farmers and
their families about safety is vital to every
operation. After all, farming is the fourth most
dangerous occupation in America. Meals in
the Field corresponds with National Farm
Safety & Health week. This
year, it is September 16-22.
Monday through Friday, each
of the 16 local offices go to
the winners’ fields with a
meal. The farmers selected
are encouraged to bring their
family, crew and neighbors out
to their fields to learn about
safety while enjoying the meal. This fits right
into the theme this year: Agriculture Safety
& Health: a family affair. Meals in the Field
provides a great opportunity for all involved
to learn about agriculture safety. In addition,
Farm Credit leaves the family with a farm
safety kit to help make their farms a safer
place to work.
Even if you are not a customer of Farm Credit,
you can enter to win. In order to enter your
farm into the drawing, you can do one of
three things: visit or call your local office, or
sign up at www.fcsillinois.com. Meals in the
Field is more than just feeding farmers; it’s
about promoting farm safety.in the
MealsMealsFieldField
lawrenceville office staff serve a meal to the atwood family on their Richland county farm in 2011.
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