Highlights and risk management strategies from the 2016 Florida Agriculture Financial Management Conference
The 2016 Florida Agriculture Financial Management Conference was held August 24-26 at the Omni ChampionsGate in Orlando, Florida to provide agribusinesses and the allied industry the most up-to-date and relevant information needed to manage financial risk and increase the bottom line for today’s farm operation.
This sixth annual conference addressed key financial issues growers and producers face. Some of the nation’s leading agricultural and economic experts provided information on the latest trends and tools to assess and manage the overall financial health of their business. Highlights of the conference included analyzing financial performance, succession planning, insurance, marketing and tax strategies, and adapting to regulatory and technology changes, to name a few.
The purpose of this program is to provide essential financial risk management education while enhancing the sustainability Florida’s agricultural producers. Risk has always been associated with farming. Typically, these challenges are considered to be production oriented, such as pest, disease, and weather. However, during the past few years of turbulent economic conditions, managing financial risk has become perhaps the single largest challenge farmers and ranchers face to maintain a sustainable and profitable business despite the uncertainties inherent in the agriculture industry.
Every day, Florida agricultural producers face financial risk through market price fluctuation, variable and fixed cost uncertainty (including interest rates and energy costs), succession planning, marketing, tax and regulatory concerns, political and social interference, human resources, and management leadership. By understanding how these risks are influenced by greater economic factors and by utilizing sound risk management tools, farmers can reduce the uncertainty they face to maintain a profitable business.
Highlights of the 2016 Florida Agriculture Financial Management Conference included presentations on the following:
TOUR OF PORT TAMPA BAY
Participants learned about Port Tampa Bay’s expansion plans due to the Panama Canal Expansion Project, opening in 2016, allowing larger ships to access this port. The port is proposing a refrigerated warehouse and food campus along with a high speed train from Tampa to Chicago to move goods and agriculture products that will have a major impact on Florida agriculture.
DISCUSSABULL … TOOLS FOR TALKING ABOUT TOUGH ISSUES
Elaine Froese, a certified farm family business coach, specializes in helping farm families work through the tough issues and take action. Elaine shared 10 tools for talking about tough issues to get clarity of expectations, certainty of agreements, and commitment to building “The Plan” for your operation. She shared a key challenge audit to help identify the issues that need to be talked about. Procrastination and conflict avoidance are killing progress in agriculture. Elaine’s common sense and practical tools help stop the pain of “not knowing.”
USING LIFE INSURANCE TO MEET SUCCESSION PLANNING GOALS
Michael Loney of John Hancock Insurance provided an overview of using life insurance products in Succession Planning. He covered the most common types of buy-sell arrangements as well as discussed other factors to help ensure the continuation of a business, such as key person insurance and estate planning for family held businesses.
THE GREAT MARGIN SQUEEZE: STRATEGIES FOR MANAGING FINANCIAL PERFORMANCE
Michael Langemeier, a Purdue University professor for the Department of Agricultural Economics, discussed why it is so important to benchmark financial performance. Key financial performance ratios— including liquidity, solvency, profitability, and financial efficiency measures— were illustrated for their use in determining financial scorecard thresholds.
MAXIMIZE YOUR RETIREMENT PLAN
Blake Willis of July Business Services asked, “As a business owner, are you maximizing your retirement and meeting your savings goals?” This session focused on types of retirement plans available, looked at the importance of saving for retirement, discussed the significant tax saving opportunities available with qualified retirement plans, and how to avoid common pitfalls.
WHAT IS ALL THE BUZZ ABOUT WHOLE FARM REVENUE PROTECTION?
Kathryn Taylor, PhD, senior risk management specialist with the USDA-RMA Risk Management Services Division, reviewed the Whole-Farm Revenue Protection (WFRP) policy that provides a risk management safety net for all commodities on the farm under one insurance policy. This insurance plan is tailored for any farm with up to $8.5 million in insured revenue, including farms with specialty or organic commodities (both crops and livestock), or those marketing to local, regional, farm-identity preserved, specialty, or direct markets.
TURBULENCE AHEAD: WORKERS’ COMPENSATION IN FLORIDA
Bill Taulbee and Ana Evans of Lykes Insurance focused on the turbulence in the workers’ compensation arena and what employers can expect as a result, along with the proposed amended request for a 19.6 percent rate increase filed by NCCI. The session addressed what employers can do to prepare and how they can control workers’ compensation costs through experience mod management.
AGRICULTURAL COST-SHARE AND PAYMENT FOR ENVIRONMENTAL SERVICES
A panel of Florida agricultural water quality and supply experts discussed emerging trends in state and federal funding programs, which are designed to both help ag operations meet regulatory requirements and be paid for providing environmental services.
FEDERAL TAX UPDATE AND STRATEGIES FOR 2016
Paul Neiffer, CPA, with CliftonLarsonAllen, LLP covered the practical implications of frequently encountered tax issues impacting farmers and ranchers. He gave strategies to identify unique tax saving opportunities, as well as how to avoid pitfalls in day-to-day decision making and tax planning. Topics included depreciation and the utilization of the Section 179 deduction; Farm Income Averaging; Repair and Capitalization update; Lease vs. Own; and how to balance Section 179 deduction among multiple entities.
US ECONOMIC UPDATE: SUMMER 2016
Back by popular demand, Ed Seifried, professor emeritus of Economics and Business at Lafayette College, gave a compelling discussion on how Greece, China, interest rates, and slow economic growth are major news headlines as our summer grinds onward. He also discussed current economic conditions, and provided an economic forecast for the remainder of 2016.
THE WINDS OF CHANGE – MANAGING YOUR ORGANIZATION THROUGH TURBULENT TIMES
Drawing on his entrepreneurial and sailing experience, as well as over 22 years of enrollment in Strategic Coach (a coaching program for entrepreneurs), Rob Saik talked about ideas and tools to use in adjusting your sails as you encounter obstacles and managing change.
FLORIDA LEGISLATIVE AND REGULATORY UPDATE ON AGRICULTURE RELATED ISSUES
In this session, speakers gave a comprehensive overview of recent Florida legislative and regulatory changes impacting agricultural businesses and also forecasted issues expected to be addressed in the upcoming year.
With the focus of the conference on financial risk management for our state’s farmers and ranchers, attendees were encouraged to invite their “team” of advisors, including CPAs, attorneys, lenders, etc. to help implement the strategies in their own operations. CPAs and attorneys in attendance were able to earn much needed CPE and CPL credits.
Videos of the 2016 conference sessions will be posted for paid-per-view on the conference website at fafmc.org. Additional information on the conference can be found online or by calling Regina Thomas at (407) 721-4687. Watch for the 2017 Florida Agriculture Financial Management Conference dates to be announced soon.
article by REGINA W. THOMAS
ABOUT THE AUTHOR: Regina W. Thomas is the chief business development officer for Farm Credit of Central Florida. Should you wish to discuss these strategies further, or have any questions, call (800) 533-2773 or email RThomas@FarmCreditCFL.com. On the web: FarmCreditCFL.com.