Capital Press | Ag Financial Services Capital Press Mon, 20 Nov 2017 13:01:27 -0500 en Capital Press | Ag Financial Services Financial planner, CFO offer unique expertise Thu, 8 Dec 2016 11:59:59 -0500 Dianna Troyer Realizing he would one day switch his role from chief executive officer of Moss Farms to retiree, Dan Moss sought advice from a financial planner 20 years ago.

The Idaho farmer not only needed an investment portfolio to provide retirement income for himself, but he wanted to offer an employer-matching 401K plan to his workers.

The farm’s 50 full-time summer workers grow potatoes, sugar beets, wheat and corn on 14,000 acres. The business’ potato packing plant in Rupert has 40 full-time year-round workers. Some 80 workers are hired during harvest.

“I wanted to offer some financial help to our employees for their retirement,” says Moss, 64.

He turned to a financial planner, Dee Darrington, an investment representative at D.L. Evans Bank in Burley.

“Dan was really progressive for offering a matching 401K plan to his employees, from managers to pipe movers,” says Darrington. “I think more farmers will start doing that in the future.”

He emphasizes that a retirement portfolio needs diversification.

“Safety through diversification is the key,” says Darrington, who helps clients pick from a combination of stocks, bonds, mutual funds and annuities to provide retirement income.

Darrington says some farmers and ranchers tend to be land rich but cash poor when approaching retirement.

“They need to bank some of their annual profit and invest that to provide for their future,” he says. “A good portfolio can buffer farmers from fluctuating commodity prices.”

With an outside financial planner in place for long-term retirement, Moss realized he needed an in-house financial planner for day-to-day operations. Ten years ago, he hired Klade Williams as chief financial officer.

“You get to a point where you outgrow the kitchen table or home office for bookkeeping,” Moss says.

Williams oversees the company’s 401K plan, bank loan applications, accounting, human resources and new rules that will impact the business financially.

“You take all this information, even if it’s bad news, and present it to Dan and managers to help them make decisions,” says Williams. “It’s a balancing act to maintain a financially healthy business that can keep the family happy and employees happy.”

Moss says the 401K has been a good investment. The plan, along with paid time off and paid leave, has fostered employee loyalty. “A lot of people at our packing plant have been there 20 years or more.”

Workers at the plant, Arrowhead Potato Co., pack Idaho’s signature crop year-round for restaurants and food service companies Sysco and Markon.

As for his eventual retirement, Moss says he cannot envision himself being completely away from the business he started in 1980 when he farmed 160 acres near Declo.

His son, Ryan, 42, chief operations officer, will likely replace his father as CEO.

“I’ll always be involved with the farm somehow,” Moss says.

Operating loans financial lifeblood for ranchers, farmers Thu, 8 Dec 2016 11:58:57 -0500 Dianna Troyer For most southeastern Idaho ranchers such as Doug Ward, an annual operating loan is the financial lifeblood of their business.

“We couldn’t operate without it,” says Ward, 59, who runs 300 cows and raises hay on about 300 acres near Almo just north of the remote Idaho-Utah border.

A third generation rancher, Ward applies for the annual infusion of cash at one of Idaho’s oldest banks. Established in 1904 in the small town of Albion about 30 miles from Ward’s ranch, D.L. Evans Bank is the same bank his dad and grandad used.

Ward relies on Kent Gunnell, commercial ag loan officer and assistant manager, not only for the loan, but also for information about new lending practices and financial assistance in case of emergencies.

“You can’t budget for unpredictable events,” says Ward. “Sometimes a tractor needs major repair or replacement or other things happen, so it’s good to know I can extend out my payments. Kent’s really on the ball and gets paperwork processed on time.”

Ward says he appreciates a banker who takes the time to know his clients.

“I can sit down and tell him what my needs are, and we go from there,” says Ward.

To help clients, Gunnell has sometimes advised them to rewrite their business plan, estimating their income conservatively.

“If unforeseen things happen, it gives you a buffer,” Gunnell says. “We sometimes advise borrowers to write a personal budget, too, to help them make decisions about their money.”

Gunnell says generations of families, such as the Wards, have supported the bank for more than a century and helped build it into what it is today.

“We’re on a first-name basis with most people who walk through our doors,” Gunnell says. “Our customers are like friends and repay their loans, so we don’t have the losses a larger city bank might have. They know that if a problem arises or if they want to discuss financial objectives, they can talk to someone face-to-face instead of a person at an 800 number.”

The bank was Cassia County’s first financial institution. When state Sen. D.L. Evans established it for farmers and ranchers in remote areas, he said, “Banking is really just about one thing: helping people.” The bank was capitalized with $25,000.

Today, the third-generation, family-owned community bank has more than $1.2 billion in assets with 28 full-service branches and seven mortgage lending offices across Southern Idaho.

The bank’s headquarters eventually moved from Albion, a town of 270, to Burley, a town of 10,500 about 18 miles to the northwest.

At the Albion branch, Gunnell says a small town atmosphere still prevails.

“We’ve stayed true to our founder’s goals about helping people.”

Estate planning can help relieve stress Thu, 8 Dec 2016 11:59:34 -0500 Dianna Troyer When confronting rare and quirky medical issues, central Idaho rancher Wiley Smith is reassured that at least his estate plans are in healthy condition.

After being diagnosed with a rare and mutating prostate cancer in 2009, he and his wife, Carolyn, discussed the unthinkable.

“We had to face it,” says Smith, 78, who owns Mount Borah Ranch 30 miles north of Mackay, where he grew up. He and his sons, Leon and Steve, raise Hereford cattle, hay and grain.

“What would become of the ranch if I passed on, or if we both did? How could we distribute our assets fairly among our five kids?”

For advice, the Smiths turned to attorney Stephen Martin of Idaho Falls, who has written estate plans for agricultural clients throughout the West since 1974.

“We discussed our goals,” says Smith, “and he guided us through the process and provided us with the legal documents we needed to do what was best for our situation. It was a worthwhile investment for us.”

The family’s estate plan was especially reassuring in late summer when Smith was diagnosed with a staph infection. The bacteria entered his bloodstream at a bruised toenail and settled in his left knee replacement, requiring intravenous antibiotics every four hours. The infected knee replacement was removed in September and was to be replaced later this fall.

Martin acknowledges that estate planning can be an emotional experience for all people.

“Think of estate planning as a way to express the love you feel for your family members,” he says. “People sometimes say business is business and love is separate, but I do not find that to be the case at all. Passing on assets is an expression of love. However, the love one holds for one’s child is not the only factor. One must also consider financial practicalities as well as the work and commitment of various family members.”

He acknowledges the questions are difficult.

“How do you fairly divide a family farm or ranch among several siblings when only one shows any interest in running it?”

Martin offers a few tips.

• You do not need to decide exactly who gets what before visiting an attorney. An experienced attorney should be able to help you solidify your goals and give you options to obtain those goals. An attorney may have some tools to help you achieve your goals that you might not have been aware of.

• Proper planning can shelter a family’s assets from federal estate taxes and reduce income taxes.

• Some parents say they will let their kids fight it out, but that is a terrible idea. Have a plan in place to avoid conflict.

Martin says every client’s situation and goals are unique.

“Engage in planning if you care about your family,” he says. “Having an estate plan before some crisis or emergency occurs provides peace of mind for you and future generations.”

Farmers rely on accountants in making tough decisions Thu, 8 Dec 2016 11:59:13 -0500 Dianna Troyer Would a robotic milking system be a sound investment for Midway Dairy?

Dairy manager Dave Gerratt asked the question recently during the weekly board meeting of Ida-Gold Farms’ general partners in southeastern Idaho.

The third-generation family business includes a 4,000-cow dairy north of Malta and a sprawling 8,000-acre farm that produces potatoes, alfalfa, grain and corn. Gerratt’s cousin, Todd Gerratt, oversees crop production.

To answer the question, they turned to their certified public accountants at Condie Stoker and Associates in nearby Rupert.

“A financial analysis showed we couldn’t cover our existing debt while adding more debt with a new robotic system,” Gerratt says. “It would have worked if we were building a new facility or were debt-free.”

For the Gerratts, their accountants are indispensable.

“We need to know the unit cost of production, whether it’s 100 pounds of milk, a bushel of wheat, or a 100-pound sack of potatoes,” Gerratt says. “When agreeing to contracts, we make our decisions based on that information.”

The Gerratts have relied on the Rupert accounting firm for more than two decades. The accountants’ analysis was crucial several years ago when Ida-Gold expanded into an existing trucking company and a precision fertilizer application business with their joint venture partners Schaeffer Farms, Jones Farms and Circle G Farms.

“We swap equipment and employees,” Todd Gerratt says. “Equipment has become so expensive that we maximize use by putting trucks, equipment and employees wherever they’re needed.”

When the Gerratts’ grandfather, Don, started farming in 1939 south of Burley, the business was uncomplicated and bookkeeping was straightforward. Eventually, Don passed the business to his sons, Rex (Dave’s father), and Larry (Todd’s father).

As Dave and Todd began managing the business, increasingly complex financial issues arose, making an accounting firm essential.

“It’s not just the quarterly financial statements that our clients need to review,” says Ben Brown, a certified public accountant at Condie Stoker who works with the Gerratts. “New income tax laws and changing labor rules affect a business financially, so a good accountant has to inform clients of impending changes.”

For example, a new Labor Department rule concerning overtime pay for salaried employees was to take effect Dec. 1. Employees earning less than $47,476 annually were to receive overtime for the hours they work beyond 40 a week. A federal judge has put the rule on hold for the time being.

“The threshold used to be $23,660,” says Brown, “and it will affect some of Ida-Gold’s 100 employees.”

Whenever Ida-Gold family members consider new ideas to keep their business profitable, Gerratt says, “We ask our accountants to run scenarios, so we can make a good decision.”