Archives for 2017-11

Loyd Retires From Farm Credit After 33 Years

Mike Loyd is retiring from Farm Credit Illinois Nov. 30, after 33 years with the Farm Credit System. Loyd most recently served as vice president of marketplace initiatives based at the financial cooperative’s headquarters in Mahomet


Loyd spent his formative years on his family’s Williamson and Union County grain and livestock farms. Before joining the workforce, he received bachelor’s and master’s degrees in instructional systems design from Southern Illinois University Edwardsville. During his tenure, Loyd and the Association’s marketing team were recognized with the Classic Telly Award, several National Agri-Marketing Association awards, and the Farm Credit System’s 2007 marketing showcase award for the Farm Progress Show. He is a 31-year member of the National Association of Farm Broadcasters.


At the beginning of his Farm Credit career, Loyd worked at the Farm Credit Bank of St. Louis as the marketing supervisor and played a lead role in communicating the merger of the Farm Credit Banks of St. Louis and St. Paul that formed AgriBank in 1992. After two years consulting for AgriBank in St. Paul, Minn., Loyd transitioned to the marketing department for Farm Credit Services of Southeastern Illinois in Mt. Vernon, Ill., in 1995. When the Southeastern and Central Illinois Associations moved to joint management in 1999, Loyd provided communications leadership and was named the head of marketing department in the newly formed Association in 2001, which eventually became Farm Credit Illinois.


Loyd and his wife Candy reside in rural Mansfield. Mike has one daughter: Lindsey, two step-children: Carrie and Tyler, and three step-grandchildren: Logan, Finn, and Avery. The Farm Credit Illinois team is grateful for Loyd’s leadership and service to farm families and rural communities.

Cash is King

Whether it’s operating a business or prioritizing your personal finances, liquidity and cash play a big role. In fact, there is an old saying that “cash is king.” But with the farm economic reset going into its fifth year, cash and working capital are increasingly difficult to maintain. Nevertheless, the efforts to preserve these additional lines of defense are critical. Why? Let’s examine some of the benefits of cash and strong working capital positions.

First, cash – or working capital – acts as a safety net if adversity strikes, creating issues with profit and cash flow. If current assets can be turned to cash without disrupting overall operations, you are more flexible – especially in marketing. More specifically, the bushels of stored grain or side pen of cattle can be marketed at a profitable point instead of at a time when cash is most needed to pay expenses, service debt, or payback operating loans.


How One Farmer Benefits from Liquidity

This summer, one young producer indicated he maintains enough working capital to cover up to 40 percent of his total expenses. This includes cash, inventory, receivables, and prepaid expenses minus obligations such as accounts payables, lines of credit, accrued expenses, and principal due within the next 12 months. This strong position allows him to negotiate input costs ranging from land rents to parts and supplies. By maintaining working capital, he is able to capitalize on cash discounts for seed, fertilizer, and feed for his diversified operation. These small discounts added up year after year and ultimately increased his bottom line by just more than 5 percent.

Working Capital Provides Independence

Another benefit of financial liquidity is the negotiation power on capital investments such as machinery, equipment, and land. This position offers two distinct advantages: self-financing and timing. When bargaining with a cash payment, a type of self-insurance is present because no borrowing or additional debt servicing is required.

Additionally, having the cash to make a purchase allows you to quickly and selectively capitalize on deals. For example, some used equipment and breeding livestock are being sold for 60 cents on the dollar for payments in cash, but only for a brief window.

Of course, I am familiar with the long-time argument that cash earns very little sitting in the bank. That is true, but the return on the cash discounts and negotiated deals – when analyzed properly – most often shows a double-digit return in the long-term viability of the business.

On the personal side of finances, I recommend preserving four to eight months (eight to 12 if self-employed) of family living obligations in cash. Of course, the old economic rule is to maintain two months of living expenses in cash. This provides for the unexpected car repair or trip to the emergency room and mitigates the need to rely on expensive credit card debt if adversity strikes.

Rules of Thumb

When analyzing your balance sheet, see if you are up to par on financial liquidity by dividing your cash into current assets. You are in a strong financial position if your ratio is between or more than 10 to 20 percent. If you are in the 5 to 10 percent range, caution is warranted as working capital reserves are getting too low. And if you are under 5 percent with credit card debt, accounts payable, or a looming operating line to pay down, you are in a vulnerable and unfavorable position.

Finally, building cash and financial liquidity often entails paying taxes. In many cases, cash or liquid assets are used as a down payment on equipment or other assets to minimize taxes, but over time this builds overhead costs. The prudent producer manages taxes instead of minimizing them. Good managers also balance taxes with cash on hand to navigate the inevitable swings and volatility in global markets.

While perhaps difficult, maintaining cash and operational working capital impacts the bottom line and strategic flexibility. Both the short and long-term advantages of cash negotiations can add to profitability and sustainability. Especially during periods of suppressed prices, increasing available options through flexible liquidity may be the one factor to tip the financial balance in your favor.

WHOW Local Farm Broadcaster Wins Award At National Convention

Jared White, local farm broadcaster for WHOW THE BIG 1520 AM and 92.3 FM in Clinton, was given the “Excellence in Ag Reporting” Award Friday, at the National Association of Farm Broadcasting annual convention in Kansas City.

White was given the award for the most used story on the N-A-F-B News Service in 2017.  Farm broadcasters from around the country, share stories with each other on the News Service.

White was presented a certificate for his work.

White has been WHOW's local farm broadcaster since 2011, and has been with the station since 2007.


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