Ag Diversification as a Path to Profitability

I always note with interest those farmer surveys, because I’m interested in knowing their thought process on topics such as marketing or the costs of inputs. And typically you find farmers spend much of their time thinking about just those areas. We do a fantastic job of raising food for a burgeoning world population; unfortunately, we can’t set prices for the commodities we sell.  So being creative in how to allocate financial resources and manage risk is very important.

An afternoon spent at the World Pork Expo in June opened my eyes to what’s possible. Many row crop producers who want to grow their operations are looking for ways to add more land to their portfolio.  Often, the reason is to support an adult child who wants to come back and farm. But the numbers might actually look better to add a swine facility if you’re open to raising hogs.

Rod Leman, Vice President of Business Operations with Cactus Family Farms, a major Iowa swine producer, says he believes a swine facility can build equity faster than buying the same dollar amount of land. “Our producer contracts pay about $109,000 a year on a 12-year contract for a wean-to-finish facility holding 2,480 head.  The producer takes care of the utilities, insurance, property taxes and maintenance, and provides the labor for caring for the hogs.”

Jeb Gent, sales manager for Hansen Ag Solutions, says such a wean-to-finish facility typically costs in the range of $800,000. As steel prices and interest rates rise, this amount could be increasing in the future but the numbers currently work pretty well for the building owner.

Doug Dickinson, Creston area representative of Farm Credit Services of America, agrees and says today’s 15-year-old facilities are still appraised at values very close to their initial cost. And after the initial integrator contract is complete and the building is paid off, much more of the cash flow goes into the farmer’s pocket. Dickinson said leasing the new facilities from FCS might also be a possibility, allowing no down payment as a possibility.

Consider this example: The gross cash return on an $800,000 facility (assuming you put 25 percent down on the facility and financed at 5 percent for 20 years), provides you with about $52,000 of gross cash flow each year to be used to pay property taxes, utilities, insurance and a return for labor (or to pay down the note earlier).⁰ In contrast, 240 acres of medium quality south central Iowa farmland (2018 ISU Land Value survey) valued at $4,079/acre ($978,960) would generate around $42,000 GROSS cash rent (if you rented out the land at $174/acre) before debt service or property taxes using ISU’s 2018 average south central Iowa cash rental rates.  For those who actually farm the land, with today’s prices, most farmers would be lucky to have one third to one half of that amount for paying taxes and servicing debt. This, of course, does not help cash flow nor does it provide any return for your labor.  With the swine facility, you also receive the manure, which Leman of Cactus Farms says should have a value of $10,000-$15,000 annually.

In either scenario – building a swine facility or buying land – you have the risk of debt, but the source of risk is different. With land, the main risks are probably a large drop in land values, poor cash flow due to low commodity prices and/or a poor crop not fully protected by crop insurance.  With a swine facility, the main risk is company risk – the risk that the swine integrator defaults on contract payments to you.  This is why it is important to understand the strength of the other party to your contract.  According to Dickinson, while this is important, most integrators are in pretty good shape financially.

Even if a facility makes sense financially, there’s always the issue of properly handling the manure. Iowa State University’s Daniel Andersen writes a regular blog on the science of manure, including its management and handling, options for treatment, use as fertilizer, the impact it can have on the environment, and new technologies being developed to improve its use.  In a recent April 2018 blog post, Andersen discusses water quality and the differences between commercial fertilizer and manure.

He says there are differences between manures and commercial fertilizers that may make their nutrient losses (and effect on water quality) a bit different. While the nutrient ratios in manure are different than commercial fertilizers, the Manure Management Plans (based on an Iowa bill passed in 2002 and implemented in 2008) uses information about how much phosphorus is currently present in the soil, how much will be added, and its risk of transport to an Iowa water body to determine if manure application should be limited by supplying nitrogen or phosphorus. This is a risk-based approach that focuses on water quality in making a manure management decision.

Andersen’s December 2017 blog also concluded that manure, when managed correctly, can be a beneficial fertilizer that not only supplies nutrients needed to support crop production, but also can be part of a system to improve soil tilth, health, and hydraulic properties.

Changes in farming and feeding practices in the swine industry have also reduced the amount of phosphorus in swine manures relative to its nitrogen content making its nutrient content approximately balanced for corn-soybean rotations and reducing the risk of phosphorus or nitrogen build-up in soils. Anderson concludes the April blog by saying, “Though it may seem like Iowa is livestock rich, it’s important to remember that adequate land to utilize our manure resources exist. Livestock operations play a vital role in Iowa’s agriculture economy and continue to strive to do so in ways that decrease environmental impact, that are more sustainable, and more importantly these farms continue to strive to do better.”

And swine facilities might be one of the better options for helping bring the next generation of farmers back to the land.

⁰ $600,000 financed at 5% over 15 years results in a $4745 monthly payment

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. There is no assurance that the techniques and strategies discussed are suitable for all individuals or will yield positive outcomes. Examples are hypothetical for illustration only, specific results will vary.

Investment advice offered through Advantage Investment Management, a registered investment advisor.

Five Reasons to Make Philanthropy a Family Affair

Getting your family involved in charitable giving can create a powerful legacy.

A growing number of successful people have a strong urge to “pay it forward” by financially supporting causes and organizations that are near and dear to their hearts. Many of you already make regular and sizable charitable contributions. And we know from research that one key reason successful people like you want to become even wealthier is to help other people increase their own success and advance in the world.  But have you gotten your family involved in philanthropy? If not, you could be missing a truly massive opportunity to teach your children and other loved ones about smart financial decision making and impart key financial values that can guide them throughout their lives.

Round up the kids

If you’re like many people we work with, your deepest financial concerns are focused on taking care of your family and ensuring they enjoy lives that are financially stable and financially responsible. Family philanthropy is one great way to do this. There are five big reasons to engage your family in charitable giving:

  1. Working together to define your shared values around wealth, community and building a better world
  2. Helping individual family members identify their own specific charitable values and intentions
  3. Making financial decisions as a team
  4. Learning about the power and responsibilities of wealth—building it, growing it and using it to positively impact others—as well as critical financial management skills
  5. Developing important life and business skills—critical thinking and analysis, listening and communicating, and negotiating and compromising to reach a desired goal

To decide how best to involve family members, consider factors such as their ages, levels of maturity and independence, and interests. You might involve younger children only peripherally, and expand their roles and influence over the family giving as they grow (and if their interest in it grows with them).

The family office approach: private family foundations

One tool that can both maximize your charitable giving options and engage family in philanthropy at a deep level is a private family foundation.

A private foundation is a not-for-profit organization (i.e., charity) that’s primarily funded by a person, family or corporation. The assets in a private foundation produce income, which is used to support the operation of the private foundation and, most importantly, make charitable grants to other non-profit organizations.

While there are certainly costs associated with creating and managing a private foundation, there are distinct benefits for doing so. Three of the most important reasons family offices often go the private foundation route include:

  • Caring. Philanthropy is about caring. A private foundation is a very powerful way to convert caring into financial and related support for worthy causes. You need to care deeply about some charitable causes to justify establishing and running a private foundation.
  • Legacy. Many people create private foundations to honor loved ones. They’re effective in binding a family together around something they consider meaningful. You should probably want to build a legacy—of one kind or another—if you choose to create a private foundation.
  • Permanence. You can establish your private foundation in perpetuity. This ensures that the charitable institutions and causes that are important to you will continue to be funded indefinitely.

Setting up and running a private foundation can be intricate and complex. Detailed accounting and filing tax returns are required. A variety of experts such as legal and accounting professionals are usually needed to handle regulatory and compliance matters. And if you’re overseeing the assets of the private foundation, investment professionals will typically be engaged.

To see why private foundations are especially compelling to wealthier families who are philanthropically inclined, consider the fundamental ways they differ from another, more commonly used charitable giving tool—the donor-advised fund—in two key areas:

  1. Control. A private foundation gives you significant control over the choice of charitable organizations you want to support. With a donor-advised fund, you’re only making recommendations to a firm responsible for both managing and distributing the money. While it’s unlikely that your suggestions will not be followed, there could be times when this will be the case.

A private foundation enables you to make a wider array of grants than does a donor-advised fund. With a private foundation, for example, you can make pledge agreements to support one or more charitable causes over a period of time. The lack of personal control in a donor-advised fund makes that impossible. Private foundations also can make grants to specific individuals, something donor-advised funds cannot do.

How the assets are managed also differs between the two. With a donor-advised fund, the assets are managed by the firm you entrusted with your money—often a mutual fund sponsor or similar investment firm, or a community foundation. In a private foundation, you—or the investment advisors you select—manage the assets as you see fit.

  1. Creating a legacy. Succession possibilities are unlimited in a private foundation. This enables the family to exercise control across the generations, helping them to pass philanthropic values and specific goals (as well as money aimed at those goals) to children, grandchildren, great-grandchildren and beyond. In contrast, many donor-advised funds have limitations on successions. When that limit is reached, the money no longer belongs to the donor or his or her family. Instead, it’s transferred into a general pool of the organization sponsoring the donor-advised fund.

ACKNOWLEDGEMENT: This article was published by the BSW Inner Circle, a global financial concierge group working with affluent individuals and families and is distributed with its permission. Copyright 2017 by AES Nation, LLC.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual, nor intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation. 

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. He can be reached at 1-800-827-5577. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor.  Cornerstone Financial Group and AIM are separate entities from LPL Financial.

 

 

Savvy Negotiating: To Get to the Moon, Ask for the Stars

One key way to build serious wealth—whether in a business or your everyday life—is to effectively and consistently negotiate deals that are good for you and your bottom line. Ideally, everyone walks away from a negotiation feeling good about the outcome—a win-win scenario. But ultimately, to be successful you must achieve your minimum goals and preferably a whole lot more.

Trouble is, it’s common for people to end up failing to get what they want due to how they approach negotiations right from the start—from the first declarations of their terms. Here’s how you can avoid that negative outcome and get the results you truly want when hashing out a deal or arrangement with another party.

Start with your goals

Clarity about goals is job one. In any negotiation, you will be well-served by being quite clear about what you want to walk away with. Most people in negotiations have a range of goals, and it’s important you specify the top and bottom of the range. For example:

  • High-end goals. These are the results you would achieve if the negotiations went extraordinarily well for you. Achieving these goals would make you exceptionally satisfied.
  • Minimally acceptable goals. These goals will close the deal if you achieve them, but you’ll walk away from the bargaining table feeling far from thrilled. If you don’t achieve these goals, there is no deal.

By spelling out your range of goals, you are more likely to not get caught up in the negotiations themselves and make a deal that doesn’t work for you.

Take your initial position—and make it big

When bargaining, self-made billionaires commonly make demands they do not expect the people they are negotiating with to accept. Often these are terms and conditions that many would consider extreme or even outrageous. They are, in effect, asking for the stars—a whole lot more than just about anyone would give them.

These billionaires recognize that they will give a little or even a lot along the way, which is both expected and perfectly acceptable. However, they are using the anchoring effect to better their bargaining position and come away with a deal that works well for them

The anchoring effect is a type of cognitive bias that occurs when people make decisions and act on the initial information they receive—the anchor. Once the anchor is set, people tend to be biased toward interpreting other information around the anchor.

There are a number of ways to create an anchor. The easiest is to ask for an outsize outcome at the start of the negotiation. This will usually influence the perception of value for the other party throughout the negotiations.

The anchoring effect also sets the stage for you to implement your concession strategies. This is how you methodically go from asking for the stars to getting the moon—your acceptable result.

STEPS FOR SAVVY NEGOTIATING

Haggling is an integral part of good negotiation, and most people go into negotiations expecting some back-and-forth around numbers and terms. When both sides make concessions, both will more likely walk away satisfied.

By using the anchoring effect, your goal is to give yourself as much room as possible to make concessions and walk away with at least the minimum results you are looking for.

In every negotiation, the concessions you make are based on a combination of art and science. You can’t concede too much or act too quickly, nor can you be inflexible.

To optimize results, there is a delicate balance of give and take that you can strike by keeping these ideas top of mind:

  • Know what you can give up easily and what is very hard to give up. In business negotiations, there are regularly multiple issues, values and conditions. Some will be more important to you, and some less. You will be well-served if you know what really matters and what does not before going into a negotiation.
  • When you give, make sure you get. Concessions should be reciprocal. If you make a concession, you should be looking to get a concession you see as equally valuable. If you make a unilateral concession, you are negotiating with yourself—and are absolutely losing.
  • Incremental concessions are best. If you ask for the stars at the start and too quickly give up a great deal of ground, you will likely lose all credibility and power. Making a large concession willingly tells the other party that there is a lot more you will give up.
  • Make concessions slowly. You want to communicate that these concessions are tough decisions. Tough decisions are ones you usually have to think long and hard about. Therefore, take your time and pace out making concessions.
  • Have a final concession ready to close the deal. Many negotiations—especially complex business deals—are just about there after a lot of back-and-forth, but still do not close. You want something in your back pocket to push negotiations to an acceptable conclusion. It’s therefore often helpful to have a “final” concession you can offer to close the deal you like.

Possible results

By shrewdly asking for outsize terms that the people you’re negotiating with cannot (or should not) take seriously, you arrange the pieces on the chessboard to your advantage. Then, by skillfully making concessions and getting concessions in return, you meaningfully increase the probability of getting the results you really desire.

These are a few possible outcomes of “asking for the stars”:

  • You get the stars. While you might think your requests are outrageous, that does not necessarily mean the people you are negotiating with won’t give them to you. Your counterparties might, for reasons you are unaware of, be so motivated to make the deal that they will accept your over-the-top numbers, terms and conditions. While this outcome generally has a low probability, it is a possibility.
  • You induce the other person to discontinue negotiations. Your requests might be so extreme that the counterparty does not believe you can ever come to an understanding. Consequently, the counterparty might end the negotiations. Like the previous outcome, this one has a low probability of occurring.
  • You get the moon. The moon is your high-end negotiating goal, and you end up making smart concessions and getting good concessions that result in you getting it.

ACKNOWLEDGMENT: This article was published by the BSW Inner Circle, a global financial concierge group working with affluent individuals and families and is distributed with its permission. Copyright 2018 by AES Nation, LLC.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. He can be reached at 1-800-827-5577. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor.  Cornerstone Financial Group and AIM are separate entities from LPL Financial.

 

Wills & Trusts

The foundation of your rock-solid estate plan.

For so many of us, family is paramount. You probably expect to use your wealth to take care of your family in the here and now—health care, travel, college tuition and the like. But chances are you haven’t thought nearly as much about positioning your assets so they’re ready and able to help the people you love after you’re gone. Even if you have made some headway in this area, your plan for your estate is probably a little—and maybe a lot—out of date.

If that describes your situation, don’t fret. Even if you have many moving parts to your finances, you can get on track by focusing on two main areas of estate planning: wills and trusts. Here’s how to do it.

Where there’s a will, there’s a way

Read this next sentence three times in a row: Everyone should have a will.

Got it? A will should be the basic foundation of every estate plan—the starting point for a well-conceived strategy to transfer assets at death.

A will identifies precisely what you want to have happen to your assets and estate. Dying without a will means you have decided that the state knows what’s best for you and your family. In addition, dying without a will means you want to make the settling of your estate as difficult, as costly and as public as possible.

As with any decision, there are both positives and negatives to a will. That said, we strongly believe the benefits of writing a will far outweigh the drawbacks.

Is a trust for you?

  1. Are your beneficiaries unwilling or unable to handle the responsibilities of an outright gift (investing the assets, spending the gift wisely, etc.)?
  2. Do you want to keep the amount and the ways your assets are distributed to heirs a secret?
  3. Do you want to delay or restrict the ownership of the assets by the beneficiary?
  4. Do you need to provide protection from your and/or your beneficiary’s creditors and plaintiffs?
  5. Do you want to lower your estate taxes?

 If you answered “yes” to any of the five questions, you may find it beneficial to set up a trust.

Advantages:

  • You decide on the disposition of your hard-earned wealth.
  • Estate taxes are mitigated—especially when the will is part of a broader estate plan.
  • You specify who the fiduciaries will be.

Disadvantages:

  • You have to accept that one day—far in the future—you just might die.
  • There is a legal cost associated with writing up a will and with estate planning.

Trust in trusts

The second component of a smart estate plan is often a trust. A trust is nothing more than a means of transferring property to a third party—the trust. Specifically, a trust lets you transfer title of your assets to trustees for the benefit of the people you want to take care of—aka your selected beneficiaries. The trustee will carry out your wishes on behalf of your beneficiaries.

WILLS AND TRUSTS COMPARED 

Broadly speaking, there are two types of trusts: living (established while you are alive) and testamentary (created by your will after you’ve passed). Living trusts are becoming more and more popular to avoid the cost of probate. In the probate process, your representatives “prove” the validity of your will. The probate process also gives any creditors the opportunity to collect their due before your estate is passed to your heirs. There may be a long delay in settling your estate as it goes through probate. To add salt to the wound, probate can be costly. 

A living trust can avoid or mitigate the effects of probate. It is a revocable trust that you establish and of which you are also typically the sole trustee. The assets in your living trust avoid probate at death, and are instead distributed to your heirs according to your wishes.

Living trusts are sometimes said to be superior to a will, but that is certainly not the case for everyone. It’s important that you understand how they compare.

Comparing Wills and Living Trusts

Wills Living Trusts
Are viable only at death. Can have uses while you’re alive.
Are public. Are private.
Are not very good when you’re dealing with more than one state. Are good in every state and not encumbered by states.
Must go through probate. Can generally avoid probate.
Are less expensive to put in place. Are more expensive to put in place and administer.

Is a living trust for you? It depends on your particular situation. Nevertheless, you should certainly consider it in consultation with your legal advisor or wealth manager.

Your next move

We recommend that your estate plan be reviewed every year or two. The review should be conducted by a high-caliber wealth manager or tax professional—one who takes the time to learn what’s changed since you put your solutions in place, assess how those changes might impact your strategy, and make recommendations for getting your solutions current and in accordance with your wishes.

ACKNOWLEDGMENT: This article was published by the BSW Inner Circle, a global financial concierge group working with affluent individuals and families and is distributed with its permission. Copyright 2017 by AES Nation, LLC.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor.  Cornerstone Financial Group and AIM are separate entities from LPL Financial.

This article is for general information only and is not intended to provide specific advice or recommendations for any individual, nor intended to be a substitute for specific individualized tax or legal advice.

 

 

Increasing Farm Efficiency During Challenging Times

It’s no secret that for many producers the past few years have been challenging. The days of $7 corn and $15 beans are more than five years in the rearview mirror and it takes a sharper pencil these days to be profitable and maintain a viable farming operation.

Farm efficiency can be obtained in many different ways. A good farm tax expert can be extremely valuable.  Some farmers focus on being better marketers.  Others key in on reducing costs of inputs and understanding government programs. Using new technologies can help an operator better understand how resources are being used.  Working with a banker to effectively manage capital is very important to other operators.

Few farmers, however, have the time or resources necessary to study all of the areas where efficiencies can be gained. But in these times of lower margins, it’s worth taking a look at areas you might have ignored over the past few years or strategies that you may need to take a second look at.

Technology

Ag technology has come a long way in the past five years, and in general is now more affordable to more producers. Seth Robinson of AgriVision Equipment Group (John Deere) in Winterset, Iowa, says their 3i service often more than pays for the cost of the program for many farmers.

“The 3i program divides your land into three zones from high producing to low producing land and we’ve seen situations where we can raise production in all zones because the data the system collects can allow decisions like planting rates and fertilizing rates to be made on a micro basis. We price 3i on a per bushel basis according to the number of services the farmer wants help with, so we are tied to the growing season and varying conditions, just like the grower.”

Granular is another digital ag solution that consists of products that help farms track their inputs, outputs, crop planning, financial forecasts, and workflow. Their Farm Management Software (FMS) helps farmers understand profitability by field by organizing the numerous data points on the farm.

Dakota Hoben, Customer Success Manager with Granular says, “We typically find farms that are 2,000 acres and above really value the product. But we can work with farms anywhere from 1,000 – 50,000 acres.”

The software is priced on a per acre basis for about $3 and includes software, customer success manager, and support.

In today’s world, time is money – especially during planting and harvest seasons. Applications using smartphones can reduce much of the time it takes to resolve issues. Apps like AgriSync allow farmers to connect with their local, trusted agribusiness consultants for help adopting and implementing new technologies.

Broad based technology has also entered the world of ag finance. Steven Johnson, Iowa State University Extension Farm Management Specialist, said in a recent farmer meeting to Farm Credit Services members in Red Oak, Iowa, that producers who are customers of Farm Credit Services should consider using their AgriPoint technology to move money between accounts, pay bills, wire money and make payments. AgriPoint also offers tools to create balance sheets, cash flows, what-if scenarios, and the ability to apply checks as payments on your desktop or mobile device.

Marketing

Although no one has a crystal ball when it comes to selling commodities, there are ways to certainly put the odds in your favor. Johnson of Iowa State University said understanding your localized historical basis information can add many cents per bushel to the average selling price of corn and beans when part of an overall marketing strategy.  He believes better days are ahead, demand for animal protein will increase demand for grain and current conditions could represent a trough of the 5-7 year cycle.

Tax Strategies

In 1935, United States Court of Appeals for the Second Circuit Judge Learned Hand said, “Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes.” The U.S. tax code offers numerous opportunities for those in agriculture to use legal means to reduce their taxes. Karen Havens, a CPA in Greenfield, Iowa, who caters to farm clients, believes you can be creative while being ethical and legal.

“Farming has progressed to where business knowledge is essential, from choosing the right business structure to accurate records, tax planning, asset acquisition, cash flows and dealing with lenders. Farmers need to be aware of various tax strategies available to choose strategies that might benefit his particular circumstances, such as retirement funding, employees with employee health benefits, the Domestic Production Deduction, estate or succession planning, as well as other ideas.   Finding knowledgeable professionals to help navigate the maze of options is critical.”

Other strategies that can serve double-duty as both cost-reducers and tax-savers for specific situations include establishing your own captive insurance companies for property casualty coverage, creating conservation easements through land trusts to potentially generate both income tax credits and deductions, and for farmers close to retirement starting cash balance plans to create deductions, postpone taxes and fund retirement. These strategies are not new and not exclusive to agriculture but will most likely grow in popularity as some farmers get closer to retirement and the average farm operation continues to grow.

Government Programs

The United States Department of Agriculture (USDA), through its Farm Service Agency (FSA) division, offers many programs designed to aid farmers in becoming more efficient and potentially improve profitability. Producers are typically fairly well versed on the more popular FSA programs such as the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs that were authorized by the 2014 Farm Bill. Agriculture Loss Coverage-County (ARC-CO) provides revenue loss coverage at the county level. ARC-CO payments are issued when the actual county crop revenue of a covered commodity is less than the ARC-CO guarantee for the covered commodity.  Price Loss Coverage (PLC) program payments are issued when the effective price of a covered commodity is less than the respective reference price for that commodity. The effective price equals the higher of the market year average price (MYA) or the national average loan rate for the covered commodity.

Another popular FSA program is the Conservation Reserve Program (CRP). CRP is a land conservation program administered by FSA.  In exchange for a yearly rental payment, farmers enrolled in the program agree to remove environmentally sensitive land from agricultural production and plant species that will improve environmental health and quality.

Beyond that, there are other programs available that are less well known, such as Noninsured Crop Disaster Assistance Program (NAP), which provides financial assistance to producers of noninsurable crops when low yields, loss of inventory, or prevented planting occur due to natural disasters.

In addition, FSA has many different types of farms loans, such as Guaranteed Farm Loan Programs that help family farmers and ranchers obtain loans from USDA-approved commercial lenders at reasonable terms to buy farmland or finance agricultural production. There are beginning farmer loan programs, minority and women farmer loan programs and emergency farm loans.

Insurance

No one relishes the idea of purchasing insurance, yet there have never been more assets at risk in farming than there is today. Finding effective insurance strategies is a must, and finding efficient ways of paying for insurance is also critical.

“To be the most efficient with their coverage farmers really need to sit down with their agent on an annual basis and review coverage limits,” said Jamie Travis of Hometown Insurance in Creston, Iowa. “I advise my farmers to take risk where they can afford to and save premium.  Many times farmers do not have adequate coverage for their liability exposure.  Umbrellas are relatively inexpensive and they provide coverage in areas where farmers cannot afford to take risk.  If someone is injured or killed as a result of a farmer’s negligence, their responsibility to the injured party could be significantly more than their liability limit.  Adequate umbrella coverage can avoid being forced to sell assets in order to indemnify an injured party.”

In summary

According to futurist Jim Carroll (www.jimcarroll.com) estimates are that the world population will increase nearly 50 percent to almost 9 billion by 2050.  As a result, he predicts a great future for agriculture. To meet the demand, he predicts everyone in agriculture will need to be more efficient.  Producers will have to continue to focus on smarter, better, more efficient strategies in order to stay competitive and thrive.  To do that, they’ll need to seek out professionals in many disciplines to keep them up to date on trends and strategies that can help them stay efficient, improve their profitability and achieve their long-term goals.

Mike Moffitt is a Chartered Financial Consultant and founder of Cornerstone Financial Group with offices in West Des Moines, Iowa, and Creston, Iowa. Using his strategic partner network of professionals in accounting, legal and other key disciplines, he works closely with farmers and ag business owners on strategies that seek to help them grow their business and/or prepare for retirement. He can be reached at 641-782-5577.  Securities offered through LPL Financial, Member FINRA/SIPC.  Investment advice offered through Advantage Investment Management, a registered investment advisor.  Cornerstone Financial Group and Advantage Investment Management are separate entities from LPL Financial.  Other companies and their services mentioned in this article are not affiliated with LPL Financial and Cornerstone Financial Group.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.  There is no assurance that the techniques and strategies discussed are suitable for all individuals or will yield positive outcomes.