April is National Intern Awareness Month and throughout the month we will interview past Horizon Farm Credit interns. We recently spoke with Emily Shaw, founder of Dairy Girl Fitness. Emily shared about herself and her passions in dairy and fitness along with reflections on her Horizon internship experience.

Let’s hear more about you and Dairy Girl Fitness. Tell our listeners about your journey in life and what you do now.

This is one of my favorite things to talk about. I'm Emily Shaw. I'm 26 years old and I currently live in north central Florida, but I am a Pennsylvania dairy girl. I grew up in central Pennsylvania and was involved in the dairy industry. We had a show herd at our house, raising show heifers. I was heavily involved in 4-H, FFA and National Holstein Association. Just about anything I could be involved in with my siblings, we were.

Along with that, we also played sports year round. We played baseball, softball, basketball, volleyball and dance. Again, just staying very active year round. We were always on the go, and that's where a lot of my passions for the dairy industry and the fitness industry came from and then allowing those passions to grow as I got older.

For college, I went to Penn State University. I graduated in 2017 with a degree in ag business management. While I was also there, I was involved in the Penn State Dairy Science Club, Alpha Zeta, which is a co-ed ag fraternity, and Ag Student Council. Again, just really trying to get involved in any way with dairy and ag. I was also on the collegiate dairy judging team.

I started weightlifting at Penn State, because let's be real, I was not qualified enough to join a D-1 sports team at Penn State. But I still wanted to be active. This is where weightlifting and becoming more interested in the fitness side of things came from.

After graduating from Penn State in 2017, I moved south to Georgia. A couple months later, my boyfriend and I moved to Florida. We've now been here three years.

There’s a lot of ag in the south, but there's not as much dairy in Florida as there is in Pennsylvania. I was having a little bit of a tougher time trying to find that dream career that so many kids are looking for right out of college. I really wanted to be involved in dairy promotion.

In March of 2018, I started my Dairy Girl Fitness Instagram page. This was my way to combine my passions for dairy promotion and the fitness industry. Through Dairy Girl Fitness I help debunk myths people have about the nutrition of dairy, or animal products, about how animals are taken care of, and really just bring in a lot of stories and a lot of information about the dairy industry to people interested in fitness.

That eventually grew into me being able to go full-time with Dairy Girl Fitness over the past year. I have a one-on-one coaching business. It's all online personal training. I also offer group coaching, and I have a couple of other different things going on, but that's really where my main focus falls with the Dairy Girl Fitness staff.

What has been the most rewarding part of starting Dairy Girl Fitness? What has been the most challenging part?

There's so many I can really think of it, but I think the coolest part about starting Dairy Girl Fitness is the connections in the community I've been able to build. When I started Dairy Girl Fitness as an Instagram page, I didn't know what it was going to lead into. I don't even know if, at that point, I was able to imagine that I could grow this into a full-time thing and grow it into what it is now.

Being able to make an impact in a way that feels really good to me and connect so many people from different parts of the country, different sides of farming - the people that consume it and the people that produce it - it's just been really, really incredible to be able to create these conversations and have conversations and bring so many people together through the community I created.

One of the most rewarding parts is when someone reaches out to me and they're like, "Hey, because of you or because of your posts, I'm not scared of eating dairy anymore.” Or they say, “I'm not scared of GMOs anymore."

They’re much more open and receptive to listening to farmers and understanding where we're coming from, rather than jump to conclusions.

Just being able to feel like I'm making an impact that I want to be and getting to connect with so many women has been one of the most rewarding parts.

Along with that, though, it is challenging, right? It's not just in being an entrepreneur, but I think in any realm of life or any career people might find themselves in, sometimes it's hard to feel like, "Hey, am I doing enough? Am I doing the right thing? Am I going to make this a sustainable thing?" So sometimes falling into that comparison trap or self-doubt.

I think a lot of people find themselves in that position at one point or another in their life, and sometimes think it's wrong or think there's something wrong with them. But no matter what, I think a lot of people may deal with imposter syndrome, but the most important thing is to push through that and know if you do feel scared, if you do feel a little bit uncomfortable, very often that means that you are doing big things, that you are doing the right thing.

It's so important to surround yourself with like-minded people that are going to really support you and elevate you even on the hard days.

Your experience as an Horizon intern in 2016 was a bit different than what you do today. However, could you reflect on that experience – what did you learn and how do you think it helped you get to where you are?

Pretty much everything I've done is a little bit different than what I've done now. I can say, I never imagined going to school for ag business management with a specialization in dairy science and then becoming an online personal trainer and Instagram influencer.  That was never necessarily the plan, but I think every single aspect of my youth, college and my internships provided so many different experiences and perspectives that have truly helped me in what I'm doing now.

With Horizon, one of the most awesome parts was going to visit customers on their farms and seeing different types of ag with different loan officers. Sitting in on those conversations and the problem-solving was eye-opening to see different ways people were thinking and looking at things.

I believe that helped in my communication skills. I became more confident in what I know and contributed to conversations, even though sometimes it could be a little bit nerve wracking going into these conversations with people who are doing very well or are just much more experienced than you, and think you have value to add.

Plus, we were able to go into the Headquarters of Horizon, and a few time throughout the summer. We interacted with Horizon leadership and had engaging conversations. I remember one of the meetings, we were talking about dairy and agriculture and how, as youth, we can continue to promote what we're doing. Having that conversation reminded me how passionate I was about dairy and ag promotion.

Being able to have those conversations with people that were very successful, doing well in their industry, and even within the company, was something that really allowed me to feel comfortable, to push myself, to challenge myself and think outside the box.

As we wrap up today, share any advice you have for young people who are interested in pursuing their passions.

My biggest piece of advice to anyone is you're never going to feel ready. Stop waiting to feel ready.

You may always think there's something else you should be doing, or you need to get one more thing done, but it's always going to be nerve wracking. It may always be a little bit scary, but that means you need to do it anyways. As long as you're falling forward, you're going to keep moving forward.

One of the biggest things is not thinking that you have to fit a certain mold or a certain box. I mean, honestly, I never really knew how I was going to combine dairy and fitness, and it felt kind of weird. It felt a little bit awkward at first. I wondered if it was even going to work.

As long as you're passionate and truly care about what you're doing and the people you're helping, there doesn't need to be a certain path, or it doesn't need to follow a certain thing anyone else is doing to move forward and be successful.

Dr. David Kohl, Professor Emeritus Agricultural and Applied Economics, Virginia Tech University

The title of this article comes from a recent Farm Credit University face-to-face session for the online Commercial Ag Lender course. This group of students represented employees from various Farm Credit associations and banks throughout the United States. One theme the class wanted to address was how can an agricultural business thrive in chaos?

The first step is preparation and focus. In my interactions with leading legendary coach John Wooden of UCLA, preparation and focus were prime strategies that he had for success when he won 10 national basketball championships. He emphasized to his teams that they would prepare the best they could with a focus on fundamentals and follow-up with the basics. In this strategy, the key was to maintain focus while limiting outside distractions. This is analogous to agriculture with all of the breaking news and tweets concerning trade and tariffs. Following one’s strategies and knowing when to take a profit or minimize losses will be key to long-term success.

Another key component that Coach Wooden stressed was the execution of fundamentals. When operating a business, developing a business plan with financial, marketing and operational strategies is an important, fundamental step. Then, one must take the business plan from concept to action and accept both the positive and negative consequences. With any good coach or business, measuring and monitoring outcomes is important to tweak the game plan for the next opportunity or the next year.

Those who thrive amid chaos often have strong financial statements, particularly on the top half of the balance sheet. Working capital and the ability to quickly convert assets to cash to garner opportunities when others are not in a position to do so provide a competitive advantage. Being able to negotiate cash discounts is possible only if adequate liquidity is maintained. Strong working capital and liquidity also allow you to market on your terms to meet profit and cash flow expectations.

Finally, develop a strong team culture where individual goals sometimes are modified for the betterment of the team's overall success. In this scenario, some team members will have to check their egos at the door, listen rather than talk, and be fully committed to the overall team success.

This chaos we are experiencing is only just beginning and will be with agriculture throughout the next decade. Staying ahead of chaos with a well-thought-out plan, execution and monitoring with flexibility in the financials combined with a team concept will be imperative.

No matter if you are a full- or part-time farmer, agricultural producers have a number of capital needs to make their operations successful. While often overlooked, leases can be a valuable option by providing tax advantages, little or no down payments and lower monthly payments.

Oftentimes, the real value for a farmer lies in the use of the asset and not the ownership. But conventional loans also have their benefits, most notably being that the asset is owned and can be reflected on your balance sheet.

Other benefits of loans and leases include:

Benefits of a loan

• Payment timing and terms are structured to fit your operation
• Owned facility/equipment are your assets
• Asset is depreciated on your tax return
• If you are an Horizon Farm Credit borrower, patronage can be earned based on the amount of interest you pay

Benefits of a lease

• Working capital and your operating line is preserved
• Cash flow is improved with lower payments
• Tax benefits are maximized with accelerated write-off
• 100% financing is available

For your next equipment or building need, in addition asking your lender about a conventional loan, ask about a lease as well. Depending on your unique situation, one option may be more favorable than the other, and you may want to consult with your accountant or other tax advisor to get his/her opinion, too.

We recently interviewed Ollie King who raises sheep and beef on his farm in Doylesburg, PA. During the interview, Ollie shared about his operation and strategies for raising sheep and marketing their products.

Our listeners can probably tell from your accent that you aren’t a Franklin County native. Share with us about your story and how you ended up being a farmer here in south-central Pennsylvania.

I'm clearly not from Pennsylvania nor America. I served 22 years in the in the British army, which now I'm retired. During my time in the army, I was serving in Afghanistan and I was in a U.S. army base when I met my soon to be wife, Megan. She was in the U.S. army. We met there and then we continued to see each other.

I'm from a farming community in the UK. I always kind of wanted to be a farmer or wanted to have some land because all my friends growing up were from farming families.

We really wanted to have some property at least, but we couldn't afford to buy any land in the UK. We started our search more in America, and Megan is from Pennsylvania. Megan's parents had a farm in Franklin County, so we looked around there and found our farm, which is a 90-acre farm. We bought it with me being in the UK and Megan being in Afghanistan. So that was quite a challenge. We did see the farm before we bought it, but we basically bought it via an online contract. And so that's what brings us to Franklin County.

We have a mixed farm. We have beef, sheep and as I said, Megan has horses. We did have some arable crops to begin with before we got the livestock. As the livestock population has grown, we've reduced down any cash crops. Now the whole farm is in pasture or hay land, which is basically the same thing because we use rotational grazing.

Let’s talk a bit more about your sheep operation. Tell us about the sheep you raise, how you’ve grown your flock and what you’ve learned over the years about raising sheep.

As I said, we are a mixed farm. We have sheep and cows, but I'm completely new to agriculture as an owner. I thought we should start with something not as big as a cow. And so I thought sheep would be a good way to start.

We started with five ewes and three ram lambs. That was in the spring. Two of the ram lambs went to butcher that autumn and the third was kept to be a stud ram. We had lambs in the springtime that following spring, and we had some lamb in the freezer and that was the beginning.

We have a bank barn on the property and so I just used the base of the bank barn. It's quite an old bank barn and it is in relatively good shape, but it's not like a new construction. It was somewhat damp and it was somewhat cramped and there wasn't any lighting in there. That first year was quite a challenge. I learned quite a lot.

Thankfully, in that first year I didn't lose any of the five ewes but because they were yearling ewes, only three of them had lambs.

I thought we needed to look at some different breeds. What we got originally was just a white, fluffy sheep. It’s a Cheviot cross. It’s not a pure bred, and it's got a mixture of bits and bobs in it. So I thought it was probably wise to go with one or two purebred breeds. On the farm now we have Shropshire, Clun Forest, and the Cheviot crosses.

I emailed a couple of people on the Clun Forest registry and one really nice chap got back to me from Maryland. I bought two ewes and the ram from him.

From that relationship, I bought a couple of more sheep from him, but also became involved with the Maryland Sheep and Wool Festival for which now I'm a board member. I really enjoyed the contacts and the friendships I've made as a result of that first meeting with the chap that sold me the Clun Forest.

So we bought five Cheviot crosses, two Clun Forest ewes and then over the next three years bought six, six and six of Shropshires, each of the groups coming with their own ram. We run three breeds. So they've got five groups with five rams come autumn time, because they're running those separate groups to keep the purebred and registered ones in their own line. Now we're now up to 60 odd sheep on the farm.

So we have 54 using the barn now for lambing. We choose springtime lambing so that when the grass comes in, which is almost now, the mothers can go out on the fresh pasture, almost straight out of the barn.

They sheared the end of February and then they stay in the barn until the beginning or middle of April. So we have basically four weeks, just with new shorn coats and then they start lambing and they go through the general population in the lambing barn.

Then they go into mothering pens for a couple of days, and get sorted to a maternity wing where all the ewes and the lambs are together. Now the grass is coming in, they will start dashing out onto the fields and enjoying the grass.

Importantly, on our farm, we practice rotational grazing. The whole principle of how we run our beef and sheep is on rotational grazing because we only have a relatively small farm at 90 acres. Grass pasture is at a premium. I use electric netting for the sheep and hot movable electric wire for the cows.

We rotationally graze them, moving them every few days. In Pennsylvania, the stocking rate is one animal unit per acre. One animal unit being a 1,000 lb. animal, and a 1,000 lb. animal in beef terms is equal to five sheep. So if you do the math on that, we will very quickly run out of space on 90 acres.

The rotational grazing makes it much more efficient because you can put more hooves on the ground. Because you moved them frequently, the grass grows and so therefore soil quality and regeneration is enhanced and it allows for a better stocking rate and being a better custodian of the pastures, I feel.

The ewes and the rams stay with their mothers. We do what we would call a soft wean. At four months, the ram lambs do get taken away from their mothers, but they can still see them. The ewe lambs stay a little bit longer with their mothers. The ram lamb continues to graze in rotational grazing until they go off to the butchers in the autumn.

Now, let’s talk about the marketing of products from your sheep. How do you approach the marketing side of your business and what strategies do you use?
One of our biggest marketing tools is me being British because I've noticed that most Americans don't eat lamb. Where I live, all the producers around me are beef producers.

Those that do have sheep, and there are a few up the Valley here that do have sheep, none of them eat their own product. If I ask them why they don't eat lamb, nine times out of 10, they'll say they don't know how to cook it. For me lamb is a staple that we've always grown up with being from Britain in Shropshire.

I encourage people to start trying it. So that's helping.

Megan, my wife has a full-time job and she works for Highmark, the health insurance provider. She’s not in the office now because of the pandemic, but her office is in Camp Hill and it's a relatively big office. Many people there have become customers. She's managed to make a lot more contacts that way.

We have begun to serve ourselves in that way through Megan. I'm at a bit of a disadvantage because I have no social network in America because I'm new to the country. Most Americans have a network of friends. Of course I don't. That made it quite difficult.

The marketing from our perspective has been very slow because we've been A - learning and B - growing the business.

We started selling to friends and family and for the first four or five years. We had more people wanting to buy lamb than we could produce lambs. 2020 was the first time we people wanted and we had lambs. We sold three separately this last year, direct to a meat producer.

This next year coming up, we will be positively marketing. We've been kind of passively marketing in the past, but obviously our network of friends and our network of people that have bought and passed it on to other people is increasing.

Two springs ago, we started a Facebook page and we have a Facebook farm page, which is every week growing more followers. It’s not perfect marketing but it kind of is surprising how fast word of mouth spreads. In fact, we took a photograph of one of our steers in a feeder just a few months ago and it went all around the world. The power of Facebook marketing is extraordinary. Last year we did sell two half lambs as a result of Facebook. So this year we will be putting more on Facebook. At some point, we would like to get a webpage put together to orders represent ourselves with a web presence.

We sell the wool and the pelts also through the Facebook marketing strategy, because we try and use as much of the animal as we can. The wool and the pelts is a whole network of other people. The people that use the wool might not necessarily even eat lamb. A person might buy some wool of ours and then come and visit and then think it might be nice to have a half of lamb.

Selling to cities is somewhat more challenging because people don't have such big freezers, but that's something we will be looking forward to looking into in the future -  the selling and the marketing of individual cuts of lamb.

As we wrap up today, if any of our listeners have an interest in starting their own sheep operation, what advice would you give them?

I think the most important piece of advice I can give, which we have adhered to purely by luck rather than any calculated judgment on our part, is start with good stock. Now I'm kind of addicted to YouTube channels because I'm trying to learn as much as I can, how to be a farmer. If any farmers are listening to this, they'll just roll their eyes and think, "Oh my goodness, how is he learning to be a farmer from just watching videos." But I've obviously had to start somewhere being in the infantry for 22 years.

A lot of YouTube channels will often do ‘Top 10 Things I Wish Someone Had Told Me’ or ‘Top Five Things I Wish Someone Had Said to Me.’ In all of those different YouTube videos, in the top 10 of that their list will be ‘starting with good quality stock.’

And so having fallen into that by accident, we started with registered Shropshires. We started with a good stock from the Cluns, and it just happens that we were lucky that the Cheviot crosses were a good standing. It makes such a difference in what you do, because if you buy from the sale barn, you don't know what you're getting, where they're coming from, what they're bringing with them. The good stock means that they will be more hardy. It means that they don't bring problems onto your farm. And it means that they take less of your time with the husbandry.

I've learned so much from different visits to different farms, and hand in glove with that, do get some YouTube videos under your belt. I know it sounds silly, but no matter how many times I watch new and old videos on YouTube, I always spot something I didn't see first time or I’ll always learn something on each episode.

Make sure your handling systems are safe and that works, I think, two ways. It keeps the handlers safe and it keeps the animals safe. Low stress handling and low stress animal movement is hugely beneficial to the animals but also for the farmers or the others working with you on your farm, and oftentimes that's family. The less stress the animal is up against, the better they will feel and the better they will work with you.

Dr. David Kohl, Professor Emeritus Agricultural and Applied Economics, Virginia Tech University

Welcome to the new decade with all of its challenges, but also some bright opportunities. This decade will be characterized by both social and global competitive shifts and could be defined as the “fork in the road” for many businesses, industries and economies. The following are just a few of the questions, perspectives and observations to consider when conducting short- and long-run planning and strategy sessions.

Will consumer trends, driven by the millennials, Generation Z and Generation A, continue to shift rapidly? Plant-based and cultured meat have established a place in the market. Will these alternative products cut into the demand for more traditional products? Will individual producers and industry leadership groups develop a game plan to align with consumer desires? Or, will they be satisfied to be the low-cost commodity producer for the U.S. and global markets?

Will trade disputes be resolved in 2020 with our trading partners? If so, will the loss of demand to our competitors around the world impact prices for commodities that are exported? The major question for cash flows and profits will be whether government support payments will continue making up a larger share of producer profits. The fork in the road concerning global economics is whether there will be a return to globalization or a shift to “decoupling” and populism as the mode of operations internationally.

Will farmland values maintain their resilience in 2020? If interest rates stay low and skepticism about alternative investments such as stocks and equity remain, expect farmland values in most regions of the country to stay strong. Baby boomer farmers and investors with new money have enough equity and cash to continue investing in hard assets, such as land, that come with other attributes including mineral and development rights, energy and water.

Political volatility and uncertainty will be key words for 2020 in the U.S. and abroad. The unpredictability of election outcomes will put a cautious, conservative stance on the stock market as well as capital investment strategies for businesses.

The year 2020 and beyond will be dominated by consolidation. Will consolidation continue to accelerate or will political, consumer and social forces result in a black swan for big business? The power struggle between big and small businesses may be in its early innings for business owners and strategic thinkers. Will non-governmental organizations (NGOs) continue to place pressure on business and institutions to regulate in favor of their desires?

The next decade will continue to bring extreme weather in both the U.S. and abroad. Will improved management practices and genetics be enough to overcome these weather aberrations without impacting worldwide supplies?

A major question for 2020 concerns the health of the economy and interest rates. The U.S. economy has set a record for economic expansion with 126 consecutive months of growth. Interest rates in the U.S. and abroad have been at record low levels for nearly a decade.

Will the U.S. energy sector still remain number one in world output followed by high rankings posted by our northern and southern neighbors? If the output of the North American energy sector continues, the resulting stability and cheaper energy will be beneficial to producers, businesses and consumers. Any disruption could lead to volatility and be advantageous to possible enemy forces.

With all these questions, one variable remains constant: good, solid planning with alternatives will be critical. A focus on execution and monitoring results will be even more important going forward. Manage to your strengths and complement your weaknesses or areas of improvement. With the best talent and a strategic plan, you can increase the probability of traveling the high road to profit, overall success and fulfillment. Best wishes for the upcoming year and the next decade!

I am from Dillsburg, PA. I’m going to be a junior this fall at Duquesne University in Pittsburgh, PA. I am public relations major with minors in French and business. I expect to graduate in May of 2022.

1. Why were you interested in Horizon?
I was interested in Horizon because it was a great opportunity to get experience in the marketing field. I had also worked at Paulus Orchards for 6 years in middle and high school, so my knowledge of the agriculture industry could be used in this position as well.

2. What are you looking forward to this summer?
While COVID-19 has canceled the majority of my plans this summer, I am looking forward to taking a boat cruise along the Susquehanna with two of my best friends from high school. 

3. Your goals for the future
In the future, I am hoping to change my French minor to a French major so that I can intern next summer in France and become fluent in the language. I hope to one day become a wedding planner in France planning destination weddings or in North or South Carolina planning beach weddings.

We recently interviewed Marlene Kaltenbach with PA Farm Link. PA Farm Link is a non-profit organization with a mission to link farmers to the future. During the interview, Marlene discussed the organization and its land-linking database.

First, could you tell our listeners about PA Farm Link, including what resources and services you provide to Pennsylvania agriculture?

PA Farm Link is a nonprofit organization that was started in 1996. This year we're celebrating our 25th anniversary of supporting and assisting Pennsylvania farmers.

So what do we have to offer? We basically have two main areas that we predominantly work in. One is farm succession and transition, where we work with a farm family to help them through the process of transitioning farm business to the next generation of farmers. All of our staff have completed farm facilitation training, and we all have an agriculture background.

The second focus is what we're going to be talking about today - linking farm owners and aspiring farmers together through our online database. We like to say we ‘link farmers to the future.’

We also have a resource page on our website at www.pafarmlink.org. Through that resource page, we offer a variety of links for people to access to help them research as they go along in their farming journey. Topics include business planning, veterans' resources, organic production, mental wellness, farm succession, beginner farming resources, etc.

Maintaining the online database is the area that I primarily work with.

Let’s talk a bit more about PA Farm Link’s land-linking database. Who uses the database and how does it work?

What we offer is an online database for landowners/farm owners and for entering or aspiring farmers. So two separate databases online through our webpage. The database is searchable 24/7 to the public. There is no fee to search our database, or if you want to be put in contact with one of our database members, there's no fee to have that done. It's one tool folks can use to either find land to lease or buy, or to find an aspiring farmer to lease or sell to.

I'll talk first about landowners. Our landowners are typically farm owners looking to find the next generation to come onto their farm and really hit the ground running to keep that land in agricultural production into the future. I’ll emphasize though that they often have specific parameters, specific details of people who they are looking for to come on and to farm their land. We do occasionally have listings from conservancies and agricultural education centers, but most of our landowners are farm owners looking to lease or sell their land for agriculture use.

We have a privacy policy that states that staff cannot give out contact information of our database members, including names, address, email, etc. Because our landowners are typically looking for someone specific, this helps to protect the landowners' privacy and help them get matched to the right couple or person that would really fit their farm situation.

When someone is interested in a PA Farm Link landowner listing, we ask for a resume, cover letter or some form of introductory information to be sent to us. This information is passed onto the farm owner to review, and it provides a snapshot of the inquiring party and their goals experience. Information sent allows the farmer to get a feel for that inquiring party and if they would be potentially a match for their farm operation. Once the farmer reviews that information, and if he or she feels there's a potential match to be made, the farm owner would then contact the inquiring party directly to discuss the farm opportunity. A key to gaining a discussion with a farm owner in our landowner database is really giving enough information to paint a detailed picture of your agricultural experience and your goals and your visions of how you want to farm.

For our entering farmer database and how that works, our entering farmers may be new farmers or existing farmers who are looking to relocate or expand their operation. It could include anyone who is looking to lease or buy farm land for agricultural use.

When a farm owner sees an entering farmer, they're scrolling through our database and they say, "Hey, this person might meet my farming operation goals." Then they contact PA Farm Link, and we often ask farm owners for some additional details. How many acres do they have? Is it currently being farmed? Are there barns and buildings to utilize?

We share that information with our entering farmer database member, and then it would be up to that member to reach out to the farmer to discuss the farming opportunity.

For either database, landowner or entering farmer, listings are available to search 24/7 from our website.

Since you work closely with the farmers and landowners in the database, would you be willing to share any “success story” matches made from the database from recent years?

Last year we worked with a farmer in the west-central part of Pennsylvania. The farm had a larger number of acres, but this farmer was looking to move on to other adventures in life. The farm had not been aggressively farmed in several years. It was an older dairy. The owner was looking for someone to come on, but still had specific goals and parameters that they were looking at for someone to buy their land and to keep it in a farm business.

We fielded several inquiries about this database listing, and finally, the owner did find a match with a couple who, when she talked to them, were able to come to an agreement. It was a perfect fit for them. They were able to secure financing, and then, the agreement went from there and they were able to come up with a sale agreement.

I will say that once we put a landowner and an entering farmer or an aspiring farmer together, try to link them together, then we really are out of that loop. Any agreements made between the two parties would be the responsibility of the landowner and that couple looking at the land.

Let me give you an example of an entering farmer success story. We had a former PA Farm Link landowner reach out to us. He was now looking for a new lease on his farm and knew the system was comfortable and familiar with our system, and searched our database, found an entering farmer that he felt might be a match. He reached out to us again, shared all the details of his farm, we shared that with the entering farmer and they were, again, able to come to a lease agreement.

This time it was a lease agreement, and that our entering farmer did move into the house on the farm this past fall to get a jumpstart on the spring planting for her business that she was looking to expand.

Again, no two situations are really ever going to be the same, and that is one thing that's very unique about our database, as opposed to, say, a real estate agent. Our landowners are looking for someone very specific. It does take time and patience and the ability to share information or the willingness to share information so that landowners can get an insight for what you want to do coming onto their farm.

Is there anything else you would like to share with our listeners today?

I do want to mention that PA Farm Link is currently running a 2021 kickoff promotion, and we're offering a complimentary database listing to either land owners or entering farmers, whichever you may be. This is $100 value and will continue through April 1. Take advantage of that offer to be listed on our database.

You can apply online through our website at www.pafarmlink.org or you can email farmland@pafarmlink.org for more information, and I would be the one corresponding with you.

Dr. David Kohl, Professor Emeritus Agricultural and Applied Economics, Virginia Tech University

Much discussion about the attributes that lead to success in business is occurring in the agriculture industry. With increased uncertainty surrounding weather, markets and trade issues that lead to volatility, these attributes will become exponentially more important. The FINPACK team from the University of Minnesota’s Center for Farm Financial Management recently held their lender's conference in the cold, snowy confines of Minneapolis-St. Paul. For audience engagement, a series of questions was asked using clicker technology for anonymous responses. One question centered on the top attributes of the most profitable operations. Participants could select up to three attributes. Let’s examine what characteristics these lenders thought were most important.

What was the top attribute? Thirty percent indicated that producers who develop and use financial statements for decision-making, such as the balance sheet, income statement and cash flow statement, rise to the top of the pack like cream on milk. I often cringe when I hear producers saying they have to fill out financial statements to request credit or because the lender requested information. Another eyebrow raiser is when the lender fills out these financial statements to complete the loan package. Financial statements are often a requirement to obtain credit, but should also be used to manage the business. Given the economic outlook, the proactive use of financial statements will be imperative over the next few years.

The planning and execution of a marketing and risk management plan was second on the list of desirable attributes. Whether it is commodities or value-added markets, more producers in the profitable segment are getting the message about the importance of marketing and risk management.

The next attribute listed is becoming much more prevalent in the down cycle. Many profitable producers are generating off-farm income and diversifying their revenue sources. 

The lenders also indicated that modest family living expenses often lead to success. Many times it is not the actual cost of one family that strains a business, but the number of families living out of the farm from a global or overall standpoint.

Another trait popping up on the radar screen was that many profitable producers are good negotiators of leases, rents, fixed and variable costs, and overall asset management. I overheard several discussions at the conference that producers who collaborate with others and create win-win situations are more successful.

One trait that surprisingly made the list was producers who are in the top 20% of production managers are more likely to be profitable. While producing one’s way to profits is important, it was seen as a top attribute by only 7% of the participants engaging in the surveys. 

On these cold winter days, step back and ponder some of these results and compare your business and your management philosophy to these attributes.

We recently interviewed Kenny Nearhoof, accounting officer with Horizon Farm Credit. Kenny explained why tax planning in 2020 is a bit unique and how farmers can avoid any surprise tax bills.

Tax planning is important for farmers every year, but it is especially important this year. Can you help us understand why that is?

Tax planning should be a normal part of managing your farm business. Hopefully your accountant or tax advisor is on your team of professionals helping your farm business, but if not, at least make sure you have a tax planning visit scheduled with your accountant each year around this time.

The expectation to never pay taxes isn’t realistic, and isn’t the best approach for any business, but a good tax advisor can help you level out the year-to-year peaks and valleys. With planning, you can make informed personal and business decisions and better understand your overall tax position.

2020 has been unique in a lot of ways. For farmers, access to COVID-relief programs including the Paycheck Protection Program (PPP), Economic Injury Disaster Loan (EIDL) and Coronavirus Food Assistance Programs (CFAP and CFAP-2) may have tax implications.

One of the big challenges is that details on how all of these programs will be treated are still unclear. Even as we record this podcast, there is proposed legislation that may pass (or not pass) and have implications on how programs are handled. Therefore, I’ll talk about them as we know information today.

Let’s talk more about these COVID-relief programs. Could you walk us through each program and what farmers should know from a tax planning stand point?

Sure, let’s start with CFAP, which is likely the easiest to understand. CFAP is technically a disaster payment, similar to crop insurance. For that reason, we question whether it can be deferred for one year like crop insurance. One clear detail points to a “no” answer: only proceeds that are related to damage can be deferred, not proceeds related to price (CFAP is price-based). Since there is no final IRS ruling, the deferment door might remain open for specialty crops that go straight to market at harvest. To be safe, don’t count on deferring CFAP or CFAP-2 payments. CFAP payments are treated like Ag Program Payments that are taxable in the year received, and look out for a 1099 from the USDA/FSA.

Next, let’s tackle the Economic Injury disaster loan. EIDL will have a relationship with PPP if your PPP loan is forgiven – we will come back to this shortly. There are two different pieces to EIDL to understand – the “advance” money that people received very quickly, and the actual loan they signed for with the Small Business Administration. The Advance piece is treated like a grant – this will not need to be repaid - but this is taxable income. The actual loan portion is just like any other loan you get – the proceeds are not taxable, and the principal you repay is not deductible.

Now to PPP. If you got a PPP loan, and also got the “advance” portion of the EIDL program – the EIDL advance will count against your loan forgiveness amount (think of it as not being able to double dip on free money). As a simple example. If you got a PPP loan for $100,000, and an EIDL advance for $10,000 – the maximum loan forgiveness you can receive is $90,000. The remaining $10,000 is your PPP loan to repay.

Congress passed the CARES Act with clear intent that PPP loan forgiveness would be excluded from gross income for the recipient. What was not addressed in the CARES Act was whether payroll and other expenses covered by PPP funds would follow Internal Revenue Code or not. To summarize Code as plainly as possible, if you are not going to claim the income (forgiven debt), you can’t claim the associated deductions. At this writing, without action from Congress, you can’t claim your payroll expenses up to the amount that your PPP loan is forgiven.

This is a challenge for accountants because we want to make sure your gross wages expense on your tax return matches your W3 Wage Transmittal (the form that summarizes all your W2s for the Social Security Administration). With a longer period allowed (up to 24 weeks) to use the PPP funds, it makes sense to wait until early 2021 to apply for PPP forgiveness and use those 2020 payroll forms to further document the forgiveness application. The big question is whether we can use this inconsistency between Code and the intent of the CARES Act to benefit us in tax savings by (1) maintaining/carrying the PPP loan into 2021, (2) claiming all the payroll/other eligible expenses for 2020 and (3) applying for debt forgiveness in 2021 and showing that income in 2021.

Potentially, there is room for interpretation. It is similar to the strategy many farmers use of prepaying next year’s crop inputs in December, but not selling last year’s crop until March. There are many pieces to consider around the timing of PPP loan forgiveness, and everyone’s situation is unique. You should seek guidance from a tax professional on when to file your PPP loan forgiveness application and stay tuned for any post-election changes from Congress before year-end. 

Is there anything else you’d like to share with farmers on this topic?

Yes, I think it’s important for farmers not to get overwhelmed, which is easy to do just with the information I shared today. That’s why it is so important to schedule an appointment with your tax advisor. He/she will be able to walk through all of these programs, along with the normal factors that have tax implications on your farm business.

We’ve had plenty of surprises here in 2020, and we don’t want your tax situation to be another. Be proactive and call your accountant.

If you are looking for an accountant who may better serve your needs, consider our Accounting, Records and Tax team at Horizon. In addition to doing taxes and tax planning, we offer a suite of services including accounting services such as software installation and support, management reports, in-house records services and payroll.

Land, as an investment, has physical characteristics that distinguishes it from all other assets. Those characteristics include the following:

1. Land is unique in location.

You may have heard it said the three things that affect real estate values are location, location and location. Value based on location is affected by physical characteristics of the property and on the socioeconomic characteristics of the surrounding area. 

The following is an example of a physical characteristic. Fifty years ago, a farm with a stream was desirable. Quite often there was a stream going through the barnyard. Due to current environmental policies that same stream is a liability because it increases costs in everything you want to do and limits the use of the property. However, for a lifestyle property that same stream may have an aesthetic or recreational appeal that would enhance the subject’s value. 

Several examples of socioeconomic characteristics include the distance a property is located from a thriving population center (such as a college town), religious communities or expanding farm operations. These all provide strength of community and support strong land values.

2. Land is unique in composition.

There are no two identical properties when it comes to soils. Soil types are the foundation for the valuing of land. This is why Horizon appraisers determine soil qualities for the subject property (the property being valued) and the comparable sales we are using to compute the subject’s land value.  

However, soil and fertility management can either enhance or diminish overall value. A farm with soils that are maintained in the optimum range of fertility lowers the out of pocket costs to a potential buyer. Properties that control excess surface and subsurface water should have more market appeal. This is due in part to actual physical costs and permitting required by current regulations.

3. Land is durable.

Provided adequate conservation practices are employed, land is a long lasting asset. Land as an investment lacks liquidity; however, long-term trends indicate land is an appreciating asset. 

4. Land is in finite supply.

They don’t make any more land. This is why you see concentrated animal farm operations willing to pay above market prices to purchase and/or lease near-by acreage. Once a property is developed for residential or commercial purposes, it is almost impossible to convert it back to farmland. 

5. Land is useful. 

When completing an appraisal, the highest and best use of the property needs to be determined based on the following factors: size and shape of the property, land quality and topography, industry infrastructure of the surrounding area, uses of surrounding properties, governmental regulations, market influences and current property improvements. The highest and best use may not be the current use of the property.  

The previous factors interact with each other to determine land values in the market area. As appraisers, we know every property is different. It is our task to analyze the subject’s unique properties and compare the subject to recent sales of similar properties. The comparisons between the properties are used to arrive at an opinion of market value.