Horizon Farm Credit reported strong financial positioning in its 2022 Annual Report. Horizon Farm Credit was formed July 1, 2022, with the merging of AgChoice Farm Credit and MidAtlantic Farm Credit--both successful and respected Associations.  Horizon Farm Credit showed continued growth in loans and strong earnings from the point of its establishment throughout the remainder of 2022.

As a result of the merger, loan volume grew to just over $6.0 billion, an increase of approximately 99.2 percent compared to $3.0 billion in 2021. Net income grew over $31.4 million, a 35.3 percent increase compared to $89.0 million in 2021. Credit quality continues to remain strong with acceptable credit quality at 97.0 percent for 2022. The merger also created a positive shift in the commodity concentration and strengthened the agricultural diversification of the Association’s loan portfolio.

“Our Association grew significantly in 2022, with respect to our footprint, membership, and our ability to serve agriculture,” said Tom Truitt, Chief Executive Officer of Horizon Farm Credit.  “The formation of Horizon Farm Credit and its strong financial performance has positioned us to continue to meet the needs of producers in our territory, grow our industry, and support our rural communities for years to come.” 

In 2023, Horizon Farm Credit will be distributing a combined total of $91 million of its 2022 earnings in cash patronage directly to its member-borrowers. “Our patronage program is something unique to Farm Credit, and one of the many benefits of being a cooperative,” says Truitt. “It’s gratifying to be able to share the Association’s success with our members and their families.”

Horizon Farm Credit recently announced a patronage distribution of over $91 million in cash to its members this year, significantly reducing their cost of borrowing.

“Our unique cooperative structure sets us apart from other lending institutions and allows our member-borrowers to share in the profits of their Association through patronage,” says Tom Truitt, Chief Executive Officer of Horizon Farm Credit.

Horizon Farm Credit was formed through the July 1, 2022 merger of AgChoice Farm Credit and MidAtlantic Farm Credit.  As a result of the mid-year merger, patronage earned during the first half of the year was calculated and distributed separately from that of the new Association. $38.2M in patronage was distributed in January, which covered earnings through both pre-merger entities.  $52.8M in patronage was distributed this week from Horizon Farm Credit, bringing the total patronage distribution for 2022 to $91M.   Going forward, Horizon Farm Credit expects to return to a single patronage disbursement in March/April.

Horizon Farm Credit is a part of the national Farm Credit System.  Each Association determines its patronage payout, which is dictated by its total income, expenses, market conditions, and the Association’s bylaws.  All patronage distributions are at the discretion of the Board of Directors, whose objectives are to ensure financial stability, fund future growth, and maximize returns to members.

 “Our cooperative structure has served our borrowers well for many years,” says Brian Rosati, Chief Financial Officer for Horizon Farm Credit, “and we are committed to ensuring that the patronage program remains strong.”

To learn more about Farm Credit’s patronage program and to calculate your patronage distribution, please visit horizonfc.com/patronage.

Farming is unpredictable, with many outside forces dictating your success in the field. Since you can’t control the weather, the only thing that can guarantee a yield, or indemnity in place of a yield, is crop insurance. Crop insurance can help you survive an unforeseen disaster and return your business to profitability, improve your cash flow in a down year, and manage your risk.

As we look ahead to the spring and prepare for planting season, now is a great time to seriously consider getting reliable coverage for your operation.

How does crop insurance help me manage my operation’s risk?  

Crop insurance can provide agricultural producers protection on two major sources of risk: production and price. As we experience more extreme weather patterns, crop insurance can help protect you when adverse weather events take a toll on your crop production, which will enable you to recover faster.

Aside from weather, another unpredictable variable producers face is the market. Crop insurance will also cover you when there is a loss in crop revenue due to price fluctuations. Having this coverage ensures a reliable level of cash flow and will allow more flexibility in your marketing plan.

Your lender likes to see crop insurance as part of your business plan because it shows that, with some level of production insured, the crop could be forward priced with greater certainty, creating a more predictable level of revenue. It will show that even amid disaster, you will have repayment ability, which will help ease your financial risk when applying for a loan or line of credit. Crop insurance enables your operation to meet your financial obligations and ensure the survival of your farm business.

What types of crop insurance are available for my operation?

Depending upon the type of operation you manage and its unique needs, there are several types of policies available to you. Please contact your crop insurance agent to discuss the details of each to help you determine which makes the most sense for your business.

• Yield Protection
• Revenue Protection
• Dairy Revenue Protection
• Livestock Risk Protection
• Hail/Fire Policies
• Whole Farm Revenue Protection
   

If you have any questions about your current policy or want to discuss the options available for your operation, contact our crop insurance agents prior to the March 15th spring crop sales closing deadline at 888.339.3334, or visit FarmCreditCropInsurance.com. We can review changes in your operation, discuss any concerns, and provide customized quotes that outline your coverage options and give you an estimated premium cost. We’re here to help you get growing this spring and beyond!

This article was written by Kathi Levan, Horizon Farm Credit Crop Insurance Manager.

What is MARBIDCO?

The Maryland Agricultural & Resource-Based Industry Development Corporation (MARBIDCO) is a quasi-public economic development organization chartered by the State of Maryland. Their mission is to help Maryland's farm, forestry, and seafood businesses succeed through financial partnership and other services.

What MARBIDCO offers

• Loan and grant programs for farmers, watermen, and rural business owners
• Land preservation programs to assist landowners in securing and protecting rural lands
• Partnerships with commercial lenders (like Farm Credit!) to maximize rural lending opportunities
• Business resources and planning tools for rural entrepreneurs

How does Farm Credit work with MARBIDCO?

Farm Credit can lend up to 80 percent of the appraised value or the purchase price, whichever is less, which equates to a 20 percent down payment. We understand this can be a challenge, especially for those that are young, small and/or beginning farmers. For our Maryland farmers, MARBIDCO is a resource we can turn to in order to help bridge that gap.

Here are some first steps:

1. Research MARBIDCO and the programs they offer:
   • Land preservation option – Rural Land Preservation Facilitation and Next Gen Programs | MARBIDCO
   • Loan options – Agricultural & Rural-Business Industry Loan Programs | MARBIDCO
2. Reach out to Farm Credit and one of our loan officers can help facilitate a call with the MARBIDCO staff, which will include checking the farm business and/or property’s eligibility
3. Proceed to application process

Ready to apply?

1. Prepare a robust farm business plan (Not sure where to start? Click here.)
2. Apply with Farm Credit (items to include: loan application, financials and business plan)
   Loans are evaluated for:

• Repayment: Ability to pay any debts (farm and personal) with income being generated
• Liquidity: Available cash on hand to service any debt payments within the next 12 months
• Equity: Looking at your ratio of assets to debt
• Credit: Pull credit report and evaluate history. Looking for no late pays, bankruptcies, tax liens
• Collateral: Evaluating value of the property to be purchased via appraisal

3. Once approved with Farm Credit, complete the MARBIDCO application process with assistance from your Farm Credit loan officer

What’s next?

The process of applying with Farm Credit and then MARBIDCO can take up to six months to complete. Be sure to inform all parties (sellers, real estate agents, attorneys) involved from the very beginning that you plan to work with both Farm Credit and MARBIDCO, to ensure this process goes as quickly and as smoothly as possible.

How does this partnership work?

Here’s an example scenario:

You are interested in purchasing a 100 acre farm. The proposed purchase price is $1,000,000. You have strong credit and a good income history. You know from your prior conversations with Farm Credit we require a 20 percent down payment. Your loan officer recommends two potential options for you to consider with MARBIDCO assistance:

Option 1: MARBIDCO Next Gen grant

• Utilize the farmland conservation easement option purchase program to help preserve the subject property from future development; this is an easement option purchase, which will limit land usage in the future
• MARBIDCO will pay up to 51 percent of the Fair Market Value (FMV) of the land only (with a cap of $500,000)
• Those interested in applying to the Next Gen program are requested to make contact with the county farmland preservation program office to determine eligibility of the property. (Not sure who to ask? Your loan officer can help you contact your local office.)
• Closing Transaction Fee: $2,500 (Next Gen only)

                       $1,000,000         (purchase price)

                       -$200,000            (MARBIDCO Next Gen grant)

                       $800,000             (Farm Credit loan amount)

Option 2: MARBIDCO Maryland Resource-Based Industry Financing Fund (MRBIFF)

• Can lend between 20-40 percent of financing needed, but MARBIDCO’s financing must be no greater than Farm Credit’s loan amount
• Current MARBIDCO interest rate*: 3.75% for first three years, 4.50% for the next three, and 5.75% for remaining life of loan
• Will typically have a balloon at ten years and require you refinance remaining balance
• Loan Origination: 1% of MARBIDCO loan amount (MRBIFF only)

                       $1,000,000 (purchase price)

                       -$350,000   (MARBIDCO loan amount)

                       -$50,000     (your cash down payment)

                       $600,000    (Farm Credit loan amount)

Are you searching for beginning farmer resources? Check out our beginning farmer page or if you need help understanding how MARBIDCO and Farm Credit can work together to maximize your options, give us a call at 888.339.3334. We're here to help!

*As of January 31, 2023.

Farm Credit has announced the launch of their 2023 Dairy Success and Profitability Review (SPR).

“In today’s volatile economy, it is critical that dairy operations understand how to assess their business’s financials,” says Rob Goodling, Farm Credit ag business consultant. “Our Dairy Success and Profitability Review (Dairy SPR) benchmark program is a tool to help producers evaluate their financial performance and make proactive management decisions for the future.

Participating benchmark farms will receive an easy-to-understand report highlighting their farm’s most pertinent information on a total dollar, per cow, and per hundredweight basis.

Dairy SPR is free to any Horizon Farm Credit customer or dairy farm located within Horizon Farm Credit’s territory. All dairy farmers are invited to participate in the program by completing the forms found at horizonfc.com/DairySPR. Completed forms should be sent to benchmark@horizonfc.com or faxed/mailed to your local Horizon Farm Credit office no later than April 17, 2023.

Questions about the Dairy SPR should be directed to benchmark@horizonfc.com or Rosie Zaginaylo at 888.339.3334.