A26-Lancaster Farming, Saturday, December 19, 1998
PDA Celebrates First Use Of Next Generation Loan Program
camps, etc.
great advantage. I think that if farm is managed right. “ It ’ s a shame to see. The state
more banks would use it, it would However, he also said he to morc to regular
help the compctidveness of agri- doesn't get too involved in a far- pricc of he
culture in the state," Cole said, mer's selection of buyer for his “The farmers have fixed costs ”
“It’s a simple product, but you commodities, he nonnally leaves to t food on
have to work with your local indc- *bat decision up to the borrower. to y c jf to
pendent economic development In the meantime, he said the area farmer) drops by $2 less a hundred
communities. has been losing a lot of family f or a mon th, there goes the cash
“Today’s farmers have to farms, some sold for recreational flow.”
become more aware they are man
aging a business," Cole said.
“Mike (Kennis Jr.) and I were able
to work out a plan that made very
good sense from a cash flow for
this product.”
He also said that farmers are
becoming more aware of the need
to do financial projections for their
operations.
The Next Generation Farmer
Loan Program loans can be made
up for a payback of up to 20 years.
Just as the industry and econom
ists have been advising farmers.
Cole said he wants to see business
plans with the three cash flow
projections best case, worst
case and conservatively realistic.
“A lot of lenders can hurt people
if they do not help them do cash
flow prelections. It’s not fruitful
for anyone (if they aren’t done).
“Mike, being fresh out of Penn
State, has a good head and under
stood the needs of the farm and
what was needed for more
productivity.”
Cole said he considered that the
milk is currently being sold to a
primarily Class I dealer, fairly well
assuring a comparitively strong
milk pricc, but be also said that he
knows that milk is a saleable com
modity and that it should be able to
provide a cash flow, as long as the
(Continued from Page A 23)
equipment, and a frees tall bam in
order to build an operation to cash
flow the loan.
The total loan under the Next
Generation Fanner Loan Program
is $221,000.
Kennis is also to take an addi
tional regular loan of $50,000 to
add cows to the existing 35 head of
Holstein and Jerseys. The Jerseys
arc there to add value to the bulk
tank milk.
The Kennis's sell the milk to
Pike’s Dairy in Union town, which
is primarily a Class I dealer.
Just-graduated from Penn State
with a degree in agriculture,
Michael’s ability to design a con
servative business plan and project
realistic cash flows (as well as
communicate the ideas and sup
port the business plan to the satis
faction of a lender) is what made
the whole project work, according
to Courtney Cole, ag lender for the
Saving and Trust Bank of Dußois,
a publicly traded bank on NAS
DAQ with $2 billion in assets
headquartered in Indiana (Pa.),
serving communities in the India
na, Jefferson and Clearfield
markets.
Cole explained that the program
is good, and he said he would urge
lenders around the state to investi
gate this tool and to use it, because
it is important to the local and state
economy.
According to Cole, the program
is similar to a manufacturing bond
issue. He said that instead of hav
ing to ask for the 9 percent interest
normally sought with a business
loan, the tax-exemption allows the
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bank to offer a lower interest, such
as 6 percent.
“It is a great program,” Cole
said. “I’ve already had a lot of calls
from farmers” about it
He said the bank is an active
agricultural lender, though he
noted that, “Ag lending is probably
at an all-time low in the state, and
this will probably provide an
advantage to getting loans.”
He also suggested that the prog
ram appears set to work well with
family estate tax planning, though
he said a professional tax planner
should be consulted.
Obstensibly, such a loan tool
should serve lending institutions
well, considering that rural eco
nomic research has shown that
there is a threshhold for the num
ber of farms needed to support
“main street” businesses where
banks may have more assets
invested.
In other words, it would seem
logical for a bank to pursue sup
porting the continuation of well
run farms, since doing so supports
other businesses and therefore,
other loans made.
Cole also said that banks are
directed to make local invest
ments, and the tax-exempt loans
can be a useful tool in complying
with provisions of the Community
Reinvestment Act of 1977, which
he said “does require us to invest in
the communities and to look at
programs like this to foster eco
nomic development.
“This is one of the best I’ve seen
in a long time to help the farmer
remain competitive.
“From a bank's standpoint it's a
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Chambersburg, were named to
the National Milk Producers
Federation (NMPF) Young
Cooperator Advisory Council, it
was announced at the
Federation’s annual meeting
Nov. 29-Dec. 3 in Las Vegas.
As members of the Advisory
Council, the Cashells will help
coordinate young cooperator
activities at the 1999 NMPF
annual meeting. They also will
attend the Federation’s summer
board meeting in July, where
they will participate in a brief
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Following the briefing, they will
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representatives.
Through their participation
on the Advisory Council, the
Cashells hope to help other
young farmers learn about coop
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give back to a program that
we’ve gotten a lot out of,” Paul
said. “We hope to help other
young couples learn about coop
eratives and become leaders of
the future.”
The Cashells farm in a three
way partnership. They milk 350
Holsteins and farm 850 acres of
com, alfalfa, grass, and wheat.
Paul is responsible for herd
health and breeding. Nadene
works full-time off-the-farm as a
computer programmer-analyst.
They have three children, Ben,
9, Quinn, 6, and Chase, 3.
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