Farm Credit announced the launch of its third annual Farmers on the Rise program, which awards up to ten beginning farmers in its footprint with $10,000 to grow their operations.  

“This award program was created to recognize outstanding farm owner-operators within the diverse agricultural community and help them to expand their existing agricultural business,” says Tom Truitt, CEO of Horizon Farm Credit. “Those selected to receive an award will be recognized based on their efforts in agriculture, financial character, leadership, community involvement, and environmental stewardship.”

The award program is open to beginning farmers in Horizon Farm Credit’s footprint who have at least three years of experience, but no more than ten years of farming experience. 

In 2022, Farm Credit selected ten applicants to receive Farmers on the Rise award funding. “Last year’s applicants were truly all impressive. Their businesses ranged from livestock and grain to agritourism and CSAs” says Johanna Rohrer, Member Education & YBS Program Manager at Horizon Farm Credit. “Our panel of judges is, once again, looking forward to reviewing the applications this year and seeing the inspiring dreams of our region’s producers.”

This program is open to all farmers meeting the experience threshold and geographic requirements outlined above. Applicants are not required to be Farm Credit customers, although current customers are encouraged to apply.  The deadline to submit an application is October 6, 2023 at 4PM. For more information and to apply, visit horizonfc.com/rise.  Questions about this program or application should be directed to learning@horizonfc.com.

When we talk about social security benefits, the subject is often met with a lot of negative thoughts.  Generally, most people don’t look it as much of a benefit for retirement and many don’t believe it will even be there when they reach retirement age. 

The truth is, we have been talking about making changes to the social security system for decades, but no major changes have happened yet.  If and when our security system is overhauled, it will have to be done gradually, with older taxpayers grandfathered into the system.

While it is true that we cannot count on social security to cover our living expenses in retirement, for most of us it still will provide the basis for our income in our senior years.  Here are a few things we should keep in mind as we plan and build for our retirement years.

How do you qualify for social security?

To qualify for social security, an individual needs 40 credits of earnings.  A person’s benefit is determined by their top 35 earning years adjusted for inflation.  In 2022, an individual needed to earn $1,510 to receive one credit with a maximum of four per year. In other words, to qualify, a person needs 10 years of work. 

It’s important to note that special rules apply to self-employed farmers.  If a farmer does not earn enough for the year to receive his four credits, the farmer can take the optional social security method, pay the resulting self-employment tax, and get credits for that year.  This step is very important for farmers to make sure they get their 10 years of earnings in.  When we are young, we don’t really think about our mortality and our retirement years.  However, social security benefits are there in case one becomes disabled or, in case of death, would provide survivor benefits for our children.  This makes it essential we build that history as soon as possible.

What is full retirement age?

Full retirement age for those born in 1960 or later is 67.  For those born between 1943-1960, the age gradually increases from 65 to 67.

How does early retirement effect social security benefits?

A person can start receiving retirement at age 62, but there will be a decrease in monthly benefits until they reach full retirement age.  The monthly benefit you start with will be your monthly benefit forever, only changing with increases for inflation.  For the person taking social security at age 62, the reduction is about 30% from the amount they would receive at full retirement.  Additionally, there is an annual limit on earnings until a person reaches their full retirement age.  This year (2023) 2023, the limit is $21,240.  Social security will deduct $1 for every $2 dollars earned above that amount.  Before taking social security early, these considerations need to be taken into account.

How does delaying benefits effect social security benefits?

On the other side of this, a person can always delay taking their benefits until age 70.  A person’s monthly benefit will increase about 8% a year until they reach age 70.  After age 70, this will not change, nor will delaying it raise the monthly payment.  Consequently, there is no reason to delay taking benefits after age 70.

What do these benefits mean for spouses?

A spouse receives one half of the retired workers’ benefit at full retirement age.  If an individual has both benefits from their spouse as well their own, the individual always gets their own first.  The individual may receive more if the spouse’s benefit is higher.  In the event of the death of an individual, the surviving spouse then receives the benefit that is highest.

Are social security benefits taxed?

Up to 85% of social security benefits are taxable, depending on other income.  For a taxpayer that is filing married, if their other income is over $44,000, they could pay tax on up to 85% of their social security income.

In summary, the decision of when to start receiving social security is one that should not be taken lightly. Everyone’s financial situation and life expectancy is different, so it not a one size fits all decision.  The first step is to check out your earnings and projected social security income at: ssa.gov/myaccount. This website replaces the yearly benefit letter that we all used to receive.  This will help you start the retirement process.  It is always a good idea to consult a retirement specialist or consultant to help you through this process. 

By Joe Waddell, Director of Market Innovation

Renewable diesel is an advanced biofuel made from renewable feedstocks, and it has been gaining signification traction over the past few years as a cleaner alternative to traditional diesel fuels, which are derived from fossil fuels. This up-and-coming energy source has favorable greenhouse gas (GHG) reduction scores among current programs, including the Renewable Fuel Standard (RFS) and the California Low Carbon Fuel Standard (LCFS). The biomass-based diesel tax credit and other tradeable credit prices have been relied upon for renewable diesel producers to turn a profit and will likely continue to play a part, but the ramp-up in renewable diesel production could have a significant impact on oil seed crops over the next decade.

Renewable Diesel v. Biodiesel

Renewable diesel and biodiesel are derived through separate production processes and have different properties.  What they do have in common is the feedstocks from which they can be created. Some common feedstocks used are soybean and canola oil, among other oil seeds and biogenic wastes (oils, fats, greases). Biodiesel is produced through a process called transesterification, which produces a nonhydrocarbon fuel. Biodiesel is typically blended with petroleum diesel (from B5 up to B20, 5-20% bio diesel). Biodiesel has a higher cloud point than both petroleum and renewable diesel, which limits its use in cold climates and makes it is more susceptible to microbial growth when not properly stored.

Renewable diesel is produced through hydrotreating or hydrocracking, a sophisticated refining process like the one used in traditional diesel fuel production. Due to the similar production process, renewable diesel results in a “drop in” replacement hydrocarbon fuel (with a higher production cost than biodiesel), meaning that it can be run as a standalone replacement for traditional diesel.

Why Should We Care About Renewable Diesel?

Both biodiesel and renewable diesel produce less GHG over their lifecycle assessments versus petroleum-based diesel. Renewable diesel has the potential to help the U.S. meet aggressive GHG emission reduction targets with its ability to be a “drop in” replacement for traditional petroleum diesel.

The renewable diesel production sector has outpaced current EPA Renewable Volume Obligations (RVO) projections. While the draft RVO numbers are out, the final numbers must be set by June 14, 2023. The capacity output for renewable diesel is projected to double by the year 2025, while the RVO currently only project a slight increase. At this year’s Commodity Classic, it was mentioned that U.S. Secretary of Agriculture Tom Vilsack was working with the EPA in an attempt to get the RVO numbers revised upwards, reflecting production capacity that will be coming online. If the EPA does not revise numbers upward to reflect capacity, it will put a major damper on the renewable diesel outlook. It will be interesting to see if there are any revisions upon final release this summer, as the RVO will directly impact actual production of renewable diesel output.

In summary, renewable diesel has the potential to have a significant impact on oil seed crops (such as soybean and canola) with an increased demand on feedstocks, while providing new revenue streams from crop residues and biogenic waste (oils/fats/grease), improving the sustainability of agricultural practices and contributing to rural economic development. The challenge will be balancing the production of renewable diesel and food production. There are several companies working to develop oil seeds for cover crops that can be used for renewable diesel production which would alleviate some concern over the use of food production for renewable diesel production.  Renewable diesel has a huge potential to benefit both the ag sector and the environment for the long term if the RVO numbers can be revised to reflect actual production capacity coming online.

We’ll be keeping an eye on this topic to see how it evolves and its impact on our customers and community members. If you have any questions on renewable diesel, or just want to talk shop on the many innovations happening in the ag industry, please feel free to give me a call at 814.573.8341 or email jwaddell@horizonfc.com.

A successful farming operation doesn’t happen by chance. It takes tremendous expertise, exceptional commitment, a great deal of planning, and a tireless work ethic.  Maximizing farm profitability also takes substantial business knowledge and management skills.  In both the technical and business aspects of farming, it is important to build relationships, establish a network of subject matter experts, and constantly work to gain knowledge.  Identifying--and tapping into--available resources can help farmers establish and grow their operations.

Farm Credit is a member-owned cooperative that has been supporting agriculture and rural communities for more than 100 years.  The Association is invested in the success of its members and the industry as a whole.  To that end, the Association has developed numerous programs to help farmers in every stage of business achieve their goals.  Resources are available to assist with business plan development, record keeping, tax preparation, succession planning, and more.

Most recently launched is the Farm Credit Grow Ahead program.  It was developed specifically to help the next generation of farmers establish and grow their operations. Grow Ahead features new financing options to help these farmers access the capital they need, as well as educational offerings, mentoring opportunities, and grant programs.

Loans through the new Grow Ahead program feature discounted pricing, reduced fees, customized loan terms, and relaxed underwriting requirements. Grow Ahead loans for young and/or beginning farmers can work in collaboration with FSA loan programs and are eligible to receive patronage.

In addition to new financing options, the Grow Ahead program offers grant and award opportunities, including the JumpStart Grant Program, which awards $10,000 grants annually to top applicants in the start-up phase of business with less than two years of farming experience, and the Farmers on the Rise Award Program, which gives $10,000 awards to top applicants with three to ten years of farming experience. 

Grow Ahead also brings together educational and mentoring resources to help farmers achieve their goals. They can develop business plans and farm business management skills through Ag Biz Basics and Ag Biz Masters educational courses. Through a partnership with the SCORE network of business professionals, beginning farmers can be paired with a mentor who is well-established within the agricultural industry. 

“The future of our industry depends on young and beginning farmers,” said Tom Truitt, Chief Executive Officer of Horizon Farm Credit. “Farm Credit is committed to ensuring that they have the tools they need to start and grow their operations, achieve their dreams, and realize long-term financial success,” he continued. “We’ve developed the Grow Ahead program specifically to meet the needs of these farmers and are excited about the opportunities it presents for them. I hope that those eligible will take full advantage of the valuable resources available through this program.”

Grow Ahead offerings are available to both full-time and part-time farmers within the Horizon Farm Credit footprint. Click here to learn more.