Wisconsin Farm Service Agency Goat Loans

1
Wisconsin Farm Service Agency Goat Loans

• Presented 10/17/07 at the Goat Lender Meeting in
  Randolph, WI
• by Laurie Makos, Farm Loan Manager

2
General FSA Loan Programs Direct Loans

• Farm Ownership (FO)
• 200,000 limit
• Term can be up to 40 years or the life of the
  security (typically amortizations of 15-25 years)
• Rate changes monthly (except for 50/50 joint
  financing where rate locks in at 5) and October
  2007 rate is at 5.5 (locks in for term of loan
  at the lower rate of either approval or closing)
• Purpose No refinancing of real estate allowed
  must be purchase or qualified improvements

3
General FSA Loan Programs Direct Loans

• Operating Loan (OL)
• 200,000 limit
• Term of loan is based on the life of the security
  in 7 year notes will balloon and can then be
  extended.
• Rate changes monthly and October 2007 rate is at
  5.125 (locks in for term of loan at the lower
  rate of either approval or closing)
• Purpose livestock, equipment, and machinery
  purchases, feed, or other annual operating
  expenses

4
General FSA Loan Programs Guaranteed Loans

• Farm Ownership (FO)
• 200,000 limit
• Term set by lender (life of security
  consideration)
• Rate set by lender

As of 9/17/07 combined Direct and Guaranteed loan
limits are at 1,649,000
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General FSA Loan Programs Guaranteed Loans

• Operating Loan (OL)
• 200,000 limit
• Term set by lender (life of security
  consideration)
• Rate set by lender 4 interest assistance
  buy-down is available to qualified applicants

As of 9/17/07 combined Direct and Guaranteed loan
limits are at 1,649,000
6
Analysis of Farm Service Agency Balance Sheet and
Cash Flow Data Preliminary Data Pull 10/11/07
by the Wisconsin State Office
7
Wisconsin FSA Goat Loan Information Analysis

• 49 loan customers were analyzed this represents
  29.7 of the total number of dairy operations in
  Wisconsin (based on WASS data)
• All are direct FSA borrowers information for
  FSA guaranteed goat loan borrowers was not
  available for analysis a quick estimate would
  be that over 60 of the Wisconsin licensed dairy
  goat farmers have FSA financing.

8
Cautions about the data analysis

• The data ranges from 2005-2007 and the analysis
  was done on the farms most recent available
  information
• There are places in the data where reporting in a
  different category may impact the final result
  (data consistency in entry is a variable)
• There are places in the data where there is
  incomplete information
• There is a wide variation in the data big
  differences between farms may impact overall farm
  data

9
Observations about FSA Farm Loans

• Of the 43 reporting a starting date (6 not
  reported)
• 4 started in 2004 (9.3)
• 13 started in 2005 (30.2)
• 24 started in 2006 (55.8)
• 2 started in 2007 (4.7)

10
Location of FSA Goat Loans

• Approximately 21 of the 49 (42.8) loans analyzed
  were located in the counties of Grant, Iowa, or
  Lafayette Those 21 farms represent 42 of the
  licensed dairy goat farms in those counties
  this is probably due to the location of the
  Montchevre and soon-to-open Woolrich milk plants
• There appears to be a strong correlation between
  the FSA goat loan farmers and the location of the
  milk plants (market considerations)

11
Items noted about the Information available

• Feed Expenses averaged about 74 of the total
  operating expenses
• Of the total operating income for the goat farms
• 84.2 came from milk sales
• Other income was from livestock, crop sales, and
  miscellaneous farm income

12
Financial Performance Measures

• Liquidity Ratio averaged 1.42
• Working Capital averaged a negative 8,856
• Debt to Asset Ratio averaged 63.75
• Total Operating Income averaged 47,884 while
  Total Operating Expenses averaged 48,629 (net
  loss of 745)
• Owner draws averaged 18,002 while non-farm
  income averaged 27,810 per farm

13
As calculated by Jeff Gruetzmacher, Farm Loan
Officer in Grant County
14
General Comparisons between FSA Dairy Goat and
Dairy Cow Farms (courtesy of Jeff
Gruetzmacher, FSA - Farm Loan Officer, Grant
County )

• Based on FSA loan data, it appears that goat
  farmers
• Are on the average about 10 years older than
  dairy cow farmers
• Have less assets and equity than dairy cow
  farmers
• Rely more heavily on off farm income to cover
  family living expenses and farm operating expenses

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More work for FSA to do

• Continue to analyze the available data
• Recognize that any benchmark data available is a
  tool and is not intended to be a one-size fits
  all situations type of information and
  adjustments must be made for individual
  circumstances
• Insure complete and consistent data entry
• Continue to monitor and analyze the credit needs
  of our current and future customers