Blog   Tagged ‘agriculture’

Hometown Perspective: Kansas

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You know you can count on us to provide insights into national and global economic outlook, but what about the business outlook where you live? Gil Trout, Chairman & CEO of Kansas and Oklahoma, gives us some perspective on how Kansas is looking this year. Hint: it’s good news.

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Mr. Trout joined UMB in 1988. As Regional CEO for Kansas and Oklahoma, he is responsible for the profitability, leadership development and commercial banking oversight of his regions. Mr. Trout has over 25 years of experience in the financial industry. He earned his MBA from Avila University, and his Executive Leadership Certificate from Washington University.

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What does the new Farm Bill mean for you?

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Bill Watson, president of UMB Agribusiness, breaks down what you need to know about the newly-passed Farm Bill in this video.

For more information, keep reading below.

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Every five years, Congress passes legislation known as the Farm Bill that sets policy for our nation’s agriculture, nutrition and conservation. After being without a bill for the last two years due to Congressional differences, Congress recently approved the latest version of the Farm Bill. One of the most important components the new bill provides is consistency to the planning process, allowing producers to determine their probable cash flows and insurance coverage levels for the years ahead.

There are two major issues that arise with the new bill that require careful consideration for farm financial planning. Both of these issues can have a material impact on revenue streams and, consequently, on producers’ ability to cover debt payments and input costs in the coming years.

1)      elimination of direct payments

  • These were based on the number of acres farmers owned and not on the condition of their crops.
  • Impact on future cash flows: In many cases this may not be material, but in some cases where new increased debt levels may have stressed cash flows and debt coverage, this reduction in total income can have a serious, detrimental effect.
  • Producers need to work closely with their banks and financial advisors to review the impact of this change in forecasting the adequacy of future cash flows, and determining if changes in debt levels, loan terms or loan structure need to be made to accommodate lower future income levels. This should be done now rather than waiting until next year when the effect has already impacted the banking relationship. Being candid and straightforward with bankers and advisors as to any problems the reduced payments may potentially bring to operations will be critical for producers and their short- and long-term financial planning.

2)      new coverage types and levels for crop insurance

  • Now that there are no more direct payments, crop insurance will become the foundation of the new bill.
  • Producers immediately need to determine which option will work best for their individual farms. Farmers now have the option between two new insurance programs – Price Loss Coverage or Agriculture Risk Protection.
  • Price Loss Coverage pays the farmer or producer when the market price for a covered crop is below a fixed reference price.
  • Agriculture Risk Protection – makes payments to farmers when either the farm’s revenue from all crops or the county’s revenue for a crop is below 86 percent of a predetermined benchmark level of revenue.
  • In most situations, the best way to make the irrevocable selection between the two program options is to review how the options would have impacted specific farming operations throughout the last several years. By looking at several years, or by forecasting crop rotations into the next five years when possible, producers can determine which option will provide the best insurance coverage under a variety of potential circumstances.

Careful consideration of future operations, past insurance costs and coverage, and required levels of risk mitigation can yield significant improvement to overall farm income in the years ahead. Taking proactive steps to evaluate these areas with bankers and financial advisors will be critical in establishing a strategic plan and achieving the best outcomes financially possible for farming operations.

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Watson serves as president of the UMB Agribusiness Division. He joined UMB in August of 2005 and has also served as the president of the UMB Kansas region. Watson is a graduate of Wabash College in Crawfordsville, Indiana with a major in Psychology. He has also attended The Colorado School of Banking, The National Commercial Lending School (where he has also been an instructor), and the Stonier Graduate School of Banking.

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Mariner Kemper – 2014 Chairman of the Board of the American Royal

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Mariner Kemper is taking the reins of the America Royal. He will be continuing a family tradition of involvement in this organization with his father, R. Crosby Kemper, Jr. serving as chair in 1991 and 1992. The building itself, Kemper Arena, was named in honor of Mariner’s grandfather, R. Crosby Kemper, Sr. Below is an excerpt from his speech at Tuesday’s annual meeting.

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Mariner Kemper Addresses the American Royal

It is truly an honor to continue the tradition of The American Royal. The mission of The American Royal is—

To promote and celebrate the excellence in agricultural progress and to develop future generations of leaders through agrarian values.

My personal interest in this mission dates back to the lessons I learned from my father. My childhood and adolescent memories are filled with a connection to land, nature, animals and getting your hands dirty.

Sure they wore suits and ties, worked in office buildings, and helped people manage their money – the RIGHT way. But at the end of the day, and most Saturday afternoons – ties were replaced by hats, hallways replaced by fences and ceilings became the blue sky.

My father truly loved the American Royal as did his father before him. I share that love and understanding of the agrarian lifestyle and values.

The example of Eisenhower

This philosophy really hit home this past Thanksgiving as I was reading the biography of President Eisenhower by Stephen Ambrose.

President Eisenhower. Here’s a man who served as Supreme Commander in Chief of World War II and President of the United States. And when he could find time to take a break from serving our nation, what did he do? He returned to his roots in Abilene, Kansas. Put on his boots, saddled a horse, talked about the weather and last year’s alfalfa crop, and voiced his opinion on John Deere vs. International Harvester. He put himself in an environment that he believed in:  the values, the sensibility and self-reliance born from an agrarian lifestyle. He embraced and understood the work ethic and ambition that is formed from living off the land. And then carried those principles and experiences in leading people and our nation to peace and prosperity.

I believe we need to “act like Ike,” as many have said before. Lead with that work ethic and ambition. Self-reliance. Values matter.

State of The American Royal

Today, The American Royal enters the 115th year of serving and celebrating agriculture. And the core of our mission is to support the future of agriculture. We cannot, and must not, lose sight of this purpose to serve current and future generations. Every year we are introduced to some of these inspirational leaders, The Royal Scholars, and are captivated by their accomplishments and what is important to them.

It’s motivating.

And when we listen to them, it’s not about their farm, their town, their county or their state. Their vision is about our future and our country – and this reinforces what The American Royal stands for.

The American Royal is not an isolated activity for Kansas City or the Midwest. It is the AMERICAN Royal. You can build a case that every person, every company, every community is touched by and obligated to play a role in our agriculture system. After all, our economy and livelihood are reliant on a functional and safe agricultural system.

We are lucky to have such a rich ag history in Kansas City that gives us the platform to not only provide leadership but to celebrate what Kansas City and our surrounding regions mean to our national food and agrarian culture.

As Greg Maday once coined, the American Royal is truly Kansas City’s most authentic asset. Every city has a performing arts center. Every city has a football team, but there are only a handful of cities in America that have something as special as the American Royal.

The American Royal is a critical piece in that food chain. We have done a great job as a supporter and advocate of agriculture throughout the years. The American Royal livestock shows, rodeos, educational programs, scholarships and world-famous barbecues are a foundation we all can take pride in.

Our Barbecue is the world’s largest, but in my opinion, it is still Kansas City’s best kept secret. When visitors come to town, what’s the first thing they want to do? Hit up a world-famous Kansas City barbecue joint. We have a better reputation nationally than we recognize locally. We are continually listed on every Best Barbecue list and the Food Network does regular exposés on Kansas City barbeque. The American Royal barbecue should be THE event in Kansas City. It’s one of our best assets.

And now is the time to think and act deeper than our roots and beyond our fences. But before we do that, we must have a heightened focus on cultivating our community. It is essential for us to involve a broader base of individual, civic and corporate support for The American Royal.

We need to act and think like Louisville, Kentucky when it comes to the Kentucky Derby. Or like Austin, Texas when it comes to the South by Southwest Festival. Or Mardi Gras in New Orleans. Those communities not only rally around the purpose–they also captivate the attention and participation of people throughout the U.S. and internationally.

And that’s what we need to do. That’s what we CAN do. The American Royal is valuable, unique and important—and it’s up to all of us to make sure others have the opportunity to know the purpose it serves and the benefits it provides.  This will be part of our mission for 2014, and we need your help to make it happen.

The American Royal in 2014

Many believe no other city in the U.S. can claim an agricultural history as rich as Kansas City’s. From Lewis & Clark, to The Oregon Trail to one of the country’s biggest railway hubs, Kansas City has served as a focal point for transporting grains, animals and freight. A recent report estimated the total value of freight handled within the Kansas City area each year is more than $800 billion. 

Thanks in large part to the entrepreneurial vision of Kansas City Southern Railway, Kansas City has direct access to markets throughout the southern U.S., Mexico and the Pacific region.

This intersection of transportation and commerce has fueled entrepreneurial opportunities established by the Greater Kansas City Chamber of Commerce’s Big 5 initiative. In fact, Kansas City has now established a global reputation as the center of the Animal Health Industry, and hosts several important international animal health conferences every year.

Given this, here are my three priorities for 2014:

  1. Capitalize on location in the Heartland – We have an opportunity to rally around what is unique in Kansas City and become recognized nationally. I also want to expand scholarship and educational activities.
  2. Secure broader engagement and endorsement from corporate and civic leadership – The impact of the American Royal is undeniable. Compared to the MLB All-Star Game that brought $60 million to the local economy ONCE, the American Royal does this every year. We need to remind the community of this impact to engage more advocates. Our ultimate goal is for the entire city to feel ownership of the American Royal.
  3. And finally, create a collaboration between Kansas City and American Royal for new facility – A new facility will breathe new life into the American Royal and agriculture. The American Royal will remain the inspiration for the future of agriculture. Rather, it will SAVE the city money. All while catering to constituents, community and ag-related interests from across the country.

As we look to the future, our role is not to defend The American Royal, but rather to promote it and build excitement for what we offer. We have an obligation and a responsibility before us.

President Eisenhower once said, Whatever America hopes to bring to pass in the world must first come to pass in the heart of America.

Well America, here we are. The American Royal. 


Mr. Kemper is the chairman and chief executive officer of UMB Financial Corporation and UMB Bank, n.a. He joined UMB in 1997. Mr. Kemper is active in both civic and philanthropic endeavors. One of the causes he is most passionate about is the arts. He currently serves as a trustee and executive committee member for the Denver Art Museum and is a past board member for The Arts Council of Metropolitan Kansas City.

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Watching the Forecast: Ag interest rates may soon rise

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If you are an agribusiness leader, you have many variables to consider in today’s market. Weather patterns spanning across the too wet/too dry continuum continue to baffle producers. Grain and commodity prices have started to gain strength, and both are up from recent levels but are still below the highs of the past several years. And land prices continue to hold (for now) at historically high levels in many areas of the country.

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These factors are all important, but there is one other variable that may be the most important when planning for your financial future: interest rates. With historically low rates currently being offered for operating lines of credit, as well as some floating rate term debt financing that has been put in place during the last four to five years, it’s important to remember that interest rates can change as fast and dramatically as corn prices.

As the American economy improves and the Federal Reserve Bank looks at beginning to ease its securities purchasing, the stage is set for a return to “normal” interest scenarios during the next couple of years. As that happens, producers with large floating rate exposure can expect to see their interest expense double or even triple during that same time frame. The range between fixedand floating rates will also expand, returning to levels similar to those before the financial crisis. When that happens, borrowers with only floating rates will be at the mercy of the financial markets in terms of controlling their interest expense.

Reviewing your balance sheets and future cash flows now – with an eye toward the next several years – can both produce large potential interest expense savings and protect against possible loan repayment challenges. As you look ahead, here are four steps to better financial planning:

  1. Review your current debt and forecast projected debt levels for the next four years. Include your amounts, repayments required, current rates, and most importantly, whether your rates are fixed or floating.
  2. Optimize how you use your fixed assets (land or equipment) for securing the minimum level of total debt anticipated each year. This should be done regardless of whether it is presently for revolving/working capital lines or fixed assets.
  3. Determine your available cash flow for debt service during the next four years.
  4. Structure new fixed-rate debt now by using a conservative debt service coverage ratio (1.3 to 1 or greater).

By fixing rates now, with proper use of fixed assets as collateral, and carefully forecasting future operational cash flows, you can effectively lock in today’s historically low rates, save tens of thousands of dollars or more in interest expense, and be far better prepared to manage other variables that may come into play.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Watson serves as president of the UMB Agribusiness Division. He joined UMB in August of 2005 and has also served as the president of the UMB Kansas region. Watson is a graduate of Wabash College in Crawfordsville, Indiana with a major in Psychology. He has also attended The Colorado School of Banking, The National Commercial Lending School (where he has also been an instructor), and the Stonier Graduate School of Banking.

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R. Crosby Kemper: Building a legacy through art and agriculture

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R. Crosby Kemper discusses the legacy of art and agriculture at UMB. He talks about his love of art and agriculture and the importance of both in the Kansas City metro and across the country.

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For more of UMB’s history, take a look at “Our Stories” on umb.com.


UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.

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UMB Bank forms agribusiness unit

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When UMB opened its doors in Kansas City 100 years ago as a local store-front bank, the city was mostly agricultural and many of the company’s first loans were to agribusinesses‡. Today, UMB serves more than 1,000 clients in this industry. Stafford County Flour Mill‡, for example, has been a long-time UMB agriculture customer.

We recently launched a division that will be solely devoted to agribusiness lending to serve customers footprint-wide. This expansion will cover all areas of agriculture, from producers and processors to suppliers and manufacturers of equipment and goods.

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I am proud to lead this new division with an expert team that has more than 200 years of combined ag lending experience. Some of our customers include ag machinery manufacturing companies, like Harper Industries‡, and ag machinery and equipment wholesalers, like Sydenstricker Implement Company‡. Our experience with a diverse customer base gives our new division the knowledge and expertise to support every type of agribusiness-related organization.

UMB has built a reputation on relationships for the last 100 years. An example of how we partner with our customers is when we worked closely with our farmers and grain merchandisers in 2008 to forecast their potential borrowing needs for the year. By doing this we increased our loan commitment levels before the market prices increased. This type of customer-based, proactive relationship has helped our customers reduce risk and, in turn, helped them meet the needs of their customers while still expanding their business in an ever changing economy

We understand that the agribusiness field is filled with factors that are outside of human control, like unpredictable weather or fluctuating grain prices. We’re here to help our agribusiness partners manage one of the areas of this industry they can control—their finances—in order to grow their business now and into the future.

 

Bank deposit products provided by UMB Bank n.a., Member FDIC. Equal Housing Lender 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Watson serves as president of the UMB Agribusiness Division. He joined UMB in August of 2005 and has also served as the president of the UMB Kansas region. Watson is a graduate of Wabash College in Crawfordsville, Indiana with a major in Psychology. He has also attended The Colorado School of Banking, The National Commercial Lending School (where he has also been an instructor), and the Stonier Graduate School of Banking.

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