Thursday, September 29, 2016

Looking at a Dairy Producer’s World From Their Perspective

Kernaleguen Dairy Barn
There is a saying, “You can’t really understand another person’s experience until you’ve walked a mile in their shoes.” I would like to add that if you can’t walk in their shoes having them tell you is the next best thing.  As part of the AG Advisors Forum in Melfort, Saskatchewan last week, attendees had the privilege of touring the Kernaleguen Dairy Barn and later in the afternoon listening to Brenda Kernaleguen enlighten her audience about the expectations they have from their advisors. Brenda graciously granted permission to have her presentation shared on this blog website.  Her presentation was insightful, sincere, and honest. Above all, her presentation is worth sharing with advisors who deal with the clients in their respective farming communities.  Listen in; I am sure you will agree.



Good afternoon everyone,


My son Paul and I were just discussing the fact that despite our farm’s upgraded technology, we are still having a major battle with mastitis in our main herd. Our somatic cell count is verging on violation, so it is imperative that we isolate the source of the problem, looking at inflation cleanliness, the number of collect cows and their periods of absence, recipe formulas that may contribute to possible acidosis (resulting in inverted protein/butterfat ratios) and the moisture content of the various silages, checking whether any components such as DDGs, Jumpstart, or Energizer have been incorrectly calculated or missed altogether in the ration.


Now, who can tell me what I just said?


The first important point to keep in mind when you are dealing with farmers is that farming is no longer the fall-back position of kids or adults who are lacking either the energy, desire, or intellect to pursue post-secondary education or a career in a more challenging field. Farming has, in fact, become a science demanding a high degree of continuing education and effort in order to be successful. As experts in our field, we have a language that accompanies our work, just as you do in your field. In order for farmers and accountants or bankers to communicate, therefore, we must be respectful of one another’s expertise while trying to find a common language through which to communicate with one another. You explain things to us in layman’s language and we will try to do the same. Please do not try to wow us with fancy terms and statistics and we promise to refrain from identifying you with either parts of our cow’s anatomy or the substance that is regularly expelled from that anatomy.


Rule #1, then, is “No bullshit from either side!”


A second helpful exercise for anyone dealing with a farming operation is to try and gather as much information about the individual members of the business/family as possible.

Who has what education?

Who does the work?

What work is being done?

Who is a visionary? Who is not?

Who is technologically savvy? Who is not?

How is debt perceived by each of the individuals?

What regard is given by each person to family dynamics such as safety, vacations, recreational activities, homes and yards.


Believe me when I say that multimillion dollar family farming operations can dissolve over such seemingly trivial things as dog food, TV antennas, grass mowing, or egg money – to name but a few.


You see, as much as one person (or perhaps several family members) might like to castrate Uncle Bob and send cousin Sally to Hinterland, family business operations do not lend themselves to such easy solutions. An astute accountant or banker would hopefully be able to delineate the generational differences in regard to technology, encouraging the older generation to recognize the efficiency and statistical value of computerized data, while keeping a check on the younger generation’s casual lack of regard for debt and its consequences. As my son so often points out, “If your farm is not moving forward, it is already dying.” So try to respect Grandpa’s legacy of hard work, without ignoring the present generation’s desire to improve and expand. Always be aware of personalities who simply want to posture for attention’s sake, or because they have finally found an arena over which to exert control. One stubborn family personality can often stall a farm to death, so it would be very helpful if you, as the “professionals,” could outline in specific terms what the ramifications of killing a family business will look like, and how it will affect the person in question. Few people survive a sinking ship, and if they do, they have irreparable damage to deal with in the end.


Point #2 then, is “Find out who you are dealing with, and deal with them!”


A third and extremely helpful tactic in dealing with family farm businesses is to come to the negotiating table with as much help as you have time and brains to uncover. There is money out there. There are possible profit-producing programs available. Are the hard-working family employees aware of these possibilities – not always, and I would venture to guess, not even often. They don’t have time to read all the brochures; they are simply too busy. You will win for yourselves undying loyalty and support from farm members whose business difficulties can be resolved by your knowledge of a possible solution.


For instance, a farm’s crippling water bills (as is the case for many dairies) might be eliminated, or at least diminished, with a reasonable bank loan and a matching government grant through the Growing Forward program that would enable the possible drilling of a well, or the laying of a pipeline to a more economically sustainable water source. Or, you might reduce the personal tax of a farming family member just by suggesting he or she keeps a log for trips made in the family vehicle for farm business. A percentage of those trips can be deducted.


Perhaps you could make a point of outlining the advantages of incorporation versus operating in a partnership. Twenty years ago, my husband and I went looking for a different tax arrangement for our farm, when we had too few kids to bring in any child allowance money, and not enough depreciation to offset our tax bill. We paid $28,000 that year to the government – the salary of a hired hand my husband pointed out – but it simply went into the hands of the government of the day, never to be seen again! Incorporation soon followed.


And speaking of incorporation – try to inform families just what can and cannot be legitimately claimed as corporate expenses. List them, even. Knowing takes the guesswork out of doing the books, and puts all families involved on the same page.


If succession planning is your forte, then be as creative as is humanly possible. Insurance payouts for the non-farming sons and/or daughters is not always the most reasonable or affordable solution -- although it might be, if RRSPs can be used to fund the insurance payments. Exploring the assigning of differing types of shares might be an option; assigning off-farm assets such as real estate or other valuables may also offer interesting options. Whatever you do, please try to refrain from the familiar mantra of days gone by, “Let’s make our decisions with just the siblings and no spouses.” Hello! Each family member willingly chose that spouse and like it or not, they have to sleep in the bed they made. Those spouses often made major sacrifices to become a part of that particular family business operation and for that reason alone, they deserve a voice at the table. Will it be complicated? Yes. Will it be messy? Probably. But the mess and the complications are going to happen anyway, and it will simply destroy families behind closed doors, if those members are not allowed at the table. Your best chance at a solution is to have every member present – bring a sword and a shield if necessary.


After this lengthy explanation, then, point #3 echoes the trusty Boy Scouts – “Come prepared.”

Lastly, let me read you my Christmas letter from 2015.
T'was 5 days before Christmas
And all through the barn,
Disaster was lurking
Starting with a 4 AM alarm.
The robot was calling,
Air pressure was low;
Out into the winter
Trudged sleepy-eyed Joe.
A crack in the compressor
No glue could set right, 
So off headed Brenda --
in to the dark night.
A part was secured 
From the Dairyland store, 
Only to discover that
Of disasters - there were more!
The scale on the mixer
Simply gave up the ghost - 
All our measured out rations
Would be nothing but "toast."
And just when we thought
It couldn't possibly get worse, 
The milk started heating --
Would Joe break down and curse?
No, such is our life 
On a robotic dairy;
We win some, we lose some,
Some days are plain "hairy."
But thankful we are 
For the work and the wonder
Of caring for cows
And putting right what's asunder.
Work is our play;
It keeps us at home - 
But when happiness abounds
Who needs to roam?
Wishing you and yours a Dairy Christmas and a Happy Moo Year!
The response to my Christmas letter was varied. Some friends thought I’d made up the circumstances just to generate a seasonal laugh. Others hoped that next year would be better. When I explained that all of these events had indeed happened in just one day, five days before Christmas, and I had not fabricated a single detail, every friend registered a note of alarm.
The truth of farming is that it never ends. You take the farm’s problems with you to bed at night and they are still there in the morning, no matter how strong the breakfast coffee. Vacations are few and far between, if they happen at all! Meals and, in fact, most events that other families would call “ordinary” are often unpredictable and inopportune, as is the weather and the mates your children choose to marry!  I have a set of tea cozies, (those fabric tents you pull over a teapot to keep it toasty) that I regularly tug over dishes of hot food to keep our meal warm while we tend to a robot that’s stopped, or a calf that’s fallen in the gutter, or a bovine birth that’s rapidly going wrong. Supper is still edible at 11:30 pm - not an unusual occurrence on our farm!  
I remember barely sliding into church one Sunday when the power had flashed off at 5:30 am and had stayed off for two hours. We were still milking in the parlour at the time (this was prior to our robot installation) and a fellow teacher friend had commented on how he’d missed his hot coffee that morning.
“Hey, how’s does a power outage affect you guys?” he queried.
“Well,” I explained, “when the power stops, all 24 milking claws drop to the cement and we have to race up and down the parlour to pull them out from under the cows before they get stepped or crapped on. The head-gates holding the animals in their milking positions lock in place and all the fans go off, as well as the lights. So now we have to contend with 24 hot, increasingly agitated cows mooing in the dark, along with the rest of the sweaty herd confined in the holding area behind them. We do have a generator to run the parlour, but it means driving a tractor to the replacement power source, hooking up the PTO, and restarting all of the equipment from the compressor to the bulk tank to the parlour itself.”
With a rather stunned expression on his face, my colleague managed to stammer, “I will never look at a power outage in the same way again.” And he wandered away.
My fourth and last point is this, “Yes, “shit happens,” most often and most profoundly on a farm.
Please be empathetic. Whether it means rescheduling a meeting, driving to the farm rather than meeting in your office or skyping a clan gathered around the supper table at nine pm, a farming family will certainly appreciate your understanding support.

Thank you for the opportunity to speak to you this afternoon. I hope I have enlightened you somewhat in the fine art of dealing with farming families as businesses. Remember these 4 points:
1.     Speak to be understood – no bullshit from either side.
2.     Find out who you are dealing with – and deal with them.
3.     Come prepared. Even better, come with creative and problem-solving suggestions.
4.     Expect the unexpected at the most inopportune times and be as helpful as you can.
Other than that, as a dairy farmer, I implore you to vote “no” to the TPP if you have the chance, eat as much cheese as your bowels will allow you, drink milk and smile at dairy people every chance you get. They may only be half awake but they’ll appreciate the warmth of your attention! Thank you.


Thursday, September 15, 2016

Cheering Others on to Success

Have you ever considered messages, like this one from Henry Ford, as gifts?  Words of encouragement create a spark to ignite the fire within us.  Any worthwhile goal can be a struggle.  “Desire” mixed with “perseverance” is the ideal mix to achieve any goal. You strive. You stretch. You give your “best” every day. This is true with any goal you set throughout your lifetime.

This past weekend, my friends ran in Regina’s Queen City Marathon.  They didn’t decide to partake in the event on the spur of the moment.  On the contrary, a “burning desire” was planted months in advance to undertake this endeavor.  Then they trained. One step at time built their endurance for the incredible run. When they showed up prepared, they were already on fire.  Equally amazing was the energy in the air. This added touch – this energizing fuel -- created an even greater flame within and set the tone for their success.   


Karla Sauve shared on her Facebook page, “WHAT AN EXPERIENCE!!!  From the dead quiet and only hearing the sound of hundreds of shoes at the start, to the insane cheering, high fives and hilarious signs from strangers the whole way.  People playing bagpipes, native drumming, random music, guitars and some pretty great scenery.”


Keith Diduch wrote, “There are several times I could of given up and just like in our personal lives there is times we want to give up.  I chose to focus less on who was passing me and how far I had to go and more on enjoying the moment, the people spurring us on and the beautiful scenery God created.” 

My favorite part, next to my friends’ great achievements, was hearing about the people cheering and spurring them to keep on keeping on. This fueled their desire to run for the goal. People cheering gives you an exhilarating feeling when reaching the finish line. Everyone shares in your success.    

A couple who had an amazing success story to share didn’t quite garner the same resounding cheers.  Instead their success story brought about on-line hatred.  

When Bryce Leung and Kristy Shen were interviewed by CBC, the headlines on August 15th read, How a 30-something couple got rich and retired by not joining home ownership 'cult'.  Three days later they’re in the news again, except this time the headlines read, Wealthy 30-somethings doling out financial advice breed online hate.  They admitted they were expecting negative comments but some comments were nasty.  Bryce and Kristy (a.k.a. The Wanderer and FIREcracker) chose to invest their money into a stock portfolio rather than invest their money in a home.  Their success story is built on wise strategies which worked for them.

I have to be honest. Years ago, I suffered pains of jealousy over my friends’ financial achievements, a newly-renovated basement and a new vehicle. This doesn’t sound like big stuff; it was just stuff.  But the truth be told, I was na├»ve about working towards a goal to save money for the “stuff” I could have.  I suffered what I recently heard diagnosed as Stinkin’ Thinkin’.  I didn’t believe I could save.  I didn’t know a strategy could help me save. After reading Bryce and Kristy’s encouraging story, I wished they were my mentors. They were running towards a goal, retirement in their thirties.  

Something needs to be said about “running towards a goal”.  Make the goal tangible! Cement it in your mind!  Above all, make the goal desirable. You want it. You see it.  You can achieve it if you are willing to put in the sweat equity.

Napoleon Hill put together a six-step formula in his bookThink and Grow Rich, which clearly defines the method by which DESIRE for riches can be achieved.

First.  Fix in your mind the exact amount of money you desire.  It is not sufficient merely to say, “I want plenty of money.”   Be definite as to the amount.  (There is a psychological reason for definiteness which will be described in a subsequent chapter.)

Second.  Determine exactly what you intend to give in return for the money you desire.  (There is no such reality as “something for nothing”.)

Third. Establish a definite date when you intend to possess the money you desire.

Fourth.  Create a definite plan for carrying out your desire, and begin at once, whether you are ready or not, to put this plan into action.

Fifth.  Write out a clear, concise statement of the amount of money you intend to acquire, name the time limit for its acquisition, state what you intend to give in return for the money, and describe clearly the plan through which you intend to accumulate it.

Sixth.  Read your written statement aloud, twice daily, once just before retiring at night, and once after arising in the morning.  AS YOU READ—SEE AND FEEL AND BELIEVE YOURSELF ALREADY IN POSSESSION OF THE MONEY.

Here’s the sincere truth.  A strategy by itself won’t bring about resounding success.  But a strategy along with words of encouragement will.  Words build people up.  When you read quotes from people like Henry Ford, study encouraging strategies from a book like Think and Grow Rich, or hear the cheering from the crowds along the sidelines of a marathon, you are spurred to keep going.  Encouraging words build you up.  Crushing words tear you down and banish hope.  The everlasting intent is to focus on bringing out the best in yourself to achieve amazing results in all your lifetime goals.

Thursday, September 1, 2016

Severance Planning – When You Lose Your Job


“When one door closes, another opens but we often look so long and so regretfully upon the closed door that we do not see the one which has opened for us.”  ~ Alexander Graham Bell.

Here’s a situation where these words of wisdom carry tremendous value.  You’ve been given the fatal news that your job is terminated.  Waves of emotions begin to take control when the news makes contact with your brain. Your mind churns the facts, asking the most logical question, “Now what?”

The questions following the shocking news are first centered around money issues.  But eventually, the money issues make way for others. You may feel a sense of grief, anger, or even euphoria. Every person will experience a range of different emotions on any given day.

Darryl Robinson, a Certified Financial Planner, delivered a presentation on Severance Planning: The Good, The Bad, and The Ugly at the Canadian Institute of Financial Planners 14th Annual National Conference.  Darryl, who once worked as a registered social worker, now specializes in offering financial, severance and retirement planning services.  He willingly shared his expertise on this important topic.  

One enormous take-away from Darryl’s presentation was that when people are seeking help with the usual requests,  “What should I do with my severance package and pension?” or “Help me pay less or no tax”, their underlying need is to know “Am I going to be okay?”  Darryl’s advice to the group was before you discussed any money issues, the first conversation should center on the client’s well-being.  Reach out and ask, “That’s rough.  How are you dealing with this?”  

Sharing your emotions is as important as dealing with the money issues.  You may be coping with a drastic change in your life as well as your lifestyle. Airing your feelings and concerns openly with a professional can help you deal with your frustrations.  

Available Resources and Provisions 

Retiring Allowance Provision

If you receive a retirement allowance, you may find some temporary tax refuge with the Retiring Allowance. Canada Revenue Agency described a retiring allowance (also called a severance pay) as an amount paid to officers or employees when or after they retire from an office or employment, in recognition of long service or for the loss of office or employment.  This link to the Canada Revenue Agency’s site discloses which specific payments qualify as a retiring allowance.

The lump sum payment (or allowance) is a taxable benefit and will be added to your annual taxable income.  Depending on your current year-to-date employment income, this added bonus may push your taxable income into a higher tax bracket unless you are able to take advantage of the Retiring Allowance.

The maximum limits determine the eligible amount based on the timing and duration of your years of service with the same employer. Consideration should be given to even temporary summer employment to increase the total years. 


·       $2,000 for each year or partial year of service before 1996


·       An additional $1,500 for each year or partial year of service prior to 1989 in which you didn’t earn any vested pension or DPSP (Deferred Profit Sharing Plan) benefits  

The most significant aspect of the Retiring Allowance is its ability to rollover your taxable allowance directly to an RRSP (Registered Retirement Savings Plan) without any immediate tax consequences, giving the flexibility and control to withdraw the funds when needed.  This extra “room”, per se, is in addition to your existing RRSP contribution room shown on your Notice of Assessment.  Utilizing both, the Retiring Allowance and RRSP contribution room, will maximize your tax savings if your annual taxable income is exceedingly high.  

This advantageous provision is often overlooked and doesn’t receive the necessary attention. Because the Retiring Allowance is available for years of services prior to 1996, some advisors and Human Resources employees are unaware of it.   Many dedicated and loyal Baby Boomers today, who have been committed to one employer, certainly may benefit from this if they are offered a payment.

A sample calculation is provided Jim Yeh, a blogger for Retire Happy, in his blog post, Dealing with Your Severance Allowance.

FCAC’s Checklist: Things to do if you lose your job

A valuable checklist is available from the Financial Consumer Agency of Canada (FCAC).  By clicking here you will see a number of actions if you lose your job. The list is fairly detailed and may appear overwhelming.  One important item on the list may help alleviate feelings of being overwhelmed: Consult an independent financial professional, such as a financial advisor or financial planner, to find out how to best handle your severance package, if you receive one.”

Employment Insurance

Another consideration is to apply for Employment Insurance. Most would not consider this option if their positions have been terminated and they received a severance package. Employment Insurance is available to those who lose their job through no fault of their own.  Applying for benefits while you transition to the next phrase of employment will provide the necessary financial help.  Specific details on How to Apply for Employment Insurance benefits are available here.

What’s Next

The better question may not only be “Now what?” but “What’s next?” 
When you received the news, you may have been on the verge of retirement.  You are not greatly affected. But if you weren’t ready for retirement, you have been presented with a new employment opportunity. I believe the important part is to hunt for the opened door.  I know first-hand the feelings of being delivered the fatal blow that your job is being terminated.  Grief certainly is part of the transition process to the “What’s Next” stage.  Recognize your feelings and acknowledge that they will pass when you develop new passions and desires.  Success will come to those who look for it.  Please share any challenges and experiences you encountered which may benefit others.