CENTRAL KENTUCKY AG CREDIT • www.ckaca.com • ISSUE 1, 2006

Patronage Refund - 7 Consumer Alert - 8 & 9 Multi-Peril Crop Insurance - 10 Managing Risk in Agriculture - 11 Tobacco Buyout - 14 & 15

2 • CENTRAL KENTUCKY AGRICULTURAL CREDIT ASSOCIATION

Central Kentucky Branch Offices DANVILLE OFFICE

485 North Danville Bypass DANVILLE, KY 40422 859-236-6570 • 1-800-589-4261

Dale T. Cinnamon

PARIS OFFICE

201 Commerce Drive Paris, KY 40361 859-987-4344 • 1-800-613-4292

Russell Gray

Asst. Vice President Branch Manager

Asst. Vice President Branch Manager

Brad Godbey

Donna Sharpe-Cassity

Loan Officer

Kim Elliott

Senior Loan Assistant

Tina Roney Loan Assistant

Lisa Yeager Loan Assistant

LEBANON OFFICE

842 West Main Street Lebanon, KY 40033 270-692-4411 • 1-800-264-0402

Harry Young

Laura Jackson Loan Officer

Loan Assistant

LEXINGTON OFFICE

640 South Broadway Lexington, KY 40508 859-252-4717 • 1-888-820-3270

Shane Turner

Asst. Vice President Regional Lending Manger

Dion Mullins Loan Officer

Charles H. (Chuck) Canter Loan Officer Trainee

Linda Haley

1000 Ival James Blvd. Richmond, KY 40475 859-623-1624 • 1-888-820-3221

John Thomas

Asst. Vice President Branch Manager Loan Officer

Loan Assistant

STANFORD OFFICE

106 Agriculture Way Stanford, KY 40484 606-365-7500 • 1-800-467-0039

Joe Goggin

Asst. Vice President Branch Manager

John Peek

Asst. Branch Manager Loan Officer

Johathan Noe Loan Officer

Pamela Johnston Loan Assistant

Felicia Madden Loan Assistant

Loan Assistant

1-888-820-3221

Nancy T. Gorley 1-800-264-0402

The is published quarterly for stockholders, directors, business associates and friends of the Central Kentucky Ag Credit Association. PRESIDENT & CEO Larry K. Stone

ADDRESS CHANGES Address changes, questions or comments should be directed to BOARD OF DIRECTORS Central Kentucky James L. May Agricultural Credit Association by calling Chairman James W. Waggener 1-859-253-3249, or by writing P.O. Box 1290, Vice Chairman Lexington, KY 40588-1290.

James A. Lyons Oscar Penn Jerry Rankin David C. Sparrow Lionel Williamson

REGIONAL MANAGER Karen L. Sarver

Monday May 29

RICHMOND OFFICE

Teresa Thomas

Susan W. Mattingly

Memorial Day

Loan Assistant

Michael R. Chiles

Loan Assistant

Friday March 24

Margie Roe

Chris Cooper

Jeanine Williams

Good Friday

Loan Officer

Asst. Vice President Branch Manager Loan Officer

Holiday Closings

Shane Turner Northern Section 1-888-820-3270

EDITOR Robert Anderson PRIVACY POLICY Your online privacy is always a top concern at Ag Credit. For a complete copy of the latest version of the online privacy policy, please visit our web site and click on the homepage link. Review our Privacy Policy

FINANCIAL INFORMATION The Farm Credit Administration does not require the association to distribute its quarterly financial reports to stockholders. However, copies of its complete report are available upon request. The shareholders’ investment in the association is materially affected by the financial condition and results of operations of AgFirst Farm Credit Bank and copies of its quarterly financial report are available by writing Patti Trotter, AgFirst Farm Credit Bank, P.O. Box 1499, Columbia, SC 29202-1499.

ISSUE 1, 2006 • CENTRAL KENTUCKY AG CREDIT LEADER • 3

Attend Your Ag Credit Annual Meeting Choose from Two (2) Sectional Meetings • Complete annual meeting details are contained in the cover wrap of this issue of the Leader. • Please return your reservation card. It is enclosed in this issue of the Leader.

Ag Credit helps maintain the quality of life in rural areas and on farms throughout the central Kentucky region. Our commitment is constant in competitive lending and expert financial services. We understand and practice sound financial partnerships with our customers.

Meet Your Ag Credit Board of Directors at the Annual Meeting Your Ag Credit Board of directors is shown here (left to right): David Sparrow, Jerry Rankin, James W. Waggener, James L. May, James A. Lyons and Oscar Penn. Not shown in the picture is Lionel Williamson.

4 • CENTRAL KENTUCKY AGRICULTURAL CREDIT ASSOCIATION

AG CREDIT TEAM Joe Goggin Named Stanford Ag Credit Manager

Joe has a life-long background in farming with his father, Billy Goggin, and continues that activity on the family’s 540-acre farm in Boyle County. He raises registered Angus cattle and shows them with his children. Joe earned his education in Agricultural Economics from the University of Kentucky, and has been honored as an Outstanding Alumni by the University of Kentucky College of Agriculture. He is also a graduate of the two-year Philip Morris Leadership Development Program that is conducted by the University of Kentucky.

Joe Goggin has been appointed assistant vice president and manager of the Stanford Ag Credit Branch office. He assumes his duties following several years of service with Ag Credit, most recently as interim manager of the Stanford Branch. Joe has served the Central Kentucky Ag Credit Association for a total of 14 years. Prior to his service at Stanford, he was assistant branch manager at the Danville Ag Credit Branch. Before joining Ag Credit, he was a field representative for the Kentucky Cattlemen’s Association in Lexington. Well-known in central Kentucky for his service to agriculture, Joe has served with many organizations. He currently serves on the boards of directors for the Boyle County Cattlemen’s Association, the Boyle County Investment in Youth Sale and the Boyle County Farm Bureau. In addition, he is on the Kentucky and Boyle County boards of the University of Kentucky’s American Private Enterprise System Study Program. Joe also serves the Kentucky Cattlemen’s Association as committee chair of the Leadership Development Program.

Joe is married to the former Teresa Davis of Russell County, and they are parents of two children, Logan and Amanda. They are members of the Danville Presbyterian Church, where Joe is a deacon.

Chris Cooper Joins Richmond Ag Credit Team

Chris worked with Castle Cabinetry in Madison County prior to assuming his post with Ag Credit in Richmond. His other career experience has included ten years of service with Bluegrass Stock Yards in Lexington, where he held several positions, culminating with office manager for the organization. He also served with the Kentucky American Water Company in Lexington as an accountant. A graduate of Eastern Kentucky University, Chris earned his degree in Business Administration, with an emphasis on accounting. Throughout his career, Chris has been an active community servant and he currently holds several key posts in Madison County organizations. He is vice president of the Madison County Cattle Association, and is a member on the boards of directors for both the Madison County Farm Bureau and the Madison County Agricultural Development Board. In addition, Chris also owns and operates a 93-acre farm in Madison County, where he specializes in beef cattle and hay production. Chris is married to the former Patty Rhodus, a native of Richmond. They are parents of four sons, ranging in age from 11-15 years of age. They are members of the Newby Baptist Church in Madison County’s Newby Community. Chris is treasurer of the church and is also a Sunday School teacher.

Chris Cooper, a long-time resident of Madison County, has been named a loan officer with the Richmond Ag Credit Branch. His background is rich in both financial experience and in service to his community.

ISSUE 1, 2006 • CENTRAL KENTUCKY AG CREDIT LEADER • 5

1 2

Lebanon Customer Appreciation Day Features Safety 3

Photo 1 October 15 marked the annual Customer Appreciation Day that was jointly sponsored by the Lebanon Ag Credit Branch, T & H Feed and Lawson Tractor & Implement. Highlights of the event included a guest appearance by the Kentucky Department of Agriculture Farm & Home Safety Program. Dale Dobson, farm safety coordinator for the department said, “we want people to know the possible dangers on farms and be aware of ways to stay safe.” The Kentucky Department of Agriculture’s one-of-a-kind rollover tractor simulator is shown here. It is a dramatic enactment that emphasizes the importance of rollover protective structures on tractors. Photo 2 Donna Mudd of Ag Credit’s Administrative Office in Lexington attended the Lebanon Customer Appreciation Day. She was talking with Leo O’Daniel of Marion County, who is shown trying on a pair of Ag Credit gloves, another simple safety tool that can be used on farms to avoid hand injury. Door prizes were given away throughout the event by all three sponsors. Photo 3 Harry Young sits comfortably on a wagon, while helping to serve lunch at the Customer Appreciation Day. Harry is Ag Credit’s assistant vice president and branch manager in Lebanon, and he talked with attendees about the tobacco buyout. Photo 4 This realistic ATV accident shows trauma that can occur when vehicles are operated in an unsafe manner. While this demonstration was targeted to youth, lessons learned certainly impacted folks of all ages. A beautiful fall day provided ideal weather conditions for safety demonstrations at the Lebanon Customer Appreciation Day.

4

5

Photo 5 Jeanine Williams, Ag Credit loan assistant and Michael Chiles, Ag Credit loan officer are shown here with box lunches at the Lebanon Customer Appreciation Day. Both Jeanine and Michael are with the Lebanon Ag Credit Branch and they helped to feed approximately 250 people who attended the event during October. Ag Credit, T & H Feed and Lawson Tractor & Implement shared in providing lunches for all attendees.

6 • CENTRAL KENTUCKY AGRICULTURAL CREDIT ASSOCIATION

Country Mortgages by Ag Credit … Leading the way in rural residential financing Financing Options: • • • •

Purchase your dream home Construct your rural home Remodel or build additions Purchase land or a lot for your future home • Refinance your home

Lot Financing: • • • •

Terms to 10 years To purchase your future home site Maximum loan-to-value is 85% Easements may be allowed

Construction Loans: • Flexible • Construction only financing • Construction/permanent financing

In-House Home Loans: • Local loan servicing • Maximum loan-to-value is 85% (95% with PMI) • Patronage refund based on Ag Credit profits • Allows large lots or acreage • No escrow requirements

Secondary Mortgage Market: • • • •

Secondary mortgage rates Competitively priced Allows large lots or acreage Maximum loan-to-value is 80% (97% with PMI)

Key Criteria for Eligible Rural Home Loan: • Single-family, owner-occupied • Detached residence • Dwelling should represent 50% or more of total loan amount • Loan will be secured by first lien • Generally, property must be located in a rural area or town with 2,500 or less inhabitants

And, There is More: • Ag Credit has even more options available to meet your needs. Contact your nearby, local Ag Credit loan officer to discuss how the association can help you realize your dream of living in the country.

Why Do Business With Ag Credit? • • • • • •

Experienced staff Flexible lending programs Competitive rates Ability to handle large lots and acreage Ability to qualify unique properties Deal with a local lender who has over 71 years of experience

ISSUE 1, 2006 • CENTRAL KENTUCKY AG CREDIT LEADER • 7

Share the Profits – One of the most important benefits of being an Ag Credit memberborrower is that you share in the association’s profits. When the association distributes a financial share of profits to member-users, it is called a patronage refund. That’s the cooperative way of doing business … and it is a one-of-a-kind financial advantage for Ag Credit members. Twice a Year – Patronage checks or notices are generally mailed to our eligible customers in April and in November. Ag Credit appreciates the business that member-borrowers conduct with the association and we send a big “Thank You” for making the patronage refund possible through continued growth of the association. Millions of Dollars – The 2005 patronage refund is the largest ever paid by Central Kentucky Ag Credit. Over $827,000 will be paid back to members. During the past nine years Ag Credit has paid over $5.9 million in patronage refunds to members, with refunds being paid in cash and allocated surplus in individual member equity accounts.

AG CREDIT PATRONAGE REFUND is One-of-a-Kind; Members Benefit by Robert Anderson

Only with Ag Credit! At the end of each fiscal year, your Ag Credit association determines its total income and expense. Income remaining after all expenses are deducted (net income) can then be distributed in accordance with the bylaws. Your association’s board of directors makes the distribution choice for the association and its members. Choices are based on financial needs of the association and its members.

Millions in the Pockets of Ag Credit Members

1997 1998 1999 2000 2001 2002 2003 2004 2005

464,335 592,279 $ 654,307 $ 701,753 $ 682,587 $ 653,341 $ 621,517 $ 795,274 $ 827,567 $ $

8 • CENTRAL KENTUCKY AGRICULTURAL CREDIT ASSOCIATION

CONSUMER Phishing Scams Could Cost You Plenty

* The FDIC consumer alert web site can be accessed on the World Wide Web at the following address: http://www. fdic.gov/consumers/consumer/alerts/phishing.html The Federal Deposit Insurance Corporation (FDIC) has created a web page to inform and warn consumers about a type of fraud called “phishing” – as in fishing for confidential information. Phishing is a scam that encompasses fraudulently obtaining and using an individual’s personal or financial information. This is how it works: • A consumer receives an e-mail which appears to originate from a financial institution, government agency or other well-known, reputable entity. • The message describes an urgent reason you must “verify” or “re-submit” personal or confidential information by clicking on a link embedded in the message. • The provided link appears to be the website of the financial institution, government agency or other wellknown, reputable entity. However, in phishing scams, the website belongs to the fraudster/scammer. • Once inside the fraudulent website, the consumer may be asked to provide Social Security numbers, account numbers, passwords or other information used to identify the consumer, such as the maiden name of the consumer’s mother or the consumer’s place of birth. • When the consumer provides the information, those who are perpetrating the fraud can begin to access consumer accounts or assume the person’s identity.

Ag Credit Offers Security Doing business with Ag Credit has many advantages, so when you have questions or concerns with your account, answers are quick, easy and personal. Your local Ag Credit office is staffed by people who know you personally. They may even know your voice when you call! So, your questions can be answered quickly and confidentially. Ag Credit will not ask you to “verify” any of your account information via an e-mail, letter or phone call. If you have any doubt about the identity of a caller who has identified themselves as Ag Credit, feel free to call back on a phone number that you have dialed yourself (all Ag Credit phone numbers are listed in the Leader). Ag Credit will not send an e-mail to you requesting that you “re-enter” your information, to sign onto a website now, to click on a link which redirects your web browser to another website location, or to reveal any other personal information. (Always enter Ag Credit’s official website by typing www.ckaca.com in your web browser address bar.)

What to Do … If you think you’ve been violated • Place fraud alerts on your credit report • Close accounts • File a Police Report • File a complaint with the Federal Trade Commission • File an Identity Theft Report • Chart a course of action that will prevent more trouble If you think you’re a victim of identity theft, or if you notice something suspicious, get to a phone and contact the following: 1. The three major credit bureaus – Ask them to place a fraud alert in your file, so that lenders and other users of credit reports will be careful before starting or changing accounts in your name. The special toll-free numbers for the fraud departments are: Equifax at 800-525-6285, Experian at 888-397-3742 and TransUnion at 800-6807289. 2. Your bank, credit card company or any other financial institution that may need to know – Ask to speak with someone in the security or fraud department and followup with a letter. If necessary, close old accounts and open new ones, and select new passwords and “PIN” numbers (Personal Identification Numbers). Your call also alerts the financial institution to a possible scam that may be targeting other customers. 3. Your local police or the police where the identity theft occurred – Fill out a police report that will detail what happened. Get a copy of the completed report, because that can help you clear up questions and problems when dealing with your creditors and other financial institutions. 4. The Federal Trade Commission – The FTC is the federal agency responsible for receiving and processing complaints by people who believe they may be victims of identity theft. Trained counselors will provide information on the steps you should take to resolve problems and repair damage to your credit record. Certain cases may be referred to law enforcement agencies, regulatory agencies or private entities that can help. Call toll-free 877-IDTHEFT (438-4338). The FTC also maintains the U.S. Government’s central web site for information about identity theft at www.consumer.gov/idtheft. Go there to fill out an online consumer complaint form or link to educational materials. For additional information and forms that will be helpful to organize your case, visit the FTC website

ISSUE 1, 2006 • CENTRAL KENTUCKY AG CREDIT LEADER • 9

ALERT!

Number of Phishing Victims in Kentucky Cities * Information from the Federal Trade Commission – Identity Theft Data Clearinghouse – Report from calendar year 2004.

Covington 25 VICTIMS

Louisville 385 VICTIMS

Lexington 147 VICTIMS

Owensboro 33 VICTIMS Bowling Green 36 VICTIMS

How to Get a Free Credit Report A credit report includes information on where you live, how you pay your bills and whether you’ve been sued, arrested or filed for bankruptcy. Nationwide consumer reporting companies sell the information in your report to creditors, insurers, employers and other businesses that use it to evaluate your applications for credit, insurance, employment or renting a home. The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies – Equifax, Experian and TransUnion – to provide you with a free copy of your credit report at your request once every 12 months.

How to Order Your Free Report You can order your free annual credit report online at the Federal Trade Commission’s official website, which is http://www.ftc.gov/bcp/ conline/edcams/credit/ycr_free_reports.htm, or at annualcreditreport.com, by calling 1-877-322-8228 or by completing the Annual Credit Report Request Form and mailing it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. When you order, you need to provide your name, address, Social Security number and date of birth. To verify your identity, you may need to provide some information that only you would know, like the amount of your monthly mortgage payment.

http://www.ftc.gov/bcp/conline/edcams/credit/ycr_free_reports.htm

A Warning About “Imposter” Sites The FTC advises consumers who order their free annual credit reports online to be sure to correctly spell annualcreditreport.com, or link to it from the FTC’s website to avoid being misdirected to other websites that offer supposedly free reports, but only with the purchase of other products. While consumers may be offered additional products or services while on the authorized website, they are not required to make a purchase to receive their free annual credit reports.

Coming Soon! Watch for new features on Ag Credit’s Web Site.

10 • CENTRAL KENTUCKY AGRICULTURAL CREDIT ASSOCIATION

Multi-Peril Crop Insurance: A Hedge Against Disaster by Luke Ramsay March 15th is rolling around quickly, and hopefully we all know what that means.

It is Crop Insurance time! If you ever had a bad financial year due to flood, drought, hail, tornados or any other Act of God, then you understand the need to hedge your profits by protecting your crops with Crop Insurance. If you have never had such an incident, you may want to consider Crop Insurance, simply because “Murphy’s Law” is likely to catch up with you sometime. Sure, insurance premiums for Crop Insurance will add more cost to your farm operation, but the question really becomes, “can I afford the loss, or should I protect my investment with insurance?” If you decide to carry crop insurance this year, you should visit your insurance agent before March 15th. That is the last day to sign up for insurance to obtain insurance coverage

for tobacco, corn, soybeans and most other crops in Kentucky. Crop insurance has historically been a subsidized program through the federal government, so insurance premiums are usually extremely reasonable. Your local insurance agent will have specifics regarding prices and coverage for your particular needs. Here

CROP Burley Tobacco Corn Grain Sorghum Soybeans Wheat (non-specific)

is a chart that will help you determine the amount of value you want your Crop Insurance to cover. The cost shown is not the price of the insurance premium. It is the amount per Unit of Measure that is covered by the Crop Insurance. The cost of your insurance premium should be calculated by your insurance agent. Ag Credit is providing this chart only as a coverage guideline for full- and part-time farmers.

UNIT OF MEASURE

INSURANCE GUARANTEE

Lb Bu Bu Bu Bu

1.50 1.95 1.95 5.15 2.80

Crop Insurance can be acquired to cover anywhere from 50% to 75% of the dollars at risk. It’s important to remember that crop insurance, when it comes down to it, covers dollars, not yield. That should be taken into consideration when calculating the amount of coverage you’ll need. It should also be noted that when you file for coverage, the amount that is not covered is the grower’s responsibility first. For instance, if you insure 70% of your crop, the first 30% will be your responsibility in the case of a bad year.

Here’s a formula for calculating your desired amount of insurance: Insurance Guarantee (X) Number of pounds or bushels you wish to insure = Policy Value Crop Insurance covers droughts, floods, hail, tornados and almost all Acts of God. What Crop Insurance does not cover is human error or bad management practices. Producers should consider Crop Insurance as another management tool to be used as protection against crop failure. Each farmer has their own level of risk tolerance and risk bearing ability. By looking at your individual situation, you can make the best decision for your operation.

March 15th is your deadline for insurance. Give it some thought!

ISSUE 1, 2006 • CENTRAL KENTUCKY AG CREDIT LEADER • 11

Managing Risk in Agriculture

Different risk management strategies help to manage different components of risk in agriculture. Most farmers understand the practice of diversifying the farming operation. The practice of having several different sources of income on the farm serves to diversify the incomes. Other management practices can vary the timing of the sales of commodities. Spreading out sale times can mitigate the risk associated with commodity price fluctuations. Many risk management alternatives are available, including: • • • • • • • • •

Diversify income sources Set up alternative land tenure arrangements Vary timing of sales Use Cash forward contracting Use government commodity programs Use hedging by using futures markets Use price options by using futures contracts Use crop, hail and fire insurance Use multiple peril crop insurance (MPCI)

A traditional way of managing risk in farming operations is through crop insurance. Management of yield or price risk through the purchase of crop insurance transfers risk from you to others for a price which is stated as an insurance premium. Crop insurance is an example of a risk management tool that not only protects against losses, but also offers the opportunity for more consistent gains. When used with a sound marketing program, crop insurance can stabilize revenues and potentially increase average annual profits.

* More information is available in the booklet, “Introduction to Risk Management: Understanding Agricultural Risks”, which is published by the United States Department of Agriculture. Members may also obtain copies of the booklet by visiting their Ag Credit branch office.

12 • CENTRAL KENTUCKY AGRICULTURAL CREDIT ASSOCIATION

Advantages of Ag Credit Who Gets Financing from Ag Credit? Country Homeowners

We are the Experts in Rural Finance All of Ag Credit’s loan officers are experienced with agriculture, rural properties and living in the country. Ag Credit has been financing land, homes and farms in the country for over 71 years. We know all of the unique situations that can arise.

Patronage Refund Program As a financial cooperative, we are owned by our customers. This allows Ag Credit to share profits with its customers. A patronage refund rewards you for your business and lowers your cost of borrowing money.

Personal and Local Service Ag Credit has a branch office near you. We’ll even come to your home, farm or office. When you call our office, you’ll talk to a real live person, not a machine. Because of our unique structure, we can analyze your operation accurately and confidentially and provide you with a credit decision in a timely manner.

Ag Credit can lend money for the purchase, refinance, construction and improvement of single family dwellings located in the country. Loans can also be made for the purchase and refinancing of unimproved residential lots.

Part-Time Farmers

For the individual who owns agricultural land or produces agricultural products, but the agricultural operation is not the primary source of income, Ag Credit can lend for most agricultural and family needs.

Full-Time Farmers

Home Loans

These loans are for periods over 10 years and up to 30 years and are generally used to finance real estate purchases such as homes and larger land tracts.

Agribusiness Loans

Ag Credit has credit expertise for large and complex lending relationships. Because Ag Credit is a nationwide network of lenders, we can provide the knowledge and capital to work with clients of any size. Talk with your Ag Credit representative to see if your operation may qualify.

What Rate Plans does Ag Credit Offer?

For the individual whose primary business is the production of agricultural products, Ag Credit can finance virtually all of their agricultural, nonagricultural and family needs.

Fixed Rate Loans

Businesses

The interest rate is fixed for a specific term, normally 1, 3 or 5 years. ARMs can include an interest rate cap to protect against broad swings in interest rates.

Ag Credit can lend money to businesses which process and/or market agricultural products. Ag Credit can also lend money to businesses that provide services to farmers, such as crop spraying, seed cleaning, veterinary services, etc.

What Types of Ag Credit Loans are Available? Short-Term Loans

These loans are for a period generally up to one year and are used for general operating expenses, etc.

Long-Term Loans

These loans can be for periods up to 10 years and are used to finance virtually anything on the farm. Machinery, breeding stock, home improvements and debt consolidation are just a few.

The interest rate that you pay remains the same for the term of the loan.

Adjustable Rate Mortgages

Variable Rate Loans

The interest rate is based on a widely available index, such as the Prime Rate or LIBOR (London Interbank Offered Rate).

Conversion from One Program to Another

Ag Credit does allow you to change from one interest rate program to another. Your loan officer can provide all details.

ISSUE 1, 2006 • CENTRAL KENTUCKY AG CREDIT LEADER • 13

FARM CREDIT UNIVERSITY 2005

Financing Available from Ag Credit Financing for Your Home • Home purchases and refinancing • Home construction • Renovation and remodeling • Lot purchases

Financing for Your Lifestyle

• Recreational property • Horses, cattle and other livestock • Livestock and utility trailers

Financing for Your Farm • • • • • • • • • • • • • • • • • • •

Farm residences Land purchases Operating expenses Machinery and equipment Barns, stables, sheds, grain bins Livestock facilities Agribusiness Livestock operations Nurseries and greenhouses Farm supply businesses Processing operations Timber tracts Timber management costs Timber harvesting Sawmill operations Veterinary services Dairies Vehicles and equipment Operating expenses

Other Services & Conveniences Offered by Ag Credit

• Appraisal service • Online account access • AutoDraft – automatic drafting of payments • AgriLine – checking account for operating lines of credit • Credit life insurance • LoanLine – 24-hour, toll-free telephone access to loan information • FastCash

Central Kentucky Ag Credit places high emphasis on training and competence among employees, a factor that assures association customers that Ag Credit staff members are lending experts. Shown here is a 2005 Farm Credit University graduating class, comprised of staff from throughout the AgFirst Farm Credit service territory. Central Kentucky Ag Credit staff members are shown in the photo, including Brad Godbey of the Danville Branch, first row, right; Laura Jackson of the Paris Branch, second row, 6th from left; Luke Ramsay, of the Ag Credit Central Office, second row, 7th from left; Dion Mullins of the Lexington Branch, third row, left; John Peek of the Stanford Branch, third row, 2nd from left; Jonathan Noe of the Stanford Branch, third row, 8th from left; and Mike Chiles of the Lebanon Branch, third row, 10th from left.

Farm Credit University Builds Ag Credit Lending Leaders The Board of Directors and management of Central Kentucky Ag Credit is constantly aware that excellent knowledge and training are key elements to assure that Ag Credit staff can serve the diverse needs of the association’s membership. As part of the association’s ongoing educational programs, the Farm Credit University is included as a key part of training. Farm Credit University is a 28week intensive training course that is conducted on-line, with a midterm gathering of all students. The photo shown with this story shows students at the mid-term gathering in Charlotte, North Carolina. Course emphasis at Farm Credit University consists of many key elements that prepare students to work closely with Ag Credit member/borrowers in a constructive and knowledgeable manner. Course elements at Farm

Credit University include lending regulations, credit analysis, history of the system, customer relations and much more. While the photo here shows several Central Kentucky Ag Credit graduates of the 2005 Farm Credit University, several other employees from throughout the association are currently studying with the class of 2006.

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14 • CENTRAL KENTUCKY AGRICULTURAL CREDIT ASSOCIATION

TOBACCO BUYOUT

WE’RE STILL DOING BUSINESS: Ag Credit is the Best Buyout Option

Program Features

Loan

Lump Sum

Govt. Program

$ Paid when Govt. Forms available

100% $ paid over 10 years

Payout Amount

$ Paid on confirmation of assignment

Payments go to …

Govt. payments Govt. payments Govt. payments assigned to Ag transferred to go directly to Credit to help Ag Credit owner/producer make loan payments

What you get right now

$ Net Loan

$ Lump Payment with NO FEES deducted

$ 1st Govt. Payment

Special Rates for Young and Beginning Farmers Dollars Stay in Your Community

The programs and plans are not intended to be final. Advance rate percentages depend on current market interest rates and the actual timing of the payments. Percentages will change every day. They are preliminary and non-binding, subject to changes as the final rules and regulations are made final by USDA and other governmental agencies. Taxpayers should consult with knowledgeable advisors to learn about the tax benefits accruing to the taxpayer’s specific situation. Information provided is for educational purposes only. Nothing herein constitutes the provision of legal advice or account services. IRS may issue rules and regulations providing guidance with regard to the tobacco quota buyout. Association stock purchase required for loan. Other loan fees may apply. Association C Stock is not guaranteed and is subject to Association Board of Directors approval for redemption.

ISSUE 1, 2006 • CENTRAL KENTUCKY AG CREDIT LEADER • 15

TOBACCO BUYOUT So Many Options, Only One Choice –AG CREDIT Ag Credit Continues the Tobacco Buyout by Robert Anderson

Your Ag Credit association continues to advise farmers on their tobacco buyout options, i.e., lump sum payments for contracts and to help farmers leverage their contract dollars with various loan options. Many farmers have already seen many advantages in doing business with Ag Credit, including: • • • • •

Local people you know and trust Accurately quoted rates Fast service Quick payments Convenient offices

Thousands of producers and tobacco quota owners from throughout the association’s 17-county service area have made the decision to sell their Tobacco Transition Payment Program (TTPP) contracts to Ag Credit. Ag Credit has put cash into the hands of farmers. Farmers did not have to wait 10 years for payments to come from the government TTPP contracts.

… over $30 million into the local economy Ag Credit has poured over $30 million into the local economy in response to the Tobacco Buyout Program. The association is ready to assist you in making the best decision for your operation, so you can take best advantage of this once-ina-lifetime opportunity. Check branch office listings in this issue if you need an Ag Credit phone number or address. You always know where you can find us. We’re always ready to serve you.

Observations … from Larry K. Stone President and Chief Executive Officer Central Kentucky Ag Credit The key to a growing rural and farming economy in central Kentucky lies in keeping the region’s financial strength viable and healthy. Ag Credit has always put the member-borrower’s interest first and that service has continually helped to keep the region strong. Full- and part-time farmers and rural residents who use the financial services of Ag Credit return time-after-time, because they know that Ag Credit is a “straight shooter”, with the best financial interests of the borrower at heart. The Tobacco Transition Payment Program (TTPP), also called the “Tobacco Buyout”, has presented a special financial opportunity to many tobacco producers and quota owners. The once-in-a-lifetime opportunity helps to “jump start” the financial condition of producers and quota owners on a higher level. Ag Credit has already invested over $30 million in the Tobacco Buyout program. Thousands of central Kentucky individuals have chosen to make Ag Credit their financial partner in the Tobacco Buyout. That’s a good thing. But there is even a better thing that has happened as a result of Ag Credit’s financial service … The association has literally brought money from Wall Street and the nation’s money markets directly into the association’s 17-county service area in central Kentucky. Money that might have left the community through other lenders, has stayed in the community, because Ag Credit is financially strong and ready to serve you. That’s right! Ag Credit’s participation has brought Wall Street money directly into your hands.

Ag Credit has served the central Kentucky region for more than 71 years. We’re here to stay.

Just Getting Started? You may not be making a career in agriculture, but your part-time farming operation is important to you. You take pride in making things grow through your own hard work. No matter how you farm – full-time, part-time or just for fun – Ag Credit can lend a hand. We can finance all types of large and small farms. America’s farmers have depended on us for generations. You can, too.

Financing for the Part-Time Farmer

FINANCING FOR YOUR LIFESTYLE

Ag Credit Offices: Danville • Lebanon • Lexington • Paris • Richmond • Stanford Central Kentucky Agricultural Credit Association P.O. Box 1290 Lexington, KY 40588-1290

PRSRT STD US POSTAGE

PAID

COLUMBIA SC PERMIT 1160