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Interest Rate Risk
−Removed: Borrowings under the Farm Credit West Credit Facility and Farm Credit West Term Loans are or will be subject to variable interest rates.
+Added: Borrowings under the AgWest Farm Credit Facility are subject to variable interest rates.
These variable interest rates subject us to the risk of increased interest costs associated with any upward movements in interest rates.
−Removed: For the Farm Credit West Credit Facility and Farm Credit West Term Loans, our borrowing interest rate is an internally calculated rate based on Farm Credit West’s internal monthly operations and their cost of funds and generally follows the changes in the 90-day treasury rates in increments divisible by 0.25%.
−Removed: At October 31, 2022, our total debt outstanding under the Farm Credit West Credit Facility and the Farm Credit West Term Loans was $88.5 million and $16.0 million, respectively.
−Removed: Based on our level of borrowings at October 31, 2022, a 100 basis points increase in interest rates would increase our interest expense $0.5 million for fiscal year 2023 and an annual average of $0.7 million for the three subsequent fiscal years.
−Removed: Additionally, a 100 basis points increase in the interest rate would decrease our net income by $0.4 million for fiscal year 2023 and an annual average of $0.5 million for the three subsequent fiscal years.
+Added: For the AgWest Farm Credit Facility, our borrowing interest rate is an internally calculated rate based on an AgWest Farm Credit internal method that follows the changing market interest rates and the cost to fund variable-rate loans.
+Added: Rate changes are expected to be generally the same as the Federal Open Market Committee (the “FOMC”) recommended changes, however the changes may be marginally different than the FOMC's recommendation.
+Added: As of October 31, 2023, our total debt outstanding under the AgWest Farm Credit Facility was $40.0 million.
+Added: Based on our level of borrowings as of October 31, 2023, a 100 basis points increase in interest rates would not materially increase our interest expense for fiscal year 2024 or the three subsequent fiscal years.
+Added: Additionally, a 100 basis points increase in the interest rate would not materially decrease our net income for fiscal year 2024 or the three subsequent fiscal years.
+Added: We have strategies in place to manage our exposure to interest rate risk, including the potential early pay down of outstanding debt under the AgWest Farm Credit Facility.
Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” for additional information.
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