MN Valley Business Journal

The Definitive Business Journal for the Greater Minnesota River Valley August 2020

Cate DeBates of Coldwell Banker Commercial Fisher Group. Photo by Pat Christman

Busy but uncertain Construction healthy but future unsure Also in this issue • SIPPET COFFEE & BAGELS IN NEW ULM • DICK’S LOCKER IN VERNON CENTER • KARSHE TEA IN DOWNTOWN MANKATO

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MN Valley Business • AUGUST 2020 • 1

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F E A T U R E S August 2020 • Volume 12, Issue 11

8

The local construction scene is surprisingly strong, but many of the projects were already in the works and developers are unsure of what 2021 will bring.

16

Like most meat markets, Dick’s Locker in Good Thunder is booked many months out with hog butchering jobs, leaving deer processing up in the air.

18

Aron Bode was looking for a new business venture and started Sippet Coffee & Bagels to fill a niche for a drive-through coffee shop in New Ulm.

20

After years of work Sami Ismail fulfilled his dream of opening Karshe Tea in downtown Mankato, featuring a mix of east African and American offerings.

MN Valley Business • AUGUST 2020 • 3

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AUGUST 2020 • VOLUME 12, ISSUE 11

By Joe Spear

PUBLISHER Steve Jameson EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Kent Thiesse Dan Greenwood Katie Roiger

PHOTOGRAPHERS Pat Christman COVER PHOTO Pat Christman PAGE DESIGNER Christina Sankey ADVERTISING Danny Creel Sales Jordan Greer-Friesz Josh Zimmerman Marianne Carlson Theresa Haefner ADVERTISING Barb Wass ASSISTANT ADVERTISING Christina Sankey DESIGNERS CIRCULATION Justin Niles DIRECTOR For editorial inquiries, call Tim Krohn at 507-344-6383.

For advertising, call 344-6364, or e-mail advertising@mankatofreepress.com.

MN Valley Business is published by The Free Press Media monthly at 418 South 2nd Street Mankato MN 56001.

■ Local Business memos/ Company news.....................................5 ■ Business Commentary.........................7 ■ Business and Industry trends..........22 ■ Retail trends.....................................23 ■ Agriculture Outlook..........................24 ■ Agribusiness trends..........................25 ■ Construction, real estate trends.....26 ■ Gas trends........................................27 ■ Stocks...............................................27 ■ Minnesota Business updates............28 ■ Job trends.........................................28 ■ Schmidt Foundation.........................30 ■ Greater Mankato Growth..................32 ■ Greater Mankato Growth Member Activities ............................33

From the editor

Business booms while COVID virus looms

T

his month’s cover story carries surprising and remarkable news: The construction business seems to be booming in the region despite the COVID-19 pandemic.

Residential and commercial building continues at a solid pace, according to construction industry leaders and bankers.

The word seems to be: Business and investors are “cautious” but not frozen. Nobody’s completely pulled back on everything they do.

That’s the good news. The uncertain future is the bad news.

The impact of COVID-19 seems to be lingering longer than some expected.

Still, job numbers on the local and national front seem to be improving since May when things started to open up. Interest rates are at an all-time low and driving much of the housing construction and development.

Of course, the bad news is those states that opened too early now face a spike in the virus and have to close businesses again in Texas, Florida and Arizona.

Maybe people will begin to take this seriously? Who knows.

Everyone is dealing with a new business reality, but it’s striking how resilient some seem to be.

And then we can add racial strife to the pandemic, and a contentious and chaotic political climate. What more could go wrong?

But some good things may come from a chaotic political environment. There’s an urgency to approve a $1.35 billion bonding bill for construction projects in Minnesota. That would be one of the biggest building investments in recent history.

And with all the governmentbased jobs and buildings in the Mankato area, we would be sure to benefit from a good chunk of that spending. There’s even serious talk of a national

4 • AUGUST 2020 • MN Valley Business

infrastructure bill that would fix highways and bridges in counties across America. Let’s hope both come to fruition.

Still, a three month shutdown of Mankato food and retail business will have a big impact on the city budget and the amenities the city can provide.

Already, the city of Mankato is planning for multi-million budget reductions. The loss of sales tax money from downtown bars and restaurants and other activity will starve things like the civic center budget and other needs.

The city of Mankato’s budget is projected to decline by $7 million to $9 million per year for the next three years. That would lead to the layoff of about 18 employees from the city’s total workforce of 309.

Revenue from the city’s sales tax is expected to decline by $1 million a year or about 20 percent.

As more and more cities got approved for local options sales taxes, many probably did not think of the vulnerability they would have should sales taxes dry up so dramatically. In fact that sales tax in Mankato has typically risen about 8 percent a year over the last decade or so. There were smaller increases more recently.

The food and beverage tax perhaps will take the biggest hit at an estimated near 45 percent reduction declining from $700,000 to about $400,000. The funding primarily supports the civic center. The loss of Minnesota State University hockey for the tail end of the season will total about $1.4 million in food and alcohol sales.

All told, civic center revenue is expected to fall to about $3.5 million compared to an original estimate of $6.28 million.

The tax situation will likely change dramatically as well. As business property values decline, the burden will likely shift to homeowners. Property tax

increases of 4 percent and 5 percent will be needed just to balance the city’s budget. Should business values decline even further, the taxes on homeowners may go up even more.

So, it’s good to see new construction coming online.

Mankato may also benefit from large new properties such as the Eide Bailly tower and Bridge Plaza when they become fully valued on the tax rolls.

It seems we’re in a mode of economic shock every 10 years or so, the first being 911 and the second being the Great Recession.

Some businesses recovered from those shocks, others went away forever or were never the same.

The business landscape is likely to change significantly and permanently from the economic shock of the pandemic. But since we recovered from a terrorist attack and a near financial collapse, we’ve at least steeled ourselves for what’s ahead.

Joe Spear is executive editor of Minnesota Valley Business. Contact him at jspear@mankatofreepress.com or 344-6382.

Follow on Twitter @jfspear.

Local Business People/Company News ■

Jaguar sale finalized

MetroNet, a provider of fiberoptic internet, TV and phone ser vice, has finalized its acquisition of Jaguar Communications, a fiber optic internet company ser ving Mankato, Owatonna, Rochester, and several other Minnesota communities.

The combination of the two companies allows MetroNet to expand its ultra-high-speed fiber optic footprint to residential and business customers across the Midwest. MetroNet is expecting to invest an additional $150 million or more in growing the Minnesota market to expand services to additional communities and neighborhoods.

Terms of the deal were not disclosed. The transaction was officially completed yesterday.

Jaguar Communications currently serves Carver, Scott, Dakota, Nicollett, Le Sueur, Rice,

Blue Earth, Waseca, Steele, Dodge, Olmstead, Freeborn and Mower counties with Gigabit speed internet.

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South Country a Top Workplace

South Country Health Alliance has been named one of the Top Workplaces in Minnesota by the Star Tribune.

The results of the Star Tribune Top Workplaces are based on survey information collected by Energage, an independent company specializing in employee engagement and retention.

Leota Lind, is CEO of South Country.

South Country Health Alliance is a county-based purchasing health plan owned by eight Minnesota counties—Brown, Dodge, Goodhue, Kanabec, Sibley, Steele, Wabasha, and Waseca—in a joint effort to support accessible, quality health care for Minnesota Health Care Program enrollees through partnerships with community services and local health care providers.

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Therapeutic Services expands

Therapeutic Services Agency announced that its Deaf and Hard of Hearing Program has expanded services to deaf children and their families living in the southwest and south central regions of Minnesota.

Through grant support from the Minnesota Department of Human Services TSA has been providing culturally affirmative services to deaf, deafblind, and hard of hearing children and adolescents across northern Minnesota for the past four years.

Mental health practitioner Chad Richardson will provide services in southwest and south central Minnesota.

MN Valley Business • AUGUST 2020 • 5

Federated again a Top Workplace

For the third consecutive year, Federated Insurance was named one of the Top 150 Workplaces in Minnesota by the Star Tribune.

Federated Insurance was ranked No. 6 on the large company list, up one spot from last year.

“This honor is a reflection of our incredible workforce living out our four cornerstones — equity, integrity, teamwork, and respect,” Jeff Fetters, CEO. said in a statement.

Federated last year opened an office in Mankato in the former Verizon building.

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Trebesch elected soybean chair

Brown County farmer Cole Trebesch was reelected chair of the Minnesota Soybean Research & Promotion Council.

Trebesch, 37, farms near Springfield on the family farm with his wife, Miranda, and their two children, Oliver and Elsie. He raises soybeans, corn, hogs and cattle. He is a member of the Brown County Corn and Soybean Growers Board. Before his election to chair in 2019, Trebesch previously served as vice chair, and has been active on MSR&PC’s environmental stewardship and production action teams. He’s also a graduate of the American Soybean Association’s Young Leader Program and serves on the board of 40 Square Cooperative.

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Pioneer Bank a Top Workplace

Pioneer Bank has been named one of the Top 150 Workplaces in Minnesota by the Star Tribune.

Pioneer Bank was ranked 33 on the small company list, 50-149 employees.

“Our place on this list is representative of our team’s passion for what they do, the respect they have for each other and the commitment to the customers and communities we serve,” David Krause, CEO of Pioneer Bank said in a statement.

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Est. 1975

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Business Commentary

By Harvey Mackay

S

The ABCs of success is a journey

uccess is a journey, not a destination. You may take a few detours, hit some roadblocks and arrive at a different place than you planned.

Success comes in many forms and means different things to different people. In the working world, it is often defined as landing the perfect job, achieving a targeted income level, occupying a corner office or owning a business. However you measure it, success is sweet. And it doesn’t happen overnight.

Here are my ABCs of success to help you be successful.

A is for adversity. I have never met a successful person who hasn’t had to overcome either a little or a lot of adversity.

B is for boredom, the kiss of death for anyone who wants to get ahead in life, and even worse for anyone who truly wants to love what they do.

C is for competition. The existence of competition is a good sign. No one ever set a world’s record competing against them self.

D is for demonstrate. Find concrete ways to demonstrate how valuable your presence is to the company, your customers, and your community.

E is for eagerness. The successful people I know display an eagerness to improve and get the job done.

F is for faults. Few of us lead unblemished personal or professional lives. It’s the ability to overcome and learn from our faults that counts.

G is for guarantees. There are none in this life, but there are creative ways to better your chances. You can, however, guarantee your customers and coworkers that they can depend on you to always give your best.

H is for happiness. To me, happiness is the key to success, not vice versa. Only you can draw the map of the road to your happiness.

I is for I’ll take care of it. There will always be a place for the person who says “I’ll take care of it.” And then does it.

J is for job. There is something unique and memorable about each one of us. It’s our job to find out what it is and let other people in on the secret.

K is for keen. You must develop a keen sense of what your customer wants, what your company needs from you, and the best way to deliver both.

L is for love what you do, do what you love and you’ll never have to work another day in your life.

M is for morals. A solid moral compass is critical to succeeding. Anything less than stellar ethics diminishes success.

N is for navigating shark-infested waters and learning how to swim with the sharks.

O is for optimism. Optimists are people who make the best of it when they get the worst of it.

P is for persistence. Much of what makes people successful is persistence.

Q is for quintessential. Successful people always strive to be the quintessential example of quality and decency.

R is for resourceful because resourceful people can see the upside of down times. They are not willing to give up just because things get complicated.

S is for success. If you want to double your success ratio, you might have to double your failure rate.

T is for things others don’t like to do. Successful people do them so they can do the things they enjoy.

U is for university. Most people drive an average of 12,000 miles a year. Turn your car into a university and listen to self-help podcasts and motivational lessons.

V is for victory. Celebrate victories, large and small, along the road to success and be sure to thank those who helped you along the way.

W is for work. It’s not enough to work hard or work smart. You have to work hard and smart. There are many formulas for success, but none of them works unless you do.

X is for eXchange of ideas. Unless you are able to communicate in a forceful, polite, effective way, the day is going to come when what you’ve learned won’t be enough.

Y is for Yoda. Yes, the Jedi master. Everyone benefits from mentors like Yoda in their quests to succeed. Once you have achieved success, be a Yoda for those who can benefit from your guidance.

Z is for zone. When you are in the zone, things just click. Success is all but guaranteed.

Harvey Mackay is a Minnesota businessman, author and syndicated columnist. He has authored seven New York Times bestselling books

Mackay’s Moral: Some people succeed because they are destined to, but most people succeed because they are determined to.

MN Valley Business • AUGUST 2020 • 7

Ryan Evenson of APX Construction Group.

Robust construction But developers worry about 2021

By Tim Krohn | Photos by Pat Christman

T

he economic turmoil has led some developers to tap the brakes and delay some projects, but the construction sector remains surprisingly vibrant in the Mankato region.

But many of the projects were already in the works and developers worry about what things will look like at the start of next year.

Residential construction remains strong.

“It’s been really good. The interest rates are great, which really helps,” said developer Mike Drummer.

“I’ve heard of people getting 3% and under. If you’re

employed and looking for a house or thinking of a house, it’s a great time.”

Long-term U.S. mortgage rates have been at nearly 50-year lows.

“Interest rates are phenomenally good,” said David Krause, CEO of Pioneer Bank.

Cate DeBates, of Coldwell Banker Commercial Fisher Group, said things slowed at the start of the coronavirus outbreak but got back on track.

“We are doing quite a few development proposals right now.”

Cover Story

8 • AUGUST 2020 • MN Valley Business

David Krause, CEO of Pioneer Bank, said there is caution but people are still investing in new and renovated buildings in the region.

One area that is sluggish is new construction and leasing in the retail sector. “With retail there are a lot of unknowns,” DeBates said.

And no one expects much in the way of big, new commercial construction.

“The commercial was hammered so hard in the first place,” Drummer said. “There’s plenty of office space available so residential (development) is carrying it now.”

Concerns for 2021

Ryan Eveneson, CEO of APX Construction Group, said they will stay busy this year as they work on projects that were already in motion.

“But architects and engineers have been slow since March 25 when things went on pause. So that will trickle down to us in the first quarter of 2021,” he said.

“It looks optimistic now but if you can’t see the backside you can be unprepared.”

APX is three firms, construction, Evenson Concrete Systems and Midwest Steel Erectors.

They are doing a number of

Pionner Bank recently opened a new location in Mankato, near Madison East Center. commercial projects including a food-grade manufacturing facility in Le Center, the new Frandsen Bank in North Mankato and a daycare in New Prague.

Evenson said the shut down of retail and hospitality is greatly slowing construction in those sectors.

“We have a Caribou going but that’s about the only one in the hospitality and retail that we have in the hopper.”

APX also handled the reuse of the former Lowe’s building in Mankato. The space is now filled with a mini-storage business, Unique and Specialty Classics

MN Valley Business • AUGUST 2020 • 9

APX Construction’s new office on Innovation Drive on the east side of Mankato. Photo courtesy of APX.

10 • AUGUST 2020 • MN Valley Business

and Pontoon One. We’re trying to find adaptive reuses for those (big box) buildings that don’t suit their original purpose.”

Cautious approach

Krause said their banks across southern Minnesota are seeing a cautious approach when it comes to development.

“We’re seeing some projects that have been put on hold for a bit to see how things end up here with this pandemic. We haven’t seen or heard a lot of people flat out canceling things,” Krause said.

He said the agriculture sector has stalled, with low commodity prices and meat prices putting the brakes on construction of things such as new hog barns.

“Mankato is a different animal,” Krause said. “It is clearly a hub and regional economic center and that makes it a center for housing and everything. With the sheer number of housing and commercial development there are just so many more opportunities than in a St. James or Mapleton.

“But the sentiment, I think, is the same throughout the region. I don’t think it’s a negative sentiment, it’s a cautious sentiment,” Krause said.

“I think there’s a sense that the pandemic is taking longer to work it’s way through.”

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DIRT IS MOVING AND LOTS ARE SELLING

Residential reigns

Drummer, who focuses on residential building, including work around Prairie Winds School on the southeast side of Mankato, said construction has been strong. “Starter homes are going well and there will be quite a few apartment units coming on line. It’s interest rate driven.”

He hasn’t seen a lot of commercial development, but there is some planned. A large truck stop on the east edge of Mankato is moving forward as is a new Frandsen Bank building in lower North Mankato.

DeBates said their plan for a mixed use building on Riverfront Drive in Old Town is on track with hopes of starting construction this year.

Drummer said there are also

siestahillsliving.com MN Valley Business • AUGUST 2020 • 11

some commercial development projects in the works for property behind Kohl’s, which is owned by a Rochester developer.

Pioneer just finished a new bank building at the corner of Victory Drive and Adams Street in Mankato.

“We needed to add more square footage. We were out of space,” Krause said.

“The running joke has been that every time a building goes up it’s a car dealer or a bank. But it’s a good thing, it’s more tax base,

its more jobs. I hope buildings keep going up.”

While Drummer continues with residential development at Prairie Winds, he’s finished a subdivision near the Walmart distribution center. “That’s full and sold.”

He also has projects in the works in North Mankato. “Some homes and some apartments there.”

Drummer said interest remains high for slab-on-grade patio homes. “Patio homes are stronger than ever. The one off Stadium

(Road) is almost full and we’re starting one by Pillars (at Prairie Winds).”

Focus on downtowns

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While the explosion of big box store construction on Mankato’s hilltop is a thing of the past, DeBates said their firm, which leases and manages commercial space and develops new projects, is seeing a lot of activity in downtown areas in the region.

The Studio 5 building is to be built in Old Town where a former dry cleaning business is. The CARPET • RUGS • HARDWOOD • andersontuftex.com building will have commercial CARPET • RUGS HARDWOOD • andersontuftex.com space on the first floor and CARPET • RUGS • • HARDWOOD • andersontuftex.com residential on upper floors.

Fisher Development and CARPET • RUGS • HARDWOOD • andersontuftex.com Brennan Companies are also working on a large redevelopment project for the Valley Green Mall in downtown Le Sueur. The mall struggled in recent years and the mall cut off the main street 1107 Cross St. through the downtown.

That 1107 Cross St. North Mankato 1107 St. 1107 Cross Cross St. street is being reopened.

507.625.3089 North Mankato North Mankato Mankato North “There will be traditional www.rickwaycarpet.com 507.625.3089 507.625.3089 storefronts that welcomes back 507.625.3089 Main Street,” DeBates said of the www.rickwaycarpet.com www.rickwaycarpet.com www.rickwaycarpet.com mall renovation. “We’re adding two upper floors of apartments.

It’ll look like a downtown strip with a modern, nice facade. We Heating Building are taking over management of Security that, talking with existing tenants & Cooling Automation and finding new ones.”

Coldwell Fisher is also doing the leasing for Bridge Plaza, the upper-end office and residential building that Brennan is building next to the Veterans Memorial Bridge in Mankato.

“Half the apartments are already leased. The building is ahead of schedule. We’re moving our offices in there, too, at the end of December,” DeBates said.

DeBates said that when talking Exceeding expectations & gaining trust to investors they are focused on mixed use projects in downtown through exceptional value and performance! areas. “Retail-commercial on the ground floor and residential above. Mankato and St. Peter have been successful and it has a ripple effect across the region.”

Coldwell Fisher is also nearing the end of an addition to the east end of Madison East Center in Mankato. The former mall has Partners of SCHNEIDER ELECTRIC® become primarily a health care campus.

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“A lot of people thought things would be slowing down but it’s been really strong,” DeBates said.

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From left, Dick and Marian, Tory, Jess and Jarrod Kruggel.

Bottom: Jess Kruggel and brother Jarrod load a customer’s cooler with pork.

Meat markets buzzing Dick’s Locker, others unsure about deer processing

By Katie Roiger Photos by Pat Christman

I

their animals butchered. t may only be midsummer, but dedicated “I think they will be caught unawares,” hunters would tell you that it’s never too said Jean Lundquist regarding local early to start thinking about deer hunters. She and her season. Those crisp husband Lar r y mor nings spent discovered an unusual patiently waiting in a trend when they tree stand or a ground purchased a pig from a blind are never far from DICKS LOCKER enthusiasts’ minds. This neighbor and brought it 120 Front St. N. year, sportsmen and to their local meat Good Thunder women have an urgent market to have it 507-278-3038 reason for getting a processed. At Dick’s facebook.com/dickslocker jump on planning their Locker in Good Thunder, autumn outings: If they they were told that the do manage to bag their meat market was 2020 deer, hunters may not be able to have currently booked through February for

Cover Spotlight

16 • AUGUST 2020 • MN Valley Business

Left: Tory Kruggel restocks the display case. Right: Jess cutting up ribs. butchering.

“That’s going to be a shock to some people, because I know they did a lot of deer processing,” Jean said.

Larry learned from the proprietor Jess that Dick’s Locker was slated to butcher approximately 40 hogs a week for the foreseeable future.

“That’s a lot of butchering and wrapping and freezing!” Lundquist added.

Tory Kruggel, the daughter of Dick’s Locker’s original proprietors, confirmed the number of hogs to be butchered does average 40 a week, or 10-12 a day.

“My dad said, ‘In 42 years of working here, I’ve never had a busy season like we’re having right now!’”

Kruggel said. Having grown up in the meat processing industry, where her first task as a little girl was to stamp meat packages, Kruggel recently adjusted the hours of her full-time job in order to help at the locker.

“That’s what you do for family,” she said.

Dick’s Locker has a long-time history of being a family-run business. In 1978, Dick Poehler and his wife Marian purchased the meat market and ran it together until turning over the reins to their son Jess in recent years. The couple still works at the locker: Dick does all of the meat cutting, and Marian wraps meat, answers phones, and looks after the meat case where customers can purchase fresh meats and cheeses.

During the COVID-19 pandemic, the Poehler family’s schedule changed overnight. While their busy season usually begins in early fall and lasts through late February, Kruggel said that the Locker hasn’t slowed down at all.

“Normally we only run our smokehouses once a week this time of year, but now we’re running them nonstop to try to keep up with everything,” Kruggel said. The intake is mostly hogs, but the family squeezes in some beef processing as well.

The unusually heavy workload is mostly due to the fact that, thanks to COVID-19 restrictions and closures, many large processing plants around the country are operating at much less than full capacity. As a result, farmers have few options when it comes to getting rid of their hogs. If they aren’t lucky enough to book with a processor, several farmers are faced with having to euthanize the animals.

“We’re trying to partner with a lot of our local farmers to help them sell some of the hogs off,”

Kruggel said. “I feel for all our farmers right now, and all the small meat markets around, because we’re all just trying to do our part in getting as much processed as possible so that people still have the opportunity to buy meat.”

Sales soar

Another unexpected pandemic result is the sudden spike of interest in buying meats from small, local stores rather than supermarket chains. The Poehler family discovered that their meat case is selling out faster than ever before.

“We’ve had a lot of people that would shop at Cub and HyVee, and they don’t want to go to the big grocery stores anymore because they’re concerned with the whole COVID thing,” said Kruggel. “That in itself has tripled our sales.”

Although the Dick’s Locker family appreciates the extra business, they worry that the frantic pace will keep them from being able to serve as many hunters in 2020 as they have in past years. Under normal circumstances, the Locker takes full-carcass deer for skinning, deboning, and butchering, and also processes trimmings into sausages, bratwurst, and meat sticks for its customers. Thanks to the deluge of hogs, however, the Locker’s calendar is looking tight.

“We took a little break in November to try to accommodate for deer season, but at this point it’s kind of up in the air for where our deer season is going to be,” Kruggel said of the shop’s schedule. “If this does continue, we’ve talked about possibly pulling back and not taking carcass deer and just taking trimmings. Honestly, at this point, we’re just telling people to play it by ear.”

In the best-case scenario, large-scale slaughterhouses will ease back into full capacity and free up small meat processors like Dick’s Locker to continue assisting hunters. Until then, the owners and employees of the Locker plan to continue being good neighbors to their farmer and hunter communities alike.

“Looking at the pandemic and how a lot of people were impacted, we were definitely one of the fortunate ones to have an opportunity to really give back,” said Kruggel. “That’s the nice thing about small communities: Everyone kind of pulls together to help everyone through a bad time.”

MV

MN Valley Business • AUGUST 2020 • 17

Aron Bode found New Ulm lacked a drive-up style coffee shop and started Sippet.

New shop for New Ulm Sippet Coffee & Bagels opens

By Katie Roiger | Photos courtesy of Sippet

W

hen starting any kind of business, a would-be world,” Bode said. A former employer suggested the owner of Aron Bode’s caliber has three things: Wisconsin-based Colectivo Coffee company, which Passion, talent, and a whole latte foresight. sent him a bag of their beans. As soon as he tasted it, “What are we lacking?” Bode he knew that both the brew and asked himself when he first the company were perfect for his considered launching his second business. start-up. A New Ulm native and “They’re super, super nice to us,” culinary school graduate, Bode had Bode said of Colectivo. “It just SIPPET COFFEE already gotten his feet wet in smallstarted to fall into place.”

SHOP business ownership with the Retz Another piece of the puzzle was 701 N. German St., New Ulm 227, a speakeasy-style lounge what to serve alongside the coffee sippetcoffee.com featuring local craft cocktails, beer, for customers with the munchies.

Facebook: and wine. Once he felt that the In Bode’s mind, bagels were the Sippet Coffee & Bagels establishment would be a success, natural pairing.

507-354-7477 he began looking around for a new “I ate bagels every day for a venture. month!” laughed Bode. “I tried five “It was two and a half years later when I thought, or six different vendors before I found a place that let’s do coffee!” Bode said. A thorough search into made bagels out in Long Island, New York.” Bode New Ulm’s restaurant roster showed him that the town liked the fresh taste and variety that the company didn’t have a spot specifically for coffee – and certainly offered and enjoyed narrowing down the flavors his not a Caribou-style drive-through. That was incentive shop would offer – although he does still enjoy mixing enough for Bode, who had fond memories of working up the menu offerings. in different coffee shops.

“They send us anything we want at any time we “I just sat for hours on my phone and called people, want,” said Bode. “They’re super cool.” old connections that I knew from the restaurant Bode chose to name his drive-through coffeehouse 18 • AUGUST 2020 • MN Valley Business

Profile

Sippet, a playful nod to their primary menu items. One of his first employees, a sixteen-year-old aspiring graphic artist, designed the coffeehouse’s elephant logo as a tribute to Bode’s sister-inlaw’s favorite animal, and Sippet officially opened in 2019.

Teamwork

Bode credits much of the establishment’s success to his employees and their ability to handle anything from design to prep work.

“They can step up and do the exact same job that I would do, exactly how I would do it, and allow me to step back and work on a side project,” Bode said. “If I’m going to work on a really crazy smoothie this week, I’m going to need five hours dedicated to getting the smoothie recipe figured out, and they’re like ‘Yeah, whatever you need to do, go do it!’” His team also weighs in on big decisions such as creating new soup recipes for their rotating menu.

“Twenty minutes later, they have it done,” Bode said. “It’s the same quality that I would do, and it’s fantastic.”

Team spirit is important in a food-related business, where prep work can sometimes begin at 3 a.m. and last long after close.

Everything on Sippet’s menu, from the specialty coffee drinks, to their gluten-free chocolate chip cookies, is made fresh in-house.

With weekly specials and six different kinds of gourmet cream cheese, this makes for a full day of work even apart from serving the customers.

“It takes an exceptionally long time sometimes to make some of our products,” Bode said. “Our cold brew takes 24 hours. Our lemonade is all fresh-squeezed.

The minute you order it, we’re doing it. Nothing is sitting around waiting.”

That goes for all of Sippet’s ingredients as well. In the quest to be locally sourced, the coffee company makes a point of creating partnerships with local farmers and providers.

“We have a really nice relationship with a couple of organic farms in New Ulm,” said Bode. “They’ll just call me and be

Aron Bode and Meghan Irwin inside Sippet Coffee & Bagels on N. German Street in New Ulm. like, ‘Hey, I’ve got a ton of chives and I don’t know what to do with them; do you guys want them?’

The last thing they gave me was cilantro, so we made a whole bunch of cilantro soup.” The changing seasonality of Sippet’s supplies gives the coffeehouse team extra freedom to display their culinary creativity.

Although Sippet is a drivethrough rather than a sit-down restaurant, staff and management are both eager to create a sterile, safe environment in the wake of COVID-19. One of Bode’s friends, who works at Saint Paul’s operational safety company Ecolab, provided the team with cleaning solutions which they use on surfaces throughout the day.

Once again, Bode was thrilled with his staff’s positive, can-do attitude.

“I had one employee making masks for us, and another

employee coming in just to sanitize,” Bode said. “We have a routine; we know what we’re doing and we just kind of keep it going.”

The Sippet crew’s enthusiasm for their work stems from their belief in the business and the excitement of being able to exercise creativity while on the job. Bode says that this, to him, is one of the best perks of owning a small business. To those contemplating a startup, he recommends the same commitment, imagination, and playfulness that he sees in his employees every day.

“If you’re going to do it, just do it, and you have to love it,” Bode advised. “You have to dive in one hundred and ten percent. It pays off. A couple weeks in, a couple months in, a couple years in, it’ll be the greatest thing ever.” MV

MN Valley Business • AUGUST 2020 • 19

Top: Rahma Abdi helps her dad, Sami Ismail, run his recently opened Karshe Tea shop in downtown Mankato.

Bottom: In Somalia, tea is synonymous with social gatherings and is served with evaporated milk and sugar, along with spices like cardamom, ginger, cinnamon and cloves.

East Africa infusion Karshe Tea blends African, American fare

By Dan Greenwood Photos by Pat Christman

B

y the time Sami Ismail arrives for work caffeinated Somali coffee – to be served each afternoon at his new Mankato when the kitchen opens in early August – business, Karshe Tea, he’s already put provides the fuel to get through the long in a 10-12 hour shift at workday.

Cambria, a company he’s “My neighbors make worked for since 2001.

American coffee, I make It’s usually around 10:30 the African coffee,” he p.m. by the time he closes said. “You drink one shot KARSHE TEA his business every night. and can work for 40 hours 634 South Front St, Then he heads home for a with five minutes sleep,” Mankato short night’s sleep before he joked.

(507-625-2857 repeating the cycle all Karshe Tea, named over again the next day. after Ismail’s grandfather, It’s that kind of devotion combines the familiar and commitment that made his lifelong with the new, although Ismail’s goal is to dream of opening an East African infused model Karshe Tea on a café found in teahouse that doubles as a café and restaurant Somaliland, an autonomous region of a reality. northern Somalia bordering Djibouti to the Ismail said the strong and highly north and Ethiopia to the east.

Feature

20 • AUGUST 2020 • MN Valley Business

Throughout Somalia, tea is synonymous with social gatherings and is ser ved at everything from formal meetings to guests in the home. It’s often served with evaporated milk and sugar, along with spices like cardamom, ginger, cinnamon and cloves.

“Tea is very much known among the Somali culture,” said Rahma Abdi, Ismail’s daughter and business manager. “At any kind of family gathering or social gathering – tea is always served.”

While Americans turn to icedtea on a 95-degree day, Ismail said hot-tea is the chosen remedy for beating the heat in Somaliland.

That approach actually has some science to back it up; a hot drink causes the person to sweat, ultimately cooling the body as it evaporates.

“We drink hot tea to cool down,” he said.

While Karshe Tea, which opened in June, features some of the usual coffee shop goodies, like cinnamon rolls, banana bread, lattes and cappuccino, it’s quintessentially Somalian fare.

The family-run business will offer a sweet and savory breakfast and dinner menu starting early August.

Some of the featured Somali dishes on the menu will include Bariis, a rice dish, and Baasto, a spaghetti dish with seasoned meat, along with chapati and sambusas, the east African version of an Indian samosa – a triangular-shaped pastry filled with meat and vegetables – and laxoox, a spongy pancake.

A trip to Somaliland

Abdi was only seven days old when she and her family relocated to Minnesota from Yemen, where her parents met and had been living for eight years after fleeing the Somali civil war. In 2016, as a present commemorating Abdi’s graduation at St. Peter High School, they took a family trip to visit relatives in Somaliland and Oromia, a region occupied by Ethiopia that is seeking independence. It was the first time in 30 years that her parents had been there, and for Abdi, it was life changing.

“I was able to see my people

Rahma Abdi serves up a cup of coffee at Karshe Tea, which offers a blend of East African and American fare. and my culture before my eyes and to be surrounded by it for 24 hours seven days a week for three months, it was a lot to soak in,” Abdi said. “It was just great being able to see my family on my dad’s side and my mom’s side and it made me realize that I want to live there one day.”

She was also able to see firsthand the cafés her father was trying to emulate, like the mango smoothie found in the teashops and cafés of Hargeisa, Somaliland’s capital.

“The mango smoothie that’s ver y popular is called a mushakalka, which in a sense means milkshake,” Abdi said.

“The smoothie with syrup, whipped cream and fresh fruit is how they serve it back home, so we wanted to incorporate it here.”

A year after the trip, Ismail turned his business idea into action. He looked at a couple locations, one in upper North Mankato and another by the bars a few blocks away on Front Street, but it wasn’t until he found the current location, a former tattoo parlor directly across from the Mankato Public Safety center downtown, that he’d found the perfect fit.

“As soon as I found it, I signed the papers,” he said.

With the help of some friends, Ismail spent the next couple years renovating the interior. When the basement flooded before opening, he spent an entire night filling buckets of water and bringing them upstairs. Abdi said her helping out with the business is the least she can do to thank her parents for the sacrifices they’ve made to provide opportunities for her and her siblings.

“Everything’s been solely on the back of both my parents,” Abdi said. “They haven’t taken a loan out for anything, it’s all just been saving money and continuously working and not getting a break to make ends meet.”

Ismail said he’s been dreaming about opening up his own business for years but wanted to wait for his children to get older before pursuing that dream. Even now, his mind is on their future rather than his own as he looks ahead to retirement.

“I’m trying to build a different life for the kids,” he said. MV

“We drink hot tea to cool down,” he said.

MN Valley Business • AUGUST 2020 • 21

Business and Industry Trends ■

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22 • AUGUST 2020 • MN Valley Business

507-327-0633

U.S. consumed record amounts of natural gas

Natural gas is one of the main sources of energy in the United States. In 2019, U.S. production of dry natural gas increased to almost 34 trillion cubic feet (Tcf) and consumption increased to 31 Tcf — both were records, according to the Energy Information Administration.

U.S. natural gas production has increased in the past decade because the widespread adoption of horizontal drilling and hydraulic fracturing techniques has allowed operators to more economically produce natural gas from shale formations. In each year since 2017, on an annual basis, production of dry natural gas has exceeded consumption within the United States.

In 2019, gross withdrawals of natural gas and other compounds extracted at the wellhead totaled nearly 41 Tcf, and most came from shale wells.

As natural gas production has increased in the United States, exports of natural gas have also

increased, surpassing natural gas imports in 2017 for the first time since 1957. In 2019, the U.S. exported a record of nearly 5 Tcf of natural gas, mostly by pipeline to Mexico and Canada or shipped overseas as liquefied natural gas.

Crude prices up

Daily Brent crude oil spot prices averaged $40 per barrel in June, up $11/b from the average in May and up $22/b from the multiyear low monthly average price in April. Oil prices rose in June as numerous regions worldwide began to lift stay-at-home orders and as global oil supply fell as a result of production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+). In June, OPEC+ announced that they extended through July.

Higher prices in 2021

Crude oil prices are expected to rise more as global oil inventories are expected to decline during the second half of 2020 and through 2021. EIA expects high inventory levels and surplus crude oil production capacity will limit upward price pressures in the coming months, but as inventories decline into 2021, those upward price pressures will increase. EIA estimates global liquid fuels inventories rose at a rate of 6.7 million barrels per day (b/d) in the first half of 2020 and expects they will decline at a rate of 3.3 million b/d in the second half of 2020

Coal production falling fast

EIA forecasts total U.S. coal production will decrease by 29% to 501 million short tons (MMst) in 2020. This decline largely reflects less demand for coal from the electric power sector and the coal export market. In 2021, EIA expects coal production to increase by 7% to 536 MMst because of forecast rising natural gas prices that make coal more competitive in the electric power sector.

Less electricity used

Retail/Consumer Spending Vehicle Sales Mankato — Number of vehicles sold - 2019 - 2020 1500

1,156 801

1200 900 600 300 0

J

M

A

M

J

J

A

S

O

N

D

Includes restaurants, bars, telecommunications and general merchandise store sales.

Excludes most clothing, grocery store sales.

Sales tax collections Mankato (In thousands)

- 2019 - 2020

600

$440,941 $399,962

500 400 300 200 100 0

J

F

M

A

M

J

J

A

S

O

N

D

Source: Sales tax figures, City of Mankato

Lodging tax collections Mankato/North Mankato

52500

CO2 falling more

175000

- 2019 - 2020

$46,504

70000

EIA forecasts 4.2% less electricity consumption in the United States in 2020 compared with 2019. The largest forecast decline occurs in the commercial sector, where EIA expects retail sales of electricity to fall by 7.0% this year because of COVID-19 mitigation efforts. Forecast electricity sales to the industrial sector fall by 5.6%. EIA forecasts that residential sector retail electricity sales in 2020 will be similar to 2019 as less electricity use for heating in the first quarter is offset by more consumption during the rest of the year as a result of people spending more time at home. EIA forecasts total U.S. electricity consumption will rise by 1.5% in 2021.

EIA forecasts that energy-related carbon dioxide (CO2) emissions, after decreasing by 2.8% in 2019, will decrease by 12.2% in 2020 and increase by 6.0% in 2021.

This forecast is highly dependent on assumptions regarding the economic impact and subsequent recovery from COVID-19 mitigation efforts. In addition to economic growth, energy-related CO2 emissions are sensitive to changes in weather, energy prices, and fuel mix.

F

Source: Sales tax figures, City of Mankato

$54,354

35000 17500 0

J

F

M

A

M

J

J

A

S

O

N

D

Source: City of Mankato

Mankato food and beverage tax - 2019 - 2020 140000

$53,101 $63, 561

105000 70000 35000 0

J

F

M

Source: City of Mankato

A

M

J

J

A

S

O

N

D

C. Sankey

MN Valley Business • AUGUST 2020 • 23

■

Agricultural Outlook

By Kent Thiesse

Changes in farm program enrollment

F

arm operators in United States overwhelmingly selected the Price Loss Coverage (PLC) farm program choice for 2019 and 2020 for most eligible commodity crops, except soybeans. The Agricultural Risk Coverage-County (ARC-CO) farm program choice was the predominant choice for soybeans for the 2019 and 2020 crop years. The most dramatic shift was the large number of corn base acres that were enrolled in the PLC program choice for 2019 and 2020, compared to the 2014-18 farm program choice when a large majority of corn base acres were enrolled in the ARC-CO program. The other farm program choice was the Agricultural Risk Coverage-Individual Coverage (ARC-IC) program, which saw increased enrollment in Minnesota, North and South Dakota. USDA recently released the results of 2019 and 2020 farm program sign-up, which ended earlier this year.

The potential ARC-CO program payments are based on a combination of the 12-month national market year average (MYA) prices for a crop and the average county yields for a given crop for that year.

The ARC-IC program payments are calculated in the same manner, except utilizing farm-level annual crop yields. The PLC program payments are based on only the MYA price, compared to crop reference prices. PLC payments occur in any year that the MYA price for corn is lower than $3.70 per bushel, $8.40 per bushel for soybeans, and $5.50 per bushel for wheat.

The MYA marketing year for corn and soybeans runs from September 1 in the year of harvest until August 31 the following year. Any farm program payments occur in October of the year following harvest. (For example --- 2019 farm program payments would occur in October, 2020.) Farm program payments are paid on 85 percent of crop base acres for the ARC-CO and PLC program, but only on 65 percent of base acres for the ARC-IC program. This probably accounts for the limited enrollment in the ARC-IC program, unless a producer is fairly certain they will earn substantial ARC-IC payments compared to PLC and ARC-CO payments for a given year.

National Farm Program Sign-Up Results

For the 2019 crop year a total of 253 million crop base acres in the U.S. were enrolled in the PLC, ARC-CO and ARC-IC farm program choices for the

24 • AUGUST 2020 • MN Valley Business

various eligible crop commodities. Following are the results of the farm program sign-up for the 2019 and 2020 crop years, listing the total base acres enrolled and (percentage) of crop base acres enrolled in each farm program option: • Total --- PLC = 177 million acres (70%); ARC-CO = 65.5 million acres (26%); ARC-IC = 9.8 million acres (4%).

• Corn --- PLC = 72.1 million acres (75.5%); ARC-CO = 17.6 million acres (18.6%); ARC-IC = 5.6 million acres (5.9%).

• Soybeans --- PLC = 7.6 million acres (14.1%); ARCCO = 43 million acres (79.7%); ARC-IC = 3.4 million acres (6.2%).

• Wheat --- PLC = 59.1 million acres (93%); ARC-CO = 3.8 million acres (5.9%); ARC-IC = 39 thousand acres (1.9%).

• Oats --- PLC = 1.3 million acres (61.4%); ARC-CO = 759 thousand acres (36.7%); ARC-IC = 662 thousand acres (1%).

• Other Crops --- Barley, canola, grain sorghum, sunflowers, peanuts, and cotton all had over 90 percent of base acres enrolled in the PLC program.

By comparison, farm program enrollment for major crops for the 2014-2018 crop years were: • Corn --- 92% ARC-CO; 7% PLC; .33% ARC-IC • Soybeans --- 96% ARC-CO; 4% PLC; .35% ARC-IC • Wheat --- 54% ARC-CO; 44% PLC; 2% ARC-IC Some observations of the 2019 and 2020 farm program enrollment data : The shift in farm program enrollment for corn base acres from 2014-18 to 2019-20 was quite dramatic, shifting from 92% ARC-CO in 2014-18 to 75.5% PLC in 2019-20. The reason revolves around the ARC-CO benchmark price, which is adjusted from year-to-year, based on changes in the MYA price. For the 2014 and 2015 crop years, the corn benchmark price was $5.29 per bushel, which was well above the PLC reference price of $3.70 per bushel. Producers in a majority of Upper Midwest counties collected ARC-CO payments for the 2014 crop year, and some counties collected payments for the 2015 crop year. Following 2015, corn ARC-CO payments pretty much only occurred in situations where counties had reduced corn yields.

The MYA prices per bushel for corn were $3.70 in 2014, $3.61 in 2015, $3.37 in 2017 and 2018, and $3.61 in 2018, which meant that there were PLC payment

for corn in the final four years. The low MYA prices also resulted in the ARC-CO benchmark price for corn to drop to $3.70 per bushel for 2019, which is the same as the PLC reference price. This means that producers that are enrolled in the PLC program start earning payments when the MYA corn price drops below $3.70 per bushel, while ARC-CO payments would not be initiated until the MYA price drops below $3.20 per bushel with average corn yields. The PLC program provides corn price protection down to a MYA price of $2.20 per bushel. Current USDA estimates for corn MYA prices are $3.60 per bushel for the 2019 crop year and $3.35 per bushel for the 2020 crop year.

Nearly 80 percent of the soybean base acres were enrolled in the ARC-CO program for 2019 and 2020.

The 2019 soybean ARC-CO benchmark price is $9.63 per bushel, which is well above the soybean PLC reference price of $8.40 per bushel. From 2014 to 2018 the soybean MYA price never dropped below $8.40 per bushel, so there were no PLC payments during the five-year period. Current USDA soybean MYA price projections are $8.55 per bushel for the 2019 crop year and $8.50 per bushel for the 2020 crop 8 year, which again would mean no PLC payments for either year. Many counties in Minnesota and 6 surrounding States had below average soybean yields in 2019, which will likely result in 2019 ARC-CO 4 payments at current MYA price projections. Most producers did not see much advantage to soybean PLC enrollment for 2019 and 2020.

2 The very low corn yields in 2019 in six or seven counties 0 in Southwest Minnesota meant that there J high F likelihood M A M ofJa significant J A S 2019 O corn N D was a very ARC-CO payments, which lead to a high corn ARCCO program enrollment in those counties. Many of the corn and soybean ARC-IC acres for 2019 and 2020 were also in Southern and Western Minnesota 8 and surrounding States. The large number of prevent plant100 acres in 2019, together with very low crop 6 yields85in some areas, made the ARC-IC program very attractive 4 for some producers for the 2019 crop year.

70

Bottom-Line 2

The55high level of enrollment in the PLC program for corn, wheat and other crops for the 2019 and 2020 40 0 crop years, J asF well M asAtheMrelatively J J high A Senrollment O N D in the25ARC-CO program for soybeans, seems to J many F M producers A M Jdid Jtheir A “home-work” S O N D suggest that to make the best choice for their farms.

It also suggests that cash flow levels in corn and soybean production are very tight in many areas, and that having the likelihood of fairly substantial 100 payments in 2020 (2019 crop year) and 2021 (2020 85 looked very attractive to reduce overall crop year) financial 70 risk. The 2019 farm program payments in October this year will help many Minnesota crop producers 55 that were impacted by poor crops in 2019.

40 25

Agriculture/ Agribusiness Corn prices — southern Minnesota

(dollars per bushel)

— 2019 — 2020

20

8

16

6

$3.96

12

4

8

2 0

4

$3.59

J

F

M

A

M

J

J

A

S

O

N

D

F

M

A

M

J

J

A

S

O

N

Kent Thiesse is farm management analyst and senior vice president, MinnStar Bank, Lake Crystal.

507-381-7960); kent.thiesse@minnstarbank.com

D

J

Source: USDA

Soybean prices — southern Minnesota — 2019 — 2020 8 20 100 16 6 85 12 4 70

(dollars per bushel)

$8.33

8 55 2 $7.77 4 40 0 0 J F M A M J J A S O N D 25 J F M A M J J A S O N D J F M A M J J A S O N D Source: USDA

Iowa-Minnesota hog prices 20 100 25 16 85 22 12 70 19 8 55 16 4 40 13 0 J F M A M J 25 10 J F M A M J J F M A M J Source: USDA

Milk prices

25

$75.58

22 19 16

$31.10 J A S O N D J A S O N D J A S O N D Minimum prices, class 1 milk Dollars per hundredweight

— 2019 — 2020 25 22

$17.6

19 16

10

$12.99

J

F

M

A

M

J

20 25 16 22 12 19 8 16 4 13 0 J 10

185 pound carcass, negotiated price, weighted average

— 2019 — 2020

13

J

0

J

A

S

O

N

D

Source: USDA. Based on federal milk orders.

Corn and soybean prices are for rail delivery points in Southern Minnesota.

Milk prices are for Upper Midwest points.

C. Sankey

MN Valley Business • AUGUST 2020 • 25

13 10

J

J

Construction/Real Estate Residential building permits Mankato - 2019 - 2020 (in millions) $1,880,052

Commercial building permits Mankato - 2019 - 2020 (in millions)

$2,021,427

60000

60000

50000

50000

40000

40000

30000

30000

20000

20000

10000

10000

0

J

F

M

A

M

J

J

A

S

O

N

J

F

M

A

M

J

J

A

S

O

N

D

Source: City of Mankato Information based on Multiple Listing Service and may not reflect all sales

Existing home sales: Mankato region - 2019 - 2020 (in thousands) 211 300

263

Median home sale price: Mankato region - 2019 - 2020 (in thousands)

250

$186,800 $190,000

200

240

150

180

100

120

50

60

0 J

F

M

A

M

J

J

A

S

O

N

D

Source: Realtors Association of Southern Minnesota

J

F

M

A

M

J

J

A

S

O

N

D

Source: Realtor Association of Southern Minnesota

Interest Rates: 30-year fixed-rate mortgage

Includes single family homes attached and detached, and town homes and condos

Housing starts: Mankato/North Mankato

— 2019 — 2020

- 2019 - 2020

5.5

40

5.0

32

4.5

24

3.6%

4.0

2

16

3.5 3.0

$2,636,649

0

D

Source: City of Mankato

0

$9,266,246

3.0% J

F

M

A

M

J

J

A

8

8 S

O

Source: Freddie Mac

Read us online!

26 • AUGUST 2020 • MN Valley Business

N

D

0

J

F

M

A

M

J

Source: Cities of Mankato/North Mankato

J

A

S

O

N

D

Gas Prices 5

Gas prices-Mankato

— 2019 — 2020

54 43

$2.59

32 21 10 0

J

F

M

A

M

J

J

J

F

M

A

M

J

J

$1.93

$39.75

-6.2%

Ameriprise

$159.59

$154.67

-3.1%

Best Buy

$81.62

$86.48

+5.9%

Brookfield Property

$11.12

$12.90

+16.0%

Crown Cork & Seal

$68.23

$67.06

-1.7%

Consolidated Comm.

$6.97

$6.14

-11.9%

A

S

O

N

D

Fastenal

$42.86

$43.48

+1.4%

General Mills

$62.82

$64.76

+3.1%

Itron

$71.09

$65.54

-7.8%

Johnson Outdoors

$84.32

$89.37

+5.9%

3M

$166.70

$154.65

-7.2%

Target

$120.72

$119.99

-0.6%

U.S. Bancorp

$42.10

$36.14

-14.2%

Winland

$0.75

$0.75

0.0%

Xcel

$66.37

$66.27

-3.2%

32 $1.98

M

$42.38

D

$2.64

F

Archer Daniels

N

54

J

Percent change

O

5

10

July 12

S

— 2019 — 2020

21

June 9

A

Gas prices-Minnesota

43

Stocks of local interest

A

M

J

J

A

S

O

N

0Source: GasBuddy.com J F M A

M

J

J

A

S

O

N

D

C. Sankey

D

C. Sankey

MN Valley Business • AUGUST 2020 • 27

Minnesota Business Updates

■

pandemic. Maplewood-based 3M recently targeted a third-party seller on Amazon.com for using its trademark to sell $350,000 worth of masks at up to 20 times list prices, the Star Tribune reports.

KM Brothers Inc., a California company trading under several different business names, “claimed to be reselling authentic N95 respirators, while actually selling damaged and fake goods at highly inflated prices,” 3M said.

The new legal actions bring to 14 the number of suits 3M has filed since January to try to control price gouging for its product by what the company calls “pandemic profiteers.”

■ Cargill not sharing earnings Cargill has announced that it will no longer publicly disclose quarterly earnings.

Instead, the Minneapolisbased company said it only will share publicly its annual revenue and percent of operating cash flow that is reinvested back into the company.

Cargill skipped the release of its third-quarter financials at the end of March. At the time, the company said the decision reflected its desire to shift its focus back toward its customers and feeding the world during the early stages of the coronavirus outbreak.

“Cargill is a company focused on long-term growth and investment that benefits our customers, employees and communities,” the company said. “We are now aligning our reporting practices to those goals. As a private organization, it’s also fiscally responsible to limit the costs needed to publicly report short-term financial performance.”

■ Saving JCPenney Mall owners Simon Property Group and Brookfield Property Partners, which owns River Hills Mall, were considering a joint bid to buy the beleaguered department store chain, the Wall Street Journal reported.

The potential move makes a lot of sense, according to Eric Rapkin, the chair of Akerman’s Real Estate practice group. JCPenney is one of the top anchor tenants in malls. By controlling the department-store chain, the mall owner can keep its anchor tenant and maintain occupancy since smaller retailers depend on larger tenants to drive foot traffic.

Buying the anchor tenant also gives the mall owners

■ 3M fights price gougers 3M is continuing its legal battle to keep price gougers from profiting on sales of its N95 face masks during the coronavirus

Employment/Unemployment Initial unemployment claims Nine-county Mankato region Major May Industry 2019 2020 Construction Manufacturing Retail Services Total*

92 139 47 177 455

Local non-farm jobs Percent change ‘19-’20

235 886 436 2,434 3,991

Construction

126000 126000 Manufacturing

Retail 113000 Services 113000 Total*

May 2,413 1,775 857 3,744 8,789

2020 16,610 18,384 11,819 58,413 95,303

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28 • AUGUST 2020 • MN Valley Business

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in clean energy investments, highlighting the importance of regulatory signals for utility-led job creation initiatives.

Xcel responded to a PUC docket that requested regulated entities to submit a list of investments to spur job growth and economic recovery from the coronavirus pandemic, following a memo from Commissioner Joe Sullivan.

Xcel’s proposal estimates 5,000 new jobs in the state along with actions to lower customer bills by $25 million this summer. The utility also pitched a program to help commercial customers maintain low rates as 139000 workers return to facilities.

options down the road if they want to redevelop their property.

■ Best Buy efforts working Best Buy is a consistent performer, thanks to its outstanding digital endeavors and “Building the New Blue” initiative. The company’s quick shift to a contactless curbside service-only operating model amid the coronavirus crisis has worked wonders, according to Yahoo Finance.

The consumer-electronics retailer is also progressing well with its Total Tech Support program and healthcare technology business. Impressively, the Richfield-based company’s shares have registered an increase of 21.8% over the course of a year, while its industry gained only 0.2%.

Despite store closures, Best Buy’s curbside operating model has helped it retain nearly 80% of last year’s sales over the last six weeks of first-quarter 2021.

■ Xcel speeds clean energy spending 139000

A recent request by the Minnesota Public Utilities 126000 Commission and 126000 the Department of Commerce to get utilities involved in the state’s economic recovery process prompted Xcel 113000 113000 to propose the acceleration of nearly $3 billion Energy 139000

J M

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88,845

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8.3% 55,004 4,006

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- 2019 - 2020

120000

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240000

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1400

Anti-mask customers are creating 700 a crisis for retailers, as employees at stores like Target and Costco have to 100000 0 J J F M handle A M J customers J A S O throwing N D tantrums and destroying displays.

Recently a woman uploaded a video of herself destroying a mask display at an Arizona Target.

3500 of the encounter went viral, with many mocking Video 300000 3500 12000 the2800 woman’s actions.

In another video that was posted online, a woman 240000 2800 10000 refuses 2100 8000 to wear a mask in a Costco warehouse in Oregon.

- 2019 - 2020

Nine-county Mankato region 12000 12000 3500 10000 10000 8000 2800 8000 6000 6000 2100 4000 4000 1400 2000 2000 700 0 0 J F 0 J F

A O

2100

113000

Employment/Unemployment

F M A A M J

2800

126000 ■ Target dealing with anti-maskers

700

100000 100000 J F

3500

Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan Minneapolis/St. Paul Minnesota U.S.

May 2019

May 2020

2.8% 3.0% 3.4% 3.1% 3.0% 2.3% 3.0% 3.0% 3.3% 2.7% 2.7% 3.4%

8.8% 6.4% 7.8% 9.0% 6.4% 7.5% 7.1% 8.0% 5.2% 10.4% 9.4% 13.0%

Source: Minnesota Department of Employment and Economic Development C. Sankey

MN Valley Business • AUGUST 2020 • 29

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Sponsored by the Carl & Verna Schmidt Foundation

How to organize important documents simply and safely

By Bev O’Shea | Nerdwallet

T

ax filing deadlines inspire many of us to vow that we’re finally going to organize our papers.

Start with understanding what should be kept, in what format and for how long. Then, set up a system to organize your records. It doesn’t have to be allencompassing or perfect — just start where you are.

Organizing will not only make next tax season easier, it will help ensure you or someone you trust can access documents when needed.

What should I save? How long?

Start by gathering documents you should keep forever: — Birth, adoption and death certificates.

— Marriage certificates and divorce decrees.

— Social Security cards.

— Military service and discharge records.

Next comes documents you may need for many years: — Property deeds and vehicle titles, until sold.

— Records of home purchase, improvements and expenses, usually until three years after a property exchange transaction.

— Current insurance policies and business licenses.

— Current will and trust documents, and retirement benefit information.

Then, think about tax documents, which you need to save for three years after filing. Certified public accountant John Madison of Ashland, Virginia, says the following documents are a start: — Investment information, including when you bought and what you paid.

— Medical expense documentation, including health spending accounts.

— Business-related receipts.

— Receipts for charitable contributions.

This tax year has some twists: There’s a charitable giving deduction of $300 per taxpayer in the coronavirus relief package passed in late March, even if you don’t itemize. And if you’re receiving unemployment benefits or working in a different state during the pandemic, save documents related to those situations.

Finally, think about items such as warranties, other receipts and financial statements.

How should you organize records?

First, the bad news: Throwing everything in a shoebox is not an organizational system.

“The shoebox works for no one,” says Lynnette Khalfani-Cox, aka “The Money Coach” author and former journalist who covered financial topics. KhalfaniCox admits that she has done it, too. She says the shoebox is “a way for people to ‘maintain’ records without putting in an infrastructure and the initial hard 30 • AUGUST 2020 • MN Valley Business

work of organizing.”

Setting up a filing system can save time and money in the long run, Khalfani-Cox says. You’ll be able to find supporting information for tax deductions, for example, or receipts to claim warranty or price protection.

Decide whether you’ll organize by topic or year. You may want a physical filing cabinet filled with folders, or a digital version to hold electronic or scanned copies.

You can begin to digitize some records by choosing paperless billing and electronic delivery of statements.

Then, download those statements as PDFs and drop them into your digital filing system.

No single solution works for everyone; the best system for you is the one you’re comfortable with and will stick with, and one that helps you find documents efficiently.

Khalfani-Cox says temporarily dropping things in a box or file, virtual or physical, is fine so long as you go through it periodically — monthly is ideal.

Francine Lipman, a professor specializing in tax law at the University of Nevada, Las Vegas, recommends reading statements before filing. That can help you discover and plug money leaks like bank fees or forgotten free trial offers that turned into recurring charges.

She also recommends scanning documents that have the potential to fade, such as receipts, then printing them out.

How do you keep documents safe?

Because these documents contain so much personal data — account numbers, insurance or investment information — they’re a gold mine for identity thieves.

Paper documents should go into a locked location.

Crucial items — such as birth and marriage certificates, titles, wills, insurance policies — are candidates for a safety deposit box or fireproof safe. Store the safe “somewhere not obvious in the case of a break-in,” Madison says, and keep digital copies of its contents.

When it’s time to get rid of documents, shred them — it’s a simple way to prevent identity theft.

If you’ve made digital copies of the papers in your safe, you may feel comfortable enough to switch from paper records to electronic. It saves space and eliminates the need to shred.

Digital files should be locked and/or passwordprotected or kept on a removable drive. Or, you can store them in the cloud to access them from multiple devices. Madison says documents should also be encrypted, and the software you use for encryption kept current.

Finally, tell someone you trust how to access your files in an emergency. MV

Sponsored by the Carl & Verna Schmidt Foundation

Different kinds of debt require different approaches Nerdwallet

A

t its simplest, debt is money owed by one party to another. But it can get complicated fast.

Depending on how much you have and how you handle it, debt can be a useful financial tool or baggage complicating your life.

Knowing how to handle your debt can be tricky, especially if you’re struggling to cover your monthly payments. There are different ways to approach each kind of debt — and there are ways to find debt relief.

Just be wary of any company that over-promises or sounds too good to be true, such as debt forgiveness.

We break down the various forms of debt and how to handle them.

Secured vs. unsecured debt

There are two types of debt: secured and unsecured.

Secured debt means the borrower has pledged an asset as collateral for the loan. Auto loans and mortgages are common examples of secured debt. If you fail to repay as agreed, the creditor can seize the asset, for instance repossessing a car or foreclosing on a house.

Unsecured debt, on the other hand, is not backed by an asset. A common example is credit card debt.

However, that doesn’t mean you get off scot-free if you fail to repay.

A credit card issuer, for instance, will likely sell your delinquent debt to a third-party debt collector, which may then hound you for payment. If you don’t pay the debt collector, it may sue you for payment, which can lead to wage garnishment. Some really aggressive original creditors may sue you directly, without using a collection agency.

Peruse these forms of debt to learn more about what they are and how to handle them.

Credit card debt

Credit card debt is among the most common — and most expensive — form of unsecured debt.

Depending on your personal credit score, the annual percentage rates, or APRs, on your credit cards can be in the teens and 20s. Not paying off your full balance each month can get expensive, fast.

If you’re having trouble paying off your credit card debt, here are a few ways to handle it: • Consider a debt management plan from a nonprofit credit counseling agency • If you have multiple debts, see if you can consolidate them • Look into a 0% intro APR balance transfer credit card • Talk with a bankruptcy attorney to explore your options

Medical bill debt

Medical bill debt can come from a routine visit to your doctor, or from an unexpected event like a broken bone or hospitalization. This type of debt can be expensive and, further complicating matters, there’s not a clear-cut way to handle it if you can’t afford to pay it off all at once.

Staying on top of medical bills can be hard. In fact, a study from the Consumer Financial Protection Bureau found that medical bills were the most common reason people were contacted by debt collectors.

Here are a few ways to pay off your medical bills: • Set up a payment plan • Use a medical credit card • Hire a medical bill advocate

Student loans

If you graduated from college in the past few years with student loan debt, chances are you’re carrying a sizable balance.

You have a few ways to get help with student loan debt: Call your student loan servicer to discuss relief options • Sign up for an income-driven repayment plan • Apply for forgiveness, if you qualify

Mortgage

Getting a mortgage is likely the biggest personal finance decision you’ll make. They generally last decades and cost hundreds of thousands of dollars. In 2017, the average American carried a mortgage balance of nearly $174,000, according to NerdWallet’s debt study. A mortgage is a secured loan, meaning the bank can take your house if you don’t pay as agreed.

But you have some recourse if you’re having trouble paying your mortgage: • Consider refinancing your mortgage • Take advantage of the Home Affordable Refinance Program MV

MN Valley Business • AUGUST 2020 • 31

IGREENSEAM N V E S T O R UUPDATE P DAT E 2019 YEAR IN REVIEW A DAVDOVCOACCAYC & V I VS I SB IIBL II LT IYT Y Y & Entrepreneurs First

(E1) was created and we are partnering with a number of southeast MN startup/coworking spaces to provide them with additional support.

GreenSeam is at the table as the ag expert.

Hosted a forum on what MN can learn from Germany on Energy Policy featuring a German energy policy expert and Senators Senjem, Rosen and Frentz.

G

Co-Hosted with Regional Economic Development Alliance (REDA) the new DEED Commissioner, Steve Grove, visit with community leaders

IN TH

E

GreenSeam

successfully secured official state recognition and

GreenSeam co-hosted the MN Chamber Supplier Round Table focused on Agriculture and Food, connecting Ag Manufacturing

In collaboration with Visit Mankato, we created new par tnerships with vendors to increase adver tising effor ts to promote large events & key campaigns like ‘Gather in the GreenSeam.’

HER AT

$

75 k in legislative suppor t

GreenSeam played an instrumental role in helping Revol Greens move forward with a

7 million-dollar

expansion creating

Thanks to the Saint Peter EDC, Sam Ziegler was invited to participate on a panel for the MN Business First Stop Tour, which included eight MN State Commissioners

24 NEW JOBS

TTAA LL EENNTT Mankato Area Public Schools (MAPS) hires FULL-TIME AG TEACHER at Mankato East and Mankato West High Schools, for the first time in 25 years !

Had a booth and interacted with several key state officials including the Gov. Tim Walz, Lt. Gov. Peggy Flannigan, and several commissioners and legislators at MN Farmfest.

GreenSeam had many shout outs by Gov. Walz during his speech.

RURAL FORUM

The was held in December and had a record

275

Mankato Area Puclic Schools (MAPS) announced TWO new ag classes at Mankato East and West High Schools (30 students each).

60 Ag Students

Agribusiness and Food Innovation Minor added to Minnesota State University, Mankato - College of Business Undergraduate Programming for Fall of 2019. GreenSeam assisted.

people in attendance

ABOUT GREENSEAM GreenSeam is a business unit of Greater Mankato Growth, Inc. which utilizes agriculture to build on the region's extensive agribusiness assets to develop the ag economy.

Learn more at greenseam.org and follow us on social media: GreenSeam @GreenSeamRegion

32 • AUGUST 2020 • MN Valley Business

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The Songs on the Lawn concert series, originally rescheduled to July, is being postponed as alternative event options are under consideration for August in coordination with Alive After Five, potentially utilizing a modified format in 2020 that follows safety guidelines for outdoor events.

Stay tuned to our social media and website for the latest updates!

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COVID-19 resources & updates greatermankato.com/join GMG & community effortsApril 2018 Guest blogs by members Business inspiration & insights Public affairs affecting our community, and more...

MN Valley Business • AUGUST 2020 • 33 greatermankato.com/join

Agriculture Presses on During Uncertain Times Dan Lemke, Spirited Communications on behalf of GreenSeam

A

dapting to conditions outside of their control is nothing new for people involved in agriculture.

Weather conditions, market uncertainty and government actions alter farm management decisions on a regular basis. Global pandemics, though, are uncharted territory.

“This is more disruptive than anything we could have possibly imagined,” says JoDee Haala, director of public affairs for Sleepy Eye-based Christensen Farms.

healthy animals because there’s no place to take them for processing and no place to keep them.

Livestock producers are well versed in animal health management and animal agriculture leaders put an emphasis on keeping cattle, hogs, turkeys or chickens healthy. While farm worker safety is also a priority, dealing with a human disease that is disrupting the food chain is new territory.

The onset of the COVID-19 outbreak and resulting disruptions have impacted nearly every U.S. citizen.

Agriculture, deemed an essential industry, is not immune from those challenges. However, farmers and agribusinesses are committed to providing food for the nation and beyond, so they press on with spring field work and livestock care despite unprecedented challenges.

“If a time like this doesn’t prove to people that agriculture and feeding the world is our foundation and is extremely important, then I don’t know what would,” says Ashley Leivermann, chief human resources officer for Crystal Valley Cooperative. “I’m proud of the industry from the standpoint that it is resilient. Whatever the challenge is, we’ll adapt. We don’t have the option to not get the crop in the ground. We don’t have the option not to feed animals, because people and animals need to eat. It doesn’t matter there’s a COVID-19 outbreak going on or not, they need to eat.”

Minnesota’s livestock sector, an economic strength across southern Minnesota and northern Iowa because of prolific hog production, is facing drastic disruptions. Hog processing facilities in Minnesota, Iowa and South Dakota are shuttered because of COVID-19 outbreaks among plant workers. Markets for processed pork products like bacon are also in disarray because restaurants and food service venues are closed or offer takeout options only.

“So, not only is it a lack of a place to go with processed product, it’s also a lack of a place to go with live animals that are ready to enter the food supply chain,” Haala says. “The situation is unfathomable, especially when the need for safe, nutritious affordable food has never been greater.”

Some hog farmers are faced with the need to try to find willing processors to take their animals in an already taxed system. The other unthinkable option is to cull otherwise

34 • AUGUST 2020 • MN Valley Business

“We’ve had to deal with animal diseases in the past, but when you have a disease that potentially impairs your workforce, that’s a different kettle of fish that requires many different actions on the part of players in the industry to figure out how to continue to operate,” explains Christensen Farms Vice President Gary Koch.

“We’re in uncharted waters here.”

Soldiering On Despite stay at home orders and social distancing guidelines, agriculture activities press on in the adjusted reality. Farmers are diligently planting crops and livestock operators remain committed to feeding and caring for their animals. The coronavirus may be a new challenge but dealing with adversity is part of the fabric of farming.

“The reality is that people need to eat, and there is no place in the world that has the geographic characteristics that southern Minnesota and the Midwest has,” Haala says. “There is absolutely no place better in the world to be growing food, both the crops that go on to feed people but also feed animals to supply the protein. What makes people get up and do that every single day? I think it’s just in their bones and it’s the fabric of who they are.”

Farmers are adapting to new safety practices as are employers and employees in all aspects of agribusiness.

From factory workers and livestock managers to sales representatives and fertilizer applicators, businesses are striving to ensure worker safety. Healthy workers are stepping up to do their jobs to produce healthy food.

“My opinion is that folks recognize what they do is important,” Koch contends. “This is an essential industry and we have the noble purpose of feeding the world.

Quite frankly, I think that is a motivating factor for people and it causes them to want to continue to come to work.

You’ve got a bunch of committed people in this essential industry who are trying to figure out how to keep the wheels on the car, and keep producing food so that the EXPOSURE American people can have the assurance that that food Build your Brand; will still be there every day. That’s the battle going on right grow your business. now.”

Stand out and get noticed!

Regional Strength

Ziegler says that while the dark clouds are hanging over agriculture now with historically low prices and a supply chain traffic jam, agriculture remains strong. Farmers are in the process of planting another crop, confident in the fact they’ll harvest a crop this fall.

“These times have not stopped this hope or motivation to plant new seeds,” Ziegler contends. “This industry is the foundation of our economy for as long as Minnesota and Iowa have been states. Looking into the future, it will remain to be the foundation of our economy. In times like this, agriculture remains a bright star and I am proud to have my career in agriculture.”

WHY JOIN

GreenSeam Director Sam Ziegler isn’t surprised farmers and agribusinesses are stepping up during the COVID-19 pandemic. Southern Minnesota and northern Iowa LEARNING were built on the of Member the region’s agriculture Gainstrength access cces to economy and Exclusive continue Content to flourish of agriculture’s to because help contributions. grow your business.

GREATER MANKATO GROWTH?

Far beyond economic reward, many in agriculture are willing to step up in the face to challenges because of their commitment to providing for others.

NETWORKING TW WORKING ORKING It’s not just st WHO WHO you ou “Iknow, think it’s people who knows kfrom coast to coast are counting on the ability our regionISto continue to make food to maintain YOU. of Networking the country and keep putting food on the table during this Powerful. time of crisis,” Koch says.

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says. “Agriculture is regularly being faced with challenges Receive our member only that we need to figure outmaking how toyou adapt emails theand first overcome. to Overall, I think the know agriculture industry the latest news.is just so resilient because we’re constantly being faced with something that we can’t control.”

MEMBER “Agriculture has always been a humble industry,” Ziegler EXCLUSIVE says. “Just because we are now labeled as essential TALENT REFERRALS Beyond supplying food for consumers, Haala says does not change the passion people in this industry have.

BENEFITS We only refer member RETENTION farmers and agribusinesses are contributing much more.

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businesses. Word of mouth your employees Christensen Farms has donated to 17 food banks across ethanol. ThereKeep is a passion to raise animals to nourish and direct referrals come engaged and retained with to care for the the Midwest and is the lead partner in the Brown County families near and far. There is a passion from being a valued access to our member only United Way Projectmember Lunchbox, which provides weekend soil and work with whatever Mother Nature throws at of GMG. meals to kids. A group of Christensen employees has also us. There is a events passionand for programs. finding solutions to grow more nourish food. Right now, more than ever there is a passion sewn and donated hundreds of masks.

CREDIBILITY to not let fellow Americans down bySHAPE keeping foodYOUR on your “People want to helpby people,” Haala says. “You can see table."

Raise your reputation COMMUNITY belonging.

Research shows that evidence all over the place.”

Your investment helps us that businesses who belong continue to build the best to a chamber of commerce environment for your business and its employees. are more successful.

How useful do you feel it is for communities to work together to promote their opportunities and to address some of the challenges that face Greater Minnesota?

GreenSeam is here to support the growth and development of agribusiness in our region, especially during COVID-19, by providing guidance and resources to new and existing businesses. See more results and insights from the 2019 MN State of Ag Survey Report on our Facebook and LinkedIn!

greatermankato.com/join April 2018

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Details

We offer eight online classes per year (August through July). Students can expect to complete all coursework in a minimum of 2 years. A fully online degree completion program, the BBA’s five-week, one-course-at-atime model is ideal for those who work full time or are unable to attend traditional classes and ensures you will receive a well-rounded business education.

To be considered, BBA candidates must have completed an Associate of Science degree in Business. Need help finishing your AS in Business? We will connect you with our partner institutions who can get you on the fast track to business success. We will evaluate previous coursework in addition to AS credentials and may be able to apply credit toward your MavBiz Online BBA.

Do you have an employee ready to advance once they finish their bachelor’s degree?

We would be happy to talk with you about opportunities within our program that could benefit your employees.

For more information contact

Mikaela Fischer, MavBiz Online Advisor mikaela.fischer.2@mnsu.edu or mavbiz@mnsu.edu An Affirmative Action/Equal Opportunity University. This document is available in alternative format to individuals with disabilities by calling the College of Business at 507-389-5420 (V), 800-627-3529 or 711 (MRS/ TTY). BUSC594AD_07-2020

MN Valley Business • AUGUST 2020 • 37

Quality Homes - Affordably Priced

“Home is Where the Heart Lands”

30 Map Drive ◆ Mankato, MN 56001

507-388-6452

heartlandmkto.com

5 Amazing Agents and one Bearded Broker!

Jillian Cousins

Jon Cramer

Chris Cousins, CRS, GRI

REALTOR®

Broker/Owner

Valerie Barrie

Nancy Drummer

Michael White

REALTOR®

304 Belle Ave, Mankato, MN 56001

REALTOR®

507-386-7653

REALTOR®

Broker Associate

vikingrealestate.com

MN Valley Business • AUGUST 2020 • 38