Financial Partner Summer 2013

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Agriculture: Telling the Story of its Economic Value

INSIDE CEO Letter 2 Cover Story 6 Healthcare Reform 8 Photo Calendar Contest 13 On the Record 14 An Organic Change 15 Sharing Their Time 16 Washington Update 17 Scholarship Winners 18 Community Support 20

Farm Credit East:

We’re in it for keeps.

CEO’s Message

Bill Lipinski, CEO, Farm Credit East

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any of you know that I can be blunt at times.

Throughout my 30-year career with Farm Credit, I have seen lenders come into agriculture and then exit as soon as farm prices decline.

Contrast that to Farm Credit East.

We stick with our customers. In fact, our lending actually increases in down cycles to help customers get through tough times. We don’t run and hide when farm income declines. Other lenders might come up with catchy slogans, try to impress a prospect with their knowledge of agriculture in Brazil or quickly read our materials to pretend to better understand Northeast agriculture, but we produce and advocate for Northeast agriculture everyday — that is our commitment.

In the upcoming months, we will launch a new advertising campaign in trade magazines, such as American Agriculturist, Eastern DairyBusiness and Country Folks. We call it the “cycles campaign,” as it is designed to underscore our long-term commitment to serving the financial needs of our customers throughout economic ups and downs.

As you can see on the following pages, our campaign uses actual commodity charts to illustrate our commitment. Competitors have come and gone, but Farm Credit East has offered steady support for farm business operators since 1917 — the

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“ When you’re in agriculture for keeps, it’s good to know your lender is, too.” year we made our first loan.

Right now, as agriculture enjoys an economic upswing, the industry looks appealing to some lenders who have recently discovered Northeast agriculture. This campaign reminds us all what makes us different — that is, we’ve been here, and will continue to be during every cycle. As the ad says, “When you’re in agriculture for keeps, it’s good to know your lender is, too.”

As an ag-specific lender, we focus all of our time, energy and expertise on that segment. However, our commitment goes deeper; the core of what we do is forged in the individual relationships we develop with our customers over the years. Our new campaign puts a spotlight on what we believe are the key attributes of those

relationships: they are long lasting, never keep you guessing and endure through all industry cycles.

Our unflagging objective is to provide you with the financial support that will help your business be profitable for the long haul. This commitment is key to our mission — always has been and always will be.

Another key to our success is an unwillingness to become complacent. We work hard to keep all of our customers and refuse to take our relationships for granted. That means a culture of working closely with our customers, providing personalized service that is increasingly rare in today’s marketplace.

Whether your business is preparing for expansion, weathering difficult times or in search of more capital, we pride ourselves in being your partner, not just in the best of times. Because our focus is on developing long-term relationships, it is far more important to us that our customers receive services that allow their businesses to thrive, rather than simply benefitting us in the short run.

Let me be clear. We are in the market to provide the best possible service to each and every customer. As we have remained loyal to Northeast agriculture, let me take this opportunity to thank you for remaining loyal to Farm Credit East.

We remain as passionate about our work together as you are.

THEY LOVE ME THEY LOVE ME THEY LOVE ME

THEY LOVE ME NOT

THEY LOVE ME NOT

The relationship with your lender should never keep you guessing.

Today, many lenders are smitten by Northeast agriculture. So are we.

The difference is that we’ll still be here when the bloom is gone. Farm Credit East.

When you’re in agriculture for keeps, it’s good to know your lender is, too.

farmcrediteast.com | 800.562.2235

Financial Partner FINAL ads.indd 2

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NOW YOU SEE ‘EM

NOW YOU SEE ‘EM

NOW YOU DON’T

NOW YOU SEE ‘EM

NOW YOU DON’T NOW YOU DON’T

When it comes to financing agriculture, we don’t believe in disappearing acts.

Some lenders say it’s a good time to be a part of Northeast agriculture. It’s true.

The difference is we’ll still be here when they want no part of it. Farm Credit East.

When you’re in agriculture for keeps, it’s good to know your lender is, too.

farmcrediteast.com | 800.562.2235

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THE BEST OF TIMES

THE BEST OF TIMES

THE WORST OF TIMES

For nearly 100 years, we’ve been there all the time.

Today, many lenders see Northeast agriculture as an opportunity.

The difference is we never saw it as a liability. And never will. Farm Credit East.

When you’re in agriculture for keeps, it’s good to know your lender is, too.

THE BEST OF TIMES

THE BEST OF TIMES

THE WORST OF TIMES

THE WORST OF TIMES

farmcrediteast.com | 800.562.2235

Agriculture: Telling the Story of its

Economic Value Helping the public understand the economic impact of agriculture, commercial fishing and forest products is an important part of telling the story of Northeast agriculture to the nonfarm public as well as to public policy makers. Over the past year, Farm Credit East has made a concerted effort to highlight the value of agricultural production in our region. In addition, we’ve explained how farm income multiplies through rural and urban communities to generate jobs.

In the six states that Farm Credit East serves, 64,570 farms result in an estimated $71 billion economic impact and 379,000 jobs that are both on and off the farm. “Agriculture is a major economic engine in the Northeast and this means jobs, local food production and economic activity in hundreds of communities,” said Bill Lipinski, Farm Credit East CEO.

What about Public Policy and Agriculture?

With an improved awareness of the industry by the nonfarm public, we have a better chance to have sound public policies for agriculture. “Agriculture has a bright future here in the Northeast and with appropriate state policies and community support will continue to enhance our Northeast economy,” Lipinski added.

Farm businesses create economic activity and jobs on the farm and far beyond the farm gate: • farm services businesses, which are upstream to farming and include suppliers, repair, equipment, lenders, insurance, et cetera • processing activities, which are downstream to farming and include dairy processing plants, sawmills, wineries, food hubs and other related facilities and businesses.

Although many states have good agricultural support programs, states should have a stronger commitment to the following principles: • Public sector costs, including business fees and property taxes, should not make Northeast agricultural businesses less competitive with similar businesses in other states.

• Environmental and labor requirements should follow national standards and not place Northeast producers at a competitive disadvantage. When states choose to exceed national standards, they need to provide greater financial assistance to cover the additional costs.

• “Right-to-farm” should have real meaning. That is, farms must be able to conduct modern farm practices and change over time to remain competitive and mitigate risk.

• State economic development benefits should apply to the agriculture, forest products and commercial fishing industries, which have just as much economic impact benefits as other industries.

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c o v e r

s t o r y

Impact of Agriculture, Commercial Fishing, Forestry and Related Businesses in Six Northeastern States Agriculture, commercial fishing and the forest products industries are all important contributors to the Northeast economy.

Combined these industries generate $8.9 billion in farm gate value and create jobs for 130,000 people. With value-added activity, including taxes and payroll on farms and activity from suppliers, such as veterinarians, seed dealers, equipment repair, et cetera, this impact grows to $17 billion and 175,000 jobs. When products leave the farm, docks or forests, such as milk, processing fruit and vegetables, timber and fish, for processing, that impact grows to $71.3 billion in economic activity and 379,000 jobs. The bottom line is agriculture’s economic impact cascades throughout state economies.

FARM & LOCAL COMMUNITY IMPACT

Farm Gate Value

ECONOMIC IMPACT WITH PROCESSING ACTIVITY

CONNECTICUT

$672 Million 13,061 Jobs

Grows to

$1.2 Billion 14,300 Jobs

Grows to

$4.6 Billion 26,774 Jobs

MASSACHUSETTS

$1.1 Billion 23,833 Jobs

Grows to

$2.8 Billion 30,897 Jobs

Grows to

$13.0 Billion 68,110 Jobs

NEW HAMPSHIRE

$309 Million 7,976 Jobs

Grows to

$744 Million 10,196 Jobs

Grows to

$2.5 Billion 18,481 Jobs

NEW JERSEY

$1.4 Billion 24,385 Jobs

Grows to

$2.6 Billion 29,562 Jobs

Grows to

$11.7 Billion 61,855 Jobs

NEW YORK

$5.3 Billion 59,683 Jobs

Grows to

$9.6 Billion 86,000 Jobs

Grows to

$38.4 Billion 196,000 Jobs

RHODE ISLAND

$120 Million 1,641 Jobs

Grows to

$282 Million 4,339 Jobs

Grows to

$1.1 Billion 7,475 Jobs

TOTAL

$8.9 Billion 130,579 Jobs

Grows to

$17.2 Billion 175,294 Jobs

Grows to

$71.3 Billion 378,665 Jobs

NOTE: Data in chart from Dr. Rigoberto Lopez, University of Connecticut, USDA and U.S. Department of Commerce sources Where possible, we used farm, commercial fishing and forest-products industry data.

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HealthCare Reform: The Need to Know

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How Will the Affordable Care Act Affect You?

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n July 2, 2013, the Treasury Department issued an abrupt change to the Patient Protection and Affordable Care Act (ACA), better known as Obamacare. In a prepared statement, they delayed the implementation of penalty fines for large employers who fail to provide affordable health insurance to their full-time employees. Instead of taking effect on January 1, 2014, the ACA’s employer’s mandate will instead be delayed one year and take effect for the 2015 tax year.

In spite of this delay, the employer mandate is still coming. Savvy employers will use this additional time to educate themselves on the law and prepare for its full implementation.

Developing an understanding of the law now and monitoring future regulatory changes is well advised.

The ACA represents the most sweeping healthcare reform to take place in the United States in a generation. While the Act affects many aspects of healthcare delivery, the employer mandate has attracted the most attention from businesses, agricultural and otherwise.

Simply put, the law mandates that all “large employers” offer “affordable” health insurance to their full-time employees beginning January 1, 2015, or else pay a penalty tax. “Large employers” and “affordable” appear in quotes because they come with specific legal definitions as far as the ACA is concerned.

Does the ACA apply to you?

The first step in determining whether the ACA applies to your business is to determine whether you are a large or small employer in the eyes of the law.

• If you expect to have fewer than 50 employees during all of 2014, you will be considered a small employer for 2015.

• If you employ an average of 50 or more full-time employees, including full-time equivalents (FTEs), on business days during a preceding calendar year, the ACA defines your business as a large employer for purposes of the following calendar year. If this is the case, you are subject to the mandate in the following calendar year and must offer health coverage to your full-time employees, or else pay a penalty tax.

• For those employers on the threshold, which includes a lot of agricultural employers, it gets complicated. Let’s break it down further.

Determine your number of FTEs Basically, you take three categories of employees into your count: fulltime, part-time and seasonal. Here’s how you can determine your FTEs, by month: • Full-time employees are those who work an average of at least 30 hours per week or 130 hours per month and count as one FTE. • Part-time employees are those who work less than 130 hours in any given month. To determine the number of FTEs you have for a month, take the total number of hours for all your part-time employees (the rules say to count only up to 120 hours even if part-timers work between 120 and 130 hours) and divide by 120.

• Seasonal employees count for this exercise, as well.

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The employer mandate applies in a particular calendar year if you employed an average of 50 full-time employees (including FTEs) or more on business days during the preceding calendar year. In other words, your employee count in 2014 will determine whether the mandate applies to you in 2015. The same is true for subsequent years.

Still with us? Here’s an example: For the month of January in a particular measurement year, ABC Farm employed 40 full-time employees (i.e., those employed at least 130 hours), five employees who each worked 125 hours that month and another five employees who each worked 108 hours. To determine the number of FTEs for the month of January, multiply each type of employee by the number of hours they worked: • Employees who worked for 125 hours: multiply 5 x 120 = 600 hours • Employees who worked 108 hours each: multiply 5 x 108 = 540 hours • This totals 1,140 FTE hours for the month (600 + 540 = 1,140).

• Next, divide the 1,140 FTE hours by 120 = 9.5 FTEs for the month of January.

Accordingly, for the month of January of the measurement year, ABC Farm employed 40 full-time employees and 9.5 FTEs for a total of 49.5 full-time employees and FTEs for purposes of the employer mandate. This means that ABC Farm is considered to be a small business for that month. The monthly average of your full-time employees (including FTEs) over the course of the year determines whether you are subject to the mandate in the following year.

What is a seasonal worker?

Seasonal workers are a special category that may help to exempt certain employers from the mandate. If an employer’s average workforce exceeds 50 full-time employees (including FTEs) for no more than 120 days during a calendar year and the employees in excess of 50 are seasonal workers, then the employer mandate will not apply in the following calendar year. (Exceptions do not currently exist for H-2A workers, interns, apprentices or other alternative work arrangements.)

The law defines a seasonal worker as a worker performing labor or services on a seasonal basis, such as agricultural workers.

It’s important to note, however, that even though you may think of certain employees as seasonal, the ACA defines them as full-time if they work an average of 30 hours or more per week in a given month or 130 hours per month. Seasonal workers who do not qualify as full-time employees are not required to be offered insurance.

Let’s try another example: A vegetable farm employs 12 full-time people year-round and ramps up to an average of 100 full-time employees during the six-month growing season from May to October. This farm would have an average full-time employee and FTE count of 56 and would thus be considered a large employer.

Even if all of the 88 additional workers hired for six-month growing season qualify as seasonal workers, the seasonal worker exception

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described above would not apply because the employee count exceeded 50 for more than 120 days, Here’s the calculation: (12 full-time employees x 6 months) + (100 full-time employees x 6 months) ÷ 12 = an average of 56 full-time employees per month for that calendar year.

The next step for large employers Once you’ve determined that you’re a large employer, your next step is to determine for whom you are required to offer “affordable” health insurance coverage. In a nutshell, the answer is all full-time employees (i.e., all employees who work more than 30 hours per week or 130 hours per month) and their dependents. This includes your “seasonal” workers if they qualify as full-time employees.

Additionally, large employers must offer health insurance to all new full-time employees and their dependents. The waiting period to enroll in the plan must be no more than 90 days from their date of hire.

If an employee is part-time or seasonal, a large employer may be able to measure that person’s hours over a period of up to 12 months to see if the employee averages at least 30 hours per week and therefore qualifies as a full-time employee. Accordingly, even if the seasonal worker exception does not prevent an employer from being considered large, the ability to measure seasonal employees’ hours over a longer period may decrease the number of seasonal employees who must be offered coverage.

The ACA contains many new requirements for health plans to qualify under the new rules. Your health insurance carrier can help you find a plan that complies with the ACA. Examples of the new provisions include allowing dependents to stay on their parents’ plans through age 26 (or older in some states), eliminating exclusions for pre-existing conditions and providing access to no-cost preventive care services.

What is affordable coverage?

Making the coverage “affordable” for employees is a bit complicated. The ACA requires that an employer’s least expensive qualifying plan be affordable, which means that the employee’s required contribution for self-only coverage must not exceed 9.5 percent of his or her household income. The only specific requirement for the employer contribution is that the employer must contribute enough toward the plan so that self-only coverage under the least expensive qualifying plan meets this affordability standard.

For an employee earning the federal minimum wage of $7.25 an hour and working 40 hours per week, affordability guidelines put that employee’s maximum contribution at about $119 per month for the single plan. That is: $7.25 x 40 hours/week x 52 weeks/year = $15,080 x 9.5% = $1,432.60 / 12 months = $119.38.

There are no affordability requirements for family plans, even though coverage must be offered to dependents.

Keep in mind that H-2A employees are counted like every other employee and are considered full-time, part-time or seasonal based on the number of hours and days that they work, even if they return to another country in the off-season.

Tax incentive for small businesses Though small businesses are not required to offer health insurance, the ACA provides incentives to encourage them to do so.

In general, you are considered a small business if you have up to 50 full-time employees (including FTEs). In some states, this includes the self-employed. If you have up to 25 FTEs, pay average annual wages not exceeding $50,000, provide health insurance and pay at least half the premiums, you may qualify for a small business tax credit of up to 35 percent to offset the cost of your contribution as an employer. This incentive can drastically reduce the cost of providing insurance to your employees. Beginning in 2014, the small business tax credit will go up to 50 percent for qualifying businesses.

If you are a small business employer who did not owe taxes in a given year, the credit can be carried back or forward to other tax years. Also, since the amount of the health insurance premium payments will always be greater than the total tax credit, eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit.

The amount of the credit you can receive works on a sliding scale: The smaller your business, the bigger the credit. To determine if your business is eligible for a tax credit, check with your Farm Credit East tax preparer. To claim the credit, you or your tax preparer must file form 8941 “Credit for Small Employer Health Insurance Premiums.”

“I studied the Act

and read all information that I could find related to ag employers, but I still had a lot of questions. I attended a seminar with Sheldon Blumling that was sponsored by Farm Credit East and other ag organizations this spring. Sheldon answered a lot of my questions, such as if we qualified as a large employer and, if so, who we had to cover and what we had to cover. And he answered our questions about penalties.

“I printed a list of our 2012 employees and checked their hours to see who qualified and who didn’t. I was concerned about providing health insurance for our 157 employees. The way that I read the law, I thought that we had to provide employee and dependent coverage.

During the seminar, I realized that many of our employees would be excluded. I also realized that we had to offer dependent coverage, but we didn’t have to pay for it. That was a big relief.

“We will provide coverage for our full-time employees, rather than paying a penalty, which makes more sense for us and our employees. That is, if I pay a penalty, I spend the money that is not tax deductible, and our employees don’t gain anything.

“We feel comfortable about being considered a large employer and about the Act. We’ll be OK. We’ll just have to do some adjusting.”

Erwin Sheppard Sheppard Farms Cedarville, N.J.

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Watch the Video In a recent seminar on the Affordable Care Act, cosponsored by Farm Credit East, Sheldon Blumling, a lawyer specializing in healthcare related issues, explored compliance issues related to the ACA. The video link below features his presentation and a subsequent Q&A session. farmcrediteast.com/Products-and-Services/ Video-Insights/healthcare-seminar.aspx

“In April, NEDPA, Farm Credit East, New York State Horticultural Society, Cooperative Extension and other industry reps teamed up to offer a seminar on the Affordable Care Act. NEDPA learned that it is important for large farms (50 or more employees) to understand the requirements that the ACA places on farm businesses. They must learn how to calculate worker equivalents, learn about minimum health care coverage requirements and understand fines for non-compliance.

We also learned that farms with fewer than 50 employees should not dismiss themselves from understanding all ACA rules. They must evaluate their options for providing healthcare coverage to their employees and understand the tax benefits — or lack there of — for small businesses. Producers will need more educational offerings once the Exchange is ready this fall.”

Tonya Van Slyke Executive director

Northeast Dairy Producers Association Editor’s note: The ACA requires states to create Exchanges, a competitive marketplace for individuals and small businesses to purchase insurance.

Two other areas to keep in mind • Not every employee is likely to accept your offer for health insurance. In fact, the law does not require employees to take your coverage; it only mandates that you offer it. While your workers remain subject to the individual coverage mandate that generally applies to all citizens, nationals or lawfully-present aliens in the United States, that’s between the IRS and each worker. In practice, some employees may be covered under a spouse’s or a parent’s plan. Some may obtain coverage on their own. Or some may simply choose to go without.

• The law does not require you to offer health insurance; it encourages you to do so. In fact, you may choose not to offer affordable health insurance to your full-timers without breaking the law. However, should you choose not to offer affordable health coverage, and at least one of your full-time employees obtains federally-subsidized coverage (which is likely to happen), you will be subject to a series of escalating penalties.

For the 2015 tax year, that penalty is $2,000 per full-time

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employee after the first 30 employees. For example, the penalty for a farm that employs an average of 60 FTEs would be about $60,000 ($2,000 x 30 employees). Bear in mind that health insurance premiums are a pre-tax (or tax-deductible) expense for both the employer and the employee, whereas penalties are an after-tax expense.

Of course we’ve only been able to scratch the surface of the ACA, and this article is intended as an overview, rather than a comprehensive discussion of the law. Numerous complexities exist, many of which are specifically designed to discourage employers from skirting the health insurance mandate through various tricks, such as splitting a “large employer” into two separate “small employers” owned by the same person or persons. (Sorry, that won’t work.)

Hopefully, the coverage within these pages has provided you with a basic understanding of the ACA and how it may impact your business. But for information more specific to your operation, be sure to contact your attorney. ◆

Agricultural Views

2014 Photo Calendar Contest Upload your best shots to our website by July 31

The rules • • • • •

Photo taken in New England, New York or New Jersey Images of 1MB or more No negatives, printed photos or links to web libraries Photos must have horizontal orientation Images become the property of Farm Credit East; no images will be returned.

• Entries must be accompanied by the entry form on this page or at FarmCreditEast.com.

Two ways to enter It’s time to dust off your digital cameras and take some of your best shots. Or to go to your photo library for your best winter, spring or fall photos. We hope you will continue to amaze us with your ability to capture a picture-perfect moment around the farm, forest, greenhouse, dock or shipyard.

• On the web: FarmCreditEast.com/news-and-events • Send CDs to: Photo Contest, Farm Credit East, 240 South Road, Enfield, CT 06082-4451

Winning photos 14 photos will be selected for a $100 cash prize each.

Winning photos will be featured in our 2014 calendar and on our website. We select two very different types of entries: • First, we look for photos that show off the best of Northeast farming, horticulture, forestry and commercial fishing. We are particularly fond of action shots in the fields, forests, barns or docks.

• And, second, we are equally interested in photos that celebrate country life in New England, New York or New Jersey, any time of year.

Timeline Submission deadline: Wednesday, July 31, 2013 Winners will be contacted by: Friday, October 18, 2013

Need creative inspiration?

See FarmCreditEast.com/Calendar

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On the Record

Strategic managers use timely reports and reliable record-keeping Check the course listings of any college’s agriculture program and you are sure to see classes such as “Farm Business Management,” “Agricultural Finance” and “Agrimarketing.” These course catalogs confirm what ag operators already know: farming requires as much know-how in the office as in the field.

After growing up on his parents’ farm, Dan Osborn attended Cornell University, where he married his love for farming with business acumen. Now, as a co-owner of three New York farm businesses, he exemplifies a modern breed of farmer: driven by data and a strategic management style.

According to Osborn, few things are more important than accurate records when making management decisions. “I’m a numbers man. It’s not that I enjoy math, but I am businessfocused,” he said. “For example, I rely on the numbers when my partners and I are considering continuing or discontinuing an aspect of our business based on profitability.”

He cites forage growth as an example of how he and his partners are guided by data. “As with many farms, we need to determine if it is cost effective to grow corn or hay or to buy

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commodities,” he said. “The answer depends on land costs and return on investment, which really drives our business model.”

In order to make data-centered decisions, Osborn’s team relies heavily on accurate records and timely reports. He cites income statements, payroll summaries and summaries of increased cost trends as reports he most relies on when developing operational strategy.

However, like many ag operators, Osborn and his partners struggle to balance their record-keeping needs against the hours they spend tending day-to-day operations. To address that challenge, Osborn’s management team turns to Jamie Purdy, of Farm Credit East, to help manage their financial record-keeping.

And because he makes use of CenterPoint software through Farm Credit East, he is able to access his financial records, payroll and tax information at any time through the online system. “Having our records easily available lets us always make day-to-day decisions based on profitability,” he said. “It’s also much less work at tax time. We’re not struggling to accumulate records; they’re already there.”

An Organic Change N.Y. Farms Bring Organic to the Marketplace Northeast agriculture has a long and creative history of farmers pursuing niche market opportunities. In recent years, organic has been a profitable and growing niche for some producers. Not only is the local foods movement expanding the market for organic, but a number of creative processors have taken organic products into the mainstream supermarket display case.

Gone are the days when organic foods were relegated to the shelves of cramped health food stores. Though organic farming may represent a small fraction of U.S. farm receipts, at just 0.9 percent in 2011, it is hard to ignore its upward spiral.

In 2012, retail sales of organic goods crested the $30 billion mark for the first time, marking a 9.5 percent increase over the previous year.

The Northeast has been a leader in supplying this growing market, as New York boasts the fourth highest number of organic farms in the nation. Among them is Cobblestone Valley Farm, on 600 acres in Preble, N.Y. Alongside their three sons, Maureen and Paul Knapp manage their diversified farm, which produces organic dairy, strawberries, compost and pastured meats.

The family’s decision to move toward organic farming more than a decade ago was driven by pricing stabilization as well as an interest in sustainable agriculture. But converting the family farm from conventional to certified organic was far from easy, Maureen admits.

“It takes a long time to transition a dairy farm to organic; it’s difficult and expensive,” she said. In fact, the Knapp family navigated a long, expensive process to get their farm certified

through the Northeast Organic Farming Association of New York (NOFA-NY). “It takes three years for the land and the herd,” she explained. She also noted the daunting feed expense.

“While you transition the herd, you need to give them organic feed, which costs about twice as much as conventional feed — but you’re still getting conventional pricing for the product.”

Maureen noted that no transition assistance programs were in place at the time of their conversion. Since then, the organic milk companies have created several such incentives.

Given the considerable investment of time and resources, why would families like the Knapps make the choice to convert to certified organic? One answer is price stability. The farmer-owned cooperative, to which the Knapps sell, provides them a stable price for milk, along with quality incentives.

In 2012, the Knapp’s certifying agency, NOFA-NY, recognized Cobblestone Valley Farm as Farmers of the Year for their leadership in the New York organic community. But despite the accolades and benefits associated with their transition and subsequent growth, Maureen readily acknowledges that her family faces challenges familiar to any ag operation. “Our biggest challenge is still finding good help,” she said. “And the price of fuel and taxes is hard — but every farmer has to deal with those.”

As a customer-owner of Farm Credit East, Cobblestone Valley Farm relies on Farm Credit East for financing, tax preparation and appraisal services.

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Sharing

Their Time

FCE employees invest in their local communities

Farm Credit East employees have been giving back to our communities for almost 100 years. We’re so proud of them that we’ll be featuring their wonderful contributions in every issue.

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Steve Makarevich

Lynn Weaver

branch manager, Flemington, N.J.

branch manager, Dayville, Conn.

Board trustee and treasurer, New Jersey Agricultural Society

Chair of steering committee, Celebrating Agriculture

Steve explains: “The New Jersey Agricultural Society brings education and food to New Jersey residents. Their educational programs range from Learning through Gardening for elementary school children to overseeing the New Jersey Agricultural Leadership Development Program for agricultural business owners and other agribusiness leaders. They also run Farmers Against Hunger, an exceptional program that feeds the less advantaged through farm produce gleanings organized by the society.

“I took over my role from Mike Reynolds, Farm Credit East’s southern regional manager, who served on the board for eight years. Even though I am new to it, I’ve been excited to be part of this organization since day one.”

“Celebrating Agriculture is a chance for families to learn about the farms, forests, ag businesses and farm families that are a valued part of “The Last Green Valley.” This will be the thirteenth year that our steering committee has organized this event that draws more than 4,000 to the Woodstock, Conn., Fairgrounds. We hope that you can join us this coming September 21.

“At Farm Credit East, we are encouraged to get involved in our local ag community. Through our involvement, we gain personal satisfaction by helping to build a larger marketing network for the industries that we serve every day.”

Darren Adsit

Shirley Spencer

loan officer, Burrville and Sangerfield, N.Y.

credit representative, Batavia, N.Y.

Director and treasurer, Farm Bureau Oswego County

NYS 4-H Foundation Trustee

“I’ve served on the board for less than two years, having taken over responsibilities from fellow FCE employee Gary Hayden last fall. I’ve enjoyed working with the members of the Oswego County Farm Bureau Board to solve problems and create opportunities for members. Our board members bring their own unique perspectives to our work on grassroots policy development and agricultural advocacy on both the state and national level. I’m equally proud to do what I can to help Farm Bureau support meaningful legislation, such as for land assessment, the Farm Bill and immigration and farm labor reform.”

“As a trustee, my work has strengthened the Foundation’s relationship with local Cooperative Extension associations and has also helped identify potential partners as well as innovative fundraising initiatives.

“The organization is important to me since I grew up as an active 4-H member and want to see 4-H continue for future generations. While many think of it as strictly animal agriculture, 4-H includes programs such as STEM (Science, Technology, Engineering and Math), Healthy Living and Youth Community Action. It can reach kids from city centers to rural farms and help develop future leaders, problem solvers, strategic thinkers and committed citizens.”

financial partner

washington Update Robert A. Smith Senior Vice President for Public Affairs

Trouble in the House Frank Lucas (R-OK) always knew that passage of a new Farm Bill in the House of Representatives would be difficult. As chairman of the House Agriculture Committee, he is fully aware that the political landscape has changed for agricultural policy.

On one side of the political aisle, some tea party Republicans, many from areas with significant agriculture, are unwilling to support a $950 billion Farm Bill (over 10 years) and especially dislike that approximately 80 percent goes to food stamps (SNAP). And some House Democrats, many from urban areas, have shown little flexibility in making substantive changes to the SNAP program even though food stamp expenditures have more than doubled in the past 10 years.

Lucas tried to pull together a bill that would appeal to some Democrats. He hoped to get 40 Democrats (but got 24!), while obtaining a strong majority of Republicans. The vote against the Farm Bill had to be a major disappointment for him since he could not build enough votes in the political middle. The bill needed 218 votes and was defeated by 195 yes to 234 no votes.

For many Northeast members, who overwhelmingly voted against the House Farm Bill, the reality is that supporting the farm community is “nice to do,” and supporting nutrition programs, of which SNAP is the biggest, is a “need to do.” The Farm Bill considered by the House Agriculture Committee cut $20 billion from SNAP over a 10 year period or about $2 billion

per year. SNAP expenditures are about $77 billion per year. The previously-passed Senate version of the bill proposes cuts of $4 billion over 10 years.

The numbers tell the story There are 23 House members from the six New England States. All 23 voted against the bill, including the four who serve on the House Agriculture Committee. New York had 7 yes votes and 19 nays.

New Jersey had 2 yes votes and 7 nays.

The only Northeast Democrat to support passage was Congressman Bill Owens, of northern New York.

What changed?

• From an expenditure standpoint, the Farm Bill is primarily a nutrition bill with approximately 80 percent going to SNAP. So the real focus is not on a trade-off of agriculture versus nutrition. It’s a fight over SNAP provisions and expenditures.

• Some environmental groups have targeted farm programs as a reason that farms have increased in size. This seems to overlook basic economics, but it plays in Washington.

• While there is a wide and growing variation in farm incomes, overall farm family income is no longer below the average nonfarm family. This changes how some members of Congress, including some from rural areas, view farm policy.

• For many farmers, farm labor and immigration reform is a far more important issue than getting a farm bill completed. Farm businesses’ reliance on farm programs (except crop insurance) is less than it has been in nearly 50 years and the need to have a stable labor supply and a guest worker program that works is more important than ever.

Passage of a Farm Bill is important so producers can know which programs will exist and which will not. At the writing of this article, the pathway forward on completion of a Farm Bill — or if we will get a Farm Bill — is unclear. In reality, the political landscape has changed along with the issues that define the success and failure of a Farm Bill.

For a copy of the final House vote on the bill, go to FarmCreditEast.com/FarmBill.

Northeast Members Supporting Farm Bill • Chris Collins (R-NY) • Rodney Frelinghuysen (R-NJ) • Chris Gibson (R-NY) • Michael Grimm (R-NY) • Richard Hanna (R-NY) • Peter King (R-NY) • Bill Owens (D-NY) • Tom Reed (R-NY) • Jon Runyan (R-NJ)

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Meet Our 28 Scholarship Winners!

Each Earned $1,500 Toward Higher Education Farm Credit East congratulates our 28 scholarship winners, all aspiring to make a difference in their agricultural communities. This year, students earned a collective $42,000 in scholarships to help them on their way to becoming the Northeast’s future leaders.

N e w H a mpshir e Amy Drogue Derry, N.H. University of New Hampshire

Our scholarship supports students with a diversity of agricultural career aspirations and farm backgrounds from across our six-state territory. Congratulations to these deserving students and best wishes for a successful educational experience.

Connec t icu t

New Jersey

Carly Aravena

Kaitlyn Eachus

Bethel, Conn.

SUNY Morrisville State College

Elmer, N.J. Cumberland County College

Major: Animal science Career path: Dairy production

Major: Agribusiness/dairy science Career path: Dairy herd manager

Lauren Finger

Peter Etsch

Lebanon, Conn.

University of Connecticut

Monroe Township, N.J. Delaware Valley College

Major: Animal science Career path: Small animal or equine veterinarian

Major: Crop science Career path: Farm owner/manager

Max Wolf

Tyler Gravatt

Lebanon, Conn.

Pennsylvania State University

Allentown, N.J. University of Delaware

Major: Animal science Career path: Dairy marketing and analysis

Major: Mechanical engineering Career path: Mechanical engineer

M a ss a chus e t t s

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Major: Biomedical science/pre-vet Career path: Large animal veterinarian

N e w Yor k

Mariah Allen

Emily Chittenden

Rochester, Mass.

Massachusetts Maritime Academy

Schodack Landing, N.Y. Cornell University

Major: Marine safety and environmental protection Career path: Environmental safety officer

Major: Agricultural science Career path: Agribusiness

Matthew Fletcher

Greer Doody

Southampton, Mass.

SUNY Morrisville State College

Tully, N.Y. SUNY Morrisville State College

Major: Animal science Career path: Dairy farmer

Major: Natural resource conservation Career path: Conservation planner

financial partner

Kendra Ellis

Rayne Paddock

Astoria, N.Y. Cornell University

Remsen, N.Y. Cornell University

Major: Agriculture science Career path: Farm owner/manager

Major: Dairy science Career path: Farm owner/manager

Mary-Elizabeth Foote

Stephen Pennings

Hartford, N.Y. Penn State University

Warwick, N.Y. Cornell University

Major: Agricultural education and extension Career path: Agricultural communications

Major: Agricultural sciences Career path: Agribusiness

Stephanie Genrich

Eric Putman

Rochester, N.Y. The Ohio State Agricultural Technical Institute

Heuvelton, N.Y. Purdue University

Major: Garden center and greenhouse manager Career path: Farm manager

Major: Doctorate of veterinary medicine Career path: Farm owner/large animal veterinarian

Leann Green

Marissa Rice

Troupsburg, N.Y. SUNY Cobleskill

Avon, N.Y. Cornell University

Major: Agricultural communications Career path: Agriculture educator

Major: Biology/pre-vet Career path: Large animal veterinarian

Jenna Hill

Maxwell Russell

Clyde, N.Y. Houghton College

Appleton, N.Y. Cornell University

Major: Biology/pre-vet Career path: Large animal veterinarian

Major: Applied economics and management Career path: Farm owner/manager

Tristan Keil

Clyde Sammons

Mattituck, N.Y. Cornell University

Johnstown, N.Y. Cornell University

Major: Animal science Career path: Large animal veterinarian

Major: Animal science Career path: Dairy herd and crop management

Quade Kirk

Danielle Teed

Ava, N.Y. SUNY Cobleskill

Watkins Glen, N.Y. Alfred State SUNY College of Technology

Major: Agricultural business Career path: Agricultural sales

Major: Veterinary technology Career path: Large animal veterinarian

Sam McDermott Granville, N.Y. Cornell University Major: Food science Career path: Produce distribution

Claire Mulligan Avon, N.Y. Cornell University Major: Animal science Career path: Agribusiness

Rhod e Is l a nd Hillary Breene West Greenwich, R.I. Kansas State University Major: Agribusiness Career path: Agricultural public policy To be a candidate for a 2014 Farm Credit East scholarship, contact your local branch office. An application will be on our website in January 2014: FarmCreditEast.com.

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FINANCIAL PARTNER is for the customers, employees and friends of Farm Credit East. Farm Credit East is a farmer-owned lending cooperative serving the farm, commercial fishing and forest products businesses in New Hampshire, Massachusetts, Connecticut, Rhode Island, New York and New Jersey. Part of the national Farm Credit System, Farm Credit East is a full-service lender dedicated to the growth and prosperity of agriculture.

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HOW TO REACH US: Whether you want to praise us, complain, ask our advice or just let us know what’s on your mind, we’d like to hear from you. WRITE: Karen Murphy, Editor, Farm Credit East, 240 South Road, Enfield, CT 06082-4451. CALL: 860.741.4380.

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Community Support Forestry Leaders Receive AgEnhancement Grant Farm Credit Northeast AgEnhancement Program recently awarded a $5,000 grant to the New Hampshire Timber Owners Association (NHTOA) to support a convening of forestry leaders from New England and New York. Leaders will come together this September to discuss educational opportunities as well as policy initiatives that better maintain a favorable regulatory climate among the states.

According to Jasen Stock, executive director of the NHTOA, “Our primary goal is to work together on the latest forest industry and timberland owner policies and training concerns and to identify one or two common issues that the group can address on a collaborative basis.

“Simply put, collaborative support is required to effectively define, research and regulate policy as well as training initiatives that impact the forest products industry. This effort is increasingly important in that New England and New York are part of a regional timber market. Timber grown and harvested on a farm in Massachusetts will be purchased and processed in Vermont, New York or New Hampshire.”

For details • Bob Smith: 800.327.6588 • Email proposals to: AgEnhancement@ FarmCreditEast.com • Proposal deadlines: April 1, August 1 and December 1 • FarmCreditEast.com/Industry-Support.aspx

AgEnhancement Grants since 1996 • Total grant dollars: $1.436 million • Total projects supported: 539

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