Financial Partner Winter 2014

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W I N T E R 2 014

A NEW KIND OF SERVICE

Veterans Returning Home to a Life in Agriculture

INSIDE News & Views 2 CEO Letter 3 Cover Story 4 Maine TREE Foundation 10 Sharing Their Time 12 Customer Appreciation Meetings 14 Economic Impact 16 Event Calendar 17 Washington Update 18 WINTER 2014

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N EW &V IEW S S Harvesting a Profit Accounting and financial management can be daunting for the uninitiated. Harvesting a Profit introduces you to the practices of how to make a profit, benchmark your business, study fixed costs and measure production efficiency in a friendly, unintimidating way that

FarmCreditEast.com

Are you leaving profits on the table?

Benchmarking can help improve your profitability by comparing your business to its industry peers, based on both your business strengths and areas where you fall behind. For example, if comparable businesses in your industry have a 7 percent return on assets and you’ve

been realizing only a 4 percent return, that difference sets a benchmark to help you figure out why your business doesn’t meet industry standards. Or if you’re planning an expansion or new enterprise, benchmarks can help you set realistic revenue and income expectations.

makes learning easy. With easy-to-understand

For more measures to compare your business to industry benchmarks, you can read our Benchmark Solutions Report at FarmCreditEast.com/Reports.

You’ll also find data from sample industries, including greenhouse, nursery, cash field, vegetables, fruit and dairy.

explanations and examples, Harvesting a Profit is a helpful guide that explains the tough stuff in a way that makes learning easy. You can flip through this guide at FarmCreditEast.com/HarvestingProfit.

Or contact your local branch office for a hard copy of this handy workbook.

Sample of data from report

Suffolk County farmland values Farm Credit East released a market study highlighting farmland values in Long Island’s Suffolk County. Due to intense development pressure, this eastern-most New York county has some of the most expensive farmland in the country. You can read the full study at FarmCreditEast.com/Reports where you will also find a table of Suffolk County farmland sales from 2003 to 2013 by various locations. For example:

Suffolk County

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FINANCIAL PARTNER

Minimum

Maximum

Median

2003-2008 Median

2009-2013 Median

$25,000

$2,032,085

$86,466

$74,823

$125,000

NEW RECRUITS CEO’s MESSAGE AND NEW ENERGY For Northeast Customers Bill Lipinski, CEO, Farm Credit East

Farming. Fishing. Forestry. These are industries driven by passion. It would be hard to find a successful ag business without owners who live and breathe the work of their enterprise day in, day out. We know, because we share your commitment to agricultural knowledge, capabilities, diversity and hard work that make Northeast agriculture so important to our lives and the economy.

The very mission of Farm Credit East is to enable the growth of ag businesses like yours by providing a consistent source of credit and financial services. But our commitment does not end there. We also actively promote the importance and value of Northeast agriculture to our way of life. We do this by our economic impact research, industry reports and ongoing financial support for a variety of organizations that reach out to the nonfarm public.

We work with public officials at the state and federal level to explain the benefits of strong Northeast agriculture, commercial fishing and forest products businesses.

And we also do this through Farm Credit East sponsorships, grants and employees who volunteer their time and energy to effective programs that truly impact our industry.

In this issue, we’re excited to present some of these programs, which play a valuable role in attracting new recruits and energy into Northeast agriculture.

“We also actively promote the importance and value of Northeast agriculture to our way of life.”

The first is the Farmer Veteran Coalition (FVC), which is actively helping to match veterans to opportunities in farming and other ag businesses. The transition from military service to farming is a natural fit. Ag business owners feel a strong affinity for the drive, discipline and maturity that returning veterans bring home to this endeavor. Farm Credit East is proud to support this worthwhile effort.

We work with the Northeast chapters,

which have 242 farmer-veteran members and are seeking to grow.

We also proudly support the Maine TREE Foundation and its Teachers’ Tours of Maine’s Forests and Mills. The tours are an innovative, professional development program that are changing educators’ perceptions of the career opportunities in the forest products industry. After four days in the woods and a Project Learning Tree workshop, educators come away with a better understanding of the industry’s growing sophistication and needs not just for laborers, but for workers with a higher level of skill.

Programs like the FVC and the teachers’ tours are doing a great job of marrying the industry’s need for new recruits to the recent upsurge in interest on the part of young — and not so young — new farmers. We’re excited to be part of making that marriage work.

I would be remiss if I didn’t also acknowledge the passion of our own employees, who give generously of their time and energy to local organizations that in many cases reflect their own involvement in agriculture. In this issue, we’ve also shared a small sampling of their contributions.

They make us proud!

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A NEW KIND OF

SERVICE

Veterans Returning Home to a Life in Agriculture “ Before Iraq, I was a perfectionist ...

Now, my family is most important.

I value peace and quiet and the satisfaction of watching plants grow.”

JAMIE CRITELLI Former Army Reserve captain and owner of Floral Beauty Greenhouses in Elmira, N.Y.

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C O V E R

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tanding large in front of the United Nations building in New York City, a sculpture bears the inscription, “They will beat their swords into plowshares and spears into pruning shears.” For thousands of returning veterans, these words apply.

In 2013, 21.4 million men and women, or 9 percent of American adults, were veterans.1 The Department of Veteran Affairs anticipates that number will continue to rise.2 As these veterans return home and enter civilian life, where are they headed? Many are returning to rural America, and some are entering agriculture.

“Our veterans are a purpose-driven group of people,” said Michael O’Gorman, executive director for the Farmer Veteran Coalition. “They don’t enter the military because it’s easy. They are looking for a challenge and to do something greater than just support themselves. They want to support their families, their communities and the future of our country.”

“Veterans have a desire to feed their families and their communities,” added Dr. Michele Pfannenstiel, Maine chapter president and coordinator of New England activities for Farmer Veteran Coalition. “They saw the hardships of food insecurity overseas and when they return home want to ensure a comfortable, healthy lifestyle for their family and community.”

While in the Panama Canal Zone in 2011, retired Army Colonel John Lemondes and other War College senior leaders learned about the strategic implications of the canal zone and its history. Today John farms in New York.

mployment Situation of Veterans Summary, U.S. Department of Labor’s Bureau of Labor E Statistics, March 2014.

2 Veteran Population Projections: FY2010 to FY2040, United States Department of Veteran Affair’s National Center for Veterans Analysis and Statistics, 2014.

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WHY AGRICULTURE? Many veterans were raised in rural areas, so agriculture is a familiar lifestyle. Others studied an ag-based curriculum in college which piqued their interest. Yet others are drawn to the outdoors, working with their hands and making something grow.

John Lemondes, a retired Army colonel, explained, “I grew up near farms and in high school, I worked on a farm. Then in college I majored in ag science. I was commissioned as an Army officer straight out of Penn State, but owning a farm was always my goal.

“While in the Army, we lived in suburban areas,” continued John. “Somewhere between moving from one cul-de-sac to another, my wife and I decided we wanted a rural lifestyle for our three children. That’s when we set our goals on owning our own farm. This decision was a huge risk, but as my retirement from the service approached, we were fortunate to purchase a 400-acre piece of land in Jamesville, N.Y.”

SUPPORTING VETERANS Pete Frizzell began his Farm Credit East career in 2009 and today works with Crop Growers, LLP as a Northeast marketing agent, serving customers throughout New England and Long Island.

Prior to Farm Credit, Pete served in the United States Army as a paratrooper and infantryman, concluding his service as a staff sergeant.

Pete served four years on active duty, stationed in Vicenza, Italy with 173rd Airborne Brigade and then in Ft. Lewis, Washington, with the 2nd Infantry Division. Following active duty, he enlisted in the Connecticut National Guard and served as a squad leader with the 29th Infantry Division, during which his unit deployed to Afghanistan in support of Operation Enduring Freedom VII. With this experience, Pete also serves as Farm Credit East’s veteran liaison, working with veterans interested in entering agriculture. “I think veterans can have an important role in agriculture — both as farm owners and employees. Most veterans have strong self-motivation and the dedication necessary to be successful,” he explained.

That is why Farm Credit East is committed to helping veterans with the resources they need to get started in agriculture. In the first quarter of 2015, Farm Credit East will partner with Farmer Veteran Coalition to host farmer veteran workshops to cover business planning for ag startup businesses and to provide networking opportunities for these new farmers.

Visit FarmCreditEast.com/FarmerVeteran for more information on these workshops.

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One of John’s military assignments helped him decide what to do with his 400 acres of open space. “For three years, my team and I were responsible for development of all textile-based individual equipment, clothing and parachutes for the Army. In that position is where I first I learned about sheep, wool and textiles.” Now John and his wife own a flock of 23 sheep, with plans to grow.

Jamie Critelli, former Army Reserve captain and owner of Floral Beauty Greenhouses in Elmira, N.Y., says he got started in agriculture because he wanted to control his own destiny. “Before Iraq, I was a perfectionist,” Jamie said. “What matters to me now is not what mattered to me before. Now, my family is most important. I value peace and quiet and the satisfaction of watching plants grow. I find there’s something therapeutic about putting my fingers in the dirt. And I enjoy the freedom of my day-to-day.

Corporate life was not for me.”

SKILLS MADE FOR AGRICULTURE Many skills developed in the military lend themselves to careers in agriculture. Jamie explained, “The military is not as regimented as you’d think. Often decision making is delegated to lower levels, allowing for flexibility and quick decision making.

After years of training, veterans don’t want to be told what to do.

Rather, we want to be told what needs to be done and then figure out the best way to do it.

“We learned how to adapt and work under pressure, often with no back up,” continued Jamie. “We’re trained to persevere against obstacles and see a task through, which I found to be beneficial when I started my greenhouse business.”

ADVICE FROM FARMER VETERANS “Some veterans are just getting started in agriculture, while others are returning to existing operations, with many a generation removed from the farming operation. Many veterans would like to own and farm their own land, but realize they need to build their dream, so they look for jobs on existing operations that pay a living wage and provide the opportunity to work with a mentor,” said Dr. Pfannenstiel.

Michael O’Gorman agreed. “Take it step-by-step. Getting started is not easy, so don’t jump right in. Farming on your own immediately isn’t the only route. You’ll find lots of employment opportunities in agriculture and ways to be involved part time to learn the trade.”

“ I feel good about directing veterans into agriculture ... it’s a good time to become a farmer.”

MICHAEL O’GORMAN, EXECUTIVE DIRECTOR FOR TH E FAR M E R VETE R AN COALITION

C O V E R

S T O R Y

Retired Army Colonel John Lemondes with his wife, Martha, and two youngest children at their farm in Jamesville, N.Y.

Michael encourages veterans to do their homework. He advises to first figure out where you’d like to live. If you want to purchase land, study the soil and weather for that area. Look at educational and training programs in farming and entrepreneurial skills.

Use your GI benefits to find training programs and to help with expenses. Take advantage of training or employment on a farm.

Then, put together a small, but efficient team of advisers. The most crucial player on this team should be someone who has actually farmed.

John can attest to this advice. “It’s not as easy as just buying a farm. Actually, finding a real estate agent competent in purchasing farmland is a challenge,” he says. “And you need to think through the capital expenses. Things that may seem simple take longer than you’d expect. And you need to be prepared for them.”

Jamie agrees that planning is a key piece of the new venture.

“Be sure to have a Plan B, C and D, in case something goes wrong, because it will. Agriculture is different from most trades. You’re not going to learn how to farm from a textbook — you need to actually do it. And it’s tough, because you have no set hours and you care for something that’s alive. Farming takes a personal investment of time and resources.

“Looking back, I would have done some things differently,” continued Jamie. “I probably would have started smaller and

maintained an off-the-farm job while the business grew. In the early stages, making ends meet was always a worry. But we were persistent and able to diversify to include vegetables in the mix, which helped the business grow.”

Jamie says he’s learned a lot already, “You don’t need to do everything right. You’ll learn from your mistakes. Along the way, I learned to seek strong mentors and hire employees smarter than me. Have a great banker and lawyer — and keep them involved.

Network as much as you can and keep that network alive.

“And make sure you have fun. While it’s hard work, the rewards outweigh the risks,” Jamie encourages, “When you find the niche that you enjoy, go after it.”

PROGRAMS TO HELP Challenges veterans face in getting started in agriculture include access to land and credit and developing the business planning, financial management and entrepreneurship skills needed to own a business.

“Many veterans are interested in getting started, they just don’t know how,” said Michael O’Gorman. “As an industry, we need to create a network for them. They need support from both veteran and industry groups.”

To help fill the industry gap, Michael founded the Farmer

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VETERAN POPULATION BY STATE: FISCAL YEAR 2014 Just over 10% of veterans reside in the Northeast.

The Homegrown By Heroes label displays on veteran-grown products. This label signifies the labor of hardworking veterans who chose to become farmers and help feed their country.

31,166 — 100,000 100,001 — 200,000 200,001 — 350,000 350,001 — 650,000 650,001 — 950,000 Source: United States Department of Veteran Affairs

Veteran Coalition (FVC) in 2007. “I saw more and more statistics showing the high number of veterans returning to rural America.

It seemed the more rural the area, the greater the number of veterans and some of the highest unemployment rates.”

The two missions of the FVC are to first help veterans return to rural America and second to help those veterans enter agriculture.

FVC developed a network to connect veterans with agricultural employment opportunities. When veterans contact the FVC, their skills and capabilities are assessed, and then they are matched with a farm that fits their skills.

FVC also has veterans on staff to help, including a food safety specialist, a lawyer for legal assistance on setting up a farm and a financial planner for business and financial planning. Of the FVC’s 3,000 members, 242 reside in the Northeast.

“I feel good about directing people into agriculture,” commented Michael. “Our veterans are relatively young and have a whole career ahead of them. With the demand for food going up, it’s a good time to become a farmer.”

To raise awareness of this growing segment in agriculture, the FVC launched the national Homegrown By Heroes program last spring as a means for veterans to market their products as veteran grown. The Homegrown By Heroes label was developed by the Kentucky Department of Agriculture to afford farmer veterans

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the recognition, pride and consumer support of their agricultural businesses and products.

With the national expansion of this program, any veteran or active duty member can place a Homegrown By Heroes label on their agribusiness signage and/or agricultural products. Since inception earlier this year, 100 veteran farmers have signed up across the country.

Jamie started labeling his products with the Homegrown

By Heroes label in May, and says, “It’s not just marketing. It’s a positive differentiator. It’s a way for consumers to support veterans with more than just words, but with actual product purchases. And it’s a daily reminder of veterans’ service for our country. I’ve had positive response from the public. It starts a conversation about my service and my product.”

As the number of veterans choosing agricultural life continues to grow, so do the benefits for all involved — including the industry, which has much energy to gain from this proud and purposeful new breed of recruits.

SUPPORT FOR VETERANS ENTERING AGRICULTURE FARMER VETERAN COALITION (FVC) MOBILIZING VETERANS TO FEED AMERICA Programs: • Farming fellowships assist veterans advance their careers in food and farming. Participants have access to resources and support services to help them become successful in the food and farming industry.

• Career development assists veterans find jobs, internships or career advancement within agriculture and agribusiness through collaborative partnerships with employers across the United States.

Learn more: FarmVetCo.org

HOMEGROWN BY HEROES Homegrown By Heroes engages consumers in a completely new way by communicating that these agricultural products represent the labors of hardworking veterans who became farmers to feed the nation. The Homegrown By Heroes label should represent authenticity, allowing consumers to proudly support veteran-farmers.

Learn more: HGBH.org

THE MISSION CONTINUES

FARM CREDIT EAST PROGRAMS

Young, Beginning, Small and Veteran Farmers and Ranchers Incentive program (YBSV) offers discounts on services, such as farm accounting software, tax preparation, consulting and appraisal for up to five years. These customers also receive payment on FSA guaranteed loan fees and may receive interest rate assistance.

FarmStart assists farmers in the early stages of their business when the demands for capital and financial management skills often make it difficult to establish their businesses. The program invests working capital of up to $50,000 to help beginning farmers’ businesses become operational. Each FarmStart participant is required to complete a business plan and monthly cash flow that serve as roadmaps for their startup business. A FarmStart advisor works with each participant to help the new business stay on track toward achieving their business objectives. (Jamie Critelli opened Floral Beauty Greenhouses in 2010 with the help of a FarmStart investment.)

GenerationNext is a seminar series focused on progressing the overall business knowledge and management ability of participants. GenerationNext is optimal for young people, ages 20 to 35, who are involved in the agriculture industry and are the middle managers or the managers of a farm or agricultural business.

Learn more: FarmCreditEast.com/startup

IT’S NOT A CHARITY. IT’S A CHALLENGE. The Mission Continues empowers veterans to serve their country in new ways by engaging them in innovative and action-oriented programs within their own communities. The programs help veterans refocus a sense of camaraderie and purpose they may have lost after leaving the military.

Programs: • The Fellowship Program provides opportunities for veterans to serve nonprofit organizations through six-month fellowships by harnessing the strengths, skills and compassion of veterans with a passion for continued service.

FARM CREDIT SYSTEM SUPPORT

FUNDS

FARMER VETERAN COALITION

$435,000

HOMEGROWN BY HEROES

$375,000

FARM CREDIT EAST SUPPORT FARMER VETERAN COALITION IN THE NORTHEAST

$6,500

THE MISSION CONTINUES

$7,662 $824,162

• The Service Platoon Program brings teams of veterans and local partners together to tackle pressing issues and strengthen communities in the process.

Learn more: MissionContinues.org

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INTO THE TRE Teachers harvest new lessons to take back to the classroom Whatever you think you know about the forest products industry, think again.

While many logging and processing practices have evolved and changed through automation, perceptions of the industry as being dangerous for workers and environmentally unsound still linger.

Updating that perception is where the Maine TREE Foundation — a.k.a.

The Maine Timber Research & Education Foundation — comes in. A nonprofit organization, the Maine TREE Foundation was established to educate and advocate for the sustainable use of forestland, with a mission that emphasizes “the ecological, economic and social health of Maine’s forest community.”

Among its most effective strategies is the Teachers’ Tour of Maine’s Forests and Mills, a program that gives teachers a hands-on, “into-the-woods” experience that allows them to bring new knowledge back to their classrooms.

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SEEING THE FOREST FOR THE TREES Project Learning Tree sessions begin four-day professional development workshops that give educators a first-hand “muddy-boots” experience. Teachers meet with foresters, loggers and other industry professionals and visit modern timber harvests and sawmills to understand the full industry process start to finish.

A recent workshop group traveled from Moosehead Lake to a harvest site where a feller buncher, skidder and delimber demonstrated the efficiency of today’s more automated operations. From there, they travelled to Moose River Lumber, where Eastern spruce, pine and fir are kiln-dried to produce dimension lumber.

The educators saw firsthand the automated processes that incorporate lasers, scanners and computers for processing lumber that competes in international markets.

“We want people to know that there’s a whole lot more to forestry then cutting

down trees,” said Sherry Huber, executive director of the Maine TREE Foundation.

“Through their teachers’ experience in Project Learning Tree, students gain an understanding of the true nature of modern forestry.”

“We want teachers to understand the interconnection between our forests and the timber they produce,” explained John Willard, forester and owner of The Birches, a nature preserve on Moosehead Lake. “Our focus is to get a good value from the timber over time and have the esthetics to maintain hiking, cross-country skiing and snowmobiling. Some think that we chop trees for no ultimate purpose.

The economy of much of Maine depends on our ability to mix the land with recreation.”

That is why the teachers are exposed to all sides of the industry, including the delicate balance between biology, economics and personal relationships — includ-

ing the interests of the landowner when approaching any harvest.

John added, “We want people to know that trees are a renewable resource that grows like a garden — they have to be carefully tended.”

LESSONS LEARNED AND PLANNED

EES A grant from the Farm Credit Northeast AgEnhancement Program plus support from our Auburn office helps support a four-day workshop “in the woods” for 11 teachers — whose knowledge is then passed along to hundreds of students.

The beauty of the teachers’ tours and Project Learning Tree is its applications across all disciplines. Workshops are led by an educator and forester, and incorporate materials that cover math, science, social studies and English. And the learning doesn’t stop after the workshops are over.

Participating teachers are given curriculum guidelines and multi-media materials to take back to the classroom. They are also provided with a list of resource professionals who will answer questions after the program or may actually visit schools to meet with students in the classrooms.

BRANCHES TO THE FUTURE OF FORESTRY In addition to gaining valuable knowledge that helps them develop a better understanding, teachers who experience the program become a strong bridge to the future workforce for the forestry industry.

Says Sherry, “Students today are not encouraged to become loggers and go into forestry because it’s perceived as dangerous.” But, much of the harvesting and processing is automated now so today’s jobs in forestry are safer and require a higher level of skill, which means higher pay.

Jeannot Carrier, an owner of E.J. Carrier — a cooperating supporter of the program — talks about the need for workers with a wide range of skills, “We are looking for the next generation of forestry professionals who have skills that range from operating new computer systems, to quickly building roads and bridges, to making on-the-spot decisions about the best and safest use of trees on a site.

We want to send a message through the teachers to the students that the forestry industry is a rewarding career.”

Roots in our community Farm Credit East knows how important programs like the Maine TREE Foundation and Project Learning Tree are. That’s why the Farm Credit AgEnhancement program has awarded more than $1 million dollars in grants to organizations across the Northeast since 1996, including annual support to the Maine TREE Foundation since our program’s inception. Industry advocacy and education programs like the Maine TREE Foundation go a long way to supporting and enhancing the growth and wellbeing of our communities, while helping generate a more current understanding of the forest products industry.

“The forests are a vital part of the fabric of Maine and a contributor to its overall economy,” said Fred Morton, a Farm Credit East regional manager and a member of the Maine TREE Board of Directors. “This program helps people understand how vital the industry is to our well-being and our quality of life.”

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Sharing

Their Time

FCE employees invest in their local communities

In the spirit of agricultural cooperatives, Farm Credit East employees have a long and rich tradition of caring by participating in a variety of charitable, agricultural and civic campaigns. Each year, our employees generously give their time, money and energy to help friends and neighbors in need, because giving back is part of our cooperative culture. Here is a sample of how employees share their time.

Cheryl Hart, Kerri Sears, Myra Marcellin, Nancy Cullinan, Rachel Reel, Cindy Houle, Thea Dickson and Lisa Morse

Enfield Raises a Whopping $4,300!

Enfield, Conn.

Employees and local farmers join forces to host an annual Farm-to-Office Fall Harvest Luncheon at our Enfield, Conn., office. Generous Massachusetts and Connecticut farmers donate products for luncheon recipes, including beef, milk, cheese, eggs, vegetables, potatoes, pies, bread and ice cream.

Other growers donate fall plants and decor. Employees work nights and weekends to gather fresh ingredients, cook an abundance of food, decorate, create gift baskets for a raffle, solicit auction donations and develop an educational PowerPoint about each donating farm.

Thanks to directors, management and staff, this team raised $4,300 and Farm Credit East matched the funds. This brought the total to a whopping $8,600 in donations to four charities, including Massachusetts Ag in Classroom, Connecticut Agricultural Education Foundation, Enfield Food Shelf and the Springfield Rescue Mission.

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Batavia Donates to FFA Chapter.

Batavia, N.Y. Our Batavia branch donated $5,000 to the Medina FFA Chapter to help support an annual New York State FFA Convention. The three-day event draws more than 1,000 FFA members, advisors and officials from around New York for workshops, networking and competing in career development contests. Batavia employees Corey Kayhart and Anna Smith, who also volunteer with local FFA chapters, helped judge the contests.

Nelda Toussaint of Toussaint Farms, LLC presents the Farm Credit East donation to Medina FFA Chapter Treasurer Cassidy Albone. On the far right are Farm Credit East employees and contest judges Corey Kayhart and Anna Smith.

Middletown Walks for a Cure.

Middletown, N.Y. For the fourth year, Middletown, N.Y., employees participated in a Relay for Life to support the American Cancer Society. They joined hundreds of others in support of those battling this disease and in memory of loved ones lost. Friends, family and customers generously contributed more than $5,000 toward cancer research and awareness, which helped raise the total amount to well over $200,000 that day. And thanks to Stewart’s Shops donations, our team also held ice cream sundae events to add more dollars to the funds raised.

Our Middletown, N.Y., walkers

‘Tis the Season.

Greenwich, N.Y. Every holiday season, Farm Credit East employees do what they can to help local families enjoy a holiday meal and have gifts under their trees. For example, dedicated New York employees work with the Greenwich Central School Operation Rudolph Program to “adopt” three children. Through this program and its generous sponsors and volunteers, families have a holiday dinner and lots of gifts, which bring smiles to the faces of children in the Greenwich area.

“As a local company, we have a deep commitment to our towns and surrounding communities,” said Chris Truso, manager of the Greenwich branch. “The Farm Credit East philosophy is to provide quality service to customers and reinvest in the people, places and causes that make our community a special place to live and work.”

Ashley Kubiak, Tricia Lockwood, Jean Gallagher, Cristi Flanigan. Not pictured: Rella Getty, Jessica Getty and Erin Perkins

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Farm Credit East President Scott Herring; John Caltabiano, eastern regional manager; Barry Vater, chief financial officer at Pleasant View Gardens, Loudon, N.H.; Board Chair Andy Gilbert and Board Vice Chair Matt Beaton attended the customer meeting in Bedford, N.H.

HERE’S WHAT REALLY CLICKED at this year’s Customer Appreciation Meetings

Handheld clicker

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Is everyone out there carrying a smart phone around the farm? It would seem so. Among the many things we learned at this year’s customer appreciation meetings is that mobile technology is alive and well on Northeast farms!

How do we know? Because this year, customers were given handheld “clickers” so they could cast their votes right at the meetings to tell us the things that were most important to them. And apparently, one of those things is their mobile device. Close to three-quarters of customers who participated told us they own a smart phone, iPad, tablet or similar device — and almost half told us that they use their mobile device to check email.

Message heard. As were many others — all of which provided important feedback for us. Two major cornerstones of Farm Credit East are our customer service and continual self-improvement. So this new twist in capturing your input was not only fun, it was important and informative.

INTERACTIVE “CLICKERS” GIVE VOTING A NEW TWIST

Here’s a sampling of what you told us through interactive polling at our Customer Appreciation Meetings: How customers like to conduct business with Farm Credit East

The apps our customers use on their mobile devices

• 64 percent prefer meeting face-to-face

• 49 percent check and send email

• 23 percent would rather talk on the phone

• 23 percent check the weather

• 10 percent favor email

• 11 percent use their device for social media

• 3 percent prefer texting (TTYL!)

• 6 percent use their device for other purposes

Online banking functions that are most valued

… the remaining responses ranged from 3 percent who use their device to check market information to 1 percent who use it for business purchases

• 46 percent prefer online banking for easier access to your funds • 40 percent value online use for checking account information

How our customers choose an accounting professional

• Just 13 percent prefer online for checking fixed interest rates

• 39 percent look for a professional who can handle complex issues

The most efficient and valuable aspects of our loan application process • 38 percent said the relationship with their lender is the most important aspect • 29 percent placed highest value in minimum turnaround time • 18 percent are most concerned with price • 15 percent said their loan officer’s ability to handle complex applicationrelated issues was especially valuable The types of mobile devices customers use

• 27 percent want an accounting professional to understand ag-related issues. An equal 27 percent said the relationship with their provider is the critical factor • 7 percent said price is most important The things that keep customers up at night Answers were all over the board on this question, although 24 percent said that margin pressure topped the list.

• 19 percent cited the challenge of transferring the farm to the next generation • 14 percent worry most about main taining a stable supply of labor

• 12 percent stay awake over production costs and another 12 percent said federal and state regulation compliance were top of mind • 6 percent worry about human resource issues, such as health care • 13 percent lose sleep over a whole host of other concerns How we can improve the Farm Credit East experience • 50 percent want more knowledge exchange, such as agricultural markets and emerging issues information • 32 percent say that Farm Credit East staff retention and training is especially important • 19 percent want financial applications for mobile devices Most important about our customers’ Farm Credit East relationship • 28 percent put competitive interest rates and patronage at the top of the list • 27 percent cited Farm Credit’s com- mitment in good times and bad • 25 percent placed the most value in our local office and staff • 14 percent said that expert under- standing of their industries was most important • 6 percent put ownership in the coop- erative at the top of the list

• 73 percent own a smart phone, iPad, tablet or similar device!

For full results of the interactive polling, visit FarmCreditEast.com/Polling.

(Note that the Mayville, Batavia and Burrville customer appreciation meetings were cancelled because of severe snowstorms in those areas of New York.)

Our goals were to engage customers in an interactive dialogue, and interactive is what we got. Asked to choose from many things that might keep them up at night, a few customers yelled out jokingly, “All of the above!”

The fun part of polling was that customers got to see results displayed on a screen instantly after clicking in their answers. The serious part was that this process gave us lots of information to think about as we work on our business plan for 2015 and beyond.

We loved this process, and may use it again at future meetings to hear your thoughts on how we’re doing and what we can improve.

Thanks for the great information!

At Farm Credit East, we look forward to the appreciation meetings every year as an opportunity to thank customers for their business. We meet bright, young new farmers and catch up with farmers we’ve been proud to work with for years. We update customers on our financial results and kick off the director nomination and election process.

Working together, these aspects of our customer appreciation meetings epitomize this year’s theme “Helping Us Serve You Better … We are You.”

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2014 AND 2015 GOOD FOR U.S. ECONOMY

Chris Laughton Director of Knowledge Exchange

As 2014 come to a close, the general economy looks pretty good.

While challenges remain in both U.S. and world economies, we continue to see positive growth as we emerge slowly from the recent recession. Most economic indicators are at or above levels prior to the recession, and 2015 promises accelerated global growth. It’s been on a long road back, but most economists predict continued incremental improvement and positive growth in the year ahead for the U.S. economy Growth in the gross domestic product (GDP) is an important indicator of the economy’s rate of expansion and how healthy a country is. A country’s GDP is made up of its consumer spending, investment spending and government spending as well as the value of its exports minus the value of its imports. Negative GDP growth spells recession, while positive growth shows expansion.

1.5%

2.2% 3.4%

2.7% 3.3%

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FINANCIAL PARTNER

GDP growth in the United States is projected to come in around 2.2 percent for 2014 and approximately 3.4 percent in 2015. Global GDP growth is expected at 2.7 percent for 2014 and 3.3 percent for 2015, with growth declining slightly in China. Just coming out of recession, Europe is already showing positive growth, while Japan sees a return to low growth or even recession.

PROJECTED GDP GROWTH RATES Percent Growth for 2014

Percent Growth for 2015

United States

2.2

3.4

Global

2.7

3.3

China

7.4

7.1

Europe

1.5

1.9

Japan

1.8

1.5

1.9%

7.4%

1.8% 7.1%

1.5%

GOOD AND BAD IN U.S. JOB MARKET

PREDICTIONS FOR 2015

The U.S. job market edged upward as well, with steady privatesector job growth and a headline unemployment rate that declined from its 10 percent peak in October of 2009 to 5.8 percent in October of 2014.

However, problems remain in the labor market, which may delay the Federal Reserve’s decision to raise interest rates. The labor force participation rate, a measure of the population that is working or seeking employment, is at its lowest point since the 1970s. Those who aren’t working or seeking employment include students, stay-at-home spouses and retired folks. Demographics and the large number of retiring baby boomers as well as the comparatively small number of “Generation X” who are in the midst of their working years are all factors. Another cause is the significant portion of those people of working age who have become discouraged, and simply stopped looking for work.

In addition, many jobs created since the end of the recession are part-time or relatively low paying. Average earnings have been slow to rise even as the labor market has tightened. We see significant stratification in the job market, as those at the top of the pay scale realize significant pay increases while those in the middle and below endure little earnings growth.

Labor. Analysts predict continued improvement in the U.S. labor market, although the decline in the unemployment rate is likely to taper. As job growth continues at a moderate pace, people are expected to return to the labor market which limits the unemployment downside.

Stock market. The stock market is another bright spot in the economy. The Dow Jones industrial average posted a respectable 6.9-percent return so far in 2014 and a phenomenal 14-percent average return over the past five years. Yet while investors prospered, returns have been slow to trickle down to Main Street, leaving many Americans feeling left out of the recovery.

The ability of U.S. stocks to continue their growth is a big question mark. The Fed’s tapering and unwinding of its bondbuying program, known as “QE3” or quantitative easing, may put upward pressure on long-term interest rates that could limit stock market gains.

Interest rates. All eyes are on the Federal Reserve. By the Fed’s prediction, rates are expected to rise in 2015. Although outlooks vary, many predict rates will increase from a half percent to a full percentage point by the end of 2015 and from 2 to as much as 3 percentage points higher than the current near-zero federal funds rate by 2016. One thing is certain, rates have only one direction to go; it’s just a matter of how much they will rise and when.

FARM CREDIT EAST CALENDAR Date

Event

Contact

Now through July 31, 2015

2016 Agricultural Views Calendar

To submit your best shots > FarmCreditEast.com/Calendar

Winter is the perfect time to submit your best fall, winter and holiday digital shots to the 2016 Agricultural Views calendar. (Of course, we hope you send in your summer and spring shots, too.)

We look for photos that show off the best of Northeast farming, horticulture, forestry and commercial fishing. And we also select photos that celebrate country life in New England, New York or New Jersey.

Only digital shots are accepted. Contest rules and an entry form as well as photos from the 2015 calendar are on our website.

January 20 to April 3, 2015

Farm Credit East College Scholarship Application Opens January 20 We award up to thirty-one $1,500 scholarships for students committed to a career in agriculture, commercial fishing or the forest products industry. We make our decisions based on your essay, experience, course of study and extracurricular activities.

To apply > FarmCreditEast.com/ Scholarship

Only applications submitted online will be accepted. Don’t delay. Apply today by submitting your complete application on our website.

January 15, 2015 11 a.m. to 12:30 p.m.

Dairy Outlook Webinar Dairy Outlook webinar will look ahead to 2015 dairy prices, economics, regulations and policies. This free webinar will feature: • • • •

To enroll > FarmCreditEast.com/ Webinars

Mark Stephenson, University of Wisconsin – Dairy economic outlook Andy Novakovic, Cornell - Dairy policy Karl Czymmek, Cornell - Environmental/CAFO and OSHA Bob Smith, Farm Credit East – Legislative update

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WASHINGTON Update Robert A. Smith Senior vice president for public affairs

What’s Ahead after the Midterm Shakeup in Congress Political tsunami, earthquake or just another political wave?

Regardless of how you see the 2014 midterm elections, they generated a lot of attention. With Republicans winning the Senate, we will see more cooperation between the House and the Senate, but whether the president and Congress will work together is a much more difficult question.

Time will tell.

Republicans picked up at least eight Senate seats with the possibility of one more with a runoff race in Louisiana.

Republicans also increased their majority in the House of Representative with a gain of approximately 13 seats.

We will see significant changes in both the House and Senate agriculture committees. Senator Pat Roberts (R) of Kansas, who won a closely watched race, will chair the Senate Agriculture Committee and Congressman Mike Conaway (R) from Texas will take over in the House.

CHANGES IN THE NORTHEAST The Northeast states had no changes in the United States Senate. While the race between Senator Jeanne Shaheen (D-NH) and Scott Brown (R) was close, Shaheen won this race as the incumbent. There were five Northeast house seats that changed from Democrat to Republican, including: MAINE’S 2ND CONGRESSIONAL DISTRICT Bruce Poliquin (R) won this open seat race. Congressman Michael Michaud (D) did not seek reelection to Congress so he could run for governor, but Michaud was defeated by incumbent Governor Paul LePage.

Poliquin is a businessman and Maine state treasurer. This district covers the northern three-quarters of Maine.

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FINANCIAL PARTNER

NEW HAMPSHIRE 1 Frank Guinta (R) defeated incumbent Congresswoman Carol Shea-Porter (D).

This is the fourth consecutive time that this district flipped from one political party to the other.

NEW YORK 1 Lee Zedlin (R) defeated incumbent Congressman Tim Bishop (D) in New York’s 1st congressional district, which covers a significant portion of Suffolk County (eastern Long Island). Zedlin previously served in the New York State Senate.

NEW YORK 21 Elise Stefanik (R) won this open-seat.

Congressman Bill Owens (D) decided not to seek reelection. Stefanik, at 30 years old, is the youngest woman elected to Congress.

Stefanik indicated that she is interested in serving on the House Agriculture Committee. This congressional district covers northern New York.

NEW YORK 24 John Katko (R), a former federal prosecutor, defeated incumbent Congressman Dan Maffei (D). This district includes the Syracuse area west to Wayne County.

Other new House members were elected in seats that did not switch parties, including: • Seth Moulton (D) in Massachusetts 6, which covers the northeast corner of the commonwealth • Tom MacArthur (R) won in New Jersey 3, which is the middle part of the state and includes significant cranberry production

programs often create opposition as the legislation is further developed. (No one likes to lose deductions).

Modest tax modifications — or at least longer extensions of current tax provisions — are possible.

• Environmental issues. As the administration moves regulatory actions ahead in order to expand the federal government’s regulatory reach (“Waters of the United States” is an example), Congress will attempt to kill those regulations by deleting funding. Farm Credit East joined Farm Bureau and other organizations to oppose an EPA regulatory expansion by redefining “Waters of the United States” under the Clean Water Act.

WHAT ABOUT THE ISSUES? That question is heard in discussions involving House and Senate Republicans. I wish I had a crystal ball.

• Republicans expressed strong opposition to executive actions taken by President Obama on immigration. While some Republican leaders want to take significant action on immigration issues before the 2016 presidential election, it will be a difficult task. Farm Credit East will continue to work with other farm organizations to establish a new ag guest worker program administered by USDA.

• Agriculture committees and the farm bill. With passage of a new farm bill in early 2014, we don’t expect major changes to farm policy. Agriculture committees will likely focus on farm bill oversight and reauthorization of the Women Infant and Children nutrition program.

• Tax reform. We will hear a lot about tax reform. There is room for negotiations, but changes in tax policies and

A LOOK AT THE INCOMING 214TH CONGRESSIONAL SESSION (2015-2016)

Republicans Democrats Undecided *

House

Senate

246 53

187 46

2 1

(218 of 435 is a majority) (51 of 100 is a majority)

*

A number of contested races still have recounts.

In Other News: FARMWORKER OVERTIME PAY The New York State governor and state

HELPING FARMERS ACCESS FARM LAND

legislature are considering legislation to

Farm Credit East and CoBank recently

farm seekers to acquire land and for retiring

establish mandatory overtime for farmwork-

contributed $10,000 to Land for Good

farmers around succession planning,” said

ers. Farm Credit East’s economic impact

in New England, with both organizations

Kathy Ruhf, Land For Good executive

analysis of this change found that with over-

jointly providing $5,000 each toward this

director. “We will also leverage these funds

time pay required after 40 work-hours per

program.

to hold a national conference on farmland

week and a 72-hour work week, labor costs

Through innovation, education, advocacy

would increase by $120 million and reduce net farm income by 10 percent. That means, more than 1,000 New York farms would go from a profit to a loss position.

and consulting, Land For Good helps farmers get on to, hold and transfer farmland in New England and beyond. Its mission is to

“At Land For Good, we will use the donation to support educational programming for

access, tenure and transfer in 2016. These issues are key challenges for farmers.

Practitioners and policymakers are eager to learn about program and policy responses.”

ensure the future of farming in New England

For more information on Land For Good’s

For a copy of the report, email

by helping farmers and future farmers gain

efforts and programs, visit LandForGood.org.

SpecialOffers@FarmCreditEast.com.

more access to farmland.

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19

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 Maine, New Hampshire, Massachusetts, Connecticut, Rhode Island, New York and New Jersey. Part of the national Farm Credit System, Farm Credit East is a fullservice lender dedicated to the growth and prosperity of agriculture.

Farm Credit East 240 South Road Enfield, CT 06082-4451 Address Service Requested

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, or Kristie Schmitt, Assistant Editor, Farm Credit East, 240 South Road, Enfield, CT 060824451. CALL: 860.741.4380.

E-MAIL: karen.murphy@farmcrediteast.com.

Copyright © 2014 by Farm Credit East, ACA. All rights reserved. Farm Credit East is an affirmative action, equal opportunity employer.

FINANCIAL PARTNER is printed on recycled paper.

The Team at Farm Credit East Wishes You Happiness and Prosperity Throughout the Coming Year.

We Look Forward to Working with You in 2015 and in Years to Come.

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