Financial Partner - Spring 2012

Spring 2012

FarmCreditEast.com

FINANCIALPARTNER Business Insights for Higher Yields

The Concordia brings

Economic Boon to a Seafaring Community

INSIDE: CEO Letter

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Cover Story

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Commercial Fishing Industry

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Benchmark Programs

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Back to the Farm after Military Service

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News to Share

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Washington Update

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2012 Director Candidates

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Community Support

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Let us know if you’d prefer to receive Financial Partner magazine electronically. Write to: SpecialOffers@FarmCreditEast.com. Please include your full name, business name and business location.

CEO’s Message

The Uniqueness of Our Customer Base is a Northeast Strength Bill Lipinski, CEO, Farm Credit East I never cease to be amazed by the one-of-a-kind businesses that Farm Credit East serves. This issue features two of them.

Fairhaven Shipyard and Kvilhaug, LLC represent the unique, innovative businesses that are part of our incredibly diverse portfolio. We have more variation in the industries that we serve than nearly any Farm Credit association, and we are proud of that diversity.

Northeast farm, commercial fishing and forest products operations are known for their ingenuity, hard work and longterm view of market opportunities, which are special attributes of our customer base.

Many financial institutions serve well-defined categories of customers. If prospects do not fit their cookie cutter, then the bank sends them down the street. Quite frankly, that strategy can be more cost-effective and easier for managing risk exposure.

However, that’s not the strategy at Farm Credit East.

We have many one-of-a-kind borrowers with innovative business models that are healthy for our industry, our local communities and Farm Credit East. We train our staff to know niche businesses and to evaluate their business models in order to make informed decisions.

As a young loan officer, I remember visiting the first farm winery on eastern Long Island, which, in those days, was “potato country.” This young entrepreneur was going against the grain with an idea that many thought would never amount to much.

Farm Credit financed the venture. Some 30 years later, many successful Long Island wineries followed in his tracks.

Your Board and I believe that Farm Credit East needs to be open-minded to new approaches and ready to figure out how we can assist innovative businesses. The capacity and expertise required to work with diverse customers is important to our value proposition. Our staff must understand the industries that we serve and their changing needs. We must be flexible when customers seek new market opportunities, management approaches or expanded operations.

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“The capacity and expertise required to work with diverse customers is important to our value proposition.”

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Our diverse portfolio is a cooperative strength

Dairy is our largest portfolio segment at nearly 25 percent. We see wide variation in successful dairy farms — some focus on production per cow, some on cost efficiencies, some on crop production and some on balancing farm and off-farm income.

Forest products — our second largest segment — has tremendous variation in markets served, size and innovation.

Six offices serve the commercial fishing industry. We are one of a small number of Farm Credit associations nationwide that serve commercial fishing. Commercial fishermen deal with many of the same challenges that farmers face. Like farm business owners, commercial fishermen find ways to be successful in light of changing markets and prices, governmental regulation and competition.

Responding to market signals is necessary for businesses, and, in many respects, why Northeast agriculture has so much diversity. Our customers respond to changes in the marketplace as their businesses evolve. This will likely be more and more important to the industries we serve.

In an increasingly complex world market, consumers demand product variation. They seek the products that they want and how they want them … now. Going forward, opportunities for many of our customers will mean doing business differently. We have seen this evolution for decades. The difference is that the pace of change is much faster.

As a Farm Credit cooperative, our mission is to serve all market segments effectively, which means we must understand all industries that we serve. We work hard to receive input from a variety of industries through our 19 customer service councils, and we appreciate their insights.

By being a knowledge-based organization, we can respond to a diverse and changing customer base in order to be the financial services partner that our customers need for tomorrow’s marketplace.

Cover Story

The Concordia Brings Economic Boon to a Seafaring Community

Why did the building and launch of a new scalloper make front page news across the seacoast towns of Fairhaven and New Bedford, Massachusetts? After all, these seafaring towns are the East Coast’s major ports for scallop fleets.

While the new scalloper — the Concordia — is more than impressive, it was the selection of the building site that captured headlines here.

Fairhaven Shipyard Companies, which sits on the historic working port of New Bedford Harbor, laid the keel for the first steel scalloper ever to be built in Fairhaven. The last boat built at the Fairhaven Shipyard was an 84-foot ground fish dragger in 2008.

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Cover Story Like others in the Massachusetts scalloping industry, Malvin Kvilhaug had three other boats built in the South, but that was more than 20 years ago.

It was time for the Kvilhaugs to build new. “If you’re in business, you have to keep your equipment modern,” Malvin said. “Today’s industry is strong and new boats are being built, so we built the new Concordia to remain competitive with others scallopers.”

For this boat, Malvin and his son, Brian, who skippers the new Concordia, decided to keep the project on their home docks as an advantage to the local economy and an opportunity to work side by side, day by day with the shipyard throughout the boat’s building and launch.

Malvin is proud that every aspect of the Concordia was supplied through local vendors, including the shipyard, architect, winches, hydraulics system, electronics and workers. His contract with the yard was for $2.5 million, before the cost of the boat’s electronics or fishing gear.

Construction began in August of 2010, and a striking, shiny-new red 95’ x 28’ Concordia was launched on December 2, 2011, to the enthusiastic cheers of onlookers, including shipyard workers, vendors, friends, family, community leaders and Farm Credit East branch manager Cynthia Stiglitz and loan officer Justin Mortensen.

All on the dock that day appreciated the significance of the landmark event. “The skies were bright and clear. The air was crisp. It was a perfect day to launch a boat that embodied the hard work and strength of the Massachusetts scalloping industry,” said Cynthia Stiglitz. “Without doubt, the launch represented a boon to the port’s fishing community.”

“It used to be less expensive to build in the South,” Malvin said. “Plus when we built other boats, we did not have local production facilities. But by working with the Fairhaven Shipyard, I could see every bolt that went into the boat. Plus I did not have to travel a long distance to stay close to the project or incur the expense of bringing a 440-ton vessel up from the South.”

According to Kevin McLaughlin, of the Fairhaven Shipyard Companies, Inc., “Both Malvin and the shipyard wanted to showcase our yard’s capabilities and demonstrate that this could be done up here. We have actively pursued opportunities to build new commercial fishing boats and scallopers, so we were pleased that the Kvilhaugs wanted to work with us. My hope is that the Concordia will be the first of many new boats that Fairhaven Shipyard will build and launch in Buzzards Bay.” Those involved recognize that the Concordia was a breakthrough for the port’s fishing community and the Fairhaven Shipyard.

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Born to a seafaring tradition Malvin Kvilhaug was born to a seafaring family that traces its sea legs back to the Vikings in the 1500s. At the age of 22, Malvin crossed the Atlantic from Karmoy, Norway, to begin a commercial fishing career on this side of the pond.

Starting as a deck hand in the ground fishing industry, Malvin later moved into scalloping, where he quickly worked his way up through the ranks to captain.

Malvin bought his first boat at just 30 years old, and today he owns several scallopers, including the original Concordia, the Contender and the Sandra Jane.

Like his dad, Brian must have Viking blood running through his veins. He began his seafaring career working summers with his father and made his first trip as a trainee at just 17 years old. While attending the Massachusetts Maritime Academy, Brian fished throughout the summer as a way to earn extra money. He captained his first boat by 1988, and, after 30 years in the industry, he still loves the independence that he finds on the sea.

The Kvilhaugs fish for scallops from Georges Bank on the Canadian border to North Carolina. The furthest east they fish is Georges Bank, which is about 18 hours from New Bedford.

According to Kevin McLaughlin, a Farm Credit East member and the president of the Fairhaven Shipyard Companies, “We have actively pursued opportunities to build new commercial fishing boats and scallopers, so we were pleased that the Kvilhaugs wanted to work with us. My hope is that the Concordia will be the first of many new boats that Fairhaven Shipyard will build and launch in Buzzards Bay.”

Cover Story

Boats in dry dock during the winter at Fairhaven Shipyard

A confident future meets regulations

Funding the venture

Malvin and Brian’s confidence in the scalloping industry is reflected in their decision to build the new Concordia.

However, the Kvilhaug’s confidence in the future of scalloping is dampened by their concern about government regulation. “The industry is strong. Prices have held steady between $10.50 and $12.50 per pound for scallop meat.

Plus the product is out there,” says Brian. “Now all we worry about is whether the government will let us fish.”

Malvin agreed. “We have restrictions on how much we can fish, where we can fish and how long we can be out to sea at a time,” he added. “We have 30 days that we can stay out as long as we want and catch as much as we want. We are allowed to take five trips in designated closed areas where we can catch up to 18,000 pounds of scallop meat. In an open area, our average catch is 35,000 pounds.

“It was a big step for us to build the Concordia,” Malvin said, “since strict government regulations make planning a challenge. But I have experienced the industry’s ups and downs ever since I owned my first scallop boat in 1968. We used to struggle with Mother Nature, and today we struggle with the government as well as Mother Nature.”

Loan officer Justin Mortensen added, “Government regulations are a challenge. But the scallop industry has successfully worked with the government on a sustainable industry. The resource is healthy and it is harvested at sustainable levels.”

Malvin chose Farm Credit East to help fund the Concordia.

“Other fishermen who finance their businesses with Farm Credit recommended that I speak with Cynthia Stiglitz. I found that Cynthia was easy to deal with. Plus she didn’t sound like a banker, which I took as a good sign,” he said with a chuckle in his voice.

“Farm Credit East’s rate is good. They financed the construction of the boat, too. When you build a boat, you pay down each step as the boat is finished. Brian and I appreciated that Cynthia and our loan officer Justin Mortensen watched the boat being built, they attended our keel party and our christening party when we put the Concordia in the water. It has been a comfortable relationship.”

Cynthia added, “It was our pleasure to work with Malvin and Fairhaven Shipyard’s Kevin McLaughlin throughout the project. They are both recognized authorities in their fields, Malvin on the scalloping industry and Kevin on all aspects of the shipyard. We are equally fortunate that Kevin is a member of our Middleboro branch customer service council. His firsthand insights continue to build our knowledge of the fishing community.”

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Cover Story

Justin Mortensen, Malvin’s loan officer; Malvin Kvilhaug, owner of the new Concordia; Cynthia Stiglitz, branch manager of the Middleboro, Mass., office; Kevin McLaughlin, president of Fairhaven Shipyard Companies, Inc.

Malvin and his wife, Berit, enjoy scallops for dinner a few times per month, but never at a restaurant. “I like my own product that I catch myself,” jokes Malvin.

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The Concordia name

About scalloping

At 440 tons and the height of a four-story building, the new boat carries the same name as the Kvilhaug’s original Concordia, simply because Malvin likes it. Taken from Roman mythology, Concordia is the goddess of harmony and peace. With that heritage, “Concordia” just may be a perfect name for a boat that contributed to its port’s scalloping community.

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Out to sea: A 15-day trip from dock to dock is common for scallopers, and some trips are longer.

Season: While scallopers can fish all year long, the best yields are from April to August.

Closed area: An area that is closed to scallop fishing to protect rebuilding groundfish stocks. Access is defined between certain dates with vessels subject to a limit on the number of trips allowed.

Commercial Fishing Industry

Commercial Fishing in the Northeast The abundance of coastal territory along the Northeast seaboard has made commercial fishing a valuable part of the local economy.

As of 2010, commercial fishing has more than $2 billion in output and generates just over 19,500 jobs, according to a recent study produced by Dr. Rigoberto Lopez, on behalf of Farm Credit East.1 Furthermore, the industry contributes $1.15 billion in value-added processing.

Our two most economically important fisheries in the Northeast are scallops and lobsters. New Bedford, Mass., is the leading fishing port for scallops on the East Coast and the most valuable fishing port in the nation, namely because of scallop production.

In 2010, the port of New Bedford experienced the highest landing values in 30 years and took top place for value of landings, bringing in $306 million, a 22.8 percent increase from the previous year. A total of 133.4 million pounds of seafood was brought into the New Bedford port that year, with sea scallops accounting for 22 percent of the volume and 77 percent of the value of landings.

Other fishing ports important to the Northeast commercial fishing industry include Cape May, N.J., Gloucester, Mass., and Point Judith, R.I. Second to Massachusetts, New Jersey contributes $185 million in output to the economy, with

Connecticut Massachusetts New Hampshire New Jersey New York Rhode Island

65.0 1,485.5 64.0 185.3 54.7 172.0

Value Added Employment $ Million Jobs

34.7 878.0 34.5 92.7 25.4 87.4

Lending to the Commercial Fishing Industry

“With the vast amounts of coastal territory within the Northeast, the commercial fishing industry is an important part of Farm Credit East’s loan portfolio as well as our commitment to Northeast agriculture,” Cynthia Stiglitz, Middleboro, Mass., branch manager, said. “For generations, we have helped commercial fishing operations plan for and finance the equipment, gear, permits and repair they need to have profitable businesses.”

Justin Mortensen, a loan officer from the Middleboro branch who works with commercial fishing customers, agreed. He said, “Those of us at Farm Credit East understand the fishing industry. It is that understanding that makes us the most competitive and best able to provide high-quality service to our customers.”

2010 Commercial Fishery Landings by Port Ranked by Dollars

Commercial Fishing in the Northeast2 Output $ Million

Rhode Island following closely behind.

“New Jersey has a progressive and diverse commercial fishing industry with more than 100 different species of fish and mollusks harvested from its waters,” said Scott Andersen, Bridgeton, N.J., branch manager. “It is estimated that for every dollar of landed value, six dollars are generated, bringing the wild harvest more than $1 billion in economic value.”

832 12,293 767 2,244 958 2,422

National Port Ranking

1 7 12 26 33 37

New Bedford, Mass.

Cape May–Wildwood, N.J. Gloucester, Mass.

Point Judith, R.I. Long Beach-Barnegat, N.J. Point Pleasant, N.J.

Millions of Pounds

Millons of Dollars

133.4 43.1 88.8 35.6 8.5 20.9

306.0 81.0 56.6 32.2 25.8 22.8

This study measured the output of Northeast agriculture and the value-added impact to the local economy generated by primary processing businesses. It does not account for the broader impact that may trickle down from the economic activity related to commercial fishing or its intangible benefits, such as quality of life and tourism.

2 In the Northeast states of Conn., Mass., N.H., N.J., N.Y. and R.I. 1

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What Gets Measured, Gets Done Read any management book and you’ll probably run across this common saying: “What gets measured, gets done.” We think it makes a lot of sense because the simple act of measuring your business performance will cause you to focus on it like never before. As a result, you’ll probably improve a number of areas.

That’s some of the reasoning behind Farm Credit East benchmarks programs, including our: • Dairy Benchmarks • Winery Benchmarks • Agricultural Retail Benchmarks • Green Industry Benchmarks By benchmarking your performance, you gain a tool that will help you evaluate your business’s ongoing performance, manage more efficiently and increase profits.

As a participant in one of our benchmarks, you’ll see how your business stacks up against your peers and your industry.

You will receive in-depth financial and operational analyses of your business, interact with other successful owners, take part in dialogue to understand your industry better and gain constructive feedback from an experienced Farm Credit East consultant.

The insights, examples and data you pick up will provide the guidance you need to take your business to the next level.

What participants say Participants give each of our programs high grades for many of the same reasons, no matter their industry. Let’s see what three owners who participate in their industry’s benchmarks say about that program.

“The Winery Benchmarks program helps us spot our strengths and weaknesses. Over time, we’ve been able to reduce costs in areas where we were less efficient and emphasize the areas where we’re succeeding. This makes us more competitive in a tight economy.”

- Art Hunt, Hunt Country Vineyards, Branchport, N.Y.

“The Agricultural Benchmarks program gave me an up-close look at diverse retail operations and insightful, sound advice from Farm Credit East consultants. At Rolling Green Nursery, we do everything we can to make improvements that don’t cost a lot, but improve our traffic flow and customer count. The Benchmarks offered us those types of ideas.”

- Beth Simpson, Rolling Green Nursery, Greenland, N.H.

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“We look at numbers every day, but we don’t always see the big picture. The Winery Benchmarks spark new ideas, point out areas to improve, tell us where we stand and give us a broader perspective of what’s going on in our industry.

“Having a system to determine the cost of production gives us a better scope of our business results. We now calculate our total cost, including electricity and interest, to make each bottle of wine. That showed us that we needed to raise our prices on a few products, because we were not making what we needed to make on them.”

-Bill Martin, Montezuma Winery, Seneca Falls, N.Y For more information, contact • Dairy Benchmarks: Bill Zweigbaum, 800.234.0269, Bill.Zweigbaum@FarmCreditEast.com • Winery Benchmarks: Gregg McConnell, 800. 929.7102, Gregg.McConnell@FarmCreditEast.com • Agricultural Retail Benchmarks: Erin Pirro, 800.562.2235, Erin.Pirro@FarmCreditEast.com • Green Industry Benchmarks: Steve Makarevich, 800.787.3276, Stephen.Makarevich@FarmCreditEast.com

From Eagle Scout to Soldier to Grower About FarmStart

The road to owning his own wholesale greenhouse operation took Jamie Critelli around the world in the military and back to Elmira, N.Y. Jamie’s first inkling to join the military came as a young guy in the Boy Scouts when he noticed how a leader’s vision could inspire others. The cost of a Cornell education sealed the deal. Jamie joined the Army Reserve ROTC, which paid 80 percent of his college tuition and costs and allowed him to earn his degree in horticulture with just a $20,000 bill to pay after graduation.

The ROTC also developed his leadership skills. After serving his country, Jamie completed his eight-year initial service obligation as a captain in the Army Reserve. He spent three years of his service time in Korea, Germany and Kosovo and one more in Iraq.

“My specialty was aviation logistics, such as refueling and rearming helicopters and resupplying repair parts,” Jamie says.

“During my last six months of service, I picked up a resupply mission to the front lines of Iraq, which was a harrowing experience.”

Running repair parts from an airbase north of Bagdad to the front lines meant facing combat every week. “That’s just the way it was,” Jamie recalls.

As a leader, Jamie was troubled that the difficult and dangerous work that his troop provided to the front lines was not appreciated by those combat soldiers.

To win their hearts and minds — and their protection — Jamie’s unit held an ice cream social. It was a huge undertaking, requiring ice cream, sprinkles and whipped cream flown in from Financial Partner

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FarmStart assists beginning farmers and new cooperatives through their start-up years by providing working capital investments of up to $50,000 to get their businesses off the ground.

To learn more, talk to your local Farm Credit representative or log onto FarmCreditEast.com.

Germany for 1,200 soldiers. “But it was worth it,” Jamie said.

“Those guys became our friends, and we gained a helicopter escort to protect us along the route.

“When I look back, I realize that my time in Iraq was rewarding. I brought my people home alive. I appreciated the opportunity to lead soldiers and to learn firsthand what leadership is all about.”

Jamie came home to agriculture because, he said, “I wanted a physical job where I could use my brain, accomplish something every day and contribute to the greater good.”

A FarmStart customer As a Farm Credit East FarmStart customer, Jamie said, “I am tickled pink that Farm Credit invested in my business. Because I did not have a track record of running my own business, other lenders would not help. But Blane Allen and Ryan Hrobuchak, from the Middletown, N.Y., office suggested that I apply for a FarmStart investment.”

Jamie opened Floral Beauty Greenhouses in 2010. He is leasing the greenhouses and land from the prior owner. Just over a year later, his greenhouses are full for the spring with 85 percent of his hanging baskets and bedding plants preordered.

“I am pleased to have turned the corner with a positive cash flow. My FarmStart adviser Ryan Hrobuchak is also pleased that my financial results exceeded our expectations within a year of opening. With the help of FarmStart, I am building my credit record, learning effective cash flow management and growing my business.”

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NEWS to Share

Borrowers Paid $35.5 Million in Patronage Farm Credit East paid a record $35.5 million in patronage dividends to more than 9,900 of our customers, including farm, fishing and forestry business owners and operators. Paid entirely in cash, the patronage payment is equivalent to 23.1 percent of the interest that members paid in 2011.

CEO Bill Lipinski said, “Paying patronage dividends, while also building capital levels to allow us to serve future generations of farm businesses, is a key aspect of our cooperative’s value proposition. By focusing on strong earnings, sound lending practices and capital levels, we continue to grow as the leading financial partner to northeastern agriculture and to do our part to maintain investor confidence.”

Since the patronage program was first adopted, customers of Farm Credit East (including predecessor associations) have earned more than $376 million in dividends from ownership in their cooperative. The $35.5 million declared from 2011 earnings is our sixteenth consecutive patronage distribution.

12.31.2011

$35.5 million

12.31.2010

$35.0 million

Building Your Retail Business with Facebook

Photo Calendar Contest

Social media has revolutionized how we do business. To keep your agricultural retail business current, you should be familiar with the latest social media marketing techniques, like Facebook. This webinar is a nuts-and-bolts discussion of how to use Facebook to promote your business.

Spring is here! It’s time to dust off your digital cameras and get out to take some of your best shots around the farm, forest, greenhouse, dock or shipyard.

We hope you will continue to amaze us with your ability to capture a pictureperfect moment, just like Joanne Van Wingerden did in the photo of her daughter that’s on the cover of the 2012 Farm Credit East calendar.

Also from the calendar, we remember how Moreen Weaver found the perfect light to shoot side-by-side combines in a wheat field … and how Dennis Dering captured Caicos, the wonder dog, flying over a frozen cornfield … and how 13-year-old Taylor Deckenbach snuck up on her dad working in the greenhouse.

Winning photos will be featured in our 2013 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. And, second, we are equally interested in photos that celebrate country life in New England, New York or New Jersey.

By the way, we wonder where the commercial fishing and timber industry shutterbugs are hiding. By uploading your best shots to our website, you will help us celebrate your unique industries.

Only digital shots are accepted. You will find contest rules and an entry form, as well as photos from last year’s calendar, at FarmCreditEast.com/ news-and-events.

Webinar: April 11

Date: Wednesday, April 11 Time: 12:00 noon to 1:30 p.m.

For: Garden center, greenhouse and farm stand businesses Topics: What is Facebook and why use it to promote your business; how to get started; how to build your Facebook page and post to it; how to use Facebook to promote events; how to keep up with others in your industry or find business contacts; and more Speakers: • Chris Heiler, consultant for the green industry and owner of Landscape Leadership.com • Erin Pirro, farm business consultant and director of Agricultural Retail Benchmark Registration: Free!

Since 1995

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$376 million

Register at: FarmCreditEast.com/ webinars

Have you uploaded your best shots to our website yet?

Update

WASHINGTON

By Tom Cosgrove with input from Chris Laughton and Bob Smith

Thoughts on Federal and State Agricultural Programs The role of federal versus state government in agriculture is a likely topic in the upcoming presidential election.

Federal policy usually dominates agricultural policy discussions because of the impact of commodity programs on farm prices and income. These programs are under a collection of laws known as the Farm Bill, due to be reauthorized in 2012.

The Farm Bill also funds many conservation programs as well as federal crop insurance. In addition, it contains nutrition assistance programs, which make up about 70 percent of its funding.

In agriculture, states are generally limited to regulatory functions like inspection and grading, overseeing plant and animal health, food safety and certain types of environmental compliance as well as assessment of property taxes at agricultural values. Most states have developed, with varying success, agricultural promotion programs and farm market development initiatives.

Across our six Northeast states, the scope of state agriculture departments varies widely. For example, the New York Department of Agriculture and Markets has a staff of nearly 500 and a $159 million budget while Rhode Island’s agriculture program has 15 employees within the Department of Environmental Management.

Selected Northeast State Departments of Agriculture (FY 2012) State

New York New Jersey Massachusetts Connecticut New Hampshire Rhode Island

Budget

$ 159,275,000 $ 19,776,000 $ 16,000,000 $ 4,600,000 $ 4,342,000 $ 1,500,000

Staff

494 215 77 48 41 15

While state governments have typically not been involved in income and price support, notable exceptions include the response from Connecticut and Massachusetts to the low milk prices of 2008 and 2009 with direct payments and tax credits to dairy farmers in those states.

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When milk prices fall below a sustainable cost of production, Connecticut has provided payments to dairy farmers and Massachusetts has provided income-tax credits.

This year New York assisted farms affected by Hurricane Irene and Tropical Storm Lee, a function usually handled solely by the federal government.

Farmland protection is one area with both federal and state programs, with most Northeast states providing significant funding for purchase of development rights. The specialty crops block grant program contained in the 2008 Farm Bill is somewhat different. These funds support projects to enhance the competitiveness of specialty crops and are administered through the states. State agricultural programs include indirect support, such as Land Grant University facilities, faculty and applied research.

Historically state programs have simply played a different role, but in an era of shrinking federal and state budgets, it becomes increasingly important to weigh in on spending priorities so farmers get the most benefit from the tax dollars spent for their industry.

Final thought An interesting development in New York involves placing an “agricultural expert” in the state economic development agency. Having an individual make state economic development programs work for agricultural projects is something all states should consider. And regulatory relief is another area that should receive more attention. That is, evaluating state and local programs, policies and fees that create burdens and roadblocks to agricultural expansion and development.

With tight budgets and cuts to existing agricultural programs, it may be a good time for states to focus on reducing regulatory burdens as a way to enhance agricultural profitability and expansion.

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2012 Candidates for the Board of Directors On behalf of the nominating committee, Farm Credit East is pleased to announce the 2012 slate of candidates for the association’s Board of Directors. Six qualified candidates are seeking election to three open seats on the Board.

The Board The Farm Credit East Board sets a clear direction for the cooperative on behalf of all customer-owners. The Board works closely with CEO Bill Lipinski to set policy, establish long-term business plans, evaluate business results and provide feedback to the management team. It does not make day-to-day management decisions, including individual loans, personnel or finance.

The Nominating Committee The nominating committee is composed of one Farm Credit East member and an alternate member from each branch office. The association membership elects the nominating committee at the annual stockholders meeting. This committee works hard to identify qualified candidates to ensure that the association attracts a skilled and diverse Board.

In addition, the committee makes every effort to nominate at least two candidates for each open seat.

Election process The information you need to make an informed voting choice for the 2012 Farm Credit East Board of Directors, includes: • This article’s profile of the candidates • An annual meeting information statement, which voting members received in the mail • Information on our website at FarmCreditEast.com Ballots will be mailed to voting members after the annual meeting in March.

Members can vote for the three candidates of their choice: one from the western region; one from the central region and one from the eastern region.

Every Vote Counts!

By voting, you convey your continued commitment to Farm Credit East and thanks to fellow members who are seeking election to the Board.

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3Central Region: Select 1 candidate (4-year term) Burrville, Claverack, Greenwich, Middletown, 3Western Region:Cobleskill, Vote for 1 candidate for aPotsdam 4-year term and Sangerfield Batavia, Cortland,offices Geneva, Hornell and Mayville office areas

Candidate: Christine E. Fesko

Candidate: Peter J. Russell

Business name: Fesko Dairy, LLC, Farms, Inc. and Chris Fesko Enterprises, LLC

Business name: Russell Farms Inc.

Location: Skaneateles, N.Y. Description: Fesko Farms, Inc. is a 2,000-acre, 600-cow dairy farm. Chris Fesko Enterprises produces children’s educational DVDs about agriculture. On the Farm Discovery Center is an educational facility for urban children to experience learning in a farm setting.

Website: www.Fesko.com Personnel: Chris owns Fesko Farms, Inc. with her daughter, Kim Fesko Brayman, and father-in-law, George Fesko. Chris is involved in planning and goal-setting, but not in day-to-day operations.

Farm Credit member since: 1974 Leadership positions: Incumbent director of Farm Credit East and a member of its audit committee; town councilwoman for Spafford Town Board; former director of New York State Ag in the Classroom Why I am seeking election to the Board: Being a director over the past nine years has been a growth experience for me on the professional level. The training that Farm Credit East has invested in me has been a huge help as a current member of the audit committee as well as a past member of the governance and farm initiatives committees. I have an excellent attendance record at meetings and bring a unique viewpoint to the Board. I want to be reelected to the Board, because I enjoy my work on it.

Why vote for me: I love being on the Board. I bring experience of communication to nonfarm people via my Discovery Center and the award-winning video series that I developed. I also bring diversity to the Board and my nine years of training that has qualified me as a certified director.

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Location: Appleton, N.Y. Description: A fifth-generation diversified farm business, Russell Farms grows 300 acres of apples, 150 acres of cabbage, 50 acres of tomatoes, 15 acres of processing peaches and 5 acres of sweet corn. Pete also owns and operates a 500,000-bushel controlled-atmosphere storage facility for his as well as other growers’ fresh market apple crops.

Personnel: Pete owns and operates Russell Farms with his brothers, William and Paul.

Farm Credit member since: 1980 Leadership positions: Incumbent director of Farm Credit East and a member of its governance committee; president of New York State Agricultural Affiliates; member of the Niagara County Ag Program Committee; Town of Newfane Planning Board Why I am seeking election to the Board: The Farm Credit System has provided reliable credit for Russell Farms and most of our farming neighbors for years. It is an organization that I believe in, and I want to do my part to help ensure it is here for our future generations.

Why vote for me: I believe that diversity is important on any Board. My background in the fruit and vegetable industry along with our commercial controlled-atmosphere storage business helps me bring operational diversity to the Board. I am also very active in various farm-related associations throughout the state and I do my best to stay up-to-date on agricultural-related issues.

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3Central Region: Vote for 1 candidate for a 4-year term

Burrville, Claverack, Cobleskill, Greenwich, Middletown, Potsdam and Sangerfield offices

Candidate: Russell J. Kelly, Jr.

Candidate: Douglas W. Shelmidine

Business name: Glenvue Farms, LLC

Business name: Sheland Farms

Location: Glen, N.Y.

Location: Adams, N.Y

Description: Glenvue Farms is a 420-cow dairy farm with 800 acres of crops.

Description: Sheland Farms is a multi-generational family dairy farm with 1,500 acres and 700 cows.

Personnel: Russ manages the operation, which he co-owns with his wife, Judy. Their sons, Justin and Ryan, have key management responsibilities in the livestock and crop operations.

Personnel: Doug runs the operation in partnership with his brother, Todd, and father, Donald. Doug is the farm’s financial manager; Todd is the herd manager; and Doug’s son, Devon, is assuming management of the crop operations.

Farm Credit member since: 1976 Leadership positions: New York State Commissioner of Agriculture’s Advisory Committee; Fulton & Montgomery County Cooperative Extension boards; Montgomery County Farm Bureau Board; past Board member of a predecessor association; past member of the Cobleskill Branch Customer Service Council and Farm Credit East Nominating Committee; past director of the Agri-Mark, Inc. Board Why I am seeking election to the Board: The continued success of Farm Credit East will require a diverse and open-minded Board, and I feel that I can provide those qualities. The Farm Credit System has been a valuable asset to our family for generations. I want to see that it is able to continue to evolve.

Why vote for me: I bring a strong background of the entire region and diversity of agriculture in the Northeast as well as cooperative Board experience. I’m optimistic about the future of Northeast agriculture. It has the resources, markets and innovative participants to ensure future growth and success. Farm Credit East’s role will be to encourage, challenge and facilitate this growth.

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Farm Credit member since: 1989 Leadership positions: Burrville Branch Customer Service Council; USDA-NRCS Agricultural Air Quality Task Force; chair of the Jefferson County Agriculture and Farmland Protection Board; past New York State Farm Bureau Board of Directors; past chair of the New York Farm Bureau Dairy Committee Why I am seeking election to the Board: Farm Credit East is an essential part of the future of agriculture in the Northeast, providing stability and opportunity through its lending and services. I feel I have the skills, knowledge, experience, time and commitment to be a director. I believe I can be a contributing director not only for the association but also for its members.

Why vote for me: I believe in Farm Credit East and I believe I can represent the diverse membership since I come from a family business that is similar to the businesses of many Farm Credit members. I have had many opportunities to become familiar with various types of farm operations and have been in numerous leadership roles. I have support at home to help with the business and I have the time and drive to be an active Board member.

3Eastern Nominating Region: Vote for 1 candidate for a 4-year term Bedford, Bridgeton, Dayville, Enfield, Flemington, Middleboro and Riverhead offices

Candidate: Matthew W. Beaton

Candidate: Jeffrey J. Mayer

Business name: Sure-Cran Services, Inc. and Beaton’s, Inc.

Business name: Mayflo, Inc., dba Mayer’s Flower Cottage and Greenhouses

Location: Wareham, Mass.

Description: Sure-Cran Services is a custom-management company, managing more than 550 acres of owned and leased cranberry bogs in southeastern Massachusetts. The company also provides custom harvesting, pesticide application, integrated pest management and other services to cranberry growers. Beaton’s, Inc. owns 150 acres of cranberry bogs.

Personnel: Matt is president and owner of Sure-Cran Services, Inc. In addition, he is president and 50 percent co-owner of Beaton’s, Inc. Farm Credit member since: 1992 Leadership positions: Incumbent director of Farm Credit East and member of its executive, compensation and governance committees; national Farm Credit director training initiative; chair of the Environmental Committee of the Cape Cod Cranberry Growers Association; past director of a predecessor Farm Credit association; past member of the Middleboro Customer Service Council; past member of the nominating committee Why I am seeking election to the Board: Successful agribusinesses need a reliable and stable source of credit and financial services to get through the cycles of agriculture.

For the past six years, I have served on the Board of Directors of Farm Credit East. I would like to ensure that our members continue to have access to the credit and services required to operate a successful business.

Why vote for me: I am committed to the success of northeastern agriculture. I believe that begins with a sound, stable and transparent lending institution. For the past six years, I have gained the knowledge and experience required to help lead Farm Credit East into the future.

Financial Partner

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Spring 2012

Location: Patchogue, N.Y. Description: A specialty cut-flower production range that spans four acres of greenhouses and open fields. The family supplies local wholesale and retail floral operations and runs a full-service retail flower shop called Mayer’s Flower Cottage.

Website: www.MayersFlowerCottage.com Personnel: I am the owner and operator of Mayflo, Inc., in partnership with my wife, Lynda Mayer. My dad, Richard Mayer, is a trusted adviser and holiday helper.

Farm Credit member since: 1980 Leadership positions: Director and treasurer of Brookhaven Memorial Hospital Medical Center and chair of its Performance Improvement Committee; Riverhead Branch Customer Service Council; and past chair of the nominating committee Why I am seeking election to the Board: As a third-generation flower grower, I have learned that I must stay current and adapt to change while not losing my core values. Chairing the performance improvement committee of my local 300-bed, 2,500+-employee community hospital gives me the experience to interpret data and analyze the challenges of a large corporation. My experience gives me the tools to face the challenges of Farm Credit East and enables me to lead our organzation to the next level.

Why vote for me: I have experience! As a national director of the FTD Association, I was responsible for a region that encompassed Maine to Virginia. My current position as a trustee of Brookhaven Memorial Hospital Medical Center has taught me the role of a governing director and how to work with administration to manage a multifaceted organization.

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FINANCIAL PARTNER is for the customers, employees and friends of Farm Credit East. Farm Credit is a farmerowned 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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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, Farm Credit East, 240 South Road, Enfield, CT 06082-4451. CALL: 860.741.4380.

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

Copyright © 2012 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.

Community

Support AgEnhancement Grants support youth programs The Northeast Farm Credit associations and CoBank recently awarded $30,500 to 12 organizations as part of the Farm Credit Northeast AgEnhancement Program. Here’s a look at the creative work that two of those organizations will accomplish with help from these grants.

• The New Jersey Agricultural Society will apply its $3,000 grant toward its popular Learning through Gardening program. “The program helps students and their teachers establish a school garden where children grow their own fruits and vegetables and teachers incorporate the garden into their curriculum,” Bill Griffin, New Jersey Agricultural Society president, said. “With approximately 8,000 children and their teachers, principals and parents participating in the program, we estimate that it helps nearly 24,000 people gain a better understanding of agriculture.”

• The New York Farm Bureau will use its $5,000 grant to give young farmers a chance to attend workshops and hear motivational speakers during its annual leadership conference.

According to conference chair Andrea Schultz, “Our goal is to empower young farmers to take action and speak out for agriculture. Our workshops educate them on the legislative process and on sharing production agriculture’s positive story with legislators and consumers.”

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

AgEnhancement Grants Since 1996 Total grant dollars: Total projects supported: New Jersey students have fun learning about agriculture by growing fruits and vegetables in their own school garden.

$1.27 million 480