Partners - Summer 2017 by GreenStone Farm Credit Services

+S ummer

Market Outlook

+ New Zealand Agriculture

+ Customer

Bill of Rights

FARMING

+HARD BLAKES pg. 5

SUMMER 17 5 YBSF Feature. After graduating from Michigan State University in 2011, and spending a year in Chicago, Andrew Blake returned to the family business with ambition and a plan. Five years later, Blake’s Hard Cider has a substantial foothold in the marketplace.

25 GreenStone Story. In addition to exceptional service, there are specific rights pledged to you, as a GreenStone borrower.

31 Country Living Feature. A herd of thirty sheep may not be enough to fully support a family, but it delivers immense satisfaction to beginning farmer, Jason Scramlin.

36 C rop Insurance. Most producers have been there before. No matter what you do during the growing season, sometimes Mother Nature just will not cooperate. 41 Tax Feature. Let’s review a few of President Trump’s tax reform proposals, which is just one of several competing proposals.

3 CEO Comments. President and CEO, Dave Armstrong, acknowledges current challenges and provides perspective on how Greenstone is working to help. 9 Guest Column. Building an effective board takes an investment; learn how the benefits balance this investment.

35 Health and Wellness. Summer is the perfect time to take that long-awaited family vacation to get away from it all! With this, it is also easy to give up on healthy eating. Here are some tips to help you stay on track while away. 39 Dairy Industry Outlook. The dairy industry is facing a challenging time, a cyclical downturn that has lasted longer than in previous cycles, and that is expected to continue for at least the near-term.

13 N ew Zealand Learning. GreenStone staff and local farmers let the New Zealand environment come to them over the course of 11 days of learning. 15 Market Outlook. This year’s grain markets could possibly be a part of a very select group of marketing years. 23 Meeting the President Hank Choate, GreenStone director and Michigan dairy farmer, recently met with President Trump, discussing issues important to Michigan agriculture. 27 PAC Progress. GreenStone has been active in the lively government arena communicating the challenges and opportunities of agriculture and rural America. 28 Legislative Matters. In contemplating the 2018 Farm Bill, some dramatic musical tune in the background might be appropriate. 29 Directors’ Perspective. As part of their election to the board of directors, GreenStone’s board members also serve on a focused committee. Here is quick look into the Legislative and Public Policy Committee.

Publisher’s Note: Question: Do peers motivate peers? Answer: In my opinion, sure they do! Two of the most common ways I have seen it happen are through competition and inspiration. While a little friendly and fun competition is certainly something I enjoy, today’s comments are tied to the latter version of motivation: inspiration. GreenStone’s sales teams come together annually to learn new systems, discuss changes, brainstorm improved solutions, and as it turns out, motivate and inspire each other. This year, as the meeting was hitting the wrap-up session, I considered heading back to the office early to tackle a stack of work. In the end, I opted to finish out the meeting with everyone, and I’m so glad I did!

11 Blog Brief

For the wrap-up, meeting organizers had identified several staff to participate in what they titled a “sales panel.” What I quickly realized was that the panel wasn’t about sales at all – it was about relationships; about getting involved and doing the right thing. As I hope you have also experienced, at GreenStone, sales isn’t about the policies or processes, it is simply about being good people.

12 Tips for Tough Times

I recall comments like…

18 Member News

“ I strive to be a teacher. I consider it a success if I can have my customer learn something new, or a different perspective from me.” – Cory.

20 Behind the Scenes 21 GreenStone Interns 22 Calendar of Events 22 Pause for Applause 24 Candid Comments

33 Avoiding Bugs 33 Blog Brief 34 Commodity Cuisine... Easy Skillet Montmorency Tart Cherry Crisp 37 Crop Insurance Calendar 38 Crop Insurance News 40 Tech Tip 42 Tax Calendar

“ I try to be the person that I would want sitting across the desk from me…I put myself in their shoes and be the person I’d want me to be.” – Sam “ I truly care about the success of my customer…every time I put a deal together, it’s always based on what’s best for them.” – Jim “ Visibility and accountability…I try to always be readily available to our customer.” – Tyson So do my peers motivate me; did I walk away with an eagerness to do better; am I inspired to provide even more value to our customers – you bet! And I hope this issue of Partners gives you a bit of motivation as well. Happy Reading! — Melissa Rogers, Publisher

This newsletter is published quarterly for the customers of GreenStone Farm Credit Services. Editorial Mackenzie Jandernoa Melissa Rogers

Art & Design William Eva Jackie Sanch

Partners GreenStone Farm Credit Services 3515 West Road East Lansing, MI 48823 800-444-3276 marketing@greenstonefcs.com

CEO Comments:

Welcome to Summer THE 2017 PLANTING SEASON HAS COME AND GONE WITH GOOD STANDS FOR MOST CROPS. THE COLDER, WET SPRING DELAYED PLANTING IN MANY AREAS, BUT CORN AND SOYBEANS ENDED UP BEING PLANTED IN A WINDOW THAT WAS VERY CLOSE TO THE FIVE YEAR AVERAGE. NOW WE NEED JUST ENOUGH RAINFALL TO KEEP CROP CONDITIONS FAVORABLE FOR WHAT WE HOPE WILL BE A THIRD YEAR IN A ROW OF RECORD TO NEAR RECORD YIELDS. Michigan and northeast Wisconsin’s agricultural economy continues to struggle at the bottom of the current cycle as a result of most commodity prices hovering at or below many operations break even cost of production. This is reflected in GreenStone’s loan portfolio as the percentage of adversely classified loans (loans to farm operations that exhibit deteriorating financial trends that, left uncorrected, could result in the discontinuation of the business) continues to rise at a gradual pace. This was 1.65 percent at the end of May 2016 and is now 3.02 percent as of the end of May 2017. Even though the level of adversely classified volume has nearly doubled, it remains very manageable. In fact, GreenStone’s long term business plan objective is to manage this ratio at 5.0 percent. In the 1980s the ratio was as high as 35 percent and in more recent times, reached 7.73 percent in October 2009. As I have commented before, there is certainly more financial stress in rural America today than we have experienced for a number of years, but many farm operations were in relatively good financial condition coming off the recent 2013 peak in net farm income, which has sustained the vast number of them. Even though earnings are not what many would like, our member base continues to “weather the storm” hoping for calmer seas ahead.

Summer 2017 — Partners

This issue of Partners is once again packed with information I hope you find valuable, including an article on our Customer Bill of Rights. While we always strive to guarantee each and every member/customer will receive personalized service; an immediate response to all requests; honest, fair, and impartial treatment; confidentiality of all their personal information; and accurate information and advice; it is even more important in times of financial stress. Your GreenStone team understands the pressure people can experience when their farm business is struggling, and we recommit ourselves to not only these principles, but to also be at a heightened level of sensitivity to the needs of all of our members during times like these. I hope you find the information in this article particularly informative because it reinforces our commitment to treat you, our members, with the highest level of individual and professional service. Even though we cannot control global markets, the weather, government regulation, etc., we can control the way we interact with you when times are tough. That, I believe, is what truly separates GreenStone from its competitors, and why you collectively rate us with annual satisfaction scores above 90 percent. You will also see in this issue that GreenStone staff and directors continue to be very active amplifying the voice of agriculture at both the state and federal levels. With the 2018 Farm Bill debate in full gear, and the ever present bitter partisanship in Washington, D.C., it is even more important that all farm organizations work together in supporting balanced legislation that is not only good for our industry, but is responsible to taxpayers as well. GreenStone especially supports programs that help farmers and lenders manage risk like crop insurance and funding for Farm Service Agency (FSA) loan guarantees. Crop insurance programs certainly have more than their share of critics, but from our experience, they provide protection from weather and/or market price declines based on the farmer’s chosen level of coverage for his or her individual needs. Unlike some farm programs, the farmer pays at least a portion of the (albeit “subsidized”) service provided.

Loan guarantee programs are also critical during periods of financial stress, by limiting the risk of loss for lenders. FSA can provide guarantees of up to 90 percent and only pays the lender if a borrower’s operation is liquidated, the lender’s collateral has been sold, and there remains insufficient dollars to pay off the balance due. In these cases, the guarantee pays the lender 90 percent of this remaining balance. In fact, from1974 through March 2017, GreenStone and its predecessor associations guaranteed $1.3 billion through FSA with loss claims of only $18 million for just 1.34 percent. After the guarantee fee of 1.0 to 1.5 percent (paid for by the borrower) of the loan guarantee amount is subtracted from the losses paid by FSA, the percentage of loss is just 0.26 percent! And, remember, this period included the 1980s. As you can imagine, since October 2009 through March 2017, the experience has been even better, with a loss ratio of just 0.14 percent. These are very low losses the government incurred to provide a critical “backstop,” which allowed GreenStone to continue financing countless family farms that it may not have been otherwise able to do. These are just two examples of farm programs critical to our industry that need to be retained, and likely bolstered, in the next Farm Bill due to “storm clouds” that continue to obscure our industry’s horizon. Our non-farm friends and neighbors have limited knowledge of the intricacies of the industry, and thus may believe the federal government provides excessive subsidies to farmers. Examples like this help

to explain the dependable, healthy, AND low cost food supply they enjoy for only pennies of support from their federal tax dollar. It is these, and a host of other issues, which require all agricultural organizations to band together to educate both the public AND our elected officials, or risk being marginalized when it comes to protecting the industry that literally feeds us and the world! You can count on GreenStone to continue to speak up on your behalf. Best wishes for a safe and productive growing season! As always, thank you for your business and please feel free to contact me directly if I can ever be of assistance.

Dave Armstrong

517-318-4105 dave.armstrong@greenstonefcs.com

Partners — Summer 2017

Farming

HARD THE OLDEST OF FOUR, ANDREW BLAKE GREW UP MAKING DOUGHNUTS AND SERVICING CUSTOMERS IN ANY ONE OF HIS FAMILYâ&#x20AC;&#x2122;S THREE FARM MARKET RETAIL STORES IN MACOMB COUNTY. BY THE AGE OF 12, HE HAD GRADUATED TO FARM CHORES WITH MORE RESPONSIBILITY, LIKE MOWING THE ORCHARDS, BRUSH MOWING AND PRUNING DURING THE WINTER.

By Jennifer Kiel

GROW

Fall of 2007 brought Andrew Blake to Michigan State University (MSU) with a desire to study business, but he would find himself coming home on occasion to work for “beer money.” Andrew would often grab a few jugs of cider to take back to college with him. “I got to messing around with my roommates and experimenting making hard cider in the garage,” he says, while admitting that the first few batches were quite terrible. “We would sample it out at parties, and people started to enjoy it as the recipes progressed and improved.” Andrew graduated from MSU in 2011 with a Bachelor’s degree in economics and pre-law and went on to work in Chicago for a real estate and development company. The farm had a certain allure to it though that the city could not fill. “I loved the city, but I wanted to come back and be a part of this and see what kind of opportunities there were here,” he says. After a year in Chicago, Andrew returned to Blake Farms with new ambitions. “I wanted to come back at some point, but I thought it would be later in life and not a year after college,” he says. Andrew took a few months to re-acclimate with the workings of the farm, which is centered on agri-entertainment, while also experimenting with hard cider. “I didn’t tell anyone; I didn’t pitch the idea right away.” When he did approach the partners in the business, his dad, Paul, and his Uncle Pete, they embraced the idea. “That was the fall of 2012, and by 2013 we had the Tasting Room open,” Andrew says. There are four partners in total as cousin, Eric Blake, operations manager of Blake Farms, is also involved. “There’s a lot of buzz and interest in hard cider right now,” says Andrew, who as the general manager oversees the Tasting Room, production, sales, and marketing. “It made a lot of sense… we have the playground to experiment with. We grow over 50 varieties of apples and produce some of the best sweet cider in the state,” he says. “Seems like it would be foolish to not add value to that process.” The hard cider company has allowed Andrew to carve out his own space in the business. “I didn’t want to come back and not have something to call my own, and I didn’t want to have something just handed to me.” The process of making hard cider is not overly complex Andrew explains, especially when you’re working with quality base ingredients. “Our apples are diverse in character ranging from tart to sweet, including 10 acres of heritage varieties—old world apples. In the cider making realm, they are regarded for their tannin properties, which produce an appealing mouth feel. In addition, we make superior products compared to some of the big guys; there is no water or sugar added, and people can taste the difference.”

The company’s head cider maker is a former wine maker from California with a passion for creating artisanal products. Andrew explains that the science and processes are very similar. Blake Farms Evolution

Blake Farms includes 800 acres of orchard and farmland consisting of pick-your-own apples, strawberries, raspberries, cherries, peaches, pumpkins, assorted vegetables and U-cut Christmas trees.

“

ur apples are diverse in O character ranging from tart to sweet, including 10 acres of heritage varieties –old world apples. In the cider making realm, they are regarded for their tannin properties, which produce an appealing mouth feel.

”

➡ Top: Andrew Blake, left, talks business and strategy with his father Paul Blake, center, and Uncle Pete Blake. Blake Farms began transforming into an agri-tourism destination in the 1980s and is now open year round.

Partners — Summer 2017

It is very much a working farm, but it has branched out to customers with a focus on agri-tourism or ag entertainment, or as Andrew calls it, “agri-tainment.” It has three retail outlets, which includes Blake’s Orchard and Cider Mill in Armada and a sister location about five miles down the road, Blake’s Big Apple and Haunted Attractions. In nearby Almont is the Garden Center, specializing in sales of apple trees. In addition to fresh fruits, vegetables and cider, the farm also has its own brand of canned fruit and vegetable products, jams, jellies, salsa and apple cider vinegar, called Blake’s Farmstyle Foods. At each location is roughly 15 acres of kids’ entertainment, including things like animated story book barns, petting farms, corn mazes, animated attractions, gemstone mining, game zones, straw mazes and mini-theme parks. Andrew’s mom, Kathy, is the office manager and matriarch of the farm, which

Summer 2017 — Partners

employs 520 employees with about 70 being full-time. It’s the most visited cider mill operation in the state, possibly the country, Andrew says, with more than 700,000 visitors a year at the three locations. It hasn’t always been that way. Andrew’s grandparents, Gerald and Elisabeth (Lovey) Blake, founded the 100-acre apple orchard in 1946 and had a lot of help with 13 children. The farm is noted as one of the very first pick-your-own orchards in Michigan. In the early 1980s, the retail and pickyour-own produce operation began to offer some fall entertainment, which served the farm well. From there, Paul, Peter and Raymond (Andrew’s father and two uncles) had a vision to expand and transform into an entertainment destination and a customer-based business. The farm went from a four-month-a-year enterprise to a year-round business. “It’s still very much a farm, but people are coming out for the experience,” says Paul Blake.

Expanded Offerings

The Tasting Room, which includes a separate event area, adds a new dimension to Blake Farms. An outdoor patio area allows visitors to sip and sun themselves, while the indoor construction and décor is unique to the farm. Some old barns were taken down on the property and reclaimed wood was repurposed in the Tasting Room, which features five year-round hard cider brands, a seasonal line up and a limitedrelease series that comes out every quarter. With a full kitchen and menu, visitors can also dine for lunch or dinner. “We really needed the Tasting Room because hard cider still requires a lot of education,” Andrew says. “Some call it beer or wine; they’re not really sure what it is. Also, to offer a little more variety, we are beginning to make craft beer in-house and offering wine, some from the farm and others sourced from vineyards in southwest Michigan.” Blake Farms prides itself on providing a super family-oriented atmosphere, so

bringing alcohol into the experience was not done lightly. “We thought there might be some repercussions, but this is one of the best apple growing states in the country, and we decided that a tasting room really fits here – much like it does at Michigan vineyards. We’ve been busier than ever.” GreenStone has been along for the ride and continues to help finance the operation’s growth, which included expansions in 2014, 2016 and one finishing up this year. “GreenStone has been a key component of our growth,” Andrew says. “They have been great partners, even though I think it was a bit of a new thing for them to jump into financing an alcohol business. But, they are true to what they do and that’s supporting farmers – they are eager and excited to work for us.” GreenStone has also helped with operating loans on the farm side. “My grandpa started working with them,” Andrew adds. Martin Kasperski, GreenStone senior financial services officer at the Lapeer branch, has been working with the Blakes for several years. “Andrew, Pete and Paul are a great team on this relatively new business venture. There is never a shortage of exciting changes to the operation from year to year. Out-of-the-box thinking has allowed them to significantly expand their market place, and the hard cider business has achieved growth that far exceeded my expectations. I am sure it will continue to grow because they offer a great atmosphere with great products.” Part of the expansion is driven by off-site sales. “Local beer distributors started asking about selling in stores,” Andrew says. Blake’s Hard Cider is currently available in 12 states through Meijer and Kroger. “We are the largest producer of craft hard cider in the Midwest,” he says. “With the expansion, we’ve added tank capacity to brew over a million gallons a year.” The expansion also includes larger capacity for apple pressing. With 150 acres planted to apples, Andrew says they produce enough apples to meet the hard cider demand, but it would take away from their other businesses. So, they source apples from orchards around the state. “We don’t want to hurt our sweet cider and u-pick businesses that were our building blocks,” he says. The growth, he believes, is centered on the authenticity of the farm’s products, its story and history. “We are not just manufacturing hard cider,” he explains. “We are growing, pressing, fermenting and packing all right here on the farm. We’re farmers first, which is something that sets us apart.” Andrew says the family plans to keep pushing forward with new ideas, citing Michigan’s strong culture and connection with apples. The management team is tossing around ideas for more specific varietal ciders and barrel aging. “We’re hoping to open a barrel

➡ Opposite page: Andrew Blake, 28, came back to the farm after college and briefly exploring a career in real estate and development. When he returned, he began experimenting with hard cider. An expansion of tank capacity this year means Blake’s Hard Cider can brew over a million gallons a year. ➡ Top: Blake Farms has more than 50 varieties of apples, as well as an assortment of other fruits and vegetables. ➡ Bottom: Blake’s Hard Cider offers five year-round hard cider brands, a seasonal line up and a limited-release series.

tasting room at the Big Apple location,” he says. “Cider aged in bourbon or whiskey barrels can offer a more distinguished, complex palate. We plan to dive into the specifics of certain varieties and what they can impart.” This year’s expansion also includes a line of beer-based orchard ale products that include apple, peach-passion fruit, and strawberry. With more cider mills per capita in Michigan than any other state, Andrew says, “It’s good to push those boundaries to make Michigan the Napa Valley of the apple world.” ■

Partners — Summer 2017

Is It Time to Invest in a Board? By Barb Dartt, DVM, MS

EVERY YEAR, FAMILY BUSINESS MAGAZINE NAMES SEVERAL “PRIVATE COMPANY BOARD OF THE YEAR” AWARD WINNERS*. (CATEGORIES INCLUDE DIFFERENT SIZED BUSINESSES AND DIFFERENT TYPES OF BOARDS.) TO COMPLY WITH STATE REGULATIONS, ANY BUSINESS THAT HAS INCORPORATED NAMES A “BOARD” AND IS REQUIRED TO MEET AND RECORD MINUTES ANNUALLY. AS YOU MIGHT GUESS, THIS IS NOT THE KIND OF BOARD THAT WINS PRIVATE COMPANY BOARD OF THE YEAR. IN FACT, THE AWARD “WAS CREATED TO RECOGNIZE THOSE PRIVATE COMPANIES WHO GO ABOVE AND BEYOND LEGAL GOVERNANCE REQUIREMENTS AND COMMIT TO THE HIGHEST LEVELS OF GOVERNANCE.”

• Development of measurable goals and holding management accountable to them

Investing in this kind of governance (which really means orderly decision making) for your own business might sound like a “nice to have” luxury for much larger businesses in different industries. However, of the five award winners, three are agriculture companies or have agricultural roots.

Many own a business and work in agriculture because they prize their independence. Having a board can be viewed as giving up control of your company. In addition, the work and effort associated with organizing a board—finding and selecting directors, preparing for the meetings and keeping directors in the loop—can seem like an extravagance. An activity that distracts, rather than adds, to the focus required to be successful.

The first winner, Samaritan Health, is led by the son-in-law of one of the founders. The company now owns and operates 18 medical office buildings in the San Jose, California area, but the land under the buildings was a ranch that has been owned by the founding families for over 100 years. I know the family and can affirm that their connection to the land and their agricultural roots still guide their decisions today. Two of the other winners are household names – Bush Brothers and Company (you know them in the supermarket as BUSH’S BEST® baked beans) and Blue Diamond Growers (on your shelves as Blue Diamond Almonds). Bush Brothers and Company is in its fourth generation of leadership. Blue Diamond Growers has been around since 1910 and represents about 3,000 grower-shareholders. Boards aren’t just for Fortune 500 companies in non-ag industries! Why consider a board? And why consider one now?

Success in the face of the challenging economics in today’s agriculture industry requires a clear focus and lots of energy. A board can be a tremendous support to a leadership team in tough times. Business leaders with a valuable board report the following benefits: • Anticipation of challenges and opportunities, providing ideas both on how management should respond and on how to share what’s coming with the team “ It’s lonely being in charge of the business—sometimes sharing my concerns with my spouse or my employees just isn’t appropriate. The board listens (confidentially), has my back and is in my corner.” • Honest, objective opinions—challenging leadership’s ideas and approach

Summer 2017 — Partners

“ Having to pull together a report for the board every quarter has really upped our game. Even though the “audience” is folks we know well—Dad and Mom, my siblings and our accountant and lawyer—it forces me to get clear about what we’ve gotten done and focus on the longer term.” • Input on how to develop next generation leaders, including giving feedback on performance and setting compensation

It is true—building an effective board takes an investment. Just like any strong relationship, it requires time, energy and commitment. The process of developing a board that works for your business is valuable in and of itself. Going through the steps below will add clarity and focus for your leadership team and business overall. Steps in Establishing an Effective Board

1. Understand a board’s role and function** 2. Develop the purpose for your board • Why are you building a board now? Is it about succession? Changing strategy? Managing and leading a larger, more complicated organization? 3. D etermine the appropriate size and composition of your board • Most family-owned businesses start with a familyonly board. Or, family plus your key advisors (CPA, lawyer). It is most important, with a group that knows each other well, to lay out the expectations for board members as outlined below. • Are you at a place in the evolution of your business where recruiting two or three independent directors could make sense? (An independent director doesn’t have a prior relationship with your family business.)

• Boards with independent directors particularly critical if not all owners have been found to be significantly will be on the board. more effective…but the added 6. Manage the board process investment of recruiting and selecting •G et deliberate about how often you these folks has to fit with what your will meet, what the agenda should business needs. look like, how decisions will be 4. Develop position descriptions for made, and what folks should be board members reading ahead of the meetings. • It will significantly increase the 7. Solicit feedback on board meetings to effectiveness of your board to define continuously improve the process the expectations of directors ahead of To answer the question that the article their being named to the board. poses, “Is it Time to Invest in a Board,” • Choosing a chair is an important I would say…it depends! As with step—and creating a separate job many best practices in a family-owned description for this position is critical. business, the best time to put one in 5. Identify and recruit the best members place is before you really need it! for your board

I do think the challenges facing our industry today call for an enhanced approach to leadership and management. And the horsepower, support, focus and clarity that a functional board provides could contribute significantly to the continuity of your business. ■ * You can read the full press release here: http://www.privatecompanydirector.com/ features/2017-private-boards-year-named ** Check out the book Building a Successful Family Business Board by Pendergast, Ward and Brun de Pontet or other articles at our website– www.thefbcg.com

• Even if you are not choosing any independent directors, it is healthy to outline the process by which folks will be chosen for the board. This is

“

I t is true–building an effective board takes an investment. Just like any strong relationship, it requires time, energy and commitment.

”

ABOUT THE AUTHOR

Barb is a consultant with the Family Business Consulting Group, working with families and management teams to help them keep their business healthy and the people happy. Barb can be reached at 269-382-0539 or dartt@thefbcg.com

The opinions stated herein are not necessarily those of GreenStone Farm Credit Services.

Partners — Summer 2017

AGRICULTURE – OPEN FIELDS BLOG BRIEF GreenStone publishes regular updates on our Open Fields blog. Check out some of the posts you may have missed at www.greenstonefcs.com! Dairy: An Unenviable Position • The predominant factor behind the current dairy industry status is simple market mechanics: there is an abundance of supply relative to demand. Ben Spitzley, vice president and commercial lending group manager, provides advice to producers to help manage through to the bright spots on the horizon. Sharing the Rewards of MAEAP Verification • Laura and Russell Braun, owners of Golden Maple Farms, recently hosted the Michigan Agriculture Environmental Assurance Program (MAEAP) Advisory Board on their farm. As a GreenStone member and director on the association’s board, Laura shares in this blog her thoughts on the importance of the program and GreenStone’s engagement with it! Farm Credit System Provides Certainty During Down Cycle • During the past two years, farmers in Michigan and throughout the nation have faced a significant economic downturn, seeing lower prices for their goods following a decade or more of strong commodity prices. In the blog, Dave Armstrong, President and CEO, provides his thoughts related to the value of the Farm Credit System. Challenges and Opportunities for Young, Beginning, and Small Farmers • Farming is a challenging undertaking, with long days that start early and are filled with physical demands from running the tractor, to calving cows, to fixing equipment, to repairing fence posts. These challenges are even more of a hurdle for young, beginning and small farm operators. Financial services officer, Ashley den Dulk, discusses the challenges and opportunities young, beginning, and small farmers face today. Buyer Confidence, Economic Optimism Growing in Farm Machinery Sector • Caution has been a major theme in the farm machinery market in recent years, with buyers relatively hesitant as grain prices strain machinery budgets. But, recent data show confidence among buyers is slowly improving, and for good reason: Experts say now is a good time to buy. We’ve Got You Covered • Ben Mahlich, GreenStone’s vice president of crop insurance, tells us a little about himself as well as the importance of crop insurance. ■

Summer 2017 — Partners

TIPS FOR TOUGH TIMES IN FARMING FOR MANY FARMS, ACROSS ALL OF AGRICULTURE, THE RETURNS ARE POOR RELATIVE TO THE COST OF PRODUCTION. THE RESULT IS GREAT STRESS AMONG MANY FARM FAMILIES. DURING TIMES LIKE THIS, IT IS EASY TO LOSE PERSPECTIVE, HAVE DIFFICULTY MAKING DECISIONS AND TO BE DISCOURAGED. HERE ARE SOME TIPS THAT MAY BE OF HELP TO ANY FAMILY IN THAT SITUATION. Focus: Discipline yourself to examine specific areas of your business to determine how they can be made better. Set aside time for this and reduce the chance of interruptions. Involve employees: Employees are often left in the dark about financial concerns and the need for economizing. That not only opens them up to believe rumors that may have no basis in truth, but it passes up on their ability to help you identify potential opportunities. Talk to them, invite their ideas, answer their questions, and enlist their help. Communicate with venders and lenders: Do not run up unpaid balances and not talk with them about it. They may be able to help you, and you need to come up with a plan to pay what you owe. These may be difficult conversations, but do not avoid them. Pencil-out the consequences of changes: Saving money does not get you any farther ahead if it reduces your income (shortterm or long-term). Consider

what the consequences will be of cutting back on this or that and monitor the results. Run your ideas past someone you trust to give you honest feedback.

Keep things in perspective: This is about your business only, not about your life or what should be most important to you. Your business may lose money or you may even lose your business, but that is not your life or your identity. Be thankful for family and friends. Consider others who may have less, and do what you can to help them. Take your eyes off of yourself and

your own problems and see what you can do to help others with needs around you. These tips may not turn the operation around tomorrow, but they may help turn you around, and that will benefit your operation. â&#x2013; Source: www.msue.anr.msu.edu

Invest where your returns will be highest: Even in the toughest times, investing in some things can be the best option. Look for investments, and others, that have a high likelihood of reducing problems or improving returns. Take a hard look at where you are losing money: Losing value is losing money. It is time to critically examine the weaknesses of the operation and search for alternatives that preserve value for your farm. Use your records: Sometimes we keep records but do not put them to full use. Yet, through them you may be able to control your operation more efficiently, find problem areas and identify what could work better. Start with financial records and calculate your cost of production, compare to benchmarks and look where you can make changes.

Partners â&#x20AC;&#x201D; Summer 2017

GreenStone on New Zealand:

Lending New Ideas to Michigan THE MISSION STATEMENT MAY HAVE BEEN A LITTLE VAGUE, BUT THAT’S ALWAYS THE CASE WHEN ENTERING A LEARNING ENVIRONMENT LIKE THE AGRICULTURE LEADERSHIP EXCHANGE STUDY TOUR OF NEW ZEALAND FARMING PRACTICES.

Like the Kiwi dairy farmers who let their cows roam across carefully planned—if not exactly symmetrical—pastures of rich grass, the six GreenStone staff on the trip let the New Zealand environment come to them over the course of 11 days of learning how they can better serve their farmer-customers. They started with minds open, and left with ideas for profitability, even if they do not always fit the comfort zone in which Michigan and Wisconsin farmers have become accustomed. “That was what I think was the coolest thing,” said Michelle Backhaus, senior financial services officer in Little Chute, Wisconsin. “Sometimes we like to keep our blinders on because it’s what we’re used to, and this trip really made me think outside the box,” she said. “We can all do different things to accomplish the same goal; but now, maybe I can offer my customers more options. I may have a whole different way of dealing with my customers.” Backhaus was most impressed by the relentless emphasis from New Zealand dairymen on low-cost production, which also impressed Tom Wilson, vice president of commercial lending who works with GreenStone’s dairy customers in Wisconsin. 13

Summer 2017 — Partners

“They focus on cost in New Zealand, and their costs are low,” he said. “They’re dealing with the same issues we are, particularly environmental issues, but their approach is so much different.” What is obvious from visiting farms and being awed by the natural beauty of New Zealand is that, in many cases, the Kiwi model cannot really be duplicated on the other side of the world, where Michigan and Wisconsin winters prohibit a grass-based pasture system that requires only open-air parlor “sheds” and drying off the whole herd at the same time – when the grass shrivels in the summer. “One of the things that fascinated me was how Kiwi dairy farmers manage their business model around crop production,” said Julie Feuerstein, GreenStone’s assistant vice president of credit based in Grand Rapids, Michigan. “Their model is based on peak grass season and how much is

“

I know that the farmers on this tour are already thinking about how they can cut costs by maybe not owning their own chopper or combine... So much of agriculture in New Zealand is done on a contract basis, and that may be an option I can discuss with farmers within my lending portfolio.

”

available, and they plan the two together, breeding all at once and drying them off all at once.” That was also fascinating to Shannon Arbaugh, senior financial services officer who works out of GreenStone’s Sandusky, Michigan office. “Peak grass means peak production for Kiwi farmers,” she said, “and while we can’t necessarily do that on the same kind of schedule in Michigan or Wisconsin, we can bring new ideas to the table, because their cows do a lot of work for them, and farmers have minimal investment in machinery.” Such things were eye-opening, said Tom Urban, who is a vice president of credit for GreenStone in Michigan. “I know that the farmers on this tour are already thinking about how they can cut costs by maybe not owning their own chopper or combine,” he said. “So much of agriculture

in New Zealand is done on a contract basis, and that may be an option I can discuss with farmers within my lending portfolio.” Larry Urban, vice president of commercial lending, who primarily works with hog and poultry producers in Michigan, said the differences in environment between the Northern and Southern hemispheres is a barrier to adopting many Kiwi practices. While he is realistic about changes that might not be viable here, he said he will also bring home new ideas about lower cost-structures in Michigan and Wisconsin. “There are different styles and different ways of doing things, and we have some farmers who have that good grassbased model, but it won’t

work here year-round like it does there,” he said. “Our job is to analyze farmers’ bottom lines and suggest things to them that they can use. What we’ve seen won’t really change is how we operate and interact with them, but we saw a lot in our short time here, and there are things that might work if we adapt them to our environment.” Looking at things differently, even if that means only minor changes, involves stepping back to look at the big picture, like the huge mountains in New Zealand, Wilson said.

seen, to reflect some New Zealand principles, but it won’t change the basic core of our structure.” After the GreenStone team returns to normal routines, though, it will likely be evident that they have had their thinking changed by what they learned from Kiwi farmers. And if they can help only one farmer make a change that helps them thrive instead of merely survive, mission accomplished! ■

“I think, particularly in the economic environment we’ve moved into, that farmers will continually look at things differently,” he said. “We may be able, after what we’ve

Partners — Summer 2017

MARKET

By Bob Utterback

THIS YEAR’S GRAIN MARKETS COULD POSSIBLY BE A PART OF A VERY SELECT GROUP OF MARKETING YEARS. AS I WRITE THIS OUTLOOK, IT APPEARS THAT THIS COULD BE A PRIMARILY ADVERSE WEATHER IMPACTED YEAR. THE QUESTION IS,“WILL IT BE LIKE THE DOUBLE-TOP PATTERN SEEN IN 1988 AND 2012?”

While the 1988 bull market started in the previous year and the 2012 event really started in the summer of 2012, they both developed a double-top in a very short time (see 1988 chart on next page). The good news is overall those tops were very short in duration. This is the real positive of this type of event. They are violent going up and just as violent going down. In fact, over the last 47 years, the December corn contract made its highs in July more than 65 percent of the time. That is a very powerful enticement to sell the summer highs. However, fear of the unknown’s impact on yield has historically kept many producers from selling. Subsequently, by the time you know how much inventory you have, the price opportunities have already come and gone.

Summer 2017 — Partners

OUTLOOK

362’4 350’0

The market top started on 6/20/88 and ended on 7/7/88. The double-top high in July was just enough to push early short positions to liquidate. The violation of the 21-day moving average was a little slow and had short-term risk before long-term confirmation. This type of double-top high is the best type because of the speed of the confirmation.

337’4 325’0 312’4 300’0 287’4 275’0 267’0 261’7 250’0 237’4 225’0 212’4 200’0 187’4 175’0

162’4 JUN-87 JUL-87 AUG-87 SEP-87 OCT-87 NOV-87 DEC-87 JAN-88 FEB-88 MAR-88 APR-88 MAY-88 JUN-88 JUL-88 AUG-88 SEP-88 OCT-88 NOV-88 DEC-88 JAN-88 1 DAY

SOURCE: CME Past performance is not necessarily indicative of future results. Although every reasonable attempt has been made to ensure the accuracy of the information provided, Utterback Marketing Services, Inc. assumes no responsibility for any errors or omissions.

Essentially, none of the classic moving averages or overbought indicators worked well. There were several false signals that simply wore the bear out before the final confirmation.

We saw three moths of a very violent, but overall range bound market until final confirmation after pollination

390’0 380’0 370’0 360’0 350’0 340’0

The 1996 high was very different from that of 1988. The first high was seen in April before planting.

330’0 320’0 310’0 300’0 290’0 280’0 269’4 260’0 250’0

JUN-95 JUL-95 AUG-95 SEP-95 OCT-95 NOV-95 DEC-95 JAN-96 FEB-96 MAR-96 APR-96 MAY-96 JUN-96 JUL-96 AUG-96 SEP-96 OCT-96 NOV-96 DEC-96 JAN-97 1 DAY

Another type of pattern is much more drawn out, as well as much more difficult to anticipate, like in 1996. The December 1996 corn chart (above) shows the market was very violent and uncertain for an extended time [in 1996], making both the bull and bear very uncomfortable with long-term sit-and-hold positions. What about this year? Are there enough reasons to see the corn and soybean markets take off and get cash values back to levels that reward those who have stored

their 2016 unsold bushels into the summer of 2017? Demand: Let’s first review what I believe

are high probability facts. Demand for corn and soybeans are solid, but not explosive. World economic growth rates are still overall positive, but far less than what would be suggested is an overheated demand market. The bottom line is that demand is a supporting character to this story, but it will not be the driver.

Partners — Summer 2017

Inventory: It appears that South America is

about to harvest corn and soybeans with yields above last year’s weather reduced production. Excess inventory will have quite an impact on the export markets since storing is not a real option and the local currency suggests selling now rather than later. When you combine this with excessive domestic stocks of unpriced corn as well as unpriced basis contracts, it is possible to see real cash pressure on these markets when bins are swept to prepare for next year. This implies that cash risk exists from mid-July through September for both corn and soybeans. By the time you read this, we may know the actual acre numbers. Corn acres are expected to continue to drop due to spring weather problems, but soybean acres are expected to be close to slightly above the March numbers. This implies yield stress will have the biggest impact on the corn complex this year. This is where we go from fact to assumptions about trends in supply. As I write this, the markets fear both corn and soybean yield will be negatively impacted by the wet spring weather. If it turns dry this summer, the impact on yields will be even more magnified. This is when the fear of the unknown starts working on producers, allowing technical players to push the market higher than the fundamentals can justify. What do I think will happen? While the trade will be concerned about yield potential, the market will not be able to really say what is out there until the late August to early September test plot time period. That is a long time for a bull market to wait. So the dominant factor that will be pushing corn and soybeans from July to early September will be how much inventory is coming out of South America, the amount of old crop inventory that must be moved into the marketplace, the level of feed wheat that must compete with corn, and finally the level of adversity of the summer weather pattern. I propose the

December corn contract will make a high by early July, soybeans could wait until August, but overall a lower price pattern is expected as adequate cash supplies dominate the market until early fall. Once old crop inventory is cleaned up and the prospect for a reduced crop has solid field observations, the market will start to stabilize. In fact, I would not be surprised to see producers quickly shut the bin doors on the expectation of a solid seasonal and technical bounce off fall lows into the next season weather scare time period. Strategy Implication: Feed buyers and those who have sold cash corn off the

combine should first consider buying all upside protection by no later than the August supply demand report. I would be surprised if the December corn contract would be able to drop below $3.60 unless the July to October weather is perfect for late season crop development. In regard to soybeans, I believe in maintaining a more bearish attitude. If hedges are in place, continue to focus on holding into fall and capture carry. As for catch-up sales, I fear by the time this copy is read the opportunities will have passed and we will have to fall back on a classic harvest and hold strategy, thereby waiting for some type of event to hit South America. This is not exactly what I call market planning, but a November price in the high $8’s allows for little else. If on the other hand we do see a strong price bounce in November soybeans in August between $9.80 and $10.10, I would be a strong off the combine cash seller. I still suggest limited re-ownership dollars be allocated to corn rather than soybeans. Looking ahead, start thinking aggressively about how to handle a stronger than normal seasonal rally in corn and soybeans from January to March if corn yield is eventually confirmed below 164. How strong of a price move is needed to start pricing the anticipated 2018 crop and beyond? Exactly what is a fair profit before the seed is out of the bag? If priced early, how will the seasonal summer weather risk be handled? Drop me a line at utterback@utterbackmarketing.com with your comments. ■ ABOUT THE AUTHOR

Bob Utterback is the President of Utterback Marketing in New Richmond, IN. Call Bob for strategy updates at 877-898-4324. Email comments on Outlook to utterback@utterbackmarketing.com.

The opinions stated herein are not necessarily those of GreenStone Farm Credit Services. This material has been prepared by a sales or trading employee or agent of Utterback Marketing Services, Inc. and is, or is in the nature of a solicitation. This material is not a research report prepared by Utterback Marketing Services, Inc. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction without registration, the market commentary in this communication should not be considered a solicitation. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Utterback Marketing Services, Inc. believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades

Summer 2017 — Partners

CONNECT

NEWS: Scholarships Jace Feldpausch Fowler, Michigan Son of Roy and Patricia Feldpausch Future major: Agribusiness management at Michigan State University Interesting fact: I am a very outgoing and athletic person that loves farming. Dream job: Owning my grandfather’s beef cattle and cash crop farm.

As part of GreenStone Farm Credit Services’ scholarship program, the cooperative recently selected 21 graduates to receive up to $2,000 to assist with the cost of higher education. Since 2010, GreenStone has presented more than $175,000 in undergraduate college scholarships to students who plan to make a positive impact on the agricultural industry. “Providing these scholarships is a way to invest in the next generation of leaders, and GreenStone is proud to lend support to youth who have a passion for agriculture,” said Dave Armstrong, President and CEO. “These students demonstrate a high level of leadership in school, community, and agricultural activities and will help sustain the industry’s success.” Courtney Allen Ithaca, Michigan Daughter of Lester and Sandy Allen Future major: Biomedical field at Western Michigan University Interesting fact: I started skiing and riding horses when I was three years old. Dream job: Research scientist Hannah Booms Harbor Beach, Michigan Daughter of Andrew and Dawn Booms Future major: Crop and soil sciences at St. Clair County Community College Interesting fact: I like to travel and have visited 38 states. Dream job: Agronomist or an ag teacher

Spencer Brown St. Louis, Michigan Son of Matthew and Nanette Brown Future major: Agribusiness management at Delta College and Michigan State University Interesting fact: I am a certified Flux Core Welder by the American Welding Society. Dream job: Working on the family farm

Torey Fischer Battle Creek, Michigan Daughter of Gale and Kathy Fischer Future major: Animal science at Michigan State University Interesting fact: I was the Michigan Interscholastic Horsemanship Association District 15 Division C Reining Champion. Dream job: Large animal veterinarian

Miriah Dershem St. Johns, Michigan Daughter of Lynn and Christie Dershem Future major: Dairy management at Michigan State University Interesting fact: I own eight dairy cattle and I don’t live on a farm. Dream job: Own and manage a dairy farm

Elizabeth Fishler Green Bay, Wisconsin Daughter of Michael and Maria Fishler Future major: Sustainable agriculture at Northeast Wisconsin Technical College Interesting fact: I have two rabbits and a pet dog. Dream job: Growing produce and selling it at the farmers market.

Meghan Goretski Port Austin, Michigan Daughter of Kevin Goretski and Bonnie Prill Future major: Agribusiness management at Michigan State University Interesting fact: I operate every piece of equipment on our farm from planting, to harvesting and transporting. Dream job: Taking over my father’s farm and running it on my own. Emma Gwidt Pulaski, Wisconsin Daughter of David and Dyan Gwidt Future major: Dairy science at the University of Wisconsin-Madison Interesting fact: I am the oldest of six children and I have played the violin for eight years. Dream job: Dairy sire analyst Callie Halsey Adrian, Michigan Daughter of David and Paula Halsey Future major: Animal science at Michigan State University Interesting fact: I ran a half marathon last fall. Dream job: Bovine embryologist

Partners — Summer 2017

Jacob Irrer St. Johns, Michigan Son of Ryan and Kerry Irrer Future major: Mechanical engineering at Baker College Interesting fact: I have been home schooled my entire life. Dream job: Designing innovative farm equipment Caitlin Lane Scottville, Michigan Daughter of Steve Lane and Cathie Critchett Future major: Animal science at Colorado State University Interesting fact: I can tie a goat faster than I can tie my shoes! Dream job: Large animal veterinarian, specializing in equine sports medicine Kelsie Letts Marshall, Michigan Daughter of Ken and Teri Letts Future major: Animal science/ veterinary medicine at Michigan State University Interesting fact: I love to cook. Dream job: Veterinarian

Aaron Maust Bay Port, Michigan Son of Brent and Emily Maust Future major: Agricultural studies at Iowa State University Interesting fact: I am a fourth generation farmer. Dream job: Farmer

Taylor Paye Casco, Wisconsin Daughter of Rick and Julie Paye Future major: Dairy science at the University of Wisconsin-River Falls Interesting fact: My favorite breed of dairy cows are Brown Swiss. Dream job: Veterinarian

Anthony Neitzke Egg Harbor, Wisconsin Son of Mike and Jen Neitzke Future major: Animal science at the University of Wisconsin-River Falls Interesting fact: I am teaching myself to play an acoustic guitar. Dream job: Large animal nutritionist and have a dairy herd

Makenna Schwass Scottville, Michigan Daughter of Ronald and Constance Schwass Future major: Agribusiness management at Michigan State University Interesting fact: I will be a sixth generation farmer along with my older brother and first cousin. Dream job: Teaching agriscience at the local community college

Keeley Pape Palmyra, Michigan Daughter of Jerry and Tammy Pape Future major: Agriculture industries/agronomy at Michigan State University Interesting fact: I love plants and I am known as a plant-nerd at my school. Dream job: Agronomist

HANTZ FARMS TREE PLANTING Volunteers from GreenStone once again traveled to the city of Detroit to plant trees in abandoned lots at Hantz Woodlands. GreenStone’s commitment to non-traditional, urban agriculture through a partnership with Hantz Woodlands is transforming blight to beauty as vacant, abandoned properties are converted to fields for new agricultural production. For the fourth year in a row, employees rolled up their sleeves, and got to work planting trees in the city. ■

Alyssa Seitz Seymour, Wisconsin Daughter of Dean and Debbie Seitz Future major: Dairy science at the University of Wisconsin-Madison Interesting fact: I own a flock of sheep and a herd of cows. Dream job: Large animal veterinarian

Summer 2017 — Partners

Madeline Zutz Valders, Wisconsin Daughter of Jeff and Kim Zutz Future major: Animal science at the University of MinnesotaTwin Cities Interesting fact: I am able to play five different instruments. Dream job: Large animal veterinarian ■

CUSTOMERS TESTIFY AT SENATE COMMITTEE FIELD HEARING Earlier this spring, GreenStone customer and west Michigan hops farmer, Pam Bouma Miller, testified before the U.S. Senate Committee on Agriculture, Nutrition and Forestry. The hearing, titled “Growing Jobs and Economic Opportunity: Perspectives on the 2018 Farm Bill from Michigan” gave legislative leaders the opportunity to hear from Michigan’s diverse agricultural producers in consideration of the 2018 Farm Bill. Bouma Miller addressed Michigan’s expanding hops industry, and specifically how GreenStone Farm Credit Services serves as a reliable, knowledgeable lender for her specialty operation, Hopyards of Kent. “A part of the success of my farm is a special

Miles Wixom Bloomingdale, Michigan Son of Richard and Robyn Wixom Future major: Agricultural business and management at Southwestern Michigan College Interesting fact: I have shown livestock (mainly cattle) my whole life. Dream job: Owning a company that specializes in livestock handling equipment

relationship and understanding with my ﬁnancial partner. This is a capital intensive business and its specialization demands dollars. GreenStone Farm Credit Services was there for me to the full extent they were able at the outset, and remains an intricate part of my success as one of the ﬁrst major hop farms.” In addition to Bouma Miller, several other GreenStone members spoke on the panel, including: • Rick Gerstenberger, Snover • Darrin Siemen, Harbor Beach • David Williams, Elsie • Chris Alpers, Lake Leelanau • Andy Snider, Hart (GreenStone Board Director) ■

BEHIND THE SCENES– GreenStone credit analysts are a vital part to doing business and serving you, our members. These individuals analyze loan requests to help ensure sound, comprehensive credit decisions are made in the lending approval process to keep your cooperative, and operations, safe and sound! David Nissen, senior credit analyst Little Chute, Wisconsin How would you describe your role here at GreenStone? Credit analysts are often the unseen faces of the association, responsible to ensure the capital of the cooperative is safely and securely provided to our hard working members. Analysis includes verification of assets and liabilities, preparing income projections, trend analysis, compiling comparative data using similar farms and/or credit standards and ratio analysis. In coordination with internal staff, analysts complete a loan narrative to present the information to the appropriate approval authority. What is the favorite part of your job? I was born and raised in the city of Appleton, so while I always had an appreciation for agriculture, I rarely, if ever, was provided the opportunity to be on a farm. I find great satisfaction in providing financial support to farmers looking for a way to improve the future of their operation, the community they support, and meet the nutritional needs of a changing world. I have been very fortunate to have been introduced to some of the hardest working families in northeast Wisconsin and beyond. What do you enjoy doing outside of the office? I enjoy spending time with my family. My wife Linda and I have two children, Grace (7) and Isaac (4), that keep us very busy. We enjoy our summer weekends with our extended family and friends on the lake. Personal interests also include running, playing ultimate Frisbee, enjoying a “local” craft beer, and listening/watching the Brewers, Badgers, and Packers win championships!

Erica Norton, senior credit analyst Schoolcraft, Michigan How would you describe your role here at GreenStone? I have been a credit analyst at GreenStone for 17 years. My primary role is analyzing larger loan relationships for three financial services officers in the Schoolcraft office. I am responsible for gathering, verifying and spreading financials in order to provide an accurate financial picture of our customers’ farm operations. In addition to traditional cash crop farms, we also have a lot of seed corn, bedding plant, and blueberry operations in our portfolio. My work is the basis not only for our loan decisions, but also for our knowledge and understanding of our customers’ business performance and overall health. What is your favorite part of your job? The people. I love the customers I serve and the individuals I work with every day. I grew up on a farm in the thumb of Michigan, and I knew I would never leave the agriculture community. I do not think you can find a more humble, hard-working, honest, and loyal group of people anywhere else…and I get to play a small role in helping them understand the financial aspects of their business and achieve their goals. What do you enjoy doing outside of the office? My husband is a hog farmer, and we have two boys who are 10 and 12 years old. Most of the time, we are a typical, busy family running between sports and school activities! We are die-hard MSU alumni, and we get back to campus for football and basketball games whenever we can. We enjoy traveling and spending time with family and friends. In my free time I like to read, and when the sun is shining, to spend time outdoors. ■

Partners — Summer 2017

GREENSTONE INTERNS GREENSTONE WELCOMES TEN STUDENT INTERNS FOR THE SUMMER, PROVIDING EACH WITH THE OPPORTUNITY TO SHARPEN THEIR SKILLS IN THEIR RESPECTIVE CAREER FIELD. SEVEN OF THE INTERNS ARE BASED IN OUR EAST LANSING GRAND RAPIDS, AND LITTLE CHUTE LOCATIONS. For nearly 10 years, GreenStone’s internship program has been focused on providing college students with real-world experience to coincide with their education. Students take part in the same hiring process as our full-time employees, applying online to their desired position and going through the complete evaluation process. Intern selection is based on experience and aptitude, with an emphasis on performance in the classroom, extracurricular activities, and involvement in the community. Each intern will work approximately 14 weeks in their position before returning to school for the fall semester. Colin Cook Harbor Beach, Michigan Title: Credit Intern Branch: Grand Rapids College: Northwood University Major: Management Hobbies: Waterfowl hunting and fishing Internship goal: “I hope to gain more knowledge about the agricultural field.” Jake Gorter Traverse City, Michigan Title: Credit Intern Branch: East Lansing College: Michigan State University Major: Economics Hobbies: Football, soccer and chess Internship goal: “I would like to gain a better understanding of the agricultural industry and how it interacts with the world of finance.”

Summer 2017 — Partners

Annah Horrack Fowler, Michigan Title: Graphic Design Intern Branch: East Lansing College: Central Michigan University Major: Graphic design, art history minor Hobbies: Anything on the water: swimming, kayaking, boating, fishing; spending time with friends; and creative outlets such as design, drawing, and painting Internship goals: “I am hoping to gain a better sense and understanding of GreenStone, as well as the brand guidelines that belong to the association. In addition, portfolio pieces and a great work experience to take into my senior year and future career. “

Emily House Webberville, Michigan Title: Credit Intern Branch: East Lansing College: Michigan State University Major: Animal science and accounting Hobbies: Welding and fabricating, volleyball, softball and livestock Internship goal: “I am hoping to gain knowledge and experience to strengthen my skill set for my future career.” Megan Hughes Woodstock, Illinois Title: Credit Intern Branch: East Lansing College: Michigan State University Major: Agribusiness management and economics Hobbies: Tennis and economics Internship goal: “I would like to learn more about finance applications and the Farm Credit System.” Aubrey Netzel Clintonville, Wisconsin Title: Credit Intern College: Concordia University – Wisconsin Major: Finance and Economics, Master’s in Management Hobbies: Running Internship goal: “I hope to use the knowledge gained from my courses in the real world and to learn more about what products and services GreenStone offers.” Jamie VanDerZanden Pentwater, Michigan Title: Crop Insurance Intern Branch: East Lansing College: Michigan State University Major: Agribusiness management Hobbies: Running, softball, horseback riding and hiking Internship goal: “I hope to obtain knowledge about the agricultural industry that will benefit me in my future career.”

Zackary Ward Bellaire, Michigan Title: Credit Intern Branch: Grand Rapids College: Grand Valley State University Major: Finance and business economics Hobbies: Fencing, reading and tennis Internship goal: “To learn how the topics I have studied fit into Farm Credit and the agricultural industry as whole.” Justin Webster Elsie, Michigan Title: Credit Intern Branch: East Lansing College: Michigan State University Major: Accounting Hobbies: Basketball and golf Internship goal: “I want to learn more about the loan process farmers go through and how they gain approval for loans.” Jordan Zimmerman Standish, Michigan Title: Tax and Accounting Intern Branch: East Lansing College: Saginaw Valley State University Major: Accounting Hobbies: Reading, volleyball and my cat Internship goal: “I hope to gain more knowledge and skills in the department, as well as a network of great people.” ■

Mark Your Calendar...

Pause for Applause...

JULY

Michigan Livestock Expo (13-18) Michigan State University Pavilion, East Lansing, MI

4-H Youth Dairy Days and Michigan Dairy Expo (17-21) Michigan State University Pavilion, East Lansing, MI

Farmers Market at the Capitol State Capitol Building, Lansing, MI

SERVICE ANNIVERSARIES Help GreenStone congratulate and thank these staff who are celebrating an employment milestone. From five to 40, the years represent the dedication and service all employees provide our members. July: Tom Smith (40) Donna Doede (30) Kelly Wilkes (30) Lynette Wood (25) Cheryl Carlton (10)

AUGUST

Michigan Farm Bureau Young Farmer Golf Scramble Centennial Acres Golf Course, Sunfield, MI

Wisconsin State Fair (3-13) Wisconsin State Fair Park, West Allis, WI

National Blueberry Festival (10-14) South Haven, MI

Agro Expo (15-16) St. Johns, MI

Breakfast on the Farm Event Gratiot County, Middleton, MI

Farmers Market at the Capitol State Capitol Building, Lansing, MI

August: Jack Koester (30) Sherry Lange (25) Jessica LaCross (15)

GreenStone Offices Closed In honor of Labor Day

Great Lakes Logging & Heavy Equipment Expo (7-9) Escanaba, WI

Quarterly financial update GreenStone Farm Credit Services recently released its first quarter stockholder report, detailing earnings of $38.0 million for the three months ended March 31, 2017. Comparatively, net income was $34.0 million for the same period last year. Owned and managed loan volume totaled $8.0 billion at March 31, 2017. “Despite market challenges, GreenStone is off to a solid start this year,” said Travis Jones, GreenStone’s chief financial officer. “Our credit quality and revenue remain stable. As a result, we expect the year to show steady growth in support of our 2017 business plan.” Other numbers of note from this quarter’s stockholder report include:

Farmers Market at the Capitol State Capital Building, Lansing, MI

OCTOBER

Matt Naeyaert (5) Deb Simmer (5) Mark Dingee (5)

September: Stephanie Luark (10) Tricia Koenigsknecht (10) Travis Jones (10) Kristine Diebel (5)

SEPTEMBER

Dave Ballman (10) Larry Sheridan (5) Sadie Pionk (5) Jackie Sanch (5)

World Dairy Expo (3-7) Alliant Energy Center, Madison, WI

• Operating expenses remained well-controlled as our efficiency ratio was 35.1 percent. • Acceptable loan credit quality remained stable at 95.3 percent. • The total capital ratio was 16.3 percent. ■

Partners — Summer 2017

MEETING THE PRESIDENT “It’s been a year that I don’t know will ever repeat again, certainly lifetime opportunities. I hope that my participation can be beneficial for not only Michigan agriculture, but for all of U.S. agriculture.” Lifetime opportunities indeed! GreenStone’s director and fifth-generation Michigan dairy farmer, Hank Choate, recently returned from a visually gratifying and mentally stimulating agricultural study trip to New Zealand. While that experience alone is enough to top the charts for most farmers, Hank’s number one experience actually came a few months before, when he was selected to be one of 14 diverse agricultural producers from across the United States to meet with President Trump, and the (then new) Secretary of Agriculture.

“

I t’s been a year that I don’t know will ever repeat again, certainly lifetime opportunities. I hope that my participation can be beneficial for not only Michigan agriculture, but for all of U.S. agriculture.

”

Summer 2017 — Partners

Of the various topics discussed that day in the White House—labor, immigration, regulatory reform, taxes and trade—labor and trade rose to the top for Hank.

that we now have beef going into China, and a signed memorandum of understanding with China to put in place a process to allow greater access of dairy into China.

“As we sat down with the President, his level of understanding of the agriculture issues was at a higher level than what I anticipated,” Hank shared. “As we spoke on various issues, he replied very substantially and without hesitation.”

The group of 14 certainly won’t claim responsibility for the positive movement seen recently on these types of issues, but hearing of the advancements clearly rings a bell and hits home for them.

Examples like those shared by farmers in the group, such as a discussion around H-2A and the growing difficulty farmers are facing in their ability to secure enough workers, in a reasonable timeline, who are willing to do the work—were demonstrations of the need to focus on labor. Since the group’s discussion on trade of livestock proteins, Hank points out

“

“All in all, I felt the President was very personable,” Hank said. And while there may be a mixed perception in the media on the value President Trump placed on our rural communities, Hank has confidence. “President Trump recognizes that a strong ag economy is going to translate into a stronger rural America. His comments and our discussion leads me to believe he is truly, truly interested in strengthening rural America.”

I would like to say thank you for awarding me with the honor of receiving the 2017 GreenStone scholarship. I will put the money to good use to further my agricultural education. The monies awarded will help pay for my tuition, allowing more time for my studies and to gain more new experiences. Thank you for funding the future of agriculture! —Aaron Maust

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Thank you so much for awarding me with the GreenStone scholarship. I look forward to using this money to pay for my schooling so that I can achieve my dream of becoming a large animal nutritionist after attending the University of Wisconsin–River Falls. —Anthony Neitzke

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➡ Above: Hank Choate, GreenStone director and Michigan dairy farmer, recently met with President Trump, discussing issues important to Michigan agriculture.

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— Caitlin Lane

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I would like to sincerely thank you for the GreenStone Farm Credit Services scholarship. I am looking forward to attending the University of Minnesota– Twin Cities this upcoming fall. I will be studying animal science with a pre-vet emphasis. This will be an exciting new chapter in my life and your aid is helping me reach my educational goals. I truly value the scholarship. I cannot wait to find my future career in agriculture! Again, thank you for your generosity.

”

I greatly appreciate that your scholarship committee chose me as a recipient of the scholarship. I am extremely excited to start college this fall at the University of Wisconsin–River Falls to further pursue my dreams in dairy science and pre-veterinary medicine. —Taylor Paye

I would just like to say thank you for selecting me as a 2017 GreenStone Farm Credit Service scholarship recipient. I am honored to receive this award as it will help me through my continued agricultural education at Colorado State University. I will be sure to keep you updated throughout my educational journey.

— Madeline Zutz

”

...Candid Comments

Partners — Summer 2017

GreenStone Story:

In addition to exceptional service, there are specific rights you are entitled to as a GreenStone borrower.

Our Pledge to Members

The Farm Credit Administration, the independent Federal agency responsible for regulating the Farm Credit System (FCS), outlines a list of rights that our agricultural borrowers are entitled to, including:

WE PRIDE OURSELVES ON BEING MORE THAN JUST A LENDER – OUR STAFF LIVE AND WORK IN THE SAME RURAL COMMUNITIES YOU CALL HOME. OUR MISSION IS TO BE THE BEST AT PROVIDING CREDIT AND FINANCIAL SERVICES TO AGRICULTURE AND RURAL COMMUNITIES; THIS IS NOT A CHARGE WE TAKE LIGHTLY! AS YOUR TRUSTED BUSINESS PARTNER OR MORTGAGE LENDER, YOU CAN RELY ON THE FACT THAT WE PUT YOU, OUR CUSTOMER, FIRST; WE STRIVE TO DELIVER QUALITY; WE SEEK OPPORTUNITIES TO GET INVOLVED, AND WE WILL DO THE RIGHT THING. THESE ARE OUR CORE FOUR VALUES, AND THEY ARE THE HALLMARK OF THE SERVICE YOU CAN EXPECT TO RECEIVE FROM GREENSTONE.

• To know the current effective rate of interest on your loan by the date it closes • T o be informed that you are required to purchase at-risk stock in your FCS institution • T o receive copies of all the documents you have signed by the time the loan closes • To be informed promptly as to whether your loan application has been accepted, reduced, or denied • T o be informed of your right to request restructuring for your loan if you cannot meet current payments • T o obtain a credit committee review of a denial or reduction of a loan request and a denial of a restructuring request • T o have first refusal when your FCS institution decides to sell any agricultural property it has acquired from you

Summer 2017 — Partners

Similarly, our country living borrowers are protected by the Truth-In-Lending Act commonly referred to as TILA. This consumer protection act helps borrowers make smart decisions regarding settlement services and eliminates fees that unnecessarily increase the costs of settlement services. Under

We are committed to working with our customers through all cycles of the agriculture economy, and that includes the stressed times many are currently facing. “Both the lender and the customer play an important role in ensuring a successful outcome

“

e pledge to work diligently W servicing your account, respond to your requests, provide you honest and accurate advice, and treat you fairly while maintaining strict confidentiality of your information.

”

TILA, when borrowers apply for a mortgage loan they are entitled to receive various disclosures, for example:

• An informational booklet containing consumer information regarding various real estate settlement services. • A Loan Estimate, which lists the charges a buyer is likely to pay at closing, as well as a Closing Disclosure of the final costs prior to closing. These rights, coupled with GreenStone’s own Customer Bill of Rights, solidify our commitment to being a truthful, stable and responsible lender, now and in the future. With that in mind, and given the current agricultural economic down cycle, it is important to us to reinforce our pledge to be a dependable source of credit for rural communities and agriculture while being fiscally responsible to the entirety of our members.

during tough economic times,” said Ian McGonigal, senior vice president of regional sales. “Open communication is key – among other things, we promise personalized service and accurate information and advice, and we can best deliver on that with honest and open discussions.”

Your Role: Communication and Record Keeping If you are anticipating or experiencing financial stress and/ or are having trouble making a loan payment, be sure to let your financial services officer know as soon as possible. With open communication, we can work together with you to help find the best solution for your individual situation. Up-to-date and accurate records are another key component and are the responsibility of you, the borrower. We know your situation will be vastly different from your neighbors, this is why your records are incredibly important to put together the tools and strategies necessary to create a customized service plan specific to your needs. The process of determining what combination is the best fit starts with the individual analysis of your operation. Our Role: Communication and Accurate Advice Just as we ask you to keep lines of communication open, we pledge to always provide clear, timely communications. And the up-to-date records you have been keeping? Those will help us offer you the most accurate information and advice possible, based on your

unique situation. It is relatively easy to tally up what you own and what you owe and put it on a balance sheet. It is more difficult to prepare an income projection or forecast for an uncertain future, but this is an important piece of information that allows your lender to analyze the future repayment capacity of your business. Once your financial services officer has an understanding of your position, he or she can begin the collaborative process of developing your financial plan. This could mean rescheduling of loan terms, additional lending to inject working capital into the operation, or other solutions. It is important to note that each situation and solution is unique. The terms and conditions may be different than those to which you are accustomed. We pledge to work diligently servicing your account, respond to your requests, provide you honest and accurate advice, and treat you fairly while maintaining strict confidentiality of your information. We appreciate your loyal business and we are thankful you have chosen GreenStone as your trusted business partner.

As a GreenStone customer, you have the right to receive: • Personalized service • Immediate response to all requests • Honest, fair, and impartial treatment • Confidential treatment of all information • Accurate information and advice

Partners — Summer 2017

In Wisconsin, following the 2017 WI Farm Credit PAC contribution campaign, opportunities to connect legislators to customers and staff in branch “Meet and Greets” have been identified. Next year, when legislators are able to accept contributions to their campaigns, the WI Farm Credit PAC will make disbursements.

PAC Progress:

FORGING AHEAD SINCE THE SPRING ISSUE OF PARTNERS, GREENSTONE HAS BEEN ACTIVE IN THE LIVELY GOVERNMENT ARENA COMMUNICATING THE CHALLENGES AND OPPORTUNITIES OF AGRICULTURE AND RURAL AMERICA.

Summer 2017 — Partners

April marked the budgeting process for the MI GreenStone PAC, following the 2017 MI GreenStone PAC contribution campaign. Over 30 elected government officials were identified by the Board of Directors to be recipients of MI GreenStone PAC funds with input from Kelley Cawthorne, GreenStone’s lobbying consultant. Delivery of the funds has begun and the goal is to have it completed by year end. In addition to communicating about the Farm Credit System and agriculture, the beneficiaries are made aware that the funds came from farmer cooperative members who appreciate the work being done to address challenges and create further opportunities for Michigan agriculture.

The national Farm Credit PAC has been active in disbursing funds within GreenStone’s territory. Members, directors, and management have been involved in meeting U.S. Senators and Representatives. All meetings have been mutually beneficial as the Farm Credit story is shared and the happenings of Washington, D.C. are relayed. In addition, focus has been placed on the upcoming Farm Bill and the importance of having strong, diverse programs for the diversity of Michigan and Wisconsin agriculture. Your support of elected officials is commended and greatly appreciated by recipients of PAC funds. As champions of the agriculture industry, we all must continue to work closely to ensure that agriculture is not forgotten as an essential component to a thriving economy and safe food system. ■

Legislative Matters:

PRELUDE TO THE NEXT FARM BILL – THE ORCHESTRA IS FORMING OR MAYBE “RE-FORMING” IN CONTEMPLATING THE 2018 FARM BILL, SOME DRAMATIC MUSICAL TUNE IN THE BACKGROUND MIGHT BE APPROPRIATE TO LISTEN OR HUM TO. BEETHOVEN’S “SYMPHONY NO. 9” MIGHT BE A GOOD START FOR SOME SMOOTH CONTEMPLATIVE REFLECTION ON THE BREADTH AND EXCITEMENT OF THE ISSUES THAT GET ADDRESSED IN THE FARM BILL. But, without some careful management and engagement, the 2018 Farm Bill might end up making the Tchaikovsky‘s “1812 Overture” more appropriate. Full of drama, complexity and epic impact for our daily bread, the Farm Bill journey has begun again.

of the Farm Bill exploded more recently with conservation, credit, renewable energy, rural development, horticulture, agriculture research, forestry and more. There is a long list of Titles in the Bill (12 to be exact). Then we must be prepared to face the appropriations battle. Just because something is authorized does not necessarily mean it will be funded. That is a separate debate, and it sets up the battle of bands so to speak.

Let’s take a step back to view the comprehensive multi-year legislation that governs the federal farm, food, fiber, forestry and rural policies under the joint jurisdiction of the House Committee on Agriculture and the Senate Committee on Agriculture, Nutrition, and Forestry. These bills started in the 1930s and through the 1960s were periodically taken up. In the 1970s through 80s they followed a routine four year cycle, and it has been intended to follow that routine since, but delays and Washington politics have rattled that routine. 2018 will mark the four year cycle for the current Farm Bill. We will all wait and see if it gets done in the “routine” time frame.

So what do we expect to see as the stage gets set? Advocacy for the Supplemental Nutrition Assistance Program (SNAP) will be a certainty, but it will likely be entangled with stronger work requirements. Commodity support was viewed as less important in 2014, but with price pressure on commodities, crop insurance and other possible support will have to come strong to the show. Then with trade issues presenting some uncertainty, the audience can expect more noise from all crops and commodity groups. Let us not forget conservation on the stage, too. Unless overall spending on conservation is increased, the Conservation Reserve Program will require reduced spending in the working land programs. Balancing all of this to make beautiful music will be extremely challenging and complex.

Historically, the Farm Bill started out to address policy relating to storable commodities. The main music of the legislation addressed corn, soybeans, feed grains, wheat, rice, peanuts, dry peas, lentils, beans, oilseeds, sugar, cotton and dairy. Federal nutrition programs joined the band in the 1960s which began the political interplay in the Farm Bill ensemble. Then the crescendo

With full engagement by the Agricultural Leaders of America, patience, and compromise in consideration for the breadth of the challenge to meet so many diverse interests, the USA can continue on a steady course building to a masterpiece of legislation, read and implemented like Ravel’s classic composition “Bolero.” Stay tuned. ■

Partners — Summer 2017

DIRECTORS’ PERSPECTIVE As part of their election to the board of directors, GreenStone’s board members also serve on a focused committee. Throughout the year, the Directors’ Perspective in each issue of Partners will highlight these committees and the directors who serve on them, to define the purpose, and more importantly the value, of each of these teams. After focusing on the Executive Committee and the Compensation Committee in the spring issue, we turn to the Legislative and Public Policy Committee this summer, as they head to Capitol Hill to help amplify your voice during Farm Credit Week in Washington! Legislative and Public Policy Committee

Purpose: The committee helps to develop the association’s legislative and public policy strategy that aligns with GreenStone’s priorities. They also manage the coordinated action plan to support these issues that affect GreenStone and the Farm Credit System. As part of this, the directors work to stay abreast and engaged in legislative and public policy activities impacting our members, rural communities and agriculture.

Laura Braun, Committee Chair

When I first considered running for the board of directors at GreenStone, it was difficult for me to understand why the association would be concerned about legislative and policy issues. After all, these areas are well covered by other agricultural organizations and commodity groups. However, after having been elected, I quickly realized the importance of this work to not only GreenStone, but to the Farm Credit System as a whole. The Farm Credit System was started by an act of Congress, and an act of Congress—the stroke of a pen—could bring it to an end. As a result, I have served on this committee for five years, and it is in fact the only committee on which I have served. I am that passionate about GreenStone, the Farm Credit System, and the legislative and policy forces that could endanger our mission of providing rural communities and agriculture with reliable and consistent credit and financial services in good times or bad. In my role on the committee, I am also appointed by the board to represent GreenStone on the AgriBank District Farm Credit Council, which is a body of representatives from around the AgriBank district working on policy and legislative matters. In my role on that council, I have also had the opportunity to serve at several

Summer 2017 — Partners

meetings of the National Farm Credit Council board of directors. The National Farm Credit Council board consists of association and bank directors from across the United States. It is truly humbling to be able to work with this group of people toward goals that strengthen the entire System and each association. Members of these groups are very diverse, but have one common goal: to do what is best for our member-customers back home in our associations. Although a big picture perspective of the Farm Credit System and GreenStone’s part in it is significant, the most important work of the Legislative and Policy Committee is to build strong relationships with both state and national legislators. Our committee travels to Washington, D.C. to meet with legislators and their staff. Often, our purpose is not to specifically ask for something during those meetings, rather we are building stronger relationships and serving as a resource to them for agriculture and Farm Credit. This helps set the foundation for when we do have a specific need, we are already known and trusted, and more likely to be positively considered in the result.

Tom Durand, Committee Member

It has been a great honor and privilege to serve on the Legislative and Public Policy Committee for the last four years. I have represented our cooperative on the Hill in Washington, D.C. calling on senators and congressman, emphasizing the importance of the Farm Credit System to rural America. I have also attended field hearings held by

Sen. Stabenow and Sen. Roberts in regards to the current farm bill as well as the upcoming farm bill, and had personally talked to Sen. Stabenow about the importance of federal crop insurance as a risk management tool for our producers.

Committee members attend events held by legislators and deliver PAC funds personally as an opportunity to answer any questions or concerns they may have, as well as to bring them up-todate on any current pending issues for our association.

Over the past few years, GreenStone has successfully activated our Michigan and Wisconsin PACs. The committee has been active in identifying those legislators who are supportive of the Farm Credit System, and agriculture and rural communities in general.

Here in July, I will be part of the team traveling to D.C. for the 2017 Farm Credit Week. Once again, I look forward to representing GreenStone by calling on congress on your behalf.

Dennis Muchmore, Outside Director/Committee Member

Serving on the Legislative and Public Policy Committee for the past ten years has been a great experience. With my professional background, this committee is a natural place for me to be of the most value to the association. With the GreenStone leadership of Pete Lemmer and Becky Whaley guiding our program, the legislative and public policy program has exceeded the expectations of the board. I believe we [GreenStone] are one of the legislative leaders in the Farm Credit System, consistently out front with policy initiatives both at home and in Washington, D.C., expanding our PAC on the state level, and maintaining a significant federal presence both financially and visually on Capitol Hill.

May 2017 be a great year for all of you!

to the House, meeting hourly with as many of our delegation in Michigan and Wisconsin as possible. While I really enjoy the Legislative and Public Policy Committee, I was also fortunate to serve on the Building Committee when we developed, planned and executed the then new GreenStone headquarters in 2010. I was pleased to play a small part in the task, and through Dave Armstrong’s and Lynn Gould’s (chair of the building committee) leadership, we achieved perhaps more than we knew. I fully expect with GreenStone’s tremendous growth, the staff’s leadership, and the continued confidence of our cooperative members, we may need to revisit that Building Committee! Go GreenStone!

Ironically, as this issue of Partners reaches your doorstep, we will once again be walking the halls of our nation’s Capitol. Together, our committee, other board members, and GreenStone staff, will work for even more recognition of GreenStone and the entire System in the farm bill and on the Hill. We will spend valuable time going from the Senate

Partners — Summer 2017

LIVE

Growing the Flock

A herd of thirty sheep may not be enough to fully support a family, but it delivers immense satisfaction to beginning farmer Jason Scramlin, who was raised on his family’s farm and founded his own operation just four years ago. Jason’s journey back to farming was a 12 year odyssey, starting with two tours in the U.S. Marine Corp, which he joined after high school. Serving as a Fire Direction Controlman in Iraq and Japan during his first tour, and as security guard at several U.S. embassies during his second, Jason was honorably discharged in 2005. Returning to his home state of Michigan, he enrolled in Michigan State University to study animal science. While there, he met fellow student and now wife, Jordan, and after graduation, the two both pursued off-farm careers, he with Michigan Farm Bureau, and she in the cattle genetics department of Zoetis. Despite enjoying the satisfaction of his job with Farm Bureau, farming still called to him and he knew he wanted his own operation. “I’ve always been independent and wanted the chance to be on my own, making my own decisions,” he says. The couple founded Split Rail Farms

Summer 2017 — Partners

in 2013 with the purchase of a 10-acre farm in Hickory Corners, with financing from GreenStone Farm Credit Services. They also purchased five ewes, recognizing that sheep require less specialized equipment than other livestock like cattle and hogs, and so getting up and running was more feasible for a small producer. The hay they raise on their acreage goes to feed their animals. After slowly growing their flock for several years, in 2016, Jason had the opportunity to double the size of their farm with the purchase of another 10 acres, and immediately doubled their sheep herd as well. Today, they have 32 brood ewes and a ram, also acquired last year, which has improved their cash flow and profitability, although not enough for Jason to farm full-time. “Having an off-farm job, there are too many days on the calendar on which I barely come in the house for supper and to say good night,” says Jason. “But Jordan sees the passion I have for what I do, and we both look at the big picture of what we’re working to achieve.” The challenges of farming part-time are only made greater by being a beginning operator, with less working capital

willing to work hard every day to improve a little each year.” Jason leans on mentors and advisors in making many of his decisions, and counts his GreenStone financial services officer, Ashley den Dulk, among those he trusts. “GreenStone has been a strong partner to us. They’ve provided funding, of course, which was important and has opened doors for us in our operation, but Ashley has also been a good advisor,” Jason says. “She’s taken time to talk to me about my ideas and my investment considerations, and she reviews my financial statements with me, making suggestions on things we could be doing differently or better.”

than most established businesses are able to retain. “We started with nothing - our first farm purchases were pitchforks and shovels, and we hand-rolled our hay the first year,” Jason says. “A big challenge beginning farmers face is making good decisions on where to spend your money. You’re always faced with either/or decisions, like is it better to buy a manure spreader or seed for the hay field.” The other challenge Jason notes is maintaining the drive and determination to keep moving forward when things are difficult. “It’s hard not to get discouraged when you don’t have all the tools you need or want, and have to battle what you want to do with what you can do,” he says. “To be successful, you need to be disciplined with the operational decisions you make and the risks you take, and you need to plan for the future in a responsible manner. And of course, you have to be

operation to the point that he can farm fulltime, and that as a family with their son, Elijah, now seven months old, they can enjoy their days together working hard but enjoying the agricultural life. “I’d love to grow our family farm into something that can be passed down to our children,” Jason says. “I don’t know if Elijah will want to be a farmer, but I want him to have the opportunity to choose this path and be able to support his family with it if the time comes.” ■

Jason’s dedication and careful decision making has paid off, as Split Rail Farms has flourished. Among his decisions was implementing rotational pasture management, which increases grazing material as well as reducing soil erosion. They breed their ewes to produce in two groups, one in January and one in March, making animal management easier. As a member of the Farmer Veteran Coalition, and treasurer of the Michigan chapter, he’s part of the Homegrown By Heroes labeling program. They have also undertaken the operational and reporting requirements to become verified in three separate systems – farmstead, cropping and livestock – by the Michigan Agriculture Environmental Assurance Program (MAEAP), a voluntary effort to reduce environmental impacts from agriculture. Jason is proud of the MAEAP sign hanging at the front of their farm. “Three years ago, if you had asked me where we’d be today, I wouldn’t have come close to predicting all we’ve achieved,” Jason says. “It truly is a blessing, more than I ever imagined we would have. And I know we’re not done yet. As long as we can continue to take care of our animals, our land and ourselves the way we have been, I know we’ll continue to keep farming.” Looking forward, Jason and Jordan hope to grow their

Partners — Summer 2017

AVOIDING BUGS From BBQs to pool parties to late night campfires, summer is filled with ample time outdoors. During these warmer months, most of us understand the importance of sun safety, but it is easy to forget to protect ourselves against insects. Be proactive this season and keep the pesky critters away! Avoid perfume and sweet-smelling beauty products. Insects flock to flowers, so it makes sense they are attracted to fragrant skin, clothes and hair. Opt for fragrance-free beauty products, skip the perfume or cologne, and avoid sweet scents of soaps. Keep an eye on your cup. The last thing you want to do is swallow something that can sting you. Insects love sweet beverages, so be sure to look before you sip, and also keep food in sealed containers at picnics and other outdoor gatherings. Go barefoot at your own risk. Bees tend to hover around low-growing clovers and yellow jackets actually live in the ground. Keep your feet safe from stingers by wearing shoes on grassy fields or lawns.

Avoid wearing bright clothing. Bright flowery prints attract insects, including honey bees and hornets. If you know you will be outdoors during the day for a long period of time, dressing in darker colors can help deter these types of pests. Maintain your property. Because ticks prefer to hide in tall grass and wait for a passing human or animal, it is important to keep your lawn cut. In addition, mosquitoes only need about half an inch of water to breed, so eliminating areas of standing water around the home - such as flowerpots and birdbaths - can greatly reduce the number pests in the area. Protect your pets, too. Your four-legged family members can also get diseases from insects. Make sure to use your pet’s flea and tick repellants. ■ Source: www.rd.com, www.northshore.org

COUNTRY LIVING – OPEN FIELDS BLOG BRIEF GreenStone publishes regular updates on our Open Fields blog. Check out some of the posts you may have missed at www.greenstonefcs.com! • Credit Score Basics A good credit score is important when considering large purchases, such as land or a home. However, exactly where that score comes from, and more importantly, how it is calculated, is less certain among many consumers. In this blog post and video, GreenStone financial services officer Ashlee Guerrero explains the basics of credit scores, along with what GreenStone specifically looks for when customers apply for financing. • Landscaping Your New Construction The planning process for building your new home started months ago with finding the perfect land and then the perfect blueprint… now your house is move-in ready and the only thing left to do is unpack and enjoy. Once you’ve settled in and had some time to adjust to your new home, your thoughts will naturally turn to all the finishing touches that make a house a home – and during this time of year, that means patio projects, flowers and landscape, and gardening. Before you launch into a grand scale outdoor plan for your new home, take a moment to read over three tips to ensure a smooth process! ■

Summer 2017 — Partners

Easy Skillet Montmorency Tart Cherry Crisp Ingredients: • 4 cups frozen Montmorency tart cherries, completely thawed

• ²/3 cup brown sugar, lightly packed

• 1 – 1½ cups white sugar

• ¾ teaspoon ground cinnamon

• ¼ cup cornstarch

• ¼ teaspoon ground nutmeg

• ½ teaspoon salt, divided

• ¼ cup pecans, finely chopped

• 1 teaspoon fresh lemon juice

• ¹/3 cup unsalted butter, at room temperature

• 1 teaspoon vanilla extract • ¹/8 teaspoon almond extract • ½ cup white flour • ½ cup old fashioned oats

• 1 cup powdered sugar • 1-2 tablespoons heavy cream • Vanilla bean ice cream, optional

Instructions: 1. Set out the tart cherries in a strainer in the sink until completely thawed. Shake off all excess liquid and place in a large bowl.

8. Using a slotted spoon, transfer the cherry filling into the bottom of the skillet and discard the leftover juices in the bottom of the bowl.

2. Add in the sugar (this is to taste depending on preference and tartness of the cherries you are using; generally use the full 1½ cups to balance the tart)

9. Top the cherry filling evenly with the crumble.

3. Add cornstarch, salt, lemon juice, vanilla extract, and almond extract. Toss gently to combine and set aside. 4. Preheat the oven to 350°F. 5. Lightly grease an 8 inch cast-iron skillet. 6. In another large bowl, toss together the flour, oats, brown sugar, salt, cinnamon, nutmeg, and pecans. 7. Cut the butter into small cubes. Use your fingers to work the butter into the mixture until a thick “dough” crumble has formed.

10. Place the skillet on a baking sheet (in case anything spills over) and then in the oven. 11. Bake for 35-40 minutes or until the top is lightly golden brown. 12. While it is baking, make the glaze: add the powdered sugar to a bowl, while slowly adding in the heavy cream, beat on low with a hand mixer until a thick glaze forms. 13. Remove the crisp and allow it to slightly cool. 14. Transfer the glaze into a small plastic bag and cut off the tip. Pipe the glaze over the crisp. 15. Serve the crisp topped with vanilla bean ice cream!

Provided by the Michigan Cherry Committee/Cherry Marketing Institute. Visit www.choosecherries.com for more delicious recipes.

Commodity Cuisine...

Partners — Summer 2017

EATING HEALTHY WHILE TRAVELING THIS SUMMER SUMMER IS THE PERFECT TIME TO TAKE THAT LONGAWAITED FAMILY VACATION OR A SCENIC ROAD TRIP TO GET AWAY FROM IT ALL! WITH THIS, IT IS ALSO EASY TO GIVE UP ON YOUR DIET OR GENERAL HEALTHY EATING. THE CONSTANT RUSH OF ACTIVITIES MAY MAKE IT TEMPTING TO STOP AT A FAST-FOOD OUTLET WHENEVER HUNGER STRIKES OR GRAB THOSE UNHEALTHY SNACKS OR BEVERAGES. OCCASIONALLY INDULGING IN ITEMS OR TREATS YOU DEEM “WORTH IT” WILL NOT COMPLETELY THROW YOU OFF COURSE, HOWEVER IT IS IMPORTANT TO KEEP HEALTHY FOOD TIPS AND TRICKS IN THE BACK OF YOUR MIND TO HELP FROM GOING OVERBOARD. Whether you will be traveling by plane, train or automobile, pack your own meal and snacks. This provides you with an alternative to eating the expensive and typically unhealthy prepared meals. Bring protein and nutrient-dense dry food that will not easily leak or get smashed in your bag, such as nuts, protein bars, and firm fruit. If possible, you may also want to pack an insulated lunch bag or cooler with cold packs to keep food temperature in the safe zone. Also, be sure to drink plenty of fluids. The best choice is water, however milk and juice are adequate alternatives. Attempting to avoid fast-food outlets that do not offer a variety of options is also a good way to remain healthy while traveling. Though stopping at a recognizable restaurant may be a comforting choice when passing through a new city, their typical meal selections are often high in fat and calories. Instead, try to find a table-service restaurant where you can customize items on the

Summer 2017 — Partners

menu and focus on meals that incorporate components like fresh veggies and lean protein. Regardless if it is day one or day five of your trip, do not forget to always eat breakfast, which is usually easier said than done with the hustle and bustle that can come with vacationing. Breakfast helps prime your system and prepares you for a full day of activities. Choose options that are high in fiber and protein, such as whole grain toast with peanut butter, to give you instant energy and fill you up until lunch. This will help reduce the temptation to grab unhealthy snacks in the moment because you are starving. A good tip to keep in mind at all times, not only when you are on vacation, is to eat when you are hungry and stop when you are comfortable. It sounds simple, but many of us have gotten out of the habit of paying attention to whether we are truly, physically hungry. Eating opportunities and celebrations are all around when on vacation, and you are in the pure excitement mindset. That is when you are the most vulnerable to eating even if you are not hungry and not stopping when you are full. It is also important to remember being on vacation does not necessarily mean completely depriving yourself! The trick is carrying “moderation” in your back pocket. Try sampling delectable foods instead of feasting on them, and keep to one treat a day. After that, opt for a healthy choice instead. At the end of the day, taking a trip is a special time to spend with those closest to you. If avoiding a world-famous dish or dessert is going to make you and your family feel as though you are missing out on sharing a special memory together, then by all means, grab the fork and dig in! ■ Source: www.webmd.com, www.usatoday.com

LEARN

CROP INSURANCE NEWS:

CLAIMS AND APPRAISALS–

Most producers have been there before. No matter what you do during the growing season, sometimes Mother Nature just will not cooperate, and you are anticipating your yields may fall below your guarantee. Obviously this is not the situation you would like to be in, but that is why you purchased crop insurance to begin with. If you do find yourself in a claims situation, there are some important things to remember that can help the process go a lot more smoothly.

• Perils The vast majority of naturally-caused perils are included under multiple-peril crop insurance (MPCI) coverage. This includes but is not limited to: adverse weather, failure of irrigation water supply, fire, insect damage or plant disease (unless you improperly or insufficiently applied pest or disease control measures) and wildlife damage. Those covered under Revenue Protection are also protected from a decline in market price.

Partners — Summer 2017

• Timeframe Insurance coverage generally begins at time of application or time of planting, whichever is later. The end of the insurance period is generally recognized as the earlier of: total destruction of the crop, final harvest of the crop, abandonment of the crop, or the end of the insurance period (which is Dec. 10 for corn insured as grain and soybeans). • Insured’s Responsibilities For planted crops, the insured must notify the insurance company within 72 hours of the initial discovery of the damage or production loss, but no later than 15 days after the end of the insurance period, even if the crop has not yet been harvested. If you have a revenue protection policy and have a claim based strictly on price, the insurance company must be notified within 45 days of the harvest price announcement for the crop. • Appraisals If you are going to harvest your planted crop in any nontraditional manner, a crop appraisal must be completed, otherwise you may lose out on a potential indemnity payment. The most common time an appraisal is needed is when you are going to chop corn that is insured as grain for silage. If you have a corn policy, any acreage that is not harvested traditionally as dry grain should be appraised. It is best to contact your agent at least a week in advance of when you are planning on harvesting in order to provide enough time to arrange for an adjuster to perform the appraisals while the crop is still in the field. In the event you harvest before an adjuster is able to perform appraisals, representative sample strips must be left in the fields so the adjusters can use them for appraisals. The strips must be at least 10 feet wide and run the entire length of the field. If you do not agree with the appraisals you have received from the adjuster, do not sign them. Instead, call your crop insurance specialist right away to have another adjuster perform a second appraisal. Throughout the entire claims adjustment process, contact your specialist as soon as possible if you ever feel uneasy that something does not seem right. Likewise, if you have any problem with the adjuster working your claim, we can generally help you get someone different. Obviously no one wants to have a claim – we all agree that producing a bumper crop is much more enjoyable than receiving a large claims check. However, when a claim does become necessary, remembering these key points will help make the process go smoother. As always, if you have questions, please contact your crop insurance specialist. ■

Summer 2017 — Partners

Crop Insurance Calendar... JULY

15 28

Spring Acreage Reports Due & Processing Beans Final Plant Date July LGM Sales Close Date

AUGUST

Spring Premium Billing Date

August LGM Sales Close Date

SEPTEMBER

29 30

September LGM Sales Close Date Wheat & Forage Production Sales Close Date End of Insurance Period (loss reporting deadline) – Peach & Blueberry Premium Bill Payment Deadline

OCTOBER

Forage Underwriting Report Signature Due Date

25*

Wheat Final Plant Date

October LGM Sales Close Date

End of Insurance Period (loss reporting deadline) for Fall Crops Final Claim Reporting Date for Dry Beans

* Please note that dates can vary by county. Please check with your crop insurance specialist for specific dates if you are unsure.

CROP INSURANCE NEWS: ACREAGE REPORTS AND ACRSI– The Acreage Crop Reporting Streamlining Initiative (ACRSI) has been a work in progress for several years at the Rick Management Agency (RMA). The goal is to streamline acreage reporting for producers by allowing them to report their insured acres with either their crop insurance agent or the local Farm Service Agency (FSA) office. The reported information will be shared electronically between RMA (through agents and AIP’s) and the FSA office. Any producer reporting acres of ACRSI eligible crops to their agent is already participating in the ACRSI program. Producers are still required to complete, submit, and sign acreage reports with their agent. Once the acreage reports are received, the Approved Insurance Provider (AIP) will submit the acreage information to a clearing house at RMA. The RMA clearing house will then push the ACRSI data to FSA. When the producer arrives at their FSA office, the ACRSI information will be available. The producer must ask the FSA office to pull the data from ACRSI to pre-populate their FSA report. The producer will review the completed acres at FSA before signing. This will streamline the process and result in a less time consuming FSA appointment. By now, you have completed your acreage report for 2017 Spring planted crops. As you know, it is your responsibility to report the crop that was planted in each section, the planting date, and your percent share of that crop. Reporting your crop accurately and double checking everything is very important. Corrections or changes can no longer be made, as the reporting deadline was July 15. ■

Sept. 30 Payment Deadline Late fees will be charged on any unpaid premium on Oct. 1, 2017. Please note this important change as late fees cannot be waived. If you cannot pay your premium before the due date, please contact your AIP to make payment arrangements. Payment is due regardless of whether or not you have an outstanding claim. ■ Hail Insurance It is not too late to purchase hail insurance for 2017! Hail is a separate policy from your multiperil crop insurance coverage. As an added bonus, your hail policy can provide coverage for fire, lightning, vandalism/

malicious mischief and transit to the first place of storage. Rates and coverage can vary by crop and county. Keep in mind, hail insurance must be purchased before damage occurs. ■ Fall Wheat & Forage Claims Appraisals are required when a customer plans to do something with the crop other than harvest in the normal manner. If you do not plan to take your wheat/forage to harvest, we must appraise the acres prior to destruction. ■ Fresh Apple Reviews Remember, a fresh apple policy can be singled out for a fresh review at any time during the

year, or at claims time. You will be asked to prove you have sold your apples as fresh and provide the price for which they were sold. The requirement is that 50 percent or more were sold as fresh, at a fresh price in at least one out of the last four years. Call your crop insurance specialist if you need more information regarding what documents can be submitted and what needs to be included on those documents. If you cannot prove fresh sales, RMA requires that your apples be changed to processing for the current crop year. ■ Forage Production If you think you may be facing a forage production loss, contact

your crop insurance specialist to file a claim. If you did not have forage insurance for the 2017 crop year and are interested for 2018, make note that the sales close date is the same as wheat, Sept. 30. ■ Crop Insurance Alert: Before You Chop! It will not be long until it is time to fill the bunker silo. Before chopping corn for silage, please call and arrange for an appraisal ahead of time. Every effort will be made to have your crop appraised before you chop. Otherwise, you will be instructed on how to leave samples in your field for later evaluation. ■

Partners — Summer 2017

DAIRY INDUSTRY OUTLOOK

TRENDING MARKET: WHAT YOU NEED TO KNOW By Benjamin Spitzley, Vice President and Commercial Lending Group Manager, GreenStone Farm Credit Services

Summer 2017 â&#x20AC;&#x201D; Partners

The dairy industry is facing a challenging time, a cyclical downturn that has lasted longer than in previous cycles, and that is expected to continue for at least the near-term. The predominant factor behind the current status is simple market mechanics: there is an abundance of supply relative to demand. This has pushed down average milk prices to levels that do not cover production costs. In short, many dairy operations are running in the red, and have been since 2015. This situation arose from increased demand in the years leading up to 2014, which raised prices and encouraged dairy operators to expand their herds to increase production. In Michigan, for example, the dairy industry has grown by 72 percent since 2004, and the industry added 12,000 cows in 2016 alone, a year when the average producer was losing money. Wisconsin has likewise seen considerable production growth of 2.3 billion pounds in just the last 2 years. Nationally, the USDA reports that herd size is continuing to increase despite the lack of profitability, from 9,328,000 cows in 2016 to 9,385,000 in 2017. While supply has thus increased, and continues to increase, demand has not kept pace, creating a surplus of milk in the market. There is also a glut in the global market as other nations increased their production to meet demand; combined with the strengthening of the U.S. dollar and trade uncertainty, there has been reduced demand for U.S. dairy exports, which traditionally represented 15 percent of our nationâ&#x20AC;&#x2122;s dairy production.

Exacerbating the situation in Michigan is a dearth of processing capacity, which has not increased in line with milk production. This puts producers in the unenviable position of needing to market their milk out-of-state, where processing is available, adding transportation costs and additional marketing costs to their already challenged cash flows. The erosion of revenue is significant: in 2004, Michigan’s dairy farmers were being paid 25 cents more than the U.S. average per hundredweight; last year, they were paid $1 less than the national average. Adding processing capacity will be paramount to protecting dairy producers against these additional costs. Wisconsin producers have benefited from more access to milk processing and have not been impacted as severely as Michigan with the added transportation and marketing costs. In fact, Wisconsin producers are earning an average of $2 more per hundredweight than their Michigan counterparts. However, processing capacity appears to be getting tighter. The recent closure of a Canadian milk processor to Wisconsin milk that left 72 farms temporarily stranded without processing underscores how critical access to processing is. Many producers are facing the likelihood of a third year of low or little profit. Fortunately, the period before this downturn was highly profitable and most producers built strong balance sheets with high levels of working capital, positioning them to withstand the current cycle. Over time, the market will balance itself out, as supply and demand draw closer together and processing capacity is added. In the meantime, producers need to take a hard look at their operations and their financials. Producing a high quality product with good components will support a better price and better marketing options. Producers should strive to tighten overhead with a careful eye to reducing costs and streamlining operations. Every asset should be examined to determine if it is

producing enough revenue to justify keeping it – whether the asset be surplus heifers, or a two-year inventory of feed. In short, if you cannot afford the asset, scale it back or sell it off. Any capital investment needs to be carefully scrutinized, with a complete Return on Investment (ROI) analysis to ensure it will add to the bottom line. It is also critical to maintain good records to support effective management decisions. These will help producers manage their working capital, identify potential cost savings, and know whether they have the resources to take advantage of opportunities when they arise. Also supporting effective decision making is an advisory team, on which producers should include key employees, vendors and financial advisors. This team should be tasked with helping to proactively develop not only a plan, but also a backup plan, for managing through this cyclical downturn. Such plans will need to be individualized for each operator, and may include steps like finding additional sources of income, implementing specific cost-savings solutions, or changing the overall scale or scope of the business. Lenders, like GreenStone Farm Credit Services, will strive to find methods, such as interest-only solutions or increased access to operating funds, to support customers who can demonstrate they have thought through their specific situations and have developed a plan for moving things in the right direction. Looking forward, there are bright spots on the horizon. It is anticipated that milk prices will begin to rebound by the fourth quarter of 2017, though the increase is expected to be modest given the processing dilemma. Producers who manage to reduce their costs and streamline their operations during this period of belt-tightening will be optimally placed to benefit from any improvements in the market. And, there will continue to be a demand for milk; the Great Lakes region, with its abundant forage and water supply, will remain an ideal location to produce milk for the benefit of a growing world population. ■

i KEEPING YOURSELF SECURE ON SOCIAL NETWORKING SITES... The web has shifted away from static webpages, and has moved to user-generated content, which is any form of content created by users of that system or service. These are sites such as Facebook, Twitter and LinkedIn. This shift means people are putting more and more information about themselves on the internet. Unfortunately, this has provided criminals with many new ways to get information about you, and makes it easier to compromise your identity. Here are a few tips that will help keep you safe on social networking sites: Limit how much personal information you post about yourself Avoid posting things that might make you vulnerable, such as information about your daily routine. Keep your posts limited to what you would be comfortable with a complete stranger knowing about you. Review the site’s privacy settings Review the privacy settings on your social networking sites to make sure you are aware of what data is visible to the public. It would be best to limit the details you allow anyone to see and restrict it to your friends or friends of friends. Some sites change their settings often, therefore be sure to review these periodically to make sure they are still accurate. Limit the number of third party applications Allowing third party apps access to your social networking accounts typically provide additional functionality or entertainment, however, also opens your account to these applications. It is important to review the type of access they have and limit it to only the sites you trust. Enable Multi-Factor Authentication Seven of the ten largest social networking sites employ two-factor authentication. By enabling two-factor authentication, it requires a criminal to not only need your password, but also a one-time passcode; this greatly reduces identify theft.

...Tech Tip Partners — Summer 2017

Tax Reform By Kelly L. Tobin, Senior Tax Accountant, GreenStone Farm Credit Services There are several tax reform proposals “in the works” as the Trump administration, the House and the Senate all intend to weigh in on the first significant tax reform expected to take place since 1986. Despite the degree of certainty created through shared hopes for comprehensive tax reform, as well as the shared concepts of lowered corporate and individual tax rates and overall simplification, there exists a significant level of uncertainty in terms of the overall direction, content, timing, and transition of changes to the tax code. Let’s review a few of President Trump’s tax reform proposals, which is just one of several competing proposals. Individual Tax Proposals Under current law, individual income tax rates are 10, 15, 25, 28, 33, 35, and 39.6 percent. The President’s proposed plan calls for replacing and lowering the current individual tax rates with a new, three-bracket range: 10, 25, and 35 percent. The income brackets, which the rates will apply to, have not yet been developed. The president’s plan calls for doubling the standard deduction. The current 2017 standard deduction amounts are $6,350 for singles and $12,700 for couples. The president’s plan would increase the standard deductions to about $12,700 for singles and $25,400 for couples. As a result, the number of individual returns filed claiming personal itemized deductions would be greatly reduced and easier to complete.

Summer 2017 — Partners

The president’s plan would eliminate all personal itemized deductions except for the mortgage interest deduction and the deduction for charitable contributions. The plan also proposes a cap on the amount of personal itemized deductions that can be claimed at $100,000 for singles and $200,000 for couples. Additionally, all personal exemptions would be eliminated as would the head-ofhousehold filing status. These “give backs” would help to offset some of the reduced government revenue realized as a result of the rate cuts and higher standard deductions.

the U.S., such as loans. A rate that has been mentioned for this one-time tax is 10 percent, much lower than the current 35 percent maximum corporate tax rate. It is very doubtful that tax reform will occur in time for 2017 tax returns. There will be a long debate over competing tax reform plans before all of the parties can put together a plan that can be agreed upon. However, it is likely safe to assume we will see some type of tax reform for 2018 taxes. Let’s hope it truly does make tax preparation easier for everyone! ■

The president’s plan calls for unspecified tax relief for families that incur dependent care expenses. Under current law, qualified taxpayers incurring dependent care expenses can claim a credit of 20-35 percent of qualifying dependent care expenses, depending upon income level and other factors. However, the total amount of expenses eligible for the credit is $3,000 for one dependent and $6,000 for two or more dependents, which is very low considering the cost of dependent care today.

Tax Calendar... JULY

The president’s plan also calls for the elimination of the alternative minimum tax (AMT) and the federal estate tax. The purpose of the AMT, a parallel tax system, is to ensure all taxable entities with substantial income do not totally avoid tax. However, the AMT has captured an increasing number of taxpayers causing these taxpayers “to do their taxes twice to see which tax system produces the higher tax liability.” Eliminating the AMT will simplify tax preparation for a significant number of taxpayers. The federal estate tax only affects estates that exceed a $5.49 million value. However, once that amount is exceeded, the rate is 40 percent. This would certainly be a tax saver for some large traditional and commercial farming operations.

on-farm employers file Form 941 for the second N quarter to report wages paid, and social security, Medicare, and income tax withheld from wages, and compute employer matching social security payments. Form 5500 due for all employers that maintain an employee benefit plan such as a pension plan.

SEPTEMBER

Business Tax Proposals

T hird quarter estimate is due for 2017 for individuals that pay estimated taxes. S Corporations file a 2016 calendar year income tax return (Form 1120S) if you requested an automatic six-month extension.

The president’s proposal calls for a 15 percent corporate tax rate. The maximum corporate tax rate currently is 35 percent. The 15 percent rate would also apply to business income produced by sole proprietors and pass-through business entities such as S corporations and partnerships. It appears the 15 percent rate would only apply to profits left within the business. When profits are distributed to the individual owners, the regular individual tax rates would apply to the distributed amounts. Therefore, for profits left within the businesses, owners would see their top tax rate reduced from 39.6 percent to 15 percent under the President’s plan.

Partnerships file a 2016 calendar year income tax return (Form 1065) if you requested an automatic five-month extension. orporations deposit the third installment of C estimated income tax for 2017.

OCTOBER

While not specifically identified, the President’s plan would reduce or eliminate several tax deductions and tax credits allowed under current tax law. Some of the deductions and credits that have been talked about include the Research and Development credit, the Domestic Production Activities Deduction, the interest expense deduction, and several energy credits.

The plan also calls for a one-time tax on profits brought back into the country (repatriated profits) by multi-national companies headquartered in a foreign country. These companies have been deferring a significant amount of tax by keeping the profits in the foreign country and using other strategies to move the cash to

Individuals file a 2016 income tax return (Form 1040) if an automatic six month extension was requested. Corporations file a 2016 calendar year income tax return (Form 1120) if you requested an automatic 6-month extension.

Non-farm employers file Form 941 for the third quarter to report wages paid, and social security, Medicare, and income tax withheld from wages, and compute employer matching social security payments.

Partners — Summer 2017

3515 West Road East Lansing, MI 48823

Summer feature highlight... A herd of thirty sheep may not be enough to fully support a family, but it delivers immense satisfaction to beginning farmer Jason Scramlin, who was raised on his familyâ&#x20AC;&#x2122;s farm and founded his own operation just four years ago. Read more on page 31.