Spring 2018
GreenStone FCS
Promoting the business success of our customers and the rural community
+S pring 2018
Market Outlook
+ I nsurance
Coverage for Specialty Crops
+T he Value of Benchmarks
+DAIRY
NEXT GEN. Wagner pg. 5
SPRING 18 5 YBSF Feature. Bringing a new generation on to a dairy farm often times requires bringing in new innovation, new ideas or new technology. For Tyler Wagner, it was automated milking systems that piqued his interest and proved to be a viable solution.
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21 GreenStone Story. Because GreenStone is a member-owned cooperative, we are also membergoverned through our board of directors.
35 C rop Insurance. The relatively new Whole-Farm Revenue Protection insurance program, offers protection to Bruce Klamer not usually obtainable for specialty crops. 37 Tax Feature. The Tax Cuts and Jobs
27 Country Living Feature. Marc and Erika Walker’s construction project was driven by the small town values and experiences they had growing up.
Act, reduces tax rates for individuals and corporations, and also repeals several deductions, resulting in it not being simple to compute the impact on your tax liability in future years.
3 CEO Comments. President and CEO, Dave Armstrong, discusses the benefits of our cooperative structure. 9 Guest Column. Alan Hahn shares an update on regulations affecting agriculture, as well as an observation on a potential external influencing factor. 11 Market Outlook. This time of year, all eyes are on spring planting and if any late season events will switch corn and soybean acres from early expectation.
29 Choosing a Builder. Engaging in new home construction involves a series of decisions, starting with choosing the right builder to partner with you through the homebuilding process. 30 Health and Wellness. Long-awaited spring sunshine and warm breeze are right around the corner. With the change of season comes the urge to say goodbye to the old, and hello to the new. This can also mean welcoming the warmer season with new, healthy habits. 41 Financial Benchmarks.
23 Legislative Matters. Anybody who has been involved in production agriculture for a meaningful time period knows trade is vitally important to sustain a farming operation. Currently, leaders in the United States government are looking at the overall global economy, and the roll of trade. 24 PAC Progress. Important issues are up for discussion, and thanks to the extraordinary support of members, directors, and employees, we are well positioned to stand for agriculture and Farm Credit. 25 Directors’ Perspective. Over the next several issues of Partners, you will hear from each director on what is important to them and why they believe GreenStone is the cooperative to help them accomplish their goals.
Financial benchmarks provide farmers key insights into how their operation is performing financially and help identify areas for improvement.
14 Blog Brief 15 Member News 16 Calendar of Events 17 Circle of Excellence 18 Candid Comments 19 Behind the Scenes 20 Pause for Applause
31 Commodity Cuisine... Fried Cheese Curds
Publisher’s Note: When our team sat down to brainstorm ideas for Patronage Day, we explored the “GreenStone experience,” revisiting questions like: why do our members choose us; what do our customers expect; what makes GreenStone unique; and specifically, what do we hope members experience on Patronage Day? In many ways, each answer came back to the benefits of cooperative membership. Cooperatives generally focus on the same set of principles, employing each in it’s own custom way that aligns to the organization’s mission and values. That cooperative conversation never sits idle at GreenStone, and as you read this issue of Partners, you might notice some connections along the way. Voluntary and Open Membership: No two of our members are the same, and each comes with their own unique story and needs. Here we feature three customers: a next generation Wisconsin robotic dairy farmer; a family who made the move to put down rural roots; and a Michigan specialty crop farmer. Democratic Control: In the GreenStone Story you’ll learn more on GreenStone’s member-governance, including how you can be a greater part. Later, your current directors took part in Patronage Day and share with you what being a GreenStone member specifically means to them. Education, Training, and Information: Each issue of Partners provides a fair amount on this principle, but pay close attention to the News section where we recap recent forums and seminars our members experienced – including three more later this year. And be sure to read to the last page where financial benchmarking could provide you with much value. Concern for Community: In Dave’s CEO Comments, he speaks to the responsibility we have to our members, and our members to us. Meeting, and exceeding, your expectations together continues to be our cooperative’s focus. Next issue, we’ll be sure to include topics relative to these and other cooperative principles. Until then, happy reading, and best wishes for spring safety and success! — Melissa
32 How to Keep Kids Reading
This newsletter is published quarterly for the customers of GreenStone Farm Credit Services.
33 Crop Insurance News
Editorial Marisa Kimerer Laura Moser Melissa Rogers
34 Crop Insurance Calendar 38 Tax Calendar 39 The Employer Brand 40 Tech Tip
Art & Design William Eva
Partners GreenStone Farm Credit Services 3515 West Road East Lansing, MI 48823 800-444-3276 marketing@greenstonefcs.com
CEO Comments:
Spring 2018— Cooperative Focus THIS ISSUE OF PARTNERS INCLUDES A FOCUS ON COOPERATIVES, STARTING WITH THE EDITOR’S NOTE AND FOLLOWING INTO THE GREENSTONE STORY. THIS ORGANIZATIONAL STRUCTURE HAS EXISTED FOR HUNDREDS OF YEARS IN COUNTRIES AROUND THE WORLD WHERE PEOPLE BELIEVED WORKING TOGETHER WAS THE BEST SOLUTION TO OBTAIN COMMON GOALS. WHETHER IT HAS BEEN FOR EDUCATION, PRODUCTION OF SPECIFIC PRODUCTS INCLUDING FOOD, OR EVEN FINANCIAL SERVICES, COOPERATIVES HAVE STOOD THE TEST OF TIME AS A WAY FOR GROUPS OF PEOPLE WITH COMMON NEEDS TO BE BETTER TOGETHER.
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The Farm Credit System, of which GreenStone is a member organization, is an excellent example of a successful cooperative. Founded just over 100 years ago, the system today is the 10th largest financial institution in the United States with over $300 billion in assets and nearly 500,000 members nationwide. GreenStone is the seventh largest of the System’s 69 retail associations with 24,000 members and over $8 billion in assets. Farmers and other eligible borrowers who have used the system over the years did so because their cooperative provided the best overall solution to their credit and financial service needs. At any given point, the rates provided by their association may not have been the very lowest or array of services the broadest, but they knew they could count on it for sound advice, a fair deal, and to be there in good times and bad. Since that first Farm Credit association was chartered in 1917, the system has stayed true to its mission of providing a competitive, dependable, and responsible source of credit through two World Wars, a Great Depression, the 1980’s agriculture credit crisis, and the financial markets meltdown of 2008-2009.
Even today, in the fourth year of a down cycle in the overall agricultural economy, GreenStone continues to be well-positioned to meet the same credit and financial service needs of its present membership base just as those farmers who organized the Farm Credit System sought to do over one hundred years ago. Being financially strong at this point in time allows us more flexibility in working with our members. It would be a much more dire situation if we were unstable and in a vulnerable state. (I invite you to review our Annual Report on our website to see the financial strength of the cooperative.) Being financially strong, however, does not necessarily mean, making unsafe and unsound lending decisions that can ultimately affect the stability of the association and its 24,000 members. As the debt capital partner for a majority of the farming operations in our territory, we are striving to work closely with all members to make thorough evaluations of their current and short-term business projections. These conversations can at times be uncomfortable for both parties when options are narrow and forecasts are dim. In all situations, you can expect your GreenStone team member to be respectful and knowledgeable in presenting information. Our experience in working with farming operations for generations is that often times making decisions is the most difficult step. Whether the decision is to diversify, seek outside investments, leverage equity, or exit the operation, making the decision is the most difficult and most important step. Once the decision is made, plans can be designed to best position the business to achieve the desired goals of the owners. To help farm owners make educated decisions on their current and projected financial situations, our team relies on metrics and benchmarks to paint the financial picture. On page ## we discuss metrics to be evaluated and how they are calculated. Understandably, no two farming operations are distinctly alike, so naturally we cannot offer a one-size-fits-all solution for every member. Having a clear plan backed by financial metrics will help us work with you to evaluate your overall financial structure and may observe possible areas to help reach your stated goals.
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armers and other eligible F borrowers who have used the system over the years did so because their cooperative provided the best overall solution to their credit and financial service needs.
difficult situations. Our staff closely monitors these situations and communicates with those whose circumstances appear to be changing. As this negative margin environment drags on, there are some farm businesses that have little, if any, risk-bearing capacity left, even after our joint efforts and extended assistance with repayment terms and custom tools. Unfortunately, as these members run out of options and the gravity of their situation sets in, people may become increasingly emotional and look for someone or thing to blame. I have heard of a few situations where customers do not believe we have done all that we could or treated them with respect. Let me assure you, we have spent a tremendous amount of time and focus working with our staff on the appropriate way to handle these situations. If you have experienced behavior from one of our staff members that is not in line with your
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expectations, I encourage you to reach out to the regional manager or directly to me so we can address the situation. We know full-heartedly this is a difficult time for our farmer members. The majority of our employees working with farmers every day, have some connection to production agriculture and understand the difficult decisions being made on farms today. If at any time you believe your cooperative or one of our team members is failing to meet your expectations, I encourage you to reach out to me. I hope you enjoy this issue of Partners as our team continues to do its best to bring you interesting and relevant content you find of value. Best wishes for a safe and productive planting season. Thank you for choosing GreenStone as your financial services provider!
Dave Armstrong
517-318-4105 dave.armstrong@greenstonefcs.com
Even for those farm businesses with a solid financial foundation, circumstances can change quickly and farmers that were trending on-target can find themselves in
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Next Generation Transformation BRINGING A NEW GENERATION ON TO A DAIRY FARM OFTEN TIMES REQUIRES BRINGING IN NEW INNOVATION, NEW IDEAS OR NEW TECHNOLOGY TO SUPPORT THE NEXT GENERATION. TODAY’S ECONOMY, COUPLED WITH THE WIDE RANGE OF TECHNOLOGY OPTIONS ON THE MARKET, REQUIRE THOROUGH EVALUATION AND RESEARCH BEFORE IMPLEMENTING NEW IDEAS.
GROW
For Tyler Wagner, it was automated milking systems that piqued his interest and proved to be a viable solution. “When I told Dad I wanted to bring in robots, he thought I was crazy,” Tyler says. “But we did a lot of research and crunched the numbers and saw it could work.” Today, the Wagners use four Lely robots to milk their herd of 240 cows in Manitowoc, Wisconsin. The transition to robots was the next progression for Tyler and his dad, Dale. Dale started the farm in the mid-1980s with 30 cows in a tie-stall barn. In 1997, they moved out of the tie stalls into freestall housing with a four-stall flat barn parlor. They had steady growth of the herd for several years including the purchase of a neighboring farm in 2010 and the addition of two more stalls in the parlor. By 2014, they were facing tough decisions – continue to invest in dairy or sell the cows.
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hen I told Dad I wanted W to bring in robots, he thought I was crazy,” Tyler says. “But we did a lot of research and crunched the numbers and saw it could work.
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“The parlor was old and tired,” Tyler said. “We needed to do something – either sell the cows and just do the crops or invest in the dairy. We couldn’t see letting the barn sit empty, so we started looking into our options. Robots seem to make the most sense because I would rather manage cows than people.” Before bringing in the robots, the Wagners met with other producers who were using robots and visited farms around the Midwest to put together the system that would work best for them. They also did a great deal of cost analysis to make sure the investment would cash flow. “We projected a $1.30/CWT labor savings using the robots, giving us a 5-year return on our investment. We are half way through the first five years and are on track to meet our goal,” Tyler says. While the Wagners could pencil out the costs and retrofit their barn to accommodate the robots, the one uncertainty they had was the potential effect on milk production and overall cow health. Having worked to achieve production levels of 85-pounds of milk per cow, they were concerned production might dip when they transitioned to the robots. The herd is currently at pre-robot levels with higher fat and protein components and lower somatic cell counts. The consistent production endured eliminating the use of Posilac® and moving from a total mixed ration to a partial mixed ration, with pellets fed at milking. Maintaining and even improving production levels was the important part of the cost equation allowing the Wagners to see their projected ROI.
➡ Above: Applying automation and new technologies like the Juno feed manager, reduces labor costs for the Wagners without sacrificing productivity.
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➡ Right: Managing and analyzing the data points collected at milking helps Tyler Wagner keep track of individual cow health.
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hen we were W growing up my parents never missed one of our games or school activities. I want to be able to do the same with my kids. Last Christmas, Dad and I were able to work around Christmas dinner, rather than having to plan around milking time. It makes a big difference.
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“The biggest unexpected benefit of the robots is the increase in pregnancy rate,” Tyler adds. “Because they are not standing in a holding area or at a feed bunk they are resting more. Before the robots the cows were waiting up to an hour and a half at each milking. We are also seeing a big improvement in the cow’s feet and legs.” The cows are not the only ones enjoying an easier lifestyle. The Wagners are too. “Using robots is a lifestyle change for a dairy farm,” Tyler says. “When we were growing up my parents never missed one of our games or school activities. I want to be able to do the same with my kids. Last Christmas, Dad and I were able to work around Christmas dinner, rather than having to plan around milking time. It makes a big difference.” While the robots do not eliminate the daily work on the farm – animals still need to be fed and monitored, barns cleaned, calves cared for – it does allow for more flexibility. The Wagners have reduced the number employees from six to two with some part-time help. The addition of the robots has become a pivotal point in the legacy of the Wagner’s family farm. Both Dale and Tyler took the opportunity during
the transition to begin the overall succession planning of the dairy and their custom harvesting business. “Dad brought me into the harvesting business as a partner in 2007, two years after I graduated high school. I became a partner in the dairy in 2015 and in 2017 the dairy bought the harvesting company,” Tyler explains. The Wagners work closely with Laurie Schetter, senior financial services officer at GreenStone’s Manitowoc branch. Having a good relationship with Laurie has helped make the business and farm transitions easier. “When we visit with Laurie, we generally present her with three ideas and plans on how they will work,” Dale says. “She will take the plans back to the office, meet with her team and then give us an idea of what each would look like. We like to plan conservatively and be surprised when things turn out better than we expected, rather than the other way around. Laurie helps us make those kinds of decisions.” Transitioning to the robots has created other opportunities on the farm and instilled a sense of optimism for the Wagners. “We are always thinking about where the next robot can go,” Tyler says.
➥ Above: Letting the robots do the milking, allows Tyler to spend more time with cows, and less time managing employees.
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Proactive Efforts Related to Nutrient Management Solutions By Alan Hahn
FARMERS ARE ROUTINELY FACED WITH EXTERNAL FACTORS THAT CAN AFFECT THEIR BUSINESS, INCLUDING COMMODITY PRICES, FUEL PRICES, UNPREDICTABLE WEATHER, INTERNATIONAL TRADE NEGOTIATIONS, AND MORE. ENVIRONMENTAL CHALLENGES, INCLUDING INCREASED REGULATION AND WHAT ARE OFTEN UNINFORMED, SHIFTING SOCIETAL PREFERENCES ABOUT FOOD, ARE OTHER GROWING EXTERNAL FACTORS IMPACTING TODAY’S FARMER. AS THESE EXTERNAL FACTORS CHANGE, THEY HAVE A DIRECT EFFECT ON FARMING PRACTICES.
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Environmental issues, regardless of the industry from which the potential issues may be arising, are not simply scientific and legislative concerns, they are social concerns. Environmental issues affect the public and the public is watching, often with a critical eye, to see if and how the industry is responding to the concern. Environmental challenges tend to be complex, and frustratingly, often not within the control of farmers. Just last fall (Fall 2017 Partners) we provided an update on several key environmental issues including Waters of the United States, Comprehensive Environmental Response, Compensation, and Liability Act/Emergency Planning and Community Right to Know Act, and more. As we stated last fall, we closely monitor these regulations as they are likely to change. Guess what, they changed. As they are still in a state of flux, we’ll postpone a detailed discussion until a later date. But, that said, an underlying challenge across all of agriculture is nutrient management. For livestock producers, especially larger farms, a prevailing topic that is influencing the majority of environmental concerns is manure management. Specifically, it is the process of recycling manure and nutrients via land application on crop fields that, when not properly managed, can be a detriment to surface water and groundwater. Excess nutrients, regardless of their source, can have a negative impact on the environment. In the Spring 2017 Partners (Naturally-Occurring Contaminants and Understanding Nitrates in the Environment) we discussed some of the advanced scientific methods used to understand the source of nitrates. In the Spring 2016 Partners (“How Do You Solve a Problem Like …Nutrients?”) we discussed the sources of phosphorus and nitrates, the impact of excess nutrients on the environment, as well as some ways in which agriculture was tackling these issues. Agriculture has moved past “just identifying” areas of potential environmental concerns, though the public may not always be aware of these efforts. There are a number of ways in which agriculture is actively involved in finding solutions and specifically addressing manure management and nutrient issues. For dairy producers and leaders, a prime example is the creation of Newtrient, LLC, an industry-collective effort to accelerate environmental solutions.
Newtrient was formed in 2015 with the primary goal to “reduce the environmental footprint of dairy and make it economically viable to do so.” Among the founding 12 dairy co-ops are Michigan Milk Producers Association, Dairy Farmers of America, Agri-Mark, Land O’ Lakes, Foremost Farms, Northwest Dairy Association and Tillamook. Supporting members also include the National Milk Producers Federation and Dairy Management, Inc. According to Jamie Vander Molen, Director of Communications at Newtrient, the principal objectives at Newtrient are to 1) provide easy access to helpful information about today’s manure management and nutrient-recovery options, 2) accelerate innovative technology and product solutions, 3) help farmers capture the opportunities and economic benefits of manure. Below are Newtrient’s three areas of focus to achieve these objectives. Newtrient Technology Catalogue. This is an open access, online catalogue that
provides an unbiased and objective view of manure management technologies. Newtrient has reached out to every manure management vendor in North America and has found that there are more than 250 promising technologies. Importantly, they are working with Natural Resource Conservation Service (NRCS) to identify those technologies that are eligible for Environmental Quality Incentive Program (EQIP) funding. Newtrient evaluates the various technologies at no cost. The evaluation is detailed and includes consideration of economic viability and practical, on farm application of the technology. Environmental Services Marketplace. Newtrient is working at both the state and
federal level in helping to advance market-based approaches to incentivize proactive pollution prevention measures farmers might consider. For example, dairy farmers who voluntarily adopt pollution prevention measures will receive payments from other “dischargers” who, because they are currently unable to reduce pollution and therefore, need pollution reduction credits (e.g., other industries and municipalities). Technology and Business Development. Because Newtrient essentially represents
over 40,000 U.S. dairy farmers, they are acting as a central point of contact for the various service providers, dairy farmers, cooperatives, investors, policy makers and Non-Governmental Organizations (NGOs). Newtrient’s goal is to find solutions for manure management for farms, small and large. On their website, they state that they are a “…driver of positive change in the emerging industry of dairy manure use and management.” To learn more about their efforts and developments, you can visit their website at www.newtrient.com. Farmers will continue to face many external challenges in the coming years. Feeding more people, using less resources, all while creating a smaller environmental footprint and providing assurances to the public. These are no small challenges, but if past farming advancements are any indication, these current and future challenges will be met. ■
ABOUT THE AUTHOR
Alan Hahn is an Environmental Professional and Business Development Manager at The Dragun Corporation in Farmington Hills, Michigan.
The opinions stated herein are not necessarily those of GreenStone Farm Credit Services.
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WE ATH ER
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Spring 2018
ACRES PLANTED
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MARKET OUTLOOK By Bob Utterback
AS THE PLANTERS END THEIR ANNUAL TRACK ACROSS THE AMERICAN FIELDS AND PRODUCERS GET OUT THEIR SPRAYERS, THEY WILL BE ASKING THEMSELVES ONE QUESTION: HOW MUCH WILL THEY PRODUCE THIS YEAR? THIS ANNUAL QUESTION NEVER GETS EASIER TO ANSWER BEFORE THE PLANTERS RUN, BUT WILL BE DISCUSSED AT EVERY ELEVATOR AND COFFEE SHOP AS ALL EYES TURN TO THE SKY TO SEE IF HEAT OR RAIN IS IN THE FORECAST.
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Historically, the most volatile prices occur from April to August because the market is trying to determine the number of acres planted and exactly what type of conditions the crops will start under, as well as throughout the growing season. Now that we are coming off one of the worst droughts in 30 years in Argentina, everyone is itching to jump to a United States weather event. While the corn stocks are high, there is some positive news that corn acres will be down, but soybean acres will be up and possibly building carryover. So, the market will be very tuned into how spring planting goes and if any late season event occurs to switch corn and soybean acres from early expectation. I am assuming that, since the November soybean contract has rallied enough to get $10 soybeans off the combine for many producers, the soybean acres will be up very close to the March prospective plantings report. Therefore, corn acres
will be down slightly but, unless Mother Nature causes disappointment on yields, we will see production numbers slightly less than last year. This also implies that soybean production will be up and stocks should build for soybeans. Many weather services suggest the dryness will stay out west and the odds of a hot, dry summer event in the main Corn Belt is less than 25 percent. When you look at the weather events since the early 1970s, it is very close to this number. There is a good chance [3 out 4 chances] we will have normal or better yields. This implies, once the crops get planted and long-term weather maps do not show any extreme stress, it will be very difficult for prices to rally this summer when excessive corn supplies may be available to the market. If weather does not ignite the market, we must look elsewhere for variables that will affect the supply/demand of agriculture productions. If you have been reading the papers or watching the TV, you know the current administration’s policy announcement in March of putting tariffs on imported steel and aluminum has many worried about how it will affect them. I suggest that most policymakers agree to a strong nation; we need a solid manufacturing base that implies a strong steel and aluminum industry. It also recognizes that countries like China, Canada and Mexico have been undercutting United States to keep factories working in their country at the expense of the United States. The problem is there is no easy way to roll back the clock. Essentially, if you put a tariff on imports, you increase the cost to consumers, which neutralizes much of the positive impact of the tax program passed last year. This, plus every industry looking out for itself, has created a situation that has made it very difficult to create equitable trade relationships that President Trump is so focused on right now. The fallout for agriculture could be significant because a large part of our corn and soybean production is exported; I fear agriculture could be the sacrificial lamb in this high stakes poker game. Without strong agriculture exports, we would experience a major price break for grains, oilseeds and even livestock. The implication would be a major financial hit for producers throughout every industry that supports agriculture. Finally, since a reciprocal tariff on soybean and corn
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Many weather services suggest the dryness will stay out west and the odds of a hot, dry summer event in the main Corn Belt is less than 25 percent. When you look at the weather events since the early 1970s, it is very close to this number. There is a good chance [3 out 4 chances] we will have normal or better yields.
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exports would really impact the President’s political base, I have been surprised that he brought it up so aggressively prior to mid-term elections. It is clearly a political issue and foreign countries must know he has exposure. This leads to the big question: How will demand be affected? At this time I have to suggest that, until NAFTA gets resolved, one has to assume it’s more of a negative than a positive. While I truly believe China really needs our soybeans and corn more than it needs to dump its excess supply of steel on our markets, we really do not know right now how much hard ball they want to play. I believe the corn supply will remain stable and the soybean supply will increase. Demand is stable for corn and soybeans globally, but uncertainty definitely exists for the next year on the level of demand growth. I suggest a modest growth rate over last year is the best one can assume. The end result is corn stocks will tighten a little, but remain above 2 billion and soybean stocks will grow to over 600 million. Implications: Once the weather risk time period is over, a pronounced downtrend will develop thereby reducing world production and lowering prices to create more usage. Bottom Line: Don’t have a lot of unpriced grain in the bins or in the feedlots during this time period. Due to my concern about the cloudy demand outlook, I strongly suggest one must have flexibility when selling in the market. Producing and selling grain when you need money could be very painful again this year. Now is not the time to pray for the “Hail Mary Pass” to bail out financial tightness. I also suggest developing a marketing plan now for expected production for the 2019 marketing season. If we do get a summer weather event in 2018 that shrinks prices from June to July, I strongly believe in preparing for a multiple-year sale. Wheat: While world stocks are still abundant, we saw some draw down in our
domestic production this year with the dry conditions in major wheat production regions. This helped to lift the market off winter lows as we moved into spring, but will be unable to extend gains unless the corn and soybean complexes get into trouble. Since harvest is very close, it is not a good time to sell inventory. At this time, with the carry in the market, make plans to roll hedges forward to capture carry if there is storage capacity. I realize a lot of producers like to store corn
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Without strong agriculture exports, we would experience a major price break for grains, oilseeds and even livestock. The implication would be a major financial hit for producers throughout every industry that supports agriculture.
rather than wheat; if an off the combine cash sale is required, take a cautious look at a call reownership strategy if any type of weather conditions are impacting corn. I would only want to buy futures if lead-month futures contracts extend corrections below the $4.20 to $3.80 range. Essentially, if there is a big carry in the market and no major outside events occur, holding wheat for a big rally is questionable. Cattle: The cattle market is moving into its weakest
time of the year. As the August to October time period approaches a lot of questions will be asked. How hard have producers fought the lower price trend since the early highs in 2018? If corn and soybean supplies are abundant, will producers elect to walk inventory off the field? Finally, has the uncertainty about NAFTA affected the flow of feeder cattle in the country and finished product out? Be careful paying too much for feeders in the expectation of a robust fat cattle market in the last half of 2018. Until we get the NAFTA issue resolved cattle and feeder cattle prices could be really adversely affected. This is not the time to take a lot of risk in fat cattle. If they are good enough to place, they are good enough to price aggressively. If anyone wants flexibility, buy a deep-in-themoney put rather than sell futures and don’t play around much with margins. Now is the time to take small profits until the picture becomes a little clearer. Hogs: My overall strategy in hogs is just like that
for cattle. There are a lot of big macro factors floating around right now that make it very difficult to see sharply higher prices in the last half of 2018. I would want a floor under my expected
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production, drag my feet a little on locking in feed needs until fall, and hold off on any expansion plans until we get through the uncertainty about NAFTA. As we move into the June/July time period, I strongly suggest getting a floor under any expected fall and first quarter production. I prefer using a deep-in-the-money put. Try to leave basis open because we could have some positive surprises there, but I believe it will be difficult for the flat price to exceed upside expectation after summer unless a major production surprise like disease shows up. Bottom Line: It is time to build cash reserves, reduce debt exposure, and focus on production efficiency; don’t try to outguess the market! If anyone wishes to discuss strategies in more detail, please call my office at 800-832-1488 or 765-426-1377. ■
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
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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/openfieldsblog.
Tips on Financing your New Home Construction Securing the right loan and lender to begin constructing your dream home can be tough. Nancy Blaauw, GreenStone’s senior financial services officer, shares tips on how to make your construction financing as easy as possible.
Economic Year in Review and Look Ahead This past year has continued to be a challenge for the agriculture economy, with low commodity prices continuing to exert pressure on farm income. Take a look at the rest of the story to read this past year’s summary and projections for the remainder of 2018.
National FFA Week - Employee Highlights In recognition of National FFA Week, we asked some GreenStone team members how their FFA experience guided their career path. FFA has made a major impact on many people, and our employees share their individual experiences in this six-part blog series.
Tax Incentive for Homeowners The recent passage of the Tax Cuts and Jobs Act is influencing some of the advantages homeowners historically received at tax time. We address some of the most important changes you will see in 2018 from a tax perspective in this blog post.
Gubernatorial Forum Addresses Agriculture Issues
GreenStone in the Community Engaging in local activities is one way GreenStone gives back to places where we work and live. Our employees carry out our passion for community engagement through a variety of activities both as GreenStone representatives and as volunteers, and we are pleased to share their stories. Follow along as we continue our community engagement blog series.
Five Michigan gubernatorial candidates took the stage in March in East Lansing to share their agriculture positions and to answer questions based on state agriculture policy. As a sponsor of the forum, GreenStone thanks the candidates for their willingness to engage in a discussion on some of the issues of importance to the Michigan agriculture industry and economy. ■
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CONNECT
NEWS: Producer Forums The MSU Pavilion was the site for the first producer forum in 2018. The day-long forum include speakers addressing a variety of topics from the latest in commodity marketing and outlook, to new technologies on the dairy farm. Those in attendance had the opportunity to engage in dialogue with the presenters to discuss applications of the information on their farms. GreenStone is hosting three more forums in 2018. Locations and dates: • August 7, 2018 at the Franklin Inn, Bad Axe • August 15, 2018 at the Pinnacle Center, Hudsonville • December 12, 2018 at the Comfort Inn, Mt. Pleasant Watch your email for invites to the forum closest to you, or RSVP now at bit.ly/GreenStoneRSVP.
GREENSTONE EDUCATIONAL EVENTS Keeping our customers informed of the issues and challenges important to them is a key part of GreenStone’s mission to serve rural America and agriculture. This past winter we hosted a variety of forums and workshops for customers. Construction Seminars This past winter, GreenStone hosted a series of construction seminars for individuals interested in building a new home. The seminars featured industry experts covering a range of topics including: • Determining which selections will add value to your home • Considerations for do-it-yourself or hiring a contractor • Financing options for your project More than 100 people attended the seminars to gain valuable information on home building and financing. If you are interested in attending a seminar in the future, please contact your local GreenStone branch.
Timber Forums Success in the timber industry takes planning, hard work, good management and long-term commitment. GreenStone recently hosted two Timber Forums in northern Michigan where more than 100 attendees learned from industry experts on topics including: • Securing new talent • Financing options: equipment, operating, land loans • Financial management: record keeping and tax planning • Business and succession planning • Wood sustainability certification: Master Logger • Closing: being prepared for your lender • Industry overview: updates from industry experts Attendees also earned Sustainable Forestry Initiative credits and networked with other loggers and industry representatives. ■
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Crumbaugh Elected to AgriBank Board, Exits GreenStone Board Christine Crumbaugh, of St. Louis, Michigan, will serve on the AgriBank board of directors following her election at their annual meeting in March. She and her family operate a 3,500-acre cash crop farm in Mid-Michigan raising sugar beets, corn, soybeans and wheat. Christine had served on GreenStone’s board of directors since 2012, with her term ending as a result of her election onto the AgriBank board. “I am excited to have the opportunity to serve GreenStone and 13 other Farm Credit associations on the AgriBank Board. For over 100 years, the Farm Credit System has been charged with providing agriculture and rural America access to reliable and consistent credit and I am honored to be a part of that mission as an AgriBank Director.”
While serving on the GreenStone board, Crumbaugh focused on the importance of preserving the Farm Credit System’s Federal Charter in order to continue providing dependable and consistent credit for rural communities and agriculture. She will continue to convey this message to legislators and other influencers in her new leadership role. “It’s vitally important AgriBank is run as an efficient organization providing reliable funding and financial solutions so our member associations can service the needs of farmers, ranchers, and rural America. My goals as an AgriBank director will be guided toward not only the success of AgriBank, but making sure we partner with our member associations in a way that ensures their success as well,” Crumbaugh says. As a member of the 18-member board for AgriBank, Crumbaugh will help lead one of the largest banks within the national Farm Credit System. Under the Farm Credit System’s cooperative structure, AgriBank is primarily owned by 14 Farm Credit associations, covering a 15-state area stretching from Wyoming to Ohio and Minnesota to Arkansas, including GreenStone Farm Credit
Services in Michigan and northeast Wisconsin. Allen Promoted to Regional Vice President of Sales and Customer Relations Ann Allen has been promoted to regional vice president of sales and customer relations for GreenStone, overseeing the sales teams within five of the cooperative’s branch locations in northern Michigan.
Ann’s experience and success as a financial services officer has prepared her well to lead the sales team, ensuring a seamless transition and exceptional service for our customers.” She began her career with GreenStone’s Cadillac branch in 2010 as a financial services officer. Prior to joining GreenStone, Ann worked with NorthStar Cooperative in East Lansing.
In this position, Ann will serve as the leader of the financial services officers and crop insurance specialists in the Mt. Pleasant, Cadillac, Traverse City, Alpena and Escanaba offices. She will be responsible for the customer service from this group, and the guidance and development of this sales team.
Growing up on a family dairy farm in Traverse City, Allen was active in 4-H and took her passion for dairy farming to Michigan State University earning a bachelor’s degree in Animal Science. While at MSU she was active in a variety of dairy-related activities and research projects.
“Ann will be an asset to our regional leadership team,” said Ian McGonigal, senior vice president of sales for GreenStone. “She is incredibly passionate about the agriculture industry, and
“I am excited to lead the north region in providing exceptional customer service to our members, and to work with my team members in their individual growth and development,” Ann says. Ann currently resides in Cadillac, Michigan with her husband, Jake, step-daughter, Brook, and their dog, Duke. ■
Mark Your Calendar... APRIL
MAY
22
MSU Small Animals Day Michigan State University, East Lansing, MI
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GreenStone Annual Meeting East Lansing, MI
7 28
JUNE GreenStone Election Ballots Mailed to Members
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Wisconsin State FFA Convention (11-14) Madison, WI
GreenStone Offices Closed In honor of Memorial Day
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GreenStone Election Ballot Deadline Voting polls close end of business day 4-H Exploration
Election 27 GreenStone Results mailed to members
JULY
4
GreenStone Offices Closed In honor of Independence Day
20 Days (20-22)
Michigan State University, East Lansing, MI
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CIRCLE OF EXCELLENCE RESULTS ALL STAFF AT GREENSTONE STRIVE TO PROVIDE THE BEST ADVICE AND SERVICE TO OUR CUSTOMERS; GREENSTONE’S SALES STAFF ALSO WORK TO BE RECOGNIZED AS A TOP PERFORMER WITHIN THE COOPERATIVE. THE CIRCLE OF EXCELLENCE REWARDS AND RECOGNITION PROGRAM IS A WAY TO ACKNOWLEDGE THESE LEADING INDIVIDUALS AND THEIR SUPPORT TEAM. VARIOUS CRITERIA SUCH AS LOAN AND REVENUE GROWTH AND NEW BUSINESS ARE USED TO MEASURE PERFORMANCE.
• Ashlee Guerrero, Ann Arbor • Samuel Schafer, Ann Arbor
The following outlines the top GreenStone staff being recognized this month as the 2017 Circle of Excellence platinum and gold award winners.
• Kimberly Cool, Cadillac
Platinum Award Winners
Commercial Lending :
Commercial Lending:
Agricultural Financial Services Officers:
• Thomas Wilson, Dairy
• Nichole Wilcox, Non-Dairy
• Matt Alt, Grand Rapids
Sales Leadership:
Sales Leadership:
• Melissa Humphrey, West Region
• Jeff Sommerfield CLU Non-Dairy
Gold Award Winners
Crop Insurance Specialists:
Agricultural Financial Services Officers:
• Kylee Zdunic-Rasch, West Region
• Wayne Sevilla, Bay City
• Scott Schmidt, East Region
• Nicole Ladd, Hillsdale
• Cory Blumerick, North Region
• Mitchell Schafer, Grand Rapids • Laurie Schetter, Manitowoc • Jacob McManus, Traverse City • Derek Tahaney, Allegan • Kim Knoerr, Bay City Country Living Financial Services Officers: • James Cole, Howell • Mark Oberlin, Grand Rapids • Jessica Hurd, Lapeer
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Country Living Financial Services Officers:
Spring 2018 — Partners
• Mark Dingee, Cadillac • Dan Kaufman, Coleman • Matthew Willbrandt, Schoolcraft
Tax and Accounting MVP Award: • Scott Martin, Heartland Region Achievement Award • Amanda Kroll, Country Living FSO, Little Chute ■
Ag Day at the Capitol GreenStone was honored to again participate in Ag Day at the Capitol celebrating agriculture and showcasing more than 30 commodity groups that contribute to Michigan’s economy and global food supply. We were particularly proud to accompany our future farm leaders as they met with legislators to spread awareness about issues that impact the agricultural industry and our rural communities! ■ Regional NAMA Award GreenStone was recently honored by the National Agri-Marketing Association (NAMA) with a first-place Regional Award for our latest video showcasing GreenStone’s mission of serving rural America and agriculture. We are fortunate to have great customers and employees helping us tell a great story!
GREENSTONE’S ANNUAL REPORT SHOWS STRONG FINANCIAL PERFORMANCE IN 2017 GreenStone members recently received its 2017 Annual Report. The report highlights the record-level earnings the association experienced in 2017, powered by internal efficiencies and a diverse loan portfolio.
total patronage paid to our memberowners to $318 million since the program’s inception in 2005. Other financial highlights in this year’s report include:
Jonesville Branch Now Open
“The ongoing weak agricultural economy continues to challenge everyone involved in the agriculture industry, requiring tough decisions and a sharp focus on long-term business goals. At GreenStone, we too are challenged with keeping the discipline to stay true to our mission and adhering to our long-term goals and objectives. By doing so, and working together with our members, we were able to post a solid financial performance again this year,” says Dave Armstrong GreenStone CEO and president.
The Jonesville branch hosted an office Grand Opening on March 15. The new location at 500 Olds St in Jonesville, replaces the Hillsdale branch office. The new office is conveniently located a few miles down the road from the previous location. ■
Based on the 2017 earnings, the GreenStone board of directors announced a record patronage payment of $50 million to members distributed in March. This year’s payment brings the
The award program honors the best work in agricultural communications. As a regional award recipient, the entry advances to the national competition. National winners will be announced in late April at the 2018 NAMA conference. ■
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Thank you for allowing me to attend this important workshop. It has been very beneficial to me and has allowed me to learn and explore more about veterinary science as well as other career options, particularly in science. This workshop will have a profound overall impact on my future.
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— 4-H Participant in the 4-H Veterinary Science Youth and Adult Workshop
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Thank you so much for your scholarships to the attendees, including me. We value your commitment to farmers!
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• Net Income: $151.7 million • Total Assets: $8.5 billion • Total Loan Growth: 4.7 percent • Patronage Paid: $50 million “The strong financial position outlined in the report is an indication of the importance of having a financial partner with a stable balance sheet, allowing us some flexibility when working with our members through difficult times,” Armstrong says. The report can be viewed and downloaded at: www.greenstonefcs.com. ■
Your continued investment into the lives of Michigan’s youth is a testament to the value you place on the future of our communities and the agricultural industry. Michigan 4-H members are exploring and growing their leadership and life skills to prepare them to be strong community and industry advocates in the years to come. Their preparation through hands-on learning outside of the classroom is thanks in large part to the long-term partnership between 4-H and GreenStone Farm Credit Services. — Amanda Masters Michigan 4-H Foundation
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Have a comment to include in the next issue of Partners? Share it with us on social media.
—Farm Women’s Symposium Participant
...Candid Comments
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What do you enjoy most about your role at GreenStone? I have had the opportunity to work in both a branch office and at the corporate office working with both internal and external customers. Having been at the branch, I am amazed with how trustworthy relationships are formed between staff and customers. One of GreenStone’s great attributes is how our customers become part of our “family;” their personal achievements have an impact with us as well. While I currently have little interaction with our external customers, I believe the strong relationships I have developed and continue to work on with our internal customers builds upon our CoreFour values. Simply put, I love working with all the people. What changes have been incorporated in your role to meet evolving customer needs?
BEHIND THE SCENES– If you have done business with GreenStone, you are probably aware of the many legal documents and contracts surrounding the transactions. Keeping all the documents current and aligned with the federal and state rules and regulations is the responsibility of the Loan Documentation Quality Assurance (LDQA) specialists and compliance officers. These individuals are part of the Legal Department in East Lansing. Jessica LaCross Sr. Loan Documentation Quality Assurance (LDQA) Specialist 15 years of service Located in East Lansing Describe how your role carries out the GreenStone mission of supporting rural communities and agriculture: We, as LDQAs, are responsible to ensure federal regulatory requirements and state laws are followed with loan transactions. We review dates, purposes, security and documents to ensure all necessary disclosures have been provided within the time frame permitted. These steps help to provide a clean product to our customer and to help mitigate possible concerns.
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Throughout 2017, the legal department has dedicated much time to streamlining many processes which in-turn has allowed loan servicing to move through processes quicker. We continue to meet as a team to discuss how we can be more efficient with all stages of the loan, whether it be prior to the loan closing or for servicing a closed loan. This continual review of existing processes has proven that our department, like GreenStone, strives to evolve as our customers’ needs grow. What do you enjoy doing in your free time? My children keep me quite busy when I am not at work. When not driving them to their various activities, I love curling up with a great book. When time permits, I also love going to our family cabin on Drummond Island for a good dose of fresh air and fun outdoor activities.
Michelle Boulter Compliance Officer 11 years of service Located in East Lansing Describe how your role carries out the GreenStone mission of supporting rural communities and agriculture. In my role, I summarize new and existing regulations to help GreenStone implement and comply with them. The rules I am predominately accountable for are all consumer-lending regulations. I work with various departments to ensure we keep a risk-based approach while implementing the requirements in a balanced fashion that is effective and efficient for our staff, and ensures our customers receive the appropriate rights and documentation.
What do you enjoy most about your role at GreenStone? I am in a unique position where I get the opportunity to work with both internal staff and external members from various departments and other Farm Credit associations on implementing regulatory change. It is amazing how a small change in regulation can impact an association, the customers. Collaborating with staff members in their various roles helps me gain perspectives and understandings that I otherwise would not be exposed to. Without that exposure, my role would be less dimensional and less challenging.
What changes have been incorporated in your role to meet evolving customer needs? In 2017 I began managing our Loan Documentation Quality Assurance Specialists, as well as our Legal Servicing staff members. One of the first things we did as a team was to go through our existing forms, policies and procedures to see where we could make improvements and efficiencies. Since January 2017, our department has implemented 39 related efficiencies. We are still looking at an additional 53 to see what improvements can be implemented. By finding ways to improve our forms, policies and procedures, we improve the turn-around time on our new loan reviews and servicing
Pause for Applause... 1. The following three farmers were named 2018 Michigan Master Farmers:
Tom Braid of Durand farms 3,200 acres of corn, soybeans, wheat and alfalfa as well as milks more than 260 cows with his brother, son and nephew. Ed Cagney of Scotts has a diversified cropping operation growing nearly 2,800 acres of everything from seed corn and soybeans to green beans. Bob Ohse of Custer farms more than 1,800 acres of corn, soybeans, wheat and alfalfa in partnership with Jacob Zwagerman.
requests; eliminate unnecessary redundancy and educate staff with a better understanding of what legal documentation is needed for various circumstances. This all trickles up to the customer, to help ensure they receive the best experience possible. What do you enjoy doing in your free time? I enjoy spending time with my family. My kids are all very active in a variety of sports. Most of the time you will find me cheering my kids on in cross country, track, year round wrestling, golf, and cheer. Other than that, I enjoy running, shooting, and traveling with family and friends to warmer destinations. â–
SERVICE ANNIVERSARIES
2. The United Dairy Industry of
Michigan (UDIM) recently honored the Shuler family of Baroda, Michigan, with the 2018 Excellence in Dairy Promotion award. This award recognizes one outstanding Michigan dairy farm family for their dedication in promoting dairy foods and the dairy community. In 2015, Bill and Carolyn Shuler, along with their sons Billy and Wyatt, planned and executed a major transformation to the dairy farm, building a new barn with robotic milkers and tunnel ventilation, and included an area for greeting visitors and a walkway above the cows for optimal viewing. They have hosted visitors from all over the world, including Asia, South America and Europe.
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. April: Beth Barker (20)
June: Paul Anderson (35) Robin Fisher (30) May: Jennifer Whitford (15) Tracy Watson-Sutter (25) Jeffery Pavlik (15) Les Karr (15) Jessica Bongle (10) Tami Baker (15) Amanda Barber (5) Warren Emery (15) Eric Vandivier (5) Mark Buuck (15) Denise Sarver (5) Bev Burwell (10) Kristen King (5) Wanda Skinner (10) Sam Foster (5) Scott Simon (5) Nicholas Trierweiler (5) Derek Tahaney (5)
3. Six members of the Oesch family, which owns and operates SwissLane Farms, received the 2018 Dairy Farmer of the Year Award given by the Department of Animal Science at Michigan State University. Today, the operation has 52 employees, grows 5,000 acres of corn, soybeans, hay, wheat and cover crops, milks 2,200 Holsteins, and has 1,900 replacements and 90 Angus-cross beef cattle. In 2011, SwissLane added eight robotic milking units that milk an additional 500 cows.
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GreenStone Story:
Board Governance BECAUSE GREENSTONE IS A MEMBER-OWNED COOPERATIVE, WE ARE ALSO MEMBER-GOVERNED THROUGH OUR BOARD OF DIRECTORS. GREENSTONE’S CORPORATE BOARD, MADE UP PRIMARILY OF MEMBEROWNERS, ENSURES GREENSTONE’S MISSION IS UPHELD THROUGH SOUND BUSINESS PRACTICES, WHILE CONTINUING TO PROVIDE ECONOMIC VALUE TO OUR 24,000 MEMBER-OWNERS. OUR BOARD MEMBERS PROVIDE DIRECTION AND OVERSIGHT WITHIN PRESCRIBED FARM CREDIT ADMINISTRATION (FCA) REGULATIONS, ASSOCIATION BYLAWS AND DISTRICT POLICIES, AS WELL AS FEDERAL, STATE AND LOCAL LAWS.
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Region 7 The GreenStone board of directors is made up of 16 individuals. Board members are determined through a nomination and election process. Candidates slated for board positions are selected by the corporate Nominating Committee (or nominated from the floor during the Annual Meeting). All voting stockholders receive a mailed ballot to cast their vote for board members within their region. Board Responsibilities: All board members are expected to fulfill the following responsibilities:
Region 1
Region 2
Region 5
• Four-year term beginning in June of the year elected • 4 two-day board meetings per year held in East Lansing, Michigan
Region 6 Region 3
• 1 to 3 two or three day trips for out of state meetings and/or trainings • Typically board members serve 10 to 30 days a year for GreenStone business which include: – Political meetings in the director’s region – Patronage Day at your branch – Branch open houses, etc. • Board Committees (each director is assigned to one of the following committees): – Executive and Compensation – Legislative and Public Policy – Audit – Finance The GreenStone board is comprised of 14 members and two outside appointed directors: • Two directors, serving fouryear terms, are elected from each of GreenStone’s seven voting regions. The regions are established to obtain a distribution of representation throughout GreenStone’s chartered territory. Stockholders vote for nominating committee
Region 4 members and directors from their region only. • Two outside appointed directors with specific skills, each serving four year terms, are selected by the board of directors. Board Eligibility Prospective board candidates must meet the following requirements: • Own at least one share of Class B Common Stock and be the authorized voting stockholder or the authorized voting representative on record with GreenStone. • Not be involved in any official capacity with another business or entity engaged in making loans or offering services that may compete with GreenStone. • Not have a GreenStone loan classified as Substandard, Doubtful, or Loss. • Not have attended a meeting as a member of the Nominating Committee in the same election cycle.
Nominating Committee GreenStone stockholders select candidates for board positions through the nominating committee process. Nominating committee members serve oneyear terms and meet two to three times a year. The committee members are responsible for selecting and interviewing prospective board members. Committee members must meet the following requirements:
Interested? If you are interested in serving on the board of directors or nominating committee, submit your interest with the below information by June 1 to your financial services officer or Cheryl Motz, executive assistant, Cheryl.Motz@greenstonefcs.com, or 517-332-9557.
• Own at least one share of Class B Common Stock and be the authorized voting stockholder or the authorized voting representative on record with GreenStone.
• Are you currently designated as a GreenStone voting stockholder? Yes/No
• Not have a GreenStone loan classified as Substandard, Doubtful, or Loss. • Not have served on the GreenStone Nominating Committee for three previous consecutive years.
• Legal name • Email address
• Desired candidacy: – Nominating Committee – Board of Directors • Provide a brief background of your operation, involvement in the agriculture industry, positions held, and current employment. ■
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Legislative Matters:
TRADE TARIFFS ANYBODY WHO HAS BEEN INVOLVED IN PRODUCTION AGRICULTURE FOR A MEANINGFUL TIME PERIOD KNOWS THAT TRADE IS VITALLY IMPORTANT TO SUSTAIN A FARMING OPERATION. TRADE CAN BE LOCAL, REGIONAL, NATIONAL AND INTERNATIONAL. IT ALL HAS AN IMPACT DEPENDING ON YOUR FARMING CHOICES. Many farm families may have started their business operations following World War II, or even earlier, as the opportunity to produce food for a growing U.S. and global population was apparent. Currently, as United States government leaders look at the overall global economy, many feel the need to react to the balance, or imbalance, of trade. This affects a large breadth of industries, including agriculture. However, this will not be the first time the government has reacted to trade balances. Take a brief step back and look at tariffs during the Great Depression. The Smoot-Hawley Tariff Act, formally United States Tariff Act of 1930, raised import duties to protect American businesses and farmers, which added considerable strain to the international economic climate of the Great Depression. It was the last legislation under which the U.S. Congress set actual tariff rates. There are lengthy historical stories to go with Herbert Hoover’s promises to help beleaguered farmers through tariff increases on agricultural products. Some narratives surround the huge economic
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changes that resulted from using the automobile rather than horses and mules. Before the automobile, nearly 20 percent of America’s farmland was used to fuel (feed) the horses and mules. President Hoover asked Congress for an increase of tariff rates for agricultural goods and a decrease of rates for industrial goods. Trade inherently creates conflicts, which require evaluation from many facets. Ultimately, these evaluations set the stage for action. From another historical time there was a tariff put in place that affected agriculture and other industries known as the “chicken tax.” Chicken was an expensive delicacy in Europe – up until the 1960s when inexpensive American chickens changed the status quo. Consumption rose, the American chicken, which accounted for almost all chicken sales, dominated the market, and the price dropped. The chicken tax is a 25 percent tariff on potato starch, dextrin, brandy and light trucks imposed in 1963 by the United States under President Lyndon B. Johnson in response to tariffs placed by France and West Germany on importation of U.S. chicken. The period from 1961–1964 of tensions and negotiations surrounding the issue was known as the “Chicken War,” taking place at the height of Cold War politics. Eventually, the tariffs on potato starch, dextrin, and brandy were lifted, but the light truck tax solidified, remaining in place to protect U.S. domestic automakers from foreign competition. The chicken tax still exists today.
The market has found a way to work around these obstacles. Historically, the status quo has been consistently less about free trade and more about economic nationalism throughout the globe. Dialogue and time usually find the balance. The Farm Credit System has been in place for all of this, and witnessed changes in trade structures to meet the multiple market place demands, including the growing global market. The System, and its producers, has weathered many of agriculture’s cyclical challenges despite trade challenges. A maturing legislative process requires tension and engagement to keep people together in dialogue so legislative leaders hear unified voices willing to join together and avoid wars on trade (and maybe other things). Some things may never make sense, and there always seem to be winners and losers. However, it does seem the industrious farmers always find meaningful ways forward to feed and supply the market. This time may be no different, and together we all will keep the Farm Credit System in place to serve the industry. ■
PAC Progress:
IMPORTANT ISSUES ARE UP FOR DISCUSSION and thanks to the extraordinary support of members, directors, and employees, we are well positioned to stand for agriculture and Farm Credit.
The 2018 MI GreenStone PAC contribution campaign was successful in its fourth year with over $16,000 being contributed by more than 180 Michigan GreenStone customers. This is another strong representation of the support members have for the MI GreenStone PAC. Now, your board of directors and management team are diligently evaluating legislative leaders with a focus on sharing the importance of rural communities, agriculture, and the Farm Credit System with elected officials. Now in its second year, the WI Farm Credit PAC contribution campaign resulted in nearly $1,000 being contributed by Wisconsin GreenStone customers. The WI Farm Credit PAC funds will also be disbursed by your directors and management team in coordination with the Cooperative Network after a thorough evaluation process. The AgriBank District 2018 Farm Credit PAC drive competition brought in almost $210,000 in contributions; these funds are used to support federal elected officials. Over 150 GreenStone
employees and directors directly contributed over $18,000 of that total. A portion of the Farm Credit PAC funds will be allocated to legislative leaders in the GreenStone territory, and your directors and management will assist in the delivery and communication of the Farm Credit message. As the debate over policies critical to agriculture—from the Farm Bill to trade—heats up, we are well positioned to stand for rural communities, agriculture, and Farm Credit. The work has already begun with Ag Day in Michigan and Wisconsin, and the Farm to Tablet panel discussion in D.C. featuring one of our members. Our success will be determined by the strength of the relationships we have with elected officials, and that is why your support of the PACs is so important. Agricultural-minded legislators commend your initiative and thank you for your engagement in their work. GreenStone thanks you for being a champion of the agricultural industry. ■
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FPO
Directors’ Perspective– Spring 2018
Being a member of GreenStone can mean something different to each customer. On Patronage Day, members took part in sharing that message with everyone by selecting the word bubble most relevant to them. If you follow GreenStone on Facebook or other social media channels, you likely saw the wide variety of choices as customers shared what they value and felt the benefit was of their cooperative membership through their patronage check. GreenStone’s board of directors are no different; they too find the benefit of their GreenStone partnership to mean so much. Over the next several issues of Partners, you will hear from each director on what is important to them and why they believe they are better together with GreenStone.
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Tom Durand: Privileged
Scott Roggenbuck: Growing
I have always felt very privileged to be involved in production agriculture. It is very gratifying to work in God’s soil, plant seeds, and watch them grow; and then of course to harvest what you’ve grown. The fact that you tie this together with feeding people all over the world makes it even more gratifying.
I chose the word “growing” because, to me, that is something GreenStone and I have been doing together for the last 30 plus years.
Since becoming a customer of GreenStone nearly 30 years ago, I have always valued the products offered and the customer service that has allowed me to enjoy the privilege of doing what I love. I also feel very proud and privileged to represent the stockholders on the GreenStone board. I must say the board is made up of very diverse and talented individuals, and it is a true privilege to be a part of this team. I wish everyone a safe, healthy, and prosperous 2018! Darl Evers: Living My Dream
As I look back and reflect on my life, I can truly say I have been living my dream – I have been a farmer!
My wife Cindy and I have watched our family grow – our two children have given us five beautiful grandchildren. Our extended family has grown to where we once all fit in my parents’ house for Thanksgiving, but it would now require a banquet hall. GreenStone was there to help us as we were growing our farm, from a 50 cow dairy to a family farming operation that supports four families today. And I have been there to witness the growth of GreenStone. Today, it holds around $8.6 billion in total assets; it was only $4.0 billion when I came on the board in 2007. And, the growth of the patronage program, which has now paid out $318 million dollars back to our member borrowers in the last 13 years. This is something I am proud to have been a part of. Growing. The word just fits. In agriculture we are always growing: growing professionally, growing personally, growing spiritually, and growing food to feed a hungry world.
Dale Wagner: Next Gen
Just two days ago, my grandson was able to spend his weekly “day at the farm” with me. He rode along with Grandpa to the auction barn to sell some cull cows. When we got back to the farm, he had to check on the newborn heifer calf. His next stop was at the farm shop to make sure Uncle Tyler and Jake were mounting the duals on the tractor properly as we get ready for spring fieldwork.
For 50 years, I have been able to work with the soil and plant crops in the springtime, watching them grow over the summer. Then comes the harvest, which is a beautiful time of year. I also worked with and care for livestock and turkeys; there was much joy in that and the rewards were great. Plus, I like the work, so it wasn’t really work, I just enjoy it! I also enjoyed being self-employed, making the decisions and taking the responsibility for everything, and being busy with farm life, making many friends along the way. I thank God for the talents he gave me to do that and the good health to carry out those responsibilities. And through it all, GreenStone has been with me, loaning me the funds to carry out this dream. I have been able to give back and help GreenStone and its borrowers by serving on the GreenStone board for 28 years. I have truly enjoyed that experience and made wonderful friends throughout the years. So, in closing, although I’ve decided it is time to end this chapter on GreenStone’s board, I will continue to keep on “living my dream.”
As I am writing this, my three granddaughters are coloring at our kitchen table. Daycare and school are closed for the day and they are super excited about spending the day at the farm. They too will soon be headed out to the barn to check on the cows and the baby calves. Later this morning, my son Tyler and I will pack the girls in the truck and head to our local GreenStone office to pick up our patronage checks, and a cookie for each of them. With multiple generations as GreenStone customers, and this next generation happily engaged, I believe we are priming the interest of the “next generation.”. ■
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LIVE
There is something about growing up in a rural community that draws people back, no matter how long they have been away. For many, the draw pulls the strongest when enrolling children in school is on the horizon. For Marc and Erika Walker, their careers pulled them closer to the city—Grand Rapids—but their roots were in the small towns they grew up in on the outskirts of the city. As their children approach school age, they began looking for a place where their family could put down roots, providing the small town values and experiences they had growing up. “My wife and I both grew up in the country,” Marc says. “We moved from a dirt road to a 50 x 100 lot in the city. That’s not where we want to be. We want the lifestyle of living in a rural area where our kids can play outside and go to a smaller school.” Last winter the Walkers purchased an 18-acre parcel in Plainwell and began working toward their dream of raising their family in the country. In order to keep costs low and generate more equity in their home, Marc and Erika decided to build their four bedroom, 3,000 square foot home themselves, with help from family and friends. “This has been much more work than we planned, but it will all be worth it when we move in,” Marc says. The first hurdle for the Walkers to overcome was finding a lender who would allow them to act as the contractors for the home. “Most banks only let you do what you are licensed for,” says Marc who is a licensed builder having worked on a construction crew in college. “So they would not let me do the electrical and plumbing, two of the biggest cost savers.”
Putting Down Roots
They were surprised and thankful to hear that GreenStone finances do-it-yourself home construction. The Walkers worked with senior financial services officer Nancy Blaauw to set up the construction financing. The financing allows the Walkers to act as the contractor as well as subcontractor provided the permitting and other regulations are met.
➡ Opposite page top: Making family memories in their new home starts before the Walkers move in.
➡ Opposite page center: Surrounded by 18 acres of woods and open land, the Walker’s new home provides the opportunity to enjoy many outdoor activities. 27
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“I thought it would be overwhelming to gain the financing and figure everything out. But the people at the office were very helpful and gave us the information we needed,” Marc says. Before breaking ground last August, Marc attended one of GreenStone’s construction seminars hosted by the Allegan branch. The seminar
addressed a number of the unknowns they had and answered their questions.
submitting the forms has been simple without any problems.”
At the seminar, Nancy and other GreenStone team members walked the participants through the different parts of the construction loan process like how to obtain lien waivers and complete sworn statements.
The Walkers plan to move into their new home in April—nine months after first setting the foundation. “This has been way more work than we thought it would be. I spend 4 hours every night working on the house and 12-14 hours on the weekends,” says Marc who does road construction work during the day. “This leaves my wife as the sole caregiver to our two children Ruby, who is four years old and Harrison, who is three years old, while I am away. We have also had a lot of help from my dad and friends. We are reaching the top of the mountain that at times felt unclimbable.”
“Building a new home, especially on your own, can be overwhelming,” Nancy says. “We like to take the time to walk people through our processes, and explain what they can expect before they begin building. Going through the seminar also helps give people a greater perspective of the work involved in home building.” “I don’t know if I was overthinking it or not, but going to the seminar made it much easier than I thought it would be,” Marc says. “Getting draws and
The Walkers hope that the “sweat equity” they are investing pays off when they finish the home. “We are planning to save approximately 23 percent in the building costs by doing this on our own,” Marc says. “If we realize these savings, we will have 20 percent value in the home when we finish. which will eliminate the need for PMI (Private mortgage insurance).” The real value, however, will be the memories the family makes on the land they own. ■
➡ Left: Investing “sweat equity” by doing the construction himself is saving the Walkers nearly 23 percent on the cost of their home.
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CHOOSING THE RIGHT BUILDER By Karen Ansell, Financial Services Officer ENGAGING IN NEW HOME CONSTRUCTION INVOLVES A SERIES OF DECISIONS, STARTING WITH CHOOSING THE RIGHT BUILDER TO PARTNER WITH YOU THROUGH THE HOMEBUILDING PROCESS. TAKING THE TIME TO FIND THE RIGHT BUILDER WILL BE TIME WELL SPENT AS THE PROJECT UNFOLDS. Referrals, Reviews and References: The best way to evaluate your builder is to see their work. Ask to visit with past customers, check with new homeowners in the neighborhood, or visit with local suppliers working with the builder. When checking references, ask questions that reflect their work quality, integrity, and competence. Shake Their Hand Spend time with the builder getting to know their personality and work style. The construction process requires a great deal of clear and accurate communication. Be sure you can develop a sense of trust with your builder and mutual respect for one another.
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Check Credentials
Meet the Team
Is the builder appropriately licensed? Does he/she have the qualifications to complete the job? Does the builder hold the appropriate insurance to cover liability during construction? There are some insurances, such as “dwelling in progress,” that can be obtained by either the builder or homeowner; be clear on who will provide the insurance needed.
Building a house takes teamwork between the builder, the bank, sub-contractors, and you. Before finalizing your builder selection, find time for the builder and your bank representative to meet and discuss how the draw process, lien waivers, and final payments are handled.
Count the Houses Is this the builder’s first home construction or are they a seasoned builder with years of experience? If they are fairly new to home construction, confirm they have the capabilities and resources to fully execute the job. Check Calendars Can the builder meet your timeline for starting and completing the construction? Busy, more seasoned builders often schedule home builds months in advance. It is important to align start and anticipated finish dates, taking into consideration weather and other factors that can delay progress. Contract Clarity Contracts between a builder and a homeowner may include stipulations for financing or other areas. Keep in mind other entities may have different criteria or details. For instance, a builder may ask for 30 percent down, but your financing contract may only allow 10 percent down. To avoid contract confusion, it is best to review the contract with others that may be impacted by the details.
Who’s on Deck? Is the person you are negotiating with the same person who will be on-site managing the project? It is important to meet and know the person who will be responsible for building your home. DIY Option Thinking of skipping the contracted builder and doing it yourself? Do-it-yourself (DIY) construction is a popular option for those with the skills and time to lead the project. Financing for DIY construction can sometimes be difficult to obtain. However, GreenStone’s financing options offers loan packages for DIY construction as well as fully-contracted home building. ■
ABOUT THE AUTHOR
Karen Ansell is a financial services officer in GreenStone’s Mt. Pleasant and Alpena branches who works with customers to realize their country living dreams.
GET A HEAD START IN SPRING HEALTH LONG-AWAITED SPRING SUNSHINE AND WARM BREEZES ARE RIGHT AROUND THE CORNER. WITH THE CHANGE OF SEASON COMES THE URGE TO SAY GOODBYE TO THE OLD, AND HELLO TO THE NEW. THIS CAN ALSO MEAN WELCOMING THE WARMER SEASON WITH NEW, HEALTHY HABITS. HERE ARE SOME TIPS YOU CAN USE TO KICK-START YOUR SPRING HEALTH: Start an Exercise Routine
Plan for Allergy Season
Now is a perfect time to begin a new exercise regimen. The American Heart Association recommends 150 minutes, just 30 minutes per weekday, of moderate exercise per week, or 75 minutes of vigorous exercise. One way to hold yourself accountable and to have fun doing it is to work out with friends or sign up for group classes.
If you know that you will be a victim of the spring allergy wave, now is a good time to stock up on your allergy medications. It is a good idea to stock up on travel tissue packs as well.
Revamp Your Diet with Fresh Fruits and Vegetables Spring and summer means an assortment of fresh, in-season fruits and vegetables. It is important to include these foods in your everyday diet to ensure proper nutrition. Try to eat three to five servings of vegetables and two to three servings of fruit every day. Of course, it is okay to indulge in warm weather treats, like ice cream cones, from time to time. Drink More Water Staying hydrated is essential as the temperatures begin to rise. Try to keep a water bottle on hand. If you do not like water, try infusing it with flavor combinations like fresh lemon, lime, mint, strawberries and raspberries.
Change Your Pillows Some experts suggest you replace your pillows every one to two years. Not only do pillows lose support over time, they collect body oil, dead skin cells, and hair making it a breeding ground for dust mites and allergens. Placing a protective layer in-between the pillow and pillowcase, and washing your pillows every six months are good ways of allergy proofing your pillows. Protect Your Skin Most people agree it is important to protect your skin from harmful UV rays during the hot summer months. What most people do not know is that UV rays can harm your skin every day, regardless of the temperature. Try to incorporate SPF into your morning skincare routine, even if it is cloudy or you are spending time inside. ■ Source: www.health.usnews.com
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Deep-fried Cheese Curds Ingredients: • 16 ounces cheese curds • 2 cups buttermilk • 2 cups lager beer • 2 cups all-purpose flour • 2 teaspoons baking powder • 1 teaspoon salt • 1/2 teaspoon pepper • 4 cups vegetable oil • Dipping sauce of choice, optional
Instructions: 1. Heat oil to 375 degrees in a Dutch oven or deep fryer. 2. Place cheese curds in mesh strainer. Whisk buttermilk and beer in a large, deep bowl. Submerge curds in strainer into buttermilk-beer mixture. 3. Combine flour, baking powder, salt and pepper in a separate large, shallow bowl. Remove curds from buttermilk-beer mixture; drain well. Dredge curds in flour mixture; gently toss to remove excess flour. 4. Fry curds, 3-4 at a time for 1-3 minutes on each side or until light golden brown. Drain on paper towels. Serve immediately with dipping sauce, if desired. Recipe Tips: DIY dipping sauces: • Sriracha ketchup: 1/2 cup ketchup + 1 to 2 tablespoons Sriracha hot chili sauce • Chipotle ranch: 1/2 cup ranch dressing + 1 tablespoon chipotle-flavored hot sauce • Honey mustard aioli: 1/2 cup mayonnaise + 1/4 cup prepared mustard + 2 tablespoons honey • Lemon dill tartar sauce: 1/2 cup mayonnaise + 1 teaspoon lemon zest + 1/2 teaspoon lemon juice + 1 teaspoon dill pickle relish + 1/2 teaspoon dried dill weed . ■ Source: www.eatwisconsincheese.com
Commodity Cuisine...
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HOW TO KEEP KIDS READING THIS SUMMER With the end of the school year in sight, you may be wondering about the best ways to keep your children from spending too much time in front of the television or with their favorite gadget, and with a good book instead. Experts say that without practicing their reading skills through the summer months, children can drop multiple reading levels, so it is important to encourage them to pick up a good book. Getting Started
Incorporate Games and Hobbies
Start small to limit pushback and lower the chances of burning out. Try simple things like having younger children read a grocery list or a short quote of the day, and older children read a short story as they wind down later in the day. Making summer reading fun and something your kids look forward to is important. Make a trip to your local bookstore or library to stock your bookshelf with books your children may not have the chance to read during the school year.
Spice up family game night from classic board games to a bookinspired game of your own. Have your children read a set of books or stories, then create a set of questions based off them. Ask questions that begin with, “In what book did…” or “Which character said…” This game can be just for fun if game nights tend to turn into a family feud, or competition-style for more competitive kiddos.
Make it a Family Effort
There are many local opportunities during the summertime for kids to enjoy reading. Signing your younger kids up for reading circles and activities at your public library is a great way to keep them engaged. You can also encourage your older kids and teenagers to form a book club with their friends and meet periodically at a local café or park to discuss what they have been reading. ■
Showing your kids the value of reading starts by spending time reading yourself. Kids will be more encouraged to read if they see their parents reading as well. Reading to your children or having them read to you is also beneficial. Try changing your voice as you read different characters and pausing at the end of sentences to create more excitement.
Get Out in the Community
Source: www.theguardian.com
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LEARN
CROP INSURANCE NEWS: NOW IS THE TIME TO SIGN UP FOR HAIL INSURANCE– While they used to be considered a fairly rare event historically speaking, storms that are capable of producing hail are becoming far more commonplace in our area of the country than even 20 years ago. Hail is a separate policy from your multi-peril crop insurance (MPCI) coverage. Federal crop insurance covers hail damage as it relates to yield reduction, but producers can also purchase separate hail coverage for their crops from the same companies that offer federal crop insurance. As an added bonus, a hail policy can provide coverage for fire, lightning, vandalism/malicious mischief and transit to the first place of storage.
Hail insurance is based on the percent of damage received at a particular growth stage, which allows insurance companies to perform adjustments and pay indemnities during a growing season, without having to wait until harvest. Rates and coverage vary by crop and county. Keep in mind, hail insurance must be purchased before damage occurs. Below are some other important items to note regarding hail coverage. • Most hail insurance covers other perils above and beyond hail damage. Beyond hail, most policies also cover fire, vandalism and malicious mischief, transit to the first point of storage, and stored grain coverage if you happen to have a bin(s) at home. • Hail coverage is available on most any crop; if you do not have a Federal crop insurance option, you can usually get it covered for hail. • A customer is able to carry a Federal MPCI policy as well as a hail policy, and collect on both in the event of a loss. • Hail coverage is based on a dollar amount of coverage per acre, with premiums generally quoted per $100 of coverage. For example, if someone wanted to cover their corn at $700 per acre, and the premium was 60 cents per $100 of coverage, their premium for corn would be $4.20 per acre.
•O ne benefit of hail insurance over MPCI is that you can insure up to the total expected value of the crop, whereas on MPCI you are limited to 85 percent. •H ail coverage generally has many different endorsements available, including quality endorsements on crops intended for fresh market, canning reject endorsements, etc. To learn more about a hail policy, including options available and coverage with a hail policy, contact your GreenStone crop insurance specialist today to set up an appointment to review your options. ■
Prevented Plant or Replant Rules Have Changed If weather conditions prevent you from planting or you need to replant a crop, you may qualify for a claim. File a claim with your crop insurance specialist before replanting. Do not replant until you have received approval to do so or, you may not receive an indemnity. If you have a prevent plant situation, a claim must be filed within 72 hours after the end of the late planting period which varies by crop. (There is a minimum requirement of 20 percent of the unit or 20 acres for both replant and prevent plant claims, whichever is less.) Some important changes were made for the current crop year in regards to both replant and prevent plant rules. Depending on the timing of the replant period, weather and field conditions, you could be required to replant. Please contact your crop insurance specialist for the most current rules and guidelines. ■ First Crop/Second Crop If you are considering removing a first crop to plant a second, make sure you contact your crop insurance agent before doing so. You could potentially be eligible for a claim, but you may forfeit that eligibility if you act before contacting your agent to discuss your options! ■ Early/Final Plant Dates Early and final plant dates vary by crop, county and state. Coverage levels can be reduced if a crop is planted too early or too late. Please check with your crop insurance specialist or actuarial documents for specific details and dates for your county if you are unsure about which dates apply to your policy. ■
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Organic Crops As a reminder, RMA now requires all insured organic certified producers to provide a copy of their organic crop plan and organic certificate to their agent before the acreage reporting date. ■ Acreage Reports 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 crop to harvest, we must appraise the acres prior to destruction. ■ 2018 Fall Wheat & Forage Claims The earlier you start on reporting your planted crop acres, the earlier your crop insurance specialist can process your reports and return for your review. It is the customer’s 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 doublechecking everything on the Schedule of Insurance is very important. Corrections or changes cannot be made after the July 15 reporting deadline. You do not need to report to FSA before reporting your planted acres to your crop insurance specialist. If you use precision planting technology, GreenStone can save you time reporting acres. Contact your local GreenStone crop insurance team to learn more. ■
Enterprise Units Structure
Crop Insurance Alerts!
At least 20 acres, or 20 percent of your individual crop acreage, whichever is less, must be planted in that second section.
Crop Insurance Alert postcards have been redesigned and will be mailed out on an “as needed” basis to customers. The goal is to communicate to you any vital information we receive. The front of the post card is printed in red so, when you receive one, please pay attention to its message. That way, any required action on your part can be completed on a timely basis. ■
The added subsidy on the enterprise unit structure makes it an affordable option for many producers. The downside is, if you don’t end up planting the required acreage, your policy can revert back to a basic unit structure, and your premium could increase substantially. There are two requirements to qualify for enterprise units: You must farm in two or more separate sections. –AND–
Adverse spring weather has the potential to cause prevented planting which could take some producers out of enterprise unit eligibility. Make sure to contact your crop insurance agent if you anticipate any issues with meeting the enterprise unit requirements. ■
Crop Insurance Calendar... APRIL
JULY
27
Deadline for April LGM Applications
29
Production Reporting Deadline for all 2017 Spring Crops
1
Forage and Fall Wheat Premiums Billing Date
15
Spring 2018 Acreage Reports Due Deadline for July
MAY
31
Deadline for May LGM Applications
31
Oat Acreage Report Due
27 LGM Applications AUGUST
15
Spring Premium Billing Date
JUNE
29
IMPORTANT– CLAIMS & APPRAISALS
Deadline for June LGM Applications
Most producers have been there before. No matter what you do during the growing season, sometimes Mother Nature just will not cooperate, and you begin 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. If you do find yourself in a claims situation, there are some important things to remember to help the process go more smoothly. Insurance coverage generally begins at time of application or time of planting, whichever is later. The end of the insurance period is the earlier of total destruction of the crop, final harvest of the crop, abandonment of the crop, or the end of the insurance period (October 31 for wheat). It is the insured’s responsibility to 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 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. The RMA is enforcing these rules and have been known to decline late filed claim requests and have even requested repayment from an insured for paid claims that were improperly filed. Remembering these key points will help avoid any problems with your claim and make the process go much better. As always, if you have questions based on what you have read, please contact your crop insurance specialist. ■
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Peace of Mind for Specialty Crop Growers
The diversity of production agriculture among GreenStone members requires a variety of services and programs designed to meet individual needs for risk management and crop insurance. When it comes to protecting highvalue specialty crops, there are only a few options for producers to rely on. The relatively new Whole-Farm Revenue Protection insurance program, brought in with the 2014 Farm Bill, offers protection not usually obtainable for specialty crops. “Whole Farm is relatively new and not a lot of people understand how to use it,” says GreenStone crop insurance specialist Kylee ZdunicRasch. “But on the right crop, with the right management, it can be a great tool to protect a producer’s revenues.” Whole Farm Revenue Protection covers growers when revenues for a given year fall below the Approved Revenue. Approved
Revenue is the lesser of either the five-year average Schedule F tax history or expected revenue for the upcoming crop year. When an insured grower receives less than the five-year average in revenues and has incurred at least 70 percent of the average expenses, a claim can be made. Causes of loss can be due to weather, disease or other unavoidable acts of nature. Beginning Farmers have the opportunity to utilize only three years of tax history, and there are expanding operation opportunities as well. Growers with less than three commodities can insure up to 75 percent of the approved revenue. Growers with three or more commodities can insure up to 85 percent of the approved revenue. For some growers, Whole Farm Revenue Protection is the only crop insurance they are eligible to purchase. “For an easy example, a farm with a 75 percent policy with average
➡ Transplanting seedlings to the field adds to the high input costs of specialty crops, like celery, putting producers at a risk if the crop is destroyed by nature or other unpredictable circumstances. 35
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revenues of $100,000 has a year where they only make $65,000, the Whole Farm policy will pay $10,000 to make them whole at the 75 percent level. If the farm produces three commodities, they can insure to 85 percent,” Kylee says. “While the math may look easy, there are a number of details involved that are best explained by a crop insurance specialist.” When the 2016 growing season started out too hot and dry and then rolled into too much rain, Bruce Klamer, a celery and onion grower in west Michigan, was glad he had purchased a Whole Farm Revenue Protection policy. “We used NAP (Noninsured Crop Disaster Assistance Program) in the past – but the one year we needed to use it, it took many trips to the FSA office and nearly three years to never receive any kind of payment. When I had a claim on the Whole Farm policy, I had a check within three days after the insurance adjuster visited the farm.” Bruce raises approximately 90 acres of celery and 50 acres of onions. He starts the celery in his greenhouses in the spring and then transplants them to his fields in early June. He staggers the plantings to create a 12 week harvesting window. The labor intensive, high value crop requires a high level of inputs to begin the growing season. Without insurance, any threat of disease or bad weather places the farm at a high financial risk. “It costs roughly $4,000 an acre to grow celery and another $7,000 to harvest,” Bruce says. “So it takes a lot of yield and a lot of dollars to break even.” Bruce contracts nearly 90 percent of his crops each year to fresh market wholesalers supplying local stores like Meijer and Kroger, and to Campbells for V-8 juice. Using the contracts generally gives Bruce the potential for reasonable returns, provided the yields are generated and markets are not over supplied. With the Whole Farm Revenue Protection insurance, he has the peace of mind that a majority of his revenue is covered should he experience a bad year. “We were one of the first ones to use the program when it started in 2014,” Bruce says. “We found it to be a reasonable insurance policy to protect our revenues and simple to use. GreenStone introduced us to the program as an added level of security.”
“Whole farm does not fit every type of farm,” Kylee says. “Farms with consistent revenues year after year are not a good fit. But for some growers, like sweet corn or other specialty crops, who have variances in revenues each year, it is a good option. It is also important to view Whole Farm insurance as part of a long-range plan, not just one year at a time.” Because Whole Farm Revenue Protection was implemented with the 2014 Farm Bill, it is subsidized by the government to protect farms and eliminate disaster payments. “I couldn’t believe how simple the program is to use,” Bruce says. “Once I have my Schedule F for the year, I meet with Kylee and within 20 minutes we have all the forms filled out and ready to go.” Additionally, Bruce shares, having everything at GreenStone makes it even easier. “We have tried to finance locally, but they don’t understand farming like GreenStone. And the nice dividend each year says a lot about them and their concern for farmers.” GreenStone has over 30 local crop insurance agents throughout Michigan and northeast Wisconsin serving a variety of farming operations. For more information on Whole Farm Revenue Protection or other crop insurance products, call or visit a local GreenStone branch. ■
➡ Above: Using risk management tools like Whole Farm, isn’t for just the current year, for Bruce Klamer, it’s for the future generations who may someday own the farm. ➡ Top of page: For Bruce Klamer (right), updating his yearly records with crop insurance specialist, Kylee Zdunic-Rasch (left) is easy and quick to do because of the close working relationship between the two.
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Tax Cuts and Jobs Act By Scott Martin, CPA, Manager, Tax and Accounting ON DECEMBER 22, 2017, PRESIDENT TRUMP SIGNED INTO LAW THE TAX CUTS AND JOBS ACT, WHICH MADE THE MOST SIGNIFICANT CHANGES TO THE INTERNAL REVENUE CODE IN DECADES. WHILE THE LAW REDUCES TAX RATES FOR INDIVIDUALS AND CORPORATIONS, IT ALSO REPEALS SEVERAL DEDUCTIONS, RESULTING IN IT NOT BEING SIMPLE TO COMPUTE THE IMPACT ON YOUR TAX LIABILITY IN FUTURE YEARS. Many of the changes will expire at the end of 2025, meaning the old tax code and rates will return in 2026 for many taxpayers unless Congress passes another law before then. This article details some of the tax law changes expected to significantly impact farmers. Tax Rates The tax rate for C-Corporations is reduced to a flat 21 percent, effective January 1, 2018 and is made permanent. This is a significant reduction for large C-Corporations since most were paying tax at 35 percent. Under the previous law, C-Corporations pay a 15 percent tax rate on taxable income under $50,000. The highest 35 percent rate kicked-in when taxable income exceeds $100,000. C-Corporations that kept taxable income under $50,000, as many small closely held C-Corporations did, will actually see a tax increase under the new law. Other types of business entities such as S- Corporations, partnerships and LLC’s that pass through the earnings to the owners are taxed at the reduced individual tax rates. The marginal tax rates for individual married filing joint returns under the new law compared to the old law are below: MARRIED FILING JOINT 2017 Taxable Income
Marginal Rate
2018 Taxable Income
Marginal Rate
Up to $18,650
10%
Up to $19,050
10%
$18,650 - $75,900
15%
$19,050 - $77,400
12%
$75,900 - $153,100
25%
$77,400 - $165,00
22%
$153,100 - $233,350
28%
$165,000 - $315,000
24%
$233,350 - $416,700
33%
$315,000 - $400,000
32%
$416,700 - $470,000
35%
$400,000 - $600,000
35%
Over $470,700
39.6%
Over $600,000
37%
Bonus Depreciation Expense The new law increases the first year bonus depreciation expense from 50 percent to 100 percent for depreciable business assets placed in service after September 27, 2017. Furthermore, the 100 percent bonus depreciation is available for new and used depreciable business assets. Bonus depreciation was only allowed on new assets under the old law. In order to qualify for bonus depreciation, the asset must have a depreciable life of 20 years or less. This means that all depreciable assets used in agricultural production qualify for the 100 percent bonus depreciation. 37
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Section 179 Depreciation Expensing Since the new bonus depreciation rules allow for 100 percent write-offs of most depreciable business assets purchased during the year, the Section 179 depreciation expensing provisions are not as relevant as in prior years. Starting in 2018, the maximum Section 179 expense increases to $1,000,000 from $510,000 in 2017. The dollar for dollar phaseout threshold starts at $2,500,000. No Section 179 depreciation expense is allowed once total qualifying purchases exceed $3,500,000. New Section 199A Deduction A new extremely complicated 20 percent deduction of qualified business income (QBI), subject to limitations, is available for all businesses other than C-Corporations. The IRS expects to issue regulations explaining the computation of the Section 199A deduction over the next year. This new deduction replaces the Domestic Production Activities Deduction (DPAD), which allowed for a 9 percent deduction of qualified business income. It appears the definition of qualified business income is all items of income, gain or loss, effectively connected with a trade or business, except for shortterm and long-term capital gains. This effectively means that the Schedule F profit or loss reported on the tax return is the QBI for agricultural producers. The DPAD allowed the inclusion of some long-term and short-term capital gain income items such as the sale of raised culled cows, raised heifers and raised sows. The reason given for excluding these income items in the computation of the new deduction is that this type of income already receives preferential tax treatment. Long-term gains are taxed at the lower capital gains tax rates and both short-term and long-term gains escape self-employment tax. Initially the new law allowed for a 20% deduction of gross sales to farm cooperatives without limitation. However, Congress recognized the law provided an unfair advantage to farm cooperatives. Recently the President signed a technical corrections bill, which closed this loophole. There are limitations that can reduce or eliminate the Section 199A deduction. The first limitation is taxable income. When taxable income reaches
$315,000 for married couples the deduction starts phasing-out. The deduction vanishes when taxable income reaches $415,000. The limitations for single taxpayers are exactly half of these amounts. The second limitation is the greater of: • 50 percent of wages paid by the business • 25 percent of wages paid plus 2.5 percent of the unadjusted basis of all qualified property
Net Operating Losses Net Operating Losses (NOLs) incurred in the business of farming can be carried back to obtain a refund of taxes paid in prior years. Other types of businesses are no longer allowed to carry back NOLs. The NOL carry forward period is now unlimited for all businesses. The old law allowed a carry forward period of 20 years.
As you can tell from the information summarized, the tax law reform did not simplify Qualified property is tangible property subject tax returns for farmers. Within this article to depreciation and is held and used by the we only covered a few of the new tax law business at the close of the taxable year and nuances affecting your business this year. There the depreciable period has not ended by the are numerous other individual and business close of the taxable year. The depreciable changes in the tax law. See a GreenStone tax period begins on the first day the property is accountant to determine how the new law placed in service and ends 10 years thereafter; affects your business and whether or not you or, if the property has a longer depreciable life should consider any changes going forward to than 10 years, the longer depreciable life is ensure you are limiting your tax liabilities. ■ used for the depreciation period. The unadjusted basis of property is the original cost basis when the asset is placed in service. This complicated limitation will require two depreciation schedules, one for the tax return and one to APRIL • Individuals file a 2017 income tax return (Form compute the limitation. 1040) and pay any tax due. If not able to file, The deduction is complicated, an file Form 4868 to request an automatic 6-month example may help us understand extension. If tax is due it must be paid with the this new deduction: Form 4868.
Tax Calendar...
17
• 1 st quarter estimate is due for 2018 for individuals that pay estimated taxes.
A married farmer reports a $50,000 Schedule F net profit, has wages paid of $250,000 and qualified property of $1,000,000. The farmer has no sales to cooperatives and taxable income is under the $315,000 phase-out threshold.
•C orporations file a 2017 calendar year return (Form 1120) and pay any tax due. If not able to file, file Form 7004 to request an automatic 6-month extension. • C orporations deposit the first installment of estimated income tax for 2018.
• The Section199A deduction is $10,000 (20 percent X the Schedule F profit of $50,000).
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• The 50 percent wage limitation of $125,000 ($250,000 X 50 percent) does not apply.
JUNE • S econd quarter estimate is due for 2018 for
15
• Nor does the qualified property limitation apply (62,500 + 2.5 percent of $1,000,000 = $87,500) since the deduction is less than the limitations.
JULY
31
There are numerous other rules that are not covered in this article. Since this is a very large potential deduction for most farmers, make sure to seek specialized tax advice to take full advantage of this new law.
• Non-farm employers file Form 941 for the first quarter to report Social Security, Medicare, and withholding.
individuals that pay estimated taxes. • C orporations deposit the second installment of estimated income tax for 2018. • Non-farm employers file Form 941 for the second quarter to report social security, Medicare, and withholding. • F orm 5500 due for all employers that maintain an employee benefit plan such as a pension plan. • I f not able to file, file form5558 to request an automatic 2.5 month extension.
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THE EMPLOYER BRAND: A strategic tool to give your farm business a leg up on the competition By Beth Barker, SPHR Chief Human Resources Officer
In today’s competitive agriculture environment, finding and keeping good employees can keep you up at night. Turnover and training costs your business valuable time and money. So what is a small business owner to do? Define your employer brand and weave it into your recruiting efforts, training programs, compensation and benefits package, and work environment. Once you do that, you have given your farm a leg up on the competition. An employer brand is essentially what the business communicates to potential and current employees about what it is like to work there. It is similar to and compliments your 39
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marketplace brand. It is grounded in your history, mission, values, culture and personality. A positive employer brand communicates that your farm is a good employer and a great place to work. Your employer brand affects recruitment of new employees as well as retention, job satisfaction, and productivity of managers and workers alike. To develop an employment branding strategy, think about the following: What do you love about your farm business? As you think about your business vision, mission and values, write down your farm’s unique attributes. Define what your company stands
for. Understand your organization’s objectives and what talent is needed to accomplish those objectives. Your employer brand should capture the essence of your company in a way that is exciting and engages employees and stakeholders. What is your employer value proposition? Today, employees want to know “what’s in it for me?” Specifically, what are the benefits of working for your farm over all the others? Ask your best staff members what they like about working for you? Today’s employees are looking for 1) respectful treatment of all employees at all levels; 2) fair and equitable
pay; 3) trust between employees and management; 4) job security; and 5) opportunities to use their skills and abilities on the job. Develop an employee marketing strategy. Your efforts should focus on two areas. The first is attracting future employees whose knowledge, skills, work ethic and attitude are a good fit for your business. Pay attention to the words and adjectives you use if you have a recruiting site, social media or other external recruiting sources. The second centers on consistently communicating your employer value proposition to current employees to retain and engage them. Consider using employee testimonials in your advertising and training materials. Capitalize on any and all community service activities that your farm participates in. All of your general marketing, advertising and support of the community youth programs like 4-H and FFA will translate to your employer brand. Finally, ensure that your management practices support your employer brand. Training, coaching, compensation and other HR-related practices can be used to support the brand. As you onboard new employees, clearly communicate your values and discuss specific work behaviors that do and do not correspond to your expectations. Keep tabs on your pay levels. As the economy has improved, wages have risen. You do not want to lose good employees over small increases in pay. Pay satisfaction is tied to pay level, pay structure and raises. Competitive pay levels won’t keep good employees if the work environment is poor. Your business must hit the sweet spot between good work environment and fair pay. In summary, job candidates want to be a part of something meaningful, something bigger than themselves. A job in the agriculture field is naturally one that lends itself to that. If your employer brand and employee value proposition can demonstrate that they will be paid fairly, develop new skills and be treated well, the time and money you save in turnover turns to profit. As an employer of choice, you will reap the rewards for retention, productivity and employee satisfaction, which are ultimately reflected in savings for the bottom line. ■
i WINDOWS TECH SUPPORT SCAM This Windows Tech Support Scam is happening more frequently. The goal for the person calling is to defraud you to install remote control software on your computer, giving them the ability to take control of your computer and/or charge you for a service to remove the virus. They then will direct you to install software on your machine to assist in removing the virus, giving them the ability to steal data from your computer, and install additional viruses or malware. You might have heard of friends or family members that have received this call or have already fallen for the fraud.
the thieves have copied (or attempted to) data from you. This could be personal data they might try to use to reset additional passwords like bank accounts or social media accounts. You should have your computer cleaned by an information technology professional immediately. If you gave them your credit card for a service, contact your financial institution to have the payment stopped. You should also change all of your passwords.
What is the best way to handle these fraudsters when they call? The best way to handle these types of calls is to hang up. Do not give them any personal information, just hang up on them.
If you have received this type of call, you can file a complaint with the Federal Trade Commission at https://www.ftc.gov/faq/ consumer-protection/submit-consumercomplaint-ftc
What do I do if I already have fallen for this scam? If the “Tech” installed software on to your computer, it is possible
Microsoft Tech support scams https:// www.microsoft.com/en-us/wdsi/threats/ support-scams. ■
Remember, Microsoft does not call customers at home and will never ask for passwords or other private details in any forum.
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Hello… I am calling from Windows and your computer is infected with a virus…
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...Tech Tip Partners — Spring 2018
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The Value of Financial Benchmarks
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By Steve Kluemper, Vice President of Credit, and Ian McGonigal, Senior Vice President of Regional Sales, GreenStone Farm Credit Services
While there are many financial ratios that deliver important information, there are three primary metrics every farmer should analyze: the Owner’s Equity Ratio, the Current Ratio, and the Debt Service Coverage Ratio, which measure solvency, liquidity, and debt repayment capacity, respectively.
FINANCIAL BENCHMARKS PROVIDE FARMERS KEY INSIGHTS INTO HOW THEIR OPERATION IS PERFORMING FINANCIALLY AND HELP IDENTIFY AREAS FOR IMPROVEMENT. BENCHMARKS APPLY TO EVERY BUSINESS OPERATION. IN ORDER TO RUN A SUCCESSFUL OPERATION, FARMERS NEED TO UNDERSTAND THEIR OWN FINANCIAL POSITION, AND HOW THEIR METRICS RELATE TO OTHER, SIMILAR BUSINESSES.
The Owner’s Equity Ratio shows your net worth as a percentage of total assets, measuring your ability to withstand periods of financial stress. Net worth is calculated by subtracting the value of everything that is owed (total liabilities) from the value of everything that is owned (total assets). The higher the ratio, the greater the solvency and the more total capital supplied by the owner and less by the creditors. The target is 50-65 percent or higher.
Spring 2018 — Partners
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enchmarks are a valuable tool farmers can use to help B improve their operation and make informed, strategic decisions. When a farmer’s financial ratio is below the industry benchmark, it may be time to consider how to improve the situation, perhaps by improving efficiency, profitability, cash flow, liquidity or solvency.
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The Current Ratio is a liquidity measure similar to Working Capital that shows the value of assets to be liquidated in the following 12 months (current assets) in relation to liabilities due in the following 12 months (current liabilities). Working Capital is calculated as current assets less current liabilities and expressed as a dollar amount, where Current Ratio is a ratio of current assets divided by current liabilities. They both indicate your ability to pay current liabilities from the normal liquidation of current assets rather than liquidating long-term assets or incurring more long-term debt. The higher the Working Capital and Current Ratio, the greater the liquidity. The target for the Current Ratio is 1.25-1.75 or higher. The Debt Coverage Ratio determines your debt repayment capacity. It is calculated as a ratio of your annual earnings after all expenses, including owner withdrawals and family living expenses, except for interest and depreciation expenses, divided by your annual principal and interest payments. The greater your earnings are to cover debt payments, the easier you can handle planned and unplanned capital spending as well as changes in revenues and expenses. A debt coverage ratio less than 1.00 means there were insufficient earnings to repay all debt payments and working capital was used to make the payments. The Debt Coverage Ratio target is 1.15-1.50 or higher. These benchmark target ratios are based on general financial management best-practices, as well as on GreenStone’s extensive analysis of the financial performance of our customerowners. Whenever you compare your operation to a benchmark number, you should always ask how the benchmark was derived, how many operations and how many data points were included in the analysis, and how similar they are to your operation.
In addition to letting a farmer understand how the operation is performing financially, financial metrics and ratios are also used to make lending decisions, though they are just one tool, not the only factor in these important decisions. For example, our loan professionals review our customers’ business plans carefully, assess their management strengths and weaknesses, and have in-depth conversations to explore their business opportunities and challenges, rather than relying solely on a few financial measurements. The financial position of any operation evolves over time and the financial ratios will also ebb and flow. An operation that is expanding to take advantage of an opportunity may leverage a significant portion of its resources, which will weaken some financial ratios. An experienced lender understands this as a temporary situation where, as the expansion plays out, the financial ratios should improve. They also understand that if one financial ratio is outside the target range, other ratios and credit factors may be strong enough to approve a sound, constructive loan. Farmers should develop the discipline to calculate their financial ratios and compare them to industry benchmarks in line with their production schedule: annually for crops and at least quarterly for livestock. While industry groups and accountancy firms often offer their own benchmarks, GreenStone has developed an extensive database of financial ratios representing a diverse customer base, and can tell individual producers how they are doing compared to the rest of the portfolio. To provide meaningful information, GreenStone common-sizes the data to compare the balance sheet, earnings, and cost of production information per unit of resource such as acres, cows, etc. and per unit of production such as bushels, pounds, etc. The common-sized metrics will have variability based on the solvency, liquidity, earnings and debt repayment rates of each operation in addition to differences in business practices such as the amount of assets rented and owned, the amount of inputs produced and purchased, etc. Financial services officers can assist producers in comparing financial metrics to similar operations. Benchmarks are a valuable tool farmers can use to help improve their operation and make informed, strategic decisions. When a farmer’s financial ratio is below the industry benchmark, it may be time to consider how to improve the situation, perhaps by improving efficiency, profitability, cash flow, liquidity or solvency. As with any tool, the value is in how the information is put to use, recognizing that benchmarks are only a target to aim for. If a ratio is outside the optimal benchmark range, there is no need to panic, especially for young and beginning farmers. Rebalancing your debt obligations with your lender is often a solution to improve ratios outside of the optimal range. Understanding the financial implications of operational decisions takes time. Applying a consistent approach to analyzing your financial ratios and making decisions accordingly can work over time to improve your financial position. ■
Partners — Spring 2018
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3515 West Road East Lansing, MI 48823
Spring feature highlight... For Marc and Erika Walker, their careers pulled them closer to the city – Grand Rapids – but their roots were in the small towns they grew up in on the outskirts of the city. As their children approach school age, they began looking for a place where their family could put down roots, providing the small town values and experiences they had growing up. Read more on page 27.