Summer 2008
Editor’s Note
Editor’s Note
Summer…it’s such a wonderful time of year here in the Midwest. Family gatherings, outdoor events, and warm evenings with the windows open…they are all a part of the fabric of this season. While we realize this is a very busy time for everyone, we sincerely hope you have the chance to simply relax at times and enjoy it all. While relaxing, we encourage you to take a moment to peruse this latest issue of Partners. Inside, you’ll find information on Michigan and Wisconsin’s upcoming agricultural expos—Ag Expo and Farm Technology Days; our recent Board of Director election results; and a feature article on one of our young and beginning farmers. Happy reading…and as always, your comments and ideas are welcomed.
CONTENTS
SUMMER2008
FEATURES
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Dave’s Trip to Argentina Dairy, beef and soybeans…sound familiar? These industries are not only prevalent in the U.S., they are three of the key agricultural industries in Argentina as well. That is just a fraction of what Dave Armstrong, GreenStone’s Executive Vice President, learned on his recent trip to this South American country.
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Published by
Young, Beginning and Small Farmer Focus
IN EVERY ISSUE
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Farm Shows Wisconsin Farm Technology Days and Michigan’s Ag Expo–July 15-17.
Market Outlook Director’s Corner News Update
COLUMNS
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The C.O.O. by Dr. David Kohl
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Estate Planning Overview by Ryan Wilson
The only doubt Brent Skinner ever had about being a farmer was how he could cash flow his own farming operation.
CEO Comments
CEO Comments
CEO Comments by Jim Schiller
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y the time you receive this newsletter we will be past the halfway point of the year 2008. It has been an interesting and exciting year for all of us at GreenStone, our membership, and the agricultural community. Summer planting went well in Michigan and most of Wisconsin with the major concern being cooler than normal weather. Warmer weather has arrived and June has brought some needed rain to replenish lack of moisture in the month of May. Commodity prices continue very favorably and some upward trends in livestock prices are visible. Milk prices remain strong, and other specialty commodities including vegetables and greenhouse operations are predicting profitability. Some fruits (cherries and apples) may be challenged due to a late season frost. Sod and nursery are pressured along with some forestry products due to the slowdown in building construction. Input costs are causing many concerns that at some point prices received will reduce dramatically while input costs remain high. Costs of funds have been favorable as short-term interest rates have taken a significant decrease since January 1, orchestrated primarily by the Federal Open Market Committee lowering its Fed Funds target rate and discount rate it charges to banks. This in turn reduces our costs of funds, and we were able to pass on a two percent reduction in our variable rate products. Intermediate- and long-term rates continue to be stable, and we anticipate a rather favorable interest rate market throughout the remainder of this year and into 2009. GreenStone FCS has experienced significant demand for lending. Loan volume has increased to $2.975 billion in mortgage loans and $1.489 billion of short- and intermediateterm loans. This is an increase of 17.8 percent and 25.0 percent respectively of mortgage and operating/ intermediate lending from last year (measured as of May 31). Cash available at the farmstead due to profits has driven demand for real estate and significant increases in input costs have fueled the demand for operating funds.
Overall, we are experiencing a positive business climate and successes for most of our farm operators and your GreenStone credit cooperative as well. A word of caution is always in order as prices continue to escalate. Review any expansions carefully so that you maintain working capital and sufficient equity to weather a downturn in the industry. Use risk mitigators where possible and practical to include crop insurance and futures/options positions for both the prices received and input costs side of the business. GreenStone–A Financial Services Cooperative I have many times mentioned the strength of our cooperative structure as a key element in the success of GreenStone. Customers are also stockholders, which helps us maintain a focus and accountability to both service and business results. Board of Director elections have just been completed, and I would like to add my congratulations to Edward L. Reed from Cass County, Marcellus, Michigan as our newly elected director representing Region IV. He fills the position vacated by Larry Bodtke from Van Buren County who chose not to run for re-election following his 12 years of service on the Board of Directors. Also, congratulations to the following directors for their re-election: • Darl Evers, Allegan County, Martin, Michigan–Region IV • William Lyndon Uphaus, Washtenaw County, Manchester, Michigan–Region III • William J. Stutzman, Lenawee County, Blissfield, Michigan –Region III Also, congratulations to our new Nominating Committee members elected. All of this information was forwarded in a separate mailing during the first week of June and can also be found on page 10. Closing Comments While volatility and uncertainty remain, let’s all stay focused on our positive opportunities, manage risk appropriately, and be active advocates for this great agricultural industry. GreenStone FCS continues to be positioned well to remain your preferred provider of financial services. Our mission is to promote the success of our customers and the rural community by being the best at providing credit and financial services. Thank you for your business, and as always, we welcome your comments and questions.
Quality of the credit portfolio has remained strong but volatility does remain in the livestock sector. Hopefully, prices will improve to offset ever-increasing costs of feed and supplies. Summer 2008 PARTNERS
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Market Outlook
MARKETOUTLOOK
SUMMER 2008
By Ken Lake
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espite recent strong performance, the corn market faded a bit recently as planting around the country was being completed. The late start and cold, wet weather has set us up for needing nearly perfect weather from here on for corn prices to be pressured. Minimal downside risk is seen with USDA’s weekly crop conditions report becoming a primary driver of the market. December corn could very well trade $7.00 on a weather scare, with $5.80 to $6.00 being a floor price at least until the crop is pollinated. Both old and new crop soybeans have spent a few weeks consolidating at higher values while displaying the traits of a market with volatile fundamentals. Weather and the political issues surrounding the Argentine Farmer strike are major contributors to that volatility. Like corn, the soybean market has been influenced by a cold, wet planting season causing the November contract to post a $1.29 per bushel gain in May. This move points to tight U.S. and World supplies, a cheap U.S. dollar, and inflated energy markets. Demand rationing does not yet seem to be at hand; therefore, look for continued strength in the soybean market. Wheat recently ended its first week since March at higher levels. In late May, new lows were posted at $7.30 July. The
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once common double digit weekly drops seem to be over and we may be forming a seasonal bottom in the wheat market. Technical support seems to be in the $7.40 basis July futures area. We do have concern over cool, wet weather and the development of scab. Next year’s wheat seedings are expected to decline and traders seemed positioned to own wheat below $8.00. The cattle market continues to make new highs. Futures are severely over bought and with a large open interest in the pits, corrections are expected. The long-term cattle outlook remains bullish with a buying opportunity presented on $2 to $3 breaks. Hog futures continue to trade in a narrow range with an overall lack of buying interest. Spec interest recently helped prop prices. Look for cash prices to remain steady with firm packer margins. Ken Lake is the Origination Services Coordinator for Michigan Agricultural Commodities Inc., Lansing, Michigan, and a licensed commodities broker registered with the National Futures Association. The opinions stated herein are not necessarily those of GreenStone FCS.
Farm Management
The
C.O.O.
by Dr. David Kohl
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any of our family farm and ranch businesses are becoming more complex and diversified with multiple generations of management. With these trends comes a new challenge of developing middle management or the next generation of management. A position that will become more important in the future will be the COO, Chief Operations Officer. This individual’s major responsibility will be to execute the strategy developed during annual planning sessions.
“A SUCCESSFUL COO NEEDS
be a part of the executive team and will not only draw a salary and bonus based on profits, but build an equity position in the business as well. The COO conducts the daily and weekly meetings and communications between enterprises to maximize economic performance amongst the units. This individual must work very closely with the CFO, Chief Financial Officer, to develop and institute key metrics for performance in each area. The creation of a COO position is a capital investment for the human side of the business, where it may take multiple years to recover the cost and demonstrate monetary benefits to the business. A successful COO needs a written business plan to follow, operate from, and communicate from effectively. Ideally, he or she will have worked three to five years away from the family business under management supervision to gain experience. Does this position sound significant for your business? If you are generating more than a million dollars in sales revenue, have multiple enterprises, and lack younger generation in management, the COO may be the critical step in maintaining and growing wealth and synergy between the work and family environment. Comments? Please send your remarks to AgGlobeTrotter@accountlist.com. I would like to know what you are thinking. –David Kohl
Dr. David M. Kohl is Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship in the Department of Agricultural and Applied Economics at Virginia Polytechnic Institute and State University (Virginia Tech), Blacksburg, Virginia. He has conducted more than 3,000 workshops and seminars for agricultural groups such as bankers, Farm Credit, FmHA, and regulators, as well as producer and agribusiness groups. He has published four books and over 400 articles on financial and business-related topics in journals, extension, and other popular publications. The opinions stated herein are not necessarily those of GreenStone FCS.
A WRITTEN BUSINESS PLAN TO FOLLOW, OPERATE FROM, AND COMMUNICATE FROM EFFECTIVELY.” The COO will often be an individual that is a son, daughter, or other family member returning to the business. This individual may come from outside the family but he or she will
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Guest Column
ESTATE PLANNING
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ongress has failed to enact permanent estate tax legislation to deal with the looming sunset provisions that take effect on January 1, 2011. With the enactment of Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”), Congress provided for a series of increases in the unified credit (or applicable exclusion amount) from $1 million in 2001 to $3.5 million in 2009, followed by a repeal of the estate tax in 2010, and then a return to the prior law in 2011, i.e., a $1 million unified credit or applicable exclusion amount (The unified credit or applicable exclusion amount is the amount that an individual can pass estate tax free to his or her heirs). Unfortunately, every attempt to repeal the estate tax has failed since 2001, and no compromise legislation is in sight. Estate planning in this time of uncertainty is going to require great flexibility and constant review and updating. Virtually every estate plan encompassing significant assets will
“A LIVING WILL IS A DOCUMENT THAT SETS FORTH A PERSON’S WISHES REGARDING HEROIC HEALTH CARE MEASURES.” have to be re-examined in the next three years either to account for Congress’s failure to enact permanent estate tax legislation or to deal with the terms of any permanent
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overview By Ryan Wilson Attorney
legislation that is passed. Some experts hold out hope that Congress will be able to pass permanent legislation in 2009 after the November 2008 elections. However, this is probably wishful thinking. The majority of experts are coming to the conclusion that a return to the pre-EGTRRA law is likely. In 2008, the unified credit or applicable exclusion amount is $2 million. Any amount transferred in excess of the $2 million will result in a federal estate tax of 45%. As mentioned above, the unified credit amount will increase to $3.5 million in 2009. For a married couple with $2 million or less in total assets, they would not be facing an estate tax in 2008, 2009 or 2010. However, in 2011, when the unified credit is set to return to $1 million, they could be facing an estate tax of $435,000! Thus, for many married couples, proper planning is necessary. Establishing two revocable living trusts and using the unified credit amount of each spouse will be critical in the event that we return to the pre-EGTRRA law. If a married couple has more than $2 million in total assets, a case can be also made that they should review their options and consider executing revocable living trusts now. By doing so, they would have the necessary essentials of a plan in place to control the possible estate tax damage in 2011 and beyond.
For example, if the couple waits and procrastinates (a common problem), an unexpected death in 2011 could wreck havoc and result in significant estate taxes down the road.
“YOU SHOULD HAVE A DURABLE POWER OF ATTORNEY FOR FINANCIAL MATTERS AND A DURABLE POWER OF ATTORNEY FOR HEALTH CARE MATTERS, REGARDLESS OF THE SIZE OF YOUR ESTATE.” While we are now living in uncertain times and knowing exactly what to do may be difficult, there are a few things that should be done in virtually every couple’s or person’s estate plan. First, a durable power of attorney for financial matters is critical. This power of attorney allows a person to designate who he or she wants to act in his or her place for financial matters, including times when the person is incapacitated. A power of attorney must be executed before the person is incapacitated. Thus, you cannot wait to do this until the time you need it. Putting this off can result in some disastrous consequences and expense. Imagine your spouse has an unexpected stroke or heart attack and he or she is now confined to a wheel chair and cannot communicate. Worst yet, he or she now requires nursing home care. The healthy spouse will likely encounter some problems if he or she needs to sell or transfer assets. Having a durable power of attorney for financial matters in place can be a life-saver. Secondly, another document that everyone needs to consider is a durable power of attorney for health care. This document allows you to designate the person that you want to make health care decisions for you when you are unable to do so. Most people have heard of a living will. A living will is a document that sets forth a person’s wishes regarding heroic health care measures. Since the passage of the Durable Power of Attorney for Health Care Statute in 1990, living wills have been rarely used. This statute authorized a person to insert “living will” language in the body of the durable power of attorney for health care. Therefore, a durable power of attorney for health care has a dual purpose. Besides designating your health care agent, you can also legally specify your wishes regarding life-sustaining measures.
Whether a person has a small or large estate, he or she should have a durable power of attorney for financial matters and a durable power of attorney for health care in place. Without one or both of these documents, a spouse or an undetermined family member or friend will need to petition the probate court for a guardian and/or conservator in the event of a disability. One of the keys to establishing these powers of attorney is that you are in control and designate the person or persons that you want to handle your affairs. If it goes to the probate court, there is no guarantee that the person the court appoints will be the one you would prefer. Also, going to probate court to establish a guardianship and/or conservatorship can be costly, embarrassing and timeconsuming. So, if you take nothing else from this article, you should have a durable power of attorney for financial matters and a durable power of attorney for health care matters, regardless of the size of your estate. If you have an estate under $2 million, there is probably less of a need for establishing revocable living trusts. However, a case can be made for a last will and testament. A will is certainly less expensive than a revocable living trust. A will also allows you to designate the person who you want to act as the personal representative, formerly known as the executor. If you have minor children, a will is used to designate the guardian and conservator for the minor children. In addition, if you have minor children, trust provisions can be inserted in the will itself to protect the money passing to the children. In a testamentary trust arrangement under the will, you are also designating the person who you want to act as the trustee of those funds. I want to mention a few words about do-it-yourself plans. Today there are websites where you can draft a will, revocable living trust and powers of attorney. To be sure, the do-ityourself approach is cheaper than having an attorney draft your documents. However, an experienced estate planning attorney is more than a document preparer. He or she can explain your options and recommend the best course of action. A computer program is no substitute for this expertise. Hiring a good attorney can also be a wise move if you own real estate or need help funding or re-titling assets in the name of a trust. There is a greater need to involve an expert if the situation is complex. With today’s blended families, it does not take much for the situation to be complicated. In any event, if you plan to go the do-it-yourself route, please be careful. Continued on page 8...
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Director’s Corner
MEET LYN UPHAUS Your Region III Director
Like many agricultural producers, farming is more than a job for Lyn Uphaus, GreenStone’s current Chairman. It is a life and has been the life of his family for more than 130 years. Lyn has been living this life since 1973 when he joined his Dad in the farm business. In 1976, when his father retired, Lyn took over ownership. Today he raises corn, soybeans and wheat; feeds-out around 1,000 head of cattle; and provides custom harvesting services. The centennial farm is home to Lyn and his wife, Ann, a teacher at Sand Creek Community Schools, and their two daughters Sarah, a sophomore at Washtenaw Community College, and Katy, a senior at Manchester High School. Like his daughters, Lyn graduated from Manchester High School. He also attended Michigan State University where he completed the Animal Husbandry technology program. Lyn has been on the GreenStone Board of Directors for 10 years, two of which he served as Vice Chairman, and the most recent three as the Chairman. He is also a founding member and Treasurer of the Great Lakes Ethanol, LLC; President of the Corn Marketing Program of Michigan Board; Treasurer for the Manchester Community School Board; and a member of the Sharon United Methodist Church.
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What is your main goal or issue you would like to address as a director? My main goal is that we stay focused on the customer – that is the driver of our success. We need to take care of our customers, serve them, and always make them number one. As a director, when it comes to making company decisions, they should be driven by what is best for our customers, our shareholders. A key example of this would be the Patronage Program.
“MY MAIN GOAL IS THAT WE STAY FOCUSED ON THE CUSTOMER—THAT IS THE DRIVER OF OUR SUCCESS. WE NEED TO TAKE CARE OF OUR CUSTOMERS, SERVE THEM, AND ALWAYS MAKE THEM NUMBER ONE.” GreenStone could keep that money as capital for the company, but that wouldn’t be serving our customers in the best way. By offering patronage payback, we can help reduce their interest rates up to around 50 basis points. Therefore, we not only offer a competitive interest rate up front, we also offer a patronage refund; and that is serving the customer!
GreenStone FCS customers encompass a uniquely diverse industry of products and services. In general, what do you see as the key to their success in the future? I believe they need to have access to adequate capital. Everything they do takes money and is expensive. Input costs have escalated—it doesn’t matter if you’re raising cherries or milking cows—you have to have a good, reliable source of capital to cover the rising expenses. Our customers also have to have a lender that understands agriculture, who recognizes when fertilizer costs go from $200 to $700 and who is in touch with the marketplace…this is where GreenStone comes in.
What do you view as GreenStone’s strategy to accomplish its mission and ensure the vision of the organization is achieved? GreenStone has identified four distinct market segments: agriconsumer (rural residents), traditional farmer, commercial
producer and capital markets. In recognition of these segments, we have built divisions with key personnel who are specialists in these different industries. Therefore, while being a large organization, we are able to specialize in each of these areas and give personal attention to our customers. Rather than just having loan officers, we have individuals who have expertise in their respective fields, who have been in the industry, and who understand the challenges, the trends, and the customers. Having this individualistic service is key to serving our customer in the best way possible.
What has been the most significant advancement you have seen in your lifetime in regards to agriculture? Well, there is no doubt in my mind that it is the technology. From the round-up ready corn and soybeans to automatic guidance and GPS systems. It allows farmers to operate virtually 24 hours a day without worrying about being able to see things like the planter marks among the dust or in the dark. The downside, of course, is with the added efficiency everyone can handle more; therefore, land rent costs go up along with other input expenses. And with each new advancement in technology comes a new learning curve for the operator – both in learning how to use it and how to fix it. ...Estate Planning continued from page 6 To summarize, in today’s uncertain estate planning environment, couples with assets in excess of $2 million need to consider establishing two revocable living trusts now. For couples with assets under the $2 million threshold, establishing two revocable living trusts will be critical in 2011 if the unified credit amount returns to $1 million. So, such couples need to stay current on the law and possible changes. Regardless of the size of your estate, each person should have in place a durable power of attorney for financial matters and a durable power of attorney for health care. A final piece of advice: don’t procrastinate. Even if you are not sure what you want to do with the disposition of your asset, take care of the powers of attorney now. While it is preferred, you do not have to do everything at one time. Ryan M. Wilson is an attorney with the law firm of Fraser Trebilcock Davis & Dunlap, P.C., Lansing, Michigan. Mr. Wilson practices in the areas of estate planning, probate, trust and business succession planning. This article is intended as a source of general information. If you have questions regarding this article, please contact Mr. Wilson at (517) 377-0897 or rwilson@fraserlawfirm.com. © 2008 Fraser Trebilcock Davis & Dunlap, P.C. The opinions stated herein are not necessarily those of GreenStone FCS.
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a n i t n e Arg
Argentina Trip
s ’ e v a Do t
Trip
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airy, beef and soybeans…sound familiar? These industries are not only prevalent in the U.S., they are three of the key agricultural industries in Argentina as well. That is just a fraction of what Dave Armstrong, GreenStone’s Executive Vice President, learned on his recent trip to this South American country. Armstrong joined 17 Michigan farmers on the Michigan Farm Bureau sponsored trip to Argentina where they were acquainted with industry competitors more than 6,000 miles away. Of course, the 70-degree August-like weather was a
“MORE ABUNDANT ARE SOYBEANS, WHICH RUN AN IMPRESSIVE 60–65 BUSHELS PER EACH OF THE 41.5 MILLION ACRES, THANKS TO THE DEEP AND NUTRIENT RICH TOPSOIL.” welcomed bonus of the trip when Michigan and Wisconsin were longing to merely close in on the high 30s.
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Argentina’s dairy cattle, which are accustomed to the March heat, are primarily pasture fed, resulting in a national rolling herd average of 16,500 pounds of milk. Argentina’s government regulates the cap on the price farmers can be paid for milk, which is currently set at $12.60 per hundredweight. Like the dairy industry, their beef cattle are also pasture fed, but there is movement toward finishing them in feedlots. The 50 million head (which averages over 1.3 head per person) proves beef is abundant. Argentineans eat more beef per capita than anywhere else in the world, and only 25 percent of their beef is exported. But what are more abundant are soybeans, which run an impressive 60-65 bushels per each of the 41.5 million acres, thanks to the deep and nutrient rich topsoil. However, export taxes eat up a large portion of the profits with a 48 percent export tax on whole soybeans, while processed soybeans see a 25 percent export tax. The group also made a stop at Expoagro, a farm exposition comparable to the Farm Progress show in the United States.
Keeping with the country trend of no-till crops, very little tillage equipment could be found at the show; however, there was no shortage of large equipment, research plots, and crop demonstrations.
“THIS WAS A GREAT OPPORTUNITY TO LEARN MORE ABOUT A MAJOR U.S. AG COMPETITOR. I WAS IMPRESSED BY ARGENTINA’S MODERN AG INFRASTRUCTURE AND FARMING PRACTICES, BUT CAME AWAY FEELING BETTER ABOUT OUR COUNTRY’S ABILITY TO COMPETE.” Armstrong summarizes the trip saying, “This was a great opportunity to learn more about a major U.S. ag competitor. I was impressed by Argentina’s modern ag infrastructure and farming practices, but came away feeling better about our country’s ability to compete—not so much from a productive standpoint, but rather from our system of government. According to farmers we spoke with, their democracy doesn’t work like ours. Even though commodity prices are relatively
Dave Armstrong (5th from left) poses for a photo with his fellow Michiganians among a field of Argentina soybeans.
high today, think about taking nearly 50 percent off the top of a bushel of soybeans in taxes before covering expenses! Eventually, these kind of populist economic policies will negatively impact the country’s agricultural output. “I also want to thank Michigan Farm Bureau for inviting me to participate in the trip. I not only enjoyed learning about Argentina’s agricultural industry, but getting to know the other trip participants as well,” he concluded.
GreenStone FCS Announces Board of Director Election Results GreenStone Farm Credit Services has announced the results of its recent election for four seats on its Board of Directors. In Region III (Michigan), incumbents William J. Stutzman, from Lenawee County, and William Lyndon Uphaus, of Washtenaw County, were re-elected for three-year terms. Stutzman, a 21-year board member, is in partnership on a 3,000 acre cash crop farm producing corn, soybeans and wheat. Uphaus, a 10-year board member, also cash-crop farms corn, soybeans and wheat, and operates a 1,000 head beef finishing feedlot. In Region IV (Michigan), incumbent Darl Evers, from Allegan County, was re-elected to a three-year term, while Edward L. Reed, of Cass County, was newly elected to the GreenStone FCS Board of Directors for a three-year term. Evers, a 17-year board member, is a partner in his farming operation raising broilers, contract heifers, and holstein feeder cattle. Reed works in hog and grain production, raising 2,000 sows from farrow to finish, and farms 1,600 acres. The 2008 Nominating Committee includes from Region I: Harold Blaine, Saginaw County; and Joel Wardin, Saginaw County; from Region II: Timothy F. Ruggles, Tuscola County; and David C. Thuemmel, Huron County; from Region III: Jeff Bristle, Washtenaw County; and Larry D. Bush, Lenawee County; from Region IV: T. Jon Drozd, Allegan County; and William M. White, Cass County; from Region V: Steven R. Bovee, Gratiot County; John Crumbaugh, Gratiot County; and Harold Walcott, Ottawa County; from Region VI: Jamie Demerly, Shiawassee County; Anthony Jandernoa, Clinton County; and Jeffery Sandborn, Ionia County; and from Region VII: Mary Eggert, Outagamie County; Dale Wagner, Manitowoc County; and Beverly Wolf, Oconto County.
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Young, Beginning, and Small Farmer Focus
BEST BOTH
IT’S THE OF WORLDS FOR THIS GRATIOT COUNTY YOUNG FARMER By Laura Moser
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he only doubt Brent Skinner ever had about being a farmer was how he could cash flow his own farming operation. With no family operation to buy into, Brent was left to his own creative resources to gain experiences and capture the right financing mix to begin his dream of having his own farm. Brent’s focused determination and desire to farm has lead to a 4,000 head hog finishing operation, 120-acre farm and a full-time job as the operations manager of JBT Grain Company in Middleton, Michigan. “I have the best of both worlds,” Brent says. “My day time job pays the bills and I work for myself (on the farm) for nothing. I absolutely enjoy farming and
my job lets me continue to invest in the farm without needing to pull an income from it at this time. I hope 10 years from now that I am in a different boat, but for now this is a great arrangement.” HE FIRST
“T
The culmination of Brent’s farming and employment stems from the trust and confidence one man put into Brent’s abilities. Waino Pihl first met Brent while he was working for the Kris Duflo
family. Brent was interested in purchasing a 120-acre farm Waino owned, but with little equity, Brent was not in a position to apply for traditional
THING THAT IMPRESSED ME
BRENT WAS HIS INTEGRITY. WHEN I ENTER INTO BUSINESS AGREEMENTS I LOOK FOR SOMEONE I CAN TRUST AND RESPECT–WHETHER THAT PERSON IS 25 OR 55 YEARS OLD.” ABOUT
Pictured above: With financial backing from a local landowner, Brent was able to build enough equity to secure traditional financing.
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financing. Brent presented a business plan including financial projections to Waino in hopes they could work out an equity financing arrangement until he could apply for traditional financing. Waino, impressed with the depth and scope of Brent’s proposal, worked with Brent so he could acquire the land. “The first thing that impressed me about Brent was his integrity. When I enter into business agreements I look for someone I can trust and respect–whether that person is 25 or 55 years old. Brent is a good businessman and is very credible,” Waino says. “The arrangement worked out well for both of us,” Brent adds. “Waino was able to hold onto the land until it was paid for, and I was able to build equity until I was able to acquire traditional financing through GreenStone.” While Waino was instrumental in Brent’s financial backing, the Duflos gave him the practical experience he needed to be successful. The Duflos hired Brent when he was in high school and gave him the opportunity to raise some beef cattle on their farm. After high school, Brent enrolled in Alma College to play football and study chemical engineering. A knee injury sidelined his football playing and he returned to Duflos looking for a full-time job.
business plans for his own operation gave Brent an advantage in both the classroom and with the loan officer.
supportive of me.” As the operations manager, Brent works with area farmers to contract their commodities and oversees JBT’s financials. JBT Grain Company handles
“I had a better appreciation for what I was learning in class because I could apply it to what was going on with LANTING PIGS GIVES ME A STEADY my own farm,” Brent says. “I was INCOME STREAM MAKING IT EASIER TO working full time, CASH FLOW THE OPERATION commuting back and forth to East Lansing and overseeing the construction 2 million bushels of grain a year and another 60,000 tons of feed ingredients of the barns.” that are sold through the grain company. By the spring of 2005, as Brent was
“P
.”
preparing to graduate, Waino and the Duflos were completing the construction of a JBT Grain Company and were looking for an operations manager. The combination of Brent’s practical experience and college education made him a good fit for the position. “I started at JBT the day I graduated from college,” Brent says. “The Duflos and Waino have been great to work with. They give me flexibility to get my crops in and still do my job. Technology and my Blackberry™ make it possible for me to be in my tractor and still do my job with JBT. They have been very
“I have been impressed with the educational background Brent has received,” Waino comments. “He is able to analyze facts and make decisions. We don’t operate on instinct and Brent is very good at presenting the facts to us.” Planting Pigs “Cash cropping by itself is too risky for me and hard to cash flow,” Brent says. “Planting pigs gives me a steady income stream making it easier to cash flow the operation.” Brent has a 10-year contract with High Lean Pork. He receives the pigs when they are 30–35 pounds and grows them
“The Duflos insisted that I stay in college and get my education if I wanted to work full-time,” Brent says. “So I transferred to MSU to major in Ag business.” During the fall of 2004, when Brent was starting his senior year at MSU, construction was starting on the finishing barns. Completing his ag business degree while simultaneously obtaining financing and constructing
With financing from GreenStone FCS, Brent Skinner built two 2,000 head hog finishing barns.
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to finish size of 250–260 pounds. High Lean Pork supplies the pigs and the feed and Brent supplies the housing and labor. “I am just one big hotel,” he jokes. “There are a lot of good things about the contract finishing that work for me. The hogs provide a steady cash flow with no market risk. Sure, I might miss the high side of the market but I also miss the low side. The steady payments also helped me to land the financing I needed to build the barns.” With financing through GreenStone Farm Credit Services, Brent built two 2,000 head doublewide finishing barns. Brent crops the 120 acres he purchased from Waino along with 200 acres he share crops with his grandfather. “I would like to cash crop more but land is hard to come by right now,” he says. Advice for Young People There are lots of young people like Brent, who have a desire to farm, yet no
direct family tie to an established operation. Brent’s advice is to get an education and be willing to look at different opportunities. “It is definitely hard to get started,” Brent says. “My education helped me tremendously. I can talk about financing and market risks as well as the farm operations. Farming today is more of a business than ever before and we need to be able to run it like one.” “There are also more opportunities available like contract finishing,” he continues. “The benefits of integrating the pigs into the cropping enterprise make this all work. I never planned to raise pigs but it enables me to do the cash cropping. There is no way I could bear the market risks of farming without the contract arrangement.” Brent also encourages young people to look for opportunities to work one on one with retiring farmers looking to sell their land. The equity financing
HAIL PROTECTION That’s GreenStone! Don’t let your crops weather the storm alone. Protect them with Crop Hail Insurance from GreenStone Farm Credit Services. Contact your GreenStone FCS crop insurance specialist to find out more.
Call us today for more information
800-444-3276 • www.greenstonefcs.com GreenStone FCS is an equal opportunity provider and employer.
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arrangement he worked out with Waino put him in a better position to obtain financing. “We put a lot of trust in Brent, but everything was backed up in writing and legal documents, including contingency plans if Brent was not performing on the loan, or for some reason, was physically unable to run the operation,” Waino explains. “We worked closely with John Jones from GreenStone to be sure this was a favorable arrangement for both of us. It has been a pleasure to see someone like Brent get a start in agriculture.” Community Involvement Working full-time while commuting to school limited Brent’s involvement in college activities. Now that he is settled in Gratiot County, he has increased his involvement in agricultural organizations. He is active in the county Farm Bureau and is a member of the Michigan Cattleman’s Association board of directors. In 2006, the Michigan Farm Bureau named him the Outstanding Farm Employee. Last fall he hosted a group of Michigan legislators on his farm. He is also featured in the “Power of Green” campaign sponsored by the Michigan Ag Council and the Gratiot County Farm Bureau. “There are a lot of changes taking place in farming, especially in terms of regulations. I think it is important to be involved in these organizations,” Brent says. “My father and grandfather were both County Farm Bureau Presidents.” Brent’s pragmatic approach to farming carried over to his recent engagement. “I asked Jessica to meet me in the pig barn at 5 in the morning, and that is where I proposed—and she said yes.” With that kind of full disclosure, there is no doubt she knows what life will be like. Brent
Farm Shows
FARM TECHNOLOGY DAYS & AG EXPO–
AGRICULTURE’S SUMMER BLOCKBUSTERS Wisconsin Farm Technology Days Coming to Brown County Brown County—ranked by the U.S. Department of Agriculture as Wisconsin’s 8th largest agricultural county—will host Wisconsin Farm Technology Days on July 15-17. Country Aire Farms, 1440 Lamers-Clancy Road, Greenleaf, is the site for this year’s show. Founded in 1954, the state’s largest outdoor agricultural expo travels to a different Wisconsin county each year. The three-day event showcases the latest improvements in production agriculture, including practical applications of recent research findings and technological developments. GreenStone Farm Credit Services will have a presence in multiple areas at this year’s show. GreenStone staff will be located at Tent City Lot #800, as well as in Agribusiness Tent E, booth 191 and 192. The 2008 show will also feature in-field demonstrations of the latest mowing, raking, merging, harvesting, baling and transporting equipment. This all takes place on more than 300 acres of land surrounding a 65-acre tent city boasting approximately 600 exhibitors. At the farm, visitors can see harvested alfalfa packed into bunkers and the wrapping of baled hay. Tillage demonstrations are also planned on a 60acre parcel adjacent to tent city. Established in 1968 when Budd Gerrits purchased the farm from his father, Country Aire Farms at that time consisted of 160 acres with 80 cows and 60 head of young stock.
Currently, Budd and Ione Gerrits—along with their sons, Mike and Tom, and their families—manage 3,600 acres of crops and more than 1,800 dairy cows. According to Budd Gerrits, his family is enthused and excited to have thousands of guests visit their farming operation. “We feel blessed to have been chosen to host a show of this caliber,” he said. Further information on the 2008 Farm Technology Days event is available by visiting its web site at www.wifarmtechnologydays.com, then clicking “Brown County”.
Win a $100 Mills Fleet Farm Gift Card! Bring this entry form to the 2008 Wisconsin Farm Technology Days and present it at either of GreenStone’s locations (Tent City Lot #800 or Agribusiness Tent E Booth 191 and 192), and you will be entered to win a $100 Mills Fleet Farm Gift Card. One winner will be chosen each day of the show. Name: ________________________________________ Address: _______________________________________ City: ____________________________ Zip: __________ Phone: ________________________________________ Email: _________________________________________
*Must be 18 years of age or older to register. GreenStone FCS employees and their immediate families, along with GreenStone directors, are ineligible.
Summer 2008 PARTNERS
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2008 Ag Expo Set for July 15-17 at MSU Ag Expo, Michigan’s largest agricultural equipment exposition, will return to the Michigan State University (MSU) campus July 15-17. Visitors to the 29th annual Ag Expo can explore exhibits and view demonstrations featuring equipment and other products and services of interest to farmers and agribusinesses. They can also learn about research, teaching and Extension programs conducted through the MSU College of Agriculture and Natural Resources (CANR). In addition to the CANR tent and a toy tractor sales tent, this year’s event will feature new activities including demonstrations of sprayers and articulated wheel loaders. Farmers can compare various manufacturers’ products
GreenStone hosting paintball shooting range fundraiser for 4-H Foundation during Ag Expo. Practice up on your shooting skills. At this year’s Ag Expo you can fire a paintball gun at targets of your most despised farm varmints at the GreenStone Farm Credit Services’ paintball range, which will be located near its exhibit. You can take aim at a possum, raccoon, rat, skunk, or woodchuck. If you hit four out of five varmint targets successfully, GreenStone Farm Credit Services will make a $5 donation to the Michigan 4-H Foundation. The event will be held three times on Tuesday, July 15 and Wednesday, July 16 at 10:00 a.m., 1:00 p.m., and 4:00 p.m.; and on Thursday, July 17 at 10:00 a.m. and 1:00 p.m., during Ag Expo. For the first two sessions on Tuesday and Wednesday, GreenStone will distribute 50 vouchers, then 30 vouchers for the last session. On Thursday 50 vouchers will be offered for each session. You need a voucher to participate. They can be picked up in the GreenStone FCS tent and you must be at least 18 years old to participate. Chaos Paintball Park, Inc. in Charlotte, Michigan is coordinating the event for GreenStone FCS.
before deciding on a purchase. The expo will also feature two days of tractor pulling contests, an annual favorite. The garden tractor pull takes place Tuesday afternoon (July 15), and the antique tractor pull Wednesday afternoon (July 16). The FFA state tractor driving competition will be held Tuesday morning. The event runs from 9 a.m. to 5 p.m., July 15 and 16, and 9 a.m. to 3 p.m., July 17. Admission to the grounds and parking at Farm Lane and Mt. Hope Road are free. For more information about Ag Expo, call 800-366-7055 or visit www.agexpo.msu.edu
Register to win a $500 Cabela’s Gift Card! Bring this entry form to the GreenStone tent (exhibit lot #905) at the 2008 Michigan Ag Expo and you will be entered in the drawing for a $500 Cabela’s gift card. One winner will be chosen after the show. Name: ________________________________________ Address: _______________________________________ City: ____________________________ Zip: __________ Phone: ________________________________________ Email: _________________________________________ *Must be 18 years of age or older to register. GreenStone FCS employees and their immediate families, along with GreenStone directors, are ineligible.
GIF T CARD
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News Update
News Update GreenStone FCS Receives National Recognition
1,270 regional entries. The National Agri-Marketing Association is an organization comprised of members from across the nation representing agriculture’s marketing, advertising, public relations and media sectors.
Announcing our New Disability Insurance for GreenStone FCS Members
GreenStone Farm Credit Services recently received a National Agri-Marketing Association (NAMA) Merit Award at the national Best of NAMA Awards Ceremony in Kansas City, Missouri. GreenStone was presented the award for its print advertisement “Green with Envy,” which promoted an interest rate reduction on equipment loans. The advertisement was seen in several agricultural publications during April, May and June 2007. GreenStone was also a national finalist for its member magazine, Partners. The advertisement and magazine advanced to the national level after receiving a first and merit award, respectfully, at the regional level. This was the first year GreenStone competed in the Best of NAMA awards competition. The Best of NAMA, sponsored by the National Agri-Marketing Association, honors the best in agricultural marketing communications. Both companies and agencies submit their work for this competition, which evaluates creative marketing communications and public relations success in the agricultural industry. Over 450 entries competed nationally for the top honors out of more than
Underwritten by Illinois Mutual, a world leader in Disability Insurance plans. Do you have “half” a health plan? You probably have health insurance to pay the doctor. When you are sick or hurt, who pays your income? At GreenStone FCS, together with FCS LifeExpress, we have several disability products when it comes to protecting your most important asset—your income. With flexible plans which include: • Individual plans with benefits up to $8,000 per month. • Business expenses reimbursed 100% up to $10,000 per month. • Farmers can receive monthly benefits up to $2,000 for both individual plans and business expense reimbursements without income documentation based on acres or herd size. • Choice of elimination period (30, 60, 90 and 180 days). • Choice of benefit periods (6 months, 1, 2, 5 and 10 years, to age 65) • Optional return of premium rider that will return all your premiums, less any claims, when you reach age 65. In addition, Illinois Mutual is offering a 5% discount on their premium rates to GreenStone FCS members. Without your paycheck, would you be able to meet your financial obligations? Contact your local GreenStone FCS office for more information on our disability insurance program. Summer 2008 PARTNERS
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GreenStone Customer Wins Trip with Professional Walleye Fisherman Mark Martin
best fishing trip I have ever been on” said Jeremy. “There is no way to beat it” added Warren. During their trip to Saginaw Bay, they visited the Professional Walleye Trail Championship weigh-in on Sunday, May 18, 2008. Jeremy and Warren were thrilled to get this opportunity, and admitted that they were so excited that they had difficulty sleeping on Sunday night. Their day started out a little rough with three to four foot waves; however, the weather cleared and the wind died down so they had a great day on Saginaw Bay. In addition to catching their limit of walleyes, the
Jeremy Wallman, of Whitmore Lake, Michigan, obtained his GreenStone loan in the fall of 2007 to buy 90 acres of Recreational land...little did he know that it would lead to another opportunity. During 2007, GreenStone offered a prize drawing to all customers who obtained a Recreational Land Loan, with the prize being a day of fishing with Michigan Walleye Pro Mark Martin. Jeremy was the winner. Jeremy was referred to GreenStone by his local realtor, and he was more than pleased with the service he received from Sr. Financial Services Officer Julie Frost of the Ann Arbor office. “Julie took very good care of me in this process, to make sure all of the documents were properly filed and the legal description was accurate,” said Jeremy. The loan process went very smooth, Winner Jeremy Wallman (left) and friend Warren Wheeler (far right) display some of and he would highly the fish they pulled in on their trip with Mark. recommend GreenStone to group also caught some perch and sheephead. anyone considering the purchase of real estate. Jeremy uses his property for woodland management “Mark was a great teacher, and since we were new to walleye fishing, we were a little apprehensive and the hunting of whitetail deer. about spending time with a total stranger” said Jeremy was originally planning to bring along his Jeremy. Mark Martin, added that Jeremy and brother-in-law on the fishing trip, but at the last Warren were fast learners, and “within an hour they minute his brother-in-law cancelled, so Jeremy were baiting crawler harnesses, setting lines, reeling brought his long time friend and co-worker Warren in fish and netting their catch.” Wheeler, who also resides in Whitmore Lake. This was their first time walleye fishing, and they certainly started off on the right foot. “This is the
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Customer Appreciation Events! It’s that time of year again, local GreenStone branches are gearing up for their annual customer appreciation events. Below are just a few of the confirmed branch events that are being planned. Official invites will be mailed in the weeks prior to each event. We hope to see you there!
• St. Johns – July 25 Oldsmobile Park, Lansing
• Corunna– August 22 Shiawassee County Fairgrounds, Corunna
• Hastings – August 7 MOO-ville Creamery, Nashville
• Grand Rapids and Hart Branches – August 25 Fifth Third Ball Park, Comstock Park
• Schoolcraft – August 14 Nottawa Fruit Farm, Sturgis
KEEPING THE SUMMER ALIVE That’s GreenStone! Bright sunny days, sparkling blue water, warm summer breeze...the sensations of the season are here, and the lending experts at GreenStone Farm Credit Services can help you keep them! Our recreational land financing will let you secure that special slice of real estate so you can keep those summer feelings strong and alive for years to come.
800-444-3276 • www.greenstonefcs.com
Summer 2008 PARTNERS
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INSPIRED BY YOU
That’s GreenStone!
Sweat, hard work and determination. You more than anyone understand what it takes today to be successful. For over 90 years, farmers have inspired us to provide the financial services agriculture depends on. And it’s your spirit and dedication that keeps us at GreenStone Farm Credit Services focused on the road ahead.
800-444-FARM• www.greenstonefcs.com
This newsletter is published quarterly for the customers of GreenStone Farm Credit Services. PARTNERS PO Box 22067 Lansing, MI 48909 517-318-2290 jim.nowak@greenstonefcs.com aaron.classens@greenstonefcs.com bill.eva@greenstonefcs.com melissa.rogers@greenstonefcs.com
1760 Abbey Road East Lansing, MI 48823