Partners - Winter 2011

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Promoting the business success of our customers and the rural community

Winter 2011

market outlook Get ready, here comes 2011

Why this dairy

Hit the ground running with a development plan!

with crop

Customer Patronage

rolls insurance insurance is a program “ Crop every farm should utilize; it‘s your guarantee that you will be protected

it's march 15, mark your calendars The new and improved GreenStoneFCS.com


Editor's

Note Winter 2011 Published by:

GreenStone Farm Credit Services

2 Comments from CEO Dave Armstrong CEO Dave Armstrong underscores the many hallmarks of 2010.

The holidays have come and gone and a new year is upon us. And, while we settle in for a couple of cold, blustery months of winter here in the Midwest, we often enjoy taking this time to look ahead with eager anticipation to what this new calendar will bring. What significant milestones will you and your family experience over the next 12 months? How will your business fare in 2011? Have you made any New Year’s resolutions? As you reminisce about the year gone by, and look forward to this coming year, we hope you will also take a few minutes to enjoy the latest issue of Partners, which includes details on this year’s Patronage checks, a feature article highlighting the benefits of crop insurance, and information on GreenStone's newly designed website. Happy reading…and as always, your comments and ideas are welcomed.

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3 Market Outlook Ag Economist Bob Utterback shares insight on how producers can prepare for the 2011 market.

11 Customer Patronage Payments The GreenStone FCS Board of Directors recently approved a payout in cash patronage for 2010 of $18.2 million.

13 Crop Insurance & the Dairy Business Dairy producers like Velmar Green, senior member of the ownership and management team at Green Meadow Farms, turn to crop insurance as a way to help mitigate their risk.

15 Guest Column Lessons in professional development straight from the hardwood.

17 Directors' Perspective Three valuable opinions that lawmakers may want to take note of.

13 Winter Notes 5 News Update 7 GreenStone Website 10 Candid Comments

Please note: GreenStone offices will be closed in observance of the holiday season on the following dates: January -Monday, 3rd -Monday, 17th February -Monday, 21st

This newsletter is published quarterly for the customers of GreenStone Farm Credit Services. Partners, 3515 West Road, East Lansing, MI 48823 • 517-318-2290 • marketing@greenstonefcs.com


Comments

From CEO Dave Armstrong

I hope this finds you well, rested up and recharged to make 2011 the best year ever! Once again, the agricultural industry will likely post very good earnings due to a recovery in commodity prices during mid- to late-2010. While many dairy and swine producers need several back-to-back years of profitability to restore working capital depleted during 2009 and part of 2010, cash crop producers are awash in some of the best profits they have seen in years. In fact, most of the people I talk to cannot remember a time when the “stars all aligned” so perfectly for crop farmers. Not only did prices increase at harvest (which they typically never do), but planting, growing (despite some areas of too much rain or not enough) and harvesting conditions were all some of the best on record. In fact, many crop producers had all their crop out of the field, fall tillage work completed, machinery repaired, cleaned, and put away well before the first of November! Likewise, GreenStone also completed a very successful year which was reflective of the relative success of our members and some one-time non-reoccurring income. While the official 2010 financial results are still being finalized, GreenStone will report somewhere in the neighborhood of $90 million in net earnings. This, too, is a record for the organization. In keeping with our cooperative principles, the association’s Board of Directors met in December and declared a record cash patronage payment to members of $18.2 million or around 20% of net earnings. The 2011 horizon remains unclear at best regarding how the industry will fare economically. Our present assessment calls for continued volatility with particular concern for our “protein” portfolio due to high feed costs. We are somewhat insulated in our swine and dairy portfolio because many of our customers grow their own feed and should have adequate supplies to get them through to the 2011 harvest. Even so, prudent risk management calls for not only producers, but ag lenders like GreenStone as well, to build working capital and manage margins as aggressively

as ever to remain financially viable. So, in order to practice what we “preach” the remaining $72 million of earnings will be applied to our line of credit and used as “unallocated surplus” to keep our wholesale cost of funds low and future risk bearing capacity strong. GreenStone experienced another milestone in 2010 when it moved its operations from 1760 Abbey Road in East Lansing, Michigan, approximately a quarter of a mile north to a brand new 78,000 square-foot building located at 3515 West Road on September 13. This was the result of a more than 11% compounded average annual growth rate since the

“ The association’s Board of Directors met in December and declared a record cash patronage payment to members of $18.2 million.” association was created in 2000. An open house for the local and agricultural community was held on October 21 with nearly 200 guests joining us in celebrating this significant event in our organization’s history. Your association also continued to work with the agricultural communities in both Wisconsin and Michigan to improve the public perception of our industry and increase our voice in both state capitols as well as Washington D.C. GreenStone started a political action committee in Michigan and leveraged the nearly $14,000 contributed by staff and board members in a matter of weeks prior to the 2010 elections Continues on page 6...

Winter 2011

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MArket outlook

Market Outlook

Winter 2011 By Bob Utterback I’ve been watching and commenting on the markets close to 30 years. If there is one thing I’ve learned, always expect the unexpected from the market. The implication is, when you’re the most confident, be careful because that’s exactly when the market will extract the most pain from you. Back in June the bears were in full steam and, as we know now, they got caught badly—reduced domestic supply, problems globally with production and sharply growing demand in China. The result was a $2.60 corn rally and $3.64 soybean rally. The November 2010 supply/demand report actually confirmed bullish expectations about supply, but like all bull market moves, many got too excited at the top.

“ When you’re the most confident, be careful because that’s exactly when the market will extract the most pain from you.”

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In less than four days the January soybean market gave back $1.73 or over 38 percent of the July to November rally, while the corn market broke 95 cents of its $2.60 rally in six days to give up 36 percent of its rally. This should be a warning to all producers—when big open interest moves to the sidelines, it could be extremely violent and quick. So where do we go now? As always, it’s a very simple question, but always difficult to give a black or white answer too! I know it’s an economist’s favorite saying that, IF “X” happens then we can expect “Y” results. The problem now is we have several uncertainties in the market that are a little more extreme than we have historically experienced. 1. Exports. Will Chinese demand continue to support prices above $5 corn and $13 soybeans domestically? Recent announcements by the Chinese Central Government that it wants to slow down domestic food inflation has raised speculation that it is about to cut its demand. The problem is China has a population that is getting more disposable income and desiring a better diet. Remember, it is the world’s largest producer of pork that consumes a


MArket outlook

lot of corn and soybean meal. Going backwards would be extremely difficult. While China may talk about putting downside pressure on prices, I really believe they could be a “straw tiger” in this respect. While they can jawbone down the market a little, they cannot simply step away from the market completely, in my opinion. The key to watch now is how domestic Chinese values trade over the next couple months. While values have come down recently, do they bounce back quickly? Just remember that it costs about $3 a bushel to get product shipped from New Orleans to China; so if soybeans go back above $18 and corn to $8.50 in China, it will be very difficult to keep corn and soybeans down domestically.

3. Crop Mix. How will producers respond this year in regard to the amount of acres that will be planted? The recent run up in cotton prices is expected to cause the southern producers to plant more acres, which will come at the expense of corn and soybeans. So the acreage battle will be full steam ahead this spring. The current thinking in the trade is that corn acres will grow up to four million acres, but soybean acres will decline by two million. While the budgets do generally favor corn over soybeans, it has been my observation that producers are very resistant to changing their planted acres unless Mother Nature steps in and prevents plantings. So I believe that it will be difficult to get enough

“ Producers should start making plans now with their banker on what they are going to do if a 2011 spring or summer weather event occurs!” 2. Supply. Domestically in years where we see drastic yield declines from the norm, the pattern is to lose yield all the way into the final January report. I see no reason to doubt this trend. The general trade expectation is at least one bushel in corn, but limited change in soybeans. It should also be noted that the winter wheat crop is off to a rough start due to dry conditions domestically. We are also hearing of some problems with the Argentina crop. The conclusion is most of the supply bullishness will be factored into the market by late January domestically. There will be no room for any supply reduction [domestically or internationally] this year! We must see more acres planted and at least an average yield.

corn and soybean acres to meet demand. Subsequently, prices will have to remain firm to ration demand until we get into the new crop. In this situation, with the possibility of inflation growing as the Fed pumps money into the economy, investors could go nuts if any type of dry weather event occurs next summer. What does a producer do? (a) I suggest that producers first need to have most of their 2011 inputs locked up. As raw demand increases for product, along with inflationary pressure, it only eats away at the bottom line if inputs are not bought. (b) While I realize a lot of producers hate futures contracts and see cash selling as a more desirable product, remember, producers who sold cash

corn at $4 rather than using put options left a lot on the table in 2010. I suggest that, if early sales are made, some type of upside price insurance is needed if the market starts to make new highs after mid-April which should only occur if a weather event is developing. (c) Producers should start making plans now with their banker on what they are going to do if a 2011 spring or summer weather event occurs! With profits now running above $250 per acre or higher, it’s only a matter of time before supply is increased and demand is rationed. I’m willing to put it on record that within two marketing seasons we will see lead month futures very close to break even values. In summary, the first half of 2011 could possibly be extremely violent [both up and down], but through this excessive volatility comes great longterm profitability. If history has taught me anything during these times, it is extremely difficult to act unless a firm set of marketing targets has already been thought out and set on paper with a plan on how to implement it. I wish you a very profitable new year! ABOUT THE AUTHOR Bob Utterback is the Economist for Farm Journal magazine and President/CEO of Utterback Marketing Services, Inc., located in New Richmond, Indiana. He has over 28 years of experience analyzing ag commodity markets, with special emphasis on the corn and soybean markets. Contact him by phone 765-339-7704 or by email: utterback@utterbackmarketing.com. he opinions stated herein are not necessarily T those of GreenStone FCS.

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News update

News Update Winter

2011 Muchmore Named to Gov. Snyder’s Administration

Dennis Muchmore, a veteran lobbyist and current GreenStone Farm Credit Services Board of Director, was appointed in November

as newly elected Michigan Governor Rick Snyder’s chief of staff. Muchmore was the founder of the Lansing lobbying firm Muchmore Harrington Smalley & Associates, Inc., and is also the executive vice president of the executive recruiting firm DHR International, Inc. His background also includes previously serving as the executive director of the Michigan

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United Conservation Clubs, the state’s largest conservation organization. Muchmore was appointed as an Outside Director at GreenStone in 2002.

The MEDC Executive Committee is being chaired by Doug Rothwell, president and CEO of Business Leaders of Michigan and a former CEO of the MEDC.

Armstrong Named to MEDC Committee GreenStone FCS President/ CEO Dave Armstrong was recently appointed by new Michigan Governor Rick Snyder to serve as a member of the new Executive Committee of the Michigan Economic Development Corporation (MEDC). In December, outgoing Governor Jennifer Granholm and incoming Governor Snyder, in an unprecedented sign of cooperation between two administrations, announced the state’s economic development agency would be governed in 2011 by a new leadership team. Armstrong was one of 10 appointees named by Governor Snyder, while Granholm also appointed 10 individuals to the Executive Committee.

Ribbon cutting ceremony October 21, 2010 commemorating the grand opening of GreenStone's new corporate office.

The Executive Committee also agreed to select Michael Finney as the new CEO of the MEDC. Finney was previously president and CEO of Ann Arbor SPARK, a public-private partnership focused on innovation-based economic development in the greater Ann Arbor region.

GreenStone Celebrates! On October 21, 2010 GreenStone Farm Credit Services celebrated the grand opening of its new corporate headquarters located in East Lansing, Michigan. The event consisted of a formal program with remarks by GreenStone’s Chief Executive Officer Dave Armstrong, Board Chairman Frank Engler, Lansing Regional Chamber President and CEO Tim Daman, and East Lansing Mayor Victor Loomis, followed by a brief ribbon cutting ceremony. Guests then proceeded into the building for guided tours and a reception, which was graciously sponsored by Plante Moran CRESA. Nearly 200 members of the local community and agricultural industry gathered to show their support of GreenStone FCS and the new facility. Corporate employees have settled into the new space and are excited to share


News update

it with visitors, customers, family and friends. CEO Dave Armstrong remarked that, “This beautiful new building not only represents GreenStone, but also the entire agricultural industry; and specifically speaks to the commitment and success of more than 20,000 customers/owners who are part of our cooperative.” On behalf of such a notion, GreenStone proudly celebrated the success of its new facility.

Annual Report Notice This is official notice that the 2010 GreenStone Farm Credit Services Annual Report will be available for viewing online at www. greenstonefcs.com by Wednesday, March 16, 2011. In addition, the Annual Report will be mailed to all stockholders within 90 days of year-end.

Michigan Pride— Tiffany Rogers Named 2010-2011 National FFA Eastern Region Vice President A natural explorer, Tiffany Rogers has charted her future with experiences ranging from raising livestock and horses to promoting agricultural awareness in rural elementary schools. Yet, this horse lover is entering a new race with a burning passion and strong desire to serve others as an agricultural advocate. For the next year, the Cassopolis Ross Beatty FFA Chapter member from Niles, Michigan will motivate and inspire more

...CEO Comments continued with other ag organizations to help elect an overwhelming number of pro-agricultural legislators at both the state and federal level. Agriculture can no longer be taken for granted and must use this narrow window to get meaningful legislation enacted that is not only in the best interest of our industry, but our state and federal governments as well. Now the “heavy lifting” of educating and developing effective relationships with these freshman legislators begins! Photo courtesy of the

National FFA Organization

than 500,000 fellow FFA members as the 2010-2011 National FFA Eastern Region Vice President. Tiffany was elected to that office during the 83rd National FFA Convention in Indianapolis. She is the seventh national FFA officer from Michigan and replaces fellow Michiganian, MSU student Alex Henry, who just finished her stint in the same role. Tiffany is the daughter of David and Cheryl, and her FFA advisor is Caroline George.

We are blessed to be part of the most productive, affordable, healthy, and safe food production system the world has ever known. So, let’s always remember how fortunate we are and be thankful we get to do it all over again this year! I want to close by thanking not only you, our members, but our GreenStone team members and the board of directors for making our association one of the most financially strong, dependable and competitive sources of credit in our marketplace. It is a team sport and none of it would be possible without YOU! Best wishes for a healthy, safe, and prosperous New Year!

Dave Armstrong

Bring your group out and visit the GreenStone booth at these 2011 trade shows: Huntin’ Time Expo January 28-30, 2011 Grand Rapids, MI www.huntingshows.net Michigan Deer & Turkey Spectacular February 18-20, 2011 Lansing, MI www.deerinfo.com/michiganhome.asp Outdoorama Sport & Fishing Show February 24-27, 2011 Novi, MI www.showspan.com/OUT/Home.aspx

Wisconsin Deer Classic & Hunting Expo Feb. 25-27, 2011 Green Bay, WI www.greenbaysportshows.com Wisconsin Public Service Farm Show March 29-31, 2011 Oshkosh, WI www.wisconsinpublicservice.com MSU Ag Expo July 19-21, 2011 East Lansing, MI www.agexpo.msu.edu

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Greenstone website

Unveiling the Fresh

www.greenstonefcs.com GreenStone recently re-launched its newly designed website to meet the progressive needs of its members. If you haven’t already, make sure you take some time to check it out and review the many new and improved features. On the homepage, you can easily navigate to the content most relevant to your individual needs, agricultural or country living related. Additional commonly utilized features are also found here, including links to current rates, local weather, real time commodity prices, company news, account access, key resources, and contact information. And don’t miss the inaugural GreenStone “Open Fields” blog aimed to provide you

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with commentary focused on agricultural news, country living, health and well-being, and GreenStone. We’ve dedicated a considerable amount of time and research into making sure the new website will best suit your needs, so don’t miss this opportunity to let us know how we did; comment on our blogs, email us, send us a tweet, or leave us a message on our Facebook page. Happy browsing!

Social Media… While your online, be sure to find us on these social networking sites: Facebook: http://on.fb.me GreenStoneFacebook Twitter: www.twitter.com/GreenStoneFCS LinkedIn: www.linkedin.com/company/ greenstone-farm-credit-services YouTube: www.youtube.com/user/GreenStoneFCS


News update

Ladies Day Out – February 14th The 2011 Ladies Day Out event will again be held in Green Bay, Wisconsin at Rock Garden Conference Center. This annual event provides women in agriculture and agribusiness

a chance to get together and enjoy a morning of fun, food, and laughter. Entertainment will be provided by Tina and Lena (www.Tina-Lena.com). Invitations, with a schedule of the morning’s events, will be mailed to northeastern Wisconsin and Michigan Upper Peninsula customers in early January. Remember to reserve your spot by registering online using your personal code or call 800-657-5702 We hope you can join us!

GreenStone FCS Announces Staff Changes GreenStone Farm Credit Services recently announced the appointment of Ben Mahlich as the Vice President of Sales and Customer Relations in the North Region and Leo Pasch as the Vice President of the Risk Asset Department. These changes became effective on January 1, 2011. Mahlich’s appointment

to Vice President of Sales and Customer Relations was part of GreenStone’s succession plan and leadership development efforts. He joined GreenStone in 2002 as a corporate credit analyst. He later became a capital markets credit analyst, capital markets loan officer, assistant vice president of capital markets, vice president of rural markets, and director of risk assets.

Grit, Sweat , Determination.

Mahlich will be responsible for the guidance and development of the sales team in the Alpena, Cadillac, Mt. Pleasant and Traverse City branches. His leadership experience and financial knowledge will be fundamental as he works to ensure GreenStone customers continue to receive superior service provided by knowledgeable and dedicated staff. Pasch accepted the role of Vice President of risk assets upon the appointment of Malich to VP of Sales and Customer Relations. He began his career with the Farm Credit System in 1980 as a loan officer for the PCA of Alma and most recently served as the Vice President of Insurance Services at GreenStone. Pasch will bring an extensive amount of Farm Credit knowledge to the Risk Asset Department, including previous experience negotiating workouts and collections in addition to managing the risk asset function from 1985-1999 for Michigan’s Heartland Farm Credit.

You’re set on feeding the world. We’re here to help.

Financing that makes a difference.

800-444-FARM www.greenstonefcs.com ■

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News update

Considering a Loan Conversion? GreenStone Farm Credit Services customers have a great opportunity to take advantage of lowering their interest rates by utilizing GreenStone’s Loan Conversion Option. A conversion is a lowcost opportunity for the customer to reduce the rate on their current loan without the extra time and headache of a traditional refinance at a bank. Loan conversions do not require a new appraisal, verification of employment or new application. Customers simply need to talk to a Financial Services Officer and see if a conversion is the right financial decision for them. While the interest rate environment is very volatile today, farm credit interest rates remain at historical lows. Whether talking about short-term or longterm rates, in most cases rates are .50% lower than they were a year ago and over 2.0% lower than they were two years ago. Typically GreenStone must pay a fee to its lending institution, AgriBank FCB, when a conversion takes place; however, the fee is much lower if a customer loan is more than a year old or the last conversion

was more than a year ago. Many customers have acknowledged the benefits of the loan conversion process and have converted their loan three times in the last three years. In 2010, GreenStone processed over 6,100 loan conversions totaling $1.1 billion in loans. The average customer saved 1.40% on their new, reduced rate after the conversion. GreenStone encourages customers to contact their Financial Services Officer to learn more about how converting their loan(s) could help them save.

Wisconsin Crop Insurance Meetings GreenStone FCS will be offering two Crop Insurance update meetings in January. The first meeting will be held at our Manitowoc office (Credit Union’s basement) on January 19, and the second meeting will be held in Green Bay at the Rock Garden Conference Center on January 20. Company representatives will be present at each meeting. Both meetings will begin at 9:45 a.m. with registration followed by crop insurance updates starting

at 10:00 a.m. running until noon. Lunch will be provided and followed by an educational LGM-Dairy meeting from 12:45 p.m. until 2:00 p.m. Please RSVP no later than January 7 by calling 1-888-739-2996 ext. 04219. You don’t want to miss out on this great opportunity to learn about new changes and discover how they many affect your crop insurance decisions.

Where do you find answers for your farm? Environmental regulation, farm policy, building consumer trust...Get answers on these and other topics vital to your operations success at Agriculture’s Conference on the Environment.

January 27, 2011

www.maeap.org/ACE

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News update

Candid Comments... 20th Annual Farm Women’s Symposium

The Farm Women’s Symposium will head west this year and hold its 20th annual program at the Holiday Inn - Muskegon Harbor, March 9-11, 2011. This program brings together women (and men) involved in agriculture to share in fun, learning and fellowship. Participants create valuable networks, renew friendships, share information, and prepare for the start of another year in agriculture. In response to participant surveys, our topics will include current agricultural issues, health, humor and finance. After a welcome Wednesday morning from the local

Dear GreenStone Farm Credit Services – On behalf of all of the counties who hosted a “Breakfast on the Farm” in 2010, we would like to sincerely thank you for your support and assistance in making the four educational events a huge success. Through the Breakfast on the Farm programs held in Clinton, Washtenaw, Isabella and Alpena counties, more than 7,600 consumers had the opportunity to learn about modern-day farming and help close the gap between the farmer and the nonfarm public. The GreenStone donation helped to make the four programs possible. We also greatly appreciate all of the assistance provided through your local offices and the involvement of many GreenStone employees. –Nancy Thelen, Mary Dunckel MSU Extension

MSU Extension, Dr. Val Gokenbach will discuss women’s health issues, followed by representatives from the Starting Block who will share information on their non-profit regional kitchen incubator and entrepreneurial center in Hart. David Okerlund will provide humor and insight on today’s farm with “The Family Farm—yesterday, today and tomorrow”. The highlight of Friday’s program will be our favorite cowboy activist, Trent Loos. Thursday’s bus tour will give us a flavor of Michigan’s west region with stops at Bayer Chemical, Country Dairy, and the Shelby Gem Factory. This will be a full day of touring with many other fun stops along the way!

Dear GreenStone Farm Credit Services – Thank you very much for sponsoring the Young Farmer and Agriculturist Conference at the Wisconsin Farm Bureau Federation annual meeting. We had a wonderful time, met some great people, learned some new things, and look forward to being more involved in Farm Bureau. Thanks for your support! Sincerely, Travis and Michelle Schullo

Scholarships are available for GreenStone FCS members; contact your local GreenStone office for details. For other scholarship opportunities or

questions about the Farm Women’s Symposium, contact Sheryl Smith at (517) 543-1360, Julie Schwab at (989) 846-4764, or Louise Courter at (989) 463-5991.

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Customer Patronage

Strength In Numbers–

Patronage Checks Available at Branches on March 15 For a sixth consecutive year, GreenStone Farm Credit Services is showing its strength and stability as a financial cooperative as it prepares once again to distribute patronage checks to its loyal customers The GreenStone FCS Board of Directors recently approved a payout in cash patronage for 2010 of $18.2 million. Each eligible customer’s patronage check will be available at their local GreenStone FCS branch on Tuesday, March 15—which also is National Agriculture Day. Those checks not picked up by the end of business on March 15 will be mailed to the respective customers the next business day. The Board’s action was based on the association’s unprecedented financial results, with 2010 net income projected to be approximately $90 million. The $18.2 million patronage payout—also a record for the organization—represents roughly 20 percent of net earnings. GreenStone’s total patronage returns to customers over the past six years now exceeds $85 million. The cash patronage paid to each customer will be based on the proportion of net-interest

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Customer Patronage

income earned during 2010 on his or her loan to the total patronage based net-interest income earned by the association. Once again, GreenStone’s plan is to not only distribute a qualified cash patronage payment to customers, but also to use non-qualified allocations as a permanent investment in the association to capitalize future growth. Customers eligible to receive the patronage payments include anyone holding stock or participation certificates with GreenStone FCS, which would include rural residential home loan customers. Loan participations either sold or purchased by GreenStone FCS, and any leasing transactions, will not be included in the patronage program. The returns to customers also will not be based on income derived from fees or any of the organization’s financial services. GreenStone FCS President/CEO Dave Armstrong noted a couple of factors that led to the record net earnings and patronage returns. “GreenStone experienced a very successful year in 2010 which was reflective of the relative success of our members, as well as some onetime non-reoccurring income,” said Armstrong. “As a result, for the sixth straight year, we’re able to share that success with those that have shown their loyalty to us over the past 12 months – the members of our cooperative. “We are very proud of the fact that GreenStone has consistently remained a strong and vibrant organization, which has allowed us the opportunity to continue to offer this added value to our members.”

Qualified Patronage Distributions Because the cash patronage refunds reduce the association’s capital, the amount of the payout must be in balance with GreenStone’s current capital position. Maintaining a strong capital position benefits all customers because an association is then better able to offer competitive interest rates and ensure a constant supply of credit. The cash portion of the patronage refund is taxable income to patrons. Each January following a year that patronage payments are distributed, GreenStone will send IRS 1099 Forms to its customers.

allocations as earnings permanently invested in the cooperative with no intention of distributing these earnings to customers. If GreenStone Farm Credit Services were ever to liquidate or be purchased by another financial institution, outstanding non-qualified allocations may be subject to distribution in accordance with the association’s bylaws. This non-qualified allocation is not taxable to patrons, unless it is ultimately distributed. More information about this year’s patronage payment distribution will be shared soon with eligible customers.

Non-Qualified Allocations GreenStone intends to allocate a portion of net earnings as nonqualified written notices of allocation. These allocations are recorded in each customer’s name in the records of the association; however, the Board of Directors of GreenStone will consider non-qualified retained

“ We are very proud of the fact that GreenStone has consistently remained a strong and vibrant organization, which has allowed us the opportunity to continue to offer this added value to our members.”

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Crop Insurance feature

Why Crop Insurance?

Green Meadow Farms Explains

airy farming is a way of life for many farm families throughout Michigan and Wisconsin. Unfortunately, in recent years it has been one of the most volatile commodities within agriculture. In 2007, we saw some of the highest profits and then came 2009 with significant losses. Crop prices and input costs increased while dairy prices became more and more unfavorable making dairy farming one of the riskiest businesses to be involved in today. As a result of these turbulent times, risk management has become even more of a hot topic. Crop insurance has been around for many years as a way for farmers to protect themselves. Dairy producers like Velmar Green, senior member of the ownership and management team at Green Meadow Farms, turn to crop insurance as a way to help mitigate their risk. “Crop insurance is a program every farm should utilize; it’s your guarantee that you will be protected if there is a drought or if you can’t plant the crop. For us, it helps offset the cost of buying feed,” Green said. Green Meadow Farms (GMF) currently milks around 3,000 cows and farms 6,500 acres of corn, alfalfa, wheat and sugar beets. Located in Elsie, Michigan, about 30 minutes north of Lansing, the Green family has been in the dairy business for over 90 years. GMF is a family corporation, which includes Craig and Darcy, who manage the daily operations of the farm, and Velmar, Margaret and Margery who are also active on the farm in many capacities. Today, GMF is one of the largest dairy operations in Michigan and takes pride in being one of the largest registered Holstein herds in North America. More locally, the farm is known for its involvement with Michigan State University (MSU) as home of the MSU Training Center for Dairy Professionals and a methane digester that converts the manure to methane gas sold to North American Biofuels LLC. Velmar is also the treasurer of the Michigan Milk Producers Association board and a member of the Michigan Agriculture Commission.

Don’t miss the March 15 close date for new policies and changes to existing policies.


Crop Insurance feature

“ Crop insurance is a program every farm should utilize; it's your guarantee that you will be protected if there is a drought or if you can’t plant the crop. For us, it helps offset the cost of buying feed.” GMF started using crop insurance in 1995 with the purchase of catastrophic coverage. Since then, it has increased coverage as the dairy operation expanded. With 6,500 acres and more than 8,000 mouths to fill, insurance was a necessary investment. “When we decided to expand the operation and had more cattle to feed, we had to be sure we had enough feed. Crop insurance is what we use to mitigate our risk of a dry or wet year that may result in a short crop,” Green said. All of the farm’s crops are grown in two counties within an approximate 10-mile radius of the farm. Locality is a great benefit for many reasons, one being the opportunity to purchase a policy that has the enterprise unit structure. This structure allows its crop insurance premiums to be purchased at an economical level without limiting the amount of crops covered. As a dairy farm, most of the corn crop is chopped for silage or harvested for high moisture corn. Since the corn goes for feed use and is not direct marketed, the yield has to be measured for production and loss purposes through an appraisal by an insurance adjuster. Though he admits it may be more time consuming, Green relies on many people for assistance. The insurance agent, the company, and the adjuster play a

significant role in making sure yields are reported correctly and efficiently. “We rely on good people and have been lucky to have an adjuster that understands our operation. Harvesting the corn and having to leave strips to be appraised doesn’t make harvest easier, but you get used to it. The benefits of having that yield reported accurately outweigh the additional time it takes to harvest the crop.” Even though GMF has not had a total loss of production, it has experienced times when a crop couldn’t get

planted due to untimely rains, or dry spells that result in yield loss. The goal is to always have a good crop for feed, but with volatile markets and the unforeseen weather from Mother Nature, crop insurance is a safety net. Green summarizes, “Crop insurance is a no brainer; it’s relatively cheap and gives you peace of mind.”

Dairy margins policy now available GreenStone offers risk management insurance for dairy margins. Livestock Gross Margin-Dairy insurance protects dairy producers against the unexpected decline in gross margins. Producers also benefit from the program's convenience, customization, and affordability. • Designed to protect the downside margin risk, yet doesn’t limit upside potential in the market • Price milk and feed costs up to 12 times a year

• Use CME prices for Class III Milk, Corn, and Soy Meal

• Each producer can insure his or her milk up to 24 million pounds of milk per year or farm capacity, whichever comes first • Deductible taken from the milk price of $0-2 in 10 cent increments • Feed is used based on the feed ration used for protein and energy equivalents, or adjust the ratios based on a bounded quantity

• Government subsidies on farmer premiums run 18 percent to 50 percent

Winter 2011

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Guest column

his

Winter

Should you be at Big Man Camp or Point Guard School? By Barbara Dartt, DVM, MS Senior Business Consultant, Lookout Ridge Consulting

It is basketball season again—one of the best times of the year, in my humble opinion. Twice a week as I watch our high school team, I get to enjoy games, intense competition and wins or losses (sometimes scoreboard losses mask real wins—but that’s another topic all together). The games I enjoy during basketball season, though, are really like harvest. Results of close to a year’s worth of inputs are finally measurable. In farming, the inputs include seed, fertilizer, weather and hard work. In basketball, the inputs are knowledge, skills and hard work.

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guest column

“ It’s up to you to steal a page from the basketball playbook and develop a winter training plan that supports your own personal and professional development.” Basketball’s off-season, summer, is marked by a sometimes confusing collection of skill building opportunities. Week-long camps, threeon-three tournaments, league play and all-star teams, just to name a few. That is why, in the spring, each player in my husband’s program sits with the coach and outlines a summer training program. If you are a very tall young man with need for some basic skills, you will likely head to big-man camp. If you are average height and skinny, your priorities might include lifting weights and joining a summer league in town. And if you can find the funds and the time, you might even attend point guard school. Here’s where the basketball to farming analogy breaks down a bit. While farmers have as many or more skillbuilding opportunities as basketball players, most business owners don’t have a coach helping map out their needs. Further, most farm business owners aren’t simply a point guard or post player. Generally, the clients I work with fill the four roles of laborer, manager, teacher and leader—nearly every day. As often is the case, it’s up to you to steal a page from the basketball playbook and develop a winter training plan that supports your own personal and professional development. Where to Start? Just like summers in basketball training, you could spend your whole off-season “at camp.” Ask yourself

these three questions to begin focusing your own personal training plan: 1. W hat does my business need now? 2. What do I get excited about? 3. How do I learn best? What Does my Business Need Now? Many dairymen in our practice have focused on picking up marketing skills within their winter training plan. Due to the volatility in the marketplace and the lean years of 2009 and 2010, they’ve determined that protecting margin is a critical business need – and are working to meet that need by increasing their own understanding and skills. What do I Get Excited About? Your business may need to evaluate the current auto steer technology options in preparation for making a big capital purchase. If the topic puts you to sleep, consider finding someone else in the business that can get passionate about the topic – and focus your training plan in another area. How do I Learn Best? As a new crop manager in a business, you may need to get up to speed on soybean pest programs. And maybe this winter’s local meeting circuit offers a full day on soybeans. How much are you likely to retain from that? If soybean “literacy” is your goal,

perhaps it would be better to hire your crop consultant for a half-day crash course where you can interact and ask questions. Or, maybe your local elevator has a top-notch applicator you could buy lunch for—and in exchange, get a list of topics to follow up on yourself. All day, classroom-type learning isn’t bad. Just be sure to assess your own learning style and choose accordingly. Professionals like accountants and veterinarians have training requirements to maintain licensure. Generally, the requirement is around 40 hours per year—only 1-2 percent of annual work time. As a professional in agriculture—a volatile industry dependant on technology—I would argue you should spend at least 3-5 percent of your annual hours learning. As you register for this winter’s meetings, consider investing an hour or two developing and focusing your “training plan.” It could earn you some extra wins next season. ABOUT THE AUTHOR Barb is a Senior Business Consultant with Lookout Ridge Consulting (formerly Salisbury Management Services), a division of AgStar Financial Services, ACA. Barb works with farm families and management teams to help them keep their business healthy and the people happy. Barb can be reached at barb.dartt@ lookoutridgeconsulting.com or at 800.663.5608. The opinions stated herein are not necessarily those of GreenStone FCS.

Winter 2011

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DIRECTORS' PERSPECTIVE

Directors’ Perspective:

election 2010

what now? The November election was one for the history books with a swing of governmental power now underway. Lagging economies, unbalanced budgets, increasing unemployment…there is a lot on the “fix-it” list. If you were part of this new state legislation, what would be the main issue on which you would focus?

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Michigan has developed into an atmosphere where industry finds it difficult to compete, forcing businesses out of the state. It is not an attractive place for the start of new businesses.

Lynn Gould

We need to improve the feasibility for economic development to create jobs in Michigan. We cannot accomplish this by simply chasing smoke stacks and offering unreasonable or unjustified tax incentives‌

Region I Director

every state is trying these tactics. Michigan voters sent a clear message. They expect a new team in Michigan that will once again make Michigan the place where existing businesses can grow and new businesses want to locate. All voters need to take the responsibility to assist this new team by providing input and ideas to make the best use of our natural and human resources.

If I were elected to have a seat in the Wisconsin legislature, I would be one of 38 new lawmakers taking office this month. Thirty are new state representatives and eight are state senators. As everyone knows, the state budget deficit is priority. Dealing with this complex issue will mean taking a close look at both revenues and expenditures.

eliminating some or all benefits. The state system was developed 40 some years ago— wages have changed, insurance rates have sky rocketed, and matching dollar investment options have increased. I'm not saying we should discard the whole idea, but I do think we need to make changes that fit the economic environment of today.

Let's talk revenues first — we've seen state income drop because of businesses or industries moving out of state or out of the country. High unemployment reduces the flow of state income taxes. In addition, we have seen a decline in income from state sales tax since it was put in place.

These several paragraphs probably sound like every other politician you know. By the way, Election Day was November 2. I just took office, so I'd better get busy on my re-election campaign NOW!

To increase revenue, we must attract and retain industry. We have an abundance of resources, both natural and human. I would propose an investment tax credit for all businesses and manufacturers. This would create jobs that would generate income tax and sales tax. Furthermore, it would encourage new construction and modernization, putting more dollars into our state's economy and creating a ripple effect in every community affected by this growth.

Gilbert Ritter

Region I Director

For the expenditure side of the deficit, well, this won't be easy to balance either. State government has gotten too large, out-pacing true economic growth. Every state department and agency needs to be evaluated on its necessity and performance. For example, does the DNR get the most bang for its buck when a citizen must talk to three different people for one permit? Let's streamline the process. We need to reduce the cost of people, space and other related costs.

David Rakowski Region VII Director

If I were part of the new legislature, I would do anything that would create an environment friendly to business. Farms are the original small business and still require a tax structure and environmental regulation that favor their development. If we can attract and encourage business in Michigan, we can keep our working population. This would help stabilize our tax base to run our government and maintain the infrastructure that was created in better economic times. Michigan legislature will need to be careful and not try to squeeze too much more out of the remaining people and businesses to cover the shortages created by the economic downturn and exidous of much of the workforce. Estate tax is a good example of a tax that harms small businesses and farms in a generational transition.

Another area I'm concerned about is the state employee retirement fund. Many private employers and businesses are reducing or even

Winter 2011

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