Partners - Summer 2013 by GreenStone Farm Credit Services

GreenStone FCS

Summer 2013

Promoting the business success of our customers and the rural community

MARKET OUTLOOK WISCONSIN LEGISLATIVE EFFORTS

DIAGNOSING EMPLOYEE PERFORMANCE GREENSTONE SUMMER INTERNS

THE COMPETITION: WHAT YOU SHOULD KNOW GREENSTONE’S STORY –LOAN CONVERSION SAVINGS

DIRECTORS' PERSPECTIVE

FARMING

FROM SCRATCH

Editor’s

NOTE Summer 2013 Published by:

GreenStone Farm Credit Services

2 Comments from CEO Dave Armstrong CEO Dave Armstrong touches on the state of the agricultural industry and reminds us all that an ounce of prevention is worth its weight in gold.

5 Market Outlook

It’s a Wednesday, the sun is out, it is around 70 degrees outside, and I just got word that the last field of alfalfa is being chopped at my family’s farm. For many of us in an office, it is things like this that keep us excited for the weekend—to experience what you all do every day when you are in the field, the barn, or even the machine shop. But the other thing keeping us motivated is knowing we are your partner in business, and we have things to deliver to you to keep you informed while you are putting in those extra hours. That is why we work hard every quarter to bring you this Partners with articles you find valuable. And that is also the reason we continue to look for ways to improve what we are already providing. Making their debut in this issue are a few sections that may have been sprinkled in the publication over the years, but have now found a consistent home in the magazine. So be sure to take a look at the Pause for Applause, Career Corner, and Tech Tip, and send us ideas on what you would like to see in these, and any other area of the publication. We do it for you, and we want to hear from you too!

Agricultural economist, Bob Utterback, explains why this is the make or break period of price setting.

8 Legislative Matters The legislative issues in Wisconsin are unique and require careful analysis and communication.

Summer Notes

11 GreenStone's Story Loan conversions are not magic, but for many customers they conjured up some serious savings.

13 Feature Article Look up hard working in the dictionary and you might just find a picture of Dean Collard. His story is an inspiring testament to the future of agriculture. -Cover Photo: Shellie Kappelman

4 Tech Tip 17 Directors' Perspective Here's a little insight on the questions members frequently ask GreenStone directors.

21 Guest Column Is poor employee productivity rooted in a lack of willingness or lack of ability. A little investigating can point you to the answer and solution.

19 Today's Competition Agriculture is looking pretty good again to some lenders, but are they in it for the long haul? You be the judge.

4 Candid Comments 9 News Update 10 Pause for Applause 10 Calendar of Events 12 Career Corner– Interns 16 Where Are They Now

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

Weather was again on everyone’s mind this year with a cooler and wetter spring than we experienced in 2012. Producers were anxious to start planting in mid to late March only to be “delayed” until early May.

ronically, a Michigan State University (MSU) article written by George Silva in February stated: “planting date research by MSU Extension specialists has consistently shown that there would be no agronomic or economic advantages for planting corn before April 20 in Michigan. For much of Michigan, the optimum corn planting period usually is from the beginning to middle of May.” Isn’t it interesting how short our memories can be? One abnormally early year and we all forget what normal really is!

Corn and soybean producers were not the only ones anxious this spring. As the fruit crops budded and then bloomed, everyone had their fingers crossed that we would dodge a killer freeze that decimated the cherry, apple, juice grape, and peach crops last year. Then, just as everyone thought we were out of the woods, many of the fruit growing regions of Michigan’s Lower Peninsula were hit by temperatures ranging from 28 to 31 degrees, with a few areas reporting mid-20 degree temperatures, during the second week of May. Fortunately, the damage was relatively minor and we should see a bumper fruit crop. By now, all of the field crops are in, with good stands being reported across the

region. Yet, we actually experienced too much rain (be careful what you wish for!) in some areas in late May that drowned out spots in many fields. Time will tell how many of these will get replanted. The hay crop is also off to an excellent start as long as we get adequate time to dry out between rains and get it harvested. GreenStone is keeping pace with its members and has had a good start to the year. Loan volume is up over a year ago with strong earnings and continued improvement in credit quality. Most all of the commodities we finance are experiencing positive margins at this time and are expected to continue throughout the remainder of this year. Of course, year-end is still a long way

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CEO COMMENTS

off and any number of events could derail this positive outlook. Barring any significant weather or economic shocks, 2013 should be another good year for agriculture and your association. Preparing for the Inevitable Storm Good times in our industry can be a blessing and a curse. Rising farm incomes result in higher asset values which result in growing net worths and an overall sense of financial invincibility by many. Yet, our industry is not immune to the laws of physics (what goes up will come down) nor to economic cycles. No one knows for sure when the current bull run in our industry will end or how deep and protracted the down turn will go. However, one thing is for sure, these good times will not last forever. To be prepared, you may want to ask yourself the following questions. Have you prepared a “stress test” for your business similar to those required of financial institutions? How much of an income shock can your business take

and still service its debt obligations? What are your sources of liquidity during a period like this? Land, machinery, a line of credit, and/or the sale of assets are some of the primary sources typically drawn on in times of adversity, but how much liquidity (cash) will you be able to access from these sources to meet your obligations should cash from operations decline 25 percent or more due to a widespread decline in commodity prices or other significant economic event? Remember, in a scenario like this you will not be alone! Unfortunately, the entire industry will be experiencing the same low commodity prices and many producers likely will not have the capacity to buy machinery, let alone land (while others will wait on the sidelines until prices have bottomed out to buy) so all that liquidity or cash you thought you had for a rainy day will either be gone, greatly diminished, or inaccessible as asset values plunge. In times like this, it is a low debt level and/or a reserve of cash that will separate those who survive to farm another day from those who may not.

$ 3

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“ GreenStone has been around for 97 years and has successfully rode the ups and downs of the industry by serving its members in good times and bad with a dependable, competitive, and responsible source of credit.” It is very difficult to fathom possibilities like this when times are so good, particularly when all the experts are telling us commodity prices will remain high for as far as the eye can see as we race to feed nine billion people by 2050. However, I would argue this is exactly the time to do that stress test for your business and prepare a documented contingency plan for the inevitable storm that will come your way. Hopefully, that storm will not be a category five tornado and instead an isolated squall line, but I bet you would sleep better just knowing you are prepared. Remember, it is too late to build the shelter after the storm has moved on. 97 Years and Counting Before closing, I want to thank you for placing your trust and confidence in GreenStone and selecting us as your financial services provider. We understand that another consequence of great financial times in agriculture is a wave of new competitors in the market making a lot of promises and professing their deep commitment to the industry. If that were true, then where were they just over four years ago when corn prices spiked and protein markets tanked? GreenStone is proud to say we were here then, as well as last year when one of the worst freezes to hit Michigan in more than 100 years

TECH TIP

severely impacted fruit producers. We were one of only four lending institutions who lowered our profit margins to assist fruit producers during this difficult time through the state of Michigan’s Agricultural Disaster Loan Origination Program. GreenStone financed $50.0 million of the $54.2 million provided through the program, that is 93 percent! Why was participation so lopsided? Because participating lenders (including GreenStone) had to give up profit margin on loans written under the program and all but three commercial banks in the state were unwilling to do that. Beware of “strangers” who profess to have your best interest at heart! The real test of a lending relationship is during difficult economic times. GreenStone has been around for 97 years and has successfully rode the ups and downs of the industry by serving its members in good times and bad with a dependable, competitive, and responsible source of credit. We appreciate and value the business you do with us and will always strive to be your “…first choice for financial services” no matter which way the wind blows. Ideas Welcomed I hope you enjoy this issue of Partners. We are blessed to have a talented group of staff members who work hard to provide this publication to you on a quarterly basis and hope you find the information useful. As always, we have included a variety of different stories that we believe you will find of interest. If you have an idea for a future article, or would like us to consider additional types of information, please let us know by contacting our vice president of marketing and public relations, Melissa Rogers at Melissa.Rogers@greenstonefcs.com or 517-324-0279.

TECH TIP

Backup Strategy

Every home or farm business should have a backup strategy to protect you from losing your important electronic information. Data backups should be performed on a routine basis with the frequency most dependent on the use and importance of the work on your computer. Remember to also back-up before performing a software upgrade! Some computer programs have backup functionality available

within the program. Otherwise, a simple option is to make a copy of important computer folders on a USB memory stick and store in a fire and water proof safe or structure, or use cloud storage. You may also wish to purchase a software/service to automate the back-up process for you.

Candid Comments... GreenStone FCS, "We would like to say that if it weren't for GreenStone, this deal would probably not have been made. I received information about your company from a friend. He advised me about a mutual friend we have that used GreenStone to secure a loan during hard times. Word of mouth advertising, even in this day and age of the internet, appears to still be alive and well.” — Mark and Jackie Garnsey Rockford, Michigan

Dave Armstrong

Have something to share? Submit your "Candid Comment" to: marketing@greenstonefcs.com

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MARKET OUTLOOK

Market Outlook By: Bob Utterback

From a historical perspective, the market is now entering its most violent time of year. By this I mean it is the time of year when the greatest amount of influence can be brought to bear on the supply side of the equation in regard to corn, soybeans, and wheat. What will be the primary drivers of the market for the near-term—how many acres were planted and how is summer weather affecting yield?

irst, let’s start with the most predictable of the grains at this time of year. Winter wheat is being or has been harvested throughout the U.S. This causes the market to come under harvest pressure as combines run. This year, however, Kansas City wheat yields are lower. At the same time, the spring wheat that is normally planted in the northern production regions has had a lot of difficulty, putting pressure on acres planted and eventually yields. So, I have to suggest there is some support for wheat based solely on domestic supply fundamentals. I suspect individual producers’ heads are swooning in regard to how far wheat has dropped and they believe prices must eventually

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MARKET OUTLOOK

rally because of supply problems and higher production costs. I feel the wheat producersâ&#x20AC;&#x2122; pain, but wheat does not operate in a vacuum and one must be aware of the influence of corn and the general health of the outside markets. Expect lows around harvest, but I believe the level of recovery will be more determined by the outside markets than wheat fundamentals. If anyone has not sold their wheat by now, hold for a post-harvest bounce but be very realistic about the level of recovery they expect from the market this fall if we have not seen significant supply problems in the corn or soybean complexes.

The numbers seem to strongly suggest if a producer took at least percent crop revenue insurance, he/she would be better off taking preventive corn planting rather than switching to soybeans. This implication makes the supply side of the equation more bullish for corn, in that one must expect planted acres to drop. The issue is, how many? The bulls want to argue big numbers, while the bears want to be very conservative. I believe we will be somewhere above 1.5 million, but under 3 million. On the surface this seems to be very positive, but remember the other parts of the country are getting significant moisture recovery and warm temperatures, so the potential for U.S. yield growth could exceed the average trade expectation of 152 to 155 and head toward 158 to 160.

to 2.0 billion. The level of flat price downside risk really lies in three developments: 1. How many acres are eventually harvested 2. Final yield 3. How strong a demand response we see

Obviously, one has to adjust as time passes, but I do not believe the By the time this article is being market will be able to push December read, the corn and soybean markets corn below $4.50 on fall lows. On will have digested the June actual the summer highs, unless we start acreage report. According to historic to see weekly crop ratings push corn percentages, corn acres usually yield on a national basis below 150, increase and do not drop that much I believe it will be very hard to get from the March estimates. This year, December 2013 corn back above the Another thing to temper the bulls is however, has been less than normal $5.95 winter highs. the expectation that a big demand for many producers in the northern recovery is based on the assumption production regions. As of this writing, Long-term, my greatest concern is that prices will be cheap this fall and Iâ&#x20AC;&#x2122;m getting the strong sense that for the 2014 to 2015 time period. stimulate usage. Subsequently, when producers will not switch as many As we see technology continue to we start to tweak the acres below 94 corn acres as I had earlier thought push up yields and possibly calmer million with yield above 155, there because of crop insurance benefits. weather, we have to ask ourselves, is still the possibility of having a The numbers seem to strongly will supply exceed demand? The burdensome supply level this fall. suggest if a producer took at least biggest concern I have is that the cost 75 percent crop revenue insurance, he/she would be My Suggestions: better off taking preventive corn planting rather than switching to soybeans. 1. Get your head around the fact that the basis levels that you have seen over While Iâ&#x20AC;&#x2122;m reluctant to come the last couple of years could go back to a more normal [wide] basis at up with a specific number, harvest, thereby forcing storage. the trend seems to be that corn preventive plantings 2. The premium of front-end contract months over the deferred months will be coming to an end. I expect a carrying charge structure to really start in at current prices will offer earnest as we move into late July to early August in the deferred contracts. a positive cash flow, while Again, this will be big incentive for on-farm storage. soybeans only offer a loss unless there is a significant price recovery. So the of producing corn has [recently] gone Basis and carry are based on the decision-making process seems to be: up much faster than revenue. The final expectation that carryover will take the bird in the hand versus two only way costs drop is if prices drop in the bush! eventually find its way back to 1.6

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MARKET OUTLOOK

I still believe in siding with the bearish side of the soybean market; represents a very solid price for fall inventory soybeans basis the November 2013 contract.

$12.50 to $13.25

significantly (similar to 1980 to 1984 when we had a period of time where the poor profit margins put some real pressure on producers). We want to avoid this problem; if we do see a price event in early July, one should aggressively sell into the event. The exceptionally tight old crop soybean situation allowed cash basis levels to push to big premiums in early May, but we saw basis bids go drastically lower as the holiday approached. I believe end users have the inventory they want already bought and are now content to sit back and wait for new crop. Shutting down facilities for repair and maintenance will be financially preferable to them than buying inventory at a negative margin. The issue now, with new crop trading in excess of $2 under the old crop, is it a buy or a sell? I know the producerâ&#x20AC;&#x2122;s attitude straight out of the box is soybeans are too cheap at $12.50 because of the cost of producing them. My response is, the market does not care what it costs to produce a crop; it wants the inventory at the lowest price possible over time. Right now the primary influences on fall soybeans are the number of planted acres and yield. Many variables are yet to be confirmed, that is why this time of year can be very violent with subsequent big swings in the market. For some time, I have felt that soybean acres would grow as suggested in the March report. As we saw spring weather develop concerns for corn, I thought soybean acres could grow even further; but I have to say I must temper my expectation of 7

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a significant increase in acres. The big variables will be how many doublecrop soybean acres will be seen and will it neutralize the influence of possible lost acres due to weather delay. So, with no big jump in acres, one of the big bearish arguments for soybeans has been neutralized. We must, however, remember there is a sizable crop in South America and China that is already showing signs of being a very discriminating buyer. Essentially, the influence of yield will, as always, play a big part on how far prices drop this fall. There are a lot of big end users that are very bearish and voting with their pocketbooks by going hand-to-mouth until harvest. To scare them, I would have to see U.S. yield potential start to show a definite decline in July and August. I still believe in siding with the bearish side of the soybean market; $12.50 to $13.25 represents a very solid price for fall inventory soybeans basis the November 2013 contract. But be cautious; hedge production by using a deep-in-the-money put rather than a short futures contract or cash position until at least mid-August just in case reduced acres are dovetailed with a bullish, hot and dry August weather event. This material has been prepared by a sales or trading employee or agent of Utterback Marketing Services, Inc. and is, or is in the nature of a solicitation. This material is not a research report prepared by Utterback Marketing Services, Inc. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading

decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction without registration, the market commentary in this communication should not be considered a solicitation. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Utterback Marketing Services, Inc. believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. ABOUT THE AUTHOR Bob Utterback is the Farm Journal Economist and President of Utterback Marketing in New Richmond, IN. Call Bob for strategy updates at 877-898-4324. Email comments on Outlook to utterback@utterbackmarketing.com. he opinions stated herein are not necessarily T those of GreenStone Farm Credit Services.

LEGISLATIVE MATTERS

Wisconsin Update

GreenStone works cooperatively to address legislative issues with three other Farm Credit associations that serve part of the Wisconsin geographic territory side-by-side with GreenStone. United FCS, Badgerland Financial, and AgStar all serve part of the important agriculture territory in Wisconsin.

Among those policy items is the provision that would repeal statutory language prohibiting certain ownership of land by aliens that are not residents of the United States, as well as certain foreign-based corporations. Current law prohibits non-resident aliens and various others from acquiring, owning or holding an interest in more than 640 acres of land in Wisconsin. Numerous farm, commodity and other trade associations, including Cooperative Network, opposed consideration of this matter as a part of the budget bill. Legislative friends of agriculture are now active in working with other legislative colleagues in order to get the provision removed from the biennial budget bill.

WE ARE ALSO FORTUNATE TO HAVE MANY OF OUR MEMBERS REPRESENTED IN THE U.S. AND STATE AGRICULTURAL COMMITTEES:

The legislative issues in Wisconsin are unique and require careful analysis and communication. The cooperative relationship among these four associations has provided significant strength in making direct communication with Wisconsin state legislators. This process includes working with the leadership of the Cooperative Network.

U.S. House Committee on Agriculture • Representative Reid Ribble (R), 8th Congressional District Wisconsin Senate Committee on Agriculture, Small Business, and Tourism • Vice Chair: Senator Thomas Tiffany (R), 12th Senate District • Senator Dave Hansen (D), 30th Senate District

As the largest statewide association of its kind, the Cooperative Network is committed to building Wisconsin and Minnesota’s cooperative businesses. It serves more than 600 member-cooperatives, owned by more than 6.1 million Wisconsin and Minnesota residents, by providing government relations, education, marketing, and technical services for a wide variety of cooperatives. Members gather each year to determine the Cooperative Network’s legislative and educational priorities, and membership committees meet throughout the year to develop and guide sector strategies. An example of a current issue which has been considered and analyzed for impact by the group involved the Wisconsin legislative Joint Financial Committee (JFC) identification of a process to review the 2013-15 state budget bill. The JFC listed the removal of 12 non-fiscal policy items that were eliminated from the budget bill, and instead potentially be considered as non-budget legislation by other standing committees.

Wisconsin Assembly Committee on Agriculture • Vice Chair: Representative Gary Tauchen (R), 6th Assembly District • Representative Alvin Ott (R), 3rd Assembly District • Representative Jeffrey Mursau (R), 36th Assembly District

The GreenStone team appreciates the strength of its membership and cooperative relationships to support the overall mission of providing strength to the agriculture and rural interests within the communities GreenStone serves.

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NEWS UPDATE

NEWS UPDATE SUMMER 2013 GreenStone Awards $21,000 in Scholarships to Students at MSU’s College of Veterinary Medicine Cultivating the next generation of agricultural leaders is critical to the sustained success of agriculture, and GreenStone is committed to preparing tomorrow’s leaders for their careers in this diverse industry. The cooperative recently announced it has awarded scholarships to seven students attending the Michigan State University (MSU) College of Veterinary Medicine. Each of the following students will receive a $3,000 scholarship to help them pursue their education at MSU: Timothy Eagan (Sturgis, MI), LeeAnn Kroll (Alpena, MI), Henry Reinart (Hopkins, MI), Stephanie Roggenbuck (Harbor Beach, MI), Jacquelyn Rowley (Richmond, MI), Levi Smith

(Walnut Bottom, PA), and Jessica Zalucha (Dexter, MI). “These students are passionate about veterinary medicine and helping preserve the legacy of Michigan’s agriculture industry, and they are each very deserving of the scholarship,” said Melissa Rogers, GreenStone’s vice president of marketing and public relations. “As an organization, we feel it is important to help these students succeed as they will be the next generation of veterinarians helping our

Pure Michigan Agriculture Advertising Campaign

The Michigan Ag Council (MAC) has again partnered with the Michigan Economic Development Corporation (MEDC) to execute a Pure Michigan Agriculture advertising campaign. It will run throughout November. The Pure

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members maintain healthy and productive herds.” In addition to the scholarships awarded by the MSU College of Veterinary Medicine, GreenStone will also distribute $12,000 in

Michigan Agriculture radio commercials started airing in June and will run into November on stations in Detroit, Grand Rapids, and Lansing. The campaign will help build consumer awareness, knowledge and trust in today’s food and agriculture, and will highlight Michigan agriculture, and its vital role in Michigan’s communities, and the impact it has on the state’s economy. The MAC and MEDC have also developed a new line of apparel as

scholarships to students pursuing an undergraduate degree in agriculture at MSU and the University of Wisconsin.

part of the Pure Michigan Agriculture campaign. T-shirts, sweatshirts, ball caps, beanies and Carhartt jackets that include either the Pure Michigan Agriculture or Pure Michigan Farmer logo are available for purchase. To find the apparel products, visit www.puremichiganstore. org and click on the Agriculture/Apple tab at the top of the page.

NEWS UPDATE

Pause for Applause The Green Valley Dairy in Krakow, Wisconsin, was recently recognized at the U.S. Dairy Sustainability Awards and presented with the Outstanding Achievement in Renewable Energy award. The management team’s "waste not" philosophy has them constantly evaluating opportunities to reclaim energy, recycle water and repurpose manure nutrients. In 2005, they constructed one of the first anaerobic digesters in Wisconsin to help manage manure nutrients and reduce odors while decreasing the dairy’s carbon footprint. Today, three anaerobic digesters have the capacity to produce 1,200 kWh of “green” electricity, most of which is used on the dairy or sold to the local utility. Congratulations to everyone involved!

Have an acknowledgement to share? Submit your "Pause for Applause" to: marketing@greenstonefcs.com

CALENDAR OF EVENTS JULY

GreenStone’s Rogers Honored by NAMA Student Organization GreenStone’s vice president of marketing and public relations, Melissa Rogers, was recently named the Outstanding Professional of the Year by the National Agri-Marketing Association (NAMA) for her work as an advisor to the organization’s Michigan State University (MSU) student chapter. “Like all GreenStone employees, Melissa is dedicated to cultivating the next generation of agricultural leaders,” said Jack Kelly, GreenStone’s executive vice president of customer delivery. “Her work with the MSU student NAMA chapter is a perfect example of GreenStone employees connecting with youth leaders to help engage them in our industry.”

Rogers, a MSU alumna herself, was a member of the NAMA student chapter during her time at the university, and finds personal fulfillment in continuing to work with the club. The award, presented annually, recognizes an outstanding professional involved with a NAMA student chapter who goes above and beyond to improve the quality of

the students’ experience in the program. Rogers was nominated for the recognition by the students she advises in the MSU NAMA chapter, making the award extra special. There are 32 student NAMA chapters at various universities throughout the United States and Canada. The award was presented during the 2013 AgriMarketing Conference held in Kansas City, Missouri.

[4] Offices Closed In Honor of Independence Day [16-18] MSU Ag Expo East Lansing, MI www.agexpo.msu.edu

SEPTEMBER [2] Offices Closed In Honor of Labor Day [6-7]

L ake States Logging Congress & Equipment Expo Escanaba, MI www.timberpa.com

[25-27] Michigan Association of Realtors Convention & Expo Mt. Pleasant, MI www.mirealtors.com Summer 2013

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GREENSTONE'S STORY

“ In 2012 alone, GreenStone helped more than 4,000 customers save an estimated $12 million annually by lowering their interest rates through loan conversions." GreenStone’s total assets converted in just one year, and we have been doing it year after year.

MEMBER SAVINGS FROM CONVERSIONS ARE NO MYTH There is not a special genie lamp nor a magic wand involved—all you need is a GreenStone financial services officer and you will get the advantageous service you would otherwise be wishing for. Although there are several benefits of being a GreenStone customer, there is one in particular that deserves a bit of time in the spotlight: the unique benefits experienced by our members through loan conversions. Take a minute and look at these numbers: in 2012

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alone, GreenStone helped more than 4,000 customers save an estimated $12 million annually by lowering their interest rates through loan conversions. We touched almost $1.2 billion in loan principal to help you, our members, save money; that’s almost 20 percent of

If that is not enough to make you believe in what others might call magic, here is what makes conversions so much different, and better, than a loan refinance. Conversions can often be completed the same day, the costs are minimal, there is no extensive paperwork or title company involvement, nor a need for a new appraisal; it just takes a conversation with your financial services officer, a signature, and you can move on knowing you are saving money. If desired, you can even reduce the loan amortization schedule, which could help save you even more over the life of the loan. Sound too good to be true? It’s not, and here is why. GreenStone maintains flexible terms on our underlying debt that allows us to extend these benefits

to you without penalty to the customer or to the association. One of the key reasons for this is that we maintain ownership of the asset—GreenStone does not sell our loans to an unaffiliated third party, so we are not only the loan servicer, we are also the asset owner, eliminating the need to work through or get approval from another party to offer a benefit like this to our customers. That is how we can do it, but if you really want to know why we do it, it is quite simply because it is what is good for you, our customer. It is one more thing we can offer so you do not have to look elsewhere for a lender. We know we are better off passing on a lower rate to assist in assuring your full satisfaction than losing you as a customer. You own your cooperative; we would not be doing our job if we did not do things like this!

CAREER CORNER

GreenStone Welcomes Summer Interns GreenStone Farm Credit Services has welcomed six student interns for the summer, providing each with an opportunity to sharpen their skills in their respective career field. Five of the interns are based in the organization’s East Lansing, Michigan headquarters, while one intern is based in GreenStone’s Grand Rapids, Michigan, branch. Now in its fourth year, GreenStone’s internship program provides college students with hands-on practical experience to complement their education. Like our full-time employees, students are selected to participate in the program after applying for their desired internship online and being selected after Front row, left to right: participating in the organization’s hiring process. GreenStone’s human resources team places an Brandon Erb and Becky Whaley. emphasis on performance in the classroom, extracurricular activities, and community involvement. Middle row, left to right: Kyle Kramer and Mike Bridge. This summer’s intern class includes one freshman and five seniors with a variety of backgrounds Back row, left to right: Jasper and interests in the agriculture industry. Each intern will work approximately 14 weeks in their Cunningham and Matt Alt. position before returning to school for the fall semester. In addition to real-world experience in the agriculture industry, GreenStone internship positions are also paid positions with the company.

MATT ALT Title: Regional Sales Intern Hometown: Grand Rapids, MI College: Michigan State University Major: Animal Science Branch: Grand Rapids, MI What I hope to gain from my internship: I am excited to learn more about the loan and credit side of agriculture and what goes into that process. MIKE BRIDGE Title: Capital Markets Intern Hometown: Midland, MI College: Michigan State University Major: Finance Branch: East Lansing, MI

What I hope to gain from my internship: I hope to increase my knowledge of the credit industry and learn more about agriculture and farming. JASPER CUNNINGHAM Title: Operations Intern Hometown: Ravenna, MI College: Michigan State University Major: AgriBusiness Management Branch: East Lansing, MI What I hope to gain from my internship: I am hoping to gain a real-world understanding of the Farm Credit System, and how each financial service or product translates to a farmer and consumer benefit. I would also like to learn more about the finance and credit process.

BRANDON ERB Title: Application Developer Intern Hometown: DeWitt, MI College: Baker College Major: Computer Science Branch: East Lansing, MI What I hope to gain from my internship: I’m hoping to gain knowledge of computer programming, specifically C#, and any other languages I can learn. I am also hoping to learn good coding habits and gain realworld experience. KYLE KRAMER Title: Credit/Audit Intern Hometown: Birch Run, MI College: Michigan State University Major: Finance Branch: East Lansing, MI

What I hope to gain from my internship: I am hoping to gain a vast amount of realworld, hands-on experience at GreenStone which simply cannot be learned in a classroom. BECKY WHALEY Title: Legal/Loan Processing Intern Hometown: Byron, MI College: Michigan State University Major: Accounting Branch: East Lansing, MI What I hope to gain from my internship: As the legal/loan processing intern, I hope to gain an accurate perspective on how all aspects of GreenStone interact with the legal department.

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YBSF FEATURE

Farming from Scratch By Jennifer Vincent

As if farming 800 acres and raising about 100 head of cattle in northeastern Wisconsin isn’t enough, Dean Collard, 32, also has another full time job. It is not one he is ready to let go of just yet, as it helped provide the means for this start-up farm to take root.

Dean has plenty of business as a hoof trimmer, but that busy schedule did not deter or squash his desire to establish his own farm in Mishicot, Wisconsin. In fact, it was that business that funded his meager beginnings as a new, beginning, young farmer 10 years ago.

farm, and I enjoyed working there,” he says.

Dean was not born on a farm, although his grandparents and an uncle each had dairy farms. “They sold out before I was at the age to have a chance at it,” he says. His hook to agriculture was developed when, as a teenager, he worked for a neighboring dairy farm. “It was a very tidy

Dean tried his hand working for a communications company. He didn’t like that. Then it was laying concrete for the construction industry. That really wasn’t his gig, either. “I learned a lot of things, but I never felt like this was for me,” he says.

That led to Dean taking a course and obtaining a one-year Dairy Business Management certificate. “I thought that’s what I wanted, but the dairy part of farming just wasn’t in my blood,” he admits.

Opposite page: Dean, his wife Jackie and their three sons, Dominic, 10, Dean Jr. (DJ), 4, and Dawson, 8 months 13

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YBSF FEATURE

PHOTO CREDIT: SHELLIE KAPPELMAN

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YBSF FEATURE

“That’s when I decided I wanted to get back into the agriculture industry. I had an interest in hoof trimming, which I had done some while working on the farm in high school.” He became a certified hoof trimmer, bought a chute, and work started to line up. “Before you knew it, I was working six days a week, but I still had the desire to have my own farm,” he says. “The hoof trimming business really helped me get started.” A Foot in the Door After a couple of years of hoof trimming, Dean had saved enough to rent some ground and buy a 3020 John Deere tractor. GreenStone was there to help him get started with his first land purchase of 23 acres. “I bought my home base through GreenStone, and I have also used them for life insurance, crop insurance and tiling loans,” Dean explains. Laurie Schetter, financial services officer in GreenStone’s Manitowoc, Wisconsin branch, says it has been a pleasure to watch Dean’s business grow. “GreenStone has been working with him since 2006 with real estate purchases, improvements

and help with the beef cattle side of things,” she says. “He’s a very bright, ambitious and hardworking agribusiness person. I really enjoy working with Dean and his wife, Jackie. They are very well respected.” Dean does not have a great deal of free time to spend with Jackie and their three sons, Dominic, 10, Dean Jr. (DJ), 4, and Dawson, 8 months, but he knows that hard work and long hours is what it has taken and will continue to demand as a young farmer starting out from scratch. “My greatest obstacles right now are lack of sleep and exhaustion,” Dean says. “But, I have the drive and am willing to work. There’s no such thing as a normal day—it’s never just eight hours.” In addition to working at the cheese processing plant, Bel Gioioso, Jackie helps with the record keeping, running farm errands and, most predominately, tending to their three sons. Dean’s hoof trimming business has evolved as farming has changed, meaning he visits less farms, but trims more cows.

About the Photographer Professional photographer, Shellie Kappelman, who shot the photographs for this article, also has a strong connection to GreenStone. After working for a few different studios for several years, 10 years ago Shellie branched out on her own, and three years ago she determined she needed an adequate facility to grow the business. GreenStone provided the financing and, “I hope to have it paid off next year,” she says. It was an obvious choice to reach out to GreenStone, as Shellie and her husband, Pete, were already customers of GreenStone. They operate a 450-head dairy farm of Holsteins and brown swiss with a 32,000-pound rolling herd average. They also farm 1,100 acres and raise most of their own feed. Their children are also involved in the agricultural industry. Bethany, 24, works for CP Seeds in marketing and communications. Mitch, 21, graduated from University of Wisconsin-Madison with a degree in dairy science and is working for Accelerated Genetics as a regional services specialist. Erin, 20, is a junior at UW-Madison pursuing dairy science.

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For the Love of Farming As his own farm continues to grow, Dean says there is a slow transition in progress. “I’m 32 years old; I’m not done hoof trimming, but I love farming a little bit more,” he says. “My future plan is to downsize hoof trimming and expand acres and the cattle herd.” He is helping others get into the hoof trimming business and has had four apprentices. “I’ve let a few customers go to the younger guys coming into the business,” he says. At the present, however, Dean plans to hold steady with hoof trimming—14,000 cows a year— while pursuing more land. “Land is hard to come by; so my goal is to always make the best use of what I have so it would be like farming more,” he says. He calls himself a “corn guy,” with a rotation that includes soybeans, winter wheat and a little alfalfa. “Farming really is a way of life and you really have to be willing to work your tail off,” he says. “But, I don’t regret a day of it. I enjoy being outdoors, sitting on the tractor and putting in the time and energy it takes to raise a good crop. At the end of the season it’s nice to sit in the combine and look at what has been accomplished all year.” Dean owns all his equipment and farms by himself, with the exception of some contract spraying when the window is open and time is of essence. For other beginning farmers, Dean advises, “Don’t be afraid to seek out other people’s advice. Farmers have a lot of knowledge, and there is a willingness to share. Take information from people who have been down that road, like. Be open-minded and don’t be afraid to take on risk. Work hard and set realistic goals—don’t set them so high that you won’t be able

YBSF FEATURE

STRAIGHT TALK

hen you were eight, W what did you want to be when you grew up?

Dean: “ In third grade, I wanted to be a farmer. My grandparents were farming, and I wanted to be part of their farm or own their farm.

Q: When did you first realize that you wanted to farm for a living?

Dean: “ When I got out of

to achieve them. Grow steadily and reward yourself when you’ve met that goal. My ultimate goal is to be farming 5,000 acres and not be hoof trimming. However, I know that’s not going to happen between now and five years or probably 10. I hope to have that kind of acreage when I retire.”

Where are they now... Brent Skinner –

How has your business changed since 2008? Many things have changed for my operation since 2008. My family has grown over the last five years. I am now married and have two beautiful daughters, ages one and three. As for my operation, I have added another set of swine finishing barns and can accommodate up to 8,800 head; I have also acquired a small amount of cash crop acres bringing my total acreage to about 600. With my operation growing, I have gone from running one truck to five, every day.

communications and concrete and when I became a hoof trimmer, that’s when realized I wanted my own farm.”

Q: Who do you look up to; who is your mentor?

Dean: “ I don’t really have one

person or two. I look up to a group of people that are go-getters. Even people outside of ag. I admire ambition.”

Q: What is the biggest

challenge for young, beginning, or small farmers today?

Dean: " Prices, land values/

availability and having the startup money. I was fortunate to buy land from my family."

Q: What advice do you have for young, beginning, or small farmers starting out?

Dean: " Work on farms and

gather information. Talk to consultants and get with older farmers that are looking at getting out. Find a farm you can work yourself into."

In the meantime, his hoof trimming business and GreenStone have provided a foot hold in agriculture that Dean continues to build upon. Farm income has now surpassed his hoof trimming business. “I love being a farmer,” he says.

Any new purchases or improvements? Last summer I added two additional swine finishing barns that can handle 4,800 head for High Lean Pork. The finishing barns help my cash flow tremendously and will allow me to further grow my operation when the time is right. At the time of the original story, you talked at length about your hog finishing operation as a key to your success. Do you still see it this way? I definitely do. My finishing barns have helped me to continue growing my operation by allowing me to maintain a consistent cash flow, and build equity in my operation. What’s next for your operation? I would like to continue growing the cash crop portion of my operation when it is economically feasible to do so. I also look forward to continuing to spend time with my wife and daughters. You truly were a beginning farmer with no land inheritance. What advice do you have for others looking to break into farming? Put yourself in a position that allows you to be unique in your area. By looking outside of a traditional cash crop operation, I found a market need in swine finishing and have been successful. It is also important to ensure you have a steady cash flow and consider alternative financing options.

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DIRECTORS' PERSPECTIVE

Directors' Perspective

“ GreenStone is doing very well and had record customer satisfaction results in 2012 at 97 percent, but we should not become complacent about an organization that is essential in each of our farming operations.”

ith GreenStone’s 2013 election results just out, we asked three directors with varying years of experience to tell us about their dialogue with our members. What are the most frequent questions asked? And, what are some of the topics they might encourage members to discuss with them? Christine Crumbaugh As a relatively new director, the most frequent question I get is, “How are you doing as a director?” My fellow directors and the GreenStone management team did a fantastic job of orientating me to my new position and have helped me to become an effective member of the board over this past year. I have found the experience to be both challenging and rewarding. I want to encourage each of you to engage with the directors of your organization when you have the opportunity.

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Darl Evers GreenStone is doing very well and had record customer satisfaction results in 2012 at 97 percent, but we should not become complacent about an organization that is essential in each of our farming operations. We need to continually improve and challenge the organization and its leaders to be forward thinking. Opportunities need to be sought that ensure GreenStone remains a relevant and reliable source of credit in its core business of agricultural lending. Keeping your directors informed of what you require from your financial institution as you grow your own businesses is an important part of the director/member dialogue.

Even though I have been a director for many years, the most frequently asked question has always been about interest rates. “How long will they stay low,” or “when does GreenStone expect rates to go up?” The answer is always the same: we are not able to predict the future, but we do our best to keep rates as low as possible. We have to keep our association profitable and keep our regulator happy, too. Some other questions have been concerning the board room. “How long are the meetings?” With our new format, we now have two day meetings and we meet less often. The board members work very well together. We have

DIRECTORS' PERSPECTIVE

Bruce Lewis four directors on each committee: executive/compensation, finance, audit, and the legislative committee. “What kind of things do you discuss?” The primary task of the directors is to set policy and direction for the association. Part of that is receiving numerous reports from management that we look at, listen to, and discuss. And finally, I get asked: “what is new at GreenStone,” or “how is GreenStone doing?” The decision to issue patronage payments was new for us eight years ago and it was a good thing to do. GreenStone, since our conception, has always done well and continues to perform above our expectations. As always, all directors are open to your comments, questions or complaints.

As a director for GreenStone, I have had a couple questions concerning our political involvement. I feel that the environment in which we operate today requires people to be involved in all aspects of their surroundings, including being politically astute. Therefore, GreenStone has become more politically involved. Along with the Agriculture Leaders of Michigan, the Michigan Farm Bureau, and other agricultural organizations, GreenStone supports candidates and agriculturally related bills.

Questions that members might wish to ask throughout the year could include: “what are you doing to ensure the organization is strong and solid for the future?” “What are the strengths and weaknesses in the Farm Credit network?” “What is GreenStone’s availability of capital at competitive rates at all times?”

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TODAY'S COMPETITION

HERE THEY COME AGAIN: THE COMPETITIONâ&#x20AC;&#x201D;

It is no secret to our member/shareholders that the agriculture industry in aggregate has had a very successful run for a number of years. Now the United States Department of Agriculture is forecasting an even more optimistic 2013, with net farm income projected to be $128 billion.

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TODAY'S COMPETITION

The recent success of agriculture is also no secret to GreenStone. As a part of the Farm Credit System, GreenStone was established 97 years ago to meet the credit needs of American agriculture. We know that agriculture is a cyclical industry. We know there are periods of outstanding performance, and periods of significant challenges. We have been around long enough to see our members, and the industry, through many of these cycles. Through those experiences, both GreenStone and its members have come to appreciate the benefit of being able to partner in good times, and in those that are challenging. With the recent success of agriculture, it seems like every national, regional, and community bank is back in the agricultural lending business. This competition can surely be good for borrowers as it helps keep interest rates low and may allow better credit terms. As the saying goes: “competition is always good.” However, it is important to keep a few things in mind as the new competition comes knocking on your door.

•D oes the bank have agricultural lending expertise from top to bottom? If they do have an agricultural loan officer, the lender probably started in Farm Credit and the expertise may not run throughout the organization. • I s the bank committed to agriculture? As recent as the 2008-2009 financial crises, many banks exited agricultural lending. GreenStone never left, and we never will. • I s the long-term fixed interest rate offered by the bank truly fixed? A number of rate offers we have seen from the competition are only fixed for five years and then the loan “balloons.” As a result, there is no rate protection to the borrower after the first five years. Additionally, many fixed rates in the market carry pre-payment penalties that you need to be aware of. GreenStone offers hundreds of interest rate products ranging from variable to long-term fixed rates, and our long-term rates are truly fixed, giving the customer interest rate risk protection. And with GreenStone, your loan only has a prepayment penalty if YOU choose one.

“ As the saying goes: ‘competition is always good.’ However, it is important to keep a few things in mind as the new competition comes knocking on your door.”

• The bank may be offering an interest rate swap product. You would borrow from the bank using a variable product but then have the option of purchasing a long-term swap to fix their rate. GreenStone members do not need swaps. We offer true long-term fixed products to the customer. There is no need to enter into a separate interest rate swap to secure your rate protection. • Does the bank offer easy interest rate conversions? GreenStone can convert variable rate products into long-term products or just lower the rate on fixed products without making our members go through the drawn out process of a bank refinancing. Find out more on page 11. • Does the bank offer patronage back to you? GreenStone has paid $134.8 million over the last eight years back to its members.

GreenStone knows the new competition would love your business today. We just want you to know that we will be here tomorrow, offering the best service, unmatched expertise, and competitive pricing. We appreciate your business and come to work day after day—year after year —to help you be successful. We take our relationship seriously, and thank you for your business!

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GUEST COLUMN

DIAGNOSING EMPLOYEE PERFORMANCE... Willingness or Ability? By: Barb Dartt, DVM, MS Over a recent weekend, I helped my parents “work” cattle. We weighed, vaccinated, dewormed, and tagged about 200 head of dairy steers. I haven’t helped with this process for several years, but I had worked cattle since I was five years old. And I have been good at it— I know that because success can be measured. This time, there were five of us working the cattle. Deworming was my mom’s job. I was next to her at the chute and noticed her using a new syringe—one I had not used before. Mom got called away to take care of something else, and we had a choice: stop working cattle; or, figure out the new syringe. This is not a very high stakes example. We didn’t have a big deadline for completing the work. The team knew I was rusty so no one had high expectations for my syringe skill. Over-applying dewormer was not going to hurt a calf. And yet, I still felt the pressure! I felt like I should know how to use the syringe—just from observing my mom out of the corner of my eye for the last couple hours. I worried about breaking the syringe. And, it bothered me to be the one holding up the process while five people stood around.

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Working on ability generally requires two things: 1) Communication to ensure the employee understands expectations; and 2) Training on what or how to do the job.

GUEST COLUMN

Now, take this simple, low stakes, easy-to-measure example and extrapolate it to one of your employees. When is the last time they were asked to cover for someone else on a job they had observed, but not actually done? Have you recently added a new tool or technology that they rely on to get their work done? If an employee stopped to ask a question or learn about a process, would they be holding up others from accomplishing work? Even the most committed, conscientious employee might fumble through, rather than asking a question. That is what I did. I did not ask for input, even though my dad was right there and could have “trained” me on the syringe. I did not

ask partly because I didn’t want to stop work. And I did not ask partly because I didn’t want to admit I didn’t know what I was doing. The bottom line is that I was willing to do a good job. But I did not have the ability. And in the flow of the work, I did not ask for the help I needed to improve my ability. As clients talk about employee productivity, I often hear conclusions about an employee’s willingness to do a job. “They don’t care enough about their work to pick up after themselves.” Or, “They just won’t put in the time to do a thorough job.” These employers have observed employee behaviors and assumed that the problem is an employee’s commitment or engagement. Sometimes that is indeed the case— employees are simply putting in their time. However, I think we often overlook the ability part of the equation. We assume that individuals who have worked with us for years (I have been working steers for over 30 years, for goodness sake) and who are good at their job magically know how to: do someone else’s job; or, tackle that new piece of technology; or, will ask for help if they don’t know! Addressing an employee productivity issue as being rooted in a lack of willingness looks much different than addressing one that results from a lack of ability. Working on willingness could merit an article in and of itself. Working on ability generally requires two things: (1) communication to ensure the employee understands expectations; and (2) training on what or how to do the job. As you continue your work on improving employee productivity, take time to determine if an employee’s challenge stems from a lack of willingness or lack of ability. Make it your job, not the employee’s, to figure out how you can bridge that knowledge gap or improve on a skill. And do not be afraid to spend some time with someone—even if they have not asked—to improve their ability. ABOUT THE AUTHOR Barb is a partner in GROW: The Family Business Advisors. She is a family business consultant, working with farm families and management teams to help them keep their business healthy and the people happy. Barb can be reached at 269-382-0539 or barb.dartt@growthefamily.biz The opinions stated herein are not necessarily those of GreenStone Farm Credit Services.

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3515 West Road East Lansing, MI 48823

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RESULTS MORE THAN FINANCINGâ&#x20AC;&#x201C; In 2012 alone, GreenStone helped more than 4,000 customers lower their loan interest rate, saving them nearly $12 million annually. And we did it all without the hassles of refinancing. Contact your local branch for more information today!

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