Partners - Winter 2014 by GreenStone Farm Credit Services

GreenStone FCS

Winter 2014

Promoting the business success of our customers and the rural community

COMMUNICATING BY ENGAGING

2014 MARKET OUTLOOK

EMBRACING

FAMILY HERITAGE

GREENSTONE PATRONAGE

UKRAINE STUDY MISSION MOBILE WEBSITE

Editor’s

NOTE Winter 2014 Published by:

GreenStone Farm Credit Services

2 Comments from CEO Dave Armstrong

I recently joined in a tour of GreenStone customers’ farming operations (you can read more on page 11). Not once did I get to ask the customer about their experience with GreenStone, because at each stop, that unspoken question was answered with the unsolicited comments the farmers each made regarding their loan officer, and the natural interaction the loan officer had with the customer. To be honest, if I had not known who the GreenStone employee was, I’m pretty sure I would have assumed he was a part of the farm rather than the financer. Not only did I walk away in awe of the work and results of our customers, but I drove home reassured of how lucky I am to work with individuals who value those relationships as much as the results!

New year, now what is next? CEO Dave Armstrong offers some predictions, reflects on 2013 and points to GreenStone's customer bill of rights as a barometer of success.

We are happy to share with you this issue of Partners, filled with the latest news and information, including the anticipated patronage payment announcement—some great topics to start a New Year!

3 Market Outlook

Coming home to the farm can be hard, and it can be even harder when you are a girl. But Brooke Totzke does not take no for an answer.

Agricultural economist, Bob Utterback, discusses how supply and demand dynamics are going to impact producers in both the short and long term.

8 Communicating by Engaging

13 YBSF Feature Article

17 Ukraine Study Mission

Six steps to help you successfully share agriculture's story with others.

Four GreenStone directors and four staff members visit Ukraine and unveil key agricultural opportunities and challenges that exist for this young country.

10 GreenStone Patronage

23 Legislative Matters

Mark your calendar for March 19: Record earnings lead to another record patronage payout for GreenStone customers.

Take a quick look at the 2013 legislative year in review.

11 Ag Tours

Conflict in family businesses are bound to crop up. Here are some tips on navigating them.

GreenStone customers give national Farm Credit's senior vice president of communications the grand tour.

Winter Notes

5 Calendar of Events

6 Mobile Website 7 News Update 7 Candid Comments 9 Women in Ag

9 Tech Tip

16 Where Are They Now? 24 Climate Basic Technology 24 Pause for Applause

25 Guest Column

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

y the time this issue of Partners finds its way into your mailbox, the Christmas tree has likely been put away, you may be feeling a few pounds heavier, your list of New Year’s resolutions is fresh, you have a good idea of your bottom line for 2013, and your planning process for the 2014 crop year is well underway. Remember, the reward for one successful year is that you get the chance to do it all over again! While the final United States Department of Agriculture numbers are not yet available, current forecasts call for another record earnings year for U.S. agriculture in 2013. Of course, this doesn’t mean that every farm operation achieved this same stellar financial performance, but it appears the majority of operations in our territory will do quite well. Even though row crop prices have deteriorated since last year and wetter than normal planting conditions forced an extended harvest season with reduced yields in some areas, profitability will be strong in the dairy, market livestock, and fruit sectors along with those cash crop operations that were blessed with great yields and favorable contracts. Likewise, GreenStone will set another record earnings year due to loan growth of nearly 9 percent, strong margins, and very favorable credit quality. As a result, we are forecasting 2013’s patronage payment to be $29 million or approximately 22 percent of GreenStone’s net earnings, which is an average reduction in borrowing cost of nearly .05 percent. Of course, none of this would be possible without the success of you, our members, and your commitment to honor your obligations. I could certainly go on and recite all of the key objectives GreenStone achieved this year in terms of financial performance, but what is really important is that your association was successful enough to provide you with a dependable, competitive, and responsible source of credit for another year. We continue to be positioned to fulfill this simple, but very important, mission for generations to come.

The reason we (you, the staff, and the board of directors at GreenStone) do what we do is because of our passion for the broader agricultural industry and the people it consists of. I know I have said this before, but this is much more of a people business than we often like to realize. First, it is people who need the products we produce to survive. Next, even though technology has continued to reduce the number of people needed for production tasks, it still takes a team of people with different skill sets to support today’s complex production system (i.e. agronomists, lenders, nutritionists, accountants, attorneys, veterinarians, implement dealers, etc.). And finally, it is the people we love the most—our families—who motivate, support, and rely on us to be the best we can at what we do. Continues on Page 6...

Winter 2014

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MARKET OUTLOOK

SUPPLY

Market Outlook By: Bob Utterback The market is asking itself if the current weakness in most commodities is simply a bump in the road or symptomatic of a larger trend in commodities. I believe we are entering a period when the global supply and demand relationship is realigning itself. These time periods are always stressful for the overextended individual.

PARTNERS Winter 2014

DEMAND

While we are still the world’s largest economy, we all know that the Asian sector is quickly expanding and sometime over the next 10 years it could top our domestic economy. In fact, it should not be any surprise that strategic alliances controlling commodities will become increasingly important as world populations increase. The problem is exploding global demand is still in the future, not in the next six months. I suggest it would be in global end-users’ best interest if a little

financial hardship in agriculture occurred. Why? So they can buy products at a discount when the upcoming supply and demand imbalance causes some significant financial hardship. Another reason for the bump in the road is domestic demand. It has been impacted by the Environmental Protection Agencies’ recent announcements. In effect, a lid on increasing domestic corn and soybean utilization by lowering ethanol and bio-fuel mandates is now in place.

MARKET OUTLOOK

With building domestic oil supplies and little excitement in Washington, D.C. about ethanol, it is easy to suggest the domestic corn demand growth curve we saw from 2002 to 2012 will not be seen in the next 10 years. Domestic usage is going back to a slow, constant function with minor annual changes. This is what end users want and, frankly, they have more political punch right now than producers. The big yearly demand change will be in exports with China being a big question mark every year. China will work very hard at securing corn, soybeans and wheat from sources other than the U.S. because they do not want to get boxed into a political corner like we are with oil and the Mideast. As China’s middle class grows, they will need more raw commodities to meet demand. The U.S. and China will be able to maintain a friendly trading status with increasing uncertainty for the markets.

the December 2014 contract to move above $5 will fall exclusively on the back of a major supply reduction event this summer. Without a yield reduction event, wide basis and low flat prices could push fall cash levels into the low $3 range. Move cash inventory if basis is good. Look to re-own if, and only if, the market starts to take out the April highs in May. Let me be very clear about the upside potential; it will not be like 2012 because we are starting out with big stocks. We also have reduced domestic usage and I question if the general public investor is as excited about commodities as he was from 2004 to 2012. SOYBEANS: This complex still has a reasonably tight old crop stock situation. We know China wants to be a big long-term buyer, but on their own terms. The problem is lead month soybeans is premium to the deferred which suggests caution for storage. Since the South American crop looks solid and U.S. acres should increase, I have to suggest dumping old beans. Take $13+ soybeans and run!

‟I suggest it would be in global end-users’ best interest if a little financial hardship in agriculture occurred.ˮ

Foreign end users will do what is in their best interest! As far as demand is concerned, I suggest domestic and export demand can take a breather for a couple of years. On the supply side we know that corn hybrids will get better and technology is expected to only improve potential in the future. So the big factor each year will be weather! For American producers this means the April to July time period will be even more critical to monitor. As a practical risk management process during this time period, I believe producers must have limited risk in the market such as using long puts rather than short cash or short futures because of the risk of weather variability. Assume normal yields and defend against the exception! Keep these things in mind when developing your 2014 and 2015 marketing plan. I believe that during the next couple of marketing years we could easily slip back into a pattern like the 1970s and 1980s when weather was the stimulus that created explosive markets. The positive news for young farmers out there is, if you can stomach the next couple of marketing seasons, you may retire very rich if staying in agriculture production. CORN: The bin doors shut some time ago which should help basis a little, but limited flat price gains are expected. Be prepared for increased supply numbers when the final January reports are released that could take carryover even closer to 2 billion. I believe the odds are extremely high that March 2014 contract lows will retest the December 2013 lows on first of year cash flow sales. The ability of

I sense that, if the crop insurance price for December 2014 corn is below $4.50 and November 2014 soybeans is above $11.50, soybean acres will grow because of reduced cash flow exposure. Subsequently, immediately get some type of floor strategy in place for 2014 soybeans. I do not recommend selling futures or cash this early, but would focus on buying November at-the-money puts and selling deep-out-ofthe-money calls to help reduce the cost. As for a specific strike price, it really depends on cash flow and the ability to manage the position. This is why individualized risk management plans should be addressed to combine crop insurance with options, cash and futures selling strategy. They must all work in harmony to provide the best net returns. WHEAT: Wheat should be rather quiet unless corn and soybeans get really negative. If anyone is short the wheat complex, focus on rolling all hedges to the December 2014 contract to capture carry and hope for some narrowing of the spreads if we see any type of winter injury concerns by March. As for significant upside potential, I just do not see a lot. Wheat should be kept in check by ample global supplies and slow growth economies. The only thing we can hope for is some weather problems creeping into the production areas; I would view those rallies as solid selling opportunities. Force yourself to have a floor under 100 percent of expected inventory by no later than early March.

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MARKET OUTLOOK

HOGS: Inventory numbers have been kept extremely tight by the disease that ran through the hog herds [sometimes killing whole barns of piglets]. While this should keep inventory tight during the first half of 2014, the hog-corn ratio is nearing historic price levels where expansion will be unavoidable. I suggest the hog market [in early 2014] could be entering a time period like that of the summer of 2012 corn market. Now is the time to start developing a plan for how to benefit from high prices in the latter part of 2014 and out into 2015. As for feed, get all the summer needs locked up during February. CATTLE: If we see excessive low prices for corn and soybeans in the last half of 2014, it will give significant long-term financial incentive to start building inventory in 2014 and beyond. Granted, it will help prices temporarily, but long-term [mid-2015 and out] things should get negative. I know this is a long way off but right now I am more worried about developing a solid

marketing plan for 2015 than I am about the spring of 2014. I strongly urge producers to use the anticipated strong prices over the next few months to assure long-term profits! 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.

CALENDAR OF EVENTS JANUARY [20] GreenStone Offices Closed for Martin Luther King Day

FEBRUARY [13] Ladies' Day Out Radisson Hotel and Conference Center Green Bay, WI [17] GreenStone Offices Closed for Presidents Day

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[27-2] Outdoorama Feb. 27 – March 2, Suburban Collection Showplace Novi, MI [28-2] Michigan Farm Bureau Young Farmer Conference Feb. 28 – March 2, Amway Grand Plaza Hotel Grand Rapids, MI

MARCH [7-9]

Michigan Deer and Turkey Expo March 7-9, The Summit, Dimondale, MI

[7-9] Farm Women’s Symposium Holiday Inn West Kalamazoo, MI [14-15] WI Ag Women’s Summit Madison Marriott West Madison, WI [15]

rop Insurance Spring C Crop Sales Close Day

[19]

GreenStone’s Patronage Day

[25]

National Ag Day

CEO COMMENTS

" I know I have said this before, but this is much more of a people business than we often like to realize." It is this people centric culture that differentiates GreenStone from our competitors and to a large extent has allowed us to be as successful as we have. Our Customer Bill of Rights says this best: Our customers have the right to receive: 1. Personalized Service 2. Immediate response to all requests 3. Honest, fair, and impartial treatment 4. Confidential treatment of all information 5. Accurate information and advice While we are human and may fail at times in delivering on these rights, it is you, our members, customers, and neighbors whose best interests we have at heart day in and day out, and drives us “to promote the business success of our customers and the rural community by being the best at providing credit and financial services.”

GreenStone Unveils Mobile Website GreenStone members who spend time on the go will now have a more convenient way to keep up with the latest happenings at your cooperative.

I hope you enjoy this issue of Partners and, as always, I want to thank you for your business. It is a privilege and honor for all of us at your association to serve you. Best wishes for an exceptional 2014!

GreenStone recently launched a mobile-friendly version of its website, www.greenstonefcs.com, which can be accessed from any smartphone with Internet connectivity. “We designed the mobile version of the GreenStone website with a focus on improving the user’s experience,” said Melissa Rogers, GreenStone’s vice president of marketing and public relations. “The mobile site is easy to navigate and provides useful information that members can access when it is most convenient for them.” The new mobile website includes the latest news from the association and information about the products and services offered to agricultural producers as well as country living customers. The site features a GPS-enabled branch locator and easy call and email functionality to make contacting a local GreenStone branch as simple as clicking a button. Additionally, members will find an easy-to-use loan calculator and a request information form.

Dave Armstrong

To access the mobile version of GreenStone’s website, visit www.greenstonefcs.com from an internet enabled smartphone.

Winter 2014

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WINTER NOTES

NEWS UPDATE WINTER 2014 GreenStone Names Birchmeier Regional Vice President of Sales and Customer Relations Cindy Birchmeier has been named regional vice president of sales and customer relations for GreenStone, and will oversee five of the cooperative’s branch offices in central Michigan. Birchmeier was promoted following the recent retirement of longtime GreenStone employee John Pohl who was with the organization for more than 30 years. In her new position, Birchmeier will serve as the leader of the financial services officers, crop insurance agents and financial services staff in the Alma, Corunna, Lakeview, Saginaw and St. Johns offices. She will be responsible for the guidance and development of this sales team.

“During her career, Cindy has shown a true passion for the agriculture industry making her an ideal candidate for this position,” said Randy Stec, senior vice president of sales and customer relations for GreenStone. “Her experience in various roles at GreenStone will help her lead an exceptional team of sales professionals and ensure a seamless transition for our customers.” Birchmeier began her career in the Farm Credit System at AgStar Financial Services before joining GreenStone in 2001. She has held a variety of roles within the system, starting as a credit analyst before being promoted to financial services officer and then vice president of commercial lending.

Annual Report Notice

Candid Comments...

This is an official notice that the 2013 GreenStone Farm Credit Services annual report will be available for viewing online at www.greenstonefcs.com by Friday, March 7, 2014. In addition, the Annual Report will be mailed to all stockholders within 90 days of year-end.

GreenStone FCS,

" I attended the state FFA convention this past year with my boys. I was blessed to see that your business was such a large supporter of FFA. As a parent, I value doing business with a business that invests in the next generation.”

"Thank you so much for your generous support of the 2014 Michigan 4-H Beef, Sheep and Swine, and Veterinary Science Teen and Adult Leaders workshops. … GreenStone’s continued support of youth and livestock programs is greatly appreciated.”

— Angie King Burr Oak, MI

— Julie Thelen MSU Extension Educator in 4-H Livestock and Veterinary Science

GreenStone FCS, " I want to say ‘thank you’ for always going the extra mile to keep your clients like me as part of your family. … Kim Cool and every employee at GreenStone is amazing!” — R.D. Holmes Tustin, MI

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Financial services officer, Kaylee Erickson, from the Hillsdale location recently received accolades from a customer, quoting her as "very helpful and prompt, providing excellent service and an enjoyable experience!”

COMMUNICATING

COMMUNICATING BY ENGAGING

Here are some great facts...

Members of GreenStone’s Marketing and Public Relations staff recently attended Engage communication training through the Center for Food Integrity. The hands-on program provided a plethora of information on generating effective dialogue around agriculture topics. Many times misunderstandings occur causing breakdowns in communication between producers and the public. Below are six steps to ensuring engaging communication that can be beneficial in spreading the positive story of agriculture, whether it is on the phone with media or waiting to check out at the grocery store. SIX STEPS TO ENGAGING 1. Be Principle–Driven As a producer, it is important to know what is important to you and why it is important. 2. Listen– Do not Judge Listening is a tough skill for many to master. It is important to go into any situation with a consumer or media member with an open mind and actively listen to what they have to say. By actively listening you will be able to identify shared values, show you genuinely care for what they are saying and build trust.

I’d like to know more

3. Ask Questions and Invite Dialogue By asking questions and encouraging conversation you will be able to learn more about what is important to the individual you are communicating with and understand their perspective on a particular topic. 4. Identify Common Values Listening for shared values will help you find common ground and provide a way for you to connect on a deeper level with the person you are communicating with.

Consumers and media are becoming increasingly interested in agriculture and learning the details behind where their food comes from and how it was raised. This interest creates a unique situation for agricultural producers. The complex nature of production agriculture can make it difficult to effectively communicate about a consumer’s food source. Furthermore, these conversations can also easily become emotionally charged, making it difficult to share information between farmers and the public.

5. Control Your Emotions This can be difficult, but is crucial to effective engagement. Even though a disagreement may be present, it is acceptable to agree to disagree and walk away. 6. Define the Outcome What is the goal of your communication and what is the next step? Is continuing the conversation at another time going to be productive, or have you accomplished everything you intended to with this meeting?

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WINTER NOTES

Women in Agriculture There are several upcoming events tailored to women who work in agriculture. Take note of some of the events and dates below, we hope to see you there! Ladies' Day Out Feb. 13, 2014 at the Radisson Hotel and Conference Center in Green Bay, Wisconsin Laughs and chocolate are on this year’s agenda. It will feature speaker Mikki Williams (www.mikkiwilliams. com). Mikki will entertain the crowd while speaking about her mantra—“Be Outrageous, It’s The Only Place That Isn’t Crowded!” GreenStone’s Wisconsin customers recently received an invitation in the mail with necessary details to RVSP for the event.

Farm Women’s Symposium March 12-14, 2014 at the Holiday Inn West in Kalamazoo, Michigan The purpose of the Farm Women’s Symposium is to strengthen agriculture by addressing the ever-changing needs of farm families. It will provide opportunities for leadership and professional development; enhance communication and management skills; build effective family and family teams; and develop a network of supportive friendships. This year’s event will feature Jane

1. Keep your anti-virus software updated: Updated anti-virus software will aid in the prevention, detection and removal of malware threats, which are a common cause of issues.

3. Lost Internet connection: Turn off your router, cable / DSL modem and PC for 30 seconds. First, turn on the cable / DSL modem, then turn on the router and lastly, turn on the PC. Many laptops have a Wi-Fi button so make sure the Wi-Fi is enabled.

2. Laptop issues: A common remedy for laptop issues is to unplug it from the charger and remove the battery for 30 seconds. Then, replace the battery, plug the laptop back in to the charger and reboot.

4. If you have a tech problem that you are unsure of how to solve: Try Googling it. Many times, others have had the same type of issue you are experiencing and have posted the solution online. This could save you a trip to the repair shop.

PARTNERS Winter 2014

Annie’s Project Annie's Project is an educational program dedicated to strengthening women's roles in the modern farm enterprise. The program’s mission is to empower farm women to be better business partners through networks and by managing and organizing critical information. Find a date and location near you by visiting: www.extension.iastate.edu/annie. Wisconsin Women’s Ag Summit March 14-15, 2014 at the Madison Marriott West in Madison, Wisconsin

TECH TIP: Simple tips and tricks that may solve your tech problems.

Aldrich and Tracy A. Weber, Ph.D. For more information visit: www. farmwomenssymposium.com or ask at your local GreenStone branch.

Women from the Wisconsin agriculture community may attend the fourth annual Wisconsin Ag Women’s Summit, March 14-15, 2014 at the Madison Marriott West in Madison, Wisconsin. Early registration is open now until Feb. 14, 2014, for $115. After the Feb. 14 deadline, registration will be $140. For more information, visit: http://wfbf.com/programs-event/ womens-program/wisconsin-agwomens-summit/.

GREENSTONE'S STORY

GreenStone

Patronage As we turn the calendar forward to 2014, another exceptionally successful year is in the record books for GreenStone. The cooperative finished the year with record earnings, and that means a record patronage payout for members on Patronage Day!

2 1 0 2

0 1 0 2

2009

Patronage Day at GreenStone is just one example of how the member-owned cooperative is different from other lenders. Patronage payments are appreciated by members, and allow them to re-invest the money into their business, pay down a loan, or make a difference in their local community by supporting a school, church or charitable initiative.

2013

Each year since 2005, GreenStone’s board of directors have declared a patronage payment for customers with qualified products. With a record payout of $29 million for 2013, GreenStone’s total amount of patronage payments to customers will be more than $163 million since the inception of the program.

2006

2007

“We are very fortunate to have an outstanding group of hard-working members throughout our territory,” said GreenStone President and CEO, Dave Armstrong. “It is because of their hard work that we have experienced record breaking success over recent years, and 2013 was no different.”

2005

The GreenStone board of directors recently approved a patronage payment of approximately 22 percent of the cooperative’s net earnings, meaning $29 million will be paid to qualified members on March 19.

2008

GreenStone invites customers to visit with staff at their local branch and to help celebrate Patronage Day on March 19. Checks will be made available for pick up during normal business hours; all checks not picked up by close of business will be mailed the following day.

20 11

The cash patronage paid to each customer will be based on the proportion of net-interest income earned during 2013 on his or her loan to the total patronage based net-interest income earned by the association.

Winter 2014

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AG TOURS

MICHIGANDER FOR A DAY:

MY ONGOING AG-UCATIONAL JOURNEY

By: Leigh Pichetti, Senior Vice President of Communications, FCC Services Four years ago I began working for Farm Credit, coordinating a national communications and giving program for our cooperative network. The best part of my job is meeting Farm Credit borrower-owners and visiting their farms, ranches and agribusinesses around the nation. I recently met with the board, leadership and several customers of GreenStone Farm Credit Services. I talked about my job including working with the media, creating lasting partnerships with farm and commodity organizations, and

PARTNERS Winter 2014

supporting non-profit organizations that in turn support the future of agriculture. I also shared plans for Farm Creditâ&#x20AC;&#x2122;s upcoming centennial and the vision for how this milestone can help position the system to fulfill its mission for another hundred years.

My colleagues at GreenStone then treated me to tours of three very different customer operations. The first stop in Conklin was to Ridgeview Orchards; Dietrich Orchards, the packing, storing and shipping portion of this apple operation; and River Ridge Produce, the marketing facility. Al Dietrich explained how his family has grown their business to 800 acres, producing 500,000 bushels of apples annually. Apples are the most valuable fruit crop in the state of Michigan,

AG TOURS

contributing up to $900 million annually to the state economy. Country Dairy was the second stop on our tour and has been processing and bottling milk since 1983. The current owner-managers, Paul Arkema and Robert Eekhoff, have expanded the dairy to add a visitor center featuring a retail store, ‘Moo School’ educational center, gift shop and restaurant, making Country Dairy a west Michigan tourist destination. The herd of 1,400 registered Holsteins produces milk made on site into delicious cheeses, butter and ice cream. The day ended at Masterpiece Flower Company and Henry Mast Greenhouses. To control the quality of the wholesale flowers, bedding plants and blooming pots that go to market, President Tim Stiles explained how Masterpiece Flower Company was created to manage the distribution of millions of plants around the United States. Floriculture is a growing industry in Michigan, ranking third in the nation in floriculture production output. Advances in greenhouse technologies, investments in smart supply-chain management and the evolution of scan-based trading have all helped Masterpiece Flower Company succeed in an increasingly competitive marketplace. Western Michigan’s diverse agricultural economy is alive and well and it was a great treat to spend time learning more with borrower-owners of GreenStone Farm Credit Services. A special thanks to all Michiganders for your many contributions to U.S. agriculture!

Above: Fresh homey crisp apples arrive from orchards and are moved to inspection before being processed and shipped. The apples are floated out of the bins onto the line to avoid bruising the fruit. Opposite Page: Tim Stiles (right) Masterpiece Flower Company hosts Leigh Pichetti (center) and GreenStone's Ian McGonigal. Right: The Country Dairy features a heard of 1,400 registered holsteins that are milked three times a day.

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YBSF FEATURE

Embracing Family Heritage By: Jennifer Vincent Kiel

She

jokingly calls herself stubborn and hard-headed, but it’s really more like determined. When Brooke Totzke was growing up on her family’s fourth generation farm in Baroda, Michigan she was told it was a “boys only” operation as it had been for three generations prior, although she helped out often with harvest and driving truck.

PARTNERS Winter 2014

YBSF FEATURE

‟

At that time, grandma did the books at her kitchen table and mom did payroll at her house; there was no office, so I worked outside. If I wanted a job here, I had to pull my own weight.

“I’m one of those persons—the more they told me there wasn’t a place for me, the more I wanted it,” says Brooke, who graduated in 2000 from Michigan State University with an agribusiness management degree.

She is now the full-time office manager at her family’s farm, Heritage Family Farms LLC, which includes 4,200 acres of corn, soybeans, wheat, rhubarb and grapes. The Totzke family is the largest Michigan grower of Concord and Niagara grapes for National Grape Cooperative, which supplies Welch's. It was not always so apparent that Brooke wanted to be on the farm. After graduation she took a position with Deere and Company out of Columbus, Ohio, as a territory aftermarket manager working with dealers in parts and service. That lasted a little more than a year. “Corporate agribusiness was not my desire,” she says. Despite a healthy income, “I was ready to get back to my hometown and do something in agribusiness here. Really, I wanted to be on the farm, but it was structured for boys only.” Brooke came home in 2001 and worked on the farm when needed driving truck and running the grain cart with the combine. “At that time, grandma did the books at her kitchen table and mom did payroll at her house; there was no office, so I worked outside. If I wanted a job here, I had to pull my own weight,” Brooke says. Her return to the farm may have been part of a greater plan, as her mom was diagnosed with breast cancer. “Looking back at the time I quit Deere and moved home, it was ideal because I had two more years with my mom.” Changes were coming for the farm. Brooke’s grandfather, Gerald “Bud” Totzke, who took over the original 60-acre farm from his parents, August and Emma Totzke, died in 2003. Just five months later, Brooke’s mom died.

“We needed a centralized place; that’s when we built the office,” she explains. “My grandmother wanted to retire, and I like finance and accounting—it’s something I’m really drawn to.” Brooke still helped outside throughout the seasons, but as the farm evolved, the office position became full time. “On the rare occasion, when they are really desperate, I put on my work books and go out to the fields,” she says sporting a smirk. Farm Dynamics Bud Totzke’s sons, Nick and Ned (who is Brooke’s father), established Totzke Farms in the early 1980s. From 1992 to 2012, they grew the farm from 2,200 acres to 10,000. “My father is more conservative and Nick is more aggressive,” Brooke explains. With different ambitions and Nick more focused on specialty crops, the partnership was dissolved a year ago. Nick Totzke Farms LLP now farms tomatoes, green beans and seed corn in Cass County, while Ned and Brooke’s brothers Brian and Brett, farm 2,300 acres of corn, 1,500 acres of soybeans and 700 acres of grapes, 250 acres of wheat and an acre of rhubarb they sell fresh, locally. The farm, now Heritage Family Farms LLC, spans a 50-mile radius in Berrien and VanBuren counties. Ned is currently the sole owner, but the family is very focused on succession planning. “Beginning in 2014, my brothers and I will gain ownership in the business,” Brooke says. “Not only are we focused on transitioning the farm from dad, but also planning for our kids,” says Brooke who has a three-year-old daughter, Ella. Brian and his wife Shaya have two sons, Luke, 3, and Cole, 1, and Brett and his wife, Kris, have two daughters, Emma, 10, and Ava, 6. “We are thinking about ways our kids can be involved in the business,” Brooke says. “We want to be inclusive, but not force anyone to do anything they don’t want to do.” Another business, Totzke Farms LLC, was formed in 2009 by Brett, Brian, Brooke and their cousin, Scott, farming 160 acres of grapes and 800 acres of corn and soybeans. “This is mostly an investment business,” Brooke says. The family, plus 30-year employee Bruce Whitehead, has weekly meetings to plan activities and discuss purchases and other business. “It’s something we started when we formed Heritage,” Brooke says. “We are a family farm, but operate and function like a corporation.” The farm has 22 full-time employees and several part timers during peak seasons. Grapes require a lot of hand labor, and the farm has mostly a Hispanic work force. “But, it’s not traditional migrant labor, our guys are full time. This is their home,” Brooke explains. “Most of them have

Winter 2014

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YBSF FEATURE

been here at least 10 years, some 20 years. We take that as a reflection on how our business is organized and functioning and how they are treated.” At Christmas time, the Totzke family hosts a thank you party for all its employees and their families. Brooke describes their corporate philosophy as having, “personal relationships with structure – they know what we expect out of them and we reward good work.” Calculated Growth Heritage Family Farms is ready to grow, but with caution. “We are very financially business oriented,” Brooke says. “We don’t let emotions drive our

decisions to grow the corporation. Brian is definitely the most aggressive one of all of us. Dad, Brett and I are a bit more conservative.” The farm added another 115 acres this fall. GreenStone, with the exception of some special equipment dealer financing, has been the farm’s sole source of lending since the early 1980s with operating, mortgage and equipment financing. “It started with Karl Kincade, (GreenStone financial services officer),” Brooke recalls. “He nurtured a relationship with my grandma and grandpa at the kitchen table. He was very family oriented and would stop in, visit and have casual conservation.”

STRAIGHT TALK

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

Brooke: “ A teacher, an artist, a truck driver for Steelcase—I liked their trucks.”

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

Brooke: “ When I went to work for agribusiness; I gained an appreciation for farming.”

Q: Who do you look up to; who is your mentor? Brooke: “ I go to my mom’s sister, Aunt Marion, for both

farm business and family stuff. She has 30+ years of experience in business.”

Q: What is the biggest challenge for young, beginning, or small farmers today?

Brooke: “ Having the economic base and transitioning the farm to a next generation.”

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

Brooke: “ Listen and learn. God gave you two ears and one mouth – listen twice as much.”

PARTNERS Winter 2014

After Kincade's retirement a couple of years ago, Dennis Nykamp, vice president for commercial lending out of Schoolcraft, took over. He worked with the family through the transition. GreenStone has been a capital partner for many decades and an integral part of the farm’s growth, Brooke notes. Dennis says, Brooke’s grandfather, Bud, had very solid management skills and was well respected and known in the community. “They have been a good customer, and we’ve helped with a lot of expansion through Ned. We’ve provided financial advice and guidance when asked, and we’re pleased to be partners with them.” With the addition of a commercial lender at GreenStone’s Berrien Springs office, starting the first of the year Heritage Farms will work with Tyson Lemon. “We want to be local and prefer that relationship,” Brooke says. GreenStone helped the Totzkes in 2008 with updating their grain drying system. “It was a big hiccup in harvest,” Brooke says. “We had big equipment, people and trucks, but an out-dated facility.” The farm installed a grain pit and leg to replace its auger system and increased storage capacity from 275,000 to 450,000 bushels. “When we buy a farm or purchase equipment, GreenStone is our go-to lender,” she adds. Calm Before the Storm Like most farms, Heritage Family Farms is bustling with activity in the spring and early summer, but by August, there is a block of free time, which just happens to coincide with the Berrien County Youth Fair. The family is heavily involved volunteering and Brooke serves on the board. “We’re through planting and wheat harvest. It’s our time to take a break—take some family time,” Brooke says.

YBSF FEATURE

Left: The Totzke family is the largest grape grower in the state and Brooke Totzke handles all the office duties and occasionally some field work for Heritage Farms. Brooke is pictured with (from left) her brother Brett, father Ned and brother Brian.

Where are they now... Hodgman Blueberry Plantation– Location: Grand Junction, MI Original Article: Summer 2006

Also, on Labor Day weekend, the family vacationed in Mackinaw City and participated in the bridge walk, as well as a Mackinac Island outing. It is welcomed down time they savor before the restlessness of grape harvest begins, which entails six weeks of constant activity, 24 hours a day, seven days a week. Two crews of guys truck scheduled deliveries to Welch’s around the clock, and in addition to their own grapes, they custom harvest another 700 acres of grapes. This year was one like no other. Growers throughout the state blew it out of the record books with tonnage. The Totzke’s averaged 16 tons of Niagaras to the acre, which is monumental. Normal is eight tons and their best ever was around 12 tons an acre. It was a welcomed outcome after last year’s freeze resulted in an average of two tons of Concord and three tons of Niagara per acre. “We hired three other harvesters to come in, and we were trucking 26 loads a day,” Brooke says. “We physically could not cover the ground fast enough.” Grape harvest ended Oct. 26 with a total of 610 loads in six weeks using every semi and person to harvest grapes. And, yes, Brooke did put on her boots. Most of her time is spent on the computer, pushing numbers and coordinating schedules and tasks, but she is still a farm girl with a CDL license.

How has your business changed since 2006? Food safety has become a real focus in our industry and we are doing more stringent audits now. We are doing the Global Food Safety Initiative audit now and it is really a world-class audit. The audit requires a tremendous amount of documentation and allows us to ship product anywhere in the world. The other thing that has changed our business quite a bit is the use of a softsorter that allows us to remove soft berries from our product. Customer demand has driven the use of that equipment. We have also built more housing to accommodate migrant workers and are building more now. Any new purchases or improvements? We have added roughly 40 acres and are now using landscape fabric on our berries. The use of the fabric helps conserve moisture better and is more forgiving. It also keeps weeds down and helps us bring blueberries into production quicker. A normal crop is production-ready in seven years but now we can harvest berries in 4-5 years. What is next for your operation? We are getting ready for the next generation. I have children that are 11, four, three and one. We are working to build the farm up so they have a place to grow into. We want to expand our acreage to help support them in the future. You were very young when you began running your family’s blueberry operation. What advice do you have for other young farmers out there? Take chances, don’t sit back and wait for things to be handed to you. Be proactive in making your own way in this industry. Get out there and make it happen.

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DIRECTORS' PERSPECTIVE

D I R E C T O R S '

P E R S P E C T I V E

UKRAINE STUDY TOUR In September 2013, a group of 27 traveled to Ukraine on an agricultural study mission co-sponsored by GreenStone and Michigan Farm Bureau. The tour took participants through Ukraine to experience its potential as a major competitor in the global marketplace as it modernizes and transitions both the Ukrainian agriculture industry and underlying culture. Four of your GreenStone directors and four GreenStone staff were among the farmers and agribusiness representatives on the trip. These eight have come together to share with you highlights of several tour stops and unveil key opportunities and challenges of the young country as it transitions and embraces its 22 yearsâ&#x20AC;&#x201D;one generationâ&#x20AC;&#x201D;of independence.

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DIRECTORS' PERSPECTIVE

Capital and Structure John Jones, Senior Vice President of Commercial Lending Ukraine, after becoming an independent state when the Soviet Union dissolved in 1991, is now a republic under a semi-presidential system with separate legislative, executive, and judicial branches. Prior to 1991, agricultural land was controlled by the state and farmed collectively. After independence, ownership reverted to the rural residents who worked those collective farms. However, the national land law did not—and still does not - allow the outright sale or purchase of agricultural land. However, farm land can be leased to other parties; currently about 30 percent of the nation’s agricultural land bank is leased to large farming operations. The balance is farmed by small subsistence or “household” farmers. Ukraine does not have its own version of the Farm Credit System to support the growth of both small and larger farms. Many of the large farm operations are owned in part by foreign investors. Availability of capital for a smaller farmer is virtually nonexistent and comes with an interest rate as high as 27 percent. Some of the large operations have access to credit from financial institutions located in Poland, Germany and the United Kingdom. Elita Ltd Tour Bruce Lewis, Director, Hillsdale County, MI

Along with animals, Elita farms 1,300 hectares (more than 3,200 acres) of land for their feed needs including wheat, barley, sugar beets, buckwheat and soybeans. They have a tremendous natural asset in their soil, which includes a top soil depth of 1-3 meters, with generally very large flat, stone-less fields. This Ukraine tour helped us American farmers see the value in what we have and they lack: availability of credit at a competitive rate, the consistent availability of money, and a Farm Credit System to secure financing for farmers. Additionally, as there are more than 200 political parties in Ukraine, the ability to manage in the political landscape in the U.S. is far less cumbersome, especially with organizations such as Farm Bureau. How do you have a voice in the political process without a strong lobbying group?

Elita, owned by a German family, has a 750 cow dairy with plans for expansion to 2,200 cows. This would make them a commercial farm versus a household farm. The facilities mirror our dairies in the U.S., with the stark contrast being that it is surrounded by a cement wall with a metal gate and a guard to protect the farm from theft, which they said included the household farmers attempting to take feed. Management of the cows also appeared to be similar to the U.S. with artificial insemination, total mixed ration, breeding programs and interest in robotic milkers. Although labor is cheap, it is also often a struggle to get workers due to the long hours. Nationally, there are around 2.5 million cows; commercial dairies include approximately 500,000 of those cows, versus the household herd of one. Villagers often run their cows together, and certainly had different management styles, quality and production levels. In Elita’s hog operation, they manage between 200-300 sows, which is a small portion of the national hog herd of 8 million. The hog facility is totally enclosed, well kept, gated and guarded. We, the tour group, were not allowed inside the facility and could not even hear a pig.

Ukraine is situated in Europe, bordered by Poland and Belarus to the north, Russia on the northeast, the Black Sea Moldova, and Romania to the south, and Hungary and Slovakia to the west. It’s capital, Kiev, is in the north central part of the country.

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DIRECTORS' PERSPECTIVE

Infrastructure and Equipment Erin DuBois, Regional Vice President of Sales and Customer Relations

majority of the ‟ The nation's agricultural

Similar to the majority of the discussions surrounding the Ukraine, infrastructure is also in a state of transition. The primary roadways are paved (165,844 km) with only 15 km (about 9 miles) of expressway all within the Kiev area (Ukraine’s capital). While we were traveling via bus transportation on the 2,500 km (1,554 miles) of the tour, the roads appeared to be in need of resurfacing and, in some cases, major improvements. (The roads were actually in worse condition than many Michigan roads.) A few larger farmers in Ukraine have their own fleet of trucks for transporting commodities off the farm; the majority hire independent companies. The railway network is owned by the government and is also considered a monopoly. It appears to be inadequate for Ukraine's potential grain output and not as readily available for access to local farmers. To the seaport of Odessa, the railroad system transports raw commodities for export to other countries via cargo vessels. We toured the seaport of Odessa and a comment by our tour guide, Mila Yashchuk, indicated there have been many improvements and growth at the port within the past 3-6 months. The agricultural facility improvements at the seaport are not from the government; rather grain companies, like Cargill make the necessary investments. The majority of the nation's agricultural production is derived from the millions of private households located in rural Ukraine where they utilize hand or manual tools to meet the farming needs of their 3-5 hectares of land. This is a direct contrast to some of the larger farm equipment we saw like combines and tractors harvesting soybeans and planting wheat in the vast grain fields. We also visited a John Deere service center where we learned one key issue with the equipment is that it can take anywhere from two weeks to multiple months to receive parts. Another tour stop was at Ropa, a German based company that provides sugar beet harvest equipment and other smaller farm equipment. As some Michigan farmers can relate to, the sugar beet equipment is massive, top of the line, and expensive. Agricor Holdings Tour Gil Ritter, Director, Saginaw County, MI Agricore Holdings is a group of Ukrainian and foreign investors. They have leased a 100,000 acre area in northern Ukraine to produce crops and livestock. They told us they had 3,300 hogs, 6,200 beef cattle, and 2,000 dairy cows. The 100,000 acres were divided into row crops and grain; the land not suitable for those crops was used for pasture. One thousand employees work on this farm, giving me the feeling that life is similar to the days of the collective farms. The tour only covered a small portion of the farm where we saw a very crude beef cattle pasture. This vast pasture was rotated with the use of a temporary single wire fence. Fences are seen around houses and farm yards, not around fields. Fields go on and on it seems. At this location, two or three people lived 24-7 with the 50-60 cattle from May to November. They haul water to the cattle and guard them while residing in an old mobile military trailer about 8 by 16 feet in size. The cattle are then stabled and fed. With only 12-17 inches of rain fall in various regions, water is very scarce.

PARTNERS Winter 2014

production is derived from the millions of private households located in rural Ukraine where they utilize hand or manual tools to meet the farming needs of their 3-5 hectares of land.

Wells are expensive and rare because the water is 600 feet down. The rich soils are limited by the water supply. The abundant labor supply is limited by lack of skills and motivation. I expected to see vast agricultural land with a lot of undeveloped potential, and I did. I also came home with a heightened appreciation of our infrastructure, government, resources, social order, and life in general. Agriculture’s Position Christine Crumbaugh, Director, Gratiot County, MI Ukraine is often referred to as Europe’s Bread Basket, because of its abundant, fertile black soil. There are 103 million acres of quality land with 80 million acres classified as arable. Approximately 25 percent of the world's black soils lie within the borders of Ukraine and the country has a moderate climate that is favorable to agricultural production. Ukraine currently produces more agricultural products for export than they consume domestically, and their export potential is supported by geographic advantages and an expanding shipping port on the Black Sea. It is the world leader in exports of sunflower oil and barley, and is also a major supplier of the world’s corn as they are currently ranked fifth in production. Other top

commodities are rapeseed, wheat, and soybeans. Yields are currently behind its counterparts in the world with corn yields at 95 bushels per acre and 24 bushels per acre for soybeans. However, as farmers continue to improve production practices and implement technology, the yields are rapidly increasing and Ukraineâ&#x20AC;&#x2122;s position in the world marketplace is becoming more dominant. This great potential for agricultural production is laden with many challenges. The first being that investment in agriculture is difficult due to the lack of legal clarity on who owns the land. The government continues to work on legislation to lift the land purchase moratorium with limits on who and how much land will be able to be purchased. Another challenge for Ukrainian agriculture is credit issues within the country because of the absence of collateral and high interest rates. There are also issues with a lack of intellectual property rights, which hinders technical information exchange, innovation, and development. One of the biggest challenges is the political risk; not only does the government lack stability, but it often imposes production and selling restrictions on agricultural markets.

Kiev-Atlantic Ukraine Paul Anderson, Sr. Vice President, Chief Credit Officer Kiev-Atlantic Ukraine is a vertically integrated agribusiness model, combining farm grain production with a 1990s supply co-op in the U.S. Founded in 1992, the company employs more than 500 individuals in five lines of business; (1) production, growing 10,000 hectares of grain for their own use, (2) grain storage for local farmers that sell additional grain to the feed mill, (3) feed mill that custom mixes grain rations for pigs, broilers, layers and ducks raised by small farm operations that would equate with our hobby farmer in the Winter 2014

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DIRECTORS' PERSPECTIVE

U.S., (4) retail distribution of the feed grain products sold by the bag through an extensive feed store network throughout the central portion of Ukraine, and (5) further processing of soybeans crushing the oil from the soybean through an extraction process. Efficient use of resources remains a work in progress. The retail distribution network is very labor intensive, employing the majority of the workforce in very small specialized stores. The feed mill is an interesting mix of automated grain ration mixing via computer and a facility that has a heavy reliance on labor for the bagging and warehousing of the product. In our visit with management, they made reference to plans for additional capital investment for automating the bagging process as â&#x20AC;&#x153;labor is unreliableâ&#x20AC;? in Ukraine. The soybean crushing equipment is only utilized a portion of the year. In the U.S., a similar investment would be running 24 hours per day. The vertical integration of this business model appears to be working well for ownership. Like many things observed in Ukraine, you can see where they have been successful as early adaptors and what the potential is for increasing efficiency and profitability with additional investment in the company by ownership.

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Culture and Economy Laura Braun, Director, Clinton County, MI Riding the bus into Kiev from the airport on our first day in Ukraine, our tour guide started out by telling us that Ukraine is unfortunately a developing country. Heading into what I assumed a modern city, I found this statement hard to believe. However, it did not take long to see that her statement was indeed correct. Traveling the countryside, we saw firsthand the progress made from the Soviet mind-set to an independent, capitalistic, and democratic way of life. Every small village or town we drove through included a monument of some sort to Lenin, or the Soviet Union, with wreaths and flowers placed around them as if in homage to a way of life that no longer exists but is fervently missed. In spite of this seeming longing by some for the days when life simply meant being told by someone else what to do, there is a current, especially among those younger than 50 years old, of drive and ambition, entrepreneurialism, and will to succeed.

DIRECTORS' PERSPECTIVE

Ukraine has a population of 42 million people. The average family has one child and subsists on about $440 U.S. per month; 40 percent of that is spent on food. Many families live in rental housing with extended family and multiple generations per household in order to make ends meet. Citizens have access to government healthcare, and the government also funds education. No safety net programs such as welfare or food stamps exist. The unemployment rate in Ukraine is about 35 percent. Most jobs are industrial, high tech, or government. Approximately 17 percent of the industrial base is agricultural; however, 70 percent of that is what is referred to as “household” farms. Just as in the United States, however, it is difficult to get younger people to do certain work such as picking apples. Labor is harder to come by for these kinds of operations. Chumak Co. Curt Flammini, Vice President of Capital Markets Having banked food processors here in the U.S. for much of my lending career, I found the Chumak Company’s model both interesting and surprisingly modern. Incidentally, Chumak is spelled ЧУМAК in Ukrainian. The company was started by two enterprising Swedes in, or about 2002 (I believe), who saw an opportunity to manufacture and market value-added tomato products in consumer-friendly packaging to busy city/suburban dwellers within and outside of Ukraine. Today, the company employs 300 people and offers an impressive array of food products and food ingredients including tomato sauce, paste, soup and juice, ketchup, pasta sauce, mayonnaise, sunflower oil, dry pasta, and canned vegetables (corn, green beans, etc.) that are sold under the ЧУМAК brand. As a general statement, the complex was really quite impressive in all material respects and compares very favorably to its U.S. counterparts. The processing plant incorporated leading edge stainless steel processing and packaging technology with a high level of automation (reflecting tight labor availability). The company also observes food safety protocols that we use in the U.S. The plant runs four shifts (three production and one sanitation) per day and operates year-round. As an aside, while U.S. plants also run year-round, we do not see four shift production schedules here given our eight hour work day. Far Left: John Johns and Bruce Lewis study the feed ration at another tour stop, the Ukrainian Milk Company. Management of these larger scale dairy operations is similar to the American dairy farm—employing genetic and nutrient management to improve production and animal health.

Tomatoes arrive continuously during harvest directly from growers’ fields. They are processed into concentrate, which is used to make tomato products throughout the year as needed. During our tour, tomato paste was being manufactured and packaged. The preferred packaging medium is plastic film made into stand-up pouches (as opposed to cans in the U.S.) followed by glass and jars. The filling and packaging lines are also very modern and are consistent with packaging systems that we see in the U.S. Product is subject to a multi-day food safety observation period before it can be shipped to customers. Palletized products are bar coded for origination and inventory control just as we do here. All things considered, we were very much impressed with the company.

Although there is transition and contrast within Ukraine, the noticeable areas of improvements already made and being planned for show the sense of hope and optimism its citizens, especially those of the younger generation, have about the potential for growth of their country. While some Ukrainians may struggle with their identity as a free country, as each generation passes, they will progress and become stronger, as will their position in the global agricultural market. Never the less, the challenges of farming in America come with a support network and freedom that these tour participants will not be taking for granted.

Left: While many operations employ modern techniques, some still rely on practices from generations ago.

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LEGISLATIVE MATTERS

The Year in Review– Legislature, Law and Regulation GreenStone to address its regulatory requirements. It demonstrates the need for making continual efforts to educate legislative leaders on the impact of proposals and existing laws and regulations. For GreenStone, communication efforts begin with the board of directors through their legislative/public policy committee. The process of communication is carefully managed on a collaborative basis with other agricultural leading groups, including Agriculture Leaders of Michigan (ALM), the leadership of Michigan Farm Bureau, and agricultural commodity groups.

The challenges of managing a federally chartered government sponsored enterprise with the cooperative ownership structure have led to rewards in agriculture and rural communities across America. GreenStone has played a significant role in Michigan and northeast Wisconsin in enabling agriculture enterprises to begin and flourish. It is a proud heritage that was given birth through federal legislation years ago. The challenges require constant engagement and support from across agricultural interests to maintain a certain prosperous course. One of those challenges has been the growth of federal regulation in the consumer product sector. The last year has been busy for GreenStone addressing many regulatory changes as a result of federal legislation enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act in January 2010 (Dodd Frank Act). While many of the provisions of the Dodd Frank Act were not directly applicable to GreenStone, there is an enormous amount of consumer regulations that were promulgated as part of the birth of the Consumer Financial Protection Bureau that have had a direct effect on how GreenStone will service the country living consumer market. The impact of the Dodd Frank Act is broad and has taken significant time and commitment at many levels within 23

PARTNERS Winter 2014

GreenStone has also utilized other primary tools to communicate important messages to support the cooperative mission. The Farm Credit PAC, the MI GreenStone PAC and the Wisconsin Legislative Committee have served as organizational tools. These tools continue to afford the GreenStone membership with an important added voice with minimal cost to amplify the agricultural position in important settings on critical issues. These efforts remain important to balance against the growth of government regulation which can unintentionally impinge upon the mission of our agricultural communities. On a federal level, association directors and senior leadership have met with Sen. Debbie Stabenow (D) and her staff on several occasions to make her aware of the importance of the Farm Credit System throughout the GreenStone territory. The Senator has received our messages in support of agriculture very favorably. Reps. Benishek (R), Camp (R), Upton (R), Walberg (R), Kildee (D), Huizenga (R) and Peters (D) also received visits and messages from GreenStone; and Reps. Walberg and Peters were welcomed by GreenStone leadership at the association’s headquarters. All representatives left with a very positive and impressive view of what our members and the association accomplishes. Through ALM and MI GreenStone PAC, the awareness of GreenStone’s connection to the broader mission of agriculture has been enhanced in the halls of the state Capitol. These efforts contributed to stopping unnecessary regulation with respect to customer notices in difficult situations, avoiding cumbersome MISS Dig processes,

LEGISLATIVE MATTERS

keeping taxation on par with other financial institutions, and adding to the support for eradication of invasive feral swine. GreenStone has become a recognized voice to increase understanding of agricultural economics for the Michigan economy thanks to the relationships built with political leaders and policy makers. The Wisconsin Farm Credit Legislative Committee met in November 2013 as part of the Cooperative Network annual meeting. Representatives from the four Wisconsin Farm Credit associations (GreenStone, Badgerland Financial,

United FCS and AgStar Financial Services) met along with Cooperative Network staff. Many issues and communication strategies were discussed during this meeting including high capacity wells, central agricultural lien system, possible consolidation of Wisconsin Department of Agriculture, Trade & Consumer Protection and Department of Safety & Professional Services, implements (equipment) of husbandry, and other issues impacting Wisconsin agriculture. Plans to make visits on these issues with state representatives in 2014 are underway

Climate Basic Technology Available to You

with collaborative measures of all four associations’ leadership. If we do not continue to speak up, we could look forward to more actions similar to the Dodd Frank Act, and other unnecessary and burdensome regulation. As Winston Churchill stated, “If you have 10,000 regulations, you destroy all respect for law.” Having a strong reliable voice over time will assist all in having a productive financial cooperative, and will increase the value of agriculture for the good of our communities.

Pause for Applause GreenStone senior vice president and chief legal counsel, Pete Lemmer, has been appointed to the Michigan Community Service Commission by Gov. Rick Snyder. In part, Pete was selected for his personal service. He has served as a coach for many youth sports teams in the Lansing area, and has worked to expose area refugee children to agriculture. Earlier this year, Pete’s volunteer efforts were awarded by the Farm Credit Council when he was presented with the prestigious Phelps Martin Award for Community Service. Congratulations, Pete!

Climate Basic combines everything you want to know about your fields and weather in the palm of your hand. GreenStone has partnered with The Climate Corporation to bring you this innovative farming tool. This interface is the most advanced way to get insight into your fields. It maximizes efficiency and effectiveness with real-time weather, soil and crop observations and next generation scouting, logging and reporting tools. Climate Basic leverages an unique technology that combines information about the current weather, the probability of future weather outcomes and your crop’s growth stage and interaction with the soil and environment. It is easy to get started. Contact your GreenStone crop insurance specialist to get signed up for free!

Congratulations to GreenStone customers Richard L. Dobbins of Concord and Harley Sietsema of Allendale on being named 2014 Michigan Master Farmers. GreenStone would like to congratulate winners of Michigan Farm Bureau’s (MFB) Young Farmer Awards. Customer Ben Chaffin of Alma, Michigan received the MFB Young Farmer Achievement award. Emily Ferwerda of Zeeland, Michigan was named the MFB’s 2013 Outstanding Young Farm Employee. Emily works on her family’s operation, Willow Creek Dairy; the family is a GreenStone customer. Additionally, GreenStone financial services officer, Sara Trattles, was presented with the MFB’s Excellence in Agriculture award for her involvement with MFB and agriculture.

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

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GUEST COLUMN

Family in Business Together…

Conflict Happens By: Barb Dartt, DVM, MS

Recently, I observed a family business client—let’s call them the Hatfields—discuss employing an additional family member in their business. In about 25 minutes, they were able to decide: 1) That they would offer the job 2) What the job would consist of, and 3) How much the compensation would be

PARTNERS Winter 2014

GUEST COLUMN

In my experience, that is a challenging set of decisions, and for most, a source of conflict, that got completed in a very short timeframe. Family employment and compensation are particularly challenging because they occur at the intersection of the family and business systems. And the family system and the business system are set up to accomplish very different results. At Odds: Family and Business PURPOSE It could be argued that the family system exists to grow adults that contribute to society. Ideally, the family does this by nurturing and developing children. A family is typically characterized by: • Informal expectations • Unconditional support • Authority based on seniority, and • Long-term commitment that is based on an individual’s identity as part of the family Now, contrast that with the purpose of the business system—to be efficient and generate profit. Typically, a successful business is characterized by: • Formal expectations and policies • Conditional support based on performance • Authority based on contributions and/or position, and • Shorter term commitment based on rewards received for employment As family businesses grow—both in the number of family managers and owners, as well as in business size— conflicts resulting from the competing purposes of these two systems are inevitable. For example, from the family perspective, family employment in the business is about belonging to the family and providing for family members, regardless of their skill set or business needs. From the business perspective, family employment is about adding needed skills at the right time to grow efficiency and profits.

So, if conflict is unavoidable, how did the Hatfields make their decisions so quickly and, at the same time, maintain family harmony? Managing the Inevitable FamilyBusiness Conflict Mom and Dad Hatfield really wanted their third son to join the business – he would be able to move back to Michigan, bringing three grandchildren much closer. The brother and sister already working in the business (and who both were owners, too), were excited about working with their younger brother who had skills the business needed. However, they were concerned about what kind of salary he expected. Also, they were not sure if the accounting role he was going to fill was really a full-time job and did not know if their brother would be willing to do outside, get-your-hands-dirty, jobs for the rest of his work time. Finally, financially they were not quite sure what the impact of adding his salary would be to business profitability. The Hatfields were able to navigate this conflict between the needs of the family and the needs of the business because prior to facing the issue, they had created structure to support and guide their decision making. 1. They created an environment for discussion. Mom and Dad modeled discussion. They were sometimes loud and contentious but they get on the same page and support each other’s positions. They have always had an office for meetings, even when the business was very small. They have regular meetings with pre-set agendas at least quarterly, including up-to-date financials. Decision making always includes every member of the family management team present and participating. 2. They created guidelines for family employment. Striking a balance in family businesses between being too informal and too bureaucratic is

tough. The trick is knowing which guidelines or policies to create before you actually need them. (How family employment decisions will be made is high on the list.) When guidelines are created ahead of need, they become part of the family and business. When guidelines are created during the need, they become about one person, are hard to justify and usually create hurt feelings. During the process of hiring their first child, the Hatfields created family employment guidelines. As the family management group has grown, utilizing the guidelines creates points for discussion and familiarity with what the business stands for. They also shared the guidelines with family not working in the business, establishing clear expectations and outlining a fair decision process. Conflict makes many folks uncomfortable, leading to avoidance of tough topics like hiring a family member. However, conflict is a natural consequence of combining two systems with very different purposes. The structures outlined above are like an insurance policy. It can be hard to devote time and money to putting them in place ahead of time, but when a conflict arises, it can be too late. As this new year begins, I challenge you to set some time aside and create structure to manage the conflicts that lurk within all family businesses.

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 269-3820539 or barb.dartt@growthefamily.biz The opinions stated herein are not necessarily those of GreenStone Farm Credit Services.

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