CEO Comments

CEO Comments:

New year, New Opportunities

A year ago, I was confident when I wrote these comments that by 2022 Covid would have been vanquished, supply chain problems would be a thing of the past, inflation would be under control, and the agricultural economy would be strong. So much for my predictive abilities. One out of four is a bad track record, but at least I got the ag economy one mostly right!

2021

We have all seen the news reports about the latest Covid variant. Covid has truly proven to be a formidable foe and is at the root of many current challenges. Unfortunately, it will likely be with us in some way, shape, or form for years to come. Fortunately, the ag economy fared well despite the head winds it, and most of the general economy, faced through much of 2021. This past year’s net farm income is currently projected to increase by 23.2% over 2020 or 18.7% in inflation adjusted terms. That’s a long way from the 40% plus increase in 2020 over 2019, but not bad considering a nearly 39% drop in “direct government farm payments” in 2021 from 2020. As we talk with our members and begin reviewing their financial statements, the overall results support these national projections. Better yields across our territory for nearly all cash crops including sugar beets, plus stronger commodity prices for both crops and protein (including dairy) resulted in relatively strong earnings for much of our portfolio. As I’ve noted before, some of the specialty crops didn’t fare quite as well due to frost and freeze conditions yet, overall, 2021 was a strong year for most of our members.

In fact, GreenStone’s credit quality, which is a measure of risk in the portfolio, was at nearly all-time highs (high is good!) and further supports the overall financial success of our members. Loan volume classified as “acceptable” (few to no credit weaknesses) improved from 91.5% at the end of 2020 to 94.8% as of November 30, 2021. Accrual Loan delinquencies remained at an exceptionally low level of 0.17% at the end of 2021. Finally, and probably most notable, was our ability to reverse approximately $13 million of loan loss provisions taken in prior periods because of improved credit conditions. This increased net earnings and bolstered our ability to pay another record setting level of patronage to our members.

Of course, as you have come to expect, your success translates into our success and has once again allowed GreenStone to increase its patronage payment to members from $105 million in 2021 to a new record of $115 million for 2022!

As you might have guessed with stronger net farm income, GreenStone’s loan growth was lower in 2021 than 2020 as members used more of their cash to finance everything from working capital needs to machinery and even real estate purchases. Other factors that also had an impact included winding down the PPP loan programs and stabilized credit markets. Still, loan growth of 7% exceeded our business plan target of 5%, yet fell short of the near record high of 12% recorded in 2020.

Other areas of our business that excelled in 2021 included crop insurance coverage (including DRP and LGM) along with increased activity with our tax and accounting services. GreenStone has been a preferred source of sound risk management advice and services for over 50 years and reached just over a 21% market share, which is up 10% over the last five years. This market share represents 2,500 insureds, 7,200 policies, 1.2 million acres, and almost $1 billion in liability for all the insurance products we sell. Not to be outdone, GreenStone’s tax and accounting team prepared approximately 5,800 tax returns in 2021. Our team has also grown, comprised now of approximately 30 full time staff, which balloons to approximately 50 with temporary workers and interns added during the busy tax season. The department has over 500+ years of combined tax preparation and accounting experience, including 6 CPAs and numerous other EAs (Enrolled Agents), serving our farm customers. So, if you have never thought of GreenStone as a premiere crop insurance agency and accounting firm, think again and come check us out! Of course, as you have come to expect, your success translates into our success and has once again allowed GreenStone to increase its patronage payment to members from $105 million in 2021 to a new record of $115 million for 2022! Please turn to page 27 of this issue to read more about these cooperative earnings being returned to our members on March 17! Although it’s taking place on St. Patrick’s Day, let me be clear – it’s not luck, it’s partnership, and partnership pays when you’re a member of our cooperative!!! Our patronage program has been providing unmatched value to our members since 2006, returning to our members a combined $720 million of earnings over the 17 years! What other financial institution does that for its customers?

2022

Shifting gears to 2022, the current net farm income forecast from the Food & Agricultural Policy Research Institute (FAPRI) at the University of Missouri predicts 2022 net farm income to fall to $99 billion from its predicted 2021 level of $116.8 billion. The exact numbers here are not the point, but rather the assumptions of slightly lower receipts (1% or less) AND higher input costs (3.2%) for likely EVERYTHING, along with still lower direct government payments than were received over the last two years. So, what does this mean to you, our members? It means one thing: you can have peace of mind about the stability and dependability of your cooperative! GreenStone’s consistently strong financial performance and outstanding service provides you with the resources that are critical to compete in an increasingly volatile and complex industry. No matter what, GreenStone is here to provide you with a competitive, dependable, and responsible source of credit and financial services to meet your ever-changing needs. And, we’re here to provide that same support and service to the future of agriculture. GreenStone’s newly refreshed and expanded CultivateGrowth program is uniquely designed to support the diversity of today’s young, beginning and small farmers. Outlined on page 23, the multiple aspects of this program provide funding, networking, education and financing to serve their unique needs. Your cooperative is rooted in knowledgeable team members who are here to listen to your unique situation and provide timely and professional support with a smile! In times of rapid change, new market entrants, uncertainty, increasing complexity and risk. Isn’t it nice to know you have the GreenStone team on your side? Thank you for your business! All of us at GreenStone know you have choices for your financial services provider and are humbled and grateful you have chosen us! Best wishes for a safe and productive harvest and thank you for your business! Please feel free to reach out to me any time at if I can ever be of assistance.

Best wishes for a healthy, safe, and productive 2022!

Dave Armstrong

517-318-4105 dave.armstrong@greenstonefcs.com