New Format BIGGER AND BETTER MEMBER NEWS and Events
BUILT ON EFFICIENCY
& DIVERSITY Country Living AT ITS FINEST TAX TIPS AND Crop Insurance Update
WINTER 15 6 YBSF Feature. With the right mix of patience, efficiency and diversity, Ed Stotz is building a business. And his plans to grow have him on track to an even brighter future ahead.
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26 GreenStone Story. Last year’s record performance has delivered a historical patronage payout for members in 2015.
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28 Gone Wild. This Wisconsin couple shares a passion for hunting and country living.
32 Changes to IRAs. Find out how new rules may impact your investments. 34 2014 Farm Bill. Become familiar with new federal crop insurance options for 2015.
Editor’s Note: 4 CEO Comments. President and CEO Dave Armstrong looks back on 2014 and shares his perspective on its success and challenges. 10 Guest Column. Learn how to avoid the pitfalls of poor communication. 12 Guest Column. New executive action on immigration may have an affect on agriculture. Find out if this is a step in the right direction or another failed attempt. 14 Market Outlook. Economist Bob Utterback shares advice on navigating the 2015 marketplace. 20 Legislative Matters. What kind of sausage will be made this year? 21 PAC Update. The team of agricultural and rural community allies is growing. 22 Director’s Perspective. Discover what makes GreenStone’s cooperative structure such a unique model and how new director Hank Choate views his role at Farm Credit.
30 Health and Wellness. Stay fit over the winter months with these healthy pointers. 38 Interest Rate Update. With the improving economy, interest rates are set to rise in 2015. Plan your next move with this helpful information.
9 Where Are They Now 17 Member News 18 Calendar of Events 19 New GreenStone Scholarship Program 19 Tax Interns 23 Board and Committee Structure 24 Pause for Applause 25 Behind the Scene
31 Winter Maintenance 31 Commodity Cuisine... Beef
33 Tax News 33 Tax Calendar
On an average day at the office, I send and receive well over 100 emails. This makes for a very productive 30 seconds when I return to my desk from a meeting and go click, click, click, delete…happily sending a healthy percent of those emails directly to the trash bin without ever opening them—junk mail. At that point, I am left with only those I need to act on and the emails that actually provide the news and resources I want to help me do my job better. My process is no different when I arrive home to a pile of mail, pick, pick, pick, toss... Like the email, the goal is to end with those of need, interest, and value to me (and of course those pesky bills I just can’t ignore). About a year ago I happened to be in one of these meetings I referenced earlier, and the discussion led to a question on how GreenStone can provide our members the most value in regards to the information you need and the resources you want, all without inundating you with piece after piece, publication upon publication. Fast-forward to today, and you hold our solution! This revised Partners publication now brings you the value of four. Those of you who were frequented quarterly with the Country Minute newsletter, the crop insurance news tri-annually, and/or the annual tax and accounting publication, will now open your mailbox to one publication delivered four times each year. Not to worry, all the same information, and much more, is included within the covers, and it is now conveniently broken into four sections. Read them in order, or skip to what is most relevant to you today and come back to the rest while you warm your feet by the fire. If you do not see something you are looking for, be sure to let us know, we are always interested in new ideas, marketing@greenstonefcs.com. Over the next few issues, I will introduce you to a few new elements you might notice within the publication; but for now, I’ll leave you with warm wishes for a year of successful innovation and perseverance! Happy Reading!
36 Crop Insurance News 36 Tech Tip 36 Crop Insurance Calendar 39 CFO Poll
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 Let’s Be Social
Connect with us online for news and updates.
CEO Comments:
New Year, New Possibilities...
This kind of “uneven” crop performance across GreenStone’s territory of Michigan and northeast Wisconsin is actually quite typical, but seems more pronounced in recent years. That is why it is very hard to summarize any given year with just one adjective.
Greetings from East Lansing! I hope you were able to enjoy a safe and healthy holiday season with family and friends, and that corn harvest is finally over! The 2014 crop year is one many in our territory would like to forget. From beginning to end it was an extraordinary struggle for many getting the crop planted and harvested due to cooler and wetter conditions than normal. Yet, as always, many of our members enjoyed yields beyond their expectations. One example of this is last year’s sugar beet crop. The beets were planted much later than at any time in recent memory and endured a challenging wet harvest, yet resulted in some of the best yields ever.
Of course, beside crop yields and quality, profitability by commodity also varied widely. The protein commodities (meat, milk, and eggs) experienced what some are calling their most profitable years EVER, while many corn and soybean producers will generate negative margins due to relatively high costs of production and low commodity prices.
GreenStone is acutely aware of the challenges facing many of our row crop customers and is prepared to work closely with those who have suffered financial losses. I encourage members to be proactive and reach out to their financial services officer as soon as possible. There are a number of things we can do to assist based on the unique circumstances of each operation, but members must also be willing to bear a share of the burden that can come with an unprofitable year. It may include implementing additional risk management plans, pledging additional collateral, seeking outside equity, obtaining guarantors, and/or selling assets
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in order to reduce debt. While we always do our very best to work with financially stressed situations, we must also do what is fair for our 23,000 stockholders at large. Even with the financial stress that will be experienced by some, 2014 will go down as the best in GreenStone history. Organizational performance was at or above all business plan goals except loan growth. Loan growth was impacted by a very profitable protein segment whereby their need for credit was significantly reduced due to record profits and a retraction of borrowing by corn and soybean producers due to reduced or even negative margins in some cases. Historical Year This high level of overall performance can be illustrated by the fact that GreenStone reached the very highest internal organizational performance score of 1000 points on a scale of 0-1000. We reached this perfect score for the first time ever; the first time since the mergers that created GreenStone in 2000 and even for its predecessor organizations. Even though GreenStone has been close a number of times, it has never reached the pinnacle because the assessment includes all facets of the business, including profitability, efficiency, capital levels, the risk profile of the loan portfolio, plus marketplace performance measures like our three year average growth rate and customer satisfaction scores. The index requires high levels of performance in every significant
area of the business AND all at the same time! However, this does not mean that the organization must reach this level of success each and every year to be of value to its members, but it is a level of performance that we strive to always achieve. We know that our success is directly related to the overall success of you, our members, and are humbled to be the financial services provider to some of the best producers in our two state territory. Record Returns As you would expect, this level of performance will also result in another 2014 record for GreenStone…we will return just over $36 million in patronage to you! As always, I invite you to come see us at your local branch on March 18, 2015 to pick up your check, or it will be mailed to you the next day. GreenStone has now completed a full decade of paying cash patronage back to its members, resulting in an impressive $200,000,000 being returned since the program’s inception in 2005. Your board and staff are proud of this record and the value it provides you, our members. No other lending institution in our territory provides this level of return of its profits to their customers. GreenStone’s philosophy with respect to the patronage program has always been to be competitively priced in the market up front, and then provide an added “benefit of membership” by sharing a portion of each year’s profits with those who are most responsible for generating them…our members!
New Year, New Resource Finally, I hope that you enjoy this new edition of Partners. As you saw on the cover, we have rolled four publications (which includes Partners) that were formerly targeted to specific audiences, into one. While we will no longer publish separate issues of the “Country Minute, Crop Insurance, and Tax and Accounting” newsletters, all the information formerly found in those publications will be included in Partners in a more frequent and timely manner. As you read this issue, I hope you will agree Partners is not just thicker, it now provides you more information
to learn, live, grow and connect what is important to you and your business. Best wishes for a successful 2015! Always know that all of us at GreenStone truly value your business and feel privileged that you choose us to be your financial services provider of choice. Feel free to contact me at if I can ever be of assistance. ■
Dave Armstrong
517-318-4105 dave.armstrong@greenstonefcs.com
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o other lending institution N in our territory provides this level of return of its profits to their customers. GreenStone’s philosophy with respect to the patronage program has always been to be competitively priced in the market up front, and then provide an added “benefit of membership” by sharing a portion of each year’s profits with those who are most responsible for generating them…our members!
”
Partners — Winter 2015
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GROW
BUILT ON Efficiency and Diversity By Jennifer Vincent Kiel
A
s each bale of straw and hay comes into the barn, Ed Stotz is calculating in his head how many cents are in each bale. It can vary as weather and equipment failures can slow progress and impact quality, but Ed continues to push for efficiency.
Efficiency and diversity, as well as strong family base and good employees, form the legs of the stool where Ed sits firmly in the farming industry. Only about a dozen years out of high school, he is built a living and reputation farming.
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“He’s a great operator and a real go-getter,” says Mark Buuck, the GreenStone senior financial services officer out of the Adrian office who works with Ed on financing. “When he wants something he goes after it, but not until he understands the risk to get there. His business is growing, but it’s calculated—well thought out before he acts.” He has gone from renting about 20 acres for hay in high school, to currently farming a little more than 150 acres of hay—although down this year after a damaging winter and wet weather. In normal years, that results in about 30,000 small bales and about 400 round bales a year. He also puts up around 45,000 bales of straw. “We added the straw business about five years ago, and it’s really taken off,” explains Ed, who farms in Ida, Michigan. He is slowly built his business, never advertising, but developing a dependable clientele through networking. “When I started out I worked with upwards of 100 hay customers,” Ed says. “But now I deal with larger horse farms and about a dozen customers.” For the straw, he works with a couple brokers, who sell it to horse tracks and for mulch. He also has about 350 acres of ground for grain and a new tiling business he started with his brothers. Family Footing
Ed is the sixth generation of his family to live and farm on Albain Road in Ida. “For about a mile and a half stretch it’s all relation,” he says. “My dad grew up down the road and the first of our family moved here in 1866.”
the family business to incorporate another full-time income, even for an ambitious individual, is often a challenging transition. While Ed helped out at the family farm, he was never employed full time there and, in many cases, it was a matter of swapping out time for equipment use and vice versa. In his teenage years, Ed showed 4-H animals and raised lambs and pigs for club projects. At about 15, he thought it was time for something a little more ambitious. With feeder pigs at bargain prices, Ed and his brother, Joe, thought it would be a good venture to feed out pigs. “But then the price of fat hogs just fell off,” Ed says. “We had about 25 hogs, and I can’t tell you how much manure pitching I did for free. It was a good lesson in business.” Later in high school he started raising chickens— about 300 at one time—for an egg route. “I was delivering locally… it was very labor intensive,” he recounts. “Yah, I don’t know how much money I made at that either.” While in high school, he worked out a deal with relatives and neighbors to borrow equipment to try out the hay and straw business. He used his uncle’s old Massey baler in exchange for baling his straw. He also exchanged labor for the use of a neighbor’s haybine. Out of high school, he saw promise in the hay business and began to pursue it more aggressively. Within two years, he had grown the acreage to 100. He had also gone back into the hog business, raising about 35 sows with his cousin, Ben Stotz.
Those deep roots are anchored in agriculture. “I knew I wanted to be a farmer from the time I can remember,” says Ed, whose father, Steve, is a 2,000-acre cash-cropper who dabbled in tomatoes for a time.
But, everybody needs a backup, right? Ed took business courses over four years during the winters at Monroe County Community College and obtained an associate’s degree in commerce. “I didn’t know at that time if I was going to farm full time or possibly go into business.”
But, coming into the farming industry is not an easy task, even with family support. Expanding
Call it fate, destiny or just luck, but Ed was renting a small portion of an 80-acre parcel owned by Joe
Partners — Winter 2015
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Straight Talk With Ed Stotz
When you were eight, what did you want to be when you grew up? “ I knew I wanted to farm. Frankly, I didn’t understand why I ever had to go to school.”
When did you first realize that you wanted to farm for a living?
➡ TOP: Ed Stotz and his wife, Michelle, with their children, Adilyn, age 4, and Conrad, 15 months.
Michalek. Joe’s wife had passed away a few years earlier and they never had children. “He was in his early 90s and was relocating to an assisted living place,” Ed says. “He approached me about buying it. He knew my grandpa, and I think he wanted someone young to buy it. It was a great opportunity for me and I really appreciated it.” Within a couple of months, the deal was closed and Ed moved into the house on the property. “His wife (Mrs. Michalek) loved trees and there were tons of them on the property—most well overgrown,” Ed says. “We went to work clearing them and planned to put up a new barn.” Working with his uncle, who worked at a community bank, Ed secured a five-year beginning farmer fixed-interest note with a 50/50 Farm Service Agency loan to build a 60x120 square-foot hay barn. In June 2007, the roof went on the barn the same day they were hauling hay in. “Hay prices really took off, and it made a lot of things work,” he adds. What did not work was the old knob and tube electrical system in the house. A fire on Dec. 11, 2007, required an entire gut job. “At the time it didn’t seem like it, but it turned out to be a blessing. We put in new dry wall, better insulation and windows, a new roof and updated everything.” There to make some of the more detailed choices on furnishings was Ed’s high school sweetheart, Michelle Opfermann, who would become his wife in 2009. Michelle has a teaching degree from the University of Michigan, but work was not easily available in the area. She took a job with Ida Farmers Cooperative and has been there ever since. Before their children were born, Adilyn is 4 now and Conrad is 15 months, Michelle was a regular on the farm. “I’ve said it before, I’m pretty sure I paid for my engagement ring with five years of free labor,” she says with a chuckle.
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“ Since I can remember. I’ve been very fortunate that I’ve never had to have a 9-5 job or a boss to report to.” Who do you look up to; who is your mentor? “ My Dad, Steve, but also my grandpa, Erhard Stotz, who helped a lot with the hay business, especially in the very beginning.”
What is the biggest challenge for young, beginning or small farmers today? “ Acquiring capital and being able to buy or rent land.”
What advice do you have for young, beginning or small farmers starting out? “ My dad helped me out, but if you don’t have family in the business, then pair up with someone who is farming. Work with and learn from an experienced farmer.”
As the hay and straw business continued to provide reputable, consistent returns, Ed got out of the business of raising hogs in 2008. Two years ago he approached GreenStone for a loan on a new 66x166 square foot barn to house upwards of 22,000 bales of straw. “They’ve (GreenStone) been the easiest to deal with. I know Mark outside of GreenStone a bit, so it was easy working with him. The whole process was unbelievably simple. In 2013, I also moved over other farm loans because GreenStone offered low interest with longer fixed rates.” Buuck adds, “Ed and I clicked right away; we’re about the same age and we’re able to relate. Growing up on family farms, I saw his vision and we went with it.” Along the way, Ed has financed equipment using AgDirect® through GreenStone. “It was simple and easy,” he says. “I’ve strived to improve our equipment, because when you got to bale, you got to bale. It’s about being fast and efficient.” Newest Venture
“My dad had a quad track and we, my brothers Joe and Tim, pushed him to buy a tile plow. He had a little over 300 acres he wanted to tile, and we thought it would
take a few years,” Ed explains. “But, we got that done in one year.” The brothers, who both work with their father and Tim is also a seed salesman, saw an opportunity and bought the tile plow from their father a year ago. They then formed Stotz Brothers LLC and started contract tiling for others. “This is another way to diversify,” Ed says. “We can do this in the fall, hopefully into December, and in the spring before planting. At some point we might consider expanding into excavating work because I already own a dozer.” The tiling business further insulates the risks in farming. “It made sense for us as brothers now. We’re all older now and are starting to work on the same page,” Ed says. “Dad is slowing down and working more as a manager. I enjoy hay and straw and it’s been a consistent money maker, but my goal is to move more into the grain side as I get older and dad steps back.” Ed says he’s been thinking about more land and has approached GreenStone with the idea. “I went to them with an up-do-date balance sheet and asked about what I’d need and the process—I don’t want to surprise them and I don’t want any surprises. I’ve been conservative and patient because when the time comes, I
want to buy quality land close to home.” Ed never stops reading and learning new ways to do things. Michelle says he does not sit still a lot. Ed says, “I like staying busy, but I couldn’t do it without the guys that work with me—Jimmy McMonagle who works with me full time and Jerrick Hoffman, who works here part time.” With two sets of feet producing pitter patter at the house, Michelle, 29, says life is so busy it is sometimes hard to find time to connect with her husband. “But, we make it work. He stops in at the house, and we take picnics to where he’s working—we find ways to work things out.” The kids already like their rides in the buddy seats. Conrad, Ed says, will most likely be a fixture next to him in a few years. “Right now he really likes it, but it’s hard for him to sit still for too long.” In regards to the kids, Ed says it is hard to say what direction the next generation will choose. “I just want them to do something that spurs their interest like farming does mine. In farming there is never a dull moment. I can’t imagine doing the same job for a week, let alone a lifetime. The challenge of farming is what I enjoy the most. I don’t really consider it a job. Michelle thinks I’m like a 5-year-old out playing all day long.” ■
Where Are They Now... How has your business changed since 2006?
Chad Minnis, Car Min Vu Farms Spring 2006
“We have made some significant changes in the past eight years. No big leaps, but it seems like every year brings some change and growth. For instance, I have added cows. I believe in 2006 we were right around 700 head. Since we have gotten our Department of Environmental Quality permit, we have grown to 950. In that time, we expanded our barns to accommodate those cows.
Our neighbor across the road from us sold his cows and bought a milk truck; he is hauling our milk along with my cousin’s milk. In turn, we are renting his land and some of his facilities. We modified his hip-roof barn to raise pre-weaned calves. We also built a 6.5 million gallon lagoon to have six months of storage to satisfy our concentrated animal feeding operation permit. We have invested in drag-line equipment to be more efficient at applying our manure. We also invested in a Mensch
vacuum truck to scrape our barns and handle the manure (much quicker than scraping with a skid steer).” What is next for your operation? “In the near future, I am planning on building a new parlor. The one we have was a remodel job and wasn’t meant to milk 950 cows, 24 hours a day. It is about 18 years old and I would find it difficult to get another 10 years out of it. With the new parlor would bring more cows; at this point I
don’t have a firm number on how many, but it will have to be enough to help justify the parlor.” What advice do you have for other young farmers out there? “My advice to young farmers is to do what you love and you won’t feel like it is work. Big or small, you have to have dreams. Lastly, success in agriculture doesn’t happen overnight; have a plan, stay the course (through good times and bad), and good things will happen.” ■
Partners — Winter 2015
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2015 Skill Development –
Embracing Difficult Conversations By Barb Dartt, DVM, MS AMONG YOUR NEW YEAR’S RESOLUTIONS MAY HAVE BEEN A COMMITMENT TO LEARNING IN 2015. PERHAPS YOU WANT TO FOCUS ON LEARNING COMMODITY MARKETING, NEGOTIATIONS OR IMPROVING YOUR FINANCE SKILLS.
I’d like to propose you consider a high priority skill—the ability to identify, and then respectfully hold, difficult conversations. The unwillingness, or inability, to bring up emotional, high stakes topics commonly inhibits progress and performance of otherwise successful family businesses. This inability to have difficult conversations can show up in several ways. One example is Jim, a key employee who was highly productive but treated others poorly, creating a harsh work environment. Jim led the cropping operation for a dairy farm, worked a lot of hours and treated the business like his own. He was there early to check moistures. He stayed late to get forages into the bunk and covered before the rain hit. But Jim’s drive meant he pushed people very hard. It was not uncommon 1
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to come into the shop and hear Jim yelling. Keeping good operators had become challenging—the cropping side was a revolving door of employees. Jim had never heard from his supervisor (the business owner) that he was not performing as expected. Jim’s boss could not figure out how to tell him in a clear, constructive way that his treatment of people was unacceptable. Since performance was high, generating quality forages and great yields, he was concerned if he asked Jim to treat people differently, those results might be compromised. Another example of how NOT having difficult conversations can hold your business back is around the alignment of owners. Some businesses will take on new enterprises, add debt or hire
great resource for learning more about this topic is Crucial Conversations: Tools for Talking A When Stakes are High, Patterson, Grenny, McMillan & Switzler, 2002
Winter 2015 — Partners
?
?
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The solutions to those examples seem pretty straightforward. But in my experience, the situations can linger for years because folks simply lack the skills to respectfully hold difficult conversations. If you decide you want to take action, here’s where to begin. 1. S tart with Heart • Think through what you want to accomplish with the conversation. When the discussion gets emotional or heated, it is very helpful to go back to this touchstone. Ask yourself, “What do I really want? For the business? For the relationship?” • If the goal is to score or win, do not have the conversation. A short-term “win” turns into a long-term cost to the relationship. 2. Prepare • Walk through how you will have the conversation. • Begin by asking if you can make an observation or share some feedback. Talk about what you have seen, focusing on the behavior, not on the person. • Limit the discussion to one topic and share examples. From your perspective, share how the behavior is impacting the business. 3. K eep the Dialogue Going • Be aware of yourself. People tend to move toward violence or silence1 when they want to avoid talking about high stakes, emotional issues. • Do you get defensive and lash out? Do you shake your head yes but withdraw and avoid the topic? Consider how you have contributed to the difficulty in discussing the topic in the past and work toward having the conversation. 4. Practice, Practice, Practice
employees without ever having the tough conversation that explores whether all the stakeholders are committed to the decision. A cash crop operation owned by two brothers welcomed back Nick (one of the brother’s sons) to the farm. Nick had a deep interest in agro-tourism and after a few years of employment, he began investing in a retail shop and advertised a corn maze for the next season. He also spent about one third of his work time in local meetings that were designed to build his network—the local county Farm Bureau, Chamber of Commerce and on the board of a local hospital.
• Most folks learn these skills—they are not born with them. When the first shot at this does not go as you had expected it to, do not quit! It will take time and repetitions to get more comfortable with difficult conversations.
It takes trial and error, as well as self-reflection, to get better in this area. And the process will likely be uncomfortable. But, improving your skills and respectfully holding difficult conversations is one of the highest-reward investments you can make in your business, and in yourself. ■
Nick’s dad and uncle were not fully supportive of this business direction. But Nick’s dad did not know how to bring up the subject without sounding like he was not supporting his son. And Nick’s uncle, also unhappy, did not know how to bring up the subject without sounding like he was not supporting his brother. All because of the “WHAT IF.” What if one brother approached the subject and found that what he wanted in the future was drastically different than what his brother wanted?
ABOUT THE AUTHOR
Barb is a partner in GROW and a member of the Family Business Consulting Group. 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.
Partners — Winter 2015
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Immigration Law
and the American Agriculture Industry: Does Obama’s Executive Action Help?
By Linda Osberg-Braun, Esq. and Rodion Tadenev, Esq. THE U.S. IMMIGRATION SYSTEM HAS LONG IGNORED THE PLIGHT OF AMERICAN AGRICULTURE, PARTICULARLY DAIRY FARMERS. MANY POLITICIANS HAVE TURNED A BLIND EYE TO THE FACT THAT MIGRANT LABOR IS ESSENTIAL TO KEEPING AMERICAN DAIRY FARMERS IN BUSINESS.
Agricultural work is physically demanding, with lengthy hours and thin profit margins. For this reason, the supply of these jobs is high and the demand among authorized workers is low. The current dysfunctional immigration system has placed farmers in the untenable position of having to either hire unauthorized workers for the jobs that Americans will not fill or lose the ability to efficiently compete. Despite previously acknowledging that our agricultural system cannot function without immigrant labor, the administration’s immigration announcement has done little to specifically address a path to relieve the everyday stress both farm workers and farm owners face relating to the present immigration system. The well-founded concerns of deportation, heavy fines, and operation-halting enforcement action imposed by Immigration and Customs Enforcement will remain until Congress takes action. 12
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Although the President and Congress have yet to specifically address the needs of U.S. farmers, the Executive Order issued Nov. 20, 2014 may temporarily shield up to 5 million undocumented immigrants from deportation. Some of these immigrants will include farm workers who have made a life for themselves in America. Who Can Benefit:
Deferred Action for Childhood Arrivals (DACA)—“Dreamers” The DACA program will include individuals who entered the U.S. before age 16 who: • Have been living continuously in the United States since Jan. 1, 2010; • Were illegal on June 15, 2012; • Have completed technical school or have a GED; • Have no significant criminal history (maximum two misdemeanors). Deferred Action for Parental Accountability (DAPA)
The DAPA program was created to protect individuals who: • Are undocumented parents of U.S. citizen or lawful permanent resident children; • Have had continuous residence in the U.S. since Jan. 1, 2010; • Have no significant criminal history. DACA and DAPA will be issued for three years and will allow qualified immigrants to obtain work permits and Social Security numbers, to work legally under their own names, and to travel within the U.S.
Provisional Unlawful Presence Waivers
Many immigrants, especially Mexican farm workers, enter the U.S. without any documents. Sometimes, a U.S. citizen or resident family member of the immigrant will petition for the foreign national to get residency—a green card. But, the U.S. will not simply issue a visa to someone who entered unlawfully. In the past, these people could only fix their status by 1) leaving the country for 10 years or 2) leaving the country and asking the government to waive the 10-year bar. Now, those who are eligible can have a waiver approved in the U.S., eliminating the risk of long separations from family. The following individuals may be eligible to have the 10-year waiting period waived: • Spouses and children of U.S. citizens and lawful permanent residents; • Adult children of U.S. citizens and lawful permanent residents. Certain waiver requirements will also be clarified to expand the class of foreign nationals eligible to apply. A Step in the Right Direction
While these changes will impact the lives of many undocumented workers, removing fears that relatives could be separated from one another, the policy changes have been made through Executive Order and grant only temporary reprieves. Although some say that this action is unconstitutional and could be reversed by a new administration, immigration should not be a partisan issue because both republicans and democrats recognize the importance of solving the
problem. Although the President’s actions will not provide any formal, lasting immigration status, much less a pathway to citizenship, it is the first step to permanent reform. Only Congress will be able to enact formal long-term immigration reform that will hopefully create a special visa dedicated to farm workers. What can be Done Now?
Farmers and their workers should speak to a qualified immigration attorney about all immigration avenues. Eligible farm workers will not automatically obtain the benefits of DACA, DAPA, and expanded waiver programs, which are expected to take effect in January 2015. These foreign nationals will require skillful screening and legal representation by an experienced attorney. Those who attempt to file applications without consulting an attorney may inadvertently trigger deportation (if they are not eligible). Individuals may also be unaware of already-available forms of immigration relief for which they may qualify, like orders of supervised release, prosecutorial discretion, and cancellation of removal. Every case is different and the attorney will conduct a confidential oneon-one screening with the foreign national to fully develop all viable strategies. When one does hire an attorney, it will be the attorney’s duty to explore each and every possible option with the foreign national worker and to protect the interests of both the farmer and his immigrant laborers. ■ ABOUT THE AUTHORS
“
he current dysfunctional T immigration system has placed farmers in the untenable position of having to either hire unauthorized workers for the jobs that Americans will not fill or lose the ability to efficiently compete.
Linda Osberg-Braun, Esq. Co-Founder, Bernstein Osberg-Braun, P.L.; F.L. Bar Board Certified Expert in Immigration Law Rodion Tadenev, Esq. Associate Attorney, Bernstein Osberg-Braun, P.L. Bernstein Osberg-Braun, P.L. assist clients with all facets of immigration law, and have pending cases across the country. They represent a number of dairy farmers and workers in their immigration matters, and know the issues they face. They can be reached at 305-895-0300 or www.visaattorneys.com.
The opinions stated herein are not necessarily those of GreenStone Farm Credit Services.
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Partners — Winter 2015
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ARKET OUTLOOK
By Bob Utterback AS ANOTHER NEW YEAR BEGINS, I LIKE TO LOOK BACK AND REVIEW WHAT I HAVE LEARNED FROM THE MARKETS THE PAST YEAR TO HELP ME PLAN FOR THE COMING YEAR. WHAT DID I LEARN?
1. My assumption for several years has been that supply will more than likely
be the bearish side of the equation because of technology. Last year we saw what happens when Mother Nature cooperates with improved corn hybrids—record yields! While many will want to use corn yields below 165, I suggest the burden of proof for lower yields will be on the bull to prove in the future.
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2. The market is not calming down like
we all would like it to; it is getting even more unpredictable and concern is growing. The August, September and October USDA reports confirmed a big crop was coming, but prices took off to the upside from late October to early November because of extremely tight stocks, tight farmer holding and unexpected cash problems in the soybean meal market. When these events were combined with oversold market and wet [delayed] harvest conditions, the market caught the bear off guard and rallied counter-seasonally higher in the middle of harvest. The lesson learned is regardless of one’s conviction of fundamental and technical perspectives, one must be flexible in implementing a market plan and be able to adjust if events differ from those desired. The old saying that the “market can be more irrational than a bank account can afford” was again proven correct last fall [to the bears]. For this reason, I strongly encourage producers to use covered put option strategies rather than a net short futures or cash strategy where there is no way to benefit if the market does rally against one’s position.
3. Big moves were seen last year in many
of the outside markets. While many in the trade will argue that oil, the U.S. dollar and gold vs. corn and soybeans are not highly correlated, I have found it very wise not to fight these relationships. Oil is down a whopping 38.7 percent as I write this outlook, and most of this has taken place since June and many oil producers are not cutting back on production. At the same time, the Dow is up 17 percent at record highs and attracting more money every day.
Conclusions: I believe we must expect a consolidation in the outside markets for 2015 even before a trend reversal is seen. This implies to me that there will be exceptionally strong headwinds against corn and soybeans to rally in 2015 unless a significant supply reduction event occurs. The only problem with this is producers are holding what I believe to be larger than usual amounts of unpriced inventory on the farm. If they wait until late July to sell, I believe they are going to be extremely right or extremely wrong with no room for error in between. If the general economy continues to improve, the Dow remains strong, and grains continue to be under pressure, the meat markets will continue to be quite strong for 2015. I believe there will be significant supplies of pork and chicken by late 2015 to early 2016. This will be the result of economic incentives that will cause producers to expand their herd size. This strongly suggests protecting downside risk exposure, especially in the pork sector for the last half 2015 and most of 2016. Bottom Line: If profit margins are good enough to motivate producers to expand, they are also good enough for producers to lock up.
Commodity
Lead Month High
Lead Month Low
Net Change
Current % Change
Gold
1.693
1,171
522
31.00% Lower
Crude Oil
107.3
65.85
41.46
38.70% Lower
Dow Index
15280
17,975
2,695
17.00% Higher
U.S. Dollar Index
78.93
89.49
10.56
13.40% Higher
Corn
5.194
3.184
2.016
38.70% Lower
Soybeans
15.37
9.054
6.71
43.60% Higher
Cattle
171.6
130.95
40.65
23.70% Higher
Hogs
133.10
84.55
48.55
36.47% Lower
4. When I develop a market plan, I work
under the assumption that, when prices rally, costs lag but eventually go up. The problem is when prices break, it takes a lot longer period for costs to go down in proportion. I sense there is a limited reduction in cash rents and only a modest cost reduction in other variable costs ahead. Overall, this is putting pressure on producers to plant soybeans rather than corn. While corn has the higher potential for better yield performance, it takes more cash flow. When the net gain is getting as close as it is, I believe producers will look to move more corn acres to soybeans than one would normally associate with crop rotation. I believe this implies December 2015 corn will be bought and November 2015 soybeans will be actively sold by spread traders. Implication to Producers: They may want to be heavier in forward selling soybeans than corn, and heavier in corn when buying calls for summer weather price protection. In the end, the free market system works; what producers must do is position themselves to take advantage of opportunities when offered at the least possible risk to their cash flow.
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Here are my general guidelines: CORN
HOGS
• Use any price weakness in early 2015 to buy December $4.50 calls and plan to hold them until mid-summer.
• Hog and poultry expansion is starting and should hit by late summer. If no disease outbreak is seen from January to March, the trend should be lower for the pork sector. Place stops to buy in-themoney puts if the market breaks technical support. Otherwise, focus on trying to sell seasonally overbought conditions that develop throughout the year.
• More experienced producers who understand the risks can focus on selling out-of-themoney May or July puts; do NOT sell calls. • Focus on buying deep-inthe-money December 2015 puts starting in April if the December 2015 contract is above $4.30. Plan on having all expected inventory priced by early July. • I will have detailed plans on how to manage call and put options, as well as cash sales in the next outlook. SOYBEANS
• Have 100 percent of the expected soybean crop sold before 50 percent of the expected corn crop is sold. • Focus on selling the first 50 percent of the expected soybean crop in forward cash contracts; sell the last half using long in-the-money November 2015 puts. • No call protection is suggested, but aggressive, more experienced traders can overload corn calls to compensate for soybeans. WHEAT
• Uncertainty in regard to Russia and its wheat exports is putting some bullish excitement into what should be a bearish fundamental complex. This means if anyone is ready to sell, they must not use cash or futures; use a put roll-up strategy instead. • I suggest buying in-the-money July puts and selling deepout-of-the-money March or May puts to help reduce time value cost. I would not start to sell cash until the July 2015 contract price exceeds $7. 16
Winter 2015 — Partners
• Remember, last year price spikes were the exception, not the new norm for hog prices. CATTLE
• As long as heifer retention stays low, limited cattle expansion will occur, which is expected to keep prices stable. • Big Concern: When does the U.S. dollar’s strength start to affect beef exports? How fast will consumers turn to less expensive pork and poultry at the supermarket? I suggest staying neutral on pricing fat cattle until April, then hedge the seasonal decline into late summer. The feeder cattle market, however, has more immediate concerns; closely monitor feeders for early signs of price weakness. I suggest at least a six month fully hedged position at this time. As usual, every year is a learning experience. As I look forward to 2015 and beyond, I know the markets will throw some curve balls, some of which we cannot even conceive of today. In the end, all one can do is try to decide what is wanted from the market, develop a plan to achieve those objectives when opportunities arise, and implement a selling strategy that allows enough flexibility to survive any nasty bullish surprises that may occur during the year. If you have any questions, call me or send an email. ■
“
I n the end, all one can do is try to decide what is wanted from the market, develop a plan to achieve those objectives when opportunities arise, and implement a selling strategy that allows enough flexibility to survive any nasty bullish surprises that may occur during the year.
”
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.
The opinions stated herein are not necessarily those of GreenStone Farm Credit Services.
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.
CONNECT
NEWS:
With nearly 100 years of experience, GreenStone’s executive management team is a tenured, talented and knowledgeable group not only for the cooperative, but also outside the office. These individuals offer their expertise and leadership experience to assist other organizations throughout GreenStone’s territory.
Dave Armstrong, President and CEO S erves on the board of directors for the Michigan Livestock Expo, and is a member of the Michigan Economic Development Corporation executive committee, appointed by Gov. Rick Snyder. Paul Anderson, chief credit officer Appointed to the Michigan Strategic Fund board of directors by Gov. Rick Snyder, and is a member of the Chicago Federal Reserve Economic Advisory Committee.
Beth Barker, chief human resources officer Active member of the Society of Human Resources Management, World at Work and the Greater Lansing Society of Human Resources Management. Travis Jones, chief financial officer Member of the Michigan Finance Authority board of directors appointed by Gov. Rick Snyder. Steve Junglas, chief information officer Serves as an advisory board member for the Ingham County Intermediate School District Computer Science Academy, active member of the Capital Area IT Council and Kiwania Club of Owosso, Michigan.
Pete Lemmer, chief legal counsel Serves on the Michigan Public Services Commission appointed by Gov. Rick Snyder, active member of the Michigan Bar Association and American Corporate Counsel Association. Melissa Stolicker, chief internal auditor Appointed to the Oakland University board of trustees by Gov. Rick Snyder, and is a member of the American Institutes of CPA’s, Michigan Association of CPA’s and Institute for Internal Auditors.
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SVP of Regional Sales
RVP of Sales and Customer Relations
Ian McGonigal was recently promoted to senior vice president of regional sales for GreenStone.
Melissa Humphrey has been promoted to the regional vice president of sales and customer relations for GreenStone, and will oversee the five branch locations in west Michigan.
In this role, Ian will provide strong and effective sales and marketing direction to the association’s 36 locations. In addition to leading the nine regional vice presidents of sales and customer relations, he will oversee the delivery of credit and financial services to GreenStone customers while maintaining superior customer satisfaction.
his demeanor and professional character, will ensure continued success and satisfaction for our members and our organization.”
“While he has proven strong sales results as both a lender and as a leader, Ian’s focus and aptitude to lead through innovation and team alignment will also be an asset to GreenStone,” said Randy Stec, GreenStone’s executive vice president and chief sales and marketing officer. “I am confident his interest in the team’s development, ability to deliver results, in addition to
Most recently serving as the regional vice president of sales and customer relations for five of GreenStone’s west Michigan branches, Ian brings more than 16 years of financial services experience to this new position, 14 of which have been with GreenStone. During that time, Ian also worked as a financial services officer at GreenStone’s Grand Rapids and Lapeer branches. ■
Melissa advanced to this position following the recent promotion of Ian McGonigal, GreenStone’s new senior vice president of regional sales.
Melissa’s experience and success as a financial services officer has prepared her well to lead the sales team, ensuring a seamless transition and exceptional service for our customers.” Melissa began her career at GreenStone in 2004 as a credit trainee. She soon transferred to the position of financial services officer, and later to senior financial services officer at the St. Johns branch. ■
In her position, she will serve as the leader of the financial services officers, crop insurance agents and tax and accounting staff in the Charlotte, Grand Rapids, Hart, Hastings, and Ionia offices. She will not only be responsible for the customer service from this group, but also for the guidance and development of this sales team. “Melissa will be an asset to our regional team,” said Ian. “She is incredibly passionate about the agriculture industry, and
Mark Your Calendar... JANUARY
13
Dairy Business Association Annual Meeting (13-15) Monona Terrace, Madison, WI
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FEBRUARY
5
Great Lakes Regional Dairy Conference (5-7) Bavarian Inn Lodge, Frankenmuth, MI
18
12 13
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16
Michigan Farm Bureau Young Farmer Conference (20-22)
Outdoorama (26-1)
Radisson Hotel & Conference Center, Green Bay, WI
26
Michigan Deer and Turkey Expo (13-15)
MARCH
GreenStone Offices Closed
11
4
Suburban Collection Showplace, Novi, MI
Great Lakes Builders Show (4-6)
18
GreenStone’s Patronage Day
18
National Ag Day
24
Wisconsin Public Service (WPS) Farm Show (24-26)
Ford Field, Detroit, MI
11
Wisconsin’s Ag Day at the Capitol Monona Terrace, Madison, WI
In honor of President’s Day
11
Farm Women’s Symposium (11-13) Holiday Inn, Midland, MI
Michigan State FFA Convention (11-13) MSU Wharton Center, East Lansing, MI
Grand Traverse Resort, Acme, MI
Ladies’ Day Out
The Summit Sports and Ice Complex, Dimondale, MI
Great Lakes Crop Summit (28-29) Soaring Eagle Resort, Mount Pleasant, MI
Winter Potato Conference (9-11) Shanty Creek Resort, Bellaire, MI
GreenStone Offices Closed In honor of Martin Luther King Day
28
9
EAA Grounds, Oshkosh, WI
25
Michigan’s Ag Day at the Capitol Lansing, MI
NEW GREENSTONE SCHOLARSHIP PROGRAM PROVIDES $40,0000 IN SUPPORT GreenStone has unveiled a brand new scholarship program for incoming college freshmen pursuing a degree in an agriculturerelated field in the amount of $2,000 each to selected students attending a four-year college program and $1,000 each to selected students attending a two-year college program. For complete program guidelines and application, visit www.greenstonefcs.com. Act now, the application deadline is Feb. 27. ■
GREENSTONE WELCOMES TWO NEW INTERNS GreenStone has welcomed two student interns, who are based out of the cooperative’s Little Chute branch. These individuals will assist with tax season until mid-April. An additional class of students will join GreenStone for the summer internship program beginning in May of this year. Keep an eye on our social media pages and Open Fields blog to learn more about these students!
Tyler Fenner Title: Tax and Accounting Intern Hometown: Neshkoro, WI
Ladies’ Day Out
Bad Axe Office Move
GreenStone’s 2015 event will take place Feb. 12 at the Radisson Hotel and Conference Center in Green Bay, Wisconsin.
Last month, GreenStone’s Bad Axe branch moved down the street into the new branch building. The Bad Axe team is now conveniently located at 749 S. Van Dyke Road, Bad Axe, Michigan, and looks forward to continue serving customers at the new location! ■
Live, Laugh and Liysa are on this year’s agenda! As the featured speaker, Liysa Callsen, www.liysacallsen.com, will entertain the crowd while telling her story of living a life without the ability to hear. GreenStone’s Wisconsin customers recently received an invitation in the mail with the necessary details to RSVP for the event. Contact any of the Wisconsin branches for more information! ■
Farm Women’s Symposium The 24th annual program will be held on March 11 – 13, 2015 at the Holiday Inn in Midland, Michigan. The Farm Women’s Symposium is designed to strengthen agriculture by addressing the ever-changing needs of farm families. It will provide women 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 Kathy Peterson, inspirational speaker, and Teresa K. Irish, author of “The Journey Letters.” Visit the website for more information, www.farmwomenssymposium. com, or inquire at your local Michigan GreenStone branch. ■
College: University of Wisconsin–Green Bay Major: Accounting and Business Administration - Finance Personal internship goal: I am hoping to increase my knowledge of taxes and how it relates to the agricultural industry. Also, I would like to determine whether or not tax and accounting is the field I would like to pursue after college.
National Best and Brightest Companies to Work For GreenStone was recently recognized as one of the 2014 National Best and Brightest Companies to Work For. This marks the second year GreenStone has earned this honor at the national level, also taking home an award in 2012 in addition to regional recognition in 2011 and 2012. The competition honors organizations that demonstrate excellence in their human resources practices and employee enrichment programs. GreenStone was assessed on points such as communication, work-life balance, employee education, diversity, recognition and retention.
“We are honored to be included in the Best and Brightest Companies
Stephanie Rodgers Title: Tax and Accounting Intern Hometown: Peshtigo, WI College: Kaplan University Major: Accounting and Human Resources Personal internship goal: I am excited to gain real-world tax and accounting experience, along with, I am hoping to increase my knowledge of the agricultural industry.
to Work For,” said Beth Barker, chief human resources officer. “We are proud of the work culture GreenStone exhibits daily, and we are committed to offering a challenging and rewarding work environment with an emphasis on superior customer service.”
meaningfully and personally connected they are to their work and to GreenStone. In addition to the survey, GreenStone also reported on company policies, culture and practices. ■
GreenStone staff participated in an employee engagement survey as part of the application process, which measured how
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LEGISLATIVE OVERVIEW
The ideas for legislation come from many sources, and at the core of the process are people coming together in one way or another for the intended good of the whole community.
Yet as President William Taft said during his service, “The world is not going to be saved by legislation.” Collectively we endeavor to work through the process of balancing a multitude of complex issues to come up with legislation to guide our communities. The focus on agricultural issues strikes a chord for all of our GreenStone members and their ancillary interests because it sustains our families and communities. Key amongst those issues are labor reform or immigration, energy, biotech, water, export trade, THE LEGISLATIVE PROCESS IS OFTEN REFERRED TO AS estate tax, health insurance and “SAUSAGE MAKING” WHEN STANDING AROUND THE general tax reform, to name a WATER COOLERS OF LEGISLATIVE, BUSINESS AND HOME few. There are mountains of OFFICES ACROSS THE COUNTRY. WHILE WE ELECT different opinions on each of REPRESENTATIVES TO LEAD, WE CANNOT SIT ON THE these subjects, even within our SIDELINES BECAUSE, IN THE END, LEGISLATION IMPACTS own rural communities. Stated US ALL. WE ARE ALL PART OF THE SAUSAGE MAKING another way by a late 1800s PROCESS. American politician, Thomas Brackett Reed, “One of the Thinking of the process on a more technical greatest delusions in the world is the hope level, it is better defined as a sequence of that the evils in this world are to be cured steps required for laws to move through by legislation.” our governing system. The U.S. Congress, So as we continue to look for additional state legislatures, county boards, and city progress, for the good of the whole, councils engage in the legislative process.
POTENTIAL LEGISLATIVE ISSUES FOR 2015 Michigan • Rail, Road, Bridge, Energy and Water Infrastructure • Talent and Labor • Growing Agriculture and Processing Capacity
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Winter 2015 — Partners
Wisconsin • Tax Changes • Segregated Transportation Fund • Alien Land Ownership Law • High Capacity Wells • Implements of Husbandry
Federal • Central Agriculture Lien Filing • Agricultural Producer Security Program • Education
• Farm Credit’s GSE Statute • Country of Origin Labeling • Immigration
we can reflect on some legislative accomplishments which directly affected GreenStone in 2014. GreenStone led a coalition to amend Michigan’s Register of Deeds Act. As a result, GreenStone and others have a clearer path to record legal documents in Michigan’s 83 counties. Thus, GreenStone worked with government leaders and legislators, and a number of other people came together to accomplish a good result. As we get into 2015, we face an entirely new membership in legislative offices. Overall, in the 2014 election, Republicans retained control of both the House and Senate in Wisconsin and Michigan. Due to term limits and other factors, there will be a considerable influx of newcomers with eight new members in Michigan’s Senate and 44 new members in the House. There is more representation from agricultural minded leaders than there has been in years past in both Wisconsin and Michigan. We expect the Legislature to be more conservative both fiscally and socially under the leadership of incoming Senate Majority Leader Arlan Meekhof of Ottawa County and incoming Speaker Kevin Cotter of Mt. Pleasant. There will also be new leadership on key committees most directly affecting GreenStone, such as the House Agriculture Committee. We believe this will also be true in Wisconsin with Senate Republicans retaining Scott Fitzgerald as Majority Leader, and Robin Vos as Speaker. 2015 Issues Regardless of any action taken in the Lame Duck session of 2014, road funding may continue to be an issue in 2015. Energy will be another major issue facing the agricultural community in 2015. We expect the Legislature to revisit the 2008 Energy Law and take action on issues including energy efficiency, renewables, natural gas extension in rural areas, and the regulatory environment necessary for building new generation capacity in Michigan. While legislative “sausage making” challenges remain, the gains in building relationships with agricultural minded leaders should help in creating solutions that meet agriculture’s needs. And while sound legislation is important for the good of the community, a view shared by Thomas Jefferson rings a bell when he said, “Agriculture is our wisest pursuit, because it will in the end contribute the most to real wealth, good morals and happiness.” ■
THE TEAM OF AGRICULTURAL FRIENDLY ELECTED OFFICIALS HAS GROWN! YOUR MI GREENSTONE PAC SUCCESSFULLY DISBURSED A TOTAL OF $15,800 TO 32 MICHIGAN SENATE AND HOUSE OF REPRESENTATIVE CANDIDATES THAT WERE IDENTIFIED AS KEY LEADERS WHO SHARE THE IMPORTANCE AND VALUE OF AGRICULTURE. In delivery of the PAC proceeds, the cooperative structure of borrower-owned lending association was conveyed along with the significance of working with other agricultural enterprises to promote the continued growth of the agricultural industry. At the same time, some current legislative members shared proposed bills they are working on issues of concern they see coming such as the Food Safety Modernization Act, a law limiting emissions for a wood heater, and a bill to expand the reach of natural gas lines. Of the 32 candidates that disbursements were made, all of them were elected to serve their respective terms beginning Jan. 1, 2015. Your Wisconsin Farm Credit PAC disbursed $950 to five Wisconsin Senate and Assembly candidates. These legislative officials were recommended by the Cooperative Network and then approved by the Wisconsin Farm Credit PAC Legislative Committee, which includes both a GreenStone executive and director member. Each of the candidates that received funds from the Wisconsin Farm Credit PAC was also elected to begin their respective terms on Jan. 5, 2015.
Credit PAC checks to seven of the eight individuals. Again, of the national Farm Credit PAC supported candidates, all were elected in November 2014. GreenStone continues to work to strengthen the recognition of agriculture as a key component to a thriving economy. The message will be simple and consistent: do not forget about the importance of rural areas and diversity of agriculture. ■
MICHIGAN CUSTOMERS: Do not wait to return your patronage pledge for the MI GreenStone PAC. Be sure to send your voluntarily pledge before Jan. 31 to direct dollars from your patronage check to the PAC; or you can make a direct contribution to the PAC at any time. Be a champion of your industry and amplify the voice of agriculture through support of the MI GreenStone PAC!
Follow us on social media for the latest updates on legislative activities and PAC progress.
The national Farm Credit PAC disbursed $38,000 to eight federal legislators located in GreenStone’s territory. GreenStone staff and directors personally participated in hand delivering the Farm
Partners — Winter 2015
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Director’s Perspective:
A Member Run
Cooperative AS A COOPERATIVE, GREENSTONE’S BOARD OF DIRECTORS IS MADE UP OF ITS MEMBERS, ELECTED BY THE VOTING STOCKHOLDERS. THE BOARD, LIKE THAT OF ANY OTHER CORPORATE ORGANIZATION, IS ELECTED TO OVERSEE THE MANAGEMENT OF THE ASSOCIATION.
This cooperative structure allows our borrowers to own and control the association and ensures a continued commitment to serving rural credit needs. This is an important benefit GreenStone customers will not find at other commercial lenders.
• Democratic Member Control. The cooperative
GreenStone, like the Farm Credit System as a whole, is guided by seven cooperative principles that are shared by other cooperatives around the world.
• Members’ Economic Participation. Members
• Voluntary and Open Membership. The cooperative
is a voluntary organization, open to all people able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political, or religious discrimination.
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Winter 2015 — Partners
is a democratic organization controlled by its members—those who buy the goods or use the services of the cooperative. The members participate in setting policies and making decisions. contribute equally to, and democratically control, the capital of the cooperative. This benefits members according to the amount of business they conduct with the cooperative rather than the amount of money they invest in it.
• Autonomy and Independence. The
cooperative is an autonomous, self-help organization controlled by its members. If the cooperative enters into agreements with other organizations or raises capital from external sources, it does so based on terms that ensure democratic control by its members and the autonomy of the cooperative. • Education, Training, and Information.
The cooperative provides education and training for members, elected representatives, managers, and employees so they can contribute effectively to the development of the cooperative. Members also inform the general public about the nature and benefits of the cooperative. • Cooperation among Cooperatives. The
cooperative serves its members most effectively and strengthen the cooperative movement by working together through local, regional, national, and international structures.
Director Introduction
In 2014, GreenStone members participated in the annual election process, selecting directors for the board for four of the 14 elected seats. Three of the elected members Hank Choate were incumbents on the board, while the fourth was filled by a new director. Hank Choate, from Jackson County, represents voting region 3 in Michigan. As we share the foundation and benefits of having a member run organization, we asked Hank to provide a bit of background on his farm operation, and explain why taking an active role in his cooperative was important to him. 1. Overview of your farm operation:
Our farming operation is a centennial family partnership between my brother (Randy) and I. We both have children involved in the farm, and are in transition to become an LLC to bring in this next generation as partners. The farm is a dairy, cash grain operation consisting of a 380 milking herd with replacement heifers, and growing 2,000 acres of alfalfa, corn, soybeans, and wheat. 2. Why did you decide to serve your cooperative as a board member?
My decision to serve on the board is basically the same as most board members. GreenStone
• Concern for Community. While
focusing on member needs, the cooperative works for the sustainable development of communities through policies and programs accepted by the members. With these principles in mind, and following the Farm Credit Administrative rules, GreenStone’s bylaws identify the number of directors on the board, the length of the directors’ terms, the qualifications director-candidates must meet, and the manner in which directors are elected and removed. To ensure GreenStone has adequate stockholder representation and the collective skill set needed to address the challenges the association faces, the GreenStone board is structured of 14 elected members and two appointed directors. This structure also maintains a small enough board to get meaningful input from each director.
Farm Credit Services is a memberowned cooperative serving the financial needs of its members. My involvement in the agricultural industry has given me a good understanding to help serve those needs. I hope that my participation, along with the rest of the board, continues to guide the association in a manor so as to meet its members’ financial needs in a growing and rapidly changing industry, keeping GreenStone financially strong and the members’ investment secure. 3. Now that you have spent part of the year on the board, what has been your greatest observation?
The GreenStone board members are assigned to various committees within the board. Those committees go into great detail understanding specific areas of the association’s operations. The information presented to the committees is very detailed, and board members are encouraged to ask questions. After the committee meetings, the entire board comes together to receive a summary from each committee by a board member of that committee. I haven’t seen any wallflowers serving on the board. You have a sound and strong GreenStone Farm Credit Services and your board is pledged to keep it that way! ■
BOARD AND COMMITTEE STRUCTURE GreenStone’s board of directors includes an executive committee, and all directors also serve on one of four specific board committees to provide more detailed review or analysis in specific areas. In addition to the two required committees, audit and compensation, GreenStone’s board has also established a finance and legislative/public policy committee. The committee structure is revisited annually following the board of director elections. Executive Committee Scott Roggenbuck, Chair Ed Reed, Vice Chair Darl Evers Bruce Lewis Audit Committee Eugene College, Chair Andy Snider, Vice Chair Christine Crumbaugh Catherine L. Webster Compensation Committee Ed Reed, Chair Scott Roggenbuck, Vice Chair Darl Evers Bruce Lewis Finance Committee Gilbert Ritter, Chair Ron Lucas, Vice Chair Matt Berge Hank Choate Legislative/Public Policy Committee Laura Braun, Chair Dale Wagner, Vice Chair Tom Durand Dennis C. Muchmore
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Pause for Applause... 1. Congratulations to GreenStone customer, Carl Bednarski, on his new
leadership position with Michigan Farm Bureau (MFB). A Tuscola County cash crop farmer, he was elected as the 16th president of MFB. Prior to this position, he served as a District 6 director on the MFB board of directors along with serving as vice president and on the executive committee with his county’s Farm Bureau.
SERVICE ANNIVERSARIES Help GreenStone congratulate and thank these staff who are celebrating an employment
2. Clinton County dairy farmer and
GreenStone customer, Carla Wardin was named a winner of the national Faces of Farming and Ranching contest sponsored by the U.S. Famers and Ranchers Alliance. She is one of five agricultural advocates selected to represent farmers across the country in advocating for agriculture to consumers. Learn more through her blog: http://truthordairy.blogspot. com.
3. Congratulations to GreenStone employee, Karen Messer (country living financial services officer, Adrian), on receiving the 2014 Lenawee County Association of Realtors Affiliate Member of the Year!
4. GreenStone board member and
customer, Christine Crumbaugh, was recently appointed to the Natural Resources Commission by Gov. Rick Snyder. Her extensive agricultural knowledge and leadership experience will serve the Commission well in working toward conserving, protecting and managing the state’s natural resources.
5. GreenStone customer, John Harnica,
set the new Michigan state record for the largest pumpkin! It weighed in at 1,865 pounds and beat the previous record by 140 pounds, which also ranks it the ninth largest in the world.
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Winter 2015 — Partners
6. Congratulations to the
winners of Michigan Farm Bureau’s 2014 Young Farmer Awards: • GreenStone customer, Ashley Messing-Kennedy, was named the Outstanding Young Agricultural Leader for her leadership in Farm Bureau, agriculture and community. She is part owner, with her parents, Greg and Shelly Messing, of Messing Dairy near Bad Axe, Michigan. • Michael Noll received the Young Farmer Achievement award recognizing the significant progress in growth of his operation since beginning farming near Croswell, Michigan on his family’s farm, Noll Dairy, that is also a GreenStone customer. • GreenStone regional vice president of sales and customer relations, Melissa Humphrey, was presented with the Excellence in Agriculture award for her involvement in Farm Bureau, agriculture and local community. • Kevin Thiel of St. Louis, Michigan was recognized as the Outstanding Young Farm Employee for his leadership in farming while being an employee at DuPont Pioneer.
milestone. From five to 35, the years represent the dedication and service all employees provide our members. January: Teresa Crook (10) Matt Poland (10) Ann Allen (5) Tim McTigue (5) Angela Myse (5) Amanda Ruggles (5) February: Troy Click (30) Ashley den Dulk (5) Maryann Peplinkski (5) Gina Siegrist (5) Jeni Yaeger (5) March: Dennis Makula (35) Al Compton (25) Rebecca Conard (25) Kimberly Rosinski (15) Molly Graham (10) Michael Schneidewind (10) David Nissen (5) Shane Prichard (5) Eric Thompson (5)
BEHIND THE SCENE TWO GREENSTONE TEAM MEMBERS WERE RECENTLY FEATURED ON THE AMERICAN FARMER TV SEGMENT ON RFD-TV. NICOLE WESOLOSKI, SENIOR TAX ACCOUNTANT, AND TYSON LEMON, VICE PRESIDENT OF COMMERCIAL LENDING, DISCUSSED CHALLENGES AND OPPORTUNITIES FACING AGRICULTURAL PRODUCERS. The episode highlights cost-effective and innovative financial products and services Farm Credit provides to help farmers and agribusinesses manage risk and succeed financially. Watch the episode at http://bit.ly/AmericanFarmer. American Farmer is broadcast on RFDTV, a channel dedicated to agricultural and rural programming.
Tyson Lemon, Vice President of Commercial Lending Branch: Berrien Springs What was it like to film for American Farmer? It was like sitting down and having a conversation with someone. The producers from American Farmer made it easy and were very nice to work with. What is your favorite thing to do in your free time? I enjoy hunting, fishing and playing basketball. What is your favorite memory while working at GreenStone? It is difficult to choose just one, but my favorite part about working at GreenStone is definitely the people that I get to work with. My customers and co-workers are really great!
Nicole Wesoloski, Senior Tax Accountant Branch: Little Chute What was it like to film for American Farmer? It was a very humbling experience working with American Farmer. It is very easy to talk with clients and co-workers about your job, but it is different knowing you’re being taped for a much larger audience to view. What is your favorite thing to do in your free time? I spend my free time with my family. I have three kids who are involved in sports, so I watch a lot of “ball.” I love watching my kids’ expressions when they are playing a ball game. What is your favorite memory while working at GreenStone? My favorite memories of GreenStone are the people I have had the opportunity to work with. Both inside and outside the office, my co-workers and clients are inspiring and a pleasure to work with.
Partners — Winter 2015
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$200 million GreenStone Story:
A PATRONAGE DAY 10 YEARS IN THE MAKING AT GREENSTONE, WE KNOW IT IS IMPORTANT TO YOU TO DO BUSINESS WITH AN ORGANIZATION THAT PUTS CUSTOMERS FIRST. IT IS ONE OF OUR CORE FOUR VALUES AND SOMETHING WE AIM FOR EVERY DAY.
Now that 2015 is upon us, many of you have set business plans and even New Year’s resolutions. As an organization, we go through a similar process, taking stock of the past year and setting intentions for the months ahead. It is always our mission to promote the success of our members and the rural community. We do this by delivering high-quality, competitively priced services to our customers, and also by providing leadership, expertise and giving back to the communities we serve.
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Winter 2015 — Partners
n
This year there is no better example of giving back than through our patronage program. With a decade of sharing profits, the program aims to reward our loyal customers and your contributions to the communities where you work and live. As a cooperative, GreenStone’s success is directly linked to the organization’s 23,000plus hard working members throughout Michigan and northeast Wisconsin. That success has allowed GreenStone to share its net earnings with members, while also building capital to continue providing exceptional service to members, in good times and challenging times, for generations to come. We will officially celebrate a decade of giving back on Patronage Day, March 18, 2015. On that special day, eligible GreenStone customers can visit their local branch to collect their share of this year’s record-breaking $36.2 million payment. Customers eligible to receive the patronage payments include anyone holding stock or participation certificates with GreenStone.
“
e are very grateful for the hard W work and commitment of our members... Patronage Day is always a celebration, but this tenth year is particularly special as we hit the $200 million milestone.
”
36.2
PATRONAGE PAID TO CUSTOMERS (in millions)
$29.0
10 36 200 YEARS
MILLION IN 2015
$26.5
MILLION IN 10 YEARS
Adding this year’s payment to the previous nine years of patronage, GreenStone has returned $200 million to you, our customers. “We are very grateful for the hard work and commitment of our members,” said GreenStone President and CEO Dave Armstrong. “Patronage Day is always a celebration, but this tenth year is particularly special as we hit the $200,000,000 milestone.” Whether you choose to reinvest in your own business, support the MI GreenStone PAC, benefit your community, or reward yourself for a year well-done, we hope this contribution has a positive impact on the lives of everyone working and living in our neighborhoods. From our entire team, thank you for your effort, for providing our country with food, fiber and fuel, and for being a part of GreenStone Farm Credit Services. ■
$23.3
$18.2
$15.0 $13.8
$13.5
$12.5
$12.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Partners — Winter 2015
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LIVE
Gone Wild! I took this “ city girl and basically put her out in the middle of nowhere...” 28
Winter 2015 — Partners
Daryl Van Geffen is a lifelong hunter. He began at the age of 9 with his father, and it is a family tradition that he and his wife, Colleen, have passed on to their own sons, Ben and Jon. The Van Geffens live in a house they built four years ago on 44 acres in Bear Creek, Wisconsin. Prior to building their home, Daryl and Colleen spent 20 years living on a 1,100 acre private duck hunting club. Daryl also managed the hunting club, which conveniently included hunting rights on the club. “I always liked the country,” said Daryl. When he and Colleen married, she joined him at the duck club. “I took this city girl and basically put her out in the middle of nowhere. My wife moved out there and never looked back.” The Van Geffens already owned the 44 acres with a GreenStone land mortgage when they left the hunting club. As they discussed their next home, one thing was certain—Colleen was hooked on country living. “We talked about where we should live,” said Daryl. “Colleen said, ‘I don’t want to go back to town. I want to stay out in the country.’” The land they owned had the perfect site to build, and with the help of GreenStone’s financial services officer, Ann Klemp, they began planning for their next home.
“Their home is perfect for a family that enjoys hunting as much as they do,” said Ann. “Large windows overlook the woods. In addition to the animal mounts that would be expected of avid hunters, they carried the outdoor theme throughout the house. All of the wood used for the ceilings, walls, trim work and flooring in the house came from their own property.”
said. “He walked behind a tree so I was able to calm down. Then he came walking through and I took the shot. It was very exciting. Jon was the first one I texted, and then a text popped up from him that he shot one, too.”
The 44 acres also provides the perfect hunting ground for the family. Before having children, Colleen enjoyed spending time outdoors, including some hunting.
Jon commented that he “spotted his deer sneaking through at 100 yards, picked a clearing and shot.” He also noted it was a “fun hunt” to be out in the woods with his mom.
“Colleen hunted a few years with us and then it got to be difficult with children,” said Daryl. After a nearly 20 year hiatus, Colleen now hunts again after encouragement from her son, Jon.
Both Jon and Colleen entered their bucks into GreenStone’s Wisconsin Big Buck Contest.
This Van Geffen family tradition will no doubt continue into the future. Their home and land provides year-round opportunities for hunting, bird watching and relaxing by the pond. “It’s just incredible to see all the different wildlife every day,” said Daryl. “We go through as many sunflowers seeds feeding the birds as we do dog food.” “The Van Geffens were definitely great to work with, and I’m glad we’ve continued to stay in touch after the home was completed,” said Ann. “Daryl and I chat periodically about football, hunting and, of course, interest rates!” ■
“He was the one who was really instrumental in talking her back into hunting,” said Daryl. Their oldest son, Ben, also helped Colleen with sighting in her gun and gave her tips on shooting and what to watch for from the stand. In the summertime, Jon and Colleen often take walks in the woods looking for shed antlers. Colleen recalls that Jon would say, “Come on, mom, you always said if we owned our own land you would hunt again.” So last year, Colleen decided she would give hunting a try. “We’d go up in his stand and we’d see a couple deer, but we mostly just talked and caught up. That’s just as enjoyable,” she said. This hunting season, Colleen and Jon both bagged eight-point bucks within minutes of each other on their land. “It was late in the afternoon, and I heard a shot,” Daryl recalls, who was hunting about three quarters of a mile away. “I thought, that’s my wife. So I texted Jon, ‘was that mom?’ and got no response.” Daryl says he was a little nervous when he did not get an immediate text back from his son. A few minutes later he heard another two shots from the area where he knew Jon was hunting. After another few tense moments, Daryl got the text message he was hoping for from his son. Jon confirmed that both he and Colleen had shot bucks, texting his dad, “I’ll take care of it and we’ll see you at the house at dark.” Colleen said she watched her buck for nearly an hour before getting a clear shot. “My heart started pounding horribly,” she
“
heir home is perfect T for a family that enjoys hunting as much as they do...
”
Partners — Winter 2015
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STAYING ACTIVE THROUGH THE WINTER MONTHS AS THE WINTER MONTHS SETTLE IN, IT CAN BE CHALLENGING TO REMAIN ACTIVE AND FIGHT OFF THE EXTRA POUNDS THAT CAN BE A LINGERING RESULT OF THE HOLIDAY SEASON.
And with the sun’s angle and the chilly weather, getting the necessary amount of vitamin D may be equally difficult. Try these tips to stay active and healthy during the wintertime! • Purchase hand weights or stretch bands. These items can be helpful to use for resistance exercise while watching your favorite TV show, movie or listening to music. Cans of food will work just as well if you do not want to buy new fitness items. • Buy, borrow or rent exercise DVDs. Looking for a fun way to stay in shape in your living room? There are a countless number of exercise DVDs available for various fitness levels, body types and activity preferences. These can be found at most stores, your local library or even online. • Join a gym or health club. Most communities have a local fitness center or other facility with an affordable membership. These will provide the use of machines such as treadmills, stair-climbers or even a wide variety of fitness classes, such as strength training boot camp, dancing or water aerobics. • Best sources of vitamin D. Meet your nutritional needs with foods that contain fiber, phytonutrients, and more. It may be hard to get enough vitamin D naturally without eating fortified foods or taking supplements, but try working in foods like fatty fish, fortified dairy, eggs, beef liver and mushrooms into your diet during the less sunny months. • Be conscious. Realizing you may need to take proactive measures to meet your vitamin D needs is a good place to start. Make an extra effort to get outside by shoveling snow, going for walks, or playing in the snow with your kids. Also, spending time sitting by a window can help stimulate vitamin D production.
• Go out and play! Engage in an outdoor activity that does not necessarily feel like a work out – though you can still get your heart rate up and have an excellent cardio session. Make snow angels, have a snowball fight or even build a snowman. If there is not snow in your area, try ice-skating – an activity that you can do in or outdoors! • Household chores. Engage in activities such as dusting, mopping, sweeping or vacuuming to remain active while keeping your home spotless. • Get excited. Instead of dreading the long winter months, begin focusing on what you most enjoy. From eating delicious in-season produce, to curling up with a big mug of sugar-free hot chocolate after a long workout, there is much to love about winter when you embrace it! ■ Source: www.webmd.com
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Winter 2015 — Partners
WINTER MAINTENANCE Ice and snow covered roads go hand-in-hand with the winter months in the Midwest. Winter driving can be scary and also hazardous to you and other motorists on the road. Follow these tips to remain safe during your winter trips. • Maintain your car. Check your battery, tire pressure and tread, and windshield wipers. Keep your windows clear, use no-freeze fluid in your washer reservoir, and keep an eye on your anti-freeze. • Create a car care package. Have supplies on hand such as a flashlight, jumper cables,
abrasive material such as sand or kitty litter, shovel, ice scraper, and blankets. Keep the supplies in your vehicle in case of an emergency.
the distance. Get plenty of rest before your trip, try to stop every three hours, and rotate drivers to avoid fatigue. • Practice cold weather driving. During the daylight, rehearse maneuvers slowly on ice or snow in an empty lot, steer into a skid and know what your brakes will do – stomp on antilock brakes or pump on non-antilock brakes. Practicing will help you react in the best way possible while on the roadways. ■
• Plan your route. Heading to an unfamiliar place? Be sure to allow plenty of time to arrive at your destination by checking the weather and leaving early. Also, be familiar with directions and let others know your arrival time, if possible. • Prevent accidents. Leave plenty of space between the cars ahead of you and slow down, if necessary, to increase
Source: https://www.osha.gov/ Publications/SafeDriving.pdf
Yankee Beef Pot Roast Makes six servings
Instructions:
Total recipe time: 3 – 3 ½ hours Ingredients: • 1 boneless beef chuck pot roast (arm, shoulder or blade), about 2 ½ pounds • ¹⁄³ cup all-purpose flour • ¾ teaspoon salt • ¾ teaspoon black pepper • 1 tablespoon vegetable oil • 1 can (14 – 14 ½ ounces) beef broth • ½ cup dry red wine • 1 ½ teaspoons dried thyme leaves • 2 packages (16 ounces each) frozen vegetable stew mixture (such as potatoes, carrots, celery and onion) Provided by the Michigan Cattlemen’s Association: http://www.beefitswhatsfordinner.com
1. Combine flour, salt and pepper. Lightly coat beef in 2 tablespoons of flour mixture. Heat oil in large stockpot over medium heat until hot. Place beef pot roast in stockpot; brown evenly. Pour off drippings. 2. Combine beef broth, red wine, thyme and remaining flour mixture; add to stockpot and bring to a boil. Reduce heat; cover tightly and simmer for 2 hours. Add vegetables to stockpot; continue simmering 30 – 45 minutes or until pot roast and vegetables are fork-tender. 3. Remove pot roast and vegetables; keep warm. 4. Carve pot roast into thin slices. Serve with vegetables and gravy.
Commodity Cuisine...
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LEARN
What it Means
2015 IRA RULE CHANGES By Kelly L. Tobin, EA, MBA, GreenStone Senior Tax Accountant/Product Manager AN INDIVIDUAL RETIREMENT ACCOUNT (IRA) ROLLOVER CAN PROVIDE A SHORT-TERM SOURCE OF FUNDS FOR INDIVIDUALS IN A CASH-FLOW PINCH. As long as the amount distributed from the IRA is put back in an IRA within 60 days from the distribution, there are no tax consequences. Often, individuals own several different IRAs because the funds are invested in different mutual funds or they opened an IRA with a bank and also with their broker or financial advisor. What Changed The prior IRS interpretation of the law allowed an IRA rollover every 12 months for each IRA owned by the individual. This interpretation of the IRA rollover rules was clearly stated in IRS proposed regulations and IRS Publication 590.
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Winter 2015 — Partners
A January 2014 tax court opinion, Bobrow v. IRS Commissioner, T.C. Memo. 201421, held that the limitation applies on an aggregate basis, meaning that an individual could not make an IRA to IRA rollover if he or she had made such a rollover involving any of the individual’s IRAs in the preceding 12 month period. On Nov. 10, 2014 the IRS announced it will follow the tax court interpretation and will withdraw the proposed regulations and revise their Publication 590 to the extent necessary to follow that interpretation. The effective date of this interpretation change was Jan. 1, 2015.
Although an eligible IRA distribution received on or after Jan. 1, 2015 and properly rolled over to another or the same IRA within 60 days will still get tax-free treatment, subsequent distributions from any of the individual’s IRAs (including traditional and ROTH IRAs) received within a 12 month period after that distribution will not get tax-free rollover treatment. A rollover between an individual’s ROTH IRAs will preclude a separate tax-free rollover within the 12 month period between the individual’s traditional IRAs and vice versa. The additional distributions will be subject to federal and state tax; and if the individual is under the age of 59-and-a-half, a 10 percent premature distribution penalty may apply. These actions by the IRS will not affect the ability of an IRA owner to transfer funds from one IRA trustee directly to another IRA trustee, because such a transfer is not a rollover and is not subject to the one rollover per year limitation. The key is the individual cannot touch the funds. If you are considering an IRA rollover to provide a short-term source of funds, make sure you only do one rollover within a 12 month period to avoid additional taxes and penalties. If you have any questions about IRA rollovers or other types of retirement plans, contact your local GreenStone tax accountant. ■
TAX NEWS: The H-2A Program The H-2A program for temporary foreign agricultural workers grants a nonimmigrant visa to foreign nationals from specific countries for temporary or seasonal agricultural jobs where U.S. workers are not available. This is a program that is being used more and more for the harvest of the various crops here in Michigan and Wisconsin. U.S. employers must apply through the U.S. Department of Labor to take part in the program, allowing them to bring in foreign workers. This process would include applying for temporary labor certification which certifies that U.S. workers are not available and the employment of the temporary foreign workers will not adversely
affect U.S. workers employed in similar jobs. The approval process and all required paper work will be filed well in advance of when the work becomes available to ensure the workers will be able to arrive on-time for the contracted employment. As part of the program, the employer is responsible for the transportation of the workers to and from their home countries, and to provide them with clean and safe housing when they arrive. As for the wages paid to the H-2A employees, once the employee has been paid more than $600, it is required to be reported to the IRS on Form W-2. The wages paid to these temporary workers will be a set, agreed upon amount that is usually higher than the
normal minimum wage in your state. However, these wages are not subject to U.S. Social Security and Medicare withholding, which means the employer will not have the additional 7.65 percent expense for matching the withheld taxes. These employees are also not subject to mandatory federal or state income tax withholding unless the employee would like the taxes withheld to cover their possible tax liability. In addition, the wages paid by the employer to H-2A workers are not subject to federal and state unemployment taxes. The IRS has specific rules and guidelines to be followed when reporting wages to H-2A employees; these rules are included in IRS Publication 51:
Agricultural Employer’s Tax Guide, which can be found through the IRS website (www.irs.gov). Additional information on the H-2A program is available through U.S. Department of Labor (www. dol.gov) and the U.S. Citizenship and Immigration Services (www. uscis.gov) websites. ■ By Cory Dykhuizen, GreenStone Tax Accountant
Tax Calendar... FEBRUARY
2
Form 1099 due to recipients of certain payments made during 2014 for interest, rent, contract labor, veterinarian services, etc.
16
S Corporations file a 2014 calendar year income tax return (Form 1120S) and pay any tax due. Provide each shareholder with a copy of Schedule K-1. If not able to file, file Form 7004 to request and automatic six month extension.
Form W-2 due to employees for 2014. Farm employers file Form 943 to report social security, Medicare, and withholding. Non-farm employers file Form 941 for the fourth quarter to report social security, Medicare, and withholding.
APRIL
15
First quarter estimate is due for 2015 for individuals that pay estimated taxes.
Employers file Form 940 for federal unemployment tax.
Qualifying farmers file tax return and pay any tax due if a safe estimated tax has not been paid.
Partnerships file a 2014 calendar year return (Form 1065). Provide each partner with a copy of Schedule K-1. If not able to file, file Form 7004 to request an automatic five month extension.
File Form 1096 and Form 1099 with the Social Security Administration.
Corporations deposit the first installment of estimated income tax for 2015.
MARCH
2
All employers file Form W-3 and Form W-2 copy A with the Social Security Administration.
16
Individuals file a 2014 income tax return (Form 1040) and pay any tax due. If not able to file, file Form 4868 to request an automatic six month extension.
30
Non-farm employers file Form 941 for the first quarter to report social security, Medicare, and withholding.
Corporations file a 2014 calendar year tax return (Form 1120) and pay any tax due. If not able to file, file Form 7004 to request an automatic six month extension.
Partners — Winter 2015
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2014 FARM BILL: WELCOMED CHANGES TO FEDERAL CROP INSURANCE By Brandon Walters, GreenStone Crop Insurance Sales Product Manager The Farm Bill signed into law by President Obama in February of 2014 brought about many positive changes for the Federal crop insurance program. It not only enhanced existing programs, it also created completely new policies designed to address existing gaps in coverage availability, and provided additional opportunity to traditionally underserved producer segments. Several of these changes are explained here:
Supplemental Coverage Option (SCO): The SCO is a plan of insurance created in the 2014 Farm Bill. It is a shallow loss policy designed to cover the gap between a producer’s individual coverage, and 86 percent of the county revenue.
The policy was designed for areas where individual coverage up to 85 percent cannot be purchased, and in many cases it makes more sense to buy up your individual coverage if you are looking for additional risk protection.
For example, a producer could have a 70 percent revenue percent insurance policy, and then decide to purchase an SCO policy that would cover the gap between 70 percent and 86 percent based on county revenue.
Beginning Farmer Provision: Starting in the 2015 crop year, qualifying producers will receive a 10 point bump in their subsidy, as well as the benefit of using 80 percent of the T-yield for yield adjustments instead of the traditional 60 percent. This provision can be in effect for a maximum of five years, and requires an additional application. Proof of status is required with application. Enterprise Units (IRR and NIRR): Beginning with this spring 2015 crop, producers will be able to carry separate enterprise units for irrigated and nonirrigated crop land. During the claims adjustment process, irrigated acreage and non-irrigated acreage will remain separate, and not be combined as it has in years past. Separate Coverage Levels (IRR and NIRR): Also starting with the spring 2015 crop, producers will be able to carry separate coverage levels on their irrigated and nonirrigated group. For instance, a producer could choose to cover his irrigated corn at a 50 percent coverage level, and have his dry land corn covered at an 80 percent coverage level. These are just some of the notable changes to the crop insurance program as a result of the most recent Farm Bill. If you are interested in obtaining more information about any of the programs listed, please contact your local GreenStone crop insurance specialist today! â–
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Winter 2015 — Partners
WHOLE FARM REVENUE INSURANCE ANOTHER SIGNIFICANT CHANGE TO COME OUT OF THE 2014 FARM BILL IS ONE THAT IS NOT TALKED ABOUT MUCH. THE 2014 FARM BILL ALSO CALLED FOR THE CREATION OF THE WHOLE FARM REVENUE POLICY, OR WFR. THE WFR POLICY IS AN INSURANCE PRODUCT THAT PROVIDES REVENUE PROTECTION FOR ALL PRODUCED COMMODITIES UNDER ONE INSURANCE POLICY. IT IS DESIGNED TO PROTECT COMMODITIES THAT ARE PRODUCED, AS WELL AS COMMODITIES THAT ARE PURCHASED FOR RESALE, DURING THE INSURANCE YEAR.
corn, soybeans and pumpkins could have a Federal MPCI policy that covers their corn and soybeans, and obtain a WFRP policy to cover their pumpkins. In this type of example, the underlying liability on the corn and soybean policies would be removed from the WFR policy, leaving the protection on the pumpkins. To be eligible for a WFR policy, the producer must: • Be a U.S. citizen
For those who are familiar, it is similar to the Adjusted Gross Revenue (AGR) and AGR-lite policies that have been around for a while now, but instead of only being available in limited areas, this new policy is available in every county within GreenStone’s territory. The amount you can cover is based on reported revenue on your schedule F. Coverage levels range from 50-85 percent in 5 percent increments; and coverage is based on the farm’s five year historic average revenue, or the farm’s current year projection, whichever is less. Liability on the policy is limited to $8.5 million dollars, and the only commodities that are not able to receive coverage are timber, forest, and forest products. Livestock kept for sport, show, or pets are also excluded. The sales close date for the WFR policy will be March 15 annually. WFR protection can be purchased as a standalone policy, or it can be bought in conjunction with other Federal crop insurance policies. As an example, a farm that produces
• Be eligible to receive Federal benefits • File either a Schedule F tax form, or other farm tax form that can be converted to a substitute Schedule F • Have five consecutive years of farm tax history (for 2015 coverage, records from 2009-2013 must be available) • Have no more than 50 percent of total revenue from commodities purchased for resale We are excited about the new WFR policy, because it makes revenue coverage available to basically anyone who produces or sells an agricultural commodity. Michigan and Wisconsin are two of the most agriculturally unique states in the U.S., and this type of policy will make a safety net available in areas where there historically has been no other option. If you think a WFR policy may be right for your agricultural operation, please do not hesitate to reach out to your crop insurance specialist today! ■ Partners — Winter 2015
35
CROP NEWS: Protecting Your Profits
GreenStone’s Crop Insurance Partners At GreenStone, we choose to partner with a number of toprated approved insurance providers (AIPs) in order to match you with the company that can provide you with the best crop insurance experience possible. The providers we currently do business with are: Rural Community Insurance Services (RCIS), Great American Insurance Company, ADM Crop Risk Services, Rain and Hail, NAU Country Insurance, as well as The Climate Corporation, which also offers weather-based insurance products. Each of these companies carry at least an A- (excellent) credit rating with the A.M. Best Company. ■
What Comes with It? Multiple peril crop insurance (MPCI) is federally-subsidized, the cost of premium for equal coverage is the same with every agent that offers crop insurance. At GreenStone, we think you will agree there are a few things that come with the relationship that set GreenStone apart from our competition: 1. Trusted Team Your team of crop insurance experts work with the resources of nearly 500 GreenStone professionals to deliver you a plan that is right for you. We are all painfully aware of the downturn the cash crop market experienced during 2014. The past three to four years have been some of the best for commodity crop prices in recent memory. But like all good things, it appears that time is coming to an end, and markets seem to be getting back to more “normal” levels. That said, making sure you have a risk management plan in place that guarantees some level of profitability is becoming more difficult. In response to declining market prices, most of the crop insurance companies GreenStone works with have developed private products designed to optimize the price protection a producer receives on their crop insurance policy. Using corn as an example, a federally subsidized Revenue Protection policy uses a projected price that is established based on the average closing for December corn futures during the month of February. A producer could also purchase a private pricing product that would allow them to potentially lock in a higher projected price. This of course comes at an additional expense, but it could mean the difference between insuring a break-even price or insuring a loss. If you may be interested in looking into a private policy that can protect prices above where Federal crop insurance ends, get in touch with your GreenStone crop insurance specialist today! The longer you wait, the smaller your window of opportunity becomes. ■
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Winter 2015 — Partners
2. Specialized Experts Our insurance professionals focus only on crop insurance and do not work on commission. They are experts in their field who understand the needs of today’s producer. 3. Individualized Approach We understand your business and will offer you products and solutions to meet your specific needs, help you achieve your goals, leverage marketing opportunities, and mitigate risk. 4. Customer Service We work year-round to create the right plan for your operation. GreenStone professionals serve our customers through a combination of hard work and the latest technology. 5. Communication and Education We work with you one-on-one to review policy changes and determine coverage levels. Throughout the year, our agents will keep you informed and remain available whenever you may need them. ■
Crop Insurance Calendar...
i
JANUARY
STAY CONNECTED WITH YOUR HANDS-FREE DEVICE
15
Fruit Acreage Reports / Yield Reports & Pre-Acceptance Worksheets Due
30
Deadline for January LGM Sign Up
FEBRUARY
The rapid adoption of smartphones and tablet devices in agriculture continues to grow and new software is continuously being developed to provide efficient communication and access to necessary data for today’s agricultural operations. Many equipment manufacturers have developed custom mounting kits for smartphones and tablet devices to provide easy access while keeping an open field of view. Hands-free wireless voice communication can be accomplished through a Bluetooth headset that can be paired with multiple devices such as a smartphone, tablet or a laptop PC. These gadgets do more than just make calls; they can play music, podcasts, and even audiobooks. Bluetooth technology for smartphones has a rated distance of 33 feet, which should allow the operator to continue a communication even when stepping out of the cab. As with any equipment, make sure to follow all the safety information and use caution when connected to your headset while engaging in any activity that requires your full attention.
1 27
Sales Close Date for Onions
Deadline for February LGM Sign Up
MARCH
15
Final date to sign up or make changes for a Spring 2015 Crop Insurance policy. If you are interested in changing the coverage level, type, or need to add a crop, please call your specialist to review your options. Any and all changes need to be completed by the March 15 deadline! Note – even if you are not making any changes, we still need your signed application returned to your agent. Your policy will automatically renew at the same level you insured at in 2014.
27
Deadline for March LGM Sign Up
...Tech-tip
Early Plant Dates Early plant dates may have changed and vary by location. Be sure to contact your GreenStone crop insurance specialist to get the specific date for your area. It is important to note that crop acreage planted before the early plant date is not eligible for replant payments, but will still be eligible for insurance coverage. The insurance guarantee is not impacted as long as producers follow good farming practices. ■
APRIL
29
Organic Crops As a reminder, the USDA Risk Management Agency (RMA) now requires all insured organic certified producers to provide a copy of their organic crop plan and organic certificate to their agent before the acreage reporting date. ■
Production reporting deadline for fall 2014 harvested crops. Before producers get busy in the field this spring, be sure to have your production reports completed, signed and submitted before April 29.
* Please note that some dates can vary by county and state, especially in Wisconsin. Please check with your crop insurance specialist for specific dates if you are unsure.
Person Types and Identification Numbers To better accommodate data reconciliation between Farm Service Agency and RMA, there have been some changes made to the social security number and employer identification number reporting requirements for individuals, estates, and trusts. If you have recently made a change in how an entity has been set up, let your specialist know and they will make sure your policy is renewed using the correct identifying numbers. These records need to be updated before the March 15 deadline. ■
Partners — Winter 2015
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Interest Rates:
Risk to be Managed Federal Funds Rate
7.00% 6.00%
Fed Tightening Cycle
5.00%
Fed Funds Target
4.00%
Fed Average Forecast
3.00%
Market Implied
2.00% 1.00% 0.00%
THE CONSENSUS OF ECONOMISTS’ FORECASTS IS THAT THE FEDERAL RESERVE WILL BEGIN RAISING SHORTTERM INTEREST RATES IN THE MIDDLE OF 2015 IF IMPROVEMENTS IN THE ECONOMY AND LABOR MARKET REMAIN ON TRACK.
Source: www.federalreserve.gov
As a result, interest rates on new financing alternatives may benefit them. Key interest factors: and inflation and existing variable rate loans will unemployment “The Fed has kept interest rates likely rise in tandem with increases to encourage The FOMC has said it is committed tolow keeping interest rateseconomic low until activity, in the federal funds rate. It can also slack fromitsthe laborlongforce and unemployment falls below 6 percentremove and inflation reaches 2 percent be predicted term that target. rates on longer-term keep inflation from falling5.9 too far, However, now that the unemployment rate has reached fixed rate loans will also rise toward percent (see Unemployment Rate chart), the FOMC has deflation,” broadened thissaid goalBrian to or turning into historical norms. As a result, borrowers encompass a wide set of labor market indicators executive to ensure that the president, labor O’Keane, vice should assessmarket their isexposure rising fully healedtobefore raising interest rates. Some of theseand indicators Banking and Finance, CFO of interest rates currently and explore theslack altershow that remains in AgriBank the labor force. As a result, the consensus (GreenStone’s wholesale natives that are available toFed limit thisuntil the forecast is for the to wait middle“Now of 2015that or later begin raisingis bank). thetoeconomy risk to a levelthe that wellrate. within their FedisFunds slowly but steadily growing, the Fed tolerance levels. is expected to increase interest rates The FOMC has also expressed concern about inflation remaining below its 2
Fixed Rates:percent current level fixed to help keep inflation in Price check.” target [seeof Core Personal Consumption Expenditures (PCE) Index rates is very chart low on relative page 4]. to Thehistory majority of FOMC members forecast the core PCE Some borrowers choose to borrow
12.00% 10.00% 8.00%
inflation rate to rise over the next few years, which means that the FOMC will Longer-term fixed rates have little room money at variable interest rates, likely consider raising interest to decline but significant potential to because the initial interest rate on rates as soon as its employment increase, as the five-year U.S. Treasury a variable rate loan is typically goals are met, provided this Unemployment Rate Yield chart indicates. Borrowers should significantly lower than a fixed rate inflation expectation is met. review their exposure to rising interest loan for More the same term. However, recently, the FOMC has in rates and determine whether fixed rate an environment such as today’ been concerned that falling soil—
6.00% 4.00%
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2.00% 0.00%
Fed Forecast Range Actual Winter 2015 — Partners Median Economist Forecast
prices and the stronger dollar may cause inflation gauges to decline. However, the stimulative impacts of lower oil prices on the economy may
when interest rates are likely to rise — a borrower may typically benefit from locking in a low rate. In the recent poll that GreenStone participated in with 15 other Farm Credit association chief financial officers, 65 percent said they expect more farmers and agribusinesses to the lock in interest rates on long-term debt in the next year. “GreenStone has excellent access to the longer-term debt financing via Federal Farm Credit Banks Funding Corporation fixed rate debt issuances,” said GreenStone chief financial officer, Travis Jones. “As a result, we offer a full range of fixed rate borrowing alternatives to our customers who are looking to limit interest rate risk over the term of their debt.”
relative to history Longer-term fixed rates have little room to decline but significant potential to increase, as the 5-year U.S. Treasury Yield chart indicates. Borrowers should review their exposure to rising interest rates and determine whether fixed rate financing alternatives may benefit them.
10.00%
“
5-Year U.S. Treasury Yield
9.00%
As a result,
we offer a full range of fixed rate borrowing alternatives to our customers who are looking to limit interest rate risk over the term of their debt.
8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% Dec-89
Dec-94
Dec-99
Dec-04
Dec-09
Nov-14
Source: Bloomberg
Although the cost of borrowing at fixed rates will initially be higher than borrowing at current variable rates, fixed rates offer several advantages, especially when interest rates are expected to rise: CERTAINTY
• With fixed rate loans, borrowers know what their payments will be for the full term of the borrowing. This eliminates the risk of higher debt service payments in the later years of the loan. VALUE
• A variable interest rate loan requires less cash flow to service the debt initially than a fixed rate loan. However, if interest rates rise, a producer who locked in a fixed rate may benefit from significantly lower interest costs over the long term. This would be especially true if the Federal Open Market Committee (FMOC) is forced to raise rates more aggressively due to an unexpected or unwanted increase in inflation. FLEXIBILITY
• Extending out maturities and locking the availability of borrowings for longer terms delays rollover funding risk until the loan matures. Borrowers should also strongly consider pre-payable fixed rate loans to reduce the risk of longer-term fixed rates falling to new lows. This could happen due to an unforeseen economic or geopolitical event, or if the FOMC is faced with inflation well below its target, or deflation. GreenStone offers flexible loan conversion options to lock in lower fixed rates when long-term fixed rates decline.
At GreenStone, approximately 60 percent of its loan balances have a fixed rate for the life of a loan. Many of GreenStone’s customers see the advantages of the certainty, value and flexibility of a fixed rate loan and have been able to utilize them for their financing needs. Farm Cash Management: another interest-saving solution Obtaining a low interest rate and locking in a fixed interest rate are not the only ways to save on borrowing costs. Cash management solutions combined with a revolving line of credit may also yield significant savings on interest and fees. Many farm operations have a revolving line of credit to supplement their working capital. GreenStone offers the opportunity to
5
”
combine your revolving line of credit with your farm cash management account. The farm cash management account acts much like a liquid money market investment account that can be used to receive and make payments. The customer can deliver business receipts directly to the revolving line of credit, minimize the loan balance and related interest charges, use credit line drafts to pay bills, incur interest charges only once a draft is actually processed, and earn interest on excess funds in the farm cash management accounts. ■
RESULTS ARE IN: A POLL OF CHIEF FINANCIAL OFFICERS (CFOs) OF FARM CREDIT LENDERS IN AMERICA’S HEARTLAND FOUND THAT, AFTER SEVERAL YEARS OF LOW INTEREST RATES, THE COST OF BORROWING IS EXPECTED TO RISE AS THE FEDERAL RESERVE CONTEMPLATES TIGHTENING MONETARY POLICY. • Sixty-five percent of CFOs surveyed said they expect more farmers and agribusinesses to lock in interest rates on long-term debt in the next year. • Sixty-three percent of CFOs expect agricultural operations to hold steady in their investment in new employees, with 25 percent expecting a decrease and six percent expecting an increase. • The CFOs were split 50-50 as to whether agricultural borrowers
would hold steady in their investment in new equipment or decrease such an investment. • Sixty percent of CFOs said they expect farmers to hold steady in their investment in farmland, versus 33 percent who said they expect an increase and seven percent who expect a decrease. GreenStone CFO, Travis Jones, says he anticipates dairy operations to continue acquiring land in 2015.
Partners — Winter 2015
39
The team you can count on...
TRUSTED CROP INSURANCE– Start 2015 off right and put your personal team of experts to work for you. Our crop insurance specialists will leverage the resources of GreenStone’s 500 professionals to tailor a plan for your business. Contact the trusted source and build a risk management plan with your local branch today.
800-444-FARM
GreenStone FCS is an equal opportunity provider and employer.
www.greenstonefcs.com