GreenStone FCS
Winter 2020
Promoting the business success of our customers and the rural community
+W inter 2020
Market Outlook +P atronage Payments
THE LEARNING CURVE Amanda Leik pg. 5
WINTER 20 5 YBSF Feature. As a solo farmer, full-time GreenStone employee, and mom to three young daughters, Amanda Leik knows a thing or two about organization. Running a farm by herself was not in her original plan, but when her husband unexpectedly passed away five years ago, Amanda chose to continue the work they had begun together.
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19 GreenStone Story. The question we recently asked ourselves as a company, “How can we better help our cooperative members and customers in 2020?�
35 Tax and Accounting Feature. A detailed and realistic budget is one of the most important tools to guide your business.
41 Crop Insurance Feature. GAP is a 27 Country Living Feature. After agreeing to purchase the 31-acre property, Michael and Karen Flynn had approximately three months to find financing, and sell a house in Royal Oak.
great risk management strategy to help protect your investment when Mother Nature throws a curve ball.
3 CEO Comments. President and CEO, Dave Armstrong, acknowledges the difficulties of last year and also points to the positive.
29 Health and Wellness.
9 Market Outlook. After experiencing a grueling, roller-coaster year of weather, tariff and market demand issues, you can use this market outlook to add balance to what occurred, what is happening now, and what is forecasted for the immediate future.
30 2020 Resolutions. Everyone likes the idea of a new year and a fresh start. Many of us pin a resolution or two on January and vow to succeed.
17 Patronage. 15 years ago, $12.5 million was a number smashing the record books. Today, that number is $100 million and we’re still ecstatic to have your partnership pay in such a significant way. 21 Directors’ Perspective. Hear from three of your GreenStone Directors on their view from the board room and the tractor seat. 23 Governance. As a member, you have three opportunities to be involved in the association leadership – the Board of Directors, the Nominating Committee, and voting.
25 Legislative Matters. We all need to be careful on labeling and being labeled.
26 PAC Progress. The 2020 election year will be another busy year to build on successes and be proactive in strengthening the recognition of rural communities and agriculture.
Temperatures fall, snowflakes fall and as a result, all too often people fall too. The good news is people can outwit and prevent winter slip, sliding and falling.
33 Guest Column. While a foundation has been set for long-term viability for leading commodities in Michigan, the short-term remains challenging.
8 Blog Brief
12 Member News 13 Calendar of Events 14 Candid Comments 15 Behind the Scenes 16 Pause for Applause
31 Commodity Cuisine... Bacon Corn Chowder 32 Blog Brief
Publisher’s Note: Planning, goals, resolutions, teams…I’m not exactly a betting girl, but if I were, I’d bet at least one of those words, likely even all four, struck a chord with you. Whether we’re talking about business, home or family, there aren’t many of us simply hitting the repeat button over and over again. Take me for example, our department has spent several hours planning the marketing and public relations top priorities along with the minute tactics to support GreenStone’s business goals in 2020, shared further in The GreenStone Story on page 19. And to help us achieve those, we’ve dug a bit deeper as a team to understand and appreciate our individual personalities and talents, because we’ve realized we can’t support each other if we can’t fully appreciate each other. The team perspective is something that rings true for many businesses, and it’s nothing lost on our members. Take Director Andy Snider as an example, on page 21 he shares his resolution to focus in on the plan to fully integrate his son into the management of the farm team. At my home, our family team is in the thick of finalizing the plans for our own building project, a barn to start a small cattle herd and raise the kids’ fair livestock projects. While it’s no comparison to what Amanda, young farmer featured on page 5, is planning each day, it’s an important step toward our family’s goals. Speaking of goals, there’s a big one GreenStone crowned in 2019. Jump to page 17 for our patronage return announcement, with checks being handed out on March 11! These are a few examples of what you’ll find as you read through this issue of Partners. But more importantly, they are a few examples of what I know each of you are doing every day…setting goals, developing plans, engaging the team, and maybe event throwing in a personal resolution or two. Your job can’t be summarized in a few words or even in the 44 pages of this magazine, but it can be recognized and appreciated, and we’re here to do that and to partner with you through it all! Here’s wishing you a few moments of successful planning toward a rewarding 2020. Happy reading! – Melissa
37 Tax Calendar 38 Crop Insurance News
This newsletter is published quarterly for the customers of GreenStone Farm Credit Services.
39 Crop Insurance Calendar
Editorial Cassie Bowman Amber Echlin Jean Macleod Melissa Rogers
40 Tech Tip
Art & Design William Eva Annah Horak
Partners GreenStone Farm Credit Services 3515 West Road East Lansing, MI 48823 800-444-3276 marketing@greenstonefcs.com
CEO Comments:
Welcome to 2020 I HOPE THIS ISSUE OF PARTNERS FINDS YOU RESTED AND RELAXED FROM THE HOLIDAYS WITH ALL YOUR CROPS FINALLY IN THE BIN! OF COURSE, I’M NOT NAÏVE ENOUGH TO BELIEVE THAT THE ENTIRE 2019 CROP IS HARVESTED, AND REALIZE SOME HAS ALREADY BEEN LOST FOR THE SEASON. HOWEVER, IT’S A NEW YEAR AND HOPE SPRINGS ETERNAL IN ALL OF US EVEN THOUGH IT‘S HARD TO FEEL UPBEAT WHEN OUR PLANS, HOPES, DREAMS, AND HARD WORK DO NOT PRODUCE THE RESULTS INTENDED. Yet, just the fact we live in the greatest country on earth (despite its challenges) means we have more than the vast majority of the world’s population. No matter how 2019 may have turned out for you and your farm business, we are all blessed and need to be grateful for what we have! Very few of us ever go without the things we really NEED (i.e. food, shelter, clothing, family and friends, excellent medical care, etc.). Yet, we define our sense of self-worth and happiness by the things we WANT, none of which will truly make us happy long term (i.e. more money, a bigger home, nicer car, more land, larger equipment, etc.). One thing is certain, we have picked an industry for our livelihoods that abounds in challenges, which will only accelerate in the future. If we do not have a solid personal foundation that consists of what is truly important in life, the “ride” will never be worth it. Last year is in the rear-view mirror and in just a short two
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Winter 2020 — Partners
to three months it will be the start of the new growing season again! While many of our members did not achieve their original business plan projections for 2019, I am pleased to report your cooperative had a successful year achieving nearly all of its business goals. Loan growth ended the year at 8.6 percent, contributing to record net earnings of just over $200 million. For GreenStone, net earnings is the result of strong non-interest income, lower than expected loan loss provisions, very manageable credit quality, and solid expense management. Put simply – it’s the addition of new members doing business with GreenStone, farmers who have successfully adjusted their farm to weather the economic and environmental challenges, and staff conscious of being fiscally responsible and accountable with the spending of our owners’ (members) money.
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Personal relationships and partnerships with our members are at the heart of what GreenStone is all about and is the “secret sauce” that makes this “partnering pay” in a very tangible way.
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Financial success keeps the foundation of your cooperative strong, but it doesn’t tell the whole story. The real story includes the 25,000 relationships we have with each one of our members—our members who rated their experience of doing business with us in 2019 at 94 percent satisfied or very satisfied. These relationships revolve around having people at GreenStone who truly put the customer first, who you can reach out to help provide you with not just solid financial solutions for many of your credit, insurance, accounting, and tax needs, but also to be a listening ear and trusted advisor for things that go beyond interest rates and commodity prices. What we do is truly a “people business” and the way we “keep score” are the financial results. Without great employees and members, these kind of “scores” would be impossible! Personal relationships and partnerships with our members are at the heart of what GreenStone is all about; it’s our secret sauce that makes partnering pay in a very tangible way. GreenStone continues to deliver by offering competitive pricing up front on all its products and services. On top of that, sharing a significant portion of its net earnings with its members each year, for the last 15 years, and 2020 will be no exception! GreenStone will pay back a single year patronage record of $100 million to members on March 11, 2020, bringing total patronage paid to members to $500 million over the last 15 years.
January 1, 2000, followed by the addition of Michigan’s Upper Peninsula and northeastern counties of Wisconsin in 2003. The vision created over 20 years ago of combining these smaller organizations into a larger, more efficient financial institution that could still put the customer first AND achieve strong financial results for its members only continues to get better and better! Moreover, we are not stopping here! GreenStone focused the entire organization on a much more detailed and aggressive business planning process for 2020. I won’t delineate all the steps and activities involved, but it is important for you to know the process produced a higher level of project planning acumen that is already paying dividends in terms of expectations for deliverables, including improved team communication, engagement, and prioritization. The 2020 business plan includes 16 initiatives (projects), that are prioritized to strengthen your cooperative further by improving operational efficiency, increasing growth and limiting expenses, while inspiring an even stronger workforce of aligned and engaged teammates.
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For example, we did a study of our country living loans and found, on average, it was taking too many hours to underwrite relatively small loans. Things like reducing the time from loan application to close is a key driver to improve not only efficiency, but customer satisfaction as well. Members of our team then examined every part of the process for ways to shorten this time and expect to reduce it by 50 percent! Further, we continue to pilot new procedures and processes from title insurance ordering, to appraisal, and consumer lending regulatory specialization. Combined with the underwriting advancements previously made, these improvements will cut the overall time from application to close from around 45 to 25 days!
Providing a high level of individualized service coupled with this level of return is well beyond what the boards of directors (and former CEOs!) ever thought was possible when GreenStone was organized through the merger of four smaller Farm Credit association’s in Michigan’s lower peninsula on
Another significant project is a “hybrid underwriting” process for agricultural loans. Using a customized, internally-created “scorecard,” along with other analytics and predictors, this will provide for a more streamlined approval of loans up to $500,000. The improved process reduces the complexity
Similar to last year, the 2020 patronage payment will represent (on average) 1 percent of the interest rate a member paid to GreenStone during the year. We believe this is the most tangible value, particularly in times like this past year, we can provide to make your partnership with GreenStone pay even more.
involved with differential information gathering, extensive loan narratives and individual analysis, and lending rubrics. Going from weeks to days to complete the process, this significant accomplishment will greatly improve customer service, reduce costs, and help focus staff time on areas where more due diligence is needed. These are just two examples of how GreenStone will continue to inspire, grow, and improve in everything we do to find new and better ways of delivering higher levels of value to you, our owners. Looking beyond the tough year we just experienced and all the negative rhetoric in the media, I am excited about the future of our industry and how GreenStone’s culture of continuous improvement will only serve to make it “rural America’s first choice for credit and financial services” for many years to come! As always, feel free to contact me directly if I can ever be of assistance. We realize you have many choices in financial services providers, and I want to thank you for choosing GreenStone. Best wishes for a safe, healthy, and productive 2020!
Dave Armstrong
517-318-4105 dave.armstrong@greenstonefcs.com
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The
LEARNING CURVE AS A SOLO FARMER, FULL-TIME GREENSTONE FARM CREDIT SERVICES EMPLOYEE, AND MOM TO THREE YOUNG DAUGHTERS, AMANDA LEIK KNOWS A THING OR TWO ABOUT ORGANIZATION. RUNNING A FARM BY HERSELF WAS NOT IN HER ORIGINAL PLAN, BUT WHEN HER HUSBAND UNEXPECTEDLY PASSED AWAY FIVE YEARS AGO, AMANDA CHOSE TO CONTINUE THE WORK THEY HAD BEGUN TOGETHER.
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Sharing her learning curve, Amanda highlights what makes life easier while farming as an individual and as a woman... Don’t try to do it all.
“I think the first thing I learned is that you can’t do it all yourself,” Amanda says. “If you’re going into farming as an individual you will need to either enlist your family or develop relationships with people you can hire or go to for expert advice. “I have a hard time accepting help just because I like to do everything on my own. But I think it comes to a time where you just have to hire things done. I hire out my harvesting; owning machinery and performing maintenance is just too expensive for a small farmer.” Start small.
Starting small is the best way to start farming, Amanda feels. It allows for flexibility. Renting acreage, or starting by providing farm-to-table fruits and vegetables to restaurants or markets are paths to getting your feet wet before a beginning farmer invests a lot of money.
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Farming is my passion and what I love to do, but when it’s your sole income, it’s a lot harder, especially starting out without having some extra income coming in.
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And keep your day job.
Amanda farms 250 acres of corn, wheat, soybeans and alfalfa and keeps 35 cows. Like many farmers, she also has a ‘regular’ job to supplement irregular farm earnings. Employed as an associate crop insurance specialist, Amanda appreciates GreenStone’s work culture, allowing her flexibility when needed to accommodate her children’s’ school hours and attend extracurricular activities. “Farming is my passion and what I love to do,” she comments. “But when it’s your sole income, it’s a lot harder, especially starting out without having some extra income coming in.” Protect your investment.
Working in crop insurance, Amanda understands the benefits of insurance for farmers, and encourages farmers to connect with a local branch expert. GreenStone also offers young, beginning and small farmer loans and Grow Forward Grants along with taxplanning services and other resources that help farmers succeed. Stay organized.
Juggling farm, work and family requires organization and the ability to multitask. “I don’t do well sitting still. I always want to be busy and I think most farmers are like that. I complain ‘my life’s so chaotic’ but I think I thrive off that chaos, ➡ Left: Amanda Leik stands with her three daughters, Lainey, 9, Emily, 11, and Kelsey, 13, in front of their Centennial Farm in Lyons, Michigan. ➡ Right: Amanda farms 250 acres of corn, wheat, soybeans and alfalfa, and has a herd of 35 cows. According to Amanda, the key to solo farming is asking for, and accepting help!
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having so many things going, and I do better under those conditions.” Amanda relies on her phone calendar to keep her on task and on time for appointments. She sets audible reminder notifications to keep her on track.
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Ask for help.
Asking for help and importantly, accepting help when it is offered is a game-changer. “I would tell a beginning farmer to not be afraid to ask experienced farmers for help or advice. Use other people as your resource! Ask neighbors who are farming, go visit other people’s operations, see what they’re doing. I haven’t met any farmer that isn’t willing to do anything for you if you ask a question.” Show confidence.
As a solo woman farmer, Amanda occasionally encounters a double standard. She advises women who farm to act confident and go get what they need – even if they don’t feel confident at first. It’s okay not to know it all, but she finds people treat you with respect when you display a selfassured attitude toward learning.
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I would like my own daughters to go into farming, but maybe on a part time aspect and not as their sole income. It’s a hard life. It’s a good life, but it’s hard. I would like them to have the best of both worlds!
Amanda encourages women to seek out organizations or social media groups that support women in farming. Based in Michigan, the Farm Women’s Symposium offers professional development, friendship and support to women in agriculture. The University of Wisconsin’s “Heart of the Farm – Women in Agriculture” website advances the evolving role of ‘farm wives’ to women as independent farmers. “I would like my own daughters to go into farming,” she admits. “But maybe on a part time aspect and not as their sole income. It’s a hard life. It’s a good life, but it’s hard. I
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would like them to have the best of both worlds!” Know it’s a lifestyle.
“I wouldn’t be able to do any of this without my family,” Amanda emphasizes. “That’s the number one thing. So go into farming understanding that you’re either going to have to have help built-in or you are going to have to hire it – and I do both. As the kids get older they help out, and for them I don’t think it ever feels like work. When we go do chores, it’s about us being together as a family and doing things together. It’s really the best part of life on a farm.” ■
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AGRICULTURE – OPEN FIELDS BLOG BRIEF GreenStone publishes regular updates on our Open Fields blog. Check out some of the posts you may have missed at www.greenstonefcs.com/openfieldsblog.
Risk Management: ARC or PLC? Your formula for choosing Agricultural Risk Coverage at the County Level (ARC-CO) or Price Loss Coverage (PLC) is as personal as the crops you grow, your acreage and expected yields, and the county where you farm. Managing risk starts with understanding the best protection for your farm. Find more information and a list of upcoming extension meetings in the full Open Fields Blog article online. Diversifying the ACBFR as a Female Dairy Farmer
Increase in Poultry Industry Creates Career Demand
Dr. Kohl: Critical Thinking through Core Values
GreenStone member and five-generation dairy farmer, Amanda Jo Carey Goodfellow, brought her small town perspective to the USDA’s Advisory Committee for Beginning Farmers and Ranchers to the recent meeting and met growers from across the nation.
To support the growing poultry industry, manual, skilled and management level positions need to be filled. Organizations and internship programs are helping fill this demand by preparing students with tools to succeed in the growing industry.
Defining and reflecting on core values provides peace of mind and the necessary objectivity in emotional business environments. ■
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Winter 2020 Market Outlook By Matthew Naeyaert, Senior Credit Analyst and Nicholas Jablonski, Capital Markets Credit Manager AFTER EXPERIENCING A GRUELING, ROLLER-COASTER YEAR OF WEATHER, TARIFF AND MARKET DEMAND ISSUES, YOU CAN USE THIS MARKET OUTLOOK TO ADD BALANCE TO WHAT OCCURRED, WHAT IS HAPPENING NOW, AND WHAT IS FORECASTED FOR THE IMMEDIATE FUTURE. BY PROVIDING THE CURRENT NATIONAL MARKET OUTLOOK TO OUR FARMERS IN MICHIGAN AND WISCONSIN, WE OFFER INSIGHT AND COUNTRYWIDE PERSPECTIVE TO A VIEW OF THE OVERALL ECONOMY.
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Winter 2020 — Partners
GDP exceeds expectations
Housing market trending up
The U.S. economy has continued to grow at a modest pace in 2019, despite headwinds from trade uncertainty. In its latest publication, the U.S. Department of Commerce reported real Gross Domestic Product (GDP) at an annual rate of 2.1 percent in the third quarter of 2019, which exceeded the original expectation of 1.9 percent for the quarter.
The housing market is also maintaining strong figures in 2019 and looks to carry that momentum into 2020. Sales of new homes have risen in two of the past three months and are on the strongest pace since August 2007. Sales of existing homes have improved as well, with single-family homes accounting for practically all of the increase. These trends have provided a boost to homebuilder confidence, with single-family ‘starts’ rising for five months in a row and growing at the strongest pace since October 2007.
Compared to 2018’s third quarter GDP growth of 3.4 percent, the 2019 GDP figure indicates the rate of economic expansion is slowing in the U.S. The increase in real GDP reflected positive contributions from personal consumption expenditures, federal government spending, residential investment, private inventory investment, exports, and state and local government spending that were partly offset by a negative contribution from nonresidential fixed investment. Imports, which are a subtraction to GDP, increased. Labor market shows job growth
The labor market continued its streak of consecutive months with job growth in 2019. The November report showed nonfarm payroll rose by 266,000 and the unemployment rate was little changed at 3.5 percent. The 266,000 jobs far outpaced economists’ estimate of 185,000, which eased recession fears. Notable job gains occurred in health care and in professional and technical services. In addition to top-line job growth, average hourly earnings also showed strength, with wages in November 2019 increasing by 3.1 percent compared to 2018. The combination of strong job and wage growth bodes well for the U.S. economy, particularly consumer spending, moving into 2020.
The current low interest rate environment is credited as the main driving force behind the improvement in the housing market. With the Federal Reserve indicating any future rate increases are on hold, these positive housing trends are anticipated to continue in 2020.
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Once fully ratified and effective, the USMCA is expected to further increase trade and economic cooperation between the U.S., Canada, and Mexico, which will hopefully drive economic growth and development for all parties.
U.S./China Reach Agreement on “Phase I” Trade Deal
On December 13th, representatives from the U.S. and China announced agreement on a “Phase I” trade deal between the two nations. As part of this preliminary Interest rates reduced as economy deal, the Trump Administration grows at moderate rate suspended its plan to impose a At the October 2019 meeting, new round of tariffs on Chinese the Federal Reserve lowered the goods and reduced some existing federal funds target rate by taxes on Chinese imports. In 0.25 percent, bringing the return, China has reportedly target range to 1.5 percent-1.75 agreed to buy $40 billion a year percent. This was the third in U.S. farm exports over the 0.25 percent cut in three next two years. To put that $40 months, following four rate billion figure in perspective, U.S. increases in 2018. farm exports to China have never topped $26 billion in any one year. In it most recent meeting minutes the Federal Reserve The impact from China’s stated that the economy was retaliatory tariffs has been growing at a moderate rate, substantial for U.S. agriculture and that the job market and over the last several years, with consumer confidence remain U.S. farm exports to China, which strong. hit a record $25.9 billion in 2012, falling to $9.1 billion last year. If However, weaknesses in China does indeed follow through global growth and trade developments have weighed on with its commitment to increase the economy and pose ongoing purchases of U.S. agricultural products to $40 billion, it could risks, which necessitated the lead to increased demand for cut in rates to sustain the economic expansion. Chairman U.S. agricultural products. That being said, it should be noted that Jerome Powell also stated that China has yet to confirm the $40 monetary policy is stable, and billion figure, and many experts signaled rates would likely have expressed trepidation that remain at this level until there increasing agricultural exports to is material change to the China to that extent may not be economic outlook. feasible in the short-term. Many
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farmers say they are hopeful but restrained in their expectations for the Phase I trade deal. One positive sign is Chinese imports of U.S. soybeans more than doubled in November, after the Phase 1 agreement was initially announced in mid-October. USMCA ratification
The United States-MexicoCanada (USMCA) trade agreement, which was signed in November 2018 by all three presidents, is still awaiting final ratification in Canada and the United States. That being said, in a bipartisan vote the U.S. House of Representative’s passed the USMCA on December 18th by a 385 to 41 margin, with 193 Democrats and 192 Republicans backing the pact. The Senate is expected to pass the USMCA legislation early next year, after which the president would sign it into law. Mexico’s Senate has already approved the deal, however it still needs final ratification in Canada in order to become effective and replace the North American Free Trade Agreement (NAFTA). Once fully ratified and effective, the USMCA is expected to further increase trade and economic cooperation between the U.S., Canada, and Mexico, which will hopefully drive economic growth and development for all parties. Partners — Winter 2020
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Importantly, in looking at the national market outlook, farmers can see that seasonal setbacks are not the entire picture and that their hard work and resilience will have the opportunity to move current assets upward in the season to come.
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Dairy industry points toward recovery
The dairy industry experienced a bit of recovery in terms of market prices and profitability in 2019. The average Class III price in 2019 through November equals $16.74 per hundredweight (/cwt), driven by higher prices for cheese and whey, and is on pace to be the highest Class III price since 2014. The all-milk price for 2019 is now forecast at $18.60/cwt, which is a significant improvement from the 2018 all-milk price of $16.15-16.25/cwt.
payments are projected to increase in 2019. Direct payments are forecasted to increase by $8 billion (64 percent) from 2018 to 2019, with nearly all this increase coming from large payments in the Market Facilitation Program. This program was developed to assist farmers in response to trade disruptions and will pay out a total of $14.5 billion in 2019. Farm real estate ‘incredibly stable’
Farm equity/wealth is forecasted to rise 2.2 percent in 2019 to $2.68 trillion. In 2019, the U.S. dairy herd has decreased The increase is driven primarily by a to its smallest size since early 2016 (9.318 2.1 percent increase in real estate million cows). However, because of valuations as farm real estate assets productivity improvements, total milk account for 82.7 percent of 2019 farm produced is up roughly 2 percent from sector assets. Increases in financial assets, 2018 milk production. In addition to the 3.6 percent, and machinery and vehicles, stronger milk prices received, dairy farmers 3.0 percent, more than offset declines in are also receiving higher cull cow prices, inventories. Farm real estate debt is forecast with an average 2019 price of $55.77/cwt to reach $256.9 billion, a 4.6 percent compared to 2018 price of $50.01/cwt. increase, and represents 61.8 percent of total farm debt. Non-real estate debt is expected Farm earnings increase Farm earnings appear to be on the road to to only increase 1.4 percent. recovery after several very difficult years Farm real estate values per acre have for most U.S. farmers. Net farm income is remained incredibly stable during this forecasted to equal $92.5 billion in 2019, period of low commodity prices, which an $8.5 billion (10.2 percent) increase is a stark difference from the farm crisis from 2018. If realized, this level of net of the 1980’s and significant benefit to income would be above the historical farm balance sheets. Michigan’s farm real average across 2000-2018. Crop receipts estate average value per acre was $4,900 are forecasted to increase by 1 percent, in 2019, a 0.2 percent increase year-overwith sector leaders including vegetables/ year. While Wisconsin’s average value per melons and corn, and offset by lower acre totaled $4,950 in 2019, which is a receipts for soybeans and wheat. 1.0 percent increase from 2018. Total animal/animal product receipts are Understanding what is occurring (and expected to rise just 0.1 percent, with what is projected to occur) in the broader milk and hogs leading this sector, and economy provides a helpful backdrop lower receipts for poultry/eggs. Overall, for farm decision-making on the local lower expected quantities of agricultural level. Importantly, in looking at the products will be marketed in 2019 -- but national market outlook, farmers can see this is more than offset by the positive that seasonal setbacks are not the entire effect of higher prices, which is leading to picture and that their hard work and the overall increase in cash receipts. resilience will have the opportunity to Another positive for U.S. farmers is the level of direct government farm program 11
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move current assets upward in the season to come. ■
CONNECT
NEWS:
GROW FORWARD GRANT PROGRAM GreenStone recognizes the importance of young, beginning, and small farmers and the role urban food production and diverse producers play in sustaining rural communities and agriculture! We believe in the value of education to prepare all producers to successfully compete in a highly competitive market. This program will support their education with initiatives provided through a variety of partner organization opportunities and will help strengthen their businesses. In 2020, GreenStone will again award up to $40,000 in grants to young, beginning, and small
farmers to help offset their costs. The grant amounts will be up to $1,000 to current customers and up to $500 to non-GreenStone customers. Eligibility: • Young, beginning or small farmer – 18-35 years of age, or – Farming for less than 10 years, or – Sustain annual gross sales from agricultural production of less than $250,000 • Must be eligible to be a member of GreenStone: reside in Michigan or northeast Wisconsin
Intended grant use must fall within one of the following categories: • Agricultural programs/events: educational course/program (on-site or online), conference fees, etc. • GreenStone resources: first time use of accounting and tax services, technology support, etc. • Non-GreenStone services: business and farm consultants, etc. Interested in applying? Visit www.greenstonefcs.com/ybsf for more information. ■
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Resort in Gaylord, MI. The event provides women in agriculture opportunities for leadership and development, enhancing communication and management skills, building effective family and family teams, and developing a network of supportive friendships. GreenStone will once again provide $150 scholarships toward the cost of registration for our members, (be sure to indicate your branch on your registration form).
GreenStone Scholarships: Apply Now
a two-year college program are eligible for a $1,000 scholarship.
GreenStone’s 2020 scholarship program is now accepting applications to award up to $40,000 to incoming college freshmen pursuing a degree in agriculture-related fields. Students planning to earn a four-year degree are eligible for a scholarship of $2,000 and students attending
For complete program guidelines and application, visit www. greenstonefcs.com. Application deadline is February 29, 2020. ■ Farm Women’s Symposium The 29th annual Farm Women’s Symposium will take place March 4-6, 2020 at the Treetops
Visit the Farm Women Symposium website for more event information, www. farmwomenssymposium.com. ■ Ladies’ Day Out The 2020 Ladies Day Out event for GreenStone customers will take place on Thursday, February 13, 2020 at the Radisson Hotel and Conference Center in Green Bay, Wisconsin.
Perry. Michael is a New York Times Bestselling author, humorist, singer and songwriter, and even intermittent pig farmer. GreenStone’s Wisconsin members can refer to the invitation received in the mail for more details and to RSVP for the event. Contact any of our Wisconsin branches for more information. ■ Annual Report date notification This is an official notice that the 2019 GreenStone Farm Credit Services annual report will be available for viewing online at www.greenstonefcs.com by Friday, March 13, 2020. In addition, the annual report will be mailed to all stockholders within 90 days of year-end. By regulation, GreenStone is required to send a copy to each stockholder, regardless if it is a duplicate address. ■
This year, guests will get to experience the world of Michael
Mark Your Calendar... JANUARY
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GreenStone Offices Closed In honor of Martin Luther King, Jr. Day
FEBRUARY
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DBA Dairy Strong Conference (22-23) Monona Terrace, Madison, WI
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Great Lakes Crop Summit (29-30) Soaring Eagle Resort, Mount Pleasant, MI
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Great Lakes Regional Dairy Conference (6-8) Bavarian Inn Conference Center, Frankenmuth, MI Winter Potato Conference (12-14) Soaring Eagle Resort, Mount Pleasant, MI Ladies’ Day Out Radisson Hotel and Conference Center, Green Bay, WI GreenStone Offices Closed In honor of Presidents’ Day
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Outdoorama (27-3) Suburban Collection Showplace, Novi, MI
MARCH
GreenStone’s
11 Patronage Day Ultimate Sports
19 Show (19-22)
DeVos Place, Grand Rapids, MI GreenStone Logging
24 Forum (Escanaba)
Island Resort and Casino, Harris, MI
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Farm Women’s Symposium (4-6) Gaylord, MI
26 Forum (Gaylord)
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Michigan State FFA Convention (4-6) Michigan State University, East Lansing, MI
31 Service (WPS) Farm
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MFB Young Farmer Leaders & Voice of Ag Conferences (21-23) Amway Grand Plaza Hotel, Grand Rapids, MI
Great Lakes Hops & Barley Conference (5-7) Park Place Hotel, Traverse City, MI
GreenStone Logging Treetops Resort, Gaylord, MI
Wisconsin Public Show (31-2) EAA Grounds, Oshkosh, WI
2020 LOGGING FORUMS
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The Cadillac Branch and Financial Service Officer Kim Cool earned high marks from a recent customer, saying this about the team: “Professional, friendly and made us feel important. We’ll definitely work with Mrs. Cool again.
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— Highly Satisfied Cadillac Branch Customer
“ Success in the timber industry takes planning, hard work, good management and longterm commitment. As a long-term, reliable financial partner to the lumber industry, GreenStone knows this. To provide our members and individuals working in timber with mill updates, information about equipment financing, legislative commentary and the opportunity to earn SFI points, GreenStone will be hosting two free Logging Forums in northern Michigan.
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— Amanda Kik, Co-Founder and Co-Director, Northern MIchigan Small Farm Conference
• Tuesday, March 24 at Island Resort and Casino in Harris, MI • Thursday, March 26 at Treetops Resort in Gaylord, MI Both Logging Forums will run from 8:00 a.m. until 1:00 p.m. Breakfast and lunch will be provided. There is no cost to attend, however registration is required. To learn more or to RSVP, go to greenstonefcs.com. ■
Thank you for sponsoring the 2020 Northern Michigan Small Farm Conference. Because of your generosity, we are well-positioned again this year for a successful event—engaging more than 1,100 farmers and growers in 25+ conference workshops, three tracks of full-day Farm School, a two-day tradeshow and much more!
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Thank you so much! We value your partnership and your commitment to our 4-H youth.
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— Brenda Scheider Executive Director, Wisconsin 4-H Foundation
2020 HOME CONSTRUCTION SEMINARS Building your dream home starts with creating a plan on how to begin; with so many construction choices, it’s important to choose the right option. During February and March, GreenStone will host free Construction Seminars to help you understand which plan will work best for you. Hear from construction loan experts about various loan options, qualifications, the draw process and the difference between do-it-yourself and contracted projects. For more information or to attend a Construction Seminar near you, go to greenstonefcs.com. ■
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BEHIND THE SCENES– In this behind the scenes, two GreenStone employees speak about the business initiatives they are championing for 2020, why they have been prioritized as top areas of focus, and how each will support the cooperative in better serving customers. Ian McGonigal Senior VP of Regional Sales 19 years of service East Lansing, MI How will your work on sales training and prospecting benefit new customers, improve customer satisfaction, and ultimately help GreenStone grow to continue being a financially strong cooperative? Our marketplace demands high quality service, which is why our goal is to develop, train, and implement a process that best ensures prompt, customer focused, consistent engagement with customers and prospective clients. Our new sales training program will allow GreenStone to support our staff in providing outstanding and professional customer service to the marketplace. This will help GreenStone maintain and strengthen its strong customer satisfaction results and continue to be a financially strong cooperative. How does your experience assist you with championing this initiative? I was a financial services officer for 12 years and since then a sales leader. These roles have taught me how critical strong and healthy relationships are for both GreenStone and our customers. This sales training program will help our team develop and maintain strong, productive relationships that last for generations. How will this initiative benefit our members? Our members expect professional and knowledgeable customer service and we understand this. These initiatives will train our staff to ask better questions, have more productive and efficient conversations and help us uncover the current and future needs of our customers. We hold ourselves accountable to very high standards when it comes to servicing our members with respect, knowledge and professionalism. What are some of the key changes you have seen at GreenStone in your tenure? When I first started as a financial services officer with GreenStone, I did it all! Everything from meeting with customers, analyzing credit requests, completing appraisals – all were a part of the job back then. Today, GreenStone has advanced with our customers, and has specialized staff in each of these areas. This provides a faster and higher quality service. It also allows our financial services officers more time to spend with customers and understand their businesses and their financial needs. 15
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What do you enjoy doing in your free time? My wife Julie and I have two children; Aidan (12) and Reese (8). Both are involved in travel sports, which means most of our “free-time” is spent running our kids to sporting events. It’s a family experience; we love it and would not change a thing. When not on the road to kids’ sports, we enjoy traveling and spending time at our cottage in southern Michigan. Ann Allen Regional VP of Sales & Customer Relations 10 years of service Cadillac, MI How will the Young, Beginning, and Small Farmer program better serve the customer? Our young, beginning, and small farmers (YBSF) has always been a priority to GreenStone. Our next generation is evolving, and we have to grow and change to meet their demands. GreenStone has prioritized the initiative to take a closer look at the current
program in order to make improvements to better serve our customers and future customers. How does your experience assist you with championing this initiative? As a financial services officer for 8 years and now a regional leader for 2 years, I have had the opportunity to work with several YBSF customers. I have both led and watched business relationships evolve between the farmer and our team, and have seen the fruits of cultivating a strong future for our YBSF through opportunities GreenStone offers. How will this initiative benefit our members? Our next generation is very hands on. They are eager to learn, involved in their community activities and they are active on social media. Along with expanding a more defined YBSF program, we are also partnering with industry affiliates to provide more educational opportunities and resources and business tools.
vice president of commercial lending for GreenStone, has been appointed by Governor Whitmer to serve on the Farm Produce Insurance Authority board. Her seat on the board is to represent the interests of agricultural lenders in Michigan. Congratulations Nicole!
2. The Lenawee County
Association of Realtors awarded Stephanie Lundy, financial services officer in GreenStone’s Adrian branch, their Realtor of the Year award! Congratulations, Stephanie for being recognized for living GreenStone’s Core Four Values in all you do.
Our online services have changed immensely. From the upgrade of our website, to our secure customer portal, My Access, to online loan requests and more, we provide our customers and prospects with services that provide instant results! Our website has a fresh new look that is easy to navigate. With My Access, customers can communicate securely with staff, and transfer money and pay bills on the weekend and after hours without traveling. Both new and existing customers can apply for a loan through our online loan request and submit all of their documentations electronically at their convenience! What do you enjoy doing in your free time? In my free time, you can find me with my husband, Jake, stepdaughter, Brook, and dog, Duke, camping, hiking, kayaking, or canoeing in the summer time. During the winter months, we enjoy downhill skiing, snowboarding, and snowshoeing. ■
SERVICE ANNIVERSARIES
Pause for Applause... 1. Nichole L. Wilcox,
What are some of the key changes you have seen at GreenStone in your tenure?
Help GreenStone congratulate and thank these staff who are celebrating an employment milestone. From five to 40, the years represent the dedication and service all employees provide our members.
3. Amanda Kutchey, GreenStone
crop insurance specialist and Macomb County Farm Bureau president, has been named Michigan Farm Bureau’s 2019 Presidential Volunteer of the Year for her active volunteer involvement and leadership of local and state-level Farm Bureau activities. Well done Amanda!
4. GreenStone financial services
officer Kim Cool received the Affiliate of the Year Award from the Water Wonderland Board of Realtors, which honored her dedication and participation in various meetings held throughout the year! Great job Kim!
5. Congratulations to Jamie Renner, GreenStone appraisal group manager, for being elected as a board member of the Clare-Gladwin United Way.
January: Harold Solomon (5) Eric Krummen (5) Amanda Ruggles (10) Ann Allen (10) Teresa Crook (15) Matt Poland (15) February: Melissa Cole (5) Nicholas Jablonski (5) Maryann Peplinski (10) Jeni Olson (10) Gina Siegrist (10) Troy Click (35) March: David Nissen (10) Eric Thompson (10) Shane Prichard (10) Michael Schneidewind (15) Molly Graham (15) Kim Rosinski (20) Dennis Makula (40)
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2020 Patronage:
Partnership Pays... $100 million back to members 15 YEARS AGO, $12.5 MILLION WAS A NUMBER SMASHING THE RECORD BOOKS. TODAY, THAT NUMBER IS $100 MILLION AND WE’RE STILL ECSTATIC TO HAVE YOUR PARTNERSHIP PAY IN SUCH A SIGNIFICANT WAY. ON MARCH 11 – A DAY KNOWN AS PATRONAGE DAY – OUR MEMBEROWNERS WILL RECEIVE THEIR PORTION OF A RECORD-BREAKING $100 MILLION BEING RETURNED TO THEM IN PATRONAGE.
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Celebrating 15 years and an overwhelming $500 million dollars of total patronage ‘pay back’ is a key value of your partnership with this cooperative, and one way we acknowledge members who have exhibited hard work, tenacity and commitment to agriculture and rural living. “2019 presented farmers with some very difficult challenges,” says GreenStone President and CEO Dave Armstrong. “A patronage check is not a fix for the situations members encountered last year, but it does signify our long-term commitment to providing dependable services at a competitive rate – and to do so, responsibly. “It is our way of showing our deep appreciation for American agriculture, and our gratitude for our members and their ongoing support.” When we set out on the unprecedented journey of returning earnings to members, the vision was to maintain and increase both the dollar value and the percentage of net income returned, while ensuring a strong capital position in order to also offer competitive rates and a consistent, strong supply of credit. Looking at today’s economic condition in many agricultural segments, that capital continues to be the foundation of GreenStone’s ability to stand together with our members and partner through the challenges. These attributes contribute to the core strength of GreenStone, and we believe our members deserve to share in GreenStone’s continued success – the success they helped to grow. And this year, that vision started years ago is in full view. GreenStone will not only return a record dollar amount, over 20 percent more than the $82 million returned last year, the $100 million also represents the largest ratio of net income being returned – nearly 50 percent of your cooperative’s 2019 net income will be coming right back to you, our members. That’s an important climb from the 20 percent share at the start.
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A patronage check is not a fix for the situations members encountered last year, but it does signify our long-term commitment to providing dependable services at a competitive rate – and to do so, responsibly.
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100,000
Patronage Paid in Millions 2006-2020
80,000 60,000 40,000 20,000 0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
In addition to hosting the Patronage Day celebration you are invited to, and handing out patronage checks to members, each GreenStone branch will also be paying appreciation forward with donations to charities. Customers will have the opportunity to vote for the charity aligned with their passion to receive a share of $20,000 earmarked for this Member Grown Outreach initiative. GreenStone’s cooperative partnership has produced rewards for both the company and for our members, and we are excited to extend our partnership to helping organizations in our local communities as well. As we work with our members through the extended downturn in the agricultural commodity markets, we
remain impressed with the tenacity, determination and resilience our members continually express. Your dedication, non-stop drive, and commitment is showcased through the success of your cooperative. The record-level of patronage is a direct result of that partnership and reflects our commitment to do all we can to support our members. Please join us on Patronage Day, March 11!
We will celebrate our members and provide a personal thank you to customers as we distribute checks at each GreenStone branch. Patronage notification letters will be sent to all eligible members in mid-February. ■
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The GreenStone Story:
Inspire, Grow, Improve THE QUESTION WE RECENTLY ASKED OURSELVES AS A COMPANY, “HOW CAN WE BETTER HELP OUR COOPERATIVE MEMBERS AND CUSTOMERS IN 2020?” MOTIVATED US TO ORGANIZE OUR ANSWERS UNDER THE WORKING BANNER OF INSPIRE, GROW, IMPROVE. Inspire
Understanding that words are easy and deeds are not, drove us to launch an internal program of professional development as we simultaneously raised the bar for customer service. Dedication to the agricultural and country living customers we serve is at the core of our company mission. Inspired by these farmers and rural property owners, GreenStone is committed to embracing a company culture of engaged employees who are equipped with the knowledge and resources to best support customers and serve our communities. One important piece of creating an inspired culture is team-building that will evolve through a company-wide conference on Mackinac Island in September. With an agenda fully aligned with the cooperative’s 2020 priorities, the forum will focus on inspiration, growth, and improvement of our teammates and as a company. Providing vision for the future with a focus on our people first is key to GreenStone’s strong profitability and stability, superior customer service, and a uniting factor within our workforce. Grow
GreenStone continues to seek opportunities to benefit new members with the value our experienced team and individualized products provide. A diversified customer base and expanding market share within the agriculture and country living sectors feed GreenStone’s growth curve, balances risk, and strengthens the bottom line, ultimately benefiting patronage returned to members. With priorities to strengthen customer service and identify new prospects, 2020 initiatives will help to increase profitability for the company and members. A steady growth curve and diversified investments provide the solid financial foundation that allows us to work with customers during good times and challenging times, and to proactively respond to changes in the marketplace. Growing our online presence and creating consistency with streamlined, ease-of-use tools for online loan applications is a GreenStone priority. Launching in 2020, online loan requests will be expanded from country living financing needs to also include agricultural real estate loan
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Dedication to the agricultural and country living customers we serve is at the core of our company mission.
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A steady growth curve and diversified investments provide the solid financial foundation that allows us to work with customers during good times and challenging times, and to proactively respond to changes in the marketplace.
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requests. These secure requests take approximately 15 minutes for members to complete and will be followed up by direct contact from a local financial services officer.
and recreational properties. Ultimately, these initiatives are prioritized due to the positive impact they’ll provide customer experience and overall satisfaction.
We are committed to developing Young, Beginning and Small Farmers (YBSF) with educational and financial resources to help secure a solid foundation for their success. In addition to flexible loan financing, GreenStone provides YBSF support through Grow Forward Grants, scholarships and contributions to young farmer programs.
As technology advances, the importance of maintaining the privacy and security of our customers’ information remains a top priority for GreenStone. In addition to the safeguards already in place, GreenStone continues to evaluate and modify our practices to enhance our cyber security programming to mitigate online threats. Along with programmatic and system protections, we have prioritized emphasis on enhanced employee education as another opportunity to utilize proven safety procedures and security measures. Amplified internal training, practice and testing will be required of every employee with redoubled attention to enhanced instruction and real-time responses to phishing and other cyber threats.
Improve
Focused on consistency and efficiency, pilot programs commencing in early 2020 are designed to measure and improve the speed and accuracy of automated workflows, staff alignment and loan processing times. We have redesigned the application and approval process for our home, land
GreenStone’s engagement with Inspire, Grow, Improve is just the start of what the cooperative is embracing to effect real changes throughout the company. We look forward to using new training and tools to better focus on the communities we serve, while our consistency of process and product across all channels and at all GreenStone branches will ensure an even stronger experience for customers who have trusted us as a partner in their future. ■
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Focused on consistency and efficiency, pilot programs commencing in early 2020 are designed to measure and improve the speed and accuracy of automated workflows, staff alignment and loan processing times.
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Directors’ Perspective– Planning, prioritizing, and resolutions HOW ARE YOU PLANNING TO INSPIRE, GROW AND IMPROVE YOUR PERSONAL LIFE AND BUSINESS IN 2020 AND BEYOND? HEAR FROM THREE OF YOUR GREENSTONE DIRECTORS ON THEIR VIEW FROM THE BOARD ROOM AND THE TRACTOR SEAT.
Tom Durand
As we enter into a new decade and new year, it is good to take time to reflect on not only the last year, but the past decade changes in agriculture. One has to ponder, ‘what will agriculture and rural America look like in the next ten years?’ From my perspective, I believe we must prepare for change. As I have grown older, I’ve found accepting and embracing change in life is the best path to dealing with aging. With the evolution of modern, fast paced technology, change is happening at a frantic pace, and being able to adapt is more important than ever. I think there is a lot to be said for young people learning lessons from the older generation, but in turn I suggest the older generation has just as much to learn from the younger generation. With all the tools technology has to offer to increase productivity. I know I love to network with younger farmers who love their occupation, and I really find value in sharing knowledge back and forth with them. I would just say to our members to stay positive and inspired even though the past year was difficult and remember no two years are alike. May 2020 be healthy and prosperous for all of you!
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Andy Snider
I have always enjoyed thinking about New Year’s resolutions even though disappointment often comes from not following through to completion or simply not meeting my lofty personal goal. Conversely, most of my business decisions for projects or a planned course of action have more teeth in them, so to speak, which forces me to follow through. However, this past year I was finally able to follow through on a personal goal of better fitness and losing a few pounds. At 56 years old I took up running and bicycling...completing two 5Ks and the Mackinac Island 8.2 mile races, and a 25 mile bike race, losing 15-20 pounds in the process. I feel great about myself and learned to enjoy it. Today we hear a lot about work-life balance; the problem for farmers over the years has been finding time for personal things with all of the business demands already on our schedules. I have regrets from the early years of not choosing more family time over driving ahead for the growth of the business. I do see better patterns of
this in today’s younger generation and I try to encourage it with all I interact with—a healthier mind and body can equate to better decision-making and productivity. This month starts our seventh year in a 50/50 partnership between me, my wife, Beth, our son, Zack, and his wife, Priscilla, running our farm. When we started this process together I had a 7 and 7 year plan that would allow us to complete our succession plan by the time I was 65. We set out on this path not because I need to be totally done working by then, but we felt it was important to have an orderly and official transfer of responsibility and decision-making. We have had a lot of expansion in most areas of our business over the last few years, which has led to one of our farm goals this year: fine-tune all of our newer and bigger endeavors. My other personal/business goal is to officially follow through this year on mapping out the remaining phase of our succession plan. I’ve heard over the past few years that farmers typically answer the succession question with “Oh, in about 5 years...”. Then, several years later, they give the same answer, never really following through. I am
very blessed to have a highly capable next generation eager to take on the task and I want to encourage other multi-generational farms to challenge the next generation sooner than later. They probably won’t farm exactly like you would have, but you might be surprised. And, the results are rewarding. Goals and succession are both real issues here at GreenStone as well. Our board, along with the executive team, have been addressing both of these topics. The ‘front burner’ topic continues to be capital. How much is enough and how to best use it to support our members. Returning nearly 50 percent of our net income in patronage is unprecedented and an exciting value we’re pleased to be a part of approving! Succession has also become a prominent topic as well. We are very blessed at GreenStone to have one of the best CEO’s in the Farm Credit System. Dave Armstrong is an excellent leader and he’s working with the board and executive committee as we start talking about these ideas. The continued development of our ‘bench’ is an important priority and our board is engaged on his topic.
Dale Wagner
As I put the extreme weather, market conditions and the disruptive state our government is in this year in the rearview mirror and look forward to 2020, several things come to mind. First, I’ll prioritize taking time for family and friends. It seems to me the struggles of the past year had a way of pushing the amount of time for this to the back burner. Refocusing here is important to our family business. Secondly, this past August the only financial services officer we ever had the pleasure of working with retired from
GreenStone. To be 100 percent honest, change is always a little scary. Although I fully expect the transition to be seamless, I believe we can be a part of the success. We have the opportunity to nurture a great working relationship with our new financial services officer by taking responsibility to help her understand our business culture, our values and our goals. My third thought is we need to focus on the things we do well. For us, that means to continue operating an efficient business by optimizing the use of technology while empowering our employees to work effectively. Growing a successful business is more than just the size; it’s about doing things that help create a good outcome. ■
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Get Involved – You Own It! AMONG THE LIST OF ADDED BENEFITS ENJOYED BY MEMBERS IS THE OPPORTUNITY TO LEAD YOUR COOPERATIVE. GREENSTONE IS GOVERNED BY MEMBERS WHO HAVE A VESTED INTEREST IN SEEING THE ASSOCIATION CONTINUE ITS SUCCESSFUL MISSION OF SERVING RURAL COMMUNITIES AND AGRICULTURE. YOU ARE OUR OWNER AND YOU HAVE THE RIGHT AND RESPONSIBILITY TO GUIDE THE COOPERATIVE FORWARD. AS A MEMBER, YOU HAVE THREE OPPORTUNITIES TO BE INVOLVED IN THE ASSOCIATION LEADERSHIP – THE BOARD OF DIRECTORS, THE NOMINATING COMMITTEE, AND VOTING.
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Nominating Committee
The Nominating Committee identifies, evaluates and nominates a qualified slate of candidates for stockholder election to GreenStone’s Board of Directors and to the association’s Nominating Committee for the next year. Nominating Committee members are elected to a oneyear term with a maximum of three consecutive years. If you fit this criteria, send us your profile for next year’s elections! www.greenstonefcs. com/governance • Be a voting stockholder of the association • Have an outstanding loan balance with the association • Not be a Director, employee or agent of the association • Not be a candidate for the Board of Directors while serving on the Nominating Committee • Reside or have a headquarters within the association’s chartered territory Board of Directors
GreenStone is governed by a 16-person board, 14 of which are elected members of the cooperative each serving 4 year terms on a rotating cycle. The board provides overall direction to the organization’s leadership. Members of the Board of Directors play an important role in overseeing that the association’s operations are maintained in a safe and sound manner, and ensuring GreenStone is fulfilling its mission of serving rural America and agriculture. If you are excited by the opportunity to serve your fellow members and help lead GreenStone, submit your
profile for consideration in next year’s elections! www. greenstonefcs.com/governance • Overseeing the strategic direction and objectives of the association • Providing for competent association leadership and management • Establishing systems and processes that provide safe and sound operations • Ensuring that information and disclosures provided to customer-stockholders and System investors are accurate and reliable • Remaining loyal to the association’s interests
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Members of the Board of Directors play an important role in overseeing that the association’s operations are maintained in a safe and sound manner, and ensuring GreenStone is fulfilling its mission of serving rural America and agriculture.
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Vote
GreenStone is a cooperative and is owned by its members. You have the right and obligation to participate in elections of both the Nominating Committee and the Board of Directors. In May 2020, all GreenStone voting members in regions one and two will receive an election ballot on which you will vote for Directors to fill two seats in each the northern and thumb region of Michigan. In addition, you have the opportunity to vote for Nominating Committee members in all regions who will serve on the selection committee that will identify the candidates for the 2021 elections. Sharing your voice and being engaged in your cooperative is critical. Whatever role you choose to fill, do it with pride and ensure you take advantage of every opportunity provided by your cooperative membership! ■
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Legislative Matters:
LABELING… A TIME FOR ACTION WHEN YOU GO INTO A GROCERY STORE AND EXAMINE FOOD FOR ITS CONTENTS, THE LABEL SERVES A BIG PURPOSE. YOU CAN BE DRAWN IN BY PRETTY COLORS, AND WORDS THAT MAKE A FOOD PRODUCT APPEAR APPETIZING.
such would threaten forward action as the future continues to evolve. Certainly there are issues outside of agriculture that we may individually be passionate about, and those should not be forgotten. But when it comes to agriculture and rural America, keen focus on facts will remain important to safeguard and grow our futures.
All that lures us in may be good and sometimes even true, but the details on the “Nutrition Facts” label as required by regulation gets us deeper into the contents. This suggests one might consider resisting the colorful label and look deeper for complete understanding of what we are really getting into. In the public policy, legislative and regulatory arena the same is true. Sometimes the truth may be difficult to dig out, and if we look no deeper than the labels that are attached to individuals inside and outside the system of politics we may not be going deep enough. Conservative, Liberal, Libertarian, Red, Green, or Blue, on most days are just labels. We all need to be careful on labeling and being labeled. 25
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For our agriculture interests we gain strength by bringing all perspectives together, and then discover the practical action to move forward. This is a call to go deeper than a label to protect our interests. There is a mixture of issues that can get slanted. Sometimes negative characterizations or miscasting statements upon agriculture or rural America demand clarification or correction. Accuracy goes much beyond labels. Whether the issue involves trade, environment, labor or infrastructure, bringing all the agricultural interests together remains serious business. Most importantly, maintaining strong support to secure the future of the Farm Credit System warrants no political label.
In the world of agriculture, we might want to consider resisting being attached to any label cast upon the industry and force deeper examination into the facts. This should be a driving force for all of us to stay engaged, as we have so much to offer on food, fiber and agribusiness outside of the political labeling. The business of agriculture does not belong to a political party, and the facts that belong to agriculture need to be heard above any labels. Accordingly, it remains critical for organizations with strong leaders from diverse agricultural interests stay engaged and together. Consider agriculture as the entire wrapper to every food product the world relies on for the very sustenance of life. To include a political label on
Communication is necessary to gain success and move forward in a meaningful manner, particularly in a changing world as agriculture continues to evolve. Conversation is critical for communication. For us to be successful and avoid being mislabeled in these conversations: ask questions, be clear, clarify when necessary, carry empathy, provide feedback, identify opponents concerns, and listen. As we enter a new year, the important issues remain consistent and clear on infrastructure, trade, environment and labor, to name a few. Let’s continue to demonstrate our collaborative, amplified voice with facts, and resist labeling, leaving only the ingredients for great results. ■
PAC Progress:
THE 2020 ELECTION YEAR... Will be another busy year to build on successes and be proactive in strengthening the recognition of rural communities and agriculture. Your MI GreenStone PAC finished 2019 strong with meetings and checks being delivered to both Michigan Senate and House of Representative legislators. In these meetings, connections were made, the cooperative structure of the borrowerowned lending association was discussed, and the significance of working with other agricultural enterprises to promote the continued growth of the agricultural industry was communicated. In Wisconsin, planning and meetings for 2020 took place and the conversations with the other Wisconsin Farm Credit associations and the Cooperative Network are boosting involvement. Together we are committed to unite and expand
our individual and collective legislative outreach efforts through the WI Farm Credit PAC and advocacy. While building relationships for future support, the overall goal is to increase awareness of the value of rural communities and the agriculture industry; Farm Credit is vital in that role. At the Federal level, the legislative happenings are across the board, from labor and trade to rural infrastructure. The Farm Credit System, through individual associations and the Farm Credit Council, has been able to provide perspective as called upon and will continue to do so. None of this would be possible without your engagement and commitment to raise legislative awareness
of rural communities, agriculture, GreenStone, and the Farm Credit System. The 2020 election year will be another busy and robust legislative engagement year, and we will continue to build on the successes of relationships already built. In addition, time will be spent proactively strengthening the recognition of agriculture as a key component to a thriving economy with those running for office at all levels of government. The message will remain simple and consistent to help them not forget about the importance of rural communities and the diversity of agriculture. We look forward to being involved in discussions as legislation affects our businesses and communities. â–
Do not wait to contribute to the MI GreenStone PAC or the WI Farm Credit PAC. Send your voluntary patronage 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. Join hundreds of other concerned members and employees in strengthening recognition and opening doors to communicate the importance of agriculture as a key component to a thriving economy.
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Remodeling Retirement KAREN FLYNN STANDS IN THE MIDDLE OF HER QUARTER MILE-LONG DRIVEWAY, ENJOYING THE FACT SHE ISN’T STANDING IN MUD UP TO HER ANKLES. “When we bought the horse farm, the driveway was impassable,” she says, grimacing at the memory. “The former owners had never put down gravel, and people who wanted to bring in hay or grain would be stuck at the bottom of the driveway with no way to get up here. We hired an excavator with part of the funding we obtained through GreenStone. The company came in with 27
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bulldozers to strip off the mud and put down a three-inch base of crushed concrete.” The new driveway marks the beginning of Michael and Karen Flynns’ post-retirement careers as business owners of Haverhill Equestrian Center, and the starting point for Karen’s training services and horses under her own professional roof.
LIVE
➡ Left: Karen and Michael Flynn visit with two of the 30+ horses they show, train and stable at Haverhill Equestrian Center in White Lake, Michigan. ➡ Right: Two indoor rings and two outdoor rings underwent renovation, along with stalls, pasture-land and the Flynn’s primary residence.
“Thirty-five years ago this place was a chicken farm,” Karen adds. “In 1986 it was converted into an equestrian farm. A year ago, we moved in and began working on making Haverhill Equestrian Center into a state-of-the-art horse training facility. We took out a construction loan with GreenStone to purchase the 31-acre property, upgrade the existing home, and renovate the stable, arenas and outside ring.”
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Typically, when people think ‘construction loan’ they’re thinking strictly of a new home. In the Flynns case, we had an existing home, so we financed their remodel and their work to the actual farm under the exact same loan we would use for a new build.
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After agreeing to purchase the property, Michael and Karen had approximately three months to find financing, sell a house in Royal Oak they had lived in for 35 years, get the stables ready and move in their horses. On top of the typical moving chaos, they had to quickly learn how to hire employees and set up payroll. Michael Flynn, Ph.D., is semi-retired from a career as a medical physicist working in sponsored research. His background in science and engineering and his familiarity with software and spreadsheets has been very helpful in keeping Haverhill Equestrian Center on track. He chose to finance their loan with GreenStone based on recommendations from other equestrian farms, and from his own research. “The concept of GreenStone is different,” Michael says. “We liked that it’s a company of members. We planned to apply for a business loan, but learned that a construction loan would cover the renovation of the house, stables and outside arena.” Vice President of Lending James Cole from the cooperative’s Howell Branch acknowledges the flexibility of GreenStone’s financing. “Typically, when people think ‘construction loan’ they’re thinking strictly of a new home. In the Flynns case, we had an existing home, so we financed their remodel and their work to the actual farm under the exact same loan we would use for a new build.” The Flynns remain impressed with their ongoing partnership with James, and the support he provides. “I was totally unaware that interest rates had dropped,” recounts Michael. “James called me up and told me we could convert our construction loan with a 5.38% interest rate
down to a 3.85% rate. We didn’t need a new appraisal and we didn’t need to pay a big fee. It was all done with a phone call and a piece of paper. It was like an early Christmas present!” Walking through the stables it is clear that the Flynns are running a first class horse facility. The stalls have been cleaned and updated, the inside and outside rings have been leveled and horses run in small groups in multiple, fenced pastures. Visibly affectionate toward Karen, the horses run toward her when they spot her, greeting her with frisky nuzzles. “I bought my first horse when I was seventeen,” Karen says, patting the neck of her favorite ride, Roxanne. After working for years in the health care field and raising five children, Karen found that her horse training ‘hobby’ had grown into a business with multiple clients. Integral to the business is the Flynns’ son, Michael, who helps manage the barn, trains
and shows horses and works as a farrier. The head groom, Rick, is in charge of the day-today horse care. “You can’t find better care anywhere else” Michael states. “Horses are offered grain, hay and water three times a day, along with daily pasture time. And our outside ring has the same size and characteristics of rings that are used nationally by top level, hunter-jumper riding competitions.” Remodeling a premier horse facility and primary residence is not what many people would equate with retirement, but the Flynns share a view of the lifestyle they have chosen. “It makes us happy,” Karen remarks. “Our goal at Haverhill is to simply break even and provide quality environment, resources and care for the horses. “At this point, I think we are fairly amazed at how far we’ve come in one year, and where we are now.” ■
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OUTWIT THE SLIP, SLIDE AND FALL WINTER IN THE MIDWEST… TEMPERATURES FALL, SNOWFLAKES FALL AND AS A RESULT, ALL TOO OFTEN PEOPLE FALL TOO. THE SEASONAL COMBINATION OF SNOW AND ICE CAN MAKE FOR A TREACHEROUS MIX FOR HUMANS ON ROADS AND WALKWAYS, ESPECIALLY IN RURAL SETTINGS WHERE LONG DRIVEWAYS AND DISTANT OUT-BUILDINGS MAKE ELIMINATING ICE A DIFFICULT TASK. The good news is, with mindfulness and preparation, people can outwit and prevent winter slip, sliding and falling 100% of the time. According to the Centers for Disease Control and Prevention, over one million Americans suffer an injury caused by a fall every year. The resulting trauma varies in degree, from serious head and bone injuries requiring a lengthy recovery with physical therapy, to the less serious sprains and bruises. What can you do this winter to avoid becoming a statistic of falling while walking the dog, shoveling the drive or carrying in groceries? Purchase a pair of ice cleats for your shoes or boots. You can keep them attached to your footwear and ready for you at the door. Human nature tells us we won’t take the time to attach the cleats for just “a quick run out to the car”–
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but having a pair of boots cleated and standing ready will encourage use, even for short errands outside. Walk like a penguin! Turn your toes out a little, bend your knees slightly and take short, flat-footed steps. Keep your arms out to help maintain your balance, and avoid carrying heavy bags or packages that shift your weight and cause you to walk unevenly. Keep a bucket of salt or sand by every door and use liberally and preventively when needed, especially on steps. Move slowly and carefully, and be aware of black ice. If walking outside in the evening, consider wearing a headlamp (instead of holding a flashlight) to keep your arms free and balanced. Even minor spills cause bumps and bruises; help keep yourself upright this winter by being aware of the weather conditions and what could be under your feet. ■
2020: RESOLUTIONS YOU CAN KEEP SCIENCE TELLS US HOW… EVERYONE LIKES THE IDEA OF A NEW YEAR AND A FRESH START. MANY OF US PIN A RESOLUTION OR TWO ON JANUARY AND VOW TO EXERCISE MORE, OR EAT HEALTHIER OR SAVE MORE MONEY. EXCELLENT GOALS…BUT ALL TOO OFTEN DOOMED TO FAIL! U.S. News & World Report estimates the failure rate of New Year’s resolutions to be near 80 percent, with most people quietly losing their motivation by mid-February. We recognize this reality, yet every year we try to improve our lives with hope and a little wishful thinking. What if your New Year’s resolution was both sustainable and life-changing? What if you could effect personal change without giving up donuts or running a marathon? Surprisingly, researchers and scientists are examining the practice of gratitude and their results have uncovered a largely ignored path to making life changes. Generosity of spirit (versus denying ourselves dessert) seems to make permanent changes in our molecular structure, igniting internal factors that help our bodies achieve the elusive state of feeling happy. What does this have to do with making and keeping resolutions? Practicing gratitude improves our attitude from the inside out, and when we improve our mental health, our resilience and our ability to cope with everyday stressors improves, too. Indiana University researchers Dr. Joel Wong and Dr. Joshua Brown found that by simply writing letters of gratitude, people developed their medial prefrontal cortex – the part of the brain that reflects learning and decision-making. Through their research,
Drs. Wong and Brown deciphered four benefits derived from the regular practice of gratitude: 1. Gratitude unshackles us from toxic emotions 2. Gratitude helps even if you don’t share it 3. Gratitude’s benefits take time and practice. You might not feel it right away. 4. Gratitude has lasting effects on the brain The ability to maintain a New Year’s resolution is often based in a person’s mental outlook, which is bolstered by a positive mood and mental clarity. Setting yourself up for success by using the psychological benefits of gratitude is a real step toward making a resolution stick! Capturing what you are grateful for in a journal every morning or evening, or writing letters of gratitude to people who have made a difference in your life, allows you to extend kindness to yourself. Well-being is a state of mind, and practicing gratitude may be the secret science behind making and keeping resolutions that improve your life. ■
Source: https://greatergood.berkeley.edu/article/item/how_gratitude_ changes_you_and_your_brain
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Commodity Cuisine... Bacon Corn Chowder Time: 10 minutes Cook time: 40 minutes Total time: 50 minutes Servings: 6 Calories: 339kcal Warm up this winter with a creamy favorite, Bacon Corn Chowder. Enjoy each bowl filled with ingredients your local farmer might be producing: corn, potatoes, bacon, and more. Ingredients: • 6 slices bacon, crisped & crumbled; divided in half • 1 medium sweet yellow onion, diced • 2 garlic cloves, minced • 3 tablespoons all-purpose flour • 4 cups vegetable or chicken broth • 2 bay leaves • ¼ teaspoon dried thyme • ¼ teaspoon dried parsley
• ¼ teaspoon ground nutmeg • 1 teaspoon Kosher salt • ½ teaspoon freshly ground black pepper • ½ teaspoon smoked paprika •
1/8 teaspoon red pepper flakes optional
• 2 medium potatoes, peeled & diced • 1 cup half ‘n half cream • 6 cups corn kernels (approx. 8 ears of fresh corn or a 28.8 oz. bag of frozen corn)
• ¼ teaspoon dried chives Instructions: 1. Cook bacon until almost crisp. Transfer bacon to a paper towel-lined plate, and discard all except 2 tablespoons of bacon grease. 2. Cook diced onion in the remaining bacon grease until onion is translucent. 3. Add minced garlic and cook 30 seconds. 4. Dust cooked onions with flour and stir to mix well. 5. Pour in broth, bay leaves, thyme, parsley, chives, nutmeg, salt, black pepper, paprika, red pepper flakes and diced
potatoes. Stir well. Bring liquid to a boil and boil for 10 minutes or just until the potatoes begin to fall apart. 6. W ith a potato masher, mash the mixture until approximately half the potatoes are mashed. 7. A dd half ‘n half and corn kernels. Mix thoroughly. 8. S immer for 15-20 minutes over low heat to thicken. 9. T o serve, place soup in bowls and top with the crumbled bacon. ■
Complete recipe and photos at: https://www.thecookierookie.com/bacon-corn-chowder/
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i
COUNTRY LIVING – OPEN FIELDS BLOG BRIEF GreenStone publishes regular updates on our Open Fields blog. Check out some of the posts you may have missed at www.greenstonefcs.com/openfieldsblog. How Much Can You Afford Applying for a loan? It’s vital to understand your budget. On paper, it may appear that you meet the income and asset requirements to qualify for financing, but is that loan compatible with your lifestyle? Your Loan, Your Way: GreenStone Online Loan Request Life is busy. With the endless battle of balancing work and family, finding extra time in the day is a challenge all on its own. GreenStone knows this and takes pride in offering flexibility through online tools like loan requests for recreational land, home site vacant land, country home mortgages with any acreage, and home construction loans including do-it-yourself construction loans.
Recreational & Vacant Land Financing Vacant land, home site and recreational property loans have grown in popularity as families take advantage of GreenStone’s flexible financing options. Striking out Hunger with the Timber Rattlers Empowered by the support of local FFA members and a mission to give back, Wisconsin’s Timber Rattlers and GreenStone’s Little Chute branch teamed up to strike out hunger through the GreenStone Garden. ■
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LEARN
The Profitability Triangle By Paul Anderson, Executive Vice President and Chief Credit Officer WHILE A FOUNDATION HAS BEEN SET FOR LONG-TERM VIABILITY FOR LEADING COMMODITIES IN MICHIGAN WITH MAJOR INVESTMENTS IN ADDITIONAL MILK PROCESSING CAPACITY, THE OPENING OF A STATE-OFTHE-ART HOG PROCESSING FACILITY, SOYBEAN PROCESSING OPERATIONS IN ITHACA AND A LARGE OSB MANUFACTURING FACILITY FOR TIMBER IN GRAYLING, THE SHORT-TERM REMAINS CHALLENGING.
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Looking out at the near-future commodity and world markets, we are not seeing any indicators suggesting a material change in current market prices. Commodity inventories remain high while it appears major economic zones in Europe, China and developing markets are experiencing a slow-down in economic growth as measured by gross domestic product (GDP). These factors combined have the potential to keep commodity prices at their current levels for the next several years. Given these indicators, farmers need to be prepared for another year of challenging commodity prices. Recognizing most farmers have already made cost reductions and changes to improve profitability, I offer the following management strategies based on my 25-plus years specializing in financial turn-around with farm operations. Based on my experience, there are three legs to farm profitability: production execution, financial management (records), and marketing. In good financial times, farmers can show profitability by being exceptional in only one or two areas, such as increasing yields or production. However, in tight times like today, it is critical all three areas are equally balanced to provide a steady foundation.
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Most importantly, we encourage customers to maintain open communication with those they work with, including their lender. We are continually working with customers to take proactive measures to help the farm reach its long-term goals. Together, we will design strategies to achieve a mutually agreed-upon plan.
Production efficiency is the area most farms manage well. Using technology and genetic advancements, our farmers are capturing yields and production levels unimaginable just a decade ago. Knowing the production costs per unit are often the missing piece when we have discussions with many farmers who are struggling financially. Understanding your cost for what you produce is critical in this commodity price environment where every penny counts.
When looking at production costs, the focus should be on efficiency, not necessarily lowest cost. Farmers who know the incremental cost of production can more accurately make management decisions regarding the cost of additional inputs versus the value of the incremental increase in production, or where costs can be shaved without impacting production and revenue. Many success stories exist. One example is a dairy farmer who, after carefully analyzing his costs (to the penny), was able to carefully shave $2 off his cost of production to a $14 level over several years without impacting revenues. One of the key decisions he made was to invest in a better management information system, tracking production and financial information needed to evaluate results, and then proactively make adjustments based on measured results. Accurately determining the cost of production is achieved with quality records, accounting for all revenue and expenses on a regular basis. Records should reflect current activity as well as projected activity throughout the year. Accurate records become the foundation for developing projections for the upcoming year, helping farmers look across the horizon to anticipate how the business will operate in the future. We continue to encourage all our customers to closely evaluate their business, establishing key production and financial goals that can be measured. If farmers are not comfortable computing these metrics we encourage them to work with their lender, an accountant or other farm consultants to establish a plan that works for their business.
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A written marketing plan is of limited value if you don’t follow it. I was told early in my career, “you can’t go broke taking profit opportunities that the markets present, but you can go broke being greedy.” Those farmers who are successful in long-term marketing exhibit the discipline to make a plan and then execute it. If, after maximizing these three areas the farm is still struggling to gain profitability, we suggest identifying assets that are not being efficiently utilized and could be sold to reduce debt, and improve profitability and cash flow. In all cases, consult with your tax professional to understand the income tax ramifications of any asset sale. One area of efficiency evaluation that is often overlooked is family labor draws from the farm business. Can the farm support the existing family units? Famers in Michigan and Wisconsin have an added advantage of a strong job market and opportunity for non-farm income to diversify revenue sources. We are seeing more farmers or their family members increasing the level of non-farm income through partial or full-time employment off the farm. Don’t go it alone One of the best practices we see implemented is the establishment of formal or informal advisory boards for a farm business. These groups include those vendors and business associates with a vested interest in the farm’s success. Individuals such as veterinarians, agronomists, nutritionists and lenders can share knowledge and provide advice based on experience with other farmers.
At GreenStone, we provide peer-based benchmarking analytics for our greenhouse, row crop and dairy customers presenting the range of measurements in key financial metrics. Farmers interested in participating Armed with cost of production information based on quality records, in the peer-based reporting can work with a GreenStone representative to farmers will be in a position to develop a written marketing plan. include their information. Source:available Food Network Kitchen,tools © 2003 A marketing plan should incorporate risk management like Television Food Network, G.P. All rights reserved Most importantly, we encourage customers to maintain open crop insurance and revenue protection programs as a hedge against not communication with those they work with, including their lender. We are having sufficient crop to cover your marketing positions. Many producers continually working with customers to take proactive measures to help the ended up making claims on their crop insurance coverage this past year, farm reach its long-term goals. Together, we will design strategies to achieve and farmers in the niche commodities are taking a closer look at the whole a mutually agreed-upon plan. ■ farm revenue insurance product.
Commodity Cuisine...
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Budgeting, Measuring, Adapting —Managing Change to Reach Your Goals By Chad Zagar, Vice President and Managing Director of Tax and Accounting FORMER NEW YORK YANKEES CATCHER AND MANAGER, YOGI BERRA, ONCE SAID, “IF YOU DON’T KNOW WHERE YOU’RE GOING, YOU’LL WIND UP SOMEWHERE ELSE.” THE BEGINNING OF THE YEAR IS A GREAT TIME TO CONSIDER THESE WORDS AND TAKE FINANCIAL MEASURE OF HOW YOUR FARMING OPERATION ENDED 2019, AND ESTABLISH GOALS FOR 2020. A detailed and realistic budget is one of the most important tools to guide your business. Providing the information necessary to operate within your family living means and handle upcoming challenges will hopefully help you record profitable results. With a budget established, you’ll continually refer to it as a way of measuring performance against expectations.
PERIOD 19 Actuals 20 Budget
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EXPECTED SALES REVENUE
CROPS
To Yogi’s point — how can you know what’s possible in the future if you don’t understand the historical results you’ve posted? The first step in the budgeting process is to make sure you know where your money has gone historically. A budget is a planning tool necessary for building a framework for your farm and its
ACRES PLANTED
OUTPUT (BUSHEL/ACRE)
REVENUE
Corn
$3.925
750
160
$471,000
Soybeans
$8.800
250
50
$110,000
Subtotals
1,000
$581,000
Corn
$3.750
500
170
$318,000
Soybeans
$9.000
500
65
$292,500
Subtotals
1,000
$611,250
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A detailed and realistic budget is one of the most important tools to guide your business, providing the information necessary to operate within your family living means and handle upcoming challenges...
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finances. Combining past trends with realistic forecasts for the upcoming year, a budget provides a detailed view of revenue expectations and how those balance against anticipated expenses. Budgets also help with setting goals and establishing priorities. At a minimum, farmers should look at their total farm operation and establish goals for the upcoming year.
DESCRIPTION
19 ACTUAL
BUDGET CHANGE NOTES
20 BUDGET
Revenues Corn
$471,000 See revenue analysis
$318,750
Soybeans
$110,000 See revenue analysis
$292,500
Revenues - subtotal
$581,000
$611,250
Operating expenses Car and truck expenses
$5,000 No change expected
$5,000
Chemicals
$12,000 No change expected
$12,000
Custom hire
$20,000 Will harvest own
Depreciation
$15,000 Harvester purchase required
Employee benefit programs
-
- No change expected
Feed
$35,000 -
- No change expected
-
Fertilizers and line
$5,000 No change expected
$5,000
Freight and trucking
$8,000 No change expected
Gasoline, fuel and oil
$5,000 Double due to harvesting
Insurance
$10,000 3% inflation increase
Interest
$40,000 Debt paid down by 10%
Labor hired Pension and profit-sharing plans
$8,000 $10,000 $10,300 $36,000
$100,000 3% inflation increase
$103,000
$3,000 3% inflation increase
$3,090
Rent - machinery and equipment
- No change expected
-
Rent - land
$45,000 No change expected
$45,000
Seeds and plants
$20,000 No change expected
$20,000
Storage and warehousing
$20,000 No change expected
$20,000
To the left is an example of how a multicrop farmer can estimate revenue for the year – items highlighted in yellow are all variable and subject to change.
Supplies
$20,000 No change expected
$20,000
Taxes
$10,000 3% inflation increase
$10,300
Utilities
$12,500 No change expected
$12,500
Goals should also be established in granularity for the upcoming year, expense line item by expense line item, including the reasons and rationale behind any expected change in your cost structure. For example, ask yourself: 1. Will expense line items increase by cost of living adjustments? 2. Are you going to outsource less custom hire work? 3. Do your rent agreements have escalations in the current year?
Veterinary, breeding and medicine
- No change expected
-
Capital expenditures - cash
($20,000)
The budget on the right provides an example of this line item approach process:
Debt repayments - principal
($100,000)
Occasionally, farms will complete their budgets with multiple scenarios – worst case, most likely, and best case models are frequently identified. This helps farmers to mentally prepare for contingencies and identify potential changes from initial expectations.
Other expenses
$25,000 3% inflation increase
$25,750
Expenses subtotal
$375,500
$380,940
Taxable net income
$205,500
$230,310
Taxable net income to cash increase (decrease) for year: Depreciation - non-cash
$35,000
Federal and state income taxes
($45,000)
Family living distribution
($100,000)
Subtotal of non-income statement cash needs
($230,000)
Cash increase for year
$310
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Tax Calendar... JANUARY Form 1099 due to recipients of certain payments made during 2019 for interest, rent, contract labor, veterinarian services, etc.
31 DESCRIPTION
EXPECTED SALES PRICE
ACRES PLANTED
OUTPUT (BUSHEL/ACRE)
AMOUNTS
Total operating expenses
$380,940
Subtotal of non-income statement cash needs
$230,000
Total cash needs related to farming operation and family living
$610,940
Soybean updates
$255,000
$8.50
500
60
Average corn breakeven price The above example budgets assumed $3.75 corn and $9.00 soybeans — what if in the middle of the year your soybean yields and prices have both dropped and you now expect that your output will be 60 bushels per acre at a sales price of $8.50? What do you need to sell your corn at to break even? You now need to sell your corn for $4.188 in order to break even. Is that possible? If so, do you sell it all when you see that price available or only a portion of it? If not possible, where are you at as compared to budget on other financial statement line items? Do you need to cut expenses elsewhere? Or, tighten the family living belt? You are only able to answer these questions and make educated decisions if you first understand your numbers and are up to date on your recordkeeping – tracking actual revenue and expenses and comparing them to what was budgeted. This
Reminder From previous years: Employers must file Forms W-2 and W-3 with the social security administration, and payers must file Forms 1099MISC and 1096 for Non-Employee Compensation with the IRS. Penalties will be assessed for not meeting the Jan. 31 deadline.
$355,940
Remaining cash needs - unfunded Corn yields
Provide employees copy of Form W-2 for 2019.
500
170
Farm employers file Form 943 to report social security and Medicare wages, and withholdings.
85,000 bu
Non-farm employers file Form 941 for the fourth quarter to report social security and Medicare wages, and withholdings.
$4.188 helps to assure your farm is sticking to its plans, but budgeting also offers an important means of identifying problems and opportunities. Regardless of whether or not your actual results and profitability are as strong as you would like, highquality reports help provide clarity to the business and family living decisions you need to make. Reports demonstrate your commitment to increasing your profitability, and show your history of successful farm management to lenders and other capital providers. This allows them to be confident of the accuracy and completeness of your records. If you are interested in learning more about creating your farming operation budget or keeping sound financial records, contact a local GreenStone branch. GreenStone offers a full array of accounting services for farmers and other business owners. ■
Employers file Form 940 for federal unemployment tax.
FEBRUARY
29
Payers must file Forms 1099 and 1096 (other than 1099-MISC for Non-Employee Compensation, which is due Jan. 31) with the IRS. If these forms are e-filed, the deadline is extended to March 31.
MARCH
2 16
Qualifying farmers file individual tax return (Form 1040) and pay tax due if no safe estimated tax amount paid in and owe over $1,000 in tax. S Corporations file a 2019 calendar year income tax return (Form 1120S). Provide each shareholder with a copy of Schedule K-1. If not able to file, file Form 7004 to request an automatic six month extension. Partnerships and LLC’s taxed as a partnership file a 2019 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 six month extension.
APRIL
15
Individuals file a 2019 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. Any tax due must be paid with the extension. First quarter estimate is due for 2020 for individuals paying estimated taxes. C Corporations file a 2019 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. Any tax due must be paid with the extension. C Corporations deposit the first installment of estimated income tax for 2020.
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CROP INSURANCE NEWS:
MULTI-COUNTY ENTERPRISE UNITS (MCEU) The Risk Management Agency (RMA) now allows a single Enterprise Unit (EU) structure that covers two adjoining counties. It is only available when authorized on the actuarial documents for crops which Revenue Protection (RP) is available. One county must individually qualify for EU as the primary and the other county must not qualify for EU. MCEU must be elected on or before the SCD and electing MCEU does not automatically make the county eligible MCEU. ■ DRY BEAN PREVENTED PLANTING COVERAGE LEVEL CHANGES PP coverage levels for dry beans has been reduced from 60 percent coverage down to 50 percent. Prevented planting coverage levels have changed for many other crops since 2017. See your crop insurance specialist for the most current levels and options for PP coverage. ■ CONTRACT PRICE ADDENDUM
ACCOUNTING & BILLING– For the 2019 crop year only, accrual of any interest on unpaid crop insurance premium is deferred to the earliest of the applicable termination date or until January 31, 2020, for all policies with a premium billing date of August 15, 2019. For any premium that is not paid by the earliest of the applicable termination date or January 31, interest will accrue consistent with the terms of the policy. For example, without this change, policies with an August 15 premium billing date would have interest attach starting October 1 if premium was not paid by September 30. However, under this change, policies that do not have the premium paid by January 31, 2020, will have interest attach on February 1,
calculated from the date of the premium billing notice. Starting with the earliest premium bill date, payments are applied as follows: 1) any unpaid finance or interest charge, 2) unpaid administrative fees and 3) unpaid premiums. Please keep in mind accrued interest on uncollected premium is attached, according with the terms of the Standard Reinsurance Agreement, and CANNOT be waived by the crop insurance specialist or AIP. If you cannot pay your premium before the March 15 Debt Termination Date, contact the AIP directly to set up a payment plan. Otherwise, you will not be eligible for crop insurance or any other federally subsidized programs. ■
RMA offers a contract price addendum that would allow a producer who receives a contract price for their crop to receive a crop insurance guarantee that is more reflective of the actual value of the crop. Under the addendum, insured producers would have the ability (where available and by choice) to use their personal contract price as their price election, or to use the existing crop insurance price election. If you grow specialty crops under contract and are interested in possibly using your contract price to set your crop insurance guarantee, be sure to ask your crop insurance specialist about the new contract price addendum. ■
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SUGAR BEET POLICY PROVISIONS– The end of insurance period has been extended to December 5 and the stage guarantees have been removed. The production guarantee will now be expressed in pounds of raw sugar. This is calculated by multiplying the tons of beet production by 2,000 and converted to pounds of raw sugar by the average percentage of raw sugar to
PERSON TYPES AND IDENTIFICATION NUMBERS To better accommodate data reconciliation between the Farm Service Agency and RMA, there have been some changes made to the social security number and employer identification reporting requirements for individuals,
estates and trusts. If you have recently made a change in how an entity has been set up, notify your crop insurance specialist to ensure your policy is renewed using the correct identifying numbers. These records need to be updated before the March 15 deadline. ■
determine the production to count. This conversion will begin with the 2018 production, and historical years will be adjusted by the AIP on your APH Database. There is also an early harvest factor to recognize for the potential lower weight and sugar content of early harvested beets. ■
POWER OF ATTORNEY (POA) AND SIGNATURES Crop insurance documents requiring a signature must be signed by an authorized person. The Crop Insurance Handbook says that for a spouse or others to sign for the insured, they must be authorized by a POA or other
legally sufficient document, even if the person is listed as an SBI on the application. Signature statements on the application or policy change form can serve as a legally sufficient document. For specific details, please consult your crop insurance specialist. ■
Crop Insurance Calendar... JANUARY
15
Fruit Acreage Reports / Yield Reports and Pre-Acceptance Worksheets Due
FEBRUARY
1
39
Sales Close Date for Onions
Winter 2020 — Partners
MARCH
15
Final date to sign up or make changes for a spring 2020 crop insurance policy. If you are interested in changing the coverage level, type or need to add a crop, please call your crop insurance specialist to review your options. Any and all changes need to be completed by the March 15 deadline! If a signed application is not returned, your policy will automatically renew at the same level you insured at during the previous year.
APRIL
29
Production reporting deadline for fall 2019 harvested crops. Before you 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, especially in Wisconsin. Please check with your crop insurance specialist for specific dates if you are unsure.
i CHILDREN AND CYBERSECURITY
According to the National Cyber Security Alliance, a child’s day can be divided into three parts – awake and online, awake and offline, and asleep. Whether we want to admit it or not, most of our children are online more than not. As parents and guardians, teaching our children about proper cyber etiquette is becoming one of the most important things we can do to protect them and their cyber identities. Experts recommend these tips to help children make good choices online: • Inform your child of the ramifications of posting online. Unlike writing something on paper, when posting on social media the content is on the internet indefinitely – even if they later delete it. The content kids post will be linked to them and can positively or negatively impact their life. In addition, sharing personal information can inadvertently expose details attackers can use to cause harm, in-person or online.
•B e aware of the sites your kids are visiting and the apps they are downloading. Keep the computer in a shared location to easily monitor your child’s online activity. Smart phones can be tricky to monitor, however both Apple and Samsung have tools to help you protect and monitor your child’s phone usage. •C reate accounts on the sites your children are using to understand what content they are being exposed to when they are online. There are many ways you can help protect your children. These are just a few tips that can go a long way to help keep them safe on the internet, and to make cybersecurity a priority in their lives. ■
...Tech Tip
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Keeping the Faith DIFFICULT TIMES CALL FOR INNOVATIVE FINANCIAL SOLUTIONS “Grandpa started it. He started the Apsey farm and worked it until he was 80.” Allen Apsey gestures toward the red barn and acreage beyond. “My dad took it over and I took it over from him in 1990. I’ve been farming ever since – really, farming ever since I was a little boy next to my dad and grandpa.” Sitting at the dining room table in the house his grandpa purchased in the early 1900s, Allen is the embodiment of a family man with deep roots in Michigan agriculture and in his local community. Married for 43 years to Kathy, they’ve spent a lifetime in their solid farmhouse raising three children and enjoying their five young ‘grands.’
“My grandma actually farmed more than my grandpa did,” Allen adds. “Grandpa got in an accident; a car hit him and broke his back so my grandma did all the field work and hauled the grain.” Kathy shook her head. “I don’t know how she ever did it, but after a day in the fields his grandma would bake for the church bake sales and show up with a tub full of pies and cookies. She cared for four children, she quilted, she had a huge garden, she canned – and they had 37 milk cows. She did it all.” The old Apsey farmhouse is lovely, and has been updated with additions and modern conveniences without losing its original carved woodwork or sweeping views of the fields. The living room was the ‘parlor’ in the old days, and one of the upstairs bedrooms housed pigs having litters during cold weather. The original barn still stands, and a 130 year-old photograph of the barn-raising hangs on the dining room wall. “We’re small farmers, about 880 acres. But we’ve kept all our land for the last 25 years which has been good,” Allen says. “We have good people and good neighbors.” The farm has weathered many cycles of plantings, harvests, family passings and celebrations. At its heart, holding it all together, is the strong and steadfast
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Nowadays, with the way weather is changing, I would be scared not to have crop insurance. It’s too important to protect your bottom line. I think having crop insurance let Allen sleep a little sounder knowing even though he couldn’t get the crops in, it was going to be taken care of one way or another.
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Winter 2020 — Partners
partnership Allen and Kathy have with each other, and their faithful relationship with God. The faith of many farmers has been tested over the past year, with weather that has delayed planting, destroyed crops and cut harvesting short. The stress of seeing a season of hard work and hard-earned money quite literally go under water, has worried farmers seeking proactive protection from crop insurance. Kathy knows what her husband faced out on their acreage all summer long and she leans across the table to share their experience. With just two days in the field in May because of all the rain, Allen was forced to late-plant and hope for the best. This year, however, he made a decision to add a GAP policy to his regular crop insurance purchase and it turned out to be the ideal year to try out the extra coverage. “Nowadays, with the way weather is changing, I would be scared not to have crop insurance,” Kathy says, her expression serious. “It’s too important to protect your bottom line. I think having crop insurance let Allen sleep a little sounder knowing even though he couldn’t get the crops in, it was going to be taken care of one way or another.” GreenStone Crop Insurance Specialist Kristen King is the Apseys’ local agent. She walked Allen through the insurance decision-making process and he chose to switch gears a little this year: after reducing his revenue protection coverage down to 75 percent, he added a GAP policy. Although revenue protection and yield protection are the two most common forms of crop insurance, private insurance products like GAP, ICE and price-flex are also useful add-ons for farmers looking for personalized solutions. “A GAP policy is above and beyond an underlying revenue or yield protection policy,” Kristen says. “If you get ➡ Right: A 130 year-old photograph of the barn-raising on the Apseys’ property. The original barn is still in-use today!
➡ Left: Kathy and Allen Apsey stand in front of their family farmhouse in Ionia County, Michigan.
Producers whose inputs are covered by their crop insurance policy and who are happy with the premium they are paying may not need additional coverage – but a discussion with a specialist on customized options could change a farm’s financial outcome. For Allen Apsey, crop insurance keeps the farm viable the years that hard work and careful planning are wiped out by weather disasters. He has no plans to leave the field; agriculture is his life’s work and his family legacy. “We had a lady at Walmart last night thank us for farming,” Allen offers. “First time that’s ever happened. She said if it wasn’t for you guys, none of us would eat! And she’s right. Shopping in grocery stores, people don’t connect Doritos or potato chips or beef with crops.” frustrated with your underlying policy not kicking in with a small loss of 1015 bushels/acre, GAP is an option that can cover some of that deductible. GAP is a great risk management strategy to help protect your investment when Mother Nature throws a curve ball, as she repeatedly did in 2019.” Allen appreciates the flexibility of GAP insurance, and to him the earlier coverage activation is worth the extra cost. “I don’t mind spending the extra money,”
Allen admits. “It’s more than paid my premium, and I think next year I’ll do 85% revenue protection and GAP. When I first heard about GAP I was leery, but Kristen talked to me about it and you know, I said I’m going to try it. It was a perfect year to step out and do it, because you don’t have to lose a lot of revenue for this thing to kick in. It’s really the best thing I ever did.” Kristen advises farmers interested in private products to enhance their crop insurance to talk with a crop insurance specialist.
Allen and Kathy smile at each other. Clearly, they’ve fielded their share of common farming misperceptions from community members over the years, and they are kindly determined to set the record straight. Agriculture is extraordinarily tough work. Agriculture keeps America fed. “I’ve worked in construction and as a factory worker but none of those were for me,” Allen says. “His love is the farm,” Kathy adds. He nods. “It’s always been farming.” ■
RISK MANAGEMENT Revenue Protection: RP protects farmers from declines in both crop prices and yields. The guarantee is based on market prices and the actual yield on your farm. Yield Protection: YP provides coverage against a production loss due to unavoidable, naturally occurring events. GAP Policy: GAP adds a band of coverage in addition to an underlying RP or YP policy. It provides simple yield and revenue protection up to 95 percent coverage.
Increased Coverage Election: ICE supplements yield protection by increasing the price selected on an underlying MPCI policy. It provides additional coverage against yield and/or revenue loss within a selected coverage band. Price-Flex: Price-Flex allows insureds to choose an alternative price discovery period. The highest projected price for these alternative price discovery periods is used to establish the revenue guarantee for loss purposes. ■
Partners — Winter 2020
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3515 West Road East Lansing, MI 48823
Winter feature highlight... After agreeing to purchase the 31-acre property, Michael and Karen Flynn had approximately three months to find financing, sell a house in Royal Oak they had lived in for 35 years, get the stables ready and move in their horses. Read more on page 27.