December 2012

30-year-old Josh Regier returned to farm with his father, Gary, following graduation from college.

Only a small percentage of principal farm operators across the U.S. are under the age of 35.

Board of Directors December 2012

District 1

Contents Myron Voth Vice Chairman

Cecil Wiebe

Returning to the farm

Joining forces for ag education

Meet three producers who represent a small percentage of farm operators who returned to the farm at a young age . . . . .Pages 6 & 7

MKC partners with others in the community to educate youth about agriculture and ag safety . . . . . . . . . . . . . . . . . . .Page 8

District 2

David Mills Secretary

Duane Johnson

District 3

Josh Regier takes his four-year-old son, Gentry, with him during fall harvest. Some of Josh’s earliest memories of farming were sharing similar experiences with his father and grandfather.

C J Blew Chairman

Jason Gaeddert

Rig technology cuts producer costs To provide a level of service unsurpassed by others in the industry, MKC utilizes rigs with leading-edge technology . . . . . . . .Page 4

At Large

Fourth grade students from Eisenhower Elementary in McPherson participate in an educational program about agriculture.

Schultz discusses impact of aflatoxin Team Marketing Alliance COO, Ted Schultz, shares insights on aflatoxin’s impact on the industry. . . . . . . . . . . . . . . . . . .Page 10

Making a difference Meet three employees who donate their time to their communities and charitable organizations . . . . . . . . . . . . . . . .Page 5

Neal Beam

Keith Becker

Randy Ellwood

President & CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Dave Christiansen Vice President & CFO . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Danny Posch Vice President & CMO . . . . . . . . . . . . . . . . . . . . . . . . . . . . .David Spears Director of Energy Operations . . . . . . . . . . . . . . . . . . . . . . . .Jason Creed Director of Southern Operations . . . . . . . . . . . . . . . . . . . . . . .Erik Lange Director of Northern Operations . . . . . . . . . . . . . . . . . . . . .Steve Peterson MKC Connections Managing Editor . . . . . . . . . . . . . . . . . . .Kerry Watson Staff Writer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Cassie Wandersee Mid Kansas Coop Association P.O. Box D • Moundridge, KS 67107 • 620-345-6328 www.mkcoop.com

The definition of dedication For the most part, many people who dedicate a lot of time to something they are passionate about go without recognition for their efforts. When one chooses to serve on various boards of directors or in advisory capacities, he or she has a choice to make. Am I here to represent a vocal few or do what is best for the entire company? Do I give all I can or do I just put in my time and go through the motions? I think it’s important to recognize the effort given by MKC’s board of directors along with the expectations they have for themselves and the standards they hold each other to.

The sheer time commitment to be a board member who is engaged and “up to speed” regarding industry knowledge is enough to take most people out of the running. In today’s business climate the pace of change is incredible and I will contend agriculture is leading the pack with our rate of change. Not only is agriculture as volatile as any other business today, but the counter party risk is becoming increasingly more worrisome.

You better have a good understanding of what that risk is and how it could potentially impact you. You can’t learn this by only attending monthly meetings. You have to seek out educational opportunities that will expose you to what the experts have to say.

MKC’s board of directors has met with consultants who are experts in doing a risk management assessment. Following assessments of the entire enterprise, the board believed, and I agree, that we have a pretty good handle on the more traditional risks. The board has also done an excellent job of making sure we have policies and procedures in place to deal with what we already know to be true and potential perils. What keeps us up at night is what we don’t know. What potentially can be lurking in the shadows and not even be on our radar? Or, if it even is known, do we have a solid understanding of what the implications of an event could be. Is it just a speed

bump or does it have the potential of tipping a company completely over?

MF Global is a perfect example of something that certainly wasn’t on anyone’s radar. It never crossed anyone’s mind that a commodity clearing house would experience fraud at such a magnitude. When you’re suddenly faced with the potential loss of a few million dollars, you review all of your processes.

Thankfully, MKC has recovered the majority of its funds at this point, but it did cause us to re-evaluate and alter many of our processes.

Assessing our enterprise risk management was prudent and provided an excellent opportunity for the board and management to look into some areas in which we may not have understood the full extent of our exposure. It caused us to assess the way we monitor and manage risk in many areas of our company.

It also forced us to determine just how much risk we’re willing and able to accept as a company. Do most companies do this? Clearly the answer is no, but they should. By going through this exercise, MKC became a better company.

In addition to meeting with consultants, your board attends a number of conferences to learn how others in the industry are managing their own risk. Rarely are two situations ever exactly the same.

However, by listening and asking great questions they get a good direction to lead discussions with management.

The key to gaining the most value from this type of exchange is the courage to ask questions, the knowledge of how to ask the right questions and the willingness to challenge the status quo. When a director observes the world from a different platform, he understands that continuous change and constant transformation is the only way to stay relevant and successful. Change is your competitive advantage. So, in addition to seeking out information, you have to be able to communicate the information in a manner that will be clearly understood and actionable.

By Dave Christiansen, President & CEO

It would be impossible to create the vision for MKC’s future if these steps weren’t taken. Envisioning our future is one of the primary duties of the board.

In addition, your directors work with management to define major objectives that help determine a direction in which to go and create a vision for the future.

The board then holds management accountable for executing the stated objectives. This can’t be done unless there is a good understanding of what is going on in the world and how you want to fit.

Another part of each director’s responsibility is succession planning. Most people automatically think that a board focuses only on CEO succession. While that is a part of their duties, another has to be succession planning for the board.

We’ve taken many steps to ensure other members are introduced to the functions of the board including decision-making processes. Our associate director program continues to be one of the best ways for younger members who think they may be interested, but are unsure, to gain exposure to the process. If you are someone (or know of someone) who may be interested in this program, please contact a board member or me.

The board also opts to send a number of producers to the quality cooperative young leader conferences held each year.

The intent is simply to expose more people to the leadership needs and scope of the cooperative system.

I’ve been in the cooperative system long enough that I’ve had the opportunity to watch an evolution take place. I can remember a time when the majority of board members of a coop lived in the same county, many times in the same neighborhood or on the same section.

Many days, most directors would be in the office in a normal course of business and it was much easier to keep them informed.

After the formation of the cooperatives and the initial infrastructure was put in place, the decisions directors made then were generally more operational than directional. For the most part, decisions Continued on page 9

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Rig technology cuts producer costs Jeff Williams, an MKC producer in the Marquette area, has been doing his business at the Marquette location since 1981. He remained there when Marquette merged with MKC and in the years since he has seen many changes.

“The biggest thing we’ve noticed is the newer equipment, they are more timely,” said Williams.

MKC strives to provide agronomy services with the latest and best technology, as well as provide a level of service that is unsurpassed by others in the industry.

This goal is accomplished by utilizing the best equipment and ensuring excellent customer service is constantly maintained.

by Cassie Wandersee, Staff Writer

application and less waste.

On the 4940 John Deere the accuracy of the sections has increased with eleven sections of nozzles that can be automatically turned on and off, instead of the previous seven, creating fewer areas of overlap.

Another important aspect of the GPS technology is auto steer.

“Auto steer makes for more accurate applications by avoiding overlaps and skips,” said Mazouch.

Fewer overlaps help to keep costs down for the producer.

“The leading technology we offer by having these newer rigs allows for more accurate and efficient application,” said Nick Mazouch, Agronomy Manager at Lindsborg. “Rigs are exchanged every three to five years for newer models.”

These advances are based largely in mapping and GPS technology. Maps of fields can be directly uploaded to the rig computer to provide a detailed guide of the field, as well as controlling application rates based on soil sampling in the field.

If a rig crosses into an area it has already sprayed, sections of the spray nozzles automatically shut off. This feature is known as “Swath Control” on the 4940 and “Accuboom” on the Patriot. Mazouch and Esau both commented that this feature is especially helpful when spraying along creek beds, waterways, or anywhere a varying route must be driven creating a more accurate

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Each brand of rig is also equipped with the technology to maintain a constant application rate at a specific constant pressure even as sprayer speeds and field conditions change.

“The operator can drive according to field conditions without worrying about pressure deviations, so average field speed can vary by 1 to 3 mph, increasing efficiency and accurate coverage,” explained Esau. “The technology eliminates unsightly skips in a field.”

The advanced equipment is not the only thing that makes MKC agronomy centers some of the top in the agricultural industry, the individuals behind the equipment are truly what make it successful.

“By trading them every three years we stay on top with the latest cutting-edge technology and efficiency,” said Dwaine Esau, the Agronomy Manger at Walton.

The John Deere 4940 sprayers as well as the Case Patriot spray rigs used at MKC’s agronomy centers feature some of the best advances in spray rig technology.

Mazouch. This is especially helpful when applying wheat fungicide he explained, by causing less crop injury there is less yield loss.

“I can contact MKC and we discuss what we want to use and how we want to use it.

I use their expertise to help make my management decisions,” Williams said.

The opening round calculates the area (in acres) of the field, so the application rate and listed acres on a work order can be double checked. Double checking the rate to acres ensures the proper amount of product is applied so producers aren’t paying for additional product.

In addition a crop will not be affected by applying too much, or too little, product.

Boom size also plays a vital role in the efficiency of the spray rigs; both the Case and John Deere rigs have 120 foot booms.

“The 120 foot booms cover acres faster and with less passes, leaving less compacted tracks in the fields,” said Esau.

“Increased boom size also decreases crop injury in solid plant fields,” said

Part of the management decisions every producer faces is determining when the best time to buy products and services is.

Scott Rolfs, a new customer in the Bushton area, said “MKC allowed me to prepay a specific amount of fertilizer.

I had anticipated price increases and MKC allowed me to lock in my fertilizer inputs.”

Serving the producer is the number one goal of the agronomy departments at MKC, and they are constantly looking for ways to improve service.

“MKC has management that listens to suggestions and makes changes to improve,” said Williams.

Making a difference MKC employees take great pride in donating their time to their communities and charitable organizations. The following are examples of how some employees are making a difference for others.

Lane Allison Seed Logistics Coordinator Lane is very involved within his community through several groups including a local nonprofit group in Moundridge, Personal Energy Transportation or PET. The organization manufactures and delivers all-terrain, self-powered wheel chairs to people in developing countries. He has delivered 11 of the PET chairs to children and adults during two separate trips to Ethiopia “I would much rather donate my time and energy in a way that I can meet the people I am supporting and develop an actual relationship with them and know exactly to who or what my contribution is going toward. These trips have allowed me to see the true happiness and joy from these people simply by receiving the gift of mobility. I am extremely grateful to have witnessed that firsthand.” – Lane Allison

Debi Lichti Direct Ship Specialist Debi has donated her hair four times to Locks of Love, a non-profit organization that provides hair pieces to financially disadvantaged children in the United States and Canada. Over the course of her donations, she has donated over 40 inches of her hair.

“A number of years ago a fellow church member, who is a beautician, gave a presentation at one of the women’s programs in my church about cancer.

As a beautician, most of her presentation was about donating hair for ‘Locks of Love’. I had not heard of it before then and decided from that presentation I could maybe donate to the cause. So with my daughter’s encouragement, I made my first appointment with the local beauty shop and took the plunge. Since then I have donated four different times; the most recent being on October 27th, donating another 10 inches. Total inches over the years would probably be about 42 inches. It is such a wonderful cause and a way I can help someone who is struggling through a difficult time in their lives.” - Debi Lichti

Jared Miller Field Marketer Jared has been active with the Dickinson County Pheasants Forever chapter since 2009. He is in charge of youth functions for the chapter which includes an annual youth shoot, an educational afternoon with gun safety, dog training, habitat information, and a youth pheasant hunt.

“I joined the Dickinson County Pheasants Forever to become more involved in the Abilene Community, and because I have a passion for the outdoors.

I have been a part of the organization since 2009, and I was recently asked to head up the Youth Division within our chapter. I am responsible for anything that involves the youth including the yearly banquet and our largest event, the annual Wade Beemer Memorial Youth Shoot. I enjoy being a role model for kids.” – Jared Miller

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Returning to the farm The statistics can be grim. There are fewer farmers every year as young people pull up their rural roots for a future anywhere but on the farm. Even current USDA statistics show that more than a third of U.S farmers are 65 years old or older, and half of the current farmers expect to retire in the next decade. Across the U.S. only five percent of principal farm operators are under the age of 35.

But around central Kansas there are young, determined producers who believe their family farms are worth saving. After college they headed back to the fields where they first learned to drive a tractor sitting on their mentor’s lap.

Growing food, raising livestock, living surrounded by nature on the land their descendents first owned, gives their life purpose. But, they also depend on family for their support and the modern technology provided by Mid Kansas Coop.

by Kathy Hanks, Freelance Writer

After graduating from Kansas State University with a graduate degree in agronomy, Jason headed to western Kansas where he worked for Monsanto.

“I wanted a chance to experience something else before I made farming a life-long career,” Jason said.

Things moved quickly and by 2000 when he returned to the farm, technology was rapidly advancing in agriculture.

Now, a decade later he is relying on the expertise and services of MKC to help him be more successful in his operation.

He feels it’s important to stay current on the latest advances in agriculture. During the winter months when things slow down on the farm, he will attend meetings and seminars, some sponsored by MKC. He also looks to his elders for advice, especially during the current season.

Local marketing Jason Gaeddert wouldn’t describe his return to the family farm, near Buhler, as following a dream as much as sticking to a plan that has been part of his life.

“They would open the field for me and turn me loose, and then come back when they thought I would be done,” said Jason. “I enjoyed what I did, but was probably undecided about farming up through high school.”

Growing up he recalls his grandfather and father hauling their crops to MKC elevators. He’d ride along, but never gave the coop much thought.

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But even back then he began to understand the marketing side of ag, selling sweet corn at stands around the area. “It was a little extra summer income,” Jason said. Working with his cousins, the sweet corn venture has grown over the years.

Younger generations of farmers are utilizing the lessons learned from their elders and implementing them into their current operation. Gaeddert has also learned an invaluable lesson, farmers are optimistic about the future.

“Or you wouldn’t want to stay in it,” he said.

Making it happen Moundridge farmer Gary Regier has two dreams.

The first is that one of his two sons, Josh or Nick, would return to his farm near Moundridge some day and work alongside him.

The second dream may take several decades to materialize. Gary dreams of farming with one of his grandsons.

Currently, Gentry (4), Lantry (5 months), and Mason (1 month old), are all too young to enjoy anything that has to do with agriculture except perhaps a brief ride in the tractor.

Today, at 40, he farms with his father John, Uncle Leon, and his cousin, Phil Burckhart. Some of the ground was the original farm first planted by Jason’s great-grandfather. Today Jason can stand on one spot of land and be in Harvey, Reno and McPherson County.

Jason was always riding along on the farm as a child, and by the time he was 10 he was driving a tractor.

“This group generally doesn’t have the equity to put at risk like they will when they’ve been at it a while,” stated Christiansen. “Our efforts to develop new tools that can help all growers manage risk are another major way the coop has evolved to serve the needs of the grower.”

Following graduation and some time working in western Kansas, Jason Gaeddert returned to the family farm in 2000.

“This is my first bad drought,” Jason said. “My dad remembers the 1980s and some of the older farmers remember the 1950s.”

He is learning that it’s cyclical, and he is learning the importance of knowing how to manage in good times and bad. What has been beneficial is utilizing risk management tools, including locking in a profit and ensuring there is crop insurance.

MKC’s President and CEO, Dave Christiansen, noted that the utilization of risk management tools is much more widely accepted by the younger generation.

Gary’s first dream is becoming a reality as Josh, 30, has returned to the farm. While the first dream is becoming a reality Gary and Josh will tell you they aren’t 100 percent there yet, there isn’t enough ground for Josh to farm full time. So, the Kansas State University agronomist works full time as a crop consultant with CropQuest and helps his dad on evenings and weekends.

“He’s working into it, acquiring ground,” Gary said.

But for now he must have the full time job. Gary says the work Josh does as a crop consultant compliments their farm.

“It works out beautifully with what he is doing as a crop consultant,” says Gary.

“Josh has brought our farm into a new era with a fresh start and new ideas. I benefit a lot from it.”

However, Gary jokes, wondering if there are times the farm is a guinea pig for

Josh’s ideas. But his son has educated ideas.

“I am willing to do this because I have seen him turn ground into highly productive crops,” Gary says.

Josh grew up on the family farm where his great-great grandfather arrived from Russia in 1874 bringing red turkey seed wheat and settling on a section of ground that is still in the family. Farming is Josh’s link to family and his past. Some of his earliest memories were spending time with his dad and grandfather, Albert Regier.

Gary still does most the work planting and harvesting wheat, corn, soybeans, and milo. Josh helps in his spare time, often bringing Gentry out to the field with him.

Like his dad and his grandfather, Josh is a member of Mid Kansas Coop. While the name is the same as when Albert Regier was a member back in the 1960s, MKC has evolved just like the ground they continue to farm.

Josh appreciates the ownership he has in the coop.

“It’s good to know when you’re paying bills, a portion is going back to you,” Josh said. “We use the coop for most of our crop inputs, fertilizer, fuel and crop protection products. As well as helping with the marketing of grain.”

Josh says people have to love farming to make it one’s life occupation.

“I can’t imagine doing it only for the money,” Josh said.

Earning his stripes Four miles south of Abilene, Todd Kohman farms his family’s land where he is the fourth generation to live in the same 100 year-old farmhouse.

Todd’s first lesson on the farm came when he was four. His granddad, Henry Kohman, was feeding hay bales to the cattle and told Todd he needed to drive the truck alongside the bunks, while grandpa stood in the truck bed tossing the bales.

“He told me if I hit the bunk, to just turn the wheel right, and when I got to the end just turn the key off,” Todd said.

“I thought it was pretty neat.”

Todd successfully mastered his first farm task, now at 34, the lessons keep coming.

All his life, the farm has been a laboratory for learning, with his dad and granddad serving as the instructors. His father, Leon Kohman, encouraged him to get training off the farm so he would always have something to fall back on if there were a few bad years farming. So Todd attended Kansas State Vocational Training School in Salina and learned auto body work. It’s a trade he still works at during the slow winter months on the farm.

In today’s world, Todd knows he’s lucky.

Dickinson County producer, Todd Kohman, (left) discusses business with Justin Jenkins, Grain Marketer for TMA.

“I love to farm and this is what I want to do,” he said. “There is no way I could go out and start a farm on my own.” He appreciates the opportunity to work with his father growing alfalfa, wheat, corn, soybeans, and raising feeder cattle.

helps fill the drills. Then the farmer and grain marketer hop in the tractor and as Todd plants the 2013 wheat crop, Jenkins suggests better ways to market his grains.

It’s the same when Jared Miller, his field marketer, comes out to take soil and tissue samples.

While there are lessons to be learned, Todd said his dad will “ride him pretty hard.”

“He doesn’t want me to fail,” Todd said, and he respects what his father is teaching.

He also appreciates the knowledge he gains working with employees at MKC. “I like the way they come up with new programs,” Todd said. He appreciates that the people he works directly with at MKC are close to his age and they can relate to each other.

He’s concerned with farmers who are stuck in their ways, “The ones who say I’ve done it this way for 200 years, and I am going to keep doing it this way,” he said.

Farmers need to adapt and move forward with change and he appreciates that thinking at MKC. He also appreciates that they travel out to the farm, ride along in the fields and talk shop about how he can make certain changes that would help increase his yield and increase their bottom line.

The Kohman’s take advantage of MKC’s soil and tissue sampling and appreciate knowing when they need to up the nutrient levels.

Justin Jenkins, Grain Marketer for Team Marketing Alliance, comes out when Todd is busy and doesn’t just stand around, he

“They do an excellent job and they are both my age,” Todd said. He likes that there is a mutual respect for each other, despite the fact that they are new to the field.

The kind of service Todd Kohman is coming to expect (or becoming accustomed to) has become the company’s standard operating platform, according to Christiansen.

“We have highly skilled people in every division of the company that call on our producers every day,” Christiansen said.

“Their primary responsibility is to call specifically on the growers farming so many acres that they don’t have the time like they used to or are less inclined to come into the coop to get answers. We make it easier for the producer by going to them.”

Christiansen commented that each person will generally have responsibility for 25 to 40 accounts. “Many companies are doing this today,” stated Christiansen. “It’s not really that unusual, but to separate ourselves we have to have the best of the best in these positions and then back them up with superior execution.”

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Joining forces for ag education Educating today’s youth about agriculture has become a concern for many in recent years. Often children do not understand that many of the things they use every day are products of agriculture, nor do they realize the farm equipment and products they could encounter have potential to cause them harm.

by Cassie Wandersee, Staff Writer

dealing with crop protection/nutrition products, and had a chance to view one of the Case Patriot sprayers, with 120 foot booms, MKC utilizes in agronomy services.

The students were amazed to learn from McCune that the spray rig could “drive itself” through the use of GPS technology and auto steer.

“I feel that we need to educate kids in our cities and towns about farm safety, because there is a high likelihood that these kids will encounter farm equipment at some point in their life,” said McCune.

Shane Eck, Lindsborg Location Manager, recently got involved in the effort to help educate area youth on agriculture by presenting a program on the process of how food and everyday products travel from the farm to their hands.

Dickinson County producer, Jeff Bathurst, and Talmage Location Manager, Matt McCune, talk about ag safety with area students.

Third graders across Dickinson County gathered earlier this fall in Abilene for “Ag Day” sponsored by the Dickinson County Farm Bureau, a day of farm education, safety, and fun. Matt McCune, Talmage Location Manager, was on hand to assist Jeff Bathurst, an area producer, with a station on crop nutrient and crop protection safety.

Bathurst, who farms in the Abilene and Talmage area, has participated in the Farm Safety Day for the past eight years and places an emphasis in his farming practice on educating kids. McCune saw where Bathurst had been recognized in the community for his involvement in Ag Day in previous years and approached him about MKC getting involved in the education effort. This is now the second year the two have partnered to present for Farm Bureau.

“It is important to educate the public about chemicals and what we use them for,” said Bathurst. “Part of MKC’s strength is they understand the farmer and we appreciate the help in educating the public.”

Students were shown the size of an acre of land, discussed safety practices when

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“I wanted to get involved in classroom education because I feel it is important to teach the next generation about the importance of agriculture. There are a lot of individuals that do not truly realize the impact agriculture has on society and how much we rely on it,” said Eck.

Students then moved onto building a model pizza discussing how each ingredient in the pizza from the dough to the toppings came from agriculture. And as a treat for lunch, pizza was provided to solidify the idea that agriculture is truly what feeds them.

“The agriculture presentation by Mid Kansas Coop was a very engaging hands-on experience for my class,” said Tiffany Pacey, fourth grade teacher at Eisenhower Elementary.

“I felt the program went very well,” said Eck. “Since it was our first time presenting it I was unsure of how well it would be received.”

Eck commented that he would like to further develop the program for middle and high school aged kids with a more advanced program that focuses on career opportunities in agriculture.

MKC places an emphasis on environmental and community stewardships as written in its core values. Involvement in safety and education programs is just one way this is demonstrated.

“They learned about where their food comes from through a wonderful visual display, and learned about the various crops grown in Kansas and their uses,” said Pacey. “My students loved looking at and touching all the grains that are grown in Kansas.”

Eck presented to the fourth grade class at Eisenhower Elementary School in McPherson, beginning his presentation by asking the students what kind of things they used every day. Responses ranged from vehicles to breakfast cereals.

Through an image based web map, students were shown how vehicles could be traced back to the farm by the use of ethanol fuels, a product of corn and milo, which are made locally in Kansas.

Or how the cereal they had for breakfast was made from a wheat product.

“The class was very involved and receptive which helped the lesson progress as we hoped,” Eck commented.

Shane Eck, Lindsborg Location Manager, explains to 4th grade students how food and everyday products travel from the farm to their homes.

The definition of dedication Continued from page 3 were about how many and what kind of trucks to buy, does the leg in the elevator get upgraded or does a new roof get put on the dry fertilizer shed. Today those decisions have been delegated to others. Decisions now are about what locations will be replaced, what assets are no longer practical (or no longer required) to serve customers today and who should their strategic partnerships be with. With today’s volatility and the risk that comes with it, it’s paramount that we do exceptional analysis to evaluate the long-term impact and the return on future projects when looking at annual investments of $5, $10 or $20 million.

different concern. Each year MKC’s directors meet with the insurance and risk management providers to review any changes we have made or should make to our coverage. Proper training to understand and perform these functions is important as legal counsel constantly reminds our directors that as fiduciaries they potentially have personal asset exposure.

tongue-in-cheek, but it’s true none-theless. I have a tendency to build a management team of very intelligent, capable people and it takes a director with strength, knowledge and confidence to challenge their thought process.

Our current board learns new ways to do that daily. By being able to work together in this fashion we generally come to much better conclusions.

Board members are fully responsible for the fiscal well-being of the coop as well as the maintenance and growth of the company’s equity. They are charged with ensuring the cooperative is a perpetual entity. There is no retirement date for their company. Boards today deal with more emphasis and scrutiny than ever before regarding regulations, environmental and safety compliance, legal compliance, fraud, insurance coverage, employment laws and personnel benefits administration. Although administered by management, the board has oversight to insure the company is managing all risk properly.

In addition to serving on our board of directors, we have two directors who chose to be further involved in the influence of the cooperative system. They campaigned and were elected to serve on the boards of Land O’ Lakes and Cenex Harvest States, both of which are multi-billion dollar worldwide regional cooperatives. We take a lot of pride in having them in these positions. The opportunities and experiences they gain far exceed what our local board participates in. Project analysis takes on an entirely different level at $100 million (plus) and in a foreign country. To bring that kind of experience back home and use it on a local level is invaluable. We also have directors who serve on the boards of banks, school districts and in various other capacities and these experiences contribute to the skill set they bring to our board meetings.

The rules are being re-written daily and you have to be tactical or deliberate in your effort to stay knowledgeable. It doesn’t happen in the coffee shop or just by attending monthly meetings.

You must be dedicated to being a lifelong learner. If you aren’t, your ability to help make the decisions that truly guide the coop in the right direction will be of little value. Sure it’s important to remember the past and have a good understanding of corporate history, but today, just doing what you’ve always done doesn’t guarantee that you will always get what you’ve always got!

When you have inventory that can exceed $100 million, understanding your exposure and policies is vital. Liability exposure for our company is an entirely

As you can tell I’m very proud of the job your board of directors does and the efforts they make to educate themselves.

I make this next comment a little

People give of time, their most valuable commodity, for many reasons. The majority do it not for the recognition or rewards or to serve a self-interest, but because they have a passion for making a difference. I’m certainly pleased we have members still interested in doing just that and who have the passion for positioning this company to be stronger in the future.

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Schultz discusses impact of aflatoxin on the industry The drought of 2012 expanded the issues the agricultural industry faced in the drought of 2011.

“One of the biggest issues faced this year was the quality of the corn crop which was greatly affected by aflatoxin,” said Ted Schultz, Chief Operating Officer for Team Marketing Alliance.

Aflatoxin is a carcinogenic mold that can be harmful in both humans and livestock that consume it explained Schultz. The Food and Drug Administration places levels of restriction on the amount of aflatoxin that are safe for consumption. Detection of aflatoxin over certain limits can result in limited use of the product or even disposal of the product through burial.

“Feed mills typically need to use corn with less than 20 parts per billion (ppb) aflatoxin due to the multitude of feeds they produce,” said Schultz. He went on to say that, “in several instances across the country, milk was disposed of when aflatoxin was detected in it.

In some cases the aflatoxin was traced back to the feed supply.

Along with the dumping of milk supplies, calf abortions have also occurred in areas of the country.”

Mills in areas of high aflatoxin concentration are forced to source corn from areas without the high levels or that are completely free of them. Outside sourcing can drive the cost up as much as $1.00 per bushel due to the cost of freight and higher prices of “clean” corn.

Ethanol plants have also been affected by aflatoxin levels. Levels have been detected in DDG (dried distiller grain), a byproduct of ethanol production used to feed cattle. The ethanol making process concentrates the levels of aflatoxin in DDG up to three times the

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detected amount in the corn. That means the corn with a level of 50ppb aflatoxin will produce DDG with 150ppb, much limiting the use.

“TMA has faced the loss of one of the best markets in recent years due to the need of corn with 20ppb or less and the limited supply available. The lack of 20ppb corn being delivered to TMA has significantly reduced marketing options,” commented Schultz.

Aflatoxin impacts grain markets and changes the flow of money and grain due to the logistical issues created. Special rates out of the northern area of the U.S. have been put in place to route corn into the central Corn Belt in order to boost good quality corn supplies for the year.

Re-routing could cause supplies for Nebraska ethanol plants to be tougher to acquire, as the bushels normally routed into the state are being pulled west to replace the loss of bushels there. Bushels in Missouri and Iowa that would typically go east and west are now moving south to Texas to meet the need to feed cattle.

The Food Safety Modernization Act passed in January of 2011 was the first big focus on food since the 1938 Food Drug and Cosmetic Act. The FDA will now have 50 new regulations, guidance and reports to work with under the new act, which will impact the way aflatoxin regulations are enforced.

“In the future it will become clearer as to what kind of impact the act will have as more parts are put into place,” said Schultz. “We’ll keep you updated as these changes occur.”

Revenue program protected production costs during drought This is the second year that MKC has worked with Swiss Re to offer a revenue program designed to assist producers manage the risk associated with the production of double crop soybeans. While MKC promoted the program to producers, MKC did not assume any of the financial risk associated with it.

In 2011, the first year the program was offered, Swiss Re paid out over $2.65 million to 138 producers throughout 11 counties.

MKC was the first in the nation in 2011 to offer this one-of-a-kind program to producers when double crop soybeans weren’t traditionally eligible for federal crop insurance.

Following the program laid out by MKC, several other vendors in the state adopted similar programs.

During the growing season of 2012, the program was utilized by over 200 producers in 21 counties.

The risk associated with double crop beans is typically weather related, drought being the largest issue over the past two years.

“Due to unfortunate growing conditions the vast majority of fields have seen yield reduction which will result in a significant number of customers receiving payments,” said Dave Spears Chief Marketing Officer for MKC. “While the growing conditions were unfortunate, we are fortunate in that we were able to offer this risk management tool to our members,” Spears went on to say.