GreenStone FCS
Spring 2015
Promoting the business success of our customers and the rural community
SEIZING THE OPPORTUNITY BUILD IT Your Way! Tech Solutions Estate Planning
SPRING 15 6 YBSF Feature. As a young man out of college, Jake Maurer’s goal was to be done with off-farm employment by the time he was 30 and working the farm full-time. Achieving that goal would take creativity, ambition, hard work and an entrepreneur spirit to build new enterprises.
6
28
30
39
28 GreenStone Story. With the introduction of GreenStone’s Customer IT Services, maintaining your PC and technology just got a lot easier!
44
30 Country Living Feature. One couple in Monroe County, MI is building a safe, secure environment for special needs you adults right on the farm.
39 Land Values. AgriBank addresses the leveling-off of land values and summarizes other trends in the district. 44 Estate Planning. Do you have your estate planning bases covered? Here are some tips to help you decide.
Editor’s Note: 4 CEO Comments. As agriculture braces for a potential adjustment period, President and CEO Dave Armstrong reaffirms GreenStone’s commitment to work with its members to help them “preserve and protect “ their business. 10 Guest Column. Some doom-sayers say the end is near, but we have heard that one before. 12 Market Outlook. Spring has sprung, and economist Bob Utterback has some words of advice to make this a green year. 18 Legislative Matters. Roads and infrastructure are important to everyone including agriculture. Can we raise the funds to make needed improvements? 19 PAC Progress. With PAC funds growing, industry influence is gaining a foothold.
32 Build it Your Way. New home construction is on the up-tick, and GreenStone offers several options to those who are looking to build. 34 Health and Wellness You don’t need to be an experienced athlete to take on a fitness challenge. 36 2014 Farm Bill. Changes to conservation provisions are here. Learn what you need to know. 42 Affordable Care Act. From a tax perspective, there are some important points in the Affordable Care Act you should note. 46 Careers. On the hunt for new employment? Here are the key things to consider in a job offer when it arrives.
15 Member News
20 MABA Leadership. Senior vice president John Jones shares his experiences in a specialized leadership program.
16 Top Sales Staff Awards
22 Directors’ Perspective. Take a closer look at the audit committee and their role on the board.
25 Calendar of Events
26 AgriBank Update. A new initiative provides strategic focus.
17 Behind the Scene 24 Pause for Applause
Welcome to the second issue of GreenStone’s refreshed and content enriched Partners magazine! In January, I introduced you to this new format, and will continue to showcase new features in each of the next few issues. With the combination of the four publications, Partners, Country Minute, Crop Insurance News, and Tax and Accounting News, this magazine is now broken into four segments. While the articles contained herein include what those publications had provided, the new categories —Grow, Connect, Live, and Learn—break them up by purpose rather than product. Grow: Following the young, beginning, or small farmer feature story, the content is focused on farming and production agriculture. It is in this section where you will find the market outlook, and other articles beneficial to growing your business. Connect: The center of the publication is populated with GreenStone news and information. It is a hub of highlights to keep you connected to what is happening at your association, including customer and employee recognition, director perspectives, PAC and legislative updates, and often a focus on one of the many untold stories at the foundation of GreenStone’s products and services. Live: If you enjoyed what you used to find in the Country Minute, this spot is for you. The section is flooded with content relative to rural life—from outdoor living to improved health, you will even find a recipe featuring a Michigan or Wisconsin product in each issue. We have also added a second customer feature to the publication, this time highlighting a member living the rural lifestyle. Learn: Whatever your reason is for working with GreenStone, the tail end of Partners holds resources for everyone, including crop insurance updates and tax news, joined with opportunities to learn from experts. Don’t miss a page; you never know where you will find something of personal interest and professional value. Happy reading!
25 Farm Women Events 25 Candid Comments
35 Spring Cleaning 35 Commodity Cuisine... Asparagus
37 Crop Insurance News 38 Crop Insurance Calendar 43 Tax Calendar 47 Tech Tip
This newsletter is published quarterly for the customers of GreenStone Farm Credit Services. Partners 3515 West Road East Lansing, MI 48823 517-318-2290 marketing@greenstonefcs.com Let’s Be Social
Connect with us online for news and updates.
CEO Comments:
Twist & Turns Expected... SPRING IS USUALLY A TIME OF HOPE AND OPTIMISM IN THE AGRICULTURAL INDUSTRY, NOT ONLY BECAUSE OF WARMER DAYS, CLEAR ROADS AND LOWER HEATING BILLS BUT, ALSO BECAUSE IT MARKS THE START OF A NEW CROP YEAR AND THE ANTICIPATION THAT COMES WITH IT.
I was invited to address customers of Michigan’s Star of the West Milling Company, at their Star Ag Day in February, to Unfortunately, due to current and projected prices for many share my thoughts on commodities over the next two years (and maybe more) many farmers, how to “preserve and especially those who grow only corn, soybeans, and wheat, are still protect” farm businesses trying to adjust to precipitous drop in income many experienced last in this period of negative year and likely have not seen since 2002! In fact, the most recent margins for primarily estimate from USDA indicates that net farm income for 2014 will be cash grains. While I hope down 32 percent from 2013. that my comments were balanced, I am concerned about the financial sustainability of some of our members (for a myriad of reasons) who may not survive over the next few years if current projections for net farm income ring true. 4
Spring 2015 — Partners
As we move into spring, our lending staff are seeing an increasing number of members who were significantly impacted by low prices last year and/or lower yields due to wet conditions during planting and harvesting. Often, we first learn about a particular member’s financial stress when they come in for additional credit to pay 2014 expenses, or become delinquent on a payment. Sadly, in some cases we find it is simply too late for them to exercise all of the options they may have had if they had better understood their situation and/or reached out for assistance earlier. In anticipation of this increased financial stress, GreenStone implemented customer service workshops for all of our lending staff this past winter. These sessions were designed to train less tenured staff members on how to work with financially stressed operations and included topics such as loan restructuring options, working capital, cash flow, and future equity projection analyses under different price and yield scenarios. In addition, the workshops also covered timely and appropriate interactions with people who are emotionally stressed. While we certainly DO NOT anticipate the expected downturn in the agricultural economy to come anywhere close to the stress many of us experienced during the 1980s, we recognize that segments of the industry are in for some dramatically different economic conditions and will need to learn how to adapt quickly. GreenStone will not, nor has it ever, changed its core underwriting standards in a
1. Know your production and financial trends, and use them in documenting your 1-3 year business plan. Remember, hope is NOT a plan!
2. Examine how efficient your operation is versus similar sized farms, and make changes as challenging economy, but we are always ready to make exceptions to those standards if the member has a reasonable chance of recovery and it is in the best interest of our other 23,000 stockholders. Still, we cannot and will not enable financially unsustainable performance. This means that in some situations, the terms and conditions of our lending relationship will need to change from business as usual by analyzing and determining answers to the following questions: • Does the borrower have the ability and willingness to work their way back to financial stability? • Has he/she/they demonstrated proven performance over the last 3-5 years during relatively good times? • Do they have the working capital and equity to execute their recovery plan? • Does GreenStone have sufficient collateral for the level of distress in the unit? • And, what is the borrower’s commitment to THEIR plan for recovery? Will they share in the risk of any additional financing by pledging additional collateral, working with other creditors for payment relief, and so on? The answers to these questions will ultimately determine how far GreenStone can go with a financially challenged operation. I shared the following list of suggestions/recommendations with the participants at Star Ag Day, and thought I would share them with you as well. The list is not intended to be anywhere close to all inclusive, but I hope that it will assist any producer (whether financially challenged or not) in thinking about ways to “preserve and protect” their farm business during challenging economic times:
necessary (investment level of machinery for acres farmed, cost of hired labor, etc.)
3. Just like sports team coaches do, utilize credible and trusted “outside” consultants to get advice to help make your business better. It doesn’t matter how good you are, you can always improve!
4. Objectively examine “family living” and “non-earning” assets. These items have risen significantly with higher net farm incomes over the years and may not be sustainable at current levels in the future.
5. Assess your exposure to rising interest rates. Do you have too much exposure to variable rates?
6. Be realistic when assigning values too inventory, chattel, and real estate assets. Don’t inflate values; it only creates a false sense of security!
7. Understand what working capital is. Your equity may be strong, but sources of cash to pay bills are tight. An adequate line of credit, liquid assets (readily marketable inventory) and/or cash are critical.
8. Minimize losses by using your working capital, off-farm income, and/or renting out owned assets (land, machinery, etc.) to meet fixed cost obligations and family living.
9. Have a good risk management plan including a marketing plan with ways to protect downside price risk, plus crop insurance, property and casualty insurance, life and disability insurance. The lower your equity and/or higher the risks are in your unit, the more of these tools you may need.
10. Diversify your income stream if possible (i.e. different commodities or non-farm income). 11. Real estate values are at or near historical highs today. Depending on your situation, this might be the right time to exit the business by selling your operation and investing your equity in less volatile assets.
12. Communicate, communicate, and communicate with your lender! Be proactive especially if you know or suspect you will have challenges.
Even though my message may sound pessimistic, I’m still very optimistic about the longer term fortunes of American agriculture. Why? Because of the productive capacity and entrepreneurial spirit of the American farmer. The United States still produces the most diverse, affordable, dependable, and safest food supply the world has ever known and that will not change any time soon. Plus, the long term trend of a growing middle class in developing countries will continue to generate greater levels of income to purchase higher value agricultural products.
process. For those producers who have prudently managed their businesses in the past, they will be in a good position to seize the opportunities that will arise from the volatility this downturn will create. As always, feel free to contact me if I can ever be of assistance. Best wishes for a safe and successful planting season!
Dave Armstrong
Those of us who have been in this business for a long time understand that it is an industry of cycles; the next few years are just part of the natural
517-318-4105 dave.armstrong@greenstonefcs.com
Partners — Spring 2015
5
GROW
SEIZING THE OPPORTUNI By Jennifer Vincent Kiel
As a young man out of college, Jake Maurer’s goal was to be done with off-farm employment by the time he was 30 and working the farm full-time. Achieving that goal would take creativity, ambition, hard work and an entrepreneur spirit to build new enterprises. Today, the 33-year-old Ruth, Michigan farmer is farming 550 acres of sugarbeets, wheat, navy beans and soybeans. He’s also established himself as the only Holmer sugarbeet equipment dealer in the country and, with his parents, Bruce and Gail, has grown a custom applicator and harvesting business. It all seems quite scripted, but Jake’s ability to become a selfmade, full-time farmer is rooted in his ability to recognize a need and take calculated risks. He has a high degree of motivation. “I like challenges,” he says. “When someone says it can’t be done or it’s too difficult to do, that’s what makes my wheels turn.” Change of Direction
Jake grew up on a dairy farm with the normal after-school, after-ball practice and weekend chores. Farming was in his blood but not really on his radar for a career—he wanted to be a mechanical engineer. “Anything mechanical intrigued me,” he says. “I was always 6
Spring 2015 — Partners
fabricating something in the shop. I was welding when I was 12 and tinkering around with go-carts and other things.” In his senior year of high school, his folks sold the cows and concentrated on cash crop farming. Jake went away to study mechanical engineering at Kettering University. He wanted to be in research and development, or so he thought. “In my junior year of college, I found myself coming home every weekend,” he says. “Subconsciously, I must have known I wanted to come back. It was in the fall, and I was driving home to run the beet digger that weekend. I just decided, this is the career I really wanted to follow.” In his final year of college, one of the farms his family was renting came up for sale. It was 80 acres about five miles from his parent’s homestead. Using the Farm Service Agency (FSA), Jake secured half of the loan through the young farmer
NITY program and worked with a local bank for the other half. In January 2005, about a month after graduating, Jake closed on the purchase. It was the beginning of Maple Grove Acres. With a bachelor’s degree in mechanical engineering in hand, he went to work for Sandusky-based, Trelleborg Automotive, which manufacturers automotive suspension components. “My folks have a rule that anyone who wants to come back to the farm first has to get a college degree and work outside the farm for a period of time,” Jake explains. “I learned a lot in the automotive field. There are several guiding principles that I am able to bring back to the farm.” Working at Trelleborg by day and farming at night and on weekends, Jake was working his own ground while also helping out with his parents’ 750 acres of cash crops.
➡ TOP: Jake Maurer is the only U.S. dealer of Holmer sugarbeet equipment. His wife, Nichole, is a calculus, robotics and chemistry teacher at the local high school.
“I started working with GreenStone on the purchase of equipment,” says Jake, who keeps his eye open for available ground at all times. “My uncle owned property that we were renting, and he wanted to sell. Of course I was interested; it also had outbuildings and the house that my
Partners — Spring 2015
7
Straight Talk great grandparents built in 1948. It has been a centennial farm since 1977.” Again using the FSA young farmer program, Jake approached GreenStone as the other financial partner. “GreenStone is super friendly, fast and easy to deal with,” Jake says. “I had a small portion to put down, and they covered the rest.” Shannon Arbaugh, a GreenStone financial services officer, has been working with Jake since 2008. “Through the years, we’ve financed operating loans, real estate loans and equipment loans, including his beet harvesters,” she says. “GreenStone has also refinanced real estate from another lender that was on a balloon term to reduce his risk by providing long-term fixed interest rates.” In August 2008, Jake closed on the purchase from his uncle. Two weeks later he married, Nichole Carrick who he’d met in college and is now a calculus, robotics and chemistry teacher at Cass City High School. New Opportunities
“I knew what I wanted to do, and I had a vision of being a full-time farmer by the time I was 30, but I really didn’t know how to get there just yet,” he says. “Land is the hardest commodity to come buy when you are farming. So, I looked at creating other income streams.” In 2008, Jake and Nichole, in partnership with his parents, established a custom applicator business for spraying and fertilizer spreading. “It was one way to help establish landowner relationships. It’s very important to get your name and face out there,” he says Along the way, Jake has also been creating a reputation. “Jake is highly ➡ RIGHT: Jake Maurer and his wife, Nicole, with their children, Eli, Audra, and Liam.
8
Spring 2015 — Partners
With Jake Maurer
When you were eight, what did you want to be when you grew up?
What is the biggest challenge for young, beginning or small farmers today?
“ I wanted to be an engineer.”
When did you first realize that you wanted to farm for a living?
“ Access to land, whether it’s to purchase or rent. If you can procure land, usually the other stuff, like equipment, will come into place.”
“ When I was about 20 years old; a junior in college.”
What advice do you have for young, beginning or small farmers starting out?
Who do you look up to; who is your mentor?
“ Don’t be afraid to look outside the box. Five years ago we would have never thought we’d be marketing and selling sugarbeet equipment. Don’t be afraid to take a different path.”
“ My parents. They have taught me a lot and instilled the values I have today.”
i respected by his peers and neighbors,” says Arbaugh, who sees future opportunities for GreenStone to work with Jake as his operation grows and evolves. “Not only does he have a vision and dream, but he always has a plan to back it,” she adds. “He’s not going to jump into anything without first researching and understanding the risks and consequences that go along with it. When Jake comes to me for financing, I know he’s already done his homework, which makes my job a lot easier.” His interest in becoming a Holmer dealer was spurred by a particularly long, drawn-out 2010 harvest that included an abundance of mud. “I was really looking to simplify and possibly purchase a selfpropelled harvester,” he says. “Ropa was the only one here (in Michigan) at the time. So, I starting looking at different manufacturers and corresponding through the winter of 2011.” In May of that year, Jake went to the Holmer’s headquarters in Germany with his two youngest brothers, Luke and Adam, to check it out. At the time, he was just looking at equipment with no real ambitions of being a dealer. “I saw the machine and liked it, which resulted in a lot of discussion,” he says. “Holmer wanted to break into the North American market, which is the only untapped market without a large percentage of self-propelled machines versus pull behinds.” Through negotiations, Jake bought a Holmer harvester and became a dealer and a custom harvester. A Holmer sales manager and technician joined him for the initial in-field, Michigan run. “We started harvesting and probably 25-30 farmers came out to watch us digging the first field,” Jake says. “That eventually created some customers.” By buying advertising in sugarbeet magazines, the first sale was in February 2012 to a group of Canadian growers. The business has grown to include
customers in Minnesota and Idaho. As the Holmer side of his business expands, Jake expects to add more employees for manufacturing sugarbeet carts. More Opportunities
Jake, with his parents and a couple of neighbors, purchased a sugarbeet cleaner/ loader in 2012 and are now picking up their own beets, as well as beets for six other growers in the area. To be efficient, Jake and his parents’ business have custom rates for each other, avoiding doubling up on equipment. In the last few years, Maple Grove Acres with its three full and two part-time split employees, is custom harvesting about 1,500 acres and picking up about 70,000 tons of beets. The employees are split between Jake and his parents’ operation, as well as the custom businesses. “It’s real busy in October and November,” Jake says. “But the kids join me in the harvester.” Not all three of them at once, though. Jake and Nichole have three children ages five and under—Eli, 5, Audra, 4, and Liam, 2. “Jake is very ambitious, educated and is a true pleasure to work with,” Arbaugh says. “I really enjoy working with Jake and Nichole and watching how their farm operations have evolved over the years.”
MICHIGAN SUGARBEETS • More than one billion pounds of sugar is produced in Michigan each year. • Sugarbeets are grown in about 20 counties in Michigan. • Approximately 1,000 farmers harvest the Michigan sugarbeet crop on 160,000 acres of land. Together, they own the cooperative, Michigan Sugar Company, the only sugar company in Michigan. • Michigan sugarbeet harvest usually begins in early October. Sugar from the beets is sold under the recognized brand names of Pioneer Sugar and Big Chief Sugar. • Processing sugarbeets also results in molasses and beet pulp (the solids left after sugar and molasses is extracted) which are both used in livestock feeds.
Jake says, “The business has grown pretty fast in the last several years, moving forward we have to catch up with our systems. We will work to fill in gaps where we’re short to have more time with the kids.” In 2012, as Jake turned 30, he retired from what he calls the corporate world and left Trelleborg—one goal checked off. “Overall, we’re real happy with where we’re at today,” he says. “I suppose you can always look back and say I could have done that differently, but that doesn’t help you moving forward.” ■
Sources: Michigan Sugar Co. and Michigan Ag Council
Partners — Spring 2015
9
Is Humanity Headed Toward an Increasing
Desperate, Hungry, and Hopeless Future? By Alan Hahn SETTING ASIDE THE HYPERBOLE ABOUT THE DIRE STRAITS OF OUR ENVIRONMENT AND THE STRESS OF OUR GROWING GLOBAL POPULATION, HOW ARE WE REALLY DOING? HAVE OUR ADVANCEMENTS IN AGRICULTURE, MANUFACTURING, HEALTH CARE, NUTRITION AND TECHNOLOGY SIMPLY ALLOWED MANKIND TO “TREAD WATER?” IS HUMANITY IN A CERTAIN GLOBAL DEATH SPIRAL? HAVE WE REACHED THE POINT OF NO RETURN?
10
Spring 2015 — Partners
In a word, no. By nearly all measures, our society is cleaner, we are healthier, we are enjoying longer lives and we are being far more productive. We quickly forget, or perhaps we fail to recognize, that in the not too distant past, life was very short and not so pleasant. Economist Max Roser has an interesting website that helps to put some of the past into perspective (OurWorldinData.org). For example, Roser points out that not so long ago (in the early 1800s), 84 percent of the world lived in extreme poverty. Today, that global number is closer to 20 percent. And, since 1980, the world poverty rate has declined at the fastest rate in history.
“
e are producing more food, on W less and less land, with a fraction of the population dedicated to agriculture. With less human capital needed for agriculture, we can use even more time and energy toward technological advancements. The whole idea of helping other, lessfortunate nations is a relatively new idea because, prior to this fortune time of history in which we live, everyone was simply fighting for survival. As we all know, life expectancy has skyrocketed. Based on the earliest data around the mid-1500s and continuing to around 1800, if you survived to your mid to late 30s, you were among the fortunate few. Now, the global average is approaching 70 and in the U.S. we are now pushing 80 as the average life expectancy. By just about every measure, we are not just doing better as a society, we are doing remarkably better. Child mortality is falling, diseases are being eradicated, caloric consumption is rising, food is more affordable, and famines are becoming increasingly rare … all while our global population has exploded. How have we accomplished these rather remarkable achievements? According to Roser, “This could only be accomplished by modernizing agriculture around the world.”
”
Ah, but surely increased food capacity and technological advancements only come at the expense and contamination of our environment— nope. For example, in the U.S., according to the Environmental Protection Agency, lead levels in ambient air are 92 percent lower today than they were in 1980. And, just from 1990 to 2008, emissions of six common (“criteria”) pollutants are down 41 percent, while gross, domestic product has grown by 64 percent.
And remember those Superfund sites? Nearly 70 percent of those sites have been addressed. Certainly, we have many challenges yet to be addressed, including several agricultural and environmental related issues. However, these challenges are not insurmountable … not by a long shot. In fact, I’m personally confident that as we continue to embrace technology, wisely use the many natural resources on our planet, and encourage the increasingly connected global populations to use their God-given creativity, we’ll do very well indeed. ■
During this same time, emissions of volatile organic compounds have dropped 31 percent, carbon monoxide has dropped 46 percent, and sulfur dioxide has dropped 51 percent. In his book The Progress Paradox, journalist Gregg Easterbrook writes, “Smog has declined by one-third since 1970, though the number of motor vehicles has nearly doubled and vehicle-miles traveled have increased by 143 percent.”
ABOUT THE AUTHOR
Alan Hahn is an Environmental Professional and Business Development Manager at The Dragun Corporation in Farmington Hills, Michigan
The opinions stated herein are not necessarily those of GreenStone Farm Credit Services.
We are producing more food, on less and less land, with a fraction of the population dedicated to agriculture. With less human capital needed for agriculture, we can use even more time and energy toward technological advancements.
Partners — Spring 2015
11
market outlook By Bob Utterback WINTER MEETINGS HAVE COME TO AN END AND SOME NEIGHBORS ARE GETTING THE PLANTERS OUT AND DRIVING UP AND DOWN THE ROAD TO GET EVERYONE EXCITED. BUT BEFORE GOING TO THE FIELDS AND ENJOYING FARMING, THERE ARE SOME IMPORTANT MARKETING DECISIONS THAT NEED TO BE MADE.
Farm Program
The deadlines to sign up for the Farm Program/ crop insurance are now behind us. While it will take time, I’m guessing most producers decided to take the money and run. The underlying conclusion: Producers who decided on this course of action must be more willing to price aggressively from May to July [2016] and out. Remember, there may be good income now, but there will be less in the future if prices drop. Strategy Implication: Every fall it is important to focus on buying deep-out-of-the-money calls in order to sell April to July summer weather scare markets. Crop Insurance
It appears a lot of producers went with the 80 percent payment plan. The big difference this year is the price that is being assured is well below last year’s price and, in many cases, it is close to the total production costs. This means if producers do not get a price event— December corn above $4.50 and November soybeans above $10.50—margin compression will be a serious discussion with the banker this fall.
12
Spring 2015 — Partners
Corn & Soybeans
The USDA’s 10-year baseline projections [released in February] are always an interesting exercise in looking into the future. While I am not suggesting these projections are extremely accurate in predicting where prices will be, they are a big help in getting at what the USDA’s basic bias is in regard to supply and demand. I believe the USDA is assuming profit margins will shrink because carryover will stabilize at overall adequate supply levels. I also believe the assumption going forward is that improved technology will increase U.S. corn yield to 185.3 by 2024 and soybean yield to 50.2. At the same time, acres are expected to stabilize in 2016 and beyond. IMPLICATION: Supply will keep pace with demand growth and carryover will be adequate enough to prevent any sharp price advances. However, we know Mother Nature has a big influence on yield prospects. Since the early 1970’s there has been a 1 in 5 chance of a yield reduction event each year; and just as important, there has
been a 4 out 5 chance of an average to above average yield. That is why [historically] I have always argued for strong seasonal sales and defending against the exception. Looking forward to the next five years, I believe producers have to be concerned that the only way to get the price events we have seen the last ten years is if significant yield reduction weather events occur. The widely held definition of insanity is doing the same thing over and over and expecting different results. This leads me to the biggest question of all—why do you believe you will be able to sell cash or futures from May to July on a significant weather event any more successfully than in 1988, 1996, 2008 or 2012? When the markets are calm, it is easy to talk about what will be done; it is a much different issue to actively price during a June to August price event like the one in 2012. What have you changed in your marketing plan to ensure future success? Producers are waiting for a May to July weather event to price their 2015 corn and soybean inventory.
Most want December corn in excess of $4.50 and soybeans in excess of $10.50. Many expect corn yields to drop off last year’s pace significantly and many expect it to move back below trend. I suggest the corn outlook is stronger than the soybean outlook; but in both cases once the planters start running, time will be working against the producers. If there has been no significant weather problem by early June, as well as big corn inventory and modest soybean inventory on hand, I fear we will see significant price and basis pressure as fall nears. SOYBEAN RECOMMENDATION: I’ve suggested the need to be heavily sold in November 2015 soybeans at $10. I suggest having 100 percent of expected soybeans sold before 50 percent of expected corn inventory is sold. I also suggest focusing on keeping limited cash flow dollars involved in the corn marketing plan rather than soybeans if cash flow is tight. This suggests aggressive offthe-combine cash sales. CORN RECOMMENDATION: Start selling corn based on “time”: start
Partners — Spring 2015
13
slowly in mid-April and reach a maximum sales level by late June; focus on the $4.30 to $4.60 price level. Maintain flexibility and buy in-the-money puts rather than sell cash or futures until early July. Once we get past the July supply demand report, roll the long puts into cash sales to capture carry and anticipated basis narrowing. Hogs
The hog market has been really hard on the producers’ nervous system! The leadmonth contract has moved from the $135/ cwt last year’s historic highs [because of the panic and fear over the PED pig outbreak] to the recent $61/cwt lows due to no occurrence of the disease this year. Expanding hog herd expectation and the meteoric rise in the U.S. dollar will affect exports. As if this was not bad enough, the recent dock strike out West seems to have had a bigger impact on pork products than other meat products. While an eventual correction was not a surprise, the severity and duration of the correction caught many producers a little unprotected in their hedges, in my opinion. The issue now is what to do.
I cannot suggest any aggressive catch-up at these price levels. Wait for a modest seasonal price bounce this fall. The USDA is projecting supplies will tighten up in the second quarter which should help to stabilize the market. My concern for hog producers is being over-optimistic on the level of the correction. A 1/2 retracement is too much to ask for. I would plan on 20 percent to 30 percent at best on a June/July price bounce to lock up third and fourth quarter marketing. Finally, I would be more inclined to buy inthe-money puts rather than make futures or cash sales. If we do get some early winter disease concerns, you will be able to participate in any unexpected price event because in-the-money puts were bought. Cattle
The cattle story has been similar to pork, but not as intense because we still have extremely lower herd numbers. I read recently that beef exports from South America to Russia are down over 30 percent [year-to-year levels] because of the low oil value’s impact on the Russian economy. The potential of any future sharp recovery in beef values really depends on the value of the U.S. dollar and its impact on exports. Frankly, I do not see any quick recovery here. So while we must expect some modest seasonal price firmness into April, do not look at last year and say prices are simply too cheap and I’m going
ABOUT THE AUTHOR
Bob Utterback is the Farm Journal Economist and President of Utterback Marketing in New Richmond, IN. Call Bob for strategy updates at 877-898-4324. Email comments on Outlook to utterback@utterbackmarketing.com.
The opinions stated herein are not necessarily those of GreenStone Farm Credit Services. This material has been prepared by a sales or trading employee or agent of Utterback Marketing Services, Inc. and is, or is in the nature of a solicitation. This material is not a research report prepared by Utterback Marketing Services, Inc. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.
14
Spring 2015 — Partners
to fight back by holding inventory. Now is the time to keep the cattle moving; move slow on herd expansion and be ready to sell a solid price recovery. Many in the trade were very bearish on feeder cattle as we moved into February, and I believe they trapped themselves a little. Now that we have seen a modest price recovery back into the $210 level, I believe feeder cattle sellers need to be aggressive sellers of spring inventory now. The real challenge will be from August to October. If fat cattle prices are struggling, it will be tough for feeders to bid up prices. At the same time, if corn carry outlooks remain above 1.8 billion and pastures see any recovery in the western states, demand for feeder cattle could be very strong. Subsequently, feeder cattle buyers should be ready to buy any unexpected wash out in prices into the low $180s going into June; but be careful buying feeders at too high of a premium into a questionable long -term cash cattle market outlook. In summary, the entire agriculture complex is heading into a time period of tighter profit margins. This implies producers are going to have to sharpen the pencil more, and be more aware of ways to keep costs down while keeping production constant. Also, continue to plan on how to defend prices when sudden price shocks occur due to unexpected fundamental events. Be safe out there this spring! ■
Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction without registration, the market commentary in this communication should not be considered a solicitation. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Utterback Marketing Services, Inc. believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.
CONNECT
NEWS: Michigan Ag Day To help celebrate the agricultural industry, GreenStone’s executives, board members and staff participated in Michigan’s Ag Day, which took place on March 25. To kick off the day, GreenStone hosted an entertaining breakfast celebration featuring the pancake flipping Chris Cakes of Michigan. The event was an excellent opportunity to bring together GreenStone customers, state legislators, and industry leaders to help spread the strong agricultural message while enjoying delicious pancakes. Later in the day, GreenStone took part in the Ag Day at the Capitol event coordinated by Michigan Farm Bureau. For the 11th consecutive year, the day provided an opportunity for members of the agriculture industry to spend time with Michigan legislators and other policy influencers while they traveled the halls of the Capitol sampling commodities and products produced within the state. ■
Patronage Day As a cooperative, GreenStone’s success is directly linked to the organization’s 23,000-plus hard working members; this success led to record earnings, and ultimately a record-breaking patronage payment for the cooperative’s customers.
Many of our members helped us celebrate a decade of giving back, when we returned a total of $36.2 million to eligible members on Patronage Day, which took place on March 18. Thank you to those customers who were able to visit us at the branch to collect your share of this year’s payment. Our GreenStone teams thoroughly enjoy sharing the day with members and having the opportunity to personally thank each of you for your business. ■
NAMA Award GreenStone was recently honored by the National Agri-Marketing Association (NAMA) with a first place award at the regional Best of NAMA competition. GreenStone came out on top in the “direct mail—directed to farmers, growers and ranchers—three dimensional” category for the “lending a hand” direct mail piece utilized by GreenStone to connect with new prospective customers.
HIGH SCHOOL ROBOTICS TEAM HOPES TO ADVANCE THE FUTURE OF AG WITH GREENSTONE SUPPORT Office Updates Bad Axe, Michigan– A new office opened in December 2014 and is located at 749 S. Van Dyke Road. Alma, Michigan– Completion of the new office on West Monroe Road is expected for May. Traverse City– Interior remodeling of the current branch location is expected to begin in July. Schoolcraft– Construction completion is anticipated in late summer to early fall 2015. Ann Arbor– This year, a new office will be built on Jackson Road. ■
This awards program honors the best work in agricultural communications; as a regional award recipient, the entry advances to the national competition. Winners will be announced later this month at the 2015 AgriMarketing Conference in Kansas City, Missouri.
Four students from Memphis High School in Memphis, Michigan visited the GreenStone Lapeer branch to demonstrate their work as part of the FIRST (For Inspiration and Recognition of Science and Technology) Robotics Team #5046. The team wants to build robots that could aid greenhouse and farm operations in the future. “These kids are our future. It is great to see they embrace the connection between agriculture and technology and want to get involved,” said Sandra Arnold, senior financial services officer in Lapeer. As an example of their work, the team brought a robot used in their 2014 competition that can pick up and launch a ball approximately 12 feet into the air. This type of automated technology could be translated to a variety of agriculture functions, such as automated planting or selfdriving machinery. The students are led by a volunteer-adviser and GreenStone customer, Glenn Haack. Glenn is the owner of Haack’s Farm Greenhouse, LLC. ■
➡ ABOVE: The FIRST Robotics Team #5046, Left to Right– Sean Wendling, Nick Haack, Alex Haack, Team Adviser Glenn Haack, Thea Melista with GreenStone senior financial services officer, Sandra Arnold.
Partners — Spring 2015
15
TOP SALES STAFF RECOGNIZED Gold Award Winners Agricultural Financial Services Officers: Ashley den Dulk Ionia, MI Laurie Schetter Manitowoc, WI Lee Rodgers Schoolcraft, MI Brian Polega Bad Axe, MI
ALL STAFF AT GREENSTONE STRIVE TO PROVIDE THE BEST ADVICE AND SERVICE TO OUR CUSTOMERS, BUT SALES STAFF ALSO AIM TO BE A TOP PERFORMER WITHIN THE COOPERATIVE. The Circle of Excellence Rewards and Recognition program is a way to acknowledge these leading individuals and their support team. Various criteria such as loan and revenue growth and new business are used to measure performance. The following GreenStone staff members represent the 2014 Circle of Excellence platinum and gold award winners.
Platinum Award Winners Agricultural Financial Services Officers:
Country Living Financial Services Officers:
Luke Bakker, Grand Rapids, MI
James Cole Howell, MI
Martin Kasperski Lapeer, MI
Melissa Humphrey Formerly in St. Johns, MI
Kate Link Grand Rapids, MI
Brent Voss Traverse City, MI
David Meyering Cadillac, MI (retired January 2015) Brandon Leep Allegan, MI Duane Paturalski Berrien Springs, MI
Peter Hirschman St. Johns, MI Sara Trattles Schoolcraft, MI Country Living Financial Services Officers: Sandra Arnold Lapeer, MI Steven Schaper Saginaw, MI Karen Messer Adrian, MI
Commercial Lending Vice President: Jim Byars East Lansing, MI
Crop Insurance Specialists: Scott Schmidt Bay City, MI Earl Zelmer Berrien Springs, MI Kristen King Charlotte, MI Accounting and Tax Specialists: Ralph Wesoloski Coleman, WI Cindy Maciag Bay City, MI Mark Koester Schoolcraft, MI Sales Leader: Tim McTigue Southwest Michigan
Commercial Lending Vice President: Tyson Lemon Berrien Springs, MI Sales Leader: Ian McGonigal Formerly in West Michigan
➡ Above: Platinum winners recently enjoyed a tropical rewards trip to celebrate their success.
16
Spring 2015 — Partners
Want to congratulate your local team? Say it on social media!
Q
QA BEHIND THE SCENE
IN HONOR OF THEIR ACCOMPLISHMENT LEADING EACH OF THE CIRCLE OF EXCELLENCE AWARD CATEGORIES, THESE FIVE GREENSTONE STAFF TAKE US BEHIND THE SCENE TO LEARN A BIT MORE ABOUT THEM AND THEIR SUCCESS.
Luke Bakker Agricultural Financial Services Officer Grand Rapids, MI What is the secret to your success? Like GreenStone, my success is driven solely from our customers and outstanding staff. Without outstanding customers and a great team to service them, our success would not be possible. Abiding by Greenstone’s Core Four Values and having passionate staff leads to outstanding results.
What do you like to do outside of work? Spending time with family (my wife, Martha), hunting (deer and turkey) and fishing (salmon, steelhead and walleye) are my hobbies. What is your best memory of working at GreenStone? We have great staff members association wide. Getting to know the GreenStone family and all of the people who make the association successful have been the best
memories. This includes things like summer conference outings and customer appreciation events.
James Cole Country Living Financial Services Officer Howell, MI What is the secret to your success? The secret to my success is being committed to helping my customers in a friendly, timely and respectful manner. This, in turn, leads to a significant amount of referral business. What do you like to do outside of work? I enjoy hunting and golfing. I also spend a considerable amount of time with family and attending my son’s extracurricular activities. What is your best memory of working at GreenStone? My favorite memory of working at GreenStone was the company-wide trip to Mackinac Island. It was great to have a chance to mingle with the co-workers I typically only speak with on the phone.
Tyson Lemon Vice President of Commercial Lending Berrien Springs, MI What is the secret to your success? I wouldn’t say that I have any secrets. I simply do the best that I can, and treat my customers how I would want to be treated.
What do you like to do outside of work? I enjoy spending time with my family, fishing, and playing basketball. What is your best memory of working at GreenStone? I have made so many great memories here and met so many wonderful people, I don’t know that I have a best one. Scott Schmidt Crop Insurance Specialist Bay City, MI What is the secret to your success? There is no secret. One thing that I feel has helped me to be successful is the name “GreenStone.” Having GreenStone associated with the product I am selling really makes my job much easier. I also spend a lot of time working with the financial service officers in my respective branches. Their existing relationships help me earn the customer’s trust. What do you like to do outside of work? When I am not working, my time is spent with my family and friends. I enjoy spending time with my wife, Summer, and my two boys, Chase and Owen. We especially enjoy going to movies, putt-putt golf, and going up to Mackinac Island. I love to golf with my brothers and friends. During harvest, I enjoy helping my dad on the farm.
What is your best memory of working at GreenStone? I met with a new customer who had not carried much crop insurance, but they knew their farm needed to be better protected. We spent several hours studying coverage levels, prices, different plans, etc. Finally, they decided on one of the best coverages we offer. At the conclusion of the crop season, they were extremely happy with the decision they had made. Ralph Wesoloski Tax and Accounting Specialist Coleman, WI What is the secret to your success? The secret is simply that I enjoy what I do. Being able to prepare an accurate tax return for my customer not only satisfies my customer, but also gives me personal satisfaction. I work the hours needed to get the job done right the first time, and that is a huge factor in my success. What do you like to do outside of work? There is nothing like getting up early and setting off for a morning of fishing on the lake or getting set up in the deer stand waiting for the “big one” to come strolling by! What is your best memory of working at GreenStone? My favorite memories revolve around the people I work with, both customers and staff. ■ Partners — Spring 2015
17
THE LONG, WINDING AND BUMPY ROAD AGRICULTURE DEPENDS ON A SOUND TRANSPORTATION SYSTEM TO MOVE PRODUCTS. RESIDENTS OF THE STATE OF MICHIGAN AND ITS VISITORS RELY ON OUR ROAD INFRASTRUCTURE. The fate of the transportation funding proposal agreed upon by the governor and state lawmakers now relies on Michigan voters. This proposal is expected to rejuvenate Michigan’s failing infrastructure by generating an estimated $1.3 billion annually in transportation funds. It has become apparent to all those who travel the Michigan roads that the infrastructure is sorely in need of repair. Funding is essential, but agreement on funding has been difficult to say the least. The Michigan Department of Transportation has indicated that an immediate increase of over $1.1 billion is needed to bring the roads and bridges up to good or fair condition by 2025. This work does not just happen without a plan. So what exactly will Proposal 1 accomplish and how is it designed? Much has been written on the subject and we will all hear much more in the way of advertisements for both a “Yes” and “No” vote. Hopefully, some of this material will be helpful to better understand the proposal as a resolution to such an outstanding infrastructure challenge. In general, the proposal would effectively draw a line between taxing fuels and all other goods. It would alter sales tax and fuel tax provisions, and raise revenue for more than roads. Schools and local
18
Spring 2015 — Partners
governments would be affected with revenue increases. Roughly one-third of the taxes currently collected at the pump are channeled to schools and local government and do not go to transportation. This would be a $1.3 billion increase for road funding. This proposal would raise the state’s sales tax from 6 to 7 percent, and allow for 100 percent of the tax collected on motor fuel to provide for additional road funding. This increase will offset the loss of revenue collected at the pump for schools and local governments. It is anticipated that this would provide an increase of $300 million to schools and $94 million to local governments. The proposal creates a fee for hybrid vehicles, which currently do not pay fuel taxes. There would be an assessment of a user fee on Michigan’s heavier trucks. There would be an end to the threeyear depreciation schedule drivers currently receive when renewing tabs. These changes are projected to add $95 million to road funding. Strategically placed in the proposal is a requirement of competitive bidding and performance-based systems for road construction projects based on quality and price. This would include warranties and provide for increased efficiencies. There are many complexities within the proposal that are worthy of further understanding. This proposal is not simply money for roads, but it appears to be our best chance to deliver safe roads for our families. More analysis may be found along the road, and a recommended State Note may be found in a comprehensive article written by Glenn Steffens, Fiscal Analyst at http://www.senate.michigan.gov/ sfa/Publications/Notes/2015Notes/ NotesWin15gs.pdf. ■
“
he process mainly T includes identifying those elected officials that will benefit from hearing the Farm Credit story and are supportive of the agriculture industry’s contributions to the economy.
”
PAC PROGRESS: THE START OF THE NEW YEAR AND ELECTION CYCLE IS TAKING OFF SMOOTHLY THANKS TO THE SUPPORT OF MEMBERS, DIRECTORS, AND EMPLOYEES. The recent 2015 MI GreenStone PAC Patronage Campaign was largely successful in its second year with over $15,000 being contributed by more than 250 Michigan GreenStone customers. With this support, your board of directors and management team are now diligently evaluating legislative leaders recommended by GreenStone’s lobbying consultant, Kelley Cawthorne. The process mainly includes identifying those elected officials that will benefit from hearing the Farm Credit story and are supportive of the agriculture industry’s contributions to the economy. GreenStone, Badgerland Financial, AgStar Financial Services, and United FCS work
cooperatively to raise meaningfully awareness of agriculture in the Wisconsin state legislature. WI Farm Credit PAC and WI Farm Credit Conduit funds are gathered during the course of the year at various events sponsored in part by the Cooperative Network. These efforts will continue during the course of 2015 to support the agriculture communication advocacy program. The national 2015 Farm Credit PAC drive saw the friendly Great Space Race competition among the 16 AgriBank district Farm Credit associations and resulted in contributions more than $150,000 by employees and directors. GreenStone employees and directors directly contributed over $15,000 to that total. The AgriBank District Farm Credit Council, which allocates a portion of Farm Credit PAC funds, budgeted $40,000
to Congressmen from districts within GreenStone’s territory. Our directors and management team have already begun assisting in the delivery of these funds and will continue to do so. Your continued support of PAC efforts are widely recognized by both legislators and Farm Credit System leaders as being forthright and timely. It is also recognized that PAC support will remain critical as the populations shrink in rural areas. As a response, GreenStone, along with the other Wisconsin associations and the Farm Credit Council, remain committed to advocating for the prevention and elimination of regulatory barriers that may hinder the ability of the agriculture industry and rural community to continue to grow. Thank you for showcasing the leadership of the agriculture industry in a powerful and positive way. ■ Partners — Spring 2015
19
MABA Leadership Program
By John Jones, Senior Vice President of Commercial Lending
THE GREENSTONE BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENT TEAM PLACE A VERY HIGH VALUE ON THE TALENTED AND DEDICATED STAFF WHO COLLECTIVELY SERVE OUR CUSTOMERS. THIS IS ACTIVELY DEMONSTRATED BY COMPETITIVE COMPENSATION PROGRAMS AND A WILLINGNESS TO INVEST IN EMPLOYEE DEVELOPMENT BY OFFERING APPROPRIATE TRAINING OPPORTUNITIES.
20
Spring 2015 — Partners
I have been employed by GreenStone since 1986 and have benefited from those development opportunities throughout my various roles and responsibilities. Most recently, as the senior vice president of the commercial lending department, I completed a leadership program offered through the Michigan Agri-Business Association.
“ The program started in 2014 and consisted of a two and a half day session in July, a similar session in November and a final three day visit to Washington, D.C. this past February.
The program is designed to increase awareness of and offer information, hands-on training and ground level experience in several critical areas regarding policy, legislation, and regulatory matters. It further promotes personal engagement, networking, and working cooperatively with other industry leaders. Each participant is assigned a topic to research and be prepared to discuss at the program culmination with legislators and other policy leaders. The topics my group worked on included: 1. Michigan’s Infrastructure 2. Immigration Reform 3. Water Quality 4. Expanding Barge Traffic on Lake Michigan 5. Sustainability in Agriculture 6. Expanding Technology and Modern Agricultural Practices 7. Ending the Embargo and Normalizing Trade Relations with Cuba
During the first two sessions, the majority of the time was spent learning about the legislative process and listening to various industry experts discuss the seven group topics. We also had the opportunity to meet with the directors of the Michigan Department of Agriculture and Rural Development, Michigan Department of Environmental Quality, and the Michigan Department of Natural Resources. Election day occurred during the November session and we received a briefing from a political consultant regarding the likely impact of the previous day’s election. The topics I referenced previously were assignments to the program participants. I requested immigration reform because it is a topic that comes up frequently with our customers. An adequate and dependable supply of labor, that is both willing and able to do the work, is critical for the future growth of the agricultural industry. To assist us in our process of preparing to speak with legislators about the issues, we were also required to write a position paper and then produce a short video on the subject. The highlight of the program was the trip to Washington, D.C. We had a very busy schedule with the typical day starting at 7:30 a.m. and not ending until 9:30 p.m. We met with White House staff members, the Deputy Secretary of Agriculture, Senator
he agricultural community T needs to be proactive when addressing issues that are important to the general public. If we do not come up with our own solution, it is highly likely that a less desirable solution will be legislated.
”
Stabenow and numerous members of the Michigan Congressional Delegation. In some cases, because we were not able to meet directly with a legislator, we met with one of their staff. We also had meetings with several associations that represent the agriculture industry.
During our meetings with legislators or legislative staff members, we were asked to present our topic on behalf of the Michigan Agri-Business Association and ask for the legislators support. In most cases, we did not have the luxury of much time to state our case and had to be efficient in our delivery. We did have the benefit of experienced staff with us, including Jim Byrum, the president of the Michigan Agri-Business Association. In most cases, the legislators that we met with were very supportive of Michigan agriculture. However, we did witness agriculture not being a high priority with some legislators, and therefore had the challenge to create awareness with the hopes of future support. I still think I am better suited to deliver products and services to our GreenStone customers instead of being a professional lobbyist. However, I am very appreciative of the opportunity to go through this program and gain a better understanding
of what is required to gain support for initiatives that are important to our customers and agriculture in general. I will conclude by sharing a few lessons learned during this experience. First, agriculture has been a huge success story and we should take every opportunity to share that story with anyone that will listen. Second, everyone that is part of the agricultural industry should get involved and do what they can to support the industry. Involvement can take many forms and can be as simple as taking the time to educate friends and family about the many positive aspects of agriculture. Third, the agricultural community needs to be proactive when addressing issues that are important to the general public. If we do not come up with our own solution, it is highly likely that a less desirable solution will be legislated. Fourth and finally, building new relationships with other members of the agricultural community, such as those I built with the emerging leaders in this program, will help us better work together to respond to future challenges and opportunities. ■
Partners — Spring 2015
21
Directors’ Perspective:
AS THE GUARDIAN OF GREENSTONE’S FINANCIAL INTEGRITY, THE AUDIT COMMITTEE IS MADE UP OF FOUR OF YOUR 16 BOARD MEMBERS. THESE DIRECTORS, WHO OPERATE INDEPENDENT OF MANAGEMENT, ACT ON BEHALF OF THE BOARD IN CARRYING OUT ITS FIDUCIARY RESPONSIBILITIES TO STOCKHOLDERS.
Outlined by the Farm Credit Administration (FCA), the audit committee has the following responsibilities: • To oversee the preparation of financial reports • To hire, and oversee the work of, the external auditor • To oversee GreenStone’s internal controls relating to financial reports • To recommend actions needed to provide full and accurate disclosure of GreenStone’s operations in the most transparent manner possible • To provide assurance that the association is in compliance with all applicable laws and regulations that govern business operations. But what does this really mean? With the 2014 annual report having just recently arrived in stockholders’ mailboxes, we asked the board of directors audit committee members to explain what role they play in finalizing the annual report and all other responsibilities throughout the year.
22
Spring 2015 — Partners
The audit committee approves the quarterly and annual reports before they are published. The quarterly reports are Gene College mainly the financial statements. The annual report, which our customers recently received, includes the financial statements, as well as footnotes, discussion of key events
Christine Crumbaugh
during the past year, outlook for major ag industries, as well as other related information. The committee reviews in detail and approves the annual report to ensure that representations made by management appear reasonable, all pertinent disclosures have been made, and that the opinion of the external auditing firm is a “clean” opinion. The audit committee approval provides added assurance to stockholders that the financial statements appropriately reflect actual results.
In August 2014 the chairman of the board appointed me to the audit committee. This committee is very engaged throughout the year as we oversee a number of items beyond internal and external audits, including financial reporting, internal controls, corporate governance, standards of conduct, and the code of ethics. We meet quarterly, plus numerous conference calls throughout the year, to review and approve quarterly stockholder reports and the annual report. The audit committee also provides another important function as it serves as an open avenue of communication between the board of directors, internal audit, and external auditors.
Many members may be surprised at how often their association’s financial records and lending practices are reviewed, as required by the FCA. GreenStone has a very robust internal audit system, with highly competent staff, but is also reviewed by external auditors (who are retained by and report directly to the audit committee), AgriBank auditors, and also the FCA. As an audit committee member, working with this diverse group of auditors gives me a high level confidence that GreenStone is being run as a safe and sound financial institution. The audit committee is one of two committees required by our regulator, the FCA. It consists of four board members, Cathy Webster one being a financial expert. The committee oversees the financial reporting as well as the internal controls in regard to financial reporting. We are an extension of the full board and act on behalf of the board, independent of management. I have been on the audit committee for six years.
We meet with GreenStone’s internal auditor prior to each board meeting. At these meetings, we review all audits done by the internal auditor, such as GreenStone branch and regional audits, various internal control audits and appraisal department audits. We also review audits/exams by our regulator, the FCA, our wholesale bank, AgriBank, and our external auditor, PricewaterhouseCoopers. In addition to the meeting materials and minutes being provided to the entire board, a report is given to the full board at the board meeting.
As I have had the privilege to serve on the GreenStone board completing my first term, I have also been a member Andy Snider of the audit committee all three years. Even though I had a good understanding of the makeup of a financial report and balance sheet coming in, the detail in which the audit committee reviews our cooperative’s financial reports has been an enlightening experience. Every large organization, especially a bank, needs multiple levels of controls to ensure safety and soundness of its processes and financial reporting. As a requirement of the FCA, institutions of GreenStone’s size are required to have two outside directors, one of them being a financial expert. GreenStone is fortunate to have Gene College filling this role on our behalf; he is a talented and thorough financial expert. As our internal auditors perform reviews of the different branches throughout the year, we see these reports in detail; and at our quarterly committee meetings, we hear from the leaders of the credit and audit departments. The commercial lending unit, capital markets, AgDirect, and information technology are also audited, and those reports are also reviewed by the committee. ■
Keep an eye on our social media pages and Open Fields blog to learn more about GreenStone directors!
Partners — Spring 2015
23
Pause for Applause... 1. Congratulations to GreenStone customer, Mike Rasmussen of Edmore, Michigan
on being named Michigan State University Department of Animal Science’s 2015 Dairy Farmer of the Year! Mike operates Hillhaven Farms with his wife and three children, and co-owns the operation with his father. His current herd is made up of 870 cows and 720 youngstock, and has a DHI rolling herd average of 26,623 pounds of milk. Great job, Mike!
SERVICE ANNIVERSARIES Help GreenStone congratulate and thank these staff who are celebrating an employment milestone. From five to 35, the
2. GreenStone staff member, Tom Wilson (vice president of commercial lending), was elected to the Kewaunee County Economic Development Corporation as vice chair. This group works to retain, expand, develop, and attract business that strengthens the economy of Kewaunee County. This is his second three-year term, and first time serving in an officer role.
3. GreenStone customers were recently honored as platinum award winners at the National Dairy Quality Awards for high-quality milk. Congratulations to Wilson Centennial Farm (Carson City, Michigan) and Oak River Dairy (Sebewaing, Michigan)!
6. Congratulations to all of
Michigan Farm Bureau’s 2015 young agricultural finalists, which include the following GreenStone customers:
years represent the dedication and service all employees provide our members. April:
• Matthew Greiner, Jackson County – Young Farmer Achievement
Kathy Thiel (20)
• Caleb Stewart, Clinton County – Young Farmer Achievement
Rochelle Jensen (5)
• Ken and Kristen Sparks, Cass County – Young Farmer Achievement
Julie Stoneburner (5)
• Brent Skinner, Gratiot County – Young Farmer Achievement
Katy Link (10) Cindy Lehman (5)
May: Stephen Zimmerman (30)
• Abbey Dorr, Van Buren County – Excellence in Agriculture
Cindy Birchmeier (15)
• Kristen Keilen, Clinton County – Young Ag Leader
David McKenny (10)
Cara Oswald (15) Jeff Mills (10) Jay VanLannen (10)
4. Congratulations to GreenStone employee, Nicole Ladd (financial services officer), on winning the Michigan Farm Bureau Excellence in Ag Award for Hillsdale County!
Doug Bailey (5) James Cole (5) Martin Kasperski (5) Amanda Leik (5)
5. Congratulations to GreenStone customer, the Tubergen family, on receiving the 2015 Dairy Farmers of America’s (DFA) Members of Distinction award in the Mideast region. Dennis Tubergen, along with his wife, Dorris, and three children, Amber Alexander, Kurt and Todd, run and operate Tubergen Dairy farm located in Ionia, Michigan. This program honors DFA members who embody the cooperative’s core values and excel on their operations, communities and in the industry.
Josh Martin (5) Michelle Simon (5) June: Mark Grabitz (35) Kenneth Ravell (35) Randy Stec (35) Thomas Urban (35)
Have an applause to include in the next issue of Partners? Share it with us on social media.
Erica Burke (10) Tyson Lemon (10) Jamie Renner (10)
24
Spring 2015 — Partners
Mark Your Calendar... APRIL
18
MSU Small Animals Day
20
GreenStone Annual Meeting
Michigan State University Pavilion, East Lansing, MI
East Lansing, MI
MAY
4 25
WOMEN IN AG EVENTS EARLY THIS SPRING GREENSTONE HELPED CELEBRATE WOMEN IN THE AGRICULTURE INDUSTRY WITH TWO EXCITING EVENTS: LADIES’ DAY OUT AND THE FARM WOMEN’S SYMPOSIUM. Ladies’ Day Out GreenStone recently hosted its annual Ladies’ Day Out in Green Bay, Wisconsin where GreenStone customers and guests came together to enjoy a day of good food and conversation. Liysa Callsen, author of “Live, Laugh, Liysa,” engaged the attendees as the keynote speaker. She shared her inspiring story of her experience in the deaf community, and how with two deaf parents and a deaf husband, she learned to communicate differently. Liysa used her unique style of improvisation and audience participation to help provide a fresh perspective on life’s obstacles. Farm Women’s Symposium
GreenStone Election Ballots Mailed to members GreenStone Offices Closed In honor of Memorial Day
JUNE
9
GreenStone Election Ballot Deadline
9
Wisconsin State FFA Convention (9-12)
Voting polls close end of business day
Exhibition Hall at the Alliant Energy Center, Madison, WI
24
GreenStone Election
28
Michigan 4-H Exploration Days (24-26) Michigan State University, East Lansing, MI
Results mailed to members
The 24th annual Farm Women’s Symposium was held in Midland, Michigan with 135 ladies from across the state attending. GreenStone was once again honored to support these women in agriculture by providing more than 50 customers a scholarship toward attendance and also hosted an evening hospitality suite to further the networking. GreenStone’s financial services officers Emelee Rajzer and Wanda Skinner had a great experience serving on the Symposium committee and are already making plans for 2016 when the Symposium will be held in Traverse City from March 9-11. ➡ Right: GreenStone financial services officers Ashlee Guerrero, Ann Arbor; Wanda Skinner, Caro; and Emelee Rajzer, Schoolcraft, pose for a photo opportunity at the Farm Women’s Symposium held this past March in Midland, Michigan.
JULY
3
GreenStone Offices Closed In honor of Independence Day
“
GreenStone FCS, “Had to write to say how much I love the new publication! Very nice mix of business, financial, and personal interest stories. Grow, Connect, Live, Learn. You definitely hit the mark! Great job!”
”
–Brigette, customer of GreenStone’s Coleman, WI branch
...Candid Comments
Partners — Spring 2015
25
Annual AgriBank Update:
New Strategic Foc
GREENSTONE HAS BEEN ABLE TO PROVIDE COMPETITIVELY PRICED LOANS TO CUSTOMERS THANKS IN PART TO THE COST-EFFICIENT FUNDING IT RECEIVES FROM AGRIBANK. IN 2015, AGRIBANK, BASED IN ST. PAUL, MINNESOTA, AND ONE OF FOUR FARM CREDIT WHOLESALE BANKS, IS STEPPING UP ITS GAME WITH A NEW STRATEGY TO BETTER SERVE ITS 17 AFFILIATED FARM CREDIT ASSOCIATIONS, INCLUDING GREENSTONE.
AgriBank CEO Bill York introduced the four-point strategy in March at the Bank’s 2015 annual meeting in Orlando, Florida. AgriBank’s 2015 Annual Report also highlights the strategy. “AgriBank’s value proposition is to create unparalleled competitive advantages for our district associations,” York said. “We have developed a fourpoint strategy that we believe will help us meet this value proposition.”
26
Winter 2015 — Partners
cus
Unique Cooperative Relationship
GreenStone and 16 other Farm Credit associations own AgriBank, which provides the associations with funding and other products and services. In this unique cooperative relationship, the associations are not only AgriBank’s owners, but its customers. The affiliated associations that comprise the AgriBank district serve farmers, ranchers, agribusinesses and rural homeowners in 15 states Wyoming to Ohio and Minnesota to Arkansas. Core resources AgriBank provides to affiliated associations include: • Lending- wholesale funding through reliable access to efficient, low-cost funding in the capital markets, supplemented by Bank participation in real estate mortgages, equipment finance and other loan sectors • Risk management- credit risk management; enterprise risk management; cost-effective, competitive crop insurance and life insurance products, services and expertise • Retail bank support- competitive product development and support, as well as business services such as financial reporting, lockbox processing, procurement and execution of meetings, operations audit, systems support, technology, and travel support Last year, AgriBank and affiliated associations embarked on a strategic planning initiative called District GPS (Growing, Positioning Strategically). Through GPS, AgriBank identified the new four-point strategy to strengthen how it supports associations and, ultimately, member-owners. Smart, Safe, Innovative, Collaborative
These are broad-based, multi-year areas of focus that will enable AgriBank to achieve its vision more effectively and efficiently: • Smart. Optimize the organization’s effectiveness and impact in driving strategic vision. AgriBank will create greater alignment within its organization to mobilize
resources on the highest priorities with orchestration through a newly established Project Management Office. The goal is to enhance AgriBank’s relationships with affiliated associations, and ensure it has the talent and technology to deliver both today and in the future. This includes moving toward a more common set of back-office technology platforms across the district to increase reliability and responsiveness and eliminate redundancy. • Safe. Enhance risk management capabilities. With a continued eye on making sound decisions, AgriBank is building additional capacity to understand, evaluate and prioritize risk. This includes optimizing data management processes, including governance, quality and security. AgriBank has assumed a leadership position across the System to improve capital modeling to enhance stress testing and economic capital capabilities. And it is implementing comprehensive business continuation and communications plans that include telling the Farm Credit story so key advocates and constituents understand the value Farm Credit delivers to rural America. • Innovative. Create and deliver value through enhanced products and services to meet district and System mission. AgriBank recognizes its core products and services must continue to evolve. Continuously aligning them with affiliated associations’ business strategies is a must. For 2015, this will include identifying and prioritizing product and services opportunities—a process that in the past has led to new risk management solutions such as AgriHedge and borrower interest rate swaps. The Bank will also work with affiliated associations to develop a strategy for business intelligence and Big Data. • Collaborative. Facilitate and support district and System effectiveness. AgriBank is positioned to provide strategic leadership to the district and System by facilitating a collaborative environment to find effective solutions to fulfill its mission. In 2015, key areas of focus include developing alternative strategies for capital efficiency, pricing and profitability to ensure the Bank maintains dependable, efficient and sustainable funding for associations, and effectively leverages the district’s capital; and continuing to streamline district technology. AgriBank will also facilitate the development of district centers of excellence that affiliated associations will drive and manage. AgriBank Chair Doug Felton, addressing district directors gathered for the Bank’s 2015 annual meeting, emphasized how District GPS—and associations like GreenStone—informed the Bank’s strategy. “You had a voice in creating this strategy,” Felton said. “We ask you to work together with us toward our common goals.” ■
Partners — Spring 2015
27
GreenStone Story:
Customer IT Services –
Tech Solutions IN TODAY’S FAST-PACED, DIGITAL WORLD, OUR BUSINESS AND HOME LIFE GREATLY RELY ON OUR COMPUTERS AND PRINTERS TO GET THINGS DONE. IT CAN BE DIFFICULT TO FIND TRUSTWORTHY SUPPORT, AND EVERY HOUR WITHOUT THEM MAKES IT ALL THE MORE DIFFICULT TO CONDUCT BUSINESS, FINISH SCHOOL WORK OR COMPLETE OTHER TASKS VITAL TO YOUR PROFESSIONAL AND PERSONAL LIFE. ADD TO THAT THE HASSLE OF TAKING TIME TO HAUL YOUR EQUIPMENT TO A BUSY STORE AND THEN WAIT IN LINE FOR A REPAIR. IT CAN BE AN ORDEAL. WE WANT TO CHANGE THAT!
GreenStone is now offering technology assistance to our customers in select areas of Michigan. Our proactive approach helps you discover potential issues before they become an obstacle to your business operations. We have a team of more than 45 technology experts that already provide service to several farm credit associations in addition to GreenStone’s 500 employees. We are excited to offer that same excellent support to our customers. After your first on-site startup appointment, additional on-site services or prompt over the phone
28
Spring 2015 — Partners
assistance is available when you need it. The one-time threehour startup package includes a technical health check-up, security review, and hardware and software support. There are no service contracts or retainers required.
we understand the specific needs of your operation and take pride in being your trusted financial services provider. We will provide that same great level of security and support for your technology needs as well.
At GreenStone, we continually strive to offer products and services that can make your life easier. We made the decision to offer customer IT services based on feedback we heard from you, our members. Supporting technology in agriculture and rural communities helps your business run smoothly and efficiently. As agricultural experts,
GreenStone customer IT services are currently available to our members in the Charlotte, Corunna, East Lansing, Ionia, Hastings, Howell, Mason and St. Johns branches. After a successful program launch and proven need, we hope to expand this service area. Call us at 800-701-0384 to learn more or book your startup appointment. ■
SERVICE INCLUDES: $299 Startup package with
$125 per hour on-site and
one-time 3 hour appointment
phone support
• On-site support for your unique needs
• Call for technical assistance whenever you need it
• Health check-up
• Calls less than 15 minutes are free
• Billed in half hour increments
• $299 on-site startup appointment required for call in support
• Security review • Hardware and software support
Lakeview
Ca
Alma Saginaw
Rapids Escanaba
an Coleman
St. Johns Corunna Ionia East Lansing Hastings Howell Charlotte
Alpena
Mason
Sturgeon Bay
oolcraft
Traverse City
Clintonville Little Chute
Cadillac Manitowoc
Bad Axe
Hart
Mt. Pleasant Lakeview
Concord
Ann Ar
Hillsdale Adrian
Mo
Bay City Caro
Alma Saginaw
Grand Rapids
St. Johns Corunna East Lansing Hastings Howell
Sandusky
Lapeer
Ionia
Allegan
Charlotte Schoolcraft Berrien Springs
Mason
Concord
Ann Arbor
Hillsdale Adrian
Monroe
WI-FI AVAILABLE IN BRANCHES Technology is something we know you use away from home as well. That is why GreenStone now also provides secure wireless (Wi-Fi) internet access to our customers in all of our 36 branches. Customers can access the Internet with their Wi-Fi enabled laptops, smartphones and other devices at no charge while meeting with our staff to check email, look up information and documents, or to log into My Access. Just ask us for connection instructions and we will get you online!
Partners — Spring 2015
29
LIVE
BUILDING A CORNERSTONE IN THE...
Community When Mark Vinciguerra and his wife, Denise, thought about starting a hobby alpaca farm about eight years ago, they had a specific goal in mind: to create a safe and secure environment for special needs youth and adults. As part of the Monroe, Michigan community, the Vinciguerras recognized the importance of agriculture to the area. Mark served on the local 4-H council, and while not a farmer by trade, he and Denise built St. Isidore Farm from the ground up to include an agriculture-focused learning program around raising alpacas and vegetable gardens. “We built it with the premise that it would be a used as a skill building center; a safe, secure environment for people with special needs to learn to work together, develop skills and build friendships,” said Mark. GreenStone was their first choice for agriculture loans. Mark learned of GreenStone through his work with the Monroe 4-H
been wonderful “Ittohas watch them grow. It’s all about having a purpose...”
30
Spring 2015 — Partners
Council. “Mark and Denise are very involved throughout the Monroe Community,” said Kristian Bezeau, GreenStone financial services officer. “Mark is a dynamic and driven individual with strong roots in many charitable organizations. He is an avid supporter of 4-H and the Monroe County Fair, and we look forward to seeing him there every year.” The farm’s 55 acres are divided up into alpaca, equine, harvest, and social areas. The property includes three barns, chicken coops and approximately four acres of gardens. The equine boarding facilities include a 12,000 square foot indoor heated arena as well as a 13,000 square foot outdoor arena, padded horse stalls and fly systems. The farm also includes over a mile of wooded groomed trails.
enterprises. “They make jam and can vegetables to sell at the farmer’s market, and hand-knit items with the alpaca yarn to sell at craft shows,” he said. “It is all about creating opportunity.” “Mark and Denise have big hearts,” said Kristian. “They are the kind of people that you can reach out to in time of need and they will do whatever they can to assist.” As the farm has grown over the years, so have the opportunities for additional skill building programs. Alpacas are the primary livestock on the farm, and their fleece is sent to an outside vendor for processing into yarn. After visiting a fiber mill and witnessing the process, Denise believed it was a skill the special adults in the community could learn to do themselves.
“It is a light manufacturing scenario, so we bought the equipment and now we are looking at purchasing a building in Monroe to put the mill,” he said. Mark and Denise plan to work with a handful of other alpaca ranchers in Michigan to also process their fleece into yarn, making it a co-op enterprise. The special adults processing the alpaca fiber will learn new skills and earn dividends. With each new endeavor, the mission of St. Isidore Farm remains. Mark and Denise say they enjoy seeing the team members learn new skills and develop a sense of purpose. “They take pride and ownership in their work,” said Mark. “It has been wonderful to watch them grow. It’s all about having a purpose. It is exciting to see all this grow.” ■
Prior to starting the farm, Mark and Denise were already involved with Helping Hands of Monroe, a foundation dedicated to programming associated with empowering people with developmental disabilities to pursue personally fulfilling and successful lives. “Our sole goal is to bring in funding to develop programming to meet the needs of special youth and adults in our county,” said Mark. Through a partnership with Helping Hands of Monroe, St. Isidore Farm is operated by special needs youth and adults during the week. Each area of the farm has a team of five assigned to the daily farming chores associated with each area. The teams learn to care for the animals, grow fruits and vegetables and then put those skills into practice at farmer’s markets and alpaca shows. Currently, there are approximately 50 to 60 special needs youth and adults working on the farm. Each team has their own skill coach provided by the CHS Group, LLC in partnership with Monroe Community Mental Health. Denise worked with the skill coaches to train them on the ins and outs of maintaining the farm. The skill coaches then work with each individual team member to create a personal goal plan. Each individual accomplishing a set of skills receives a letter of recommendation. In addition to the agricultural skills they gain working on the farm, Mark explained how some team members are also developing their own micro
Partners — Spring 2015
31
Build it
your way! By James Cole, Country Living Financial Services Officer IT FINALLY APPEARS OUR WEATHER IS TRENDING WARMER AND WITH THAT COMES INTEREST IN CONSTRUCTION FINANCING FOR THOSE THINKING ABOUT BUILDING THEIR OWN HOME. WHETHER YOU WANT TO HIRE A CONTRACTOR OR DO THE WORK YOURSELF, THERE ARE SEVERAL ADVANTAGES AND CHALLENGES TO EACH.
Do-It-Yourself What could be more fun and exciting than building your own home? You get to pick and choose everything and make changes whenever you like because you are in charge of the project. In a perfect world, it would be that easy, but the reality is not everyone is ready for all that is required in building a home on their own. If I had to pick the number one issue doit-yourself homeowners face, it would be scheduling. This includes scheduling of materials and sub-contractors. The subcontractors need to be scheduled out weeks, if not months, in advance. Many sub-contractors are already booked through the end of summer. You will also need to know in which order to schedule the sub-contractors. Some may be able to work simultaneously, but some will need another sub-contractor to be finished before they can begin their work. Depending on your situation, the cost savings of being your own general contractor may not be worth the hassle. While you have the flexibility of choosing the sub-contractors and materials, the actual savings may not be as much as you think. Contractors have special pricing deals set up with their suppliers that they often pass on to home owner. You have to decide if you are up to the task of managing the entire project yourself to gain the freedom of choices and changes. Fully-Contracted For those that decide to hire a contractor to build the home, be sure to do your research in choosing the right one for you. This is one time when the lowest bid is not always the best bid. Take the time to check references and view their existing work. The good news is that many of what you might consider sub-par contractors are no longer building after the construction downturn a few years ago.
The major advantage of hiring a contractor is they know what is required in the home building process. This includes permits, scheduling of materials and sub-contractors, realistic cost estimates, and time frames for work to be completed. The disadvantage of a fully-contracted build project is you will be giving up some of your flexibility with changes and materials. Change orders can raise the cost of building a home significantly. You are also at the mercy of their chosen sub-contractors as to when the work will be completed. A good contractor will give you a professional building estimate package, including a detailed contract and evidence of insurance. There is a fee for hiring a general contractor, but it may not be as much as you think once factoring in their discounted material pricing and efficiency. A Third Option The last option to consider is more of a hybrid scenario. You would act as your own contractor, but hire a project manager to oversee the construction. This individual should be well-versed in home construction and able to assist you in developing timelines for the project. You would still be the one in control, but you will also have someone to assist you in decision making. Whichever option you choose, GreenStone will be more than happy to assist you with your lending needs. We have significant experience in all three scenarios, and are one of few lenders who understand the do-it-yourself concept. We will discuss the loan options and draw process with you, your contractor or your project manager, in order to make the construction of your home a simple and enjoyable experience. â–
Partners — Spring 2015
33
Start spring off on the right foot:
GET MOVING! AS TEMPERATURES CLIMB, YOU MAY NOTICE A NUMBER OF RUNNING EVENTS POPPING UP IN YOUR LOCAL COMMUNITY. IF YOUR FIRST THOUGHT IS, “I COULD NEVER PARTICIPATE IN ONE OF THOSE,” DO NOT BE SO QUICK TO COUNT YOURSELF OUT. PUSHING YOURSELF BEYOND YOUR COMFORT ZONE AND ADDING A NEW LEVEL OF CHALLENGE AND INTEREST TO YOUR EXERCISE PROGRAM MAY NOT BE AS DIFFICULT AS YOU THINK! Do not be discouraged by the distance, a 5K is 3.1 miles. You can be well prepared for this in less than two or three months, and the best part is, no prior running experience is necessary! To reduce the risk of injury, stress or fatigue, 5K training incorporates a mixture of running, walking and resting. Many schedules recommend three days a week a runwalk combo to build up your endurance. For instance, during week one on these days, you might run for 15 seconds and then walk for 45 seconds, repeating for 30 minutes. The exact breakdown varies by training program and your personal health, but the goal is to gradually increase the amount of time running and reduce the amount of time walking. Some experts also recommend spending one to two days a week strength or cross training. This can include simple core routines including moves such as modified bicycle, plank, leg lifts or other floor exercises such as squats or push-ups. These training schedules often suggest completing three sets, doing each move between 45 seconds to one minute, transitioning
34
Spring 2015 — Partners
between movements without rest. Between sets, it is also important to spend one or two minutes recovering. Another option is to work in 20 to 30 minutes of exercise by biking, hiking or swimming. And remember to give your body time to rest and recover throughout the week. Whether you are a beginner looking to participate in your first race, or ready to take on more distance, there are countless training programs available. Doing the research to find a trusted program that is right for you, and has the flexibility to fit into your daily schedule, will give you the most success in conquering your goal! ■ Source: www.shape.com/ fitness/training-plans, www. mayoclinic.org/healthy-living/ fitness/in-depth/5k-run/art20050962
GETTING THE FAMILY INVOLVED Encouraging your family, including the kids, to become more active not only benefits your training, but also leads everyone to a healthier lifestyle – and doubles as quality time! • Turn TV commercials into fitness breaks. Invent creative or silly names for simple exercises such as squats, push-ups and sit-ups, and then do them all together until the show comes back on. • Create a weekly game night. Pick an evening and get everyone up and moving! For younger children, create a series of playing cards featuring family-friendly exercises, such as bear-crawling or ape-walking. Each family member picks a card and performs the exercise pictured until the cards have been dealt. For older kids, choose an outdoor activity such as playing kickball, catching a football or shooting a basketball. • Go for pre- or post-dinner walks. Whether you head into your local town or stroll around your country backroads, building it into your schedule ensures that it will not get put off. Mix up the pace with speed walking or jogging to increase the benefit and keep things lively. ■ Source: www.parents.com/fun/sports/exercise/10-ways-toexercise-as-a-family/
SPRING CLEANING All signs point to spring! With this comes the dreaded cleaning deeds we inevitably face. To make spring cleaning and de-cluttering your home a little less painful, follow these tips and tricks. Handy Cleaning Kit
thoroughly with a towel to prevent rust. For wooden blinds, wipe with a few drops of gentle wood cleaner on a nearly dry sponge.
magnetic strip, which will turn it into something more fun than just messages.
Deep-Clean Carpets and Rugs
Keep your closet tidy with hooks and clips. Screw them on the inside walls to secure your broom, dustpan, mop and duster in place. To avoid getting a bulky toolbox out for quick repairs, do the same with tools on the inside of the door.
Combine these items in a cleaning bucket to allow you to easily carry your supplies throughout the house: all-purpose and glass-cleaning spray, sponge, toothbrush, squeegee, scrub brush, and terry-cloth towels.
If the carpets need a thorough cleaning, consider renting a shampooer, and remove traces of soap using hot water. Open the windows and let the air flow through to dry the carpets and freshen the house air after a long winter.
Wash Your Blinds
Entryway Organization
The warmer weather of spring is the perfect time to wash aluminum blinds outdoors by placing them on an old sheet on a slanted surface and then scrubbing with a mix of water and noncorrosive cleaner. Use a garden hose to rinse and dry the blinds
To remove the clutter and also add some décor to your entryway, wooden shutters are perfect for tucking invitations and mail, displaying artwork or hanging a message pad. Another option is to find a convenient spot to hang a bulletin board with an attached
Broom Closet Organizer
Furniture Moving Tricks To avoid scuffed floors while scrubbing behind heavy pieces of furniture, fold two clean towels, place one under each end to more easily slide the piece across the floor. ■ Source: http://www.marthastewart. com/277002/spring-cleaning
Roasted Asparagus If you have never tasted roasted asparagus, this is something you have to try! The result is delectable and the texture, although not as crisp as steamed asparagus, is tender and medium-firm. Directions: 1. Wash and trim fresh asparagus spears. 2. Spread spears on a large rimmed baking sheet. 3. Drizzle spears with olive oil and roll to coat lightly. 4. For added flavor, add two or three cloves of chopped garlic to spears. 5. Roast medium-thick spears in a preheated 450-degree oven for 15 minutes (thin ones about 10 minutes) and occasionally shake the pan for even browning. 6. Test with a fork to determine doneness. Spears should be tender throughout and lightly browned but no charred. 7. For variation, drizzle balsamic vinegar or lemon juice after roasting. Try adding your roasted asparagus to pasta, rice, salad, or even on vegetable pizza! Provided by the Michigan Asparagus Advisory Board
Commodity Cuisine...
Partners — Spring 2015
35
LEARN
2014 FARM BILL: The USDA has supplied a list of noncompliant producers to each insurance company, who are then supplying lists to individual agencies. If you have crop insurance coverage through GreenStone, we will be in contact with you if you are not currently in compliance. If you have insurance with a different agent, we suggest you contact your agent to verify whether or not you are in compliance. Those who are not in compliance need to file an AD-1026 form with their local FSA office prior to June 1, 2015* to be eligible for crop insurance subsidy for the 2016 crop year.
CHANGES TO CONSERVATION COMPLIANCE PROVISIONS By Brandon Walters, Crop Insurance Sales Product Manager AN IMPORTANT CHANGE THAT THE 2014 FARM BILL BROUGHT TO CROP INSURANCE WAS REESTABLISHING THE APPLICABILITY OF THE HIGHLY ERODIBLE LAND CONSERVATION (HELC) AND WETLAND CONSERVATION (WC) PROVISIONS AS A REQUIREMENT TO BE ELIGIBLE FOR SUBSIDIZED FEDERAL CROP INSURANCE. IN ORDER TO RECEIVE CROP INSURANCE PREMIUM SUBSIDY FOR THE 2016 CROP YEAR GOING FORWARD, A PRODUCER MUST HAVE THE FORM AD-1026 ON FILE WITH THEIR LOCAL FSA OFFICE. Essentially, this form is a certification form that states you will not: ➊ Plant or produce any agricultural commodity on highly erodible land without following a NRCS approved plan or system; ➋ Plant or produce any agricultural commodity on a converted wetland; or ➌ Convert a wetland in such a way that makes the production of an agricultural commodity possible.
36
Spring 2015 — Partners
HELC and WC provision requirements remain in place for FSA loans or disaster assistance payments, along with any other NRCS or FSA conservation program benefit. While this provision does have a fairly significant impact on the crop insurance program, the USDA estimates that only 5 percent of producers who currently purchase Federal crop insurance will need to make sure they have an AD-1026 on file; the rest most likely already do.
While this is a significant change in comparison to recent years, there are a few key points to remember. • While being out of compliance with the HLEC and WC provisions prohibits you from obtaining premium subsidy, you are still able to purchase crop insurance; it would just be at the full premium rate. • If a producer has an AD-1026 on file, but for some reason is found out of compliance, they are able to keep subsidy throughout the appeals process, and will only lose eligibility once a final determination has been made. • If a producer is found out of compliance once a final determination is made, they will only lose subsidy from that point forward, there will be no reach back to recover previously issued subsidy. If you believe you may have subsidy eligibility concerns, the best thing you can do is contact your crop insurance specialist as soon as possible to determine which course of action is best for you. ■ *June 1, 2015 is the current deadline, but is subject to change at any time at the discretion of the USDA.
CROP NEWS: REPLANT OR PREVENT PLANT
Important Date Reminder! Late fees will be charged on any unpaid premium on Oct. 1. Please make note of this important change as late fees cannot be waived. If you cannot pay your premium before the due date, please contact your AIP to make payment arrangements. Payment is due regardless of whether or not you have an outstanding claim. ■ Acreage Reports Acreage reports will be mailed to you in May for spring 2015 planted crops. It is the customer’s responsibility to report the crop that was planted in each section, the planting date and your percent share of that crop. Reporting your crop accurately and double checking everything is very important. Corrections or changes cannot be made after the July 15 reporting deadline. If you have any questions or would like assistance, just contact your local GreenStone crop insurance team and they will be more than willing to help. ■ Now is the time to sign up for Hail Insurance! Standalone hail coverage is a separate policy from your multiperil crop insurance coverage. While Federal MP insurance covers hail as well, it only covers hail damage once its had an impact on your yield. A private hail policy will pay when the storm occurs, not making you wait until harvest to see the effect it had on production. As an added bonus, your hail policy can provide coverage for fire, lightning, vandalism/malicious mischief and transit to the first place of storage. Rates and coverage can vary by crop and county. Keep in mind, hail insurance must be purchased before damage occurs. Contact your GreenStone crop insurance specialist today to set up an appointment to review your options. ■ GreenStone Offers Mapping
Probably the most forgotten and under-utilized feature of federal crop insurance is the replant provision. If you think you may need to replant a portion of your planted crop due to poor weather conditions, you may qualify for a claim.
Have you gotten yours? At no cost to you, GreenStone will create a customized map booklet for your operation. Your personal booklet is a great tool for: • Acreage and production reporting
In order to make sure the claims process goes smoothly, it is vitally important that you file a claim with your specialist before replanting. If you replant the crop prior to filing a claim, you will not be eligible to receive a replant payment.
• More accurate claims adjustments • Field record keeping • Communicating with employees and vendors • Tracking chemical and fertilizer applications
In the event that weather conditions are so bad that you have a prevent plant situation, a claim must be filed within 72 hours after the end of the late planting period which varies by crop. Both of these provisions are very time sensitive, so as soon as you anticipate a replant or prevent plant claim, contact your specialist as soon as possible. (There is a minimum requirement of 20 percent of the unit or 20 acres for both replant and prevent plant, whichever is less.) ■
In addition, these easy to read maps will simplify reporting your information to your crop insurance specialist. But most importantly, they will help to increase your reporting accuracy. Call your crop insurance specialist to schedule an appointment and get started today! ■
Partners — Spring 2015
37
2015 Fall Wheat and Forage Claims Reminder
unit structure and cause your premium to substantially increase.
Crop insurance requires that appraisals are done whenever a customer plans to do something with the crop other than harvest in the normal manner. If you do not plan to take your wheat/forage to harvest, you must have your acres appraised prior to destruction. ■
There are two requirements to qualify for enterprise units:
Organic Crops As a reminder, RMA now requires all insured organic certified producers to provide a copy of your organic crop plan and organic certificate to your crop insurance agent before the acreage reporting date. ■ Enterprise Units Structure The added subsidy on the enterprise unit structure makes it an affordable option for many producers. The downside comes if you end up not planting the required acreage, as your policy could revert back to a basic
➊ You must farm in two or more separate sections. AND ➋ At least 20 acres, or 20 percent of your individual crop acreage, whichever is less, must be planted in that second section. Adverse spring weather has the potential to cause prevented planting which could take some producers out of enterprise unit eligibility. Make sure to contact your crop insurance agent if you anticipate any issues with meeting the enterprise unit requirements. ■ First Crop / Second Crop
your crop insurance agent before doing so. You could potentially be eligible for a claim, but you may forfeit that eligibility if you act before contacting your agent to discuss your options! ■ Crop Insurance Alerts! Like previous years, GreenStone will CROP INSU continue to send ALERT RANCE crop insurance alert postcards when we believe it is necessary to communicate any vital information that is important to you and your farm. When you see a red postcard in the mail, please pay attention to its message. Among other things, it may explain action you need to take in a timely manner. ■ www.gree nsto
If you are planning on possibly removing a first crop to plant a second, make sure you contact
Crop Insurance Calendar... MICHIGAN
WISCONSIN
APRIL
APRIL
24
Earliest Plant Date for Soybeans in most Michigan counties
26 29
Dry Beans Early Plant Date Production Reporting Deadline for all Spring 2014 Crops
Sugar Beets and Oats Final Plant Date Forage Seeding Final Plant Date Oat Acreage Report Due
JUNE
5 15 25 38
26 29
Corn Early Plant Date
Soybeans Early Plant Date Production Reporting Deadline for all Spring 2014 Crops
MAY
MAY
20 25 31
11/21*
15* 25*
Spring Wheat Final Plant Date
31*
Corn (grain) and Spring Wheat Final Plant Date
Forage Seeding, Oats, Spring Wheat and Barley Final Plant Date
JUNE Corn Final Plant Date Soybeans, Potatoes and Tomatoes Final Plant Date Dry Beans Final Plant Date
Spring 2015 — Partners
5* 10*
Corn (silage) Final Plant Date Soybeans Final Plant Date
* Please note that some dates can vary by county. Please check with your crop insurance specialist for specific dates if you are unsure.
nefcs.com
LAND VALUES AGRIBANK IS OWNED BY GREENSTONE AND 16 OTHER AFFILIATED FARM CREDIT ASSOCIATIONS. INCLUDING GREENSTONE’S MICHIGAN AND WISCONSIN TERRITORY, THE AGRIBANK DISTRICT COVERS THE MIDWEST, A 15-STATE AREA STRETCHING FROM WYOMING TO OHIO AND MINNESOTA TO ARKANSAS, REPRESENTING MORE THAN HALF OF THE NATION’S CROPLAND.
average of 11.1 percent. However, the 2014 growth rate was still notably higher than the previous three-year average of 4.3 percent. This may be indicative of strong livestock profit margins starting to factor into the value of pastureland. AgriBank District Benchmark and Fed Surveys: Wide Variations in Land Values by Region
THE CONTENT PROVIDED HEREIN IS, IN PART, THANKS TO ANALYSIS CONTRIBUTED BY GREENSTONE AND THE AFFILIATED ASSOCIATIONS.
The AgriBank district continues to monitor agricultural land values through its own annual benchmark survey. The survey is completed by licensed real estate appraisers, including GreenStone’s certified appraisers, based on benchmark farms selected to represent the lending footprint of affiliated associations throughout the district. The district’s most recent real estate market value survey indicated that district real estate value changes varied widely by region, generally ranging from -6 percent to 16 percent over the 12-month period ending June 30, 2014. Real estate values in one region surveyed increased above that range at 26 percent.
AgriBank District Land Values: Slower Growth in 2014 In recent years, factors such as increasing commodity prices and farm incomes, combined with lifetime low long-term interest rates, have helped fuel higher land values. However, given natural economic and market cycles, these factors are reversing course, as crop prices and farm incomes moderate, and interest rates begin to rise. Not surprisingly, land values also face a correction. However, most agricultural producers across the nation are in a strong financial position that will help keep the correction from becoming a crisis. USDA Land Value Surveys: Cropland Growth Slows, Pastureland Strengthens The average value of cropland across the 15-state AgriBank district rose by 8.3 percent to $4,547 per acre, according to the U.S. Department of Agriculture 2014 survey. The district growth rate was slightly higher than the U.S. average of 7.6 percent. However, the 2014 growth rate represents a notable slowdown from 12.9 percent in 2013 and 14.1 percent in 2012. Lower actual and expected corn and soybean prices started to weigh on valuations in the summer of 2014, when the survey was conducted. In 2014, the average value of pastureland in the AgriBank district rose $103 per acre, or 5.1 percent, which was a slower growth rate than the U.S.
Note that the USDA procedure differs substantially from the AgriBank district benchmark survey. The USDA data is based primarily on producer surveys with statistical validity checks and final revisions based on some benchmarking data from the Census of Agriculture. AgriBank district benchmark survey land value estimates are based on actual appraised values of selected benchmark farms that remain mostly constant over the lifetime of the survey. Qualitative surveys of lending officers compiled by the Federal Reserve Banks of Chicago, Kansas City, Minneapolis and St. Louis as of the end of the second quarter 2014 also indicated moderating farmland values. The Federal Reserve Bank surveys cited year-over-year changes in the average value of non-irrigated cropland of -3.5 percent to 6 percent, with respondents indicating that the rate of growth in farmland values appears to be slowing, and in some cases, declining.
Partners — Spring 2015
39
Debt: Not the Factor It Was in the 1980s Farm Crisis The overall net worth of the U.S. farming sector is projected to increase by 6.1 percent, or $145.3 billion, in 2013 and 2.3 percent, or $58.2 billion, in 2014. The farm sector debt-to-asset ratio is projected to reach a record-low 10.75 percent in 2013 and remain relatively flat into 2014. The same holds true for the debt-to-equity ratio for 2013 and 2014. During the 1980s farm crisis, the ratio reached the 50-year high of 22.2 percent in 1985. Since then, the ratio has shown steady improvement through 2014, with the exception of the recession time periods where there was a slight retracement in the longterm downward trend. A similar pattern would be seen with the debt-to-equity ratio. In addition, overall debt levels, measured in real dollars (2009), are currently significantly lower than in the early 1980s. Note the limitation of this data, which does not report on the concentration of agricultural debt and assets with individual agricultural producers. Are District Land Values Still Headed Toward a Soft Landing? A year ago, AgriBank expressed the opinion that the district cropland values likely were headed to a soft landing despite the low forecasts and bearish long term outlook for corn and
7.00
BILLIONS $
6.00
Source: USDA 2014 Survey * The 10-year treasury rate is the 12 month average from July of the preceding year through June of current year. Cap rate is equal to the USDA cropland average rental rate ($ per acre) divided by the USDA cropland average price ($ per acre) from annual survey conducted in June of each year (see http://www.nass.usda.gov/Surveys/Guide_to_ NASS_Surveys/June_Area/Index.asp).
40
Spring 2015 — Partners
soybean prices. This prediction was primarily based on three observations. All three still hold true. Implied Cap Rate—Barometer of Farmland Values Shows Some Restraint in Decline First, it was noted that the AgriBank district “implied” cropland capitalization rate, which is calculated by dividing the USDA district average cropland cash rent rate by the average district cropland value, had stabilized in the 3.25 percent to 3.6 percent range since 2009 and had not followed the interest rate (measured by U.S. 10-year Treasury yield) to its record lows set in early 2013. This would indicate some restraint in setting the average district cropland value, as the market is building in a higher-risk premium compared to the projected growth rate in cash rents. The accompanying chart shows the plot of the implied cap rate versus the 10-year Treasury rate with the 2013 and 2014 observations added. The results show a slight decline over the past two years in the cap rate, but it still has held well above the 10-year Treasury rate, which started moving higher in 2014.
District Implied Cap Rate Versus 10-Year U.S. Treasury Rate*
5.00 4.00 3.00 2.00 1.00 00.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Implied Cap Rate
5.79 5.51 5.25 5.12 4.90 4.71 4.56 4.49 4.08 3.77 3.53 3.26 3.53 3.54 3.44 3.45 3.37 3.24
10-Year Treasury Rate
6.60 5.83 5.10 6.17 5.45 4.98 3.95 4.29 4.23 4.59 4.76 4.14 3.29 3.55 3.08 2.08 1.82 2.71
Crop Price and Interest Rate Changes: Worst-Case Prediction Shows 25%-30% Drop in Cropland Values Second, it was observed, using linear regression and simulation analysis, that district cropland values tended to be more sensitive to changes in interest rates compared to crop prices (for district average cropland values, corn is the dominant price). With the major immediate factor looming over the market being the prospect of lower crop prices, our sensitivity analysis indicated a much smaller impact on cropland values, with a worst-case scenario of declines of 25 percent to 30 percent, compared to the 40 percent declines in the AgriBank 15-state district average farmland value (USDA) from 1981 to 1987. A re-estimation (adding the data from the last two years) and regeneration of forecasts (using current district average corn price and 10-year Treasury rates) from our district cropland value forecasting model confirms that the previous projection of a 25 percent to 30 percent pullback in cropland values still holds. Borrowers and Lenders: Well-positioned for Land Value Correction The third observation made a year ago was that today’s environment is not comparable to the 1980s due to more prudent lending practices, the greater ability of producers to lock in long-term interest rates on farmland mortgages, and the very strong financial position of U.S. agriculture. The predicted aggregate debt-to-asset ratios for 2013 and 2014 are at their lowest levels since 1960 at around 10.8 percent. For comparison, in 1981, the ratio was almost 18 percent and climbed to over 22 percent in 1985. In addition, the USDA aggregate farm sector balance sheet data shows current real (2009 dollars) total farm debt is almost $74 billion less (in 2009 dollars) than the peak value observed in 1980, just prior to the farm crisis years ($291 billion versus $365 billion). Since 2002, the real value of U.S. aggregate farm debt has increased at an annual rate of 2.4 percent, while the aggregate value of farm assets has increased at a 5.3 percent annual rate over the same time period. Holding aggregate U.S. farm debt constant, a 40 percent decline in real asset values would result in the aggregate debt-toasset ratio increasing to 18 percent—slightly above the pre-farm crisis values that were in the 15 percent to 18 percent range from 1973 through 1981. To get the debtto-asset ratio up to the 1985 peak of 22.2 percent would require that aggregate U.S. farm asset values fall by over
51 percent, while holding debt constant. Approximately 85 percent of the aggregate U.S. farm sector asset value is held in the form of real estate. Holding the non-real estate real asset value constant, it would require more than a 60 percent decline in farm real estate values to get the 51 percent decline in total asset values required to push the real debt-to-asset ratio up to the 1985 high.
The GreenStone Perspective:
The prospects for a “soft landing” in the GreenStone territory are even more likely than on the national level. “The mix of commodities produced in our area of service is much more diverse than the traditional cornsoybean rotation that is prevalent in much of the AgriBank district,” said James Garvey, GreenStone chief appraiser. “The diverse blend of crop and livestock products produced by our GreenStone customers helps to reduce income variability as compared to regions that are dependent primarily upon a corn-soybean rotation.”
The bottom line is that the U.S. farm sector is in the best financial shape in over a generation. Some farming operations may face unique challenges that lead to unique financial difficulties. Given current expectations for crop prices, interest rates and farm real estate values, AgriBank does not foresee widespread conditions similar to the 1980s farm crisis. ■
Partners — Spring 2015
41
AFFORDABLE CARE ACT: EMPLOYER MANDATE By Kelly Tobin, Senior Tax Accountant Under the Affordable Care Act (ACA), the federal government, state governments, insurers, employers, and individuals have been given shared responsibility to reform and improve the availability, quality, and affordability of health insurance coverage in the United States. As a result, all employers that are “applicable large employers” including for-profit, non-profit, and government entity employers, are subject to the Employer Shared Responsibility provisions, also known as the “employer mandate.” Therefore, starting in 2015, if you are an applicable large employer that does not offer affordable health coverage that provides a minimum level of coverage to your full-time employees (and their dependents), you may be subject to an Employer Shared Responsibility payment. This may apply if at least one of your fulltime employees receives a premium tax credit for purchasing individual coverage on one of the new Affordable Insurance Exchanges, also called a Health Insurance Marketplace. Also, effective in 2015,
42
Spring 2015 — Partners
applicable large employers are required to file information returns with the IRS and provide statements to their full-time employees about the health insurance coverage they offered. You are an applicable large employer if you employ at least a certain number of employees (generally 50 full-time employees or a combination of full-time and part-time employees that is equivalent to 50 fulltime employees). There is transition relief for employers that employ on average at least 50 full-time employees but fewer than 100 full-time employees on business days during 2014. These employers will not face a shared responsibility payment for 2015. However, this relief is only for 2015. The 50 full-time employee threshold applies to all employers in 2016. An employer identifies its full-time employees based on each employee’s hours of service. An employee is a full-time employee for a calendar month if he or she averages at least 30 hours of service per
week. In a calendar month,130 hours of service is treated as the monthly equivalent of at least 30 hours of service per week. Part-time employees are calculated as fulltime equivalents by taking the total hours worked by a part-time employees and dividing by 30. For example, an employer that employs 40 full-time employees (that is, employees employed 30 or more hours per week on average) and 20 employees employed 15 hours per week on average has the equivalent of 50 full-time employees, and would be an applicable large employer. Seasonal workers are taken into account in determining the number of full-time employees, with certain exceptions. Also, for purposes of determining whether an employer is an applicable large employer, all employees are counted (subject to a limited exception for certain seasonal workers), regardless of whether the employees are eligible for health coverage from another source, such as Medicare, Medicaid, or a spouse’s employer.
The employer determines each year, based on the current number of employees, whether it will be considered an applicable large employer for the next year. For example, if an employer has at least 50 full-time employees (including full-time equivalents) for 2014, it is considered an applicable large employer for 2015. The employee’s share of health insurance premium payments must be considered affordable. If an employee’s share of the premium for employer-provided coverage would cost the employee more than 9.5 percent of that employee’s annual household income, the coverage is not considered affordable for that employee. Because employers generally will not know their employees’ household incomes, employers can take advantage of one or more of the three affordability safe harbors, which include the employee’s W-2 wages.
Tax Calendar...
An employer’s health insurance plan must provide minimum value to its employees. A plan provides minimum value if it covers at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan.
APRIL
15
Individuals file a 2014 income tax return (Form 1040) and pay any tax due. If not able to file, file Form 4868 to request an automatic six month extension.
If an applicable large employer does not offer coverage or offers coverage to fewer than 70 percent of their full-time employees in 2015 (95 percent in 2016 and beyond) of its full-time employees (and after 2015 their dependents), it owes an Employer Shared Responsibility payment equal to the number of full-time employees the employer employed for the year (minus up to 30) multiplied by $2,000.
First quarter estimate is due for 2015 for individuals that pay estimated taxes. Partnerships file a 2014 calendar year return (Form 1065). Provide each partner with a copy of Schedule K-1. If not able to file, file Form 7004 to request an automatic five month extension.
Starting in 2016, the ACA also requires applicable large employers to file information returns with the IRS and provide statements to their full-time employees about the health insurance coverage the employer offered. The required information is reported on Form 1095-C. The IRS will use the information provided on the 1095-C to administer the employer shared responsibility provisions of the ACA.
Corporations deposit the first installment of estimated income tax for 2015.
30
Non-farm employers file Form 941 for the first quarter to report social security, Medicare, and withholding.
The vast majority of businesses fall below the threshold that makes them subject to the Employer Shared Responsibility provisions. However, for applicable large employers, 2015 is a significant year in the implementation of the ACA. To avoid potential costly penalties, these employers should ensure they are in compliance with the provisions. If you are uncertain, contact one of GreenStone’s tax accountants. ■
JUNE
15
Second quarter estimate is due for 2015 for individuals that pay estimated taxes. Corporations deposit the second installment of estimated income tax for 2015.
Partners — Spring 2015
43
Estate Planning 101:
Can someone fill your shoes? By Varnum Law Firm ESTATE PLANNING IS THE CREATION OF A DEFINITE PLAN FOR MANAGING YOUR WEALTH WHILE YOU ARE ALIVE AND DISTRIBUTING IT AFTER YOUR DEATH. WHEN WE TALK ABOUT AN ESTATE, WE MEAN ALL ASSETS OF ANY VALUE THAT YOU OWN, INCLUDING REAL PROPERTY, BUSINESS INTERESTS, INVESTMENTS, INSURANCE PROCEEDS, PERSONAL PROPERTY, AND EVEN YOUR PERSONAL EFFECTS.
44
Spring 2015 — Partners
Your planning considerations can become very complicated and should start with assessing some basic objectives, including the following questions:
• How do you want your assets distributed? The people who receive your assets are called beneficiaries. If any beneficiaries do not survive you, who should receive those assets? Do some of your beneficiaries have special needs? • Do you want to give anyone special items such as family antiques and jewelry? Maybe you would like specific farm equipment to be divided amongst family members. • Do you wish to include any charity or church? Or a bequest to grandchildren or anyone else? • If you have children under 18 years of age, who will care for them and their property if something happens to you? • If your estate is large enough to be subject to federal estate tax when you die, do you want to avoid or minimize those taxes? • If you become incapable of handling your own affairs, who should take care of your finances (deposit checks, pay bills, etc.)? • In the event you are unable to make health care decisions (permanent coma or terminally ill), what are your wishes regarding medical instructions and who should you appoint as your patient advocate to ensure your wishes are carried out?
Once these basic objectives are identified, then move forward with planning and utilizing estate planning tools. What are your Estate Planning options? Joint Tenancy is where two or more people hold title to an asset together. Upon the death of one of the owners, the entire interest passes automatically to the surviving joint tenant(s). Because a joint tenant’s interest passes to the surviving joint owner immediately at death, it is not controlled by the owner’s will. A Last Will and Testament is a legal document that lays out how you want your assets distributed at death. It governs only those assets which are titled in your name alone at the time of your death. It does not control joint tenancy property, life insurance proceeds, retirement benefits or trust assets. A will also allows you to name a guardian and conservator for any minor children you may leave behind. Wills do not take effect until you die, meaning they are no help with lifetime issues. Upon your death, your will becomes a public document when it is filed with the probate court and is available to anyone who wants to read it. Your will is controlled by the probate court system. Personal Representatives and Trustees become very important in fulfilling objectives. After your death, your estate will be administered by whomever you designate. Referred to generally as a “fiduciary,” the designee in your will is known as the Personal Representative, and the designee in your trust, if you have one, is the Trustee. If you do not have a will or trust, the probate court will decide whom to appoint (usually a close relative) as personal representative to administer your estate. The fiduciary you select should be able to provide a high level of skill, integrity, and common sense. Your fiduciary may be an individual (family member or trusted friend), a professional, or an institution (a bank trust department). The fiduciary must be available to handle the frequent problems that arise
in the administration of your estate and should be capable of making sound decisions. Living Will and Designation of Patient Advocate has become a very common practice in estate planning. As a part of a person’s right to self-determination, every adult has the freedom to accept or refuse medical treatment. This is relatively easy when you are well and can communicate. The living will comes into effect if you are unable to participate in medical treatment decisions. It states your wishes for or against certain types of medical interventions in key situations. For example, your living will can direct that you be given comfort care and pain relief, but that no life prolonging procedures be used. Durable Power of Attorney appoints an agent (the attorney-in-fact) to handle financial matters involving any assets titled in your name, as opposed to assets titled in the name of a trust. This document has the benefit of avoiding appointment of a guardian or conservator for you during your lifetime in the event you become disabled. Your agent’s power ends at your death. Typically, this power is effective when you sign it, but you can specify that it become effective only if you become disabled. It may be a general power to do all things or a specific power (for example, to sell a residence). There are many nuances to the planning of an estate that need to be carefully scrutinized for value preservation. Certainly some serious tax implications can make planning an even bigger opportunity for the estate. The opportunity exists to do this well when there are sound objectives in mind. ■ ABOUT THE AUTHOR Content of this article is taken from information provided by the law firm of Varnum LLP. This advisory is for informational purposes only and does not constitute legal advice. Copyright © 2014, Varnum LLP. All rights reserved.
The opinions stated herein are not necessarily those of GreenStone Farm Credit Services.
Partners — Spring 2015
45
CAREERS By Cara Oswald, SPHR, CCP, Director of Human Resources
WHAT TO LOOK FOR IN A JOB OFFER
Whether you have a job offer on the table or are beginning the search, it is important to understand what the components of an offer may look like. Typically, one of the first things that come to mind is the amount of money a company is willing to spend on a position in your field, but the paycheck is only one piece of a total rewards package. Doing a personal needs assessment and plenty of research of the many additional benefit options is crucial to understanding the perfect bundle for you. Benefits Offered by Employers Benefits included in employment can vary in numerous ways, and instead of a company putting their entire funds in one place, most are looking to offer an array of options to appeal to a multi-generational workforce. Wages An obvious component of a compensation package, evaluate if the offer amount is enough to support your current standard of living, as well as your goals for the future (starting a family, a home or car purchase, etc.) Health Coverage Sifting through the details of the various coverage options can be time consuming and also confusing. Focus on: • If there are any monthly or pre-pay period costs, which would result in a more upfront reduction in your takehome pay. • Look at the start date of your components; this can vary from beginning on your first day, after thirty days or even after a year. • Keep in mind that some benefits could be taxable (i.e. life insurance) and plan on paying taxes on it at the end of the year. Medical, Dental, Vision Insurance Weigh the plans; look at expenses that will or will not be covered, including deductibles, co-pays and exclusions for pre-existing conditions When it comes to dental and vision insurance, be aware of the annual “up to” coverage limits, as well as lifetime maximums. Retirement Today, companies no longer offer the traditional pension programs like what had been popular in the past. Often, they have been replaced with 401(k) plans. Keep an eye on the variation in the percentage or dollar amount that a company will match, along with a defined maximum amount for either matching contributions and/or employee contributions.
46
Spring 2015 — Partners
Wellness Programs
Company Culture
Companies are beginning to recognize the benefits of promoting an active lifestyle for their employees to ensure a healthy workforce. In some workplaces, a subsidy could be offered to those who participate in a physical wellness program, fitness classes or smoking cessation program and the purchase of substantial personal fitness equipment
Although the culture of a company may not be considered a “traditional” part of a compensation package, it is still important to research. To gain insight, use technology to look for various awards or honors the company has earned, as well as media coverage. Reach out to other professionals in the same industry to learn more about things like the work/life balance, tenure and retention of employees.
Sick/Personal Leave and Vacation Days Look into the amount being offered and allowed in your first year:, how it is accrued, can unused days can be carried forward into the next year or converted into cash, and what is the policy on what type of circumstances (doctor visits, sick children, etc.) fall under each category? Company-Sponsored Training and Developent Employers understand that most employees are looking for a career that offers new challenges and further develops their skillset. Consider what type of training and development courses and workshops would be available to you; these experiences commonly lead to better work performance and help translate to upward mobility.
Negotiating a Job Offer Negotiating a proposed salary or benefits may put you out of your comfort zone, but it can be appropriate if you believe your skills are worth more than what is in the offer package. This takes prior planning, preparation and goal setting in order to be effective. However, keep in mind that there may be a line of other qualified candidates for the same job and pushing too hard could cost you the opportunity. Always remember there may be components of a job offer that are extremely generous in some areas, but they may not offer much else to keep you happy for the long term. Look creatively at what is in front of you and make sure you are getting close to everything that is important to you in your total rewards package. ■
i WI-FI ON THE FARM With the increase in precision agriculture equipment needing Internet connectivity, a common question we hear is “How do I get wireless Internet access out to my barn, shop, or field?” One cost effective solution for this problem is using wireless point-to-point range extenders. These wireless range extenders simply lengthen the range of an existing wireless network. Strategically placed range extenders can also allow for the signal area to reach around or through large barriers such as L-shaped buildings. The extenders require line of sight, but alignment is convenient as it pivots on a ball joint for easy alignment. The extenders are small enough to easily blend into the background and can be mounted to poles or walls. The point-to-point devices are rugged and will operate in temperatures ranging from -40 to 158° F. The cornerstone of any wireless network, or Wi-Fi as it is commonly known, is an access point. The access point’s primary job is to broadcast a wireless signal that computers and devices can detect. By installing point-to-point extenders, you can create multiple access points. These access points, or hotspots, have a range of about a 66 foot radius indoors and a greater range outdoors. Hotspot coverage can also be enhanced by using multiple overlapping access points. As explained in the GreenStone Story on page 28 and 29, GreenStone’s new Customer IT Services is a great resource for those customers in the service area to get assistance in designing and installing these point-to-point extenders. Give us a call to see how we might be able to assist you with your internet connectivity needs.
...Tech-tip
ROUTER
RANGE EXTENDER
RANGE EXTENDER
ROUTER MODEM
Partners — Spring 2015
47
The team you can count on...
TRUSTED CROP INSURANCE– Start 2015 off right and put your personal team of experts to work for you. Our crop insurance specialists will leverage the resources of GreenStone’s 500 professionals to tailor a plan for your business. Contact the trusted source and build a risk management plan with your local branch today.
800-444-FARM
GreenStone FCS is an equal opportunity provider and employer.
www.greenstonefcs.com
3515 West Road East Lansing, MI 48823
With you every step of the way...
RELIABLE OPERATING LOANS– When it is time to get the job done, you need a strong partner by your side. A GreenStone line of credit provides the resources to take on the growing season with confidence. The simple application process and auto-renewal options make managing cash flow a snap. Contact us today to get started. 800-444-FARM
www.greenstonefcs.com