2024 PLANT Magazine

PLANT

A letter from the CEO

Greetings,

I am no stranger to talking about AgCountry’s mission to serve agriculture and rural America. Our mission acts as a compass to guide us in improving the lives of our member-owners and creating an organization that is a destination for their success. We are well served by such a meaningful purpose.

We experienced a tremendous amount of success over the last year. This success is the result of seeking new ways to create value and build upon the work we previously accomplished. None of this would be possible without the dedication of our staff along with the support of our Board of Directors.

Let us celebrate what has been achieved while keeping our eyes fixed on future opportunities.

Patronage Reflecting Our Strength

March is a wonderful time for our cooperative. This month marks the fifth consecutive year a 1% patronage dividend is paid to our member-owners on all eligible business. The AgCountry Board took it a step further by declaring a special additional cash dividend of .5% to be paid in May 2024, to celebrate the unique success achieved in 2023.

The combined cash dividends for 2023 amount to over $125 million, a figure that marks a new record and further demonstrates our unwavering commitment to sharing our earnings with our members. This action helps members manage overall interest expenses and reduces net borrowing costs. That is the power of the co-op!

Introducing Mark Jensen

We are also celebrating a new beginning in 2024. When the collaboration between AgCountry, Farm Credit Services of America (FCSAmerica), and Frontier Farm Credit becomes effective on April 1, 2024, our associations will be led by CEO Mark Jensen. Mark has proven to be a true asset to the Farm Credit System and the associations he has served.

Mark has served as president and CEO of FCSAmerica and Frontier Farm Credit since 2017. He previously held the roles of senior vice president and chief risk officer from 2013 to 2017. Mark has 32 years of Farm Credit experience. His leadership will be pivotal in steering our cooperative into a future full of opportunities.

A Grateful Note to Our Members

I extend my deepest appreciation to all our member-owners. Your continued support and trust mean everything to our association. Our achievements are a testament to the collective strength and unity of our cooperative. Together, we will continue to build upon our deep history of success.

Thank you for your continued patronage of AgCountry.

Sincerely,

Marc Knisely, President & CEO 701-499-2559

Marc.Knisely@AgCountry.com

STRATEGIC COLLABORATION ASSOCIATIONS OVERVIEW

Offıces: 45

Corporate HQ: Fargo, ND

Member-Owners: 25,000

States Served:

· Minnesota

· North Dakota

· Wisconsin

Patronage Paid in 2024*: $125M

*Including Special .5%

Offıces: 43

Corporate HQ: Omaha, NE

Customer-Owners: 55,000

States Served:

· Iowa

· Nebraska

South Dakota

· Wyoming

Patronage Paid in 2024: $357M

Offıces: 6

Corporate HQ: Manhattan, KS

Customer-Owners: 6,700

State Served:

· Kansas

Patronage Paid in 2024: $23.9M

ND

WY

SD

NE

KS

MN

IA

WI

Celebrating a Successful 2023

For the fifth consecutive year, AgCountry’s Board of Directors has declared 100 basis points (1%) patronage dividends on eligible business conducted with the cooperative in 2023. AgCountry’s patronage program grants the Board of Directors the ability to distribute a portion of the association’s net income to its member-owners on eligible business when financial conditions allow.

To share in AgCountry’s unique success in 2023, the Board has declared a special 50 basis points (.5%) patronage dividend. The total combined patronage dividends paid on business conducted in 2023 is a record $125 million!

Total Patronage Dividends Patronage Dividends as a Percentage

“ ” $125M 2017 2018 2019 2020 2021 2022 2023

$83.5M

– Lynn Pietig, AgCountry Board Chair.

The patronage program is part of the cooperative’s mission to serve agriculture and rural America, helping to manage overall interest expenses, and significantly reduce total borrowing costs. Member-owners of AgCountry benefit by sharing in the financial success of the cooperative.

AgCountry’s 2023 patronage dividends will be paid in two installments, with the first paid in March 2024 and the second paid in May 2024.

AgCountry.com/Patronage

*Future patronage is not guaranteed and may vary as the earnings and capital needs of the cooperative change.

2017 0.72% 2018 0.75% 2019 1% 2020 1% 2021 1% 2022 1%

TRADITIONAL SPECIAL 1% 2023 0.5% 2024

Beyond MPCI Insurance Options to Keep in Mind

Written by:

Bill Roiger, AgCountry Senior Insurance and Marketing Education Specialist

While multi-peril crop insurance (MPCI) offers protection against a wide array of perils, it does not cover everything. Farmers and ranchers should explore other options to protect their bottom lines. The ideal risk management strategy varies depending on each farm’s unique circumstances, risk tolerance, and financial resources. Your team at AgCountry is here to explore options beyond MPCI.

The Federal Crop Insurance Corporation (FCIC) has provided insurance protection for American agriculture dating back to the late 1930s. Years ago, farmers signed up annually for “Federal Crop”, as it was then widely referred to. Today, we refer to this annual base

LGM

Livestock Gross Margin

Commodity Type:

Cattle Feedlot, Swine Finishing, Milk

*Released in 2002

Protects against the loss of gross margin. Margin is calculated by taking the difference between the market value of livestock or milk, minus certain feed costs. LGM can provide a high level of protection with a deductible as low as $0.

coverage as MPCI. This coverage comes in the form of Revenue Protection (RP), Yield Protection (YP), or Actual Production History (APH). These specific plan types are known everywhere for protecting growing crops in our fields. These base coverage plans do a great job covering your operation, but some plans and policies can be used to mitigate risk beyond base coverage.

Here are 12 unique insurance offerings of crop insurance to know as you look beyond MPCI for risk management solutions. You may have heard of some of these options while others may be new to you. It is important to know your options in case there is an additional opportunity for you.

LRP

Livestock Risk Protection

Commodity Type: Feeder Calves, Cattle Feedlot, Swine Finishing, Cow/Calf Operator

*Released in 2003

Price protection tool that provides an indemnity if the ending value expires below the coverage price selected at the time of purchase. Levels up to 100% of the market price are available on any given day.

PRF-RI

Pasture, Rangeland, Forage, etc.

Commodity Type:

Grazing Pastures, Haying

*Released in 2007

Rainfall index product that provides coverage for lack of rainfall across a grid area in which your field or fields are located. This product is intended for perennial acres. Coverage levels up to 90% are available.

AF-RI

Annual Forage

Commodity Type:

Annual Seeding

*Released in 2014

Rainfall index product that provides coverage for a lack of rainfall across a grid area in which your field or fields are located. This product is intended for annually planted acres. Coverage levels up to 90% are available.

WFRP

Whole Farm Revenue Protection

Commodity Type:

Orchard, Vegetable, You Pick Market, and More

*Released in 2015

Revenue product that establishes coverage based on an operation’s schedule F tax form. It allows the insured to lump the value of all commodities in the operation together as a starting basis of revenue. You may elect a level of coverage up to 85%.

SCO

Supplemental Coverage Option

Commodity Type:

Row Crops Endorsement

*Released in 2015

An endorsement to the base RP or YP row crop policy that provides additional price and county yield protection. The bottom end of SCO varies based on the underlying coverage level selected, and the coverage extends up to a top level of 86%. Please note this is only allowed to elect on Farm Service Agency-Farm Numbers enrolled in Price Loss Coverage (PLC) at FSA.

MP

Margin Protection

Commodity Type:

Area Plan for Row Crops

*Released in 2016

An area-based plan for certain row crops that provides coverage against a decline in operating margin. This margin is calculated by taking crop value minus certain input costs considered by the policy. You may elect coverage levels up to 95% of the expected margin.

DRP

Dairy Revenue Protection

Commodity Type:

Milk Price Risk

*Released in 2019

Revenue protection product designed to provide price protection from a quarterly milk revenue decline. This product utilizes milk futures prices to establish price protection. Coverage levels up to 95% are available.

API-RI

Apiculture

Commodity Type: Beekeeping, Honey Production

*Released in 2017

Rainfall index product that provides coverage for lack of rainfall in a grid area in which your honeybees are located. This lack of precipitation lowers the production of honey in the given area. You may elect a level of coverage up to 90%.

ECO

Enhanced Coverage Option

Commodity Type: Row Crops Endorsement

*Released in 2021

An additional price and county yield protection endorsement through ECO can be added to a base RP or YP policy. ECO provides coverage levels between 86%-90% or 86%-95% based on your choice.

Micro Farm

Micro Farm

Commodity Type:

Community Garden CSAs, and More

*Released in 2022

Revenue coverage for farm-to-table type operators under similar provisions as whole farm revenue protection. Coverage levels up to 85% are available.

WCRP

Weaned Calf Risk Protection

Commodity Type:

Cow/Calf Operations

*Released in 2024

A new plan designed to protect against loss of price and lost yield (weight of calf crop) during the year resulting from multiple perils. Coverage levels of up to 85% are available under this program. Program availability is limited.

MPCI remains a valuable tool, and by exploring alternative options and embracing a holistic approach to risk management, farmers can build greater resilience and navigate the uncertainties of the agricultural landscape with more confidence.

Contact your local AgCountry office to discuss program details, availability, and to review scenarios using the Optimum analyzer tool. We will continue to watch for new developments and expansions in the federal crop insurance program.

AgCountry.com/Locations

*Years of program release are estimated. Often a policy begins as a pilot status only in certain states and is expanded shortly thereafter.

Factors Impacting Ag Commodities Production and Prices

Written by: Shawn Hackett, President of Hackett Financial Advisors, Inc

Throughout history, global agricultural commodity prices and production have been affected by a myriad of factors that have a very well-defined statistical, cyclical, and correlated historical DNA backdrop.

Those factors include the value of the U.S. dollar, geopolitical trends, cost of capital (interest rates, cash rents, farmland values), demographics (China vs India),

environmental factors (Amazon deforestation), and weather volatility trends.

When we look at the array of factors and their respective historical DNA markers, we find a very unusual synchronicity within all of them that has not seen this type of alignment in over 400 years. The decade ahead, if history repeats or at least rhymes, would see escalating

inflationary trends for overall commodities and especially for agricultural commodity prices.

When we look at U.S. dollar trends since the early 1970s when the gold standard was abandoned by the United States, the U.S. dollar has exhibited a 16-year cycle from trough to trough and peak to peak. That cycle comes into play with a trough expected in the 2026/2027

time horizon. A weaker U.S. dollar has the effect of inflating U.S. dollar-denominated commodities relative to foreign prices and has the effect of making our exports more competitive with the rest of the world.

Geopolitical trends throughout the last 500 years have abided by a reliable 53.5-year escalation cycle.

That is the point where global geopolitics reaches a crescendo usually ending in a world war altercation. That next geopolitical peak is coming due in 2026/2027. Geopolitical escalation tends to increase inflationary pressures as countries spend and print enormous amounts of money to fight them and also creates a need for greater stockpiling trends just as trade flows become more unreliable. “Guns and butter” is a famous catchphrase for these inflationary impacts of war.

The cost of capital has always been a major contributor to the price of commodities and agriculture

commodities. When the cost of money was virtually free, as it was between 2010-2020, expanding supplies and increasing capacities was not a hard investment to justify. Now that the cost of capital has surged, the ability to invest and grow productive capacity in the future is going to be much more restrained. U.S. interest rates follow a 35-year cycle from peak to trough and trough to peak. In the last year, that 35-year downswing has been broken and suggests that the cost of capital will remain high and likely go higher in the years ahead.

Demographics always play an important role in looking at longer-term demand trends for agriculture commodities and other commodities, overall. A healthy demographic deposition is when a country has a large, well-educated young population that is about to head into its peak income-producing years causing a boom in consumer demand. That is especially true if the country has a steadily growing economy. China 30 years ago exhibited that positive demographic quality and set commodity demand on fire, which was the basis for the current state of the “must grow agriculture production every year to meet demand” mantra. However, China now has a smaller pool of younger people and a larger pool reaching their older and less productive parts of their lives. As such, China’s economy is beginning to decelerate, and their demand is now starting to be questioned. How this potential loss in demand plays out will have a lot to do with whether current

demand-side expectations need to be altered. The good news is that India has fantastic demographics and should see a boom in consumer demand in the decades ahead. The dance between China and India demographics is a key metric to watch.

Probably the most impactful variable is weather volatility. The more volatile and extreme weather becomes, the more productive potential for agricultural commodities becomes restrained offering significant increases in price volatility to compensate. Since 2019, weather volatility has seen a marked upturn and global yields have flatlined as a result causing various agriculture commodities to see wild changes in production and prices. The long-term factors driving this increase in weather volatility are motion and the activity of the sun.

The sun has a reliable 220-year cycle where overall sunspot activity quiets down for a period of roughly 40 years. They call these periods Grande Solar Cycle Minimums. When the amount of energy from the sun hitting Earth’s atmosphere is reduced, the atmosphere contracts as cooler air in the stratosphere shrinks. This then imposes a major shift in the upper airflow pattern of both the northern and southern arteries of the jet stream. When the sun has anormal activity the jet stream flow is zonal leading to more docile and fruitful weather for production. However, when the jet stream becomes more undulating and snakelike as it is now, stagnant

weather patterns can cause significant weather extremes from record heat, cold, drought, floods, etc. This escalating weather volatility cycle will get more extreme for another decade before starting to ease up.

Another factor is the human impact on local ecosystems. In Brazil, in the northern growing areas, 20% of the Amazon has been deforested in place of planting more crops. This has begun to rupture the Amazon atmospheric river flow mechanics, and rainfall levels in the North have fallen 50% in just the last 10 years. If these trends continue, then growing crops in the North may become much less productive.

The takeaway from the above summary is that current cyclical

trends in what we deem to be the most influential variables to agricultural commodity prices and production are in a synchronous pattern that calls for increased commodity price inflation over time and dramatic increases in price volatility. Managing one’s risk on the farm has never taken a more critical role than it does today. Altering farming practices, selecting proper crop insurance,

Get more insights from Shawn by visiting HackettAdvisors.com, or listen to Shawn’s Fielding Questions podcast interview by scanning the QR code.

being much more proactive in one’s cash marketing/hedging, and input buying endeavors along with a greater appreciation for international influences will be important factors in determining those that can prosper in such chaotic times. Price and production volatility are a producer’s friend and not a liability so long as proactivity wins out over-reactivity.

Spring Forecasting: What is Next?

Written by: Steve Wohlenhaus, CEO of Weatherology

This winter has been anything but normal. Above-average temperatures and a lack of snow contrast greatly to what we experienced during the previous winter.

Snow cover heading into February was virtually nonexistent as the month started off much warmer and drier than normal. One to six inches of snow was common across northeastern Minnesota and northern Wisconsin. Otherwise, less than one inch of snow was typical elsewhere and many farm fields were bare.

Most river basins are currently rated in the lowest percentile of historical averages regarding flooding potential. Areas of west central Minnesota are inching into the upper 25% range, and portions of northeastern Minnesota and northern Wisconsin are stretching into the upper 50% range of “normal streamflow.”

Any sudden surge in spring moisture could easily increase flooding scenarios that may impact tributaries adjacent to low-lying farmland. We are optimistic spring flooding will be manageable and historically neutral across the region.

Assuming our current prediction of precipitation materializes, odds are we ease into the spring planting season with little fanfare. Flood potential remains low across Minnesota, North Dakota, and Wisconsin, and current trends suggest little departure from the existing trend.

One thing to note is that March is traditionally the snowiest month on record

across the region. The warmer-thanaverage temperatures forecasted through April are leading to rain being equally as likely to occur during a period when heavy snowfall is more typical.

The latest drought map shows normal soil conditions across most of North and South Dakota. Sections of northeastern North Dakota still show signs of moderate to severe drought, especially across Cavalier, Pembina, and portions of Walsh counties.

Much of central and northern Minnesota are experiencing abnormally dry conditions with pockets of moderate to severe drought across Lake of the Woods, Beltrami, Hubbard, Cass, Itasca, and Koochiching counties. Portions of southeastern Minnesota also report moderate drought conditions.

Much of northern Wisconsin is also abnormally dry with pockets of moderate drought across Ashland, Iron, Price, Taylor, Lincoln, Vilas, Oneida, Lincoln, and Langlade counties. A small section of southwest Wisconsin is reporting unusually dry conditions between La Crosse, Marquette, and Crawford counties.

Is La Niña Next?

The long-range forecast into the month of May still indicates the influence of El Niño across the northern tier of states. Above average temperatures still look likely heading into early spring, which will impact precipitation events that would traditionally yield significant snowfall.

The precipitation into early spring appears to emulate the trend we have seen all winter. Models currently show at-to-below normal rain and snowfall values anticipated.

The latest El Niño modeling and observations indicate a gradual weakening and return to an El Niño-southern oscillation (ENSO) neutral pattern by April. Historically, this relaxation of El Niño can precede a developing La Niña event by the following fall.

We are merely speculating at this point, but the sudden shift toward neutrality lends credibility to that possibility. If you enjoy statistical probabilities, I will estimate a 75% plus chance that spring around our region will be warmer and drier than normal.

A typical La Niña winter features colderthan-normal conditions for the upper Midwest. The polar jet stream dives south and chilly air from Canada tends to come with it more frequently. This is normally accompanied by quick moving clipper systems that shake loose frequent snowfall across the region. Winter snowfall can be especially heavy across the Great Lakes from Wisconsin into New England. Cold air moving east over the Great Lakes generates lake effect snow that can be very heavy.

Weather Around the World

We often focus on what is happening locally. It can be beneficial to understand what is happening elsewhere as agricultural commodities are grown and consumed in many foreign markets.

Europe has been cold and wet across the north and wet and warm across southern regions.

The Middle East has been warmer than normal while winter has delivered heavier rainfall across Turkey and Iran.

Africa continues to experience drought conditions from Morrocco to Algeria, with warmer and wetter conditions throughout South Africa, improving crop conditions in the eastern agricultural region.

Beneficial rains have been falling through southeast Asia despite an overall deficit that afflicts most areas.

Weather across Australia has been wetter in the east, favoring summer crop development. Drier conditions prevail in the western portion of the country where crop stress continues to indicate lower precipitation values.

It is no secret that the weather in Argentina and Brazil has the potential to impact commodity prices for farmers and ranchers in our region. Argentina has been blessed with heavy rain in the higher yielding corn and soybean locations. Western and southern sections of the country are still very dry with little relief in sight.

Brazil has experienced above normal temperatures, which have created higher evaporation levels and greater stress on livestock. Rainfall has been plentiful with this warmer, more unsettled scenario. Pockets of extremely dry conditions are isolated across the extreme northwestern tip of the country, along with extreme southwestern regions.

We will closely monitor these weather events and keep a careful eye on the developing trends for 2024.

Agriculture Focused Customer Education

Leverage the power of your co-op Members from around our territory enjoyed a series of events showcasing some of the largest voices in agriculture. Regional AgFocus conferences featured unique speaker lineups addressing topics that matter to farmers and ranchers.

Local AgCountry offices also provided key insights to help members understand the finer details of all the products and services the co-op offers in local AgFocus meetings throughout the winter.

Thank you to everyone who attended an AgFocus conference or meeting!

Did you miss out on an AgFocus conference? Watch the AgFocus Conference - Fargo, ND on-demand by visiting AgCountry.com/Events or scanning the QR code below.

1. Jim Wiesemeyer, Washington Policy Analyst for Pro Farmer.

2. David Batcheller, Site Lead at AGCO Corporation and Brian Carroll, Chief Innovation Officer for Emerging Prairie.

3. Matt Bennett, Co-founder of AgMarket.net.

4. Matt Makens, Meteorologist/Atmospheric Scientist at Makens Weather LLC.

1.

4.

2.

3.

2023 Giving Summary

AgCountry works to make a positive difference in the lives of farmers, ranchers, and rural Americans every day. We proudly fund and support organizations, causes, and communities that fill critical needs across our marketplace. Our annual giving is a holistic approach to fulfilling our mission of service that extends far beyond lending and business services. Our employees act as changemakers within the communities in which we live and work.

OVER $2 MILLION IN TOTAL GIVING

60 $1,000 High School and Upperclassmen Scholarships

$28,225 Hunger Donations

48 Grain Bin Rescue Units Donated

$372,800 Giving and Growing Donations

1,095 Total Volunteer Hours by AgCountry Employees

Visit AgCountry.com/Give to learn more about the programs and causes we support across our service area.

Investing in the Future of Agriculture

Students who have completed 69 college credits are eligible to receive our $1,000 Upperclassmen Scholarship. We’re offering 10 scholarships to those studying agribusiness, business, or a related field of study, and plan on working in production agricultural lending or related agricultural services.

Selection is based on academic aptitude, vocational promise, personal attributes, and demonstrated leadership. Family of AgCountry Farm Credit Services Executive Leadership, Board Members, or Selection Committee Members are not eligible to apply.

Apply for AgCountry’s Upperclassmen Scholarship by June 1, 2024.

AgCountry.com/Scholarships