Cultivate Magazine: Winter 2022-23

CULTIVATE

GRATEFUL FOR

WISHING YOU A WONDERFUL HOLIDAY SEASON.

One of the real joys of the holiday season is to say, simply but sincerely, thank you to our clients and partners. We’re grateful for the opportunity to work together to meet your needs and serve agriculture and rural America. We value our relationship and look forward to continuing our partnership in the New Year. May good health and happiness be yours this holiday season.

Compeer Financial can provide assistance with fi nances based on historical data and industry expertise. Compeer does not provide legal, tax or investment advice.

Compeer Financial, ACA is an Equal Credit Opportunity Lender and Equal Opportunity Provider and Employer. © 2022 All rights reserved. NMLS #619731

EDITORIAL STAFF

Nora Nolden,

Editor

Chastity Valvick, Editor

Amy Barnett, Assistant Editor

Terri Poburka, Designer

DIRECTORS

Akin Agar Ponte Vedra Beach, Fla.

Ashley Ahl Merrillan, Wis.

Rodney Bosma Rushmore, Minn.

Ann Broome Austin, Texas

Allyn Buhrow Ashton, Ill.

Mark Cade Westby, Wis.

Daniel Erickson Alden, Minn.

Tim Evert North Freedom, Wis.

Larry Fischer Sleepy Eye, Minn.

Dale Holmgren N. Mankato, Minn.

Daniel Scheider Freeport, Ill.

David Peters Manteno, Ill.

Greg Pollesch Oshkosh, Wis.

Kimberly Wedig Darlington, Wis.

Stephanie Wise Joliet, Ill.

Cultivate is a publication of Compeer Financial®, ACA. Compeer Financial exists to champion the hopes and dreams of rural America. This publication is copyrighted in its entirety. Cultivate is published by Compeer Financial, 2600 Jenny Wren Trail, PO Box 810, Sun Prairie, WI 53590.

Please send address changes to Compeer Financial, Attn: Cultivate Magazine, 2600 Jenny Wren Trail, PO Box 810, Sun Prairie, WI 53590 or call (844) 426-6733.

Compeer Financial, ACA is an equal opportunity employer, lender and provider. Equal Credit Opportunity Lender. Compeer Financial is a registered trademark of Compeer Financial, ACA. ©2022 All rights reserved.

Nothing is more important to Compeer team members than the relationships with and the success of our clients and communities. The Compeer team always has had, and always will have, our clients’ backs working tirelessly to be their trusted financial services provider for the long haul.

Celebrating the NEW CHAPTER AHEAD

As our Board chair announced last winter, I will retire from Compeer Financial this coming January. Our current chief financial officer, Jase Wagner, will begin leading the organization as president and CEO on Jan. 1, 2023. That transition is drawing near and, as a result, this issue of Cultivate marks my final opportunity to share my thoughts with you.

After 43 years, it’s difficult to envision a day when I’m not working to support the great people in agriculture and rural America. Farm Credit and cooperative service are embedded in my life, and I will miss being an active part of both.

Yet, I am as certain as ever the time is right for a leadership transition at Compeer. We’ve shared strong financial results with our member-owners; created a dynamic and innovative culture for our team and clients; returned more than $890 million in patronage; and supported rural America by awarding $14.8 million to date in grants, scholarships and one-time gifts through Compeer’s corporate giving program, the Fund for Rural America.

I’m proud we delivered on the commitments we made to our stockholders when we formed Compeer in 2017. This solid foundation is only possible because of the 73,600 clients who trust us for their financial service needs — a responsibility we take seriously. Nothing is more important to Compeer team members than the relationships with and the success of our clients and communities. The Compeer team always has had, and always will have, our clients’ backs — working tirelessly to be their trusted financial services provider for the long haul. My confidence in that commitment makes leaving easier.

Compeer and our clients are in good hands not only with a proficient, innovative and engaged team and a Board committed to Compeer’s success, but also with Jase Wagner as president and CEO. The Board selected him as my successor after a thoughtful and meticulous process. He has more than 20 years of experience in the financial services industry, including 13 years within the Farm Credit System, as well as leading various areas of Compeer’s portfolio. Jase has a strong aptitude for leadership, exemplifies the organization’s mission and values, and has a steadfast dedication to serving our clients in agriculture and rural America.

As outlined in the official announcement in September, Jase has extensive experience, a proven track record and a strong resolve to continue moving Compeer forward. I’ve known Jase since bringing him into Compeer in 2009, and I’m excited about the energy and leadership he’ll provide as the organization's next president and CEO. Compeer is well positioned to remain a strong, successful partner for rural America, and there’s no doubt the positive trajectory of the organization will continue under Jase’s leadership.

As my time with Compeer and Farm Credit winds down, I want to thank our clients, partners, directors and team members. My career has been deeply rewarding because of our mission and all the people connected to it. Looking back on the past 43 years, I am filled with appreciation for the opportunity to lead the organization and gratitude for the many people I worked with along the way. Together, we’ve enriched agriculture and rural America in many different ways, and I couldn’t have asked for anything more.

Rod Hebrink, President and CEO

PRESIDENT & CEO

CHIEF FINANCIAL OFFICER

BOARD OF DIRECTORS

ELECTION RESULTS: Board of Directors and Nominating Committee

The results of the Compeer Financial Board of Directors and Nominating Committee election were tallied by an independent third party on October 10, 2022. Two candidates were elected to a four-year term on the Board of Directors, and 24 candidates were elected to a one-year term on the Nominating Committee.

BOARD OF DIRECTORS

ASHLEY AHL

Merrillan, Wis. | Region 2

Ashley Ahl is a nursery and Christmas tree farmer, working with her brother on their thirdgeneration farm in Merrillan, Wis. She serves on Compeer Financial’s Audit and Finance Committee. Ashley graduated from the University of Michigan with a degree in economics. Before returning to the farm, she worked in the financial industry in Chicago, specializing in globally listed derivatives.

Ashley serves on the USDA Christmas Tree Promotion Board’s promotion committee and is a participating member of the Wisconsin Christmas Tree Producers Association. She and her husband Brad have two young sons.

Ashley’s current term expires in 2026.

DANIEL SCHEIDER

Freeport, Ill. | Region 3

Daniel Scheider is the president and general manager of his family’s fifth-generation dairy farm near Freeport, Ill. The operation milks 675 cows and includes 1,100 acres for corn and alfalfa. Scheider previously worked in the financial services industry and has experience in credit underwriting, loan documentation and treasury management.

Scheider has served on a client advisory council at Compeer Financial and is currently a board member for Stephenson County Farm Bureau and Buckeye Mutual, a local mutual insurance company. He previously served on the board for the Professional Dairy Producers of Wisconsin (PDPW). Daniel and his family are active in their church, and he’s also served on his county’s board of health. Daniel and his wife Sarah have two school-age children.

Daniel’s current term expires in 2026.

NOMINATING COMMITTEE

REGION 1

Rick Alberts (I) – Pine Island, Minn.

Rosanne Caughey – Fort Ripley, Minn.

David Marquardt – Howard Lake, Minn.

Ron Mohr (I) – New Ulm, Minn.

Tami Nelson – Pipestone, Minn.

Julie Sievert (I) – Gibbon, Minn.

Diane Stenzel (I) – New Richland, Minn.

Brent Ziegler (I) – Green Isle, Minn.

REGION 2

Dorothy Anderson (I) – Cambridge, Wis.

John Bertram (I) – Malone, Wis.

Marc Boettcher (I) – Bloomer, Wis.

Mark Breunig (I) – Sheboygan Falls, Wis.

Steven Endres (I) – Waunakee, Wis.

Carla Kastenschmidt – Markesan, Wis.

Brian Schaal (I) – Burlington, Wis.

JoAnn Wingers (I) – Randolph, Wis.

REGION 3

Chad Bremmer (I) – Pearl City, Ill.

Ken Fornoff (I) – Bloomington, Ill.

Zach Henkel (I) – Sublette, Ill.

Jenny Mennenga (I) – LeRoy, Ill.

Kathy Reinhardt (I) – Seaton, Ill.

Lynn Stoller (I) – Gridley, Ill.

Jacob Streitmatter (I) – Sparland, Ill.

David Westerlund (I) – Osco, Ill.

(I) – Incumbent

LEARN MORE ABOUT SERVING ON THE BOARD

The Board of Directors, elected by member-owners, is responsible for setting business direction, monitoring operations and evaluating success.

Election Timeline:

Spring 2023: Names Collected of Member-Owners Interested in Serving on the Board

May & June 2023: Nominating Committee Conducts Interviews

June 2023: Final List of Candidates Announced

August 2023: Annual Meeting Takes Place

September & October 2023: Ballots Mailed and Collected, Results Announced

November 2023: New Director Terms Start

Eligibility: Any Compeer Financial voting stockholder with an outstanding loan balance who is not a team member or agent of the association may be eligible to stand for election to the Board. Candidates are nominated by geographic regions. Learn more at compeer.com/boardcandidates

THE FUTURE Farming for

SWANVILLE, Minn. — “If you would have asked us years ago if we would have robots today, we would have laughed and told you no,” recalled Stephen Roerick, co-owner of Roerview Dairy.

In 1983, first-generation farmers Roger and Diane Roerick started milking 25 cows. Always focused on building toward the future, they doubled the herd to 50 cows in 1992 and put up the first freestall. “I always had to be willing to change to make sure the farm was profitable,” Roger shared. “If you’re not changing, you’re going backward.”

Today, the farm milks 215 cows with three robots and uses a robotic calf feeder, manure scraper and feed pusher. They grow about 900 acres of grass, alfalfa, corn, soybeans and small grains; and built a contract broiler barn to help diversify income streams.

The Roericks’ sons, Stephen and Craig, have joined the operation. Their daughters, Kaitlyn and Sara, and daughters-inlaw, Amanda and Sarah, remain closely connected to the farm. And their soon-tobe 12 grandchildren have latched on to learning about farm life.

A FEW BUMPS IN THE ROAD

“We had a blueprint for the parlor barn, and I asked the boys how they planned to find all the help needed to milk more cows in a parlor,” Diane shared. “We actually got turned down for financing for the new parlor and had to start considering other options. That led us to robots. It was a blessing in disguise.”

Around this time, minimum wage increases and lower interest rates made the robots an attractive option.

“We started looking at robots initially to balance labor needs,” Stephen shared. “But now we see there are so many other benefits like feed efficiencies that we didn’t previously consider.”

ADVICE FOR OTHER FARMERS

The Roericks have learned a lot along the way and have advice for others who are considering robots.

“It is important to do your homework,” Craig said. “You have to make sure everyone is on board — your wives and any partners in the farm. Your role on the farm will likely change, and you have to be open to adapting to this new tool.”

Roger added, “Any big expansion costs a lot of money whether you’re looking at a parlor or robot barn. So really consider what labor you have available and what will work best for your family in the years to come.”

How robotics helped Roerview Dairy expand with the next generation

What’s more, barn design is key to how you and the cattle adjust to robots.

“Don’t be afraid to do something that someone else isn’t doing,” Stephen shared. “No one local had the type of barn we were looking to build; they said we’d have to fly across the ocean to see something similar. We liked the concept and made a few tweaks, and while there are probably a few things we’d change, overall we’re really happy with the setup.”

One hidden bonus? Your schedule will change as well.

“I used to get up at about 4 a.m. to milk cows, but with the robots, I now get out to the barn a little after 6 and I feel like I’m late to work,” Roger said with a chuckle.

The family is very happy with the decision to use robots, and in a true testament to that statement, they are looking to add more in the future.

WANT TO LEARN MORE ABOUT DAIRY ROBOTICS?

Compeer Financial has a unique virtual program designed to fit a busy schedule. Dairy Robotics On-Demand delivers the decisionmaking tools you’ll need to know if your farm is ready to add dairy robots. The series features several on-demand sessions, including topics like establishing your goals, financial consideration and implementation guidance. You’ll even hear from Craig and Stephen, who share more about ongoing management of the herd, nutrition changes, maintenance and key metrics.

To learn more or register, visit compeer.com/dairyrobotics

Left: Roger, Stephen and Craig Roerick operate Roerview Dairy in central Minnesota.

Top & Bottom: The family has implemented robotic milking systems to help ease labor needs and create more efficiencies in the operation.

Right: The operation milks 215 cows. Adding robots to the process has resulted in saving time and has helped the family create efficiencies with feed and in other areas.

From OHIO TO WISCONSIN

Young farmers find their way through direct-to-consumer marketing

RIO, Wis. — “Farming in any capacity comes with challenges,” Sarah Wells said. “If you are continuing your family legacy, or starting one from scratch like us, there are always hurdles and challenges you face throughout the process.”

Sarah and Kenny Wells own Wells Farms Premium Beef, LLC in Rio, Wis. With their daughters, Nola and Maycee, they care for their herd of angus and angus crossbred cattle, several litters of piglets, laying hens and a few friendly barn cats.

The couple are both Ohio natives who moved to Wisconsin eight years ago.

“Kenny’s full-time off-farm job is based in Wisconsin, which led us here in 2014,” Sarah explained.

After the couple settled into their new life in Wisconsin, they began looking for a rural home and land to raise cattle. They reached out to Compeer Financial for help.

“The Compeer team just understands us and our goals,” Sarah shared. “They grasp our rural lifestyle and our business in a way that others don’t because so many of them live it as well.”

A LEAP OF FAITH

“As Kenny’s work and travel obligations continued to increase, I began to question if our demanding and expensive ‘hobby’ of raising beef cattle was worth it,” Sarah recalled.

Shortly after this moment, the couple stayed with friends at an Airbnb on a farm outside of Indianapolis. Seeing the demand behind experiences like this, where non-farmers can enjoy farm life, Sarah had a new idea — direct-to-consumer sales.

“We started our direct-to-consumer beef sales slowly with quarters and halves, and eventually added retail cuts,” Sarah said. “Last year, we added pork to the listing from pigs we raise on our farm.”

LOCAL PARTNERSHIPS

The Wells are passionate about providing local food to communities around their farm.

“Knowing your local farmer gives you a window into how your food is produced,” Sarah explained. “If a consumer has a question about a cut of meat or reads a trendy article, they know an expert to ask.”

The couple is also dedicated to building partnerships within the agriculture industry.

“Partnerships with our neighbors and local farmers are important to us,” Sarah said. “If we need to buy more cattle, we will work with someone local so we know the genetics will result in a quality product similar to what we’re raising.”

Wells Farms Premium Beef, LLC sells retail cuts at several local farmers markets, on their website and directly from the farm.

THE FUTURE

The Wells have continuously worked toward their goal of growing and expanding the reach of their business, and they have no plans to slow down.

“We hope in the next five to 10 years to expand the farm to a point of fully sustaining our family,” Sarah shared.

GUIDING COMPEER

You could say things have come full circle since the Wells relied on Compeer’s expertise in purchasing their farm. Sarah recently joined Compeer’s Client Advisory Council, composed of 143 clients from across the upper Midwest. They help guide Compeer and provide input around new ideas.

“I feel honored to have been asked to serve on the Client Advisory Council and represent not only our niche in farming but also women in agriculture,” Sarah said. “It has been eye-opening and exciting to see how Compeer is gearing up for the future and to see all the ways they are looking to support clients beyond financing.”

To learn more about Wells Farms Premium Beef, LLC, you can follow them on Facebook and Instagram or visit their website at wellsfarmsbeef.com.

THINKING OF STARTING A DIRECT-TO-CONSUMER MEAT BUSINESS?

Paul

Dietmann, Sr. Lending Specialist at Compeer has some advice:

1. Identify a processor who can process according to your needs and get on their schedule early. Processing capacity is the biggest bottleneck in the business right now, with many processors scheduling a year or two into the future.

2. Decide how you want to market your products. Will customers come to your farm to pick up meat or will they pick up from the processor? Will you do home delivery? Do you want to sell at farmers markets? Each of these methods has unique licensing and food safety requirements.

3. Develop a realistic sense of the size of your potential market. Draw a bullseye map with radii 10 miles and 20 miles out from your farm. How many people live within 10 and 20 miles of your farm? The annual U.S. per-capita consumption of beef is 59 pounds and of pork is 51 pounds. Can you capture 5% of the market share within 10 miles of the farm and 0.5% of the market 10-20 miles from the farm? Do the math to figure out the maximum number of pounds of meat you might be able to sell.

4. You don’t have to raise every species yourself. If you really only enjoy raising beef, consider partnering with local producers of pork, lamb, chicken and other products to offer more variety to your customers.

5. Don’t be too quick to jump from raising livestock into the meat processing business. Meat processing is a capital-intensive, highly skilled business with significant and unique challenges. Find ways to work with and support your local processors for your mutual benefit.

Sarah Wells packages up the family’s locally grown meat for a customer. In addition to producing the meat, the Wells family has built a brand for their business and stays connected to their customers through social media and their website.

2023 CROP INSURANCE: REVISIT YOUR RISK

Crop insurance is all about mitigating risk — but these days, the policies themselves can make things sweaty inside your comfort zone. Over the last few years, crop insurance choices and options have become more complex, and in 2022, costs continued to increase. As of right now, 2023 looks like it will present similar challenges.

A lot can change before the end of February, and one could be tempted to wait it out. However, we encourage farmers to start thinking about insurance coverage for the 2023 crop year now to have a better position going into the coming season.

WHERE TO START?

The first thing to do is define your risk. This will look different for everyone, and it's likely changed since the last time you visited these numbers. So, really sit down and list out your numbers for everything.

“Establishing your breakevens is going to get you to a solid starting point,” said Jason Gama, state insurance product officer at Compeer Financial. “Your cost of production is going to include everything — feed, fertilizer, land, operating costs. And those things have all likely changed since the last time you evaluated your operation. Now is as good a time as any to reestablish those figures after so much has changed in the markets.”

Tools like Compeer’s Grain Margin Manager can provide a snapshot of all the pieces that go into your cost of production.

“One thing we know is input costs are up,” said Tom Timko, state insurance product officer at Compeer. But so are commodity prices. “When corn was $4 an acre, we had to get creative with coverage. The beauty of $6 corn is that a multi-peril policy gets you the base coverage you need, and then we can explore hail and wind policies to cover spot losses.”

Commodity prices may bring you into a profitable scenario, but what happens if that price drops? What happens if a wind storm or an adverse weather event hits?

ADJUST WHEN NEEDED

More than ever, you need to know your numbers to make sure you’re protected with crop insurance. You may need to adjust your policy to add more coverage. You might consider adding one of the county bands of coverage. If you haven’t been updating your budget, it’s time to check back again.

“Cost of production should lead your conversations,” Gama said. “Once we know your cost of production, we can use a multi-peril policy to figure out what type of policy you need. The goal is to match up a policy to get that apples-to-apples coverage so you’re not underinsured.”

With many ways to get coverage, selecting the right combination for the 2023 crop year can feel overwhelming. These three steps can make the process less daunting, especially if you act now:

1. Get working on your break-even numbers. It might be frustrating to think about rising input costs, but those are largely out of your control. Keep track of what they are and use a tool such as Compeer’s Grain Margin Manager to assist you in nailing down your breakevens.

2. Voice your concerns to your Compeer insurance officer. If wind and/or hail is on your mind, make sure your insurance officer knows it.

3. Ask your Compeer insurance officer about your correlation to the county. Compeer insurance officers can look at producer yields compared to county yields to help you see where you stand comparatively.

For additional crop insurance insights, check out our crop insurance podcast and other resources at compeer.com. To speak to an insurance officer, call (844) 426-6733.

Check out Compeer Financial's Grain Margin Manager at compeer.com/ grain-margin-manager

THREE GENERATIONS STRONG

How one family is approaching transitioning the farm

RUSHVILLE, Ill. — Triplets Joseph, Madeline and Ryan Ward have farming in their blood. They are the eighth generation of the Ward family to live and farm in their home county and one of three generations actively farming today at Dusty Farms in Rushville, Ill.

In fact, Joseph and Ryan started early and were still in high school when they bought 10 cow-calf pairs.

“Dad borrowed the money from Compeer Financial, but we paid back the loan, which was $25,000,” Ryan shared. “Joseph and I each paid back half within a year. This was my first taste of making a little money on the farm, and that’s when I really decided this is what I want to do.”

Madeline took a keen interest in the cattle and now owns a share of the 165 cow-calf pairs in addition to working off the farm at a Pioneer agency.

All three siblings have found their place on the farm, helping with feeding cattle and taking on unique responsibilities throughout the crop season. Joseph and Ryan do this full time, while Madeline helps on evenings and weekends.

BACK TO THE BEGINNING

But these triplets didn’t make it this far all on their own. Their father, Harold, started farming in 1985 with their grandfather, Jerry. At the time, the family was growing crops on about 1,600 acres and raising pigs.

“We had pigs. The buildings were in need of repair or we needed to build new to expand,” Harold recalled. “Dad asked if I wanted to add buildings or start buying ground. Because I was newly married with kids, I chose to start buying ground.”

Today, the family grows corn, soybeans and wheat on 5,400 acres.

TRANSITION PLANNING

Compeer Financial is committed to helping our clients succeed through every stage of their operation. As your operation changes, we understand the importance of an effective transition plan to safeguard and prepare your operation for future generations. The team at Compeer will be by your side to ensure your planning needs are met.

We have developed a vetted network of highly skilled professionals who offer innovative solutions, a collaborative approach and personalized planning for your farm’s unique needs. You can learn more at compeer.com/ag-financing/ agriculture-business-services/transition-planning

A TRANSITION PLAN

“Dad and Grandpa have been looking to get us more involved on the business side of the farm,” Ryan said. “A farm recently came up for rent, and Dad talked to us about whether we wanted to rent it on our own, which we did. We ended up working with our Compeer financial officer Robb Creasey to take out a line of credit.”

The family members know the importance of planning because life circumstances can change in the blink of an eye.

“We’re in the process of forming a partnership between the two farms we own,” Harold explained. “We already set up an LLC, so the next step is a partnership. We’re working with a legal professional who can guide us through the process because they are the experts.”

Throughout this process, Joseph and Ryan are continuing to plan for their farm’s future and how they will be involved.

“I wouldn’t say we’re going to reinvent the wheel, but we’re looking to grow more on the crop side of the business and maintain the cattle herd,” Joseph shared. “As we look to the future of our farm, we know Robb and the Compeer team will continue to play a vital role in our success.”

Opposite Page: The Ward triplets got involved in the family’s farming operation at an early age, and plan to continue the family’s legacy as they build their own operation while also forming a partnership with their dad and grandpa.

Above: The three generations of the Ward family involved on the farm rely on guidance from each other, the team at Compeer Financial and other experts as they build a plan to transition the operation to the next generation.

ON THE MOVE

Director Dan Erickson’s passion for being involved

ALDEN, Minn. — “Sitting still” is not in Dan Erickson’s vocabulary. A farmer, father, advocate for agriculture, involved community member, volunteer firefighter and a Compeer Financial Board member, Erickson isn’t content unless he’s involved.

“I’m one of those people who can’t sit around,” Erickson noted. “I get antsy.”

Erickson grew up on the dairy farm his parents bought in the early 1970s, just outside of Alden in southern Minnesota. After earning a degree from South Dakota State University, getting married and working a few off-farm jobs, Erickson came back to work his own farming operation and help his father.

“Dad sold off the dairy portion of his farm right before I came back. I rented my first piece of land in 2000 and started custom raising dairy heifers,” Erickson explained. “Our transition planning started right when I began farming. Our financial officer at Compeer was instrumental in helping us work through the transition to figure out the loan structure and plan carefully. As my parents started slowing down, I kept pushing forward to rent and buy more to get us to where we are now.”

Today, Erickson Family Farms includes 1,300 acres of corn, soybeans and alfalfa and custom raises 350 dairy heifers. Together with his wife, Jenny, who is a special education teacher, they have three children — Grace (19), Tyler (16) and Karina (13).

A love of farming is already clear in the next generation. The teens regularly pitch in to help on the farm and show animals for 4-H and FFA at many shows during the summer.

BUILDING A COMMUNITY OF PEERS

Erickson relies on the expertise of many people connected to his operation, including his financial officer, attorney, CPA, and seed and chemical reps. He also turns to a group of peers for advice and ideas.

“Our peer network started with about four buddies, roughly the same age, who also farm,” Erickson said. “We’d casually get together and naturally talk about all things farming. So we decided to formalize it, and

today, the peer group includes seven farms of all sizes within a 100-mile radius.”

And because they’ve built a community of trust, the group can talk openly about many things.

“We talk candidly about our financials and our cost of production — but we trust the people we’re with,” Erickson explained.

“The things I’ve picked up from this group have been invaluable. We bounce ideas off each other and learn from each other. We all do little trials in our cropping operations, and I’ve actually changed some of my practices because of what I’ve learned from others — like sidedressing a lot of my nitrogen later in the season and adding a late-season fungicide, which I never used to do.”

Erickson said they’ve formalized their meetings, getting together about three times a year with an agenda. They even bring in speakers to talk with the group.

SERVING ON COMPEER’S BOARD

It was talk in the peer group that ultimately led Erickson to run for Compeer’s Board of Directors in 2018. One day, the group realized they had a lot of stake in Compeer as borrowers, but no one had further involvement in the cooperative.

“The idea to run for Compeer’s Board of Directors was born as a result of that discussion,” Erickson reflected. “My passion for agriculture, paired with the enjoyment

I have for figuring out finances, was a good fit with Compeer. I treat my role on the Board as a job, and I never lose sight of my role in serving our member-owners.”

While planning for the future of the cooperative as a Board member, Erickson also looks forward to the future of his operation.

“I was fortunate to have parents willing to work through a transition plan,” he said. “With my kids on the farm, the next generation is already putting in hard work, and with any luck, I hope we can continue the legacy.”

Opposite Page: Dan Erickson serves as a Director on Compeer’s Board, bringing his passion for agriculture and serving others together for the benefit of Compeer’s member-owners.

Below: Erickson Family Farms custom raises dairy heifers and has 1,300 acres of corn, soybeans and alfalfa.

L to R: Jenny, Karina, Grace, Tyler and Dan Erickson at the Minnesota State Fair, where the teens showed their dairy steers.

TAX STRATEGIES

FOR A YEAR OF HIGH COMMODITY PRICES

The last few years, 2022 being no exception, prices have been doing quite well in the world of agricultural commodities. In years of higher income, tax planning becomes imperative to avoid any surprises at tax time. Agriculture has more opportunities to plan for taxes than other industries, so it’s important to take advantage of those chances when they arise. Consider the following food for thought to help spread income more evenly across years:

• Set up properly structured deferred payment grain contracts in small bushel amounts. Even if deferred, it’s possible to elect to bring that income into 2022 versus 2023 if at tax time you determine that you could report more income. You can make the election on a contract-by-contract basis. If only one large contract is set up, it may not be workable to elect reporting that full amount in 2022 and forces that income to remain in 2023. If there are many contracts set up, it may become more feasible to pick and choose which of those contracts could be reported as income in 2022 with the rest deferred until 2023.

• Prepay expenses like feed, seed, fertilizer, chemicals or other farm supplies. Note there are some limitations on this opportunity, but it’s worthwhile especially as input prices continue to rise and availability may be limited.

• Defer crop insurance income recognition if you received payment for crop damage, as long as under normal business practices, you would have included income from the sale in gross income in the following year. Note payments for revenue protection policies are ineligible for this deferral opportunity.

• Purchase capital assets that allow for accelerating depreciation deductions into the current year . With the reduced availability of equipment and increasing interest rates, think about whether you really need to make a purchase. To take advantage of those depreciation benefits, like bonus depreciation or Section 179, you need to receive the equipment by the end of the tax year. Also note that any trade proceeds received in a purchase are considered income.

• Gift commodities to charity. This strategy can save not only on ordinary income tax but self-employment tax as well. The key in this gifting strategy is ensuring the title of the commodity is transferred to the charity before selling to the co-op. The charity is then responsible for the storage/selling of the commodity.

Note most of these options are for cash basis versus accrual taxpayers. Always talk to a tax advisor to determine the best action to take for your situation.

Finally, consider paying more tax this year, given that tax rates are still as low as they’ve ever been. If the tax is manageable, it may be beneficial to hold onto some of the extra cash to pay down debt or self-finance 2023 inputs. Additionally, consider funding more liquid retirement plans rather than only relying on land and equipment alone.

Fortunately, there are no major tax law changes in the pipeline that would inhibit proper tax planning now. The 2022 Inflation Reduction Act was recently passed, but this legislation mostly deals with various energy tax credits, providing additional IRS funding, extended benefits for those on ACA Marketplace insurance, and extension of the Excess Business Loss rules.

Tax planning schedules will fill up quickly this year, so be sure to schedule with your current tax advisor soon. To connect with a Compeer tax advisor, please call the Compeer Contact Center at (844) 426-6733.

Getting ready for year end?

BENCHMARKING BEST PRACTICES

How does your operation compare?

If everyone is facing the same prices, aren’t all farmers in the same economic position? The short answer is “no.” The differences come in operational management and financial position. While one producer is struggling to break even, their neighbor may be celebrating another successful year.

How are you assessing your financial health, your strengths and areas that need improvement? The answers to these questions may lie in benchmarking or peer data.

At Compeer Financial, we conduct annual benchmarking studies of our clients to help identify which factors enable top producers to be successful.

There are several key areas in which many top producers excel, including:

• Land Cost/Acre: Does your cashflow support the cost of the land needed for your operation? A high land cost can pressure expenses in other areas or decrease your profit margin.

• Machinery Cost/Acre: Are your machinery and vehicle costs appropriate for the number of acres you operate? Investing in an equipment line sized for your business can propel it to great achievements, but too much debt can tip a business over.

• Working Capital/Acre: Having adequate working capital in relation to the size of your business allows you to make the right management decisions. This can help position you to adapt to changing conditions.

CASHFLOW DRIVERS

Once you identify financial strengths and opportunities, how should that affect your decisions? Staying on top of cashflow drivers is another way top producers manage their operation.

• Commodity Prices: Develop, update and execute your written marketing plans, review comprehensive risk management practices and ensure you have the proper level of crop insurance.

• Yields: Strong production is key to driving down the break-even price.

• Land Rent Levels: Are rents appropriate in the current environment? Should you reduce or adjust the ground you are renting?

• Other Operating Costs: Look for opportunities to reduce costs without harming the bottom line.

• Living Draws: Many producers dramatically underestimate this number. Make sure you know your actual living cost by going through the detailed calculations.

• New Income Sources: Consider changes that allow new income sources either from business operations or off-farm employment.

• Income Taxes: Analyze and develop the most appropriate approach in managing your income tax liability.

• Capital Spending: Assess if there are non-essential or non-earning assets that should be liquidated to free up cash. Evaluate the return on investment for new capital purchases.

• Know Your Cost of Production: Develop a “manage by the numbers” approach to steering your business decisions and investments.

• Finance Structure: Debt servicing requirements are driven by finance structure and terms. This is typically the last component of developing a plan to ensure that your cashflow break-even price is competitive.

The real value in benchmarking is understanding key areas where you can create efficiencies and maximize opportunities for profitability. Minor adjustments can have substantial impacts, including putting your operation into the top 25 percent of earners.

Talk to your financial officer at Compeer Financial about how to review your operation’s financial performance and how we can compare your business to our benchmark data.

HOLIDAY HOURS

Compeer Financial will be CLOSED for business in observance of these upcoming holidays:

Christmas Holiday Dec. 26 New Year’s Holiday Jan. 2, 2023 MLK Day Jan. 16, 2023

In the Fall 2022 issue of Cultivate, we mistakenly printed our Contact Center would be open for calls on Dec. 24. The Contact Center will not be open on this day, we apologize for this error.

CHANGES COMING TO DIGITAL TOOLS

Online Banking — Clients who use Compeer’s Online Banking and Mobile Banking app are getting an upgraded experience! In mid-January, the Online Banking tools will have a fresh, new look and enhanced features to make managing your money even easier. Keep an eye out for more information coming soon.

MyCompeer — As we further strengthen security features in our MyCompeer portal, clients with accounts will soon be required to change their username to an email address. Clients impacted by this change will receive direct communication on the steps they need to take to change their MyCompeer username, along with information on the timeline on when this change will occur.

IMPORTANT YEAR-END INFORMATION FOR 2022

Payments received at your local Compeer Financial office and by our Compeer Financial lockbox location will be applied as you direct on your payment stub (please include all payment stubs with your check for accuracy). Payments are applied on the date and to the year in which they are received.

Payments received at a Compeer Financial office or lockbox location after noon on Friday, December 30, 2022, will be treated as 2023 payments.

Due to increased volume, please allow at least two weeks for your payment to arrive by mail. Compeer has many digital tools available to avoid potential mail delivery delays. Please consider using electronic funds transfer by contacting us at (844) 426-6733 or through Online Banking.

If you have money in Funds Held on December 31, 2022, and a payment due on January 1, 2023, the interest portion of the installment will be paid in 2022 (to the extent of the balance in Funds Held) so you are credited for paying the interest in 2022. If you do not want your January 1, 2023, interest billing paid from Funds Held in 2022, please notify your Compeer Financial office or call us at (844) 426-6733 by Wednesday, December 28, 2022.

Year-End Electronic Funds Transfers

If you use the electronic funds transfer as a means of payment and would like it canceled, please notify us by 3:00 p.m. on Thursday, December 29, 2022.

Online Banking Transactions

Loan payments and transfers submitted through Compeer Financial Online Banking before 4:30 p.m. on Thursday, December 29, 2022, will be applied as directed in the online transaction. ACH Transactions submitted after 4:30 p.m. on Thursday, December 29, 2022, will be posted to the loan on Tuesday, January 3, 2023.

2023 PHOTO CALENDAR AVAILABLE NOW

We received numerous photo submissions for our 2023 photo calendar. We loved seeing photos from across our territory highlighting so many touching scenes and moments! Some made us pause and reflect, while others made us smile and laugh. Thank you to all who participated, and congratulations to those whose photos were selected for the calendar. Additional copies of the calendar are available at your local Compeer office.

SCHOLARSHIP APPLICATIONS

OPEN IN JANUARY

The Compeer Financial Fund for Rural America is offering 123 scholarships of $1,500 each to high school seniors. Recipients will be chosen based on a combination of academic achievement, agricultural and community youth organization involvement, and an essay.

The application period is January 1 through March 15, 2023.

Visit compeer.com/giving-back for more details about qualifications and to download the application.

SAVE THE DATE for These Upcoming Events

Mark your calendars for exciting upcoming opportunities from Compeer Financial to expand your knowledge, network and connect with experts. Our client education programs take a forward-thinking approach to provide the innovative, customized insights and expertise you need to succeed.

Strengthening Your Roots

January 17, 2023 (Virtual)

Get a head start in the new year with this multi-session program designed to help you brush up on the basics of farm financials, risk management and taxes.

GroundBreakers

Conference

February 18-19 or February 25-26, 2023 (In-Person)

The GroundBreakers Conference is an event developed just for young and beginning farmers; by invite only.

Wisconsin: February 18-19 Grand Geneva Resort Lake Geneva, Wis.

Minnesota: February 25–26 Mystic Lake Center Prior Lake, Minn.

Women’s Seminar

March 8, 2023 (Virtual)

A half-day session for women who work or live on a farm, are farm owners or support the agriculture industry in another way. Join us virtually for a chance to connect, learn, share stories and hear from other women in agriculture.

Women’s Retreat

March 10-11 & March 17-18, 2023 (In-Person)

The Compeer Financial Women’s Retreat provides an opportunity to develop strong connections with other female farmers and take a deep dive into current topics and trends in agriculture. The overnight program focuses on building networks for women in agriculture to last long beyond the event.

Minnesota: March 10-11 St. James Hotel Red Wing, Minn.

Wisconsin: March 17-18 The Abbey Resort Fontana, Wis.

Visit compeer.com/events to learn more about the events offered by Compeer Financial.

on Cultivate magazine!

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Cultivate is a publication sent to Compeer Financial clients three times a year to share stories of agriculture and rural America. We want to make sure we’re delivering content and insights that are beneficial and valuable to you.