Financial Partner Spring 2014

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FarmCreditEast.com

Steady As We

Grow 3 consultants discuss long-term strategies

INSIDE

News & Views 2 CEO Letter 3 Cover Story 4 High-cost Projects 9 Scholarships 10 Secure Messaging 11 Washington Update 12 Sharing Their Time 14 Candidates for Board of Directors 15 Community Support 20

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FarmCreditEast.com

TOTAL PATRONAGE REFUNDS (in millions) $50

Calling All Talented Photographers!

The Farm Credit East Photo Calendar Contest is open.

We hope that your shutter finger has been busy over the winter and that you are ready to upload more winning shots for our 2015 calendar. We look for photos representing Northeast agriculture during every season. We like to have all industries represented, from commercial fishing to dairy, the forest products industries to row crops — with all other industries in between.

Ready! Aim! Shoot!

Visit FarmCreditEast.com/Calendar to upload your best shots.

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TOTAL PATRONAGE REFUNDS OVER 18 YEARS: $467

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MILLION

Record $44.5 million in patronage dividends distributed in 2013 PERCENTAGE OF INTEREST REFUNDED

26.25%

Among the many differences between Farm Credit East and other lenders, our patronage dividend program stands out as truly unique. As a cooperative, our customers are our owners, which means that we return our profits to you.

And as a result of solid growth, earnings and capital in 2013, we’re proud to have distributed a record $44.5 million in patronage dividends to qualifying borrowers in late February this year ($42 million to customers based on 2013 net income

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We hope that you stop by our website (FarmCreditEast.com/Video-Insights) or the Farm Credit East YouTube channel (YouTube.com/FarmCreditEast ) to view these new releases, along with more than 20 additional videos, on the various products and services that we offer to help strengthen Northeast agriculture.

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Farm Credit East has been busy producing YouTube videos to help you learn more about our various products, services and programs.

Our most recent video releases provide insight into: • Appraising Your Assets • Serving the Northeast’s Diverse Farms: CSAs & Farm Retail • CenterPoint: Financial Solutions for Agriculture (ag-specific accounting software that we offer in partnership with Red Wing Software) • Farm Credit Fellows Program: An Educational Program for Students Interested in Agricultural Business

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What’s New at the Movies?

and another $2.5 million to our customers who were members of Farm Credit of Maine through year-end). We are equally proud that our patronage program significantly reduces the cost of borrowing money for ag owners, which means a considerable value for your business.

On behalf of our Board and staff, we thank you for your business.

patronage: A Promise Kept for 18 Years

CEO’s Message

Bill Lipinski, CEO, Farm Credit East Last year, one of our excellent New Jersey customers told us about being called upon by a loan officer from a commercial bank that recently developed a new interest in serving agriculture. In response to the customer pointing out that he had just received a rather large Farm Credit East patronage dividend, the banker responded that patronage dividends are “highly overrated” and that, anyway, there was no promise that Farm Credit East would pay them in the future!

“Highly overrated?” The last week of February, Farm Credit East distributed a total of $42 million to customers based on 2013 net income and another $2.5 million to our customers who were members of Farm Credit of Maine through year-end.

Those numbers speak for themselves as to materiality.

While many customers thank us for their patronage dividends, I have yet to hear anyone tell me that their dividend was “overrated” or not material to their Farm Credit East borrowing experience.

And while that commercial bank pays dividends to its stockholders, its customers have a zero percent share in the success of that institution.

Our would-be competitor is technically correct in saying that Farm Credit East cannot promise to pay patronage dividends in the future. Each December, our Board adopts a resolution for the following year in which it commits to paying a portion of net income as patronage dividends based on an evaluation of the need to replenish loss reserves and build capital.

Thirteen months after the books are closed, the Board makes that determination and authorizes a patronage dividend payment back to our customer-owners.

Trust me, when that vote is taken, the Board and all of us have the same feeling that you do at the end of a successful, productive harvest.

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I am pleased that [our business model] makes our competitors uncomfortable!

But mostly, I am very proud of the value that it brings to our 13,700 customers.

”

Starting with 1996 net income, predecessor Empire Farm Credit paid the first patronage dividend followed by First Pioneer Farm Credit in 1997. And each year since, Farm Credit East and its predecessor associations have paid patronage dividends. I think reasonable people would agree that our track record on patronage dividends is consistent!

What is the “promise” when it comes to patronage dividends? The Boards that I have worked with since 1995 and this management team have a strong commitment to this business model: • We charge interest rates that are competitive to what other lenders charge in our market.

• We work hard to operate efficiently and to continually become more efficient, keeping our cost of operations lean just like you do.

• We have a strong credit culture.

That is, our credit team strives to analyze loan requests and structure loan approvals that are balanced to meet your needs without undue risk to Farm Credit East. Between that approach and the highly disciplined manner in which our customers handle their financial obligations, this strategy results in manageable credit losses over time.

• We avoid the temptation to divert net income into nonproductive pursuits, such as fancy buildings.

• We operate to an annual Boardapproved financial plan, which we monitor throughout the year. Management is accountable for achieving targeted net income. At year-end, management recommends and the Board adopts a strategy that moves our earnings to loss reserves, then capital, in order to support current and anticipated growth and patronage dividends.

That business model is our promise to you as customer-owners. I am pleased that it makes our competitors uncomfortable!

But mostly, I am very proud of the value that it brings to our 13,700 customers.

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Steady As We

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Long-term strategies for an upturn cycle As has often been said in the pages of Financial Partner magazine, if we fail to plan, we plan to fail. Perhaps there is no better time to take stock of our strategies than early in a new year — and to hear from Farm Credit East experts on what they expect 2014 to bring. This month, we asked three of our farm business consultants to let us pick their collective brains regarding trends they see emerging and what advice they are consistently providing their Farm Credit East customers for the current year.

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Never standing still As our three contributors poured their first cup of coffee, the issue of what trends to expect throughout 2014 and the foreseeable future seemed the most logical conversational starting point.

The short answer? Data, data and more of it.

“I am struck by how people want to have real-time financial analysis to understand the results of their labor and provide feedback about the changes they are making in their businesses,” observed Randy Risjan, who covers our Batavia and Mayville, N.Y., branch office territories. He also noted that many emerging technologies allow farmers to harvest real-time data that can increase their efficiency and profit.

Rick Hermonot, who covers our New England branch office territories, added that the thirst for data was an extension of an industry-wide move toward a more hands-on management model.

“Over the past five years, it seems like the light bulb is going on that operators have to wear the business management hat more often. They have to focus on budgets, costs and gross margins.”

Rick also called attention to collaboration between businesses as being an innovative way to share large capital investments and stay profitable. “I’ve begun to see joint ventures on solving business problems, including sharing capital investments that one business alone couldn’t justify,” he said. “I’ve also seen a lot more businesses willing to share financial results with each other to learn from each other’s strategies. I think we’ll see more of that going forward.”

Bill Zweigbaum, a business consultant who covers our Greenwich, Potsdam, Cobleskill and Claverack, N.Y., branch territories, stressed the need for a progressive attitude in order to take full advantage of a good economic cycle. “I am very optimistic for the folks who are willing to collaborate with other farms in order to grow and move forward. You need to be willing to change,” he said.

All three consultants had good things to say about 2014, expressing confidence in both the market and the growth potential for individual operators. “I am very optimistic that there will be opportunity for producers to make the right decisions and achieve balance for their business,” said Randy.

In terms of industry strength, Rick struck a positive note.

“Commodity agriculture is strong, in terms of the past several years’ trends, and I think that will continue,” he said. “And retail agriculture is enjoying the niche of the locally grown movement that isn’t showing any signs of slowing.”

An eye on the down cycle

Rick Hermonot, CAC* Title: Vice president and farm business consultant Areas of expertise: Budgeting, benchmarking, business planning, profitability analysis, farm family transfers, expansion planning, business and family meeting facilitation Professional perspective: “Since I’ve been a farmer, I know what it’s like to be in our customers’ shoes.

As a result, I can really relate to my clients.” *Certified agricultural consultant

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Of course, agriculture is a world of cycles, and all three consultants stressed the need to look to challenges ahead. According to Rick, when a segment of agriculture has a strong year, such as dairy did in 2013, it is the right time to prepare for an inevitable downturn. “The valleys of the cycle are generally as deep as the peaks are high,” he observed. “When facing a good year, it’s a good strategy to focus on building liquidity in any industry.”

Bill built on Rick’s thoughts concerning liquidity. “A switch in strategies to more prepays can help build liquidity for the downturn,” he advised. “And that also means that capital expenditures need to be prioritized to ensure that we focus on what the business needs rather than what the farmer wants.”

Throughout his consulting work, Bill acknowledged that a key service he offers clients is to help them distinguish between emotionally driven capital expenditures and a purchase that will truly position their business for profitability.

During an upturn as we are experiencing in some markets now, “When to grow?” is a burning question in the minds of many ag owners. Randy made the connection between growth and the need for liquidity. “Growth is hard on liquidity. A business with high overhead cost may determine that it needs to grow to cover those costs. But do they have the liquidity or working capital

c o v e r necessary to grow?” he asked. “That is a point of balance. It also takes working capital to put feed in the bunk and heifers in the pipeline.”

A capital idea Similar to the “When to grow?” conundrum is the determination of “When to buy?” A profitable year can seem like the perfect time to make significant capital investments, but Randy offered a word of caution — and that word is “balance.”

“It’s important to ask how a capital investment will affect the balance of my business,” said Randy. “What will a large piece of equipment do to our overhead costs? Does it make my overhead costs high and potentially add interest costs? Will the capital investment help me on labor or will I need to hire labor? And what management challenges will a capital expenditure create?”

Rick shared a real-world example to support Randy’s point. Recently, he had worked with a farm that was thinking of purchasing an automated feed system that would push feed to the barn five times a day. “It would have eliminated six hours of labor each day and reduced labor costs,” said Rick. “But you’ve also got to ask the question, ‘What happens to the six hours a day saved? If the saved time does not directly show up in the checkbook, how will the person be more productive with those hours?’ You need to think about the ripple effect.”

In the discussion of wise capital investments, Bill brought up one of the biggest investments a farmer can make — that of land.

“The capital investment on land is harder to put numbers to,” he acknowledged. “Looking at how to budget for a return on investment on land is difficult because appreciation of that value is hard to determine.”

Nonetheless, Bill encourages his clients to adopt a long-term strategy when considering a land purchase. He noted that the asking price for a parcel of land can feel too high today, but time has a way of giving a different perspective. “Think back to the land you bought 20 years ago. You probably said the same thing then, and

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The “Need-to-Knows” for 2014 • Input cost and commodity prices remain volatile making it more challenging to effectively manage and make long-term investment decisions.

• Effective managers need real-time information about costs and profitability in order to make adjustments in their businesses.

• Human resource management is becoming more important as cost pressures increase. For example, minimum wage is increasing in some states and being considered in others.

• Preparing for the unexpected helps ensure future success.

• Succession planning is more and more important, particularly when three generations are involved on a farm.

• As always, producers must plan for liquidity in the good years to help ensure success in down cycles.

• When making capital investments, it is important to project multiple future scenarios for prices and input costs.

• The recently passed farm bill leaves the producer with far more decisions/options to make regarding participation in farm programs.

• More and more, precision agriculture (i.e., satellite farming or site-specific crop management) will become critical to production success as it offers better information for business management.

Randy Risjan Title: Vice president and farm business consultant Areas of expertise: Budgeting, profitability analysis, benchmarking, business planning, expansion planning Professional perspective: “I grew up on a dairy farm, which helps me relate to customers. I can help with strategy and how to balance competing aspects within a business. I also have a formal training in economics, which I find helpful in determining a client’s competitiveness in their industry and recommending how they can improve their competitive position.”

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chances are the land you bought is now worth three times what you paid for it.” Having said that, Bill was quick to add that land purchases do not always offer the tax planning advantages that an owner may be looking for in a capital investment.

Hearkening back to an earlier thought from Bill, Rick underscored the value of prepays. “A great form of building liquidity and tax management is to prepay for inputs without committing to capital investments,” he said.

Keeping costs in control

Bill Zweigbaum, CAC Title: Vice president, business consultant coordinator, dairy benchmarks success strategies coordinator Areas of expertise: Benchmarking, operational issues, succession, retirement and estate planning Professional perspective: “I try to help my clients meet their personal goals for enjoyment in the business and financial success. I have the ability to listen and to discern goals. Farm business owners want to achieve a balance between business success and personal goals.”

The trio’s conversation soon turned to the all-important topic of production costs. As a specialist in the dairy industry, Randy cited tools like Farm Credit East’s dairy profit analyzer as furnishing great opportunities to get more efficient by the numbers.

“For a commodity business, the way to profit is low cost per unit.

Lower cost of production as a way to improve profits is a consistent strategy in a good, bad or average year,” he said.

A focus on bringing down production costs goes beyond assuming a profitable posture, explained Bill; it also addresses risk concerns. “The best risk management tool is lowering net cost of production,” he said. “In light of the new programs that we’re just now learning about from the farm bill, there needs to be trade-offs in terms of using risk management tools and simply lowering net cost of production.”

In terms of tactics to lower production costs, Bill stated that a good strategy must be customized for each business. “Each operation needs to analyze their cost structure to get the answer that’s right for them,” he said. “And that tees off a discussion on gross margin analysis and the difference between variable costs and overhead costs.”

Randy noted that, in some cases, high overhead costs require a business to build volume to reduce the overall cost of production, which suggests the need for growth. While Bill agreed, he also offered a caveat: “The other side of the story is that some businesses’ variable costs are out of line because of external contingencies in the marketplace, labor efficiency or feed conversion issues,” he said. “Those businesses have to focus on corrective actions to management and protocols before expansion can improve profitability.”

As our three experts wrapped up their coffee shop talk, Randy acknowledged that the group had covered well-trodden ground.

“We may not have discussed anything that we haven’t heard a hundred times already, but it’s good to get the reminders,” he said.

“One of our primary responsibilities is to help our customers constantly assess how well their business is positioned for the future.”

And on that note, it was time to start the workday and help their clients turn theory into practice — and profits.

To learn how a Farm Credit East farm business consultant can help your business, contact your local branch office.

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Determining the Feasibility of High-Cost Projects

John Lehr Farm business consultant

Should you take the step? Or not?

Step 2: Determine impact on equity Imagine that you are considering a major improvement to your operation where large sums of money are involved, such as adding a new facility or buying the farm next door. You remind yourself that the benefits need to significantly outweigh the associated costs, and, at the same time, you are worried how the lost capital will impact your net worth and how additional debt will drain your cash flow.

1. Determine your equity before and after the project: Since you don’t want to borrow your last dollar, ask yourself whether this project will have a positive or negative impact on your net worth.

Also, identify the amount of lost capital that will be associated with the project.

2. Know your tolerance for debt: For example, are you willing to borrow more money?

3. Contemplate the timing of the project: Determine if you have sufficient liquidity to fall back on in case of an industry downturn after the project is completed. You may want to look at a more conservative plan, for example. Develop a contingency borrowing plan to ensure that you can maintain funds on your line of credit.

Step 3: Cash flow impact

When determining the feasibility of a complex, high-cost decision, a three-tier approach to due diligence is useful. To use this tool, follow these steps:

1. Determine if you can afford this project: How will your projected cash flow affect earnings?

Step one: Develop a matrix of projected costs

2. Identify the long-term savings for your business: Will the project benefit your business profitability long term?

1. Identify ripple effects: List unintended consequences of the project, such as needing more power or bigger equipment or adding another driveway.

2. Get three opinions of the cost (yours, your consultant’s, actual quote): Work with your consultant to estimate the project cost before you solicit hard quotes from various manufacturers or contractors.

3. Sensitivity analysis: Before you make a decision, consider different price and expense scenarios as well as a possible downturn in the marketplace. This will help you estimate the bottom line and if you are prepared for various situations.

Once you are armed with financial due diligence, then you and your family are prepared to decide if this step is right for you.

3. Structure the deal: Determine the amount to put on short-term debt and on long-term debt. Your goal is to match the useful life of the asset with the term of the loan.

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Scholarships Don’t delay. Apply today!

Farm Credit East awards

Eligibility

up to thirty-one $1,500

• Students must have a permanent address within Farm Credit East’s territory.

scholarships to qualified students. We look for students committed to having a career in agriculture, commercial fishing or the forest products industry. We make our decisions based on your essay, experience, course of study and extracurricular activities. As part of this

• Students must be pursuing post high school education (full-time) in fall 2014 leading to a career in agriculture, commercial fishing or the forest products industry.

• Individuals demonstrating through their career plans, experience, program of study and extracurricular activities, significant progress toward and a clear intention for a career in agriculture, forestry or commercial fishing.

Disclosure of ethnic origin is purely voluntary and only required to be considered for a diversity scholarship.

Application On FarmCreditEast.com, click on “Scholarships” under “Industry Support” for more details and an application. Individuals who have previously received a scholarship from Farm Credit East or predecessor organizations are ineligible to receive a scholarship under this program.

program, Farm Credit East supports diversity

Only applications submitted online will be accepted.

scholarships.

Deadline Submit your complete application electronically on FarmCreditEast.com by April 11, 2014.

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What Do PTO Safety Shields & Secure Messaging Have in Common?

I hope that headline got your attention enough to read this column. That’s because, I want to talk about the importance of protecting your financial security against cybercrime and decided to compare it to a safety shield that protects your safety around farm equipment.

Most of us know that having a PTO safety shield installed and operational on tractors is critical to farm safety, even if it protects against a one-in-a-million incident. This critical safety device may sometimes get in your way and slow down your daily routines, but it’s well worth the temporary delay if the shield does its job and protects us against a worst case accident.

Over time, farmers get used to it and come to rely on the added safety for their family members and valued employees.

Secure messaging is a tool that Farm Credit East and other financial institutions use to protect your and your employees’ financial safety. Secure messaging (“secure email”) is relatively new in today’s cyber world. Like a safety shield on a tractor, secure messages can be an inconvenient, added step that may slow you down, especially when you’re just getting used to it. We appreciate that it requires one more password to remember and that you’ll probably need to write that umpteenth password down on a little piece of paper by your computer or mobile device to remember it.

But the reality is that secure messaging is the best “safety

Paul Bajgier Security officer

shield” that we can deploy to protect your personal and business identity — as well as that of your employees when you use our payroll service. Too many cyber crooks are out there ready to scan your email and steal your confidential information and financial identity.

For nearly 100 years, you have trusted Farm Credit to safeguard your private financial information. We are just as vigilant in maintaining your trust in today’s cyber world.

Let’s work together to protect your personal and financial data: • Ask your branch office to help you set up and learn secure messaging. We have training materials available and people who are eager to help.

• Take advantage of secure messaging to send confidential information to your Farm Credit East representative.

• Don’t ask our staff to break the rules. Secure messaging is a well-defined company policy intended for your protection; it is not an optional practice. In addition, the Farm Credit Administration, our regulator, has well-defined policies regarding confidentiality of your data in the states where we operate.

Let’s control risk together … A PTO shield safeguards the health of those driving a tractor. And secure messaging protects the confidentiality and security of your financial information.

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washington Update Robert A. Smith Senior vice president for public affairs

The Agricultural Act of 2014 After nearly three years of deliberations, Congress passed and the president signed the Agricultural Act of 2014 in February. While this farm bill’s provisions clearly impact many aspects of agricultural production, nearly 80 percent of funding in this legislation goes toward nutrition programs.

Passage of this farm bill was far more difficult than others as competing interests and viewpoints on policy and spending priorities collided making it difficult to muster the necessary votes. From an agricultural perspective, a few things stand out: • This farm bill leaves the producer with far more decisions/options to make regarding participation in farm programs.

• Farm support programs become less significant and crop insurance becomes more important as risk management takes a higher priority.

• There is far more diversity in programs representing the wide range of agricultural production and marketing.

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Northeast highlights Trying to develop a short summary of a 949-page bill will inevitably omit something that is important to some readers.

Futhermore, USDA needs to promulgate rules and establish procedures: Readers should watch for those details. With those limitations, I’ve outlined a number of key provisions.

Farm programs Significant changes are made to farm programs for row crops (corn, soybeans, others) and wheat. The direct payment program is repealed. Producers will now have a one-time option to choose between two programs — the Price Loss Coverage (PLC) or Agricultural Risk Coverage (ARC) program — for 2014 to 2018 crop years.

Each producer will have to evaluate the pros and cons of those two programs.

PLC is intended to complement crop insurance and help producers address multiple-year price declines. ARC requires a producer to have a 14 percent loss (so-called shallow loss) in comparison to historical average revenue and coverage is 75-to-85 percent of the benchmark revenue.

The 2014 farm bill has one payment cap set at $125,000 ($250,000 for married couples). An income test is also established at $900,000 of adjusted gross in-

come (farm and non-farm) for participation in farm commodity programs. (This limit does not apply to crop insurance).

Dairy program The farm bill eliminates the Dairy Price Support Program and the Milk Income Loss Contract Program (MILC) and establishes a Margin Protection Program.

This is a voluntary program that provides dairy producers with payments when dairy margins are below margin levels that the producer selected on an annual basis.

The margin is the difference between the all-milk price minus the average-feed cost. The minimum margin level is $4.00.

To protect a higher margin level, producers pay based on the amount of milk they want to protect (25 to 90 percent) and the level of protection (margin selected).

(Note that marketings in excess of four million pounds pay higher premiums.)

The MILC Program will be effective until the Margin Protection Program is in place or September 1, 2014, whichever occurs first.

Crop insurance Crop insurance takes a more prominent role in this farm bill. A new condition is compliance with conservation requirements for wetlands and highly erodible land. Specialty crops have a phase-in

period and the conservation compliance provision does not apply for permanent crops (orchards, vineyards, etc.).

A number of provisions are designed to expand coverage, including allowing a revised value of crop insurance to reflect prices of organic crops. In addition, USDA is required to conduct more research on whole farm revenue insurance with higher coverage levels.

Another study is required to consider insuring specialty crop producers for food safety and contamination-related losses.

Other highlights • The farm bill consolidates 23 conservation programs into 13. The Environmental Quality Incentives Program (EQIP) increases in funding from $1.35 million to $1.75 billion during this bill. 60 percent of EQIP payments must go to livestock production.

The EQIP payment limit is raised from $300,000 to $450,000 (over a six-year period).

• The amount of land to go into the Conservation Reserve Program is reduced from 32 million acres to 24 million by 2018. The Farmland Protection Program is consolidated into the Agricultural Conservation Easement Program.

• The farm bill reauthorizes FSA direct and guaranteed loan programs, broadens eligibility to include trusts and limited liability companies and eliminates the 15-year eligibility term limits for participation in the guaranteed farm operating loans. The bill also puts into law a new microloan program for up to $50,000 for both direct and guaranteed loans.

• Funding increased from $72.5 million to $85 million over the next five years for the Specialty Crops Block Grants Program and was modified to allow for multi-state projects.

• The Value-Added Agricultural Producer Grants program is continued with annual appropriations of $63 million.

• The Renewable Energy for America Program (REAP), which has funded various biofuels-related projects, including many in the Northeast, is continued with $50 million annually.

• The bill includes a new grants program to promote the domestic maple syrup industry (Acer Development) and allows appropriations of $20 million for this initiative.

• The bill provides that apples that are shipped to Canada in bulk bins are exempt from the Export Apple Act, which requires prior inspection and certification.

• The Farmers Market Promotion Program continues with $30 million, of which 50 percent should go to enterprises that aggregate and market locally produced food products.

• The National Organic Program is reauthorized in this farm bill with appropriations of $15 million annually.

• The Market Access Program, which provides funds for export-related promotional activities, continues to be funded at $200 million annually.

How they voted The seven states that Farm Credit East serves has 14 senators and 59 members of the House of Representatives of which four senators and 18 representatives supported passage of the final bill.

Senate supporters King (I-ME) Menendez (D-NJ) Schumer (D-NY) Shaheen (D-NH) House supporters Bishop (D-NY) Collins (R-NY) Gibson (R-NY) Grimm (R-NY) Hanna (R-NY) King (R-NY) Kuster (D-NH) Maffei (D-NY) Maloney (D-NY) Michaud (D-ME) Owens (D-NY) Reed (R-NY) Runyan (R-NJ) Shea-Porter (D-NH) Sires (D-NJ) Smith (D-NJ) Tonko (D-NY)

For more: You can find more information on the farm bill at FarmCreditEast.com/FarmBill.

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Sharing

Their Time

FCE employees invest in their local communities

In the spirit of agricultural cooperatives, Farm Credit East employees have been giving back to their local communities for almost 100 years.

Here is a small sampling of how some employees contribute.

Jason Hoagland, senior loan officer, Enfield, Conn.

Connecticut Governor’s Council for Agricultural Development “Ever since I first volunteered my time with ag community organizations, I’ve enjoyed being able to educate the nonfarm public about the important role that agriculture plays in their daily lives. “When I started working for Farm Credit in 2000, I quickly realized how little the general public knows about farming. This lack of understanding drove me to participate in many educational groups over the years.

“For example, as an appointed member of the State of Connecticut Governor’s Council for Agricultural Development, I’ve spent the last few years working on recommendations for the State Department of Agriculture and the Connecticut Legislature. I recently co-chaired a workgroup to develop and implement a strategic plan on the Food Safety Modernization Act. Our goal is to make Connecticut a leading state in educating the public and helping farmers continue to thrive in the face of ever-increasing food safety requirements.”

[Editor’s note: Jason was the 2013 recipient of the Pride of Farm Credit East Outstanding Citizen Award. We are proud that his community service makes a difference in the agricultural community.]

Jennifer Johnston, credit representative and analyst, Auburn, Maine Good Will-Hinckley “About two years ago, I got involved with Good Will-Hinkley, which is an agriculturally focused charter school that offers hands-on learning experiences for students seeking an alternative education. For example, the school incorporates greenhouses into the agricultural curriculum so students can be directly involved in growing food for their fellow students and faculty.

“To lend a helping hand, I organized a volunteer event to introduce 11 of our Auburn employees to this project. We spent a day cleaning and helping set up hydroponic equipment and supplies that students later used to grow lettuce and peas. I was so proud of the enthusiasm that our staff brought to this effort and how they supported an organization that offers students unique ways to succeed in school by focusing on real-life skills, which, in the long run, will help our surrounding Maine communities remain vibrant.”

Clarissa Kniskern,

credit analyst, Cobleskill, N.Y. Cobleskill Agricultural Society and 4-H Advisory Committee “I’ve been an elected member of the Cobleskill Agricultural Society, which oversees the Schoharie County Sunshine Fair, for four years. I grew up exhibiting my dairy cattle at this fair and now I enjoy working with today’s youth and many of our customers in the fair’s dairy division and dairy cattle exhibit every year.

“I also serve on the 4-H Advisory Committee for Schoharie County and Otsego County Cooperative Extension. I get a great deal of satisfaction from working with an organization like 4-H, which helps youth get involved in their communities and thrive in leadership roles. My committee finds synergies between various county 4-H clubs so we can continue to offer new and exciting opportunities for local youth across our two counties.”

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2014

Candidates for

the

Board of Directors On behalf of the nominating committee, Farm Credit East is pleased to present the 2014 slate of candidates for the association’s Board of Directors. Eight qualified candidates are seeking election to four open seats. There are three director seats to be elected for four-year terms and one open seat to be elected for a three-year term: • One from the Eastern Region • One from the Central Region (3 years)

• One from the Central Region • One from the Western Region

At the close of the current election cycle, the Farm Credit East Board will consist of 17 directors: 14 member-elected directors, one appointed customer director and two appointed outside directors.

The Board The Farm Credit East Board sets a clear direction for the cooperative on behalf of all customer-owners. The Board works closely with CEO Bill Lipinski to set policy, establish long-term business plans, evaluate business results and provide feedback to the management team. It does not make day-to-day management decisions, including individual loans, employees or finance.

The nominating committee The nominating committee is composed of 23 Farm Credit East members and 23 alternates. The association membership elects the nominating committee at the annual stockholders meeting. This committee works hard to identify qualified candidates to ensure that the association attracts a skilled and diverse Board. In addition, the committee makes every effort to recommend at least two candidates for each open seat.

Election process You’ll find the information you need to make an informed voting choice for the 2014 Farm Credit East Board of Directors, including: • An annual meeting information statement, which voting members received in the mail • This article’s profile of each candidate • Information on our website at FarmCreditEast.com/Director-Elections Ballots will be mailed to voting members after the annual meeting.

Every Vote Counts!

By voting, you convey your continued commitment to Farm Credit East and thanks to fellow members who are seeking election to the Board.

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eastern Region Vote for 1 candidate for a 4-year term

Auburn, Bedford, Bridgeton, Dayville, Enfield, Flemington, Middleboro, Presque Isle and Riverhead offices Candidate

Candidate

Michael N.

Samuel G.

Brooks Business name: Dusty Lane Farms, LLC

Business name: S.R. Conard & Sons LLC

Location: Elmer, N.J.

Location: Hillsborough, N.J.

Description: Dusty Lane Farms is a diverse, 1,500-acre irrigated grain and vegetable operation producing white potatoes, tomatoes, spinach, sweet corn, corn and soybeans. The farm also includes 27,000 square feet of heated greenhouse space for vegetable transplants production. Dusty Lane Farms is a dealer for RJ Equipment and Pik-Rite, Inc.

Description: S.R. Conard & Sons LLC is a 1,300-acre hay and grain farm. The family markets the bulk of their hay and long straw production to horse farms in central New Jersey. They also supply garden centers and landscapers with straw and mulch hay. They operate a transportation business for their products as well as livestock and equipment for other customers.

Personnel: Mike owns Dusty Lane Farms in partnership with his parents, William and Diane Brooks.

Personnel: Sam owns and manages the operation and his son, Jesse, manages the farm’s day-to-day activities and employees.

Farm Credit member since: 2002

Farm Credit member since: 1981

Leadership positions: Mike has been a member of the Bridgeton branch customer service council since 2009 and served as an alternate on the nominating committee. In addition, he sits on the executive committee of the Salem County Board of Agriculture and is the vice president of the New Jersey White Potato Association. He chairs the Woodstown-Pilesgrove Agricultural Education Advisory Committee and is a member of the United States Potato Board, the New Jersey Vegetable Growers Association and the Association of Agricultural Production Executives (AAPEX).

Leadership positions: Sam has been on the Farm Credit East Board of Directors since 2011 and currently serves on the Board’s governance committee. He also served on the Flemington branch customer service council. In addition, Sam is secretary of the Belle Mead Farmer’s LLC Board and he serves other organizations, including the New Jersey Farm Bureau of Somerset County Board of Directors; Somerset County Board of Agriculture; Princeton Agricultural Society and the Hillsborough Township Planning Board.

He also chairs the Hillsborough Township Agricultural Advisory Committee.

Why I am seeking election to the Board: Farm Credit East has been instrumental in my business’s growth over the past 10 years.

I have been able to utilize many of Farm Credit’s services and programs in my time involved with the institution. I want to become a member of the Board of Directors to help continue Farm Credit East’s commitment to providing low-cost capital and business services to Northeast agriculture.

Why vote for me: As a board member, I feel that I can help continually improve the organization through my ability to analyze problems and think outside the box. I feel that my youth and ability to bring a group to consensus will be a great asset to the Farm Credit East Board.

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Conard

financial partner

Why I am seeking reelection to the Board: This is an exciting time for our organization with the merger with Farm Credit of Maine.

I have learned so much through the mentorship of fellow Board members and staff. I want to use these skills and knowledge to be able to give back to our organization.

Why vote for me: I have enjoyed serving on the Board of Directors of Farm Credit East these past three years. I feel that I have made significant contributions in serving both the Board and the members of our association. I have dedicated myself to making Farm Credit East a true success for our membership.

central Region Seat One-Vote for 1 candidate for a 4-year term

Burrville, Claverack, Cobleskill, Greenwich, Middletown, Potsdam and Sangerfield offices Candidate

Candidate

Eric B.

Andrew J.

Behling

Gilbert

Business name: Behling Orchards, LLC

Business name: Adon Farms

Location: Mexico, N.Y.

Location: Potsdam, N.Y.

Description: Behling Orchards, LLC is a 250-acre farm where the family grows apples, strawberries, raspberries, blueberries and cherries, sold retail and pick-your-own. Behling Orchards is a popular agritainment destination near the eastern end of Lake Ontario with a corn maze, haunted house, baked goods and cider mill.

Description: Adon Farms is a 1,250-cow dairy farm. The family raises their own replacements and forage and grow corn for grain and for market. The Gilberts haul their own milk and operate a sand-andgravel business that they co-own with a cousin.

Personnel: Eric is managing member and co-owner of Behling Orchards, in partnership with Marion and Stephen Behling.

Personnel: Andy owns and operates Adon Farms in partnership with his brother, Tony. Their mother helps with financial record-keeping and Tony’s son, Nick, is working into the business.

Farm Credit member since: 1982

Farm Credit member since: 1981

Leadership positions: Eric has been a member of the Burrville branch customer service council since 2000. He is active in local community and New York State organizations, including serving as the Town of Mexico deputy supervisor and town councilman. He sits on the Mexico Academy School Board and on the Operation Oswego County Board. He served on the New York State Farm Bureau Board from 2006 to 2012 and has been the regional office chair since 2012. Eric was previously the president of the Oswego County Farm Bureau. He also served as president of the NorthEastern Juice Cooperative, Inc. and chaired the Cornell Extension Oswego County Agricultural Board.

Leadership positions: Andy has been a Farm Credit East director since 2005 and is currently serving his second year as Board chair.

Prior to his election as director, Andy served on the Potsdam branch customer service council and was a member of the association nominating committee. Andy has also served as a director of the Farm Credit Council and chaired its compensation and governance committees. In addition, Andy was a director of Agway, Inc., where he served as vice chair and on its investment committee. Andy was also a director of Agway Foundation.

Why I am seeking election to the Board: I believe that my unique agritainment business background can be a significant contribution to the Farm Credit East Board. In addition, my outside involvement in local community-elected positions and state organizations, such as the New York Farm Bureau State Board, would be of equal value with regard to political issues.

Why vote for me: I believe that my agricultural background, involvement in ag-related boards, my farm’s use of Farm Credit East services in our business plan and my understanding of farm issues on the political side help me bring the experience that members want on their Board of Directors.

Why I am seeking reelection to the Board: I enjoy being part of Northeast agriculture and want to help this vibrant, diverse, vital aspect of our economy continue to grow and prosper. Farm Credit East is a critical infrastructure for our ag economy. Agricultural businesses are capital intensive and cyclical in nature, and it is critical that our financial partner remain strong and vibrant. Farm Credit is, and has been, a critical partner in my farm business. I want to do what I can so that Farm Credit can serve future generations of farmers.

Why vote for me: I am willing and able to learn. I will dedicate the time to do the job to the best of my abilities. And I am passionate about agriculture and Farm Credit East.

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central Region Seat Two-Vote for 1 candidate for a 3-year term

Burrville, Claverack, Cobleskill, Greenwich, Middletown, Potsdam and Sangerfield offices Candidate

Peter J.

Barton

Business name: Barton Entertainment Co., LLC and Barton Orchards Location: Poughquag, N.Y. Description: Barton Entertainment Co., LLC, oversees Barton Orchards, a 122-acre agritourism farm operation with an offsite retail bakery and warehouse. Barton Orchards offers 18 commodities for PYO (from vegetables to field crops to tree fruit) along with extensive attractions and a free public fireworks event during harvest season.

Two farm markets/bakeries feature Barton produce, pies, cider donuts, jar products, apple dumplings and holiday decor.

Personnel: Peter is owner and manager of Barton Entertainment Co. His parents, Rose and Bruce Barton, are involved with the farm’s accounting and management oversight.

Candidate

Philip J. “Jamie”

Jones

Business name: Jones Family Farms Winery, LLC and Jones Family Farms, LLC

Location: Shelton, Conn.

Description: Jones Family Farms is a harvest-your-own berries, pumpkins and Christmas trees operation. Jamie started the winery to add a new dimension to the business. Connecticut magazine named their wine the best in Connecticut in 2010, 2011 and 2012. The farm has positioned itself as a consumer destination for diverse farm products, including The Harvest Kitchen, a farm-to-table cooking studio.

Personnel: Jamie manages the farm and owns and manages the winery. He is in business with his parents, Terry and Jean Jones, and his wife, Christina Jones.

Farm Credit member since: 2004

Farm Credit member since: 2005 Leadership positions: Peter sits on the customer service council for his local Claverack branch office. In addition, he is on the New York State Horticultural Society Board and is a 12-year elected councilman on the Beekman Town Board as well as its deputy supervisor.

Why I am seeking election to the Board: Without the financial support and internal guidance of Farm Credit, my business would not be as successful as it is today. Handling residents’ personal demands versus financial responsibilities for a town has enhanced my leadership capabilities, which I’ll bring as a director.

Why vote for me: Being involved in the fruit industry at its darkest moments, when our livelihood was taken for granted and legislative leaders overlooked the value of farmland to our communities, made a huge impact on my personal character and the farmer I am today. I have learned through many debates that a collective decision is the most productive and that Board members may have to concede some personal opinions to achieve the best for stakeholders. If elected, I will be actively involved in all facets of shaping new ideas and developing internal components, thus helping members’ businesses thrive.

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financial partner

Leadership positions: Jamie is first vice president of the Connecticut Farm Bureau Association, also serving on its executive board. He is president of the Connecticut Vineyard and Winery Association and was appointed to the Governor’s Council for Agricultural Development in 2011. Jamie also serves as secretary of the Shelton Zoning Board of Appeals.

Why I am seeking election to the Board: Farm Credit East has been a vital component to our farm’s success and growth. We have relied on many services and lending options that Farm Credit East provides. I want to ensure these functions remain viable and strong to enable our farm and other northeastern agricultural enterprises to thrive. I believe I have the background and experience to make that happen.

Why vote for me: I am passionate about seeing all agriculture prosper. I have traveled extensively across the Farm Credit East region visiting farms and related agricultural businesses. Each farm is unique, each farmer works hard and many can benefit from Farm Credit East services. I want to use my experiences as a farmer, businessperson and agricultural advocate to see that Farm Credit continues to be a resource of excellence for all farmers in the Northeast.

western Region Vote for 1 candidate for a 4-year term

Batavia, Cortland, Geneva, Hornell and Mayville offices Candidate

Candidate

Richard P.

Dennis J.

Janiga

Rak

Business name: R & D Janiga Enterprises LLC

Business name: Double A. Vineyards, Inc. and Double A. Willow

Location: Marilla, N.Y.

Location: Fredonia, N.Y.

Description: R & D Janiga Enterprises LLC is a 300-cow dairy, custom harvest and cash crop operation.

Description: Double A. Vineyards, Inc. spans 1,000 acres, including 253 acres of Concord, five acres of Niagara and 55 acres of wine and table grapes. It is the largest producer and marketer of grapevines and other small fruit plants east of California. Double A. Willow grows and markets hybrid shrub willow for production of renewable energy.

Personnel: Dennis owns Double A Vineyards and Double A Willow in partnership with his wife, Sue. Their sons, Adam and Abram, work in the family business.

Farm Credit member since: 2003

Leadership positions: Dennis has served on the customer service council of the Mayville office. He is a director of National Grape Cooperative, a member of its compensation committee and chair of its governance committee. In addition, Dennis has served on its nominating and budget committees. Dennis is vice chair of the Chautauqua County Industrial Development Agency Board and the Chautauqua County Chamber of Commerce. He also serves on the Chautauqua County Cooperative Extension Board and is a member of the Farmland Protection Board.

Why I am seeking election to the Board: In today’s agricultural climate, access to operating capital is critical. Having a financial institution that understands agriculture is equally important. I would like to serve on the Board to help maintain and improve Farm Credit East.

Personnel: Rick is owner-operator, his wife, Lucille, is responsible for payroll and record-keeping and Luke Greis manages the dairy operation.

Farm Credit member since: 1977 Leadership positions: Rick is an incumbent director of Farm Credit East and is on the Farm Credit Council Board. Rick was first elected to the Farm Credit of Western New York Board in 2000. As vice chair, he served a key role in the negotiations that led to the Farm Credit East merger in 2010. He served as Farm Credit East’s vice chair in 2011. He is on the Town of Marilla Planning Board and was its chair.

Rick is a delegate to the Upstate Niagara Cooperative, a member of its finance committee and a past director. He is a past director of Cornell Cooperative Extension of Erie County and previously served on its ag program committee.

Why I am seeking reelection to the Board: I’ve had the privilege of serving as a Farm Credit director since 2000. I believe my experience would be valuable as we go through Board turnover.

Being reelected would also allow me to continue to serve on the Farm Credit Council.

Why vote for me: While I continue to learn on the Board, I’ve gained experience and knowledge at the association level as well as nationally. As we go through Board turnover at a fairly rapid pace, it is important to combine the fresh ideas of our newer directors with the knowledge and experience of those with longer tenure to keep Farm Credit East a leader in the Farm Credit System and, more importantly, to bring the best possible value to our members.

Why vote for me: I believe I would bring expertise that is not adequately represented at this time. My background in the grape and wine industry and experience in the development of dedicated energy crops for biofuels and other energy production would be beneficial.

My extensive experience on boards is an additional asset, such as the Chautauqua County Industrial Development Agency and National Grape Cooperative Board.

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FINANCIAL PARTNER is for the customers, employees and friends of Farm Credit East. Farm Credit East is a farmer-owned lending cooperative serving the farm, commercial fishing and forest products businesses in Maine, New Hampshire, Massachusetts, Connecticut, Rhode Island, New York and New Jersey. Part of the national Farm Credit System, Farm Credit East is a fullservice lender dedicated to the growth and prosperity of agriculture.

Farm Credit East 240 South Road Enfield, CT 06082-4451

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Address Service Requested

HOW TO REACH US: Whether you want to praise us, complain, ask our advice or just let us know what’s on your mind, we’d like to hear from you. WRITE: Karen Murphy, Editor, Farm Credit East, 240 South Road, Enfield, CT 06082-4451. CALL: 860.741.4380.

E-MAIL: karen.murphy@farmcrediteast.com.

Copyright © 2014 by Farm Credit East, ACA. All rights reserved. Farm Credit East is an affirmative action, equal opportunity employer.

FINANCIAL PARTNER is printed on recycled paper.

Community Support Northeast Agriculture 2014: Insights and Perspectives This new Farm Credit East report is packed with insight on what the general and agricultural economies mean to Northeast producers.

Topics include: • Outlook for Northeast agriculture • Balancing growth and risk • Tax and estate planning and business strategies • Review of Northeast farm real estate markets • Industry sector analysis You’ll also find short perspectives from some of the industry’s top thought leaders: • Dr. Andrew Novakovic highlights coming trends.

• Dr. Brent Gloy comments on farmland market fundamentals.

• Dr. Michael Goodman looks at the U.S. economy.

• Guido van der Hoeven talks about handing down the farm.

• Kathryn Ruhf offers perspectives on beginning farmers.

• Drs. Charles Nicholson and Mark Stephenson explore milk price cycles.

• Dr. Greg Bethard talks about dairy herd replacement.

• Dr. Ben Campbell covers local and organic foods.

• Jeff LaFleur tackles regulatory certainty.

• Dr. Thomas Sproul examines agriculture as an engine of economic development.

• Dr. Todd Schmit explores food manufacturing relative to other manufacturing sectors.

Insights and Perspectives is available: • Online at FarmCreditEast.com/InsightsAndPerspectives • As a hardcopy in your local Farm Credit East branch office