Spring 2017 Financial Partner

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Exporting Northeast Agricultural, Commercial Fishing and Forest Products Cover Story p.4

CONNECTICUT

also in this issue:

CONSUMER AG, FOREST, SEAFOOD, FRUIT JUICES, FRESH FRUIT, WHEAT, SOYBEANS, PROCESSED VEGETABLES, WINE/BEER/SPIRITS

MASSACHUSETTS

2017 Director Candidates

NEW YORK

CONSUMER AG, FOREST, SEAFOOD, FRUIT JUICES, PROCESSED VEGETABLES, WINE/BEER/SPIRITS, DAIRY

CONSUMER AG, FOREST, SEAFOOD, DAIRY, FRESH FRUIT, PROCESSED VEGETABLES, WINE/BEER/SPIRITS, LIVE ANIMALS, SOYBEANS, WHEAT

MAINE

RHODE ISLAND CONSUMER AG, SEAFOOD

CONSUMER AG, FOREST, SEAFOOD, FRESH FRUIT, PROCESSED VEGETABLES

p.15

News & Views p.2 CEO Letter p.3 Business Transfers p.10 Washington Update p.12

NEW JERSEY

CONSUMER AG, FOREST, TOBACCO, SEAFOOD, DAIRY, PROCESSED VEGETABLES

NEW HAMPSHIRE CONSUMER AG, FOREST, SEAFOOD

consumer ag products

tobacco products

processed vegetables

dairy products

soybeans

live animals

forest products

seafood

fruit juices

wine, beer & spirits

fresh fruit

wheat

This illustration is a sampling of northeast exports.

NE &v W iew S s Insights & Perspectives Be sure to check out Farm Credit East’s Northeast Agriculture 2017: Insights and Perspectives. This year’s edition provides analysis and perspectives on agriculture, commercial fishing and the forest products industries, as well as insight on some of the new trends that are surfacing, from Farm Credit East leadership and industry experts nationwide.

FarmCreditEast.com

2017 Farm Credit East Scholarships For Students Farm Credit East will award 31 qualified students with a $1,500 scholarship to put toward their full-time, post high school education (this includes colleges and technical schools) in the upcoming fall semester. We look for students committed to pursuing a career in agriculture,

commercial fishing or the forest products industry. Eligible students must have a permanent address within Farm Credit East’s territory.

Apply: FarmCreditEast.com/Scholarship Deadline: Wednesday, April 5, 2017

For Ag Educators Farm Credit East is committed to supporting programs and initiatives that strengthen Northeast agriculture, commercial fishing and forest products. As such, we are providing scholarships to teachers attending institutes offered by the Curriculum for Agricultural Science Education (CASE). These scholarships will cover up to 50 percent of the cost of the CASE institute, not to exceed Topics include: • Managing your business during challenging times • Northeast farm economy • Tax implications for business entities • 2 017 outlooks for the dairy, grain and oilseed, vegetable, greenhouse and nursery, and ground fish industries • Implications of FSMA for Northeast producers • Food and agriculture marketing, digital agriculture and leadership development To view this year’s report, visit

FarmCreditEast.com/InsightsAndPerspectives 22

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$1,000. Educators must teach in a school district within Farm Credit East’s territory and must currently or plan to teach agricultural or natural resources courses.

Learn more: FarmCreditEast.com/AgEducator Deadline: Friday, May 12, 2017

Calling all talented photographers!

The Farm Credit East Photo Calendar Contest is open.

We’ve received many creative images representing Northeast agriculture and country life from customers, employees and friends over the years. We hope that your shutter finger has been busy and that you will upload some of those wonderful shots for our 2018 calendar.

We look for photos representing North-

east agriculture, commercial fishing and forest products during every season, so don’t forget to send in the snowy scenes you captured this winter too! We encourage creative photos from all industries, from commercial fishing to dairy, the forest products industry to row crops — with all other industries in between.

Ready! Aim! Shoot! Upload photos at FarmCreditEast.com/Calendar Deadline: July 31, 2017

Special note from the CEO: In this edition, we include director candidate background information. This year’s director candidates have excellent backgrounds and are emblematic of the outstanding producers and businesses that we have the opportunity to serve. Over the years, we have been fortunate to have strong candidates that become outstanding directors — and this year is no exception. I strongly urge all members to take the opportunity to learn about this year’s candidates by reading their backgrounds in this publication and visiting FarmCreditEast.com to view their video interviews. And when your ballot arrives in the mail in early April, be sure to vote.

What does it mean to provide the utmost customer value? At Farm Credit East, we believe it is doing what is in the best interest of our customers — and not just talking about what it is in their best interest, but actually delivering on that talk. We like to call it walking the walk.

And not only are we committed to acting on what we say, but we’re always seeking ways to do it better.

Following over two decades of solid growth, your cooperative closed out 2016 with $6.3 billion in loan volume and $1.2 billion in capital. Moreover, this growth and solid credit quality allowed for a record patronage distribution of $56 million in February. We have paid patronage annually for 21 years, which now totals more than $650 million. I hope you agree that this is walking the walk.

What’s our 2017 plan? We are committed to continuing to grow our organization to best serve our customers into the future. In late January, the Board approved our 2017 Business Plan — with superior customer experience as its foundation. With this in mind, we developed the following priorities for the coming year: 1. Relationship Lending: Our continued focus on day-to-day customer interactions is the principal strength of our organization. Farm Credit East’s marketplace varies across our service area, but our customer interface, along with our knowledge and expertise, allows us to differentiate ourselves from competitors and provides opportunities for growth.

2. Services as our Key Differentiator: Our wide array of financial services bring specialized talent to the marketplace, which benefits our customers.

Walking the Walk Bill Lipinski CEO, Farm Credit East

3. Employee Development: As a premier employer, we continue to provide opportunities for career training, skills enhancement and management development. Ultimately this means having the best people to serve your needs.

4. Strong Financial Performance: Critical to our business strategy, this includes strong net earnings to build the necessary capital to grow and to withstand commodity cycles.

CEO’s Message 5. Investment in Technology and Innovation: We look for tools that allow us to deliver innovative solutions to our customers and also empower our employees. A critical component of this strategy is retaining a secure business environment, thereby neutralizing cyber threats.

6. Commitment to the Next Generation: We continue to provide an extensive set of programs to assist young, beginning, small and veteran farmers. This year we will expand the GenerationNext program to further develop the next generation of farmers, commercial fishermen and forest products producers.

7. Managing Risk in a Changing Environment: Understanding and addressing areas of risk is essential to any business and certainly a core function of Farm Credit East.

8. A Partner to Northeast Agriculture: We will continue to be a strong and reliable partner to Northeast agriculture, forest products and commercial fishing through a wide variety of industry support efforts. As part of this commitment, our Knowledge Exchange Program will provide outlook and market information, financial insights and regulatory compliance information to assist our customers’ businesses.

Thank you for your business in 2016. We look forward to providing you unsurpassed service in 2017 as we walk the walk to serve you.

spring 2017

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Top Export Products by Farm Credit1 East State maine

Agricultural Product

Consumer Ag Products2

Topping the list are prepared foods, fresh & processed vegetables

2016 Export Value in millions

$150

Export Destination

Canada, China

massachusetts

Agricultural Product

Fish Products Includes lobster

Agricultural Product

Fish Products Includes lobster

2016 Export Value in millions

$562

2016 Export Value in millions

$496

Export Destination

Canada, Japan, China, South Korea

Export Destination

Canada, EU, China, South Korea

new hampshire

new jersey

Agricultural Product

Forest Products

Agricultural Product

2016 Export Value in millions

$65

2016 Export Value in millions

$1,493

Export Destination

Canada, China, EU, Japan

Export Destination

Canada, EU, United Arab Emirates, China, Mexico

new york Agricultural Product

Consumer Ag Products2

Topping the list are prepared foods, fruit & vegetable juices, fresh fruit

rhode island

Consumer Ag Products2

Agricultural Product

Fish Products Includes lobster

2016 Export Value in millions

$1,521

2016 Export Value in millions

$46

Export Destination

Canada, EU, China, Mexico

Export Destination

Canada, China, Japan

Topping the list are prepared foods, wine & beer, processed fruit, dairy

1 E xport data is attributed to the last location of handling or processing activity prior to export.

2 Includes fruits, vegetables, processed and value-added food products.

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connecticut

financial partner

Source: USDA Foreign Agricultural Service

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We’ve all heard the stats — 95 percent of the world’s population is located outside U.S. borders, as well as the majority of the world’s purchasing power, and that’s only expected to grow — but what does this mean for Northeast products, specifically those produced by the region’s agricultural, commercial fishing and forest products producers?

Examining agricultural export and import markets can be complex and at times misleading. As a nation, we have a significant trade deficit, in that we import considerably more in dollar value than we export. The agriculture situation is very different. While the U.S. imports an array of agricultural goods that in some cases compete with U.S. products, we also import items that are not produced domestically, such as bananas and most coffee.

While the balance of agricultural trade has been close in some years, overall U.S. agricultural exports have exceeded imports since 1960.

In 2016, the United States had a $20 billion agricultural trade surplus. This is reflective of global consumers’ demand for an increasing diversity of high quality food. The leading importers of U.S. agricultural products are Canada and China, and the largest exporting state is California, with Iowa, Illinois, Minnesota, Nebraska and Texas not far behind.

Here in the Northeast2, it is estimated that 14.5 percent of agricultural products are exported, as compared to 35 percent nationally. For our analysis, agricultural products include raw and processed agricultural, commercial fishing and forest products. In 2016, the exports of these products valued more than $9 billion.

Exporting Northeast Agricultural, Commercial Fishing and Forest Products

by Kristie Schmitt, Farm Credit East Director of Marketing and Communications

Total value ag & food exports (2016) in millions 1

connecticut

$333 maine

$956 massachusetts

$1,138 new hampshire

$174 new jersey

$3,228 new york

$2,805 rhode island

$85 total

$8,719

As the middle class continues to grow in developing countries, so will discretionary spending, and demand for animal, fruit and vegetable products. This demand and the supply response will impact world prices, which will impact all Northeast producers, even those that are not exporting.

The Northeast is home to an array of agricultural products that are exported, including fruits, wine, dairy, maple syrup, timber and seafood. The region also hosts a large, welldeveloped food processing industry that produces a wide range of value-added products, including organic, kosher and specialty foods. In the international marketplace, differentiation can be critical — so some producers are taking advantage of our access to the region’s food processing capabilities to develop a comparative advantage for their products.

Nationally, more than half of agricultural exports are value-added, according to USDA. The top export markets for Northeast products are Canada and Mexico, mainly due to their proximity and ease of transporting product. Asia — China, Korea and Japan — is also a top importer of Northeast products, and Central America and Southeast Asia are growing markets.

In contrast to some of the leading exporting states, the Northeast’s top agricultural exports are consumer-ready products, such as fruits, vegetables, processed and value-added food products, including dairy products. In 2016, the region exported more than $6.3 billion in agricultural products (not including seafood or timber),with $3.9 billion of those products being consumer-ready.

The Northeast also exported more than $879 million in forest products, with New York and Maine leading the charge, exporting $398 million and $201 million respectively in 2016. The region is also a large exporter of various seafood varieties, shipping in excess of $1.3 billion in fish products in 2016. Massachusetts is the frontrunner in this category for exports of scallops and other groundfish and Maine tops the list for lobster exports.

Some of the region’s other export specialties include soybeans, dairy products, and wine, beer and spirits from New York. Additionally, New Jersey is exporting large quantities of fresh fruit and fruit and vegetable juices. (continued on page 8) 1 T his represents the dollar value, including processing and marketing cost in addition to the agricultural sale values.

Source: USDA Foreign Agricultural Service as of February 1, 2017.

2 Northeast includes all six New England states, New York and New Jersey

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lund’s fisheries cape may, N.j.

Northeast Exporters Farm Credit East recently interviewed two Northeast producers that have been exporting their products for decades. On these pages, learn more about the challenges their businesses have faced and the opportunities they foresee.

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salamanca lumber salamanca, N.y.

Originally owned by the Lund Family, Lund’s Fisheries was incorporated in 1954. Today, the business continues to be family-owned by long-time employee Jeff Reichle and his family.

the Caribbean, Central America, Europe, Australia, New Zealand, China, South Korea, Thailand, Iceland — there’s not many places they don’t send to.

The fishery produces, processes and packages seafood from the Mid-Atlantic, New England and California’s West Coast. Their primary products include scallops, three species of squid and just about any type of native East Coast fish that can be harvested.

Depending on the season and the year, Lund’s is harvesting between 30-40,000 metric tons of seafood, which equates to about 60-85 million pounds annually.

Jeff notes that the biggest challenge he faces today is fisheries management. “Our fisheries are extremely well-managed. We’re not overfishing,” he says. “But monitoring ocean fishery stocks isn’t easy.

It’s not like counting cows or looking out at rows of crops — you can’t see the fish, so it’s a very difficult and still inexact science. And if it’s not done well, and in conjunction with knowledgeable fishermen, we have poor stock assessments, which result in poor quotas.

Lund’s Fisheries made its first export back in the early 1980s. Prior to that time, they were primarily packing and distributing fresh fish.

In 1976, the U.S. government enacted the 200-mile limit, which basically began the process of eliminating foreign fishing within 200 miles of the U.S. Coastline. In the interim, the government allowed “joint ventures,” so Lund’s worked with some overseas countries, such as Japan and Portugal, to catch certain fish species and bring to the international freezer trawlers at sea. Jeff spent a lot of time on these boats learning about freezing and exporting. As a result, Lund’s sent its first container of squid to the UK.

“So we work closely with the government and academic institutions, like Rutgers University, to get better science because it’s important to our future,” he continues.

Today, Lund’s domestic business is growing considerably. Much of this can be attributed to their recent venture into processing scallops. In dollars, about 50-60 percent of their product is sold domestically and 40-50 percent is exported.

He also foresees changes in the industry. “By volume, we still sell the majority of fish unprocessed, but that’s changing,” he says. “We’ve spent the past few years putting in automatic weighing and packing systems to further process and add value to the raw material that we harvest so that we’re ready to meet increased demand in a changing marketplace. We used to just sell bulk materials to other processors, but there’s a strong demand in both domestic and international markets, so we’ve made a conscious effort to develop our fishery.”

Overall, Jeff’s outlook for his industry is positive. “People all around the world are eating more seafood all the time — it’s a healthy protein,” he says. “And the population is only growing.”

Their primary export products are scallops and the three species of squid. These products are going worldwide — South America,

Now celebrating its 40th year, Salamanca Lumber has been exporting timber since inception. When the company began in 1977, it exported 100 percent of its products to the Netherlands, but today only 10 percent is going there and the remaining is distributed all over the world, with various European countries being the company’s largest customers.

Family-owned, Salamanca operates a concentration yard with dry kilns. They purchase hardwood lumber from various sawmills and then dry and grade the lumber into its usable form before exporting it. Once dried, the lumber has many applications, but it’s primarily used for interiors, such as furniture and kitchen cabinets.

The primary hardwood species Salamanca is exporting include red oak, white oak, white ash, cherry and hard maple. In addition to Europe, the company also sells into the Middle East, Southeast Asia, China and Australia. The red oak is very popular in the Middle East and China and the white oak is mainly purchased by Europe and Southeast Asia.

As owner Reinier Taapken looks to the future, he sees plenty of growth opportunities. “China, industry-wide, is buying more than 60 percent of the product produced in the United States, but only 20

percent of our exports go to China,” he says. “So there’s plenty of business yet to be done in our existing markets, as well as opportunities in many up-and-coming markets, such as South Korea and Pakistan.”

He foresees his biggest challenge as being able to produce enough.

“Selling is really not a problem for us,” he comments. “When we first got started, we only had three dry kilns with capacity for about 90,000 board feet. Today, we have 23 dry kilns with 1.2 million board feet capacity. We definitely have plenty of more room to grow, but we can only produce so much.”

But this is a good challenge to have, because as Reinier notes, there’s a large demand for North American hardwoods worldwide.

“You cannot go into a home without seeing some type of wood displayed. The species don’t grow everywhere and the U.S. has a history of taking good care of the forests — we grow more than we harvest every year.

“Plus, softwood and hardwood is the only renewable resource in the world,” he adds. “They aren’t making any more oil and gas. But wood? We add to it every year.”

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Canadian Dairy Situation In recent years, U.S. dairy exports have been a key factor supporting the U.S. dairy market. In 2009, the value of U.S. dairy exports was $2.2 billion and increased to a peak of more than $7.0 billion in 2014.

Admittedly, both years probably represent a unique set of circumstances, but 2016’s level of dairy

U.S. products are in high demand internationally because of the quality, the consistency and the high food safety standards. But, there are challenges to exporting, including complex trade restrictions, logistics and the strong value of the dollar, which makes it more costly to purchase U.S. goods relative to products from competing countries.

There’s also the unpredictable trade climate to consider and in some cases, country specific trade barriers. For example, the Canadian province of Ontario has created new milk pricing regulations that discriminate against certain dairy exports to Canada. Public and industry officials are pushing to have them rescinded so that dairy exports from western New York and other areas can continue.

For many small to mid-sized companies, the most limiting factor to exporting can be the time and financial resources required. It can take years to develop relationships in international markets before a sale is made, so it certainly requires time and dedication.

As with any sales activity, it’s important to understand demand, product limitations and competition for the markets you’re working in. Doing business internationally presents unique challenges, such as language barriers, cultural differences and even differences in the way business is conducted. There are organizations, such as Food Export USA–Northeast, that assist producers in getting started. Additionally many industry organizations offer services to help producers and processors entering international markets.

exports at $4.7 billion still represents a significant increase from the value of products exported a decade ago.

While we often think of export markets as being overseas, Canada is a key importer of U.S. dairy products, purchasing $632 million in dairy products last year. However, an issue has emerged that may inhibit U.S. dairy exports.

Provincial policies for ingredient class milk pricing, adopted in April 2016, are displacing U.S. ultrafiltered milk exports into Canada.

A number of members of Congress and governors from states that export dairy products to Canada, as well as groups supporting the dairy industry, have weighed in to push for elimination of these new rules.

The situation illustrates that while exports are important to agricultural markets, there can be unforeseen issues not faced by producers selling domestically.

Source: US Dairy Export Council 8

financial partner

Within the Farm Credit System, CoBank has a division dedicated to providing financing for U.S. agricultural exports. CoBank’s services have been used predominately for bulk commodity exports, but have also been used for value-added products, and are an essential tool to grow exports and maintain key export markets.

So whether it is dairy or another commodity, exports have an important role in the economics for agriculture, commercial fishing and forest products. Without access to international markets, all U.S. producers would have to market all of their products domestically, which could create increased supplies and lower prices.

This is confirmed by U.S. Apple Association senior vice president Diane Kurrle, who notes, “With more than 30 percent of the fresh apple crop destined for foreign shores, a robust export market is critical to the health of the industry. This is equally true for producers who grow exclusively for the domestic market as it stabilizes supply.”

The same economic principle reigns true for producers of other agricultural commodities, including commercial fishermen and forest products producers, and will continue to be an increasingly important factor. As the New York Wine & Grape Foundation states, “Exports are an important part of the state’s growing wine industry. With increasing competition, New York wineries need to expand regionally, and then statewide and into other states, in order to grow. Those wineries with a long-term outlook realize that exports can be an important part of their marketing strategy.”

Production of Marijuana — What You Ought to Know

Michelle Smith Cotto, Farm Credit East Assistant Counsel

Here in the Northeast, all seven states served by Farm Credit East have enacted laws that license the production and sale of marijuana for medical purposes. Additionally, Massachusetts and Maine have passed legislation regarding the recreational use of marijuana. The individual state mandates do not change the fact that federal law prohibits the growing, marketing and distribution of marijuana, for medical use or otherwise.

It might seem that the action of these states paves the way to a straight-forward business decision as to whether to grow “legal” marijuana, but there is no such thing as legal marijuana as federal law supersedes state law. We encourage those contemplating any sort of marijuana enterprise to consider the very difficult business and legal issues associated with marijuana.

Profound challenges arise with federal laws that govern marijuana as an illegal drug under the United States Controlled Substances Act. Further, the federal racketeering law, RICO (Racketeer Influenced and Corrupt Organizations Act), can apply. Under RICO, the government may seek criminal penalties and civil causes of action against those growing, marketing or distributing marijuana if the government deems the operation an ongoing criminal organization.

RICO should cause producers major concern for several reasons. Under RICO, financial institutions (commercial banks, credit unions and Farm Credit Associations) are prohibited from taking deposits and/or accepting loan payments of any proceeds obtained via criminal activity. Therefore, any monetary proceeds from the sale of marijuana may be considered prohibited financial transactions and subject to forfeiture.

If a financial institution has any reason to believe that its customer is transacting funds from the sale of marijuana, it is required to file a Suspicious Activity Report (SAR), on a quarterly basis, with the U.S. Department of Justice.

So far, federal financial regulators have provided no safe harbor on these requirements. Fines and penalties for noncompliance can be severe. Additionally, in states that were early to legalize marijuana, commercial growers have no access to banking services and must resort to storing cash proceeds through other means, often creating security issues.

A lender who learns that marijuana is being grown on mortgaged property is required to file a SAR report, even if the loan transaction occurred prior to marijuana being legalized. Filing of a SAR is confidential and lenders may not inform customers of its filing.

We encourage producers to check with FSA-USDA as to their stance on “legal” marijuana. It is our understanding that marijuana production, even if allowed under state law, would disqualify a farmer from access to any FSA programs, whether loans, loan guarantees, government payments, etc.

Farm Credit East has prepared a more detailed fact sheet regarding these issues to assist customers in understanding the ramifications. It is available at no charge through your local Farm Credit East representative.

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estate planning

Suzanne Balet Haight and David Haight

Transferring the Farm to the Next Generation A conversation with David Haight, American Farmland Trust

Successfully transferring a business to the next generation, especially one that is asset rich such as those in agriculture, commercial fishing or forest products, is vital to the future of these industries, but presents unique challenges. The last thing you want is for a catastrophe to strike and you’re not prepared. That is why the development of successful business transfer plans are a high priority of Farm Credit East business consultants.

A number of farm organizations, such as American Farmland Trust (AFT), have been working with Northeast producers to ensure they have a plan in place so that Northeast agriculture, commercial fishing and forest products businesses continue to thrive for generations. AFT believes that a critical part of protecting farmland is to keep farm families viable and farming their land. To shed some light on this topic, Farm Credit East recently asked AFT’s New York State Director, David Haight, some questions about their work in assisting beginning and senior farmers to ensure New York’s farmland remains in production.

How is AFT helping young farmers and those looking to retire?

We work with farmers across the country to help those just beginning find farmland and to aid senior farmers and landowners in successfully transferring their farms to the next generation.

Here in New York’s Hudson Valley, AFT coordinated with 14 partner organizations to launch the Hudson Valley Farmlink Network. Each partner has trained staff that provides advice to farmers looking for land and to landowners looking for someone to farm their land. Together, we’ve hosted training programs on topics like farm leasing and the role of conservation easements in facilitating farm transfers. Additionally, we launched a regional website to help locate farmland and connect farmers: www.hudsonvalleyfarmlandfinder.org. Since its 2014 launch, nearly 20,000 people have used the website, 1,000 farmers and landowners have been coached, and more than 100 farmers have found land.

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financial partner

Why is generational transfer a priority for AFT NY? AFT and our partner, Land for Good, released a report in 2016 that showed 30 percent of New York’s farmers are over age 65 and manage roughly two million acres of farmland. 92 percent of these farmers did not identify a young farmer as being involved in the ownership and management of their farm.

These results suggest that we can’t take it for granted that farm businesses will successfully transfer from one generation to the next and that in many cases, farms will need to be transferred outside of the family. This transition period is when many farms are lost to real estate development.

With the equivalent of 5,000 New York farms being lost to real estate development since the 1980s, it is critical that action be taken to ensure the successful transfer of farms to a new generation of farmers.

As you look to the future, what are AFT’s priorities in this area?

Our experience in the Hudson Valley is demonstrating that land trusts and agricultural service providers can collaborate to offer shared resources to help beginning farmers efficiently find information, while providing the personal coaching that farmers and landowners require. These needs are very similar to those identified by Governor Cuomo’s Beginning Farmer Task Force, which was led by NYS Ag Commissioner Ball.

AFT has suggested the creation of a ‘Farmland for a New Generation’ program to provide state funding that will support a network of advisors across New York. It can often take years to transfer a farm and for new farmers to find the right land, so these farmers need advice and support from capable advisors throughout the process.

We also plan to advocate for public funding that enables more farm families to protect their land, which facilitates a successful transfer and makes farmland affordable for new farmers to purchase. Additionally, we support changes in tax policy and the next Farm Bill to help address the needs of beginning and senior farmers.

American Farmland Trust (AFT) is a national conservation organization dedicated to protecting farmland, promoting sound farming practices and keeping farmers on the land. Working from the ‘kitchen table to Congress,’ AFT engages directly with farmers and communities and uses research, communications and policy to magnify effective solutions to have greater impact. AFT established its New York Office in 1990 as the state was home to some of America’s most threatened farmland. Learn more at farmland.org.

David’s Haight’s wife, Suzanne Balet Haight, is the owner of Balet Flowers & Design, which has produced high quality plants and flowers for customers around the Saratoga region since 1995. Balet Flowers & Design also creates elegant floral designs with a unique country flair for weddings and special events, and designs, plants and maintains flower and vegetable gardens for residential and commercial customers.

Farm Credit East’s Role: The Facilitator

by Erin Pirro, Farm Credit East Business Consultant

There’s a lot more to transferring a business than just who inherits the land. You want to position the business so that someone is ready to step into management, while preserving profitability. To ensure this happens, we involve all interested parties to understand everyone’s objectives. Together, we then explore opportunities to accomplish those goals and develop an organized plan.

It’s important to involve both the exiting and upcoming generations.

Most farm kids are great at production because we grew up doing it, but they often don’t get exposure to the business and people side of the operation until the older generation is ready to leave.

You can push someone off a cliff and let them figure out how to swim, but it’s a lot more productive to teach them how to swim first. It’s the same in transferring your business — the next generation should be involved in learning the business side of things and its future direction as early as possible.

What are the challenges in transitioning a farm business?

The top challenge is almost always communication. You want to make sure everyone is on the same page in the direction of the business, but that’s often easier said than done. A facilitator asks those sometimes awkward questions that are vital to the future of the business. A business plan also helps to put the direction in writing.

Decisions can be another challenge. You don’t know what you don’t know, which sometimes makes it hard to commit. The important thing to remember with a transition plan is that it’s not once and done. It’s best to evaluate every few years to make sure it’s still accomplishing what you expect. A facilitator also helps drive decisions to move the process forward.

What to expect Farm Credit East develops a relationship with the businesses and families we work with. They are dynamic businesses, so any time a business pursues a new venture, adds a value-added enterprise, introduces a new product, implements new marketing methods or members come and go from a business, we’re there to help reevaluate and modify the plan so that it continues to accomplish the overall vision. As I mentioned, a transition is not once and done.

We often work with farm businesses over many generations. I’ve watched teenagers grow into ownership and am now helping their young son or daughter enter the business — that’s pretty neat.

Erin Pirro has been helping farmers, large and small, make their businesses run better since 2001. Her focus is on benchmarking and profitability improvement. She also runs Farm Credit East’s Agricultural Retail Benchmarks (ARB) program, helping owners of farm markets, garden centers, nurseries, wineries and other ag retail businesses improve their profitability. At home, her small family farm raises and markets sheep and wool products in southern New England. spring 2017

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Legislative and Regulatory Outlook in Congress: Rural Influence Grows Predicting the outlook for Congressional and regulatory issues in early 2017 may be like throwing darts while blindfolded, but the reality is that the farm community is likely to be impacted by several issues in the new Congress.

As the dust settled from the November elections, the Republican Party now controls the White House and has majorities in both houses of Congress. There is little question that rural voters influenced this election far more than recent elections.

Congressional Make-up and Political Realities While there are a few House seats currently vacant due to appointments, this is how the 115th Congress breaks down:

Republicans Democrats

House Senate

237 52

193 48

Northeast1 Members of Congress

Republicans Democrats House

Senate

15 1

45 15

In addition to support from Republican senators on issues like tax reform and infrastructure, there may be some Democratic senators that support President Trump’s early initiatives. These may include the 10 Democratic senators that are up for election in 2018 who come from states that voted for President Trump.

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financial partner

issues to watch: Regulatory Reform – Rolling back regulations may take time With the election of President Trump, regulatory reform will be front and center for many business organizations, including those in agriculture, forest products and commercial fishing.

President Trump’s campaign clearly established regulatory relief as one of his main policy objectives to help stimulate economic growth and remove barriers to business development.

Actions such as reversing Executive Orders and issuing new ones can be done immediately, while some regulations already in place will require a lengthier rulemaking process. In some cases, the President can also ask Congress to strip funding for implementing certain regulations while rulemaking is underway.

One of the first regulations addressed by Executive Order is the Waters of the U.S. (WOTUS) regulation that expands federal regulatory reach on waterways and adjacent wetland areas.

Tax Policy – Legislative accomplishment number 1?

We anticipate a major push by the Trump administration for tax policy changes, including both reductions in the corporate tax rate and tax rates for individuals and families. The lower corporate tax rate should make it less attractive to move business operations overseas and stimulate U.S. business activity.

1 Northeast includes New England, New York and New Jersey. Two independents who caucus with Democrats are included in that column.

washington Update Tom Cosgrove Senior vice president for public affairs

Infrastructure Improvements — Likely, but how?

Farm Bill – The process begins in 2017

As a developer of hotels and other properties, President Trump touted his building knowledge during both the primary and general election and called for infrastructure improvements.

Infrastructure spending could include roads, bridges, waterway systems (locks, etc.), ports, communications and rail/subways.

Pieces of an infrastructure strategy, such as special tax incentives and credits, could be incorporated into the tax reform legislation.

Although current farm programs don’t expire until September 2018, Farm Bill hearings have already begun.

The Farm Credit System’s national trade association, the Farm Credit Council, along with the American Farm Bureau Federation and the National Council of Farmer Cooperatives, spearhead a letter to President Trump asking that any infrastructure initiative include projects that support rural America.

In the House, Rep. Mike Conaway (R-TX) will chair the Agriculture Committee and Rep. Collin Peterson (D-MN) will continue as Ranking Democrat.

Affordable Care Act “Repeal and replace” was one of the most common promises made by President Trump throughout the campaign. Congressional action has begun, but the issue will likely play out over the next few years as the Administration and Congress deal with the details of the “replace” component of this campaign promise.

Farm Labor – Uncertainty, but opportunity for guest worker legislation?

Agricultural labor availability and immigration enforcement is an area of uncertainty. There is concern that enhanced immigration enforcement and executive order changes could mean more difficulties for workers on some farms.

We will not see major changes to the Senate or House Agriculture committee. Senator Pat Roberts (R-KS) will continue to Chair and Senator Debbie Stabenow (D-MI) will continue as Ranking Member.

From the Northeast, Reps. Ann Kuster (D-NH), Sean Maloney (D-NY) and James McGovern (D-MA) are staying on the Agriculture Committee and will be joined by newly elected Congressman John Faso (R-NY). Senators Patrick Leahy (D-VT) and Kirsten Gillibrand (D-NY) continue on the Senate Agriculture Committee.

In recent decades, the agricultural community’s influence on farm bill provisions has lessened with greater influence from nutrition and environmental organizations. That may change, but will be partially dependent on how united the farm community is. Nearly 80 percent of the 2014 farm bill spending was projected for nutrition. For farm programs, crop insurance is by far the most significant. We believe that crop insurance programs administered through the private sector will continue to be the top priority.

The policy focus for agricultural interests is changing from supporting parts of a comprehensive immigration reform bill to limited legislation to improve agricultural guest worker programs.

Given that President Trump has used guest worker programs, this approach may have greater acceptance. Reps. Stefanik, Collins and Faso from New York have introduced a measure that would constitute a good first step. Their bill, HR 281 would reform the H-2A program so it can be used for operations needing year round labor, like dairy farms, and move administration of the program to USDA. spring 2017

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credit, taxes, payroll and record-keeping services

Shawn McGillicuddy and his wife Nicole with their Farm Credit East credit representative Jacob Raleigh and accounting specialist Cathy Blanchette

A Square Meal of Business Services there from the beginning. They learned my personality a long time Shawn McGillicuddy is the owner of Square A Farm, a 280ago, so even when someone new handles my relationship, they’re cow dairy in Lebanon, Conn. The farm, originally known as Abell, brought up to speed on how I like to work.”

Abell and Abell, was first purchased by Shawn’s great-grandfather Shawn said the structure this relationship provides is really more than 100 years ago, and then owned by his grandfather important to his business. “I’m working all the time, so it’s easy to and three brothers before Shawn began slowly purchasing the get derailed, but Farm Credit East helps me stay farm in 1994. on track.

“My lending relationship began with Farm C u sto m e r “When I was completing my records myself, Credit when I was 18 years old,” said Shawn. “I P r of i le I’d sometimes be a few days late on payments and started out doing much of the bookkeeping myself face penalties. Now, I know Cathy, my accounting because that is what my grandfather and his specialist, will be at the farm on Tuesday, so I brothers had done, but they were doing business need to get everything together that she needs. before today’s regulations.”

It ensures everything is completed thoroughly After getting audited at age 20 Shawn quickly and on schedule. took his taxes to Farm Credit. Then he got audited “Before year-end, I know someone from the again the very next year, but this time he had Farm office will call to ask about what’s going on in my business. This is Credit behind him. just one less thing that I need to worry about every day because I “That second audit lasted well over a year and Farm Credit know somebody else is thinking about it,” he continued. “For me, stood behind me throughout the process, pulling together without a full time bookkeeper on the premises, this is the way.” requested forms and attending multiple meetings,” said Shawn.

Over the years, Shawn has developed a great deal of trust in “It was way over my head, so it was great to have somebody his Farm Credit East relationship. “I know my team is behind me. helping me out.

If anything goes wrong, they’re in this with me.”

“Farm Credit East provides a team for my business,” Shawn continued. “If my direct contact isn’t available, I can always talk to someone else in the branch and many of these folks have been

Square A Farm Lebanon, Conn.

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financial partner

On behalf of the nominating committee, Farm Credit East is pleased to present the 2017 slate of candidates for the association’s Board of Directors. Six qualified candidates are seeking election to four open seats. There are three open director seats to be elected for four-year terms, and one open seat to be elected to a one-year term:

• One from the Eastern Region

• One from the Central Region (1 year)

• One from the Central Region

• One from the Western Region

At the close of the current election cycle, the Farm Credit East Board will

2017 candidates for the board of directors

This is your opportunity to express your voice in ownership and direction of the cooperative.

director and two appointed outside

By voting, you convey your continued

behalf of all customer-owners. The Board works closely with CEO Bill Lipinski to set policy, establish longterm 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.

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 the 2017 Farm Credit East Board of Directors, including:

received in the mail

and thanks to fellow members who are

• An annual meeting information statement, which voting members

commitment to Farm Credit East

The Farm Credit East Board sets a clear direction for the cooperative on

of 23 Farm Credit East members and

directors.

The Board

The nominating committee is composed

make an informed voting choice for

consist of 17 directors: 14 elected directors, one appointed customer

The nominating committee

• This article’s profile of each candidate

• Information on our website at

FarmCreditEast.com/DirectorElections

seeking election to the Board.

Ballots will be mailed to voting members after the annual meeting.

Every Vote Counts! spring 2017

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Seat 1

vote for 1 candidate for a 4-year term nominated from the eastern region: Auburn, Bedford, Bridgeton, Dayville, Enfield, Flemington, Middleboro, Presque Isle and Riverhead offices.

Edward W. Kasheta, Jr.

Lisa Preger Sellew

Business name: Kasheta Farms, Inc.

Business name: Prides Corner Farms, Inc.

Location: South Windsor, Conn.

Location: Lebanon, Conn.

Description: Kasheta Farms, Inc. is a family-run century-farm, growing grain corn, sod, tobacco and pumpkins on 500 acres.

Description: Prides Corner Farms is a wholesale nursery growing more than 2,200 varieties of nursery stock and perennials that are sold throughout the Northeast and Mid-Atlantic.

Personnel: Ed is president and CEO of Kasheta Farms, Inc., in partnership with his two brothers, Donald and David, and wife, Susan.

Farm Credit member since: 1986

Farm Credit member since: 2006

How Farm Credit East is essential to my business: Farm Credit East has been with our business through ups and downs. We’ve always had longevity with our loan officers so they understand the issues we face, which helps guide critical decisions that advance our business. It’s thanks to the advice of a Farm Credit loan officer some 50 years ago that we are in business today.

How Farm Credit East is essential to my business: As our nursery has grown, the association has been there every step of the way. With the recent entry of two of our sons into the business, it is critical to me that Farm Credit East continues to be a strong financial and consultative partner for our next generation.

What my past involvement brings to the Board: Through both my leadership of Kasheta Farms and involvement with various industry groups, such as the Conn-Mass Tobacco Co-op, USDA and Central Connecticut Farmers Co-op, I have negotiated many contracts and have worked with managers and board members to positively resolve matters and concerns.

Why I am seeking election to the Board: Farm Credit East is the backbone of Northeast agriculture, and I am especially impressed with its focus on youth initiatives. I have been proud to serve on the local customer service council and the association nominating and tellers committees. Through this involvement, I am aware of what the cooperative does and the scope of association members, and feel confident that I can understand their businesses.

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Personnel: Lisa, vice president of Prides Corner Farms, manages the business with her husband Mark.

financial partner

What my past involvement brings to the Board: My commercial lending experience brings important banking and broad business perspectives to the board. In addition, my experience with national industry groups and local community organizations has helped me to understand the importance of working together to be aligned with an organization’s strategy. I apply this collaborative mentality to ensure that Farm Credit East continues to progress as a strong cooperative lender.

Why I am seeking reelection to the Board: I am honored to have served my first term. The experience gained in the board room and as the AgInitiative Committee Chair makes me well suited to represent the cooperative’s diverse membership. I am eager to use this knowledge, combined with my agriculture and banking background, to ensure that Northeast farmers have a reliable source of credit and financial services.

Seat 2

vote for 1 candidate for a 1-year term nominated from the central region: Burrville, Claverack, Cobleskill, Greenwich, Middletown, Potsdam and Sangerfield offices.

Peter J. Barton Business name: Barton Entertainment Co., LLC Location: Poughquag, N.Y. Description: Barton Entertainment Co., LLC, oversees Barton Orchards, a 122-acre family farm with an offsite retail bakery.

Personnel: Peter is the owner and manager of Barton Entertainment Co., LLC. Farm Credit member since: 2005 How Farm Credit East is essential to my business: I started as a commercial fruit and vegetable grower, but saw exponential growth when I diversified to include agritainment, and Farm Credit East provided tremendous stability throughout my farm’s transitional years. As a beneficiary of Farm Credit East’s services, I have knowledge and a professional understanding of how effective and affordable the cooperative approach is for agricultural businesses.

What my past involvement brings to the Board: My years of representing the fruit industry on various boards, as well as my service as an elected official, have developed my moral character to listen, understand and appreciate others’ opinions. Additionally, the experience I have gained in diversifying my agricultural business speaks to my ability to “think outside of the box,” which has provided me the leadership and vision required to help grow Farm Credit East and help its customers.

Why I am seeking reelection to the Board: I would like to continue to serve on the board so that I may have a voice in the discussions that lead to innovative funding and new policies. It would be my honor to serve our community in the hopes that they, too, may achieve success — as I have.

spring 2017

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Seat 3

vote for 1 candidate for a 4-year term nominated from the central region: Burrville, Claverack, Cobleskill, Greenwich, Middletown, Potsdam and Sangerfield offices.

Philip “Jamie” Jones

LouAnne F. King

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

Business name: Mapleview Dairy LLC

Location: Shelton, Conn.

Description: Jones Family Farms, LLC is a 400-acre harvestyour-own berry, pumpkin and Christmas tree farm. Jones Family Farms Winery, LLC is a 5,000 case winery.

Personnel: Jamie manages Jones Family Farms, LLC with his parents, Terry and Jean, and his wife, Christiana. He also owns and manages Jones Family Farms Winery, LLC. Farm Credit member since: 2003 How Farm Credit East is essential to my business: Farm Credit East is instrumental to my family farm’s success.

We rely on financial services to streamline office operations and guide our strategic direction. The ability to finance capital expansion projects has enabled us to meet market demands.

What my past involvement brings to the Board: I have served as vice president of Connecticut Farm Bureau, president of the Connecticut Vineyard and Winery Association and been active in numerous other agricultural organizations.

This involvement, combined with my business experience, has strengthened my understanding of the requirements for the Northeast’s diverse agricultural operations to be profitable. This perspective makes me a thoughtful and productive director.

Why I am seeking reelection to the Board: I ran for the board to be more engaged in our cooperative and was humbled to be elected. My first term has been educational, demanding and enriching. I now have a greater knowledge of Farm Credit East’s scope of operations and its importance to members. I want to use this insight to ensure our cooperative successfully serves Northeast agriculture for the next 100 years.

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financial partner

Location: Madrid, N.Y. Description: Mapleview Dairy LLC is a 2,800-cow family-owned dairy, with 2,500 replacement heifers and approximately 4,600 cropped acres.

Personnel: LouAnne is owner of Mapleview Dairy LLC, along with her brother, David Fisher, John Kingston, and her two nephews, Jordan and Jacob Fisher.

Farm Credit member since: 1990 How Farm Credit East is essential to my business: Farm Credit East is our most valued partner. Staff expertise and experience in financing, business planning, payroll and tax compliance, along with their understanding of industry trends, makes the cooperative an irreplaceable resource.

What my past involvement brings to the Board: Having served as an officer of membership organizations, such as the Northeast Dairy Producers Association, Dairy Promotion and my church, I have learned to offer input, while being mindful of different viewpoints. With this experience, and by relying on the mission and bylaws to advance the purpose, I’m confident that I would be a positive contributor to the board.

Why I am seeking election to the Board: It is important for members to be connected to those who operate their cooperative and I want to contribute to the cooperative that has supported my community for 100 years. The opportunities and challenges arising with new technology, management transitions and delivery of services for the next generation are issues that I look forward to discussing.

Seat4

vote for 1 candidate for a 4-year term nominated from the western region: Batavia, Cortland, Geneva, Hornell and Mayville offices.

John P. Knopf Business name: Fa-Ba Farms, LLC Location: Canandaigua, N.Y. Description: Fa-Ba Farms, LLC is a family-owned dairy operation consisting of 500 milking cows, 400 replacements and 850 acres of cropland.

Personnel: John owns Fa-Ba Farms, LLC. Robert DiCarlo is an equity partner in the dairy operation.

Farm Credit member since: 1990 How Farm Credit East is essential to my business: I have been fortunate to have had many influential mentors, including Farm Credit staff, who years ago opened my eyes to the future possibilities of our small family farm. Farm Credit invested in our promise and potential. My young partner and staff will benefit from the same encouragement and support.

What my past involvement brings to the Board: Service on the Farm Credit East Board and Audit Committee has provided invaluable experience. Career experiences have helped me develop an empathetic understanding of the challenges many farm families face. I have been the son trying to gain a foothold in a family business, the owner responsible for leveraging growth and modernization and now, I am a senior partner concerned about developing non-family successors.

Why I am seeking reelection to the Board: I believe my family’s long-term affiliation with Farm Credit comes with an obligation to help advance, protect and promote the value proposition that we enjoy as cooperative member-owners. Board service is my attempt to fulfill that obligation. Every significant milestone our farm has achieved has been a combination of our effort, along with the confidence, coaching and support of Farm Credit East. spring 2017

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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: Kristie Schmitt, Editor, Farm Credit East, 240 South Road, Enfield, CT 06082-4451. CALL: 860.741.4380.

E-MAIL: kristie.schmitt@farmcrediteast.com.

Copyright © 2017 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.

FARM CREDIT EAST CARES DONATIONS 2011

2012

Giving Back to Rural Communities Farm Credit East Cares was initiated just over five years ago by Farm Credit East employees who were looking for a united way to give back to the farmers and rural communities that we serve.

Initially funded by Farm Credit East and CoBank, the program is today supported by Farm Credit East employees’ contributions with matching support from Farm Credit East. At the end of each year, contributing employees determine the charities to receive their voluntary contributions. Last year, the Farm Credit East family donated $61,000 to more than 60 northeast charitable organizations.

Since inception, Farm Credit East Cares has donated more than $400,000 to farm families and organizations

2013 2014 2015 2016

$500 donations provided to 167 Northeast farm families impacted by summer 2011 tragedies Six contributions to Northeast charities assisting with relief efforts $500 donations provided to 57 Northeast farm families suffering from Hurricane Sandy Contributions provided to five Northeast charities distributing food and assisting with recovery Donations provided to 27 Northeast charitable organizations Donations provided to 35 Northeast charitable organizations Donations to more than 50 Northeast charitable organizations Donations to more than 60 Northeast charitable organizations

$83,500 $60,000 $28,500 $35,000 $39,300 $42,700 $56,000 $61,000

$406,000 impacted by disasters; to various northeast charitable organizations; and to local, regional and state not-for-profit charitable organizations focused on youth involvement in agriculture or local agricultural promotion.

“I’m humbled each year by the growing generosity of our employees and their desire to support important causes that touch both rural and urban

communities,” said Craig Pollock, Farm Credit East branch manager and Farm Credit East Cares coordinator. “We hope Farm Credit East Cares donations help the recipient organizations continue their good work.”