Page 1

Spring 2017

GreenStone FCS

Promoting the business success of our customers and the rural community


Maple Ridge

+O  nline Loan Application

+ Spring Outlook + Sweet Hobby

SPRING 17 5 YBSF Feature. After graduating high school in 2001, Tom Barbier did not have a vision of coming back to work for the family’s saw mill company. Instead, he had aspirations of following his grandfather’s path and becoming an attorney.





Top 10 Reasons 37

21 GreenStone Story. When you provide personal information, we hold that information secure and never share or resell it to a third party.

31 C  rop Insurance Feature. The top 10 reasons you should consider GreenStone for your crop insurance needs. 37 Tax Feature. The IRS’s Small Business/

27 Country Living Feature. Mike Poupore tends to 26 bee hives on the 25 acres he purchased in Manchester, Michigan.

Self-Employed Division has issued an internal memorandum outlining a pilot program for auditing farm expenses claimed on Schedule F, Profit or Loss from Farming.

3 CEO Comments. President and CEO, Dave Armstrong, shares an optimistic spring message, and update on GreenStone operations. 9  Guest Column. Soils contain a number of naturally-occurring chemicals and organisms. This can complicate the process of scientifically assessing the source of nitrates in groundwater. 11 Market Outlook. Looking ahead, Bob Utterback weighs corn and soybean futures, offering strategies for producers to consider. 19  Farm Credit Update With new proposals coming out of the White House, Farm Credit organized a coalition to ensure the needs of rural communities are included in future infrastructure initiatives.

23 Legislative Matters. During times of change on the national political stage, challenges to the Farm Credit System are re-examined by a crop of new legislative leaders. 24 PAC Progress. Thanks to the extraordinary support of members, directors, and employees, we are well positioned to stand for agriculture and Farm Credit. 25 Directors’ Perspective. As part of their election to the board of directors, GreenStone’s board members also serve on a focused committee. Here is a first peak into that process.

30 Health and Wellness. Whether you hit the gym, track, or sports field occasionally or you are a committed fanatic, a postworkout rest and recovery should be an essential part of your healthy lifestyle.

Editor’s Note:

35 Staff Column.

Not surprisingly, this same philosophy came through as I visited with some of our top Circle of Excellence winners (listed on page 16). Their story is never about what they individually do, it’s about the support of the team that makes each customer relationship prosperous.

Financial reports are often viewed by farmers as a burden, but such reports can be immensely valuable, driving informed business decisions for the future.

“Your team doesn’t care if you are a superstar. They care if you are a super teammate.” I recently read this quote, tweeted by my son’s coach. While this easily applies to a sports team, it resonates on many levels. At work within my own department, at home amongst my children, in GreenStone’s branches between our staff and customers, in my community related to volunteer committees, and so on.

14 Member News

We hope you agree in the value the GreenStone TEAM brings you, including the information found within this publication. From the business planning found in the marketing outlook, to family planning within the college financing column; and the team approach to GreenStone’s board committees, to a behind the scenes look at two of our customer service representatives. It’s all here for you, as one of the many super teammates working with you!

15 Calendar of Events

Here’s to a championship year…however you define it!

13 Blog Brief

15 Candid Comments

— Melissa Rogers, Publisher

16 Circle of Excellence 17 Pause for Applause 18 Behind the Scenes

31 Saving for College 30 Commodity Cuisine... Salted Caramel Maple Pecan Pie Bars 32 Crop Insurance News 32 Crop Insurance Calendar 33 Tech Tip 34 Careers 38 Tax Calendar

This newsletter is published quarterly for the customers of GreenStone Farm Credit Services. Editorial Lindsey Bliss Mackenzie Jandernoa Melissa Rogers

Art & Design William Eva Jackie Sanch

Partners GreenStone Farm Credit Services 3515 West Road East Lansing, MI 48823 800-444-3276

CEO Comments:



Spring 2017 — Partners

I could go on about depressing commodity prices, the rhetoric coming out of Washington, D.C., and any number of negative and depressing subjects, but then, that only begs the question, why? To start off, GreenStone held its twelfth consecutive Patronage Day on Wednesday, March 22. Our branches enjoyed handing out patronage checks to members who chose to stop by to pick theirs up in person, while taking the opportunity to have a snack and enjoy some fellowship with staff and other members alike. While we have had better years in terms of financial performance with higher total patronage payments, 2016 was still a strong year for GreenStone. We returned a total of $33 million in cash patronage to members for the business they did with us. This represents about 25 percent of net earnings, and an average of 0.50 percent reduction in interest paid. Total patronage paid to members since the inception of the program in 2005 now stands at $268 million! You have to agree, that this is a pretty good way to start off the 2017 planting season, isn’t it?

There certainly are not many things like good, hard cash to put a smile on faces. Yet, maintaining an upbeat and positive outlook as this spring’s planting season gets underway will once again be difficult given the continued pressure on commodity prices. But, stop and take a moment to think of those whose shoulders you stand on today. Fathers, uncles, grandfathers, great grandfathers, neighbors, and many others who have endured the same kind of economic cycles, frustrations, and pessimism that you are likely feeling. However, they persevered through similar, if not more difficult, times with the vast majority making not only a good living and providing for their families for decades, but also doing their part to contribute to the advancements of a modern American agricultural industry that is the envy of the world. It is this great story—your story—that I was privileged to share among hundreds of Lansing’s business leaders at the Lansing Regional Chamber of Commerce Economic Club Luncheon a few weeks ago. While the challenges today are real, there is much to be proud of, and I am glad to be an advocate for the industry. We all know that less than 100 years ago, our forefathers were using horses to pull plows through the fields and hand milking cows in buckets. But in fact, as little as 80 years ago, 23 percent—nearly a quarter—of Michigan’s population was farming about 18 million acres. Average yields for corn was 30 bushels, wheat 16 bushels, and milk only 12 pounds per cow per day (and you think you have it bad?). Since then, U.S. corn yields have jumped nearly 580 percent to 175 bushels and milk per cow is now about 73 pounds per day – a mere 600 percent increase! Plus, this increase in productivity has been accomplished with about half as many acres and only 1 percent of today’s population.

food, fuel, and fiber supply the world has ever known! And that is a story I was, and continue to be, proud to tell! In fact, in Michigan the economic impact of our industry from your farm’s “gate” to the consumer’s “plate” is currently at an all-time record of $101.2 billion and employs 923,000

I n Michigan the economic impact of our industry from your farm’s “gate” to the consumer’s “plate” is currently at an all-time record of $101.2 billion.

people, which is one in four Michiganders! The impact in Wisconsin is just as significant! So, as you lace up your work boots for another season, remember you are an integral part of the greatest industry on the face of the planet, which has and will continue to accomplish great things for mankind for decades and centuries to come. You should be very proud of what you do and what you have accomplished. Do not forget you are doing what you love to do, and it does not get any better than that! Best wishes for a safe and productive year. Now, do your best and go out there and get ‘em! Thank you for your business! If I can ever be of assistance, feel free to contact me.

According to the Michigan Agri-Business Association, these and other efficiency gains have not come at the expense of a larger environmental impact either. In more recent times, the use of herbicides have been reduced nearly 30 percent due to glyphosate resistant corn, while insecticide use has all but completely disappeared, again, due to advances in seed technology. While information on fertilizer use is limited, it indicates that, since the 1990s, the pounds of nitrogen, phosphorus, and potassium have stayed flat even though yields have increased significantly during the last 20 years. Not only have you, and those who have gone before you, made these gains possible, but you have collectively provided Americans with the most dependable, affordable, safe, and healthy

Dave Armstrong


Partners — Spring 2017


By Jennifer Kiel




Two years later, with a business management degree in hand, Thomas returned to Maple Ridge Hardwoods in Sterling, where he had spent summers sweeping floors, stacking wood and other laboring work. “I knew the industry well and the people in it,” he says. “It gave me a leg up, and it’s where I could make the greatest impact.” Nothing has been simply handed to Tom, but by recognizing the opportunity and aiming for a career, he has steadily advanced by getting to know every aspect of the business. In the summer of 2016 he was named president of the family-owned company. Maple Ridge Hardwoods is a high-grade hardwood saw mill selling to customers who make furniture, flooring, paneling and more. They also have a veneer yard, where they sell whole logs. The company had sales of $18.5 million in 2016 and exclusively contracts with 11 logging crews. The Sterling facility has 50 employees who run two saw mills. State-of-the-art equipment, such as 3-D imagery of logs, keep Maple Ridge Hardwoods looking forward. According to Tom, the business is a continual learning curve, to which he says, “Bring it on. To some degree I guess you create your own luck, but you need people to invest their time and provide you that opportunity to gain their trust. I was fortunate to have that and to be able to take it, build on it and learn even more.” When he came back from college and as he’s advanced in leadership positions, including plant manager, he says the transitions have been smooth. Since his early years of working at the mill, “I was expected to give 110 percent; there was no favoritism,” he says. “My head was on the chopping block as much as anyone if I messed up. In this business, you have to carry your own weight, which served me well.” Maple Ridge Hardwoods is a business his dad Peter got involved with in the mid-1980s by partnering with the founder, Doug Devereaux. “They were friends, and Doug had a need for trucking,” Tom says. “My dad was an

engineer by trade, but had an oil company business that he was running with his brother and father out of the Tawas area. Dad had some trucks and was able to provide some solutions for the sawmill, while his creative thinking helped the company grow and improve efficiency in regards to building structures to transfer lumber. It was a good fit.” Doug’s son, Aaron, was also highly involved in the business and eventually Peter and Aaron bought out Doug’s financial interest, but he remained working at the company. “Doug and Aaron took me under their wings and really taught me what it takes to be a true lumberman —from purchasing timber, logging and harvesting responsibly, to working with landowners and in the saw mill,” says Tom, who credits his dad with more of his sales and financial knowledge. Aaron passed away in 2010, leaving Tom’s parents, Peter and Chiara, as the principle owners of the company. When Tom returned from college, he attended an inspection course for three months in Memphis, Tenn., where he honed skills as a lumber inspector. In addition to serving as manager at the mill, he also was a timber buyer. The company select-cuts timber from private landowners. Finding those landowners can involve studying aerial photos and looking for good canopy density, according to Tom. Using a Geographical Information System, the taxpayer and their current address can be obtained. Getting a foot in the door with potential sellers sometimes requires a foot on the doorstep. “One of my first big deals was a timber stand in northern Michigan. I was pretty green at the time, but identified the landowner in the Detroit area, got in my car and made a day of it.” Tom says the northern Michigan landowner had a stack of envelopes and cards from others inquiring about the property. “They said, you’re the first person that knocked on the door,” Tom recalls. “It was a six-month process of courting them, but I landed it.”

Partners — Spring 2017


➡T  op: In the summer of 2016, Tom Barbier, 32, was named president of Maple Ridge Hardwoods in Sterling. He says GreenStone understands the finance needs of agriculture, including the timber industry.

Ups and downs

The business continued to grow and at its height in the early 2000s had sales of $30 million. However, just like many segments of agriculture, there are peaks and valleys. As the economy began to buckle, it sent sales plummeting. The company, which had just borrowed money for capital expenditures, had to look at downsizing. “We had to cut back in the mid 2000s and cutback hard in 2010,” Tom explains. “We had to concentrate and hone in on what we are good at by utilizing our equipment smarter and doing some renovations.” That experience, Tom says, resulted in the company now being able to withstand a fluctuating economy. “We run efficiently and can get through down times,” he adds.


Spring 2017 — Partners

However, it was during that downturn Maple Ridge Hardwoods began having issues with the bank they had done business with for 20 years. “We had a couple of bad years and were being hit with crazy reassessing fees and a reevaluation of our company,” Tom says. “We were deemed a toxic account because about half our debt service was tied up in inventory.” A sales call from a GreenStone financial services officer led to several meetings. “Some banks just don’t understand inventory and the cyclical nature of agriculture,” Tom says. “It was a lot easier working with GreenStone than any other bank in the past. It was almost like it was too good to be true. The rates were way lower and, because it’s a cooperative, we received rebates. It was a great option for us. To be able to have a partner like GreenStone, who understands our finances, is really important. It makes it easier and more comfortable when you have to make big decisions regarding capital allocations.” GreenStone has been very accommodating, says Tom, who recently bought land for its timber stand. “GreenStone made it easy and simple. What would have been a two to three month process with any other bank, was 15-20 days with GreenStone. When it comes down to being profitable, you need to be quick and agile—you need a partner like that.” Harry Tope, the current GreenStone financial services officer for Maple Ridge Hardwoods, says the company is a valued customer. “GreenStone’s commitment to agriculture has allowed us to partner with businesses in the timer/hardwood industry. Michigan has a valuable and abundant agricultural resource in its timber, more so than what many people realize. Working with Maple Ridge Hardwoods and the Barbiers has been a highlight in my first year

I t was a lot easier working with GreenStone than any other bank in the past. It was almost like it was too good to be true.

About Maple Ridge Hardwoods Maple Ridge Hardwoods, in Arenac County, produces a perishable product. Logs are sawed, but not kiln dried. Sales are regional, usually within 500 miles, to Indiana, Wisconsin, Canada and within Michigan. The company sources all its quality hardwood from Michigan, including: • Cherry • Oak, red and white • Walnut

at GreenStone. It did not take me long to realize that these folks operate with a high degree of integrity. This is evident in their market knowledge, management practices, and genuine concern for the welfare of their employees.” Customer driven

In his new role as president, Tom says the customers come first. “If I’m doing my job right, we will be supplying our customers with a steady diet of quality material that meets their specs. I’m only as good as my employees and customers. We pick winners. We have about 20-25 core customers and seek to continually align ourselves with our customer base to compete in a global environment very efficiently. We strive to help them make a better product and to see what new opportunities are out there.”

He doesn’t plan to do that on his own though. “There’s not enough time in the day, so I draw from the strengths of the guys around me and try to add onto that,” he says. The company’s plant manager Adam Eschimilia is self-sufficient, Tom says. “He’s great, and I work with him on a daily basis; there’s no need to micromanage,” he adds. “If I had to do it all, there would be lost opportunities.” In addition to managing employees and the company’s financials, Tom oversees procurement, and land and material management. “My goal is to continually develop better leadership skills, which means being open to new ideas, while maintaining and making sure our core philosophies stay intact.” ■

• Hickory • Ash • Maple, hard and soft

➡ Top: Maple Ridge Hardwoods had sales of $18.5 million in 2016 and exclusively contracts with 11 logging crews. The Sterling facility has 50 employees who run two saw mills. ➡ Bottom: Tom Barbier, president of Maple Ridge Hardwoods, started out working summers at the family owned business. Here, lumber that was been graded and stacked is awaiting shipment to customers.

Partners — Spring 2017




Naturally-Occurring Contaminants and Understanding Nitrates in the Environment By Alan Hahn



Spring 2017 — Partners

Dr. Dragun’s point is illustrated throughout history. In the 1840s, potato farmers in Ireland experienced the full wrath of natural disasters. A fungus led to a catastrophic loss of potato crops which resulted in the loss of livelihood for some. For others, it cost their lives.

While we in the western world have done a rather remarkable job in reducing health, nutritional, environmental, and general mishap risks, we must remain diligent. This requires clearly identifying risks and using our knowledge and scientific advances to properly address them. In the current farming world, and generally across rural America, there is a relative emerging risk that requires ongoing diligence. This risk relates to the understanding and management of nutrients, most notably, nitrate. Both regulators and special-interest groups have focused their attention on farms as a potential source of nitrates. Many in the farming community are familiar with the consent order between the United States Environmental Protection Agency (EPA) and dairies in the Lower Yakima Valley (Washington State). In this 2013 consent order, the farmers agreed to provide an alternate source of drinking water for neighbors within one mile (downgradient) of their farms, conduct additional testing, and take steps to mitigate nitrogen sources in the groundwater. For details, see the EPA document “Yakima Valley Dairies Consent Order Update, June 2016,” It is important to note that nitrate is both naturallyoccurring and man-made. It is a nutrient that is essential for plant growth, and according to the EPA, nitrates are naturally occurring in groundwater at about 1 to 3 parts per million (ppm). The maximum allowable nitrate concentration in drinking water is 10 ppm (Maximum

 hile we know the human health and W environmental risks associated with excessive nitrates, understanding the movement and persistence of nitrates in the environment is very complicated.

Contaminant Level under the Safe Drinking Water Act). The Centers for Disease Control state that excessive nitrates in drinking water poses a particular risk to infants. Environmental risks associated with excessive nitrates in surface waters are excessive aquatic plant growth that can deprive the water body and the associated aquatic invertebrates of oxygen. While we know the human health and environmental risks associated with excessive nitrates, understanding the movement and persistence of nitrates in the environment is very complicated. Recently, my colleagues have been involved in projects requiring them to scientifically assess the source of nitrates in groundwater. These are not cases arguing the presence of nitrates. Rather, these are cases of determining 1) the regional background concentrations, 2) what its source(s) is, and 3) whether the nitrate is related to our client’s operation. If a farm is identified by a regulator or named in a lawsuit as a potential source of excessive nitrates, it is not an

automatic indictment. Every site is different and should be evaluated before jumping to what can sometimes be costly conclusions. There are some basic environmentalinvestigative questions to ask when evaluating nitrates or any other potential contaminant in the environment.

•Does this timing make sense? If nitrates were “released” at the surface on a particular date, is it feasible for the nitrates to get to the point in question? (Note: you cannot know this without a thorough understanding of the site conditions.) Finally, there are advanced scientific methods that can be used to evaluate the “age” of the groundwater, which provides clues about the source(s) and specific markers that will help indicate whether the source is chemical or organic.

• I s this a legacy issue? In other words, are the nitrates here naturally or are they from another source such as synthetic fertilizer application? •W  hat are the vertical and horizontal concentrations of nitrate?

As our founder, Dr. Dragun, noted… There are many threats to human health and the environment. Some are natural threats, while others are manmade threats. These potential threats and hostilities require diligent monitoring, but before we can offer a solution, we must first understand the problem. ■

•Which way does the groundwater flow, and what is entering the site in question (upgradient), and what is moving away from the site (downgradient)? •How does the groundwater “behave” on the site? Is it “trapped” (perched) on the site? What are the overall geological conditions that will influence groundwater and nutrient movement?


Alan Hahn is an Environmental Professional and Business Development Manager at The Dragun Corporation in Farmington Hills, Michigan.

•Can the nitrate actually get from Point A to Point B (is there a completed pathway)?

The opinions stated herein are not necessarily those of GreenStone Farm Credit Services.

Partners — Spring 2017



By Bob Utterback

Many producers wait the entire year for the potentially volatile April to July time period to sell corn and soybean production. The fundamental reason lies in the various influences on the supply component of the corn and soybean marketing equation. The first critical decision that is made during this time is the mix of corn to soybeans. I believe producers want to keep acres in a rotation mix that helps promote good weed management, rest the soil, and overall blends well with harvest and storage limitations. I also believe most producers simply like producing corn more than soybeans. This year, however, many are being forced to look at the financial impact of soybeans price versus corn price when deciding what to plant. When the November soybean price is divided by the December corn price, the ratio is above 2:5. Many believe this price relationship will promote more soybean production. The University of Illinois recently studied this relationship1. They suggest that historically the math does not support the conclusion that there will be a wholesale movement of soybeans to corn when the price incentive for soybeans is as high as it is over corn [at the time this outlook is being written]. This implies there is more at work than a simple price relationship. I am guessing many producers have planted a lot of corn lately and want to get their corn and soybean rotations back close to 50/50.


Spring 2017 — Partners

In the end, I suggest corn acres will not drop as much as 4 million, while the soybean acres increase will be below 5 million. Overall, I have to consider the acreage figure as overall anticipated and essentially neutral to price action. Implication: The market does not move decisively out of the trading range on this fundamental. This implies all the weight of price action from mid-April to late July will fall on the shoulders of the overall status of the crop conditions and how the expectation about impact on yield is proceeding. Since yields last year were considered outside the expected trend line pattern, almost all market watchers are being conservative and assuming yield will drop back closer to 20-year trend line expectation. I suggest around 171 for corn and 49 for soybeans. I am concerned that, if corn acres are reduced and yields increase like they normally do, I am already in conflict with the historical data patterns. Another item that really concerns me is corn and soybean seed hybrids have improved faster than long-term trends.

170 160 180

US Corn Yield Actual vs Various Trendlines - No 2012

150 170 140 160 130 150


20 Year

Updated: 01/12/2017

10 Year
























110 130


120 140

The Hightower Report

20 Year

Updated: 01/12/2017

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110 1997

The final key variable that will determine how many acres will be planted is spring weather patterns. For the most part, the Midwest had a very mild winter. Moisture conditions are adequate in primary crop production regions and many producers have already done nearly all of the necessary field work before spring plantings. The trade realizes that, with the technology of minimum tillage and high speed planters, large acreage of both corn and soybeans can be planted in the U.S. in a matter of days rather than weeks. Subsequently, for spring weather to be bullish, we will need to see a period of extended cold and/ or wet conditions throughout the Midwest from March to May. I am working on the assumption that weather overall will support good spring planting conditions.


Bushels / Acre Bushels / Acre

So the stage is set for a possible 4 million acreage reduction in corn and a 5 million increase in soybeans.

US Corn Yield Actual vs Various Trendlines - No 2012

The Hightower Report

SOURCE: USDA. Past performance is not necessarily indicative of future results. Although every reasonable attempt has been made to ensure the accuracy of the information provided, Utterback Marketing Services Inc. assumes no responsibility for any errors or omissions.

US Soybeans Yield - Actual vs Trendline 57

US Soybeans Yield - Actual vs Trendline

52 57 Bushels / Acre Bushels / Acre


Second, the corn to soybean rotation helps with weed management. Third, many producers probably have used up their excess cash flow made in the good times [2001 to 2014]; subsequently, with tighter cash flow balances at the bank, they are looking for ways to reduce cash flow exposure and soybeans fit nicely into this profile when compared to corn.

47 52 42 47 37 42 32 37

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 20 Year

Updated: 01/12/2017

10 Year

The Hightower Report


SOURCE: 95 USDA. is not necessarily every 96 97Past 98 performance 99 00 01 02 03 04 05 06 07 08 indicative 09 10 11 of 12 future 13 14 results. 15 16 17Although 18 reasonable attempt has been made to ensure the accuracy of the information provided, Utterback 20 Year 10 Year Updated: 01/12/2017 The Hightower Report Marketing Services Inc. assumes no responsibility for any errors or omissions.

In fact, as the graphs show, the slope of soybean yield is actually better than corn. This leads to the question, “What if last year’s yield patterns were not a statistical abnormally, but simply a reflection of better yield performance due to better technology?” This is my gut belief; but it still relies on two components—summer heat and rain. So, as I suggested in my opening comments, this is the time of year that many producers wait to price old crop production that is in the bin. However, I will be focusing on pricing the crop being planted. While the market was rather drab from fall through winter [providing limited hedging opportunities above most producers’ cost of production], I fear that this summer’s price movement could be very active, but it likely will not result in the desired target objectives of most Midwest farmers!

Partners — Spring 2017


I am guessing producers will need cash bids very close to $4 corn and $9 soybeans to cover all fixed and variable costs. When a normal fall basis bid is added in, it amounts to a December corn price in excess of $4.25 and November soybeans in excess of $10.75. At this time, I believe it is very difficult to argue these objectives [fundamentally and technically] will be seen during this time frame unless a historically bullish yield variability event occurs that is on par with the one experienced in 2012. We have already anticipated a rather robust demand outlook for both corn and soybeans for 2017. The problem is we are starting out with too much inventory in the bins both domestically and internationally, and it looks as if South America is coming off what looks like a completely different yield outlook than last year. Subsequently, if the crop gets planted in April to May, the rain has to stop and the heat must come on hard as pollination takes place. I am not saying this will happen; but, if anyone is holding a lot of unpriced inventory in the bin and limited new priced inventory, and it does not occur, basis will be staggeringly wide from mid-July on as producers start to move old crop inventory to make room for the new crop. In summary, this is a year where we are going to have to see some lucky breaks occur for the bulls or it is going to get increasingly more bearish as we move into the fall time period. This is bad for producers, but great for feed buyers who want to take advantage of buying inventory below the cost of production Hubbs, T. and D. Good. “Using the Soybean-to-Corn Price Ratio to Predict Corn and Soybean March Planting Intentions.” farmdoc daily (7):43, Department of Agricultural and Consumer Economics, University of Illinois at UrbanaChampaign, March 8, 2017. Permalink: using-soybean-to-corn-price-ratio-to-predict-march.html ■




Bob Utterback is the President of Utterback Marketing in New Richmond, IN. Call Bob for strategy updates at 877-898-4324. Email comments on Outlook to

The opinions stated herein are not necessarily those of GreenStone Farm Credit Services. This material has been prepared by a sales or trading employee or agent of Utterback Marketing Services, Inc. and is, or is in the nature of a solicitation. This material is not a research report prepared by Utterback Marketing Services, Inc. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction without registration, the market commentary in this communication should not be considered a solicitation. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Utterback Marketing Services, Inc. believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades

AGRICULTURE – OPEN FIELDS BLOG BRIEF GreenStone publishes regular updates on our Open Fields blog. Check out some of the posts you may have missed at! Organizing Your Farm Finances: A Two-Part Series •T  hree Key Financial Reports Financial reports are often seen by farmers as a burden, required by lenders and other strategic partners, but less important than actually running their operations. These three key reports, individually and in concert, can help guide short- and long-term decision making, and help target how to most effectively spend resources. •T  rends and Operating Cycles A single report yields insight into the current state of your business, but comparing your reports over time provides additional value. Analyzing your balance sheet and income and expense report is one way to determine if you need to secure a loan to bridge the gap until profitability returns and working capital can rebuild.


Spring 2017 — Partners



GreenStone’s Publishes 2016 Annual Report GreenStone recently released its 2016 annual report, which in addition to detailed financial reports, also included recaps on the association’s efforts to support youth, U.S. military veterans and young, beginning and small farmers. In the report, President & CEO Dave Armstrong and chairman of the board, Edward Reed, addressed the challenging farm economy and what GreenStone has done to prepare for this anticipated down cycle. “The most important thing we can do in difficult financial times like these is simply to be there for our members and treat them in a fair, respectful, courteous, and timely manner,” they wrote in a message to the association’s more than 24,000 members. “The industry is relatively healthy compared to the depth of downturns over history, and GreenStone is well-positioned to support its members.” Numbers of note from the 2016 annual report include: • $131.9 million in net income • 6.2 percent total loan growth (owned and managed)


• $33 million cash patronage paid in March 2017

It’s here! Jump start your country living loan with GreenStone’s new online loan application. As we mentioned in our winter edition of Partners, we continue to advance the way we provide services to you, our members. Using our Online Loan Application, you can now apply for the following country living loan products: • Vacant and recreational land financing

• Home site loans

• Home and building construction loans

• Country home mortgages

You can apply right from the comfort of your home – or anywhere! When you are ready for your next loan, our new application is a convenient and easy way to jump start the lending process. Visit for more information or apply at ■

The complete annual report can be viewed online by visiting: ■

Office and Facility Updates • Clintonville, Wisconsin—The branch is currently under construction with an anticipated completion of May. • Hillsdale, Michigan—Construction of a new building is expected to begin in the summer of this year. • Ionia, Michigan—Interior remodeling of the current office is estimated to begin this summer. • Sandusky, Michigan—Sites are currently being evaluated for a new building, and construction is anticipated to begin fall 2017. ■

Partners — Spring 2017


Mark Your Calendar... APRIL



MSU Small Animals Day Michigan State University Pavilion, East Lansing, MI GreenStone Annual Meeting East Lansing, MI


8 29

GreenStone Election Ballots Mailed to members GreenStone Offices Closed In honor of Memorial Day


11 11 11 11


Breakfast on the Farm Event Brown County, Greenleaf, WI


Breakfast on the Farm Event Waupaca County, Weyauwega, WI

21 24 25

4-H Exploration Days (21-23) Michigan State University, East Lansing, MI Breakfast on the Farm Event Ottawa County, Marne, MI Breakfast on the Farm Event Marinette County, Crivitz, WI

Breakfast on the Farm Event Kewaunee County, Forestville, WI


Breakfast on the Farm Event Manitowoc County, Maribel, WI

Breakfast on the Farm Event Shawano County, Marion, WI


GreenStone Election Results mailed to members

Breakfast on the Farm Event Oconto County, Lena, WI Breakfast on the Farm Event Outagamie County, Shiocton, WI


Wisconsin State FFA Convention (12-15) Exhibition Hall at the Alliant Energy Center, Madison, WI


GreenStone Election Ballot Deadline Voting polls close end of business day



Breakfast on the Farm Event Door County, Sturgeon Bay, WI


GreenStone Offices Closed In honor of Independence Day

I am writing to thank GreenStone for their generous scholarship to attend the Farmers Veteran Coalition Conference. I will finish my master’s next semester and am hoping to pursue a career in agriculture. Any chance to learn about farming is an opportunity that puts me one step closer to achieving this goal. Your generosity helped me connect with other veteran farmers and provided an invaluable learning experience. I hope one day I will be able to help other veterans achieve their goals just as you have helped me!

—FVC Conference Scholarship Recipient

Thank you so much for your continued support of the Farm Women’s Symposium! The generosity of GreenStone is outstanding, and so much appreciated. We couldn’t do it without you! Thank you!

—FWS Attendee

Thank you for your support and cash award I received at the Master Farmer lunch. It was a great honor to be chosen as a 2017 Master Farmer!

—Tim Brodbeck

Thank you for your continuous support of the Great Lakes Regional Dairy Conference. As the next generation of dairy professionals, we sincerely appreciate the opportunity to learn from industry experts alongside dairy farmers across the region. We consider your support an investment in the future of dairy and look forward to returning it, with interest, to the industry.

—2017 Michigan Dairy Ambassadors

Thank you for allowing me the opportunity to learn more about animals by sponsoring the 4-H Veterinary Science Teen and Adult Leaders Workshop! When I grow up, I want to become a veterinarian and you have helped me continue to try and reach my goal.

—Grand Traverse County 4-H Member

...Candid Comments 15

Spring 2017 — Partners


Commercial Lending Vice President:

Tax and Accounting MVP Award:

• Luke Bakker, Grand Rapids, Michigan

• Stephen Zimmerman, Escanaba, Michigan

Crop Insurance Specialists: • Kylee Zdunic, West Region • David Moll, Southeast Region • Cory Blumerick, North Region

Platinum Award Winners

Gold Award Winners

Sales Leader:

Agricultural Financial Services Officers:

Agricultural Financial Services Officers:

• Nicole Wesoloski, Little Chute, Wisconsin

• Travis Bratschi, Traverse City, Michigan

• Michelle Backhaus, Little Chute, Wisconsin

• Laurie Schetter, Manitowoc, Wisconsin

• Peter Hirschman, St. Johns, Michigan

• Ann Allen, Cadillac, Michigan

• Shannon Arbaugh, Sandusky, Michigan

• Wayne Sevilla, Bay City, Michigan

• Mark Dingee, Cadillac, Michigan

• Mark Buuck, Adrian, Michigan

• Dan Kaufman, Coleman, Wisconsin

• Lee Rodgers, Schoolcraft, Michigan

• Kim Knoerr, Bay City, Michigan

Country Living Financial Services Officers:

Country Living Financial Services Officers:

• James Cole, Howell, Michigan

• Cynthia Cole, Ionia, Michigan

• Samuel Schafer, Ann Arbor, Michigan

• Mark Oberlin, Grand Rapids, Michigan

• Ashlee Guerrero, Ann Arbor, Michigan

• Emelee Rajzer, Schoolcraft, Michigan

Achievement Award Winners • Matt Alt, Agricultural Financial Services Officer, Grand Rapids, Michigan • Corey Fanslau, Agricultural Financial Services Officer, Clintonville, Wisconsin • Jessica Hurd, Country Living Financial Services Officer, Lapeer, Michigan ■

Commercial Lending Vice President: • Larry Urban, Allegan, Michigan Sales Leader: • Benjamin Mahlich, North Region

Partners — Spring 2017



Michigan Celebrates Ag Day at the Capitol

GreenStone was recently honored by the National Agri-Marketing Association (NAMA) with a merit award in three different categories at the regional Best of NAMA competition. These awards were in the categories of: “direct mail–directed to farmers, growers and ranchers–flat” for a new customer welcome mailer, “direct mail– directed to farmers, growers and ranchers– three dimensional” for the “Is the Grass Truly Greener” crop insurance tool, and in the “company publications–annual report” for the editorial and creative design of GreenStone’s 2015 annual report.

The State of Michigan celebrated Ag Day on March 22 at the State Capitol in Lansing. Michigan Farm Bureau hosted the event, which included over 30 Michigan agricultural commodity organizations, uniting to showcase the abundant variety of Michigan agriculture. Governor Rick Snyder was on hand to address legislators and commodity representatives, commenting on the strength of agriculture in Michigan, which contributes approximately $101.2 billion annually to the state’s economy.

This award program honors the best work in agricultural communications; as a regional award recipient, the entries advance to the national competition. National winners will be announced in late April at the 2017 AgriMarketing Conference in Kansas City, MO. ■

GreenStone’s Wisconsin branches hosted a very successful Ladies Day Out on Feb. 14 at the Radisson Hotel & Conference Center in Green Bay. The event included a hearty breakfast, speakers and even entertainment! Nancy Meulemans of Black Creek, WI has attended Ladies Day Out for the last 23 years and said she enjoys it every year. “The Elvis Presley impersonation was my favorite! The last couple of years I have brought my friend from church and we both enjoy attending.” ■

GreenStone’s President and CEO Dave Armstrong was also in attendance, and stood alongside agricultural leaders in Michigan while the Governor gave his address. “We have the support services we need with GreenStone,” said Governor Snyder. “We all play a role in making Michigan a stronger and better place with a very bright future.” ■

Ladies Day Out Event is a Success!

Pause for Applause... 1. Recently, the Michigan

Commission of Agriculture and Rural Development elected new officers. GreenStone customer, Brian Pridgeon has been selected as the Comission’s secretary.


GreenStone customers were recently honored as platinum award winners at the National Dairy Quality Awards for high-quality milk. Congratulations to Simon Dairy (Westphalia, Michigan) and Country Aire Farms (Kaukauna, Wisconsin)!


Congratulations to GreenStone customer Zaluckyj’s Farms on receiving the 2016 Environmental Stewardship Award presented by the Berrien County Conservation District!


The Lenawee Conservation District recently honored GreenStone customer, Hartland Farms, as the Conservation Farmer for 2016.

Have a comment to include in the next issue of Partners? Share it with us on social media.


Spring 2017 — Partners

SERVICE ANNIVERSARIES Help GreenStone congratulate and thank these staff who are celebrating an employment milestone. From five to 40, the years represent the dedication and service all employees provide our members. April: Mary Fields (20) Amy Trepkowski (15) Carrie Demko (10) Lisa Burnham (10) Jason Folkens (10) Nicole Ladd (10) Jody Nelson (5) Ashlee Guerrero (5) Heidi Lyons (5) Amanda Arnold (5)

May: Kim Heisler (40) Betty Marston (30) Curt Flammini (10) Melissa Rogers (10) Andrew A. Warner (5) Jacob McManus (5) Hilary Sawmiller (5) June: Steve Eshelman (35) Joe Hickey (30) Ben Spitzley (15) Barb Powell (10) Julie Plaggemars (5)

BEHIND THE SCENES– If you have ever walked into a GreenStone branch, chances are you received a friendly greeting and assistance from one of our customer service representatives (CSRs). GreenStone’s CSRs are often referred to as the glue that holds the branches together. They work diligently alongside our financial services officers and other branch staff to help process loan documents and ensure our customers receive the high-quality service they have come to expect from GreenStone. Julie Adams, Customer Service Representative Clintonville, Wisc. How would you describe your role here at GreenStone? I am a customer service representative at the Greenstone branch in Clintonville. I work with our financial services officers to prepare loan documents for our farm customers. What is your favorite part of your job? The favorite part of my job is working with our customers on a day-to-day basis. I enjoy getting to know them better and learning more about their farming operations. Speaking with customers helps provide insight to determine if GreenStone has additional products or services that could help their operation run more smoothly. Growing up on a family farm, which has been in our family for more than 135 years, I hold farm families very near and dear to my heart. Seeing the way farming has progressed through the years is very interesting to me. I remember when I was young and before my dad installed a milk pipeline, I would carry milk buckets to the bulk tank and dump them into the tank, and now there are rotary parlors and robotic milking systems! I also enjoy being able to go on farm visits with the financial services officer to experience the new technology first hand. What do you enjoy doing most outside of the office? I enjoy spending time with my family and friends. I also enjoy spending time outdoors working in my garden and flower beds, and I’m looking forward to traveling more in the future.

Trina Powers, Customer Service Representative Cadillac, Mich. How would you describe your role here at GreenStone? I have now been with GreenStone for 11 years and what a journey it has been. I started out as a customer service representative for our traditional farm business and after a couple of years moved to the country living segment. Although I grew up in the rural farming community of McBain and truly enjoyed working with our dairy farmers, it has been a new and exciting challenge to transition to the country living side of our business. Helping people finance their first home or their perfect piece of recreational land is very exciting! What is your favorite part of your job? I love the variety of work and all the people involved in working on loans. Every file we touch has its own story, be it a first-time home buyer, a new construction, hunting property or a future retirement home. They all have different elements and different people to get to know through the process. It’s exciting to work with the customer, title company and loan officer to get a package complete and to the closing table. What do you enjoy doing most outside of the office? I spend as much time with family and friends as possible. We are a summertime family who loves to enjoy bonfires, golfing, tubing down a lazy river and ORV trail riding. As an office we try to attend local events as much as possible to show support for this great community we all live and believe in. This rural, northern Michigan area has been the perfect place for my husband and I to raise our two sons. ■

Partners — Spring 2017


Farm Credit Update:

Farm Credit Urges White House to #RebuildRural Infrastructure By Mark Hayes, Director of Media Relations for the Farm Credit Council



Spring 2017 — Partners

Led by Farm Credit, the more than 200 #RebuildRural organizations involved represent U.S. agricultural producers, rural businesses, rural communities and rural families. The first action the #RebuildRural coalition took was sending a letter to the president encouraging him to prioritize rebuilding infrastructure in rural America. “Those of us in rural communities have seen our infrastructure deteriorate, jeopardizing jobs, our agricultural competitiveness, and the health of rural families. Past infrastructure initiatives often focused on urban and suburban infrastructure while not adequately addressing the unique needs of rural communities. We ask that you address this as part of your administration’s comprehensive infrastructure renewal efforts.”

 e are grateful that the White House is exploring the W unique infrastructure needs of U.S. agriculture and rural communities. Rural communities rely on clean water, affordable power and broadband internet to attract new jobs and provide a good quality of life.

“American agriculture truly feeds the world and creates millions of jobs for U.S. workers. Our nation’s ability to produce food and fiber and transport it efficiently across the globe is a critical factor in U.S. competitiveness internationally. Infrastructure that supports rural communities and links them to global markets has helped make the U.S. the unquestioned leader in agricultural production. Our deteriorating infrastructure threatens that leadership position,” the letter stated. The coalition went on to highlight the unique infrastructure needs in rural communities where populations are less dense and distance between communities creates challenges, calling on the president to “provide leadership to ensure that rural America’s needs are addressed.” While a stronger transportation infrastructure will help American agriculture compete in an increasingly crowded global marketplace, the other infrastructure needs of rural communities differ from urban areas. The letter highlights the “critical needs” that “exist in providing clean water for rural families, expanding broadband to connect rural communities to the outside world, and enhancing the ability to supply affordable, reliable and secure power for the rural economy.” Following that letter, Farm Credit representatives and members of the coalition had a meeting at the White House with senior advisors focused on infrastructure and rural America. During the nearly 90-minute meeting, topics of discussion ranged from the agriculture transportation chain (from farm gate to port) to water, broadband, power and health care. Farm Credit institutions were represented by their national association, the Farm Credit Council. Following the meeting, Council CEO Todd Van Hoose expressed optimism about the depth and breadth of understanding of the White House staff. “We are grateful that the White House is exploring the unique infrastructure needs of U.S. agriculture and rural communities. Rural communities rely on clean water, affordable power and broadband internet to attract new jobs and provide a good quality of life.” “Our agricultural competitiveness requires upgrades in transportation infrastructure to get supplies to farmers and to move farm products to markets around the U.S. and overseas.” Moving forward, Farm Credit will continue to work with the White House and Congress to ensure the infrastructure needs of rural communities are understood and addressed in any proposals. ■

Partners — Spring 2017


GreenStone Story:

The Value of Privacy


Spring 2017 — Partners


Often, that information ends up in the hands of data brokers. A data broker collects personal information about consumers and then resells that information to other organizations. These data brokers get their information by purchasing it from entities that gather consumer data as a routine part of their business. If you carefully read the terms and conditions for many services, you may notice disclosures that give the company the right to share your information as a condition of using that service. We want you to know this is not the case at GreenStone. When you enroll in My Access, fill out an online loan application, provide personal information for your business lending needs, or even submit a request for information, we hold that information secure and never share or resell that information to a third party. “We do not sell, rent or trade personal information to third parties,” said Michelle Boulter, GreenStone’s compliance officer. “Any nonpublic information is maintained privately and is not sold or shared with unaffiliated companies.” However, we also feel it is important for you to know that certain information is considered a matter of public record and is required to be filed with agencies, such as the county clerk’s office. This includes information like the lender, the borrower, the property address and in some cases the loan amount. The rules of the Farm Credit Administration (FCA), our federal regulator, also permit GreenStone to disclose customer information to others only in the following situations: •W  e may provide such information to another Farm Credit institution that you do business with. •W  e can be a credit reference for you with other lenders.

 ny nonpublic information is A maintained privately and is not sold or shared with unaffiliated companies.

• We can provide information to a credit bureau or other consumer reporting agency. • We can provide information in certain types of legal or law enforcement proceedings. • FCA examiners may review loan files, which include personal and financial information, during regular examinations of our association. • If an employee of the association applies for licensing as a real estate appraiser, we may provide copies of real estate appraisal reports to the state licensing agency. In this case, GreenStone removes as much personal information as possible prior to providing the reports. There are also several Federal regulations and agencies that require we report data that may include information such as your name, address, loan amount, or other personally identifiable information. These include: • Home Mortgage Disclosure Act (HMDA): This United States Federal law requires certain financial institutions to provide mortgage data to the public. Congress enacted HMDA in 1975.

• Office of Foreign Assets Control (OFAC): This office of the U.S. Department of Treasury administers and enforces economic sanctions to ensure applicants or borrowers are not involved with countries or groups involved in terrorism, drug trafficking or other such activities. • Internal Revenue Service (IRS): In cases where debt over $600 is forgiven, the IRS requires a form 1099-C to be filed. Your privacy is very important to us! Our commitment to your right of privacy is part of our commitment to customer service and customer satisfaction. As a member/owner of this institution, the protection of your privacy and the security of your personal information are vital to our continued ability to serve your ongoing credit needs. We are here to ensure you understand the information we collect and the reasons why. If you have questions about the data we collect, or the data we are required to report, we encourage you to reach out to your financial services officer. Your privacy is of our utmost concern and we do everything possible to maintain the confidentially you expect and deserve as a GreenStone customer. ■

Partners — Spring 2017


Legislative Matters:

WHAT DO WE HAVE TO PROTECT? AS LEADERS OF AGRICULTURE AND OUR RURAL COMMUNITIES, WE ALL KNOW HOW IMPORTANT IT IS TO HAVE A VOICE AT THE TABLE TO CREATE A HIGHER LEVEL OF AWARENESS OF WHO WE ARE AND WHAT WE DO. DURING TIMES OF CHANGE ON THE NATIONAL POLITICAL STAGE, CHALLENGES TO THE SYSTEM ARE REEXAMINED BY A CROP OF NEW LEGISLATIVE LEADERS. ONCE THEY LEARN OF OUR SYSTEM, THE SYSTEM GETS RECOGNIZED FOR STRENGTH AND ITS STORY. GreenStone, as part of the national Farm Credit System, is akin to any agriculture asset that deserves protection and care on your farm. The System merits every level of protection we can collectively accomplish. Together, we have a great story to tell, and we need you to be part of telling the story on the importance of Farm Credit. As a cooperative we are an autonomous association of people united voluntarily to meet common economic needs and aspirations, through a jointly owned and democratically controlled business, which is part of the national Farm Credit System.

Reflecting on the structure of the cooperative, the strength of GreenStone Farm Credit Services is clearly centered on its members, and surrounding the core of the strength is the cooperative governance, which starts with the Nominating Committee to identify member leaders. That path of leadership exists for any passionate member to serve the needs of other members within the GreenStone territory.

remind these leaders that the credit structure of the farmerowned credit cooperative is essential to meeting the needs of agriculture and our rural communities. We know Farm Credit has served generations of family farms, and has enabled new and beginning farmers. Our members have inspired other members, and together have built a very unique family of members serving other members.

Just as important is the voice of the member, and we want to hear from you on how important Farm Credit is to you and your family. As national leaders continue to consider governmental reforms, we constantly educate and

Yet, each member story is unique to their family and immediate community. Imagine there is NO Farm Credit system. How would that have affected your story? Your credit cooperative is something worth protecting!

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Spring 2017 — Partners

GreenStone continues to play a role in amplifying the voices of our members and the cooperative interests of agriculture. You, our members, are the individuals and families we serve by delivering that message to policymakers and legislative leaders. Your stories have been extremely valuable in protecting your farmer-owned credit cooperative, and we encourage you to tell us more! â–

As you reflect on this article, please take a moment to share with us why GreenStone Farm Credit Services is important to you, and how it has positively made an impact on you and your agricultural operation. Why is the Farm Credit System worthy of supporting and protecting both now and far into the future? Email us at:

PAC Progress:

CHANGE IS HAPPENING FAST ON ISSUES IMPORTANT TO THE SYSTEM. THANKS TO THE EXTRAORDINARY SUPPORT OF MEMBERS, DIRECTORS, AND EMPLOYEES, WE ARE WELL POSITIONED TO STAND FOR AGRICULTURE AND FARM CREDIT. The 2017 MI GreenStone PAC Contribution Campaign was largely successful in its third year with more than $16,000 contributed by more than 275 Michigan GreenStone customers. This is another strong representation of the support members have for the MI GreenStone PAC. Now, your board of directors and management team are diligently evaluating legislative leaders and the focus will be sharing the importance of rural communities, agriculture, and the Farm Credit System with elected officials. In the inaugural WI Farm Credit PAC Contribution Campaign, almost $1,000 was contributed by 19 Wisconsin GreenStone customers. The WI Farm Credit PAC funds will also be disbursed by your directors and management team, in coordination with the Cooperative Network, after an evaluation process. It was a great inaugural year and the efforts will continue to build in the years to come.

The national 2017 Farm Credit PAC drive competition between the 16 AgriBank district Farm Credit associations brought in over $220,000 in contributions. This is a $30,000 increase in contributions over last year. More than 125 GreenStone employees and directors directly contributed almost $18,000 of that total. A portion of the Farm Credit PAC funds will be allocated to the GreenStone territory, and your directors and management will assist in the delivery and communication of the Farm Credit message. As the debate over policies critical to agriculture—from trade to taxes—heats up, we are well positioned to stand for rural communities, agriculture, and Farm Credit. The work has already begun with letters being sent in support of crop insurance, rural infrastructure, and adequate funding for agriculture programs. In addition, the educational efforts will continue as Congress holds hearings on the Farm Bill and the Farm Credit System. Our success will be determined by the strength of the relationships we have with elected officials, and that is why your support of the PACs is so important. Agricultural-minded legislators commend your initiative and thank you for your support of their work; and together we thank you for being a champion of the agricultural industry! ■

Partners — Spring 2017


DIRECTORS’ PERSPECTIVE As part of their election to the board of directors, GreenStone’s board members also serve on a focused committee. As part of the next several issues, the Directors’ Perspective will focus on each committee, featuring input from the directors who will help to define the purpose, and more importantly the value, of each of these teams. To lead the series, this issue we hear from the four directors who serve on both the Executive Committee and the Compensation Committee. Executive Committee:

Ed (Committee Chair): The Executive Committee handles routine matters with the CEO, such as meeting schedules and reports. Also, the committee reviews matters that may not be ready for full board deliberations, allowing the CEO to vet new ideas and discuss confidential information. Andy: As in with most boards, this committee is responsible for some of the leadership roles of our board. Oversight of our CEO is the responsibility of our entire board, however the role of this committee is to take a more detailed approach. Our CEO, Dave Armstrong, is a very experienced and dedicated leader. With roots all the way back to the farm and an entire career with our institution, we are very fortunate to have Dave. He makes the current job of the executive committee, especially for someone who has only been on this specific committee for a few months, a pleasant experience. Compensation Committee:

Bruce (Committee Chair): The Compensation Committee is responsible for recommending the CEO’s compensation package to the full board, as well as to review board compensation. As part of these responsibilities, the purpose is to ensure responsible management of the association’s assets. Christine: In addition, the purpose of this committee is to ensure the compensation, incentive programs, and benefit packages are adequate to attract and retain high caliber employees. We must also align the interests of the employees with the long term financial health of the organization. What has impressed me the most is the level of detail and intricacies of both human resources and compensation philosophies that are available to help us achieve these objectives.


Spring 2017 — Partners

Christine Crumbaugh

I have served on the Executive and Compensation Committees since August 2016. Prior to that I was a member of both the Audit and Finance Committees. It has been a privilege to serve in a variety of capacities during my tenure on the board as it has allowed me to gain a deeper understanding of the operations of GreenStone from different

perspectives. The Compensation and Executive Committees are unique in that its members are elected by the board rather than appointed by the board chair. The purpose of the board committees at GreenStone is to take a closer look at key areas that are critical to fulfilling our mission, “To promote the success of our customers and the rural community by being the best at providing credit and financial services.”

Bruce Lewis, Board Vice Chair

I have had the privilege of serving on both the Executive and Compensation committees for four years. Prior to this, I had served on the Finance Committee for two years. The board committee structure allows the different committees to discuss in greater detail the issues that each committee is responsible for. By operating in this manner, the board is able to function at a higher level of efficiency, thus ensuring our members that there is high transparency in all aspects of the business. I have enjoyed serving on these committees as it has given me a greater understanding of how GreenStone operates, as well as its relationship within the Farm Credit System.

Ed Reed, Board Chair

I have served on the Executive and Compensation Committees for the last six years. Previously, I was on the Legislative Committee for two years, which I found very interesting. The legislative committee works with our elected officials, educating and advising on pending legislation affecting GreenStone

Andy Snider

I am currently serving in my fifth year on the GreenStone board, and spent the entirety of my first four years on the Audit Committee, with the past year as the committee Vice Chair. I really appreciated the chance to learn in detail some of the more technical areas of the review process that the audit committee deals with. The responsibility of safety and soundness of our cooperative rests solidly on that committee and our chief internal auditor. Each committee has its specific areas of expertise that allow our board to be more involved with important details, and the responsibility of certain tasks in these areas. I count it a privilege to now serve on the Executive Committee, which also includes the Compensation Committee role. As a new member of these committees, I am looking forward to providing leadership input and continuing the learning process to become more experienced.

business. The Legislative Committee not only works with Michigan and Wisconsin, but also travel to Washington, D.C. to work with our federal legislators.

information and formulate questions. At the conclusion of the committee meetings, an oral report is given to the full board.

I feel the committee structure allows four board members, with the executive vice president in charge of each area, the quality time to review the business reports, ask questions and provide oversight. The committees are provided with the information, along with an agenda, in advance of each meeting. This allows board members time to study

I am always impressed with the quality of the questions and detail that our board members provide to staff. I feel the committee structure allows for this oneon-one exchange that covers much more information than might otherwise be possible through traditional PowerPoint style presentations. ■

Partners — Spring 2017





It was more than four years ago that Mike Poupore first starting reading articles about endangered honeybees. “I always thought that beekeeping was an interesting hobby, and after I read about bees being in danger, I thought I could help out by starting a couple of hives,” said Mike. According to the American Beekeeping Federation, nearly one-third of all the food Americans eat is either directly or indirectly derived from honey bee pollination. Crops such as cucumbers, cherries, apples and blueberries—all top commodities in Michigan—rely on honeybees for pollination. It was with that focus on our food supply in mind that Mike began with two hives, which he kept in his suburban backyard. Initially, he purchased a three-pound package of Italian bees to get started. He selected the Italian variety of bee because they are well-known to have a mild temperament and do well in honey production. 27

Spring 2017 — Partners

After the first year, he was able to split those two hives, and by his second year as a beekeeper he had nine hives. At that time, Mike knew if his hobby was to continue, he would need to find additional space for the hives; “I had them in my backyard for a while, which is fine when you have two or three hives.” Today, Mike has 26 hives on the 25 acres he purchased in Manchester, Michigan, about 30 minutes from his home. “I found GreenStone by searching online for lenders who will finance vacant land,” said Mike. “I learned that not many banks will lend money for vacant land unless you plan to build a house on the property. GreenStone was willing to do the loan, and I found GreenStone’s rates to be really competitive.” Sam Schafer, a GreenStone financial services officer in Ann Arbor, says he is happy to see that Mike was able to carry out his goal of expanding the hives on the land in Manchester. “Our

customers are so unique, and I am always thrilled to hear about when we help make someone’s dream a reality.” Learning as he went along, Mike read articles and talked to experienced beekeepers to learn how to keep his hives alive through Michigan’s harsh winters. “It’s a steep learning curve,” he said, commenting on the delicate balance that must be maintained in a hive. “There needs to be adequate ventilation, but without too much cold air coming in, otherwise the bees won’t survive. I usually lose about a third of my hives over the winter, which means come spring I have to split them again.”

Mike enjoys the work that comes with maintaining his hives, but even so, has had to endure some of the pitfalls that come with the beekeeping territory. “Last October, I was out there checking on the hives and one seemed like it was leaning,” he explained. “I thought that I could prop it up to straighten it back out, but it fell over on top of me. I didn’t have my bee gear on, and I got stung probably 40 times that day. It wasn’t that big of a deal, but it was interesting. It’s part of the job, I guess.” Another part of the job—albeit much sweeter—is harvesting the honey from the hives. Mike added a shed to his property in 2015 so he could process the

honey on site. “I started out taking it back home and processing the honey in my kitchen, but when you have 30 gallons of honey, that can turn the kitchen into a sticky mess.” The honey is harvested by putting the frames containing honey comb into a machine that uses centrifugal force to extract the honey, which is collected in buckets and then divided into jars. On average, Mike estimates he collects between 20 and 30 gallons of honey each year. “It’s really dependent on the weather,” he says. “Too much rain or not enough sun can really affect the bee’s production.” For now, Mike is content with giving his honey to friends and family, and has not ventured into a retail outlet. “I’ve actually traded a lot of honey,” he said. “I like to hunt, so I’ve been able to trade my honey for access to hunting land.” As a full-time car salesman, he also likes to give a jar to his customers when they buy a car. “They remember me as the honey guy,” he said. The shed also gives him a place for storage when he is not processing honey. “The hives don’t all stay out year-round—only the first and second box,” Mike explained. “As the season progresses and they make more honey, you add a new box to the top of the hive. Usually around September, the hives are as tall as they are going to be and you have two or three boxes of honey per hive. Then you remove those boxes and pull the honey out of each frame. It’s those boxes that need to be stored for the winter.” Mike is looking forward to Michigan’s winter weather turning warmer, performing spring maintenance and assessing how his colonies survived the cold. With the recent mild weather, he is hopeful for a fruitful season. Longer term, Mike says he is considering building a house on the property after he retires. “It’s a little far from my work, but 10-15 years down the road, it might be nice to build on the land.” For now though, Mike is content tending to his bees and sharing the sweet fruits of his labor with friends and family. ■ ➡ Mike Poupore tends to his beehives on 25 acres of land near Manchester, Michigan.

Partners — Spring 2017




ESA, or transferred to a 529 plan within 30 days of the beneficiary’s 30th birthday to avoid income taxes and a 10 percent IRS penalty. With an ESA, like a 529, if a student receives a tax-free scholarship, withdrawals up to the amount of the scholarship may be made penalty free within the same tax calendar year. Eligibility to contribute to an ESA is based on the contributor’s modified adjusted gross income (MAGI).

Rather than sending your children or grandchildren into the world with the burden of student loan debt, you can save to cover at least a portion, if not all, of their higher education expenses.


TAX-ADVANTAGED OPTIONS: 529 saving plans • Wisconsin – Tomorrow’s Scholar (advisor) and Edvest (State) • Michigan – MI 529 Advisor (advisor) and Michigan Education Savings Program (State) 529 plans allow annual tax deferrals on account earnings, and earnings withdrawn from the account may be federal tax free if they are used to pay for qualified higher education expenses. 529 plans offer no guarantees on investment returns, but – like a 401k – they let you choose an investment strategy from a particular plan’s options. Roughly half of the states’ 529 plans offer in-state residents additional state income tax benefits. Contribution minimums and limits are also quite flexible, including the unique gifting and estate tax benefits they entail. Coverdell Education Savings Account (ESA) An ESA allows for after-tax contributions of up to $2,000 per year on behalf of the child named in the account. You may forego federal income taxes when you withdraw funds to pay for qualified education expenses. Different from a 529, the funds must be withdrawn for qualified expenses, rolled into another eligible family member’s


Spring 2017 — Partners

Custodial accounts • Uniform Gift to Minors Act (UGMA) • Uniform Transfer to Minors Act (UTMA) With UGMA and UTMA accounts, all gifts to minors are irrevocable, and the donor of the gifts retains no right to the property. Distributions should be used for the child’s benefit. Unlike an ESA or 529 savings plan, the funds are not restricted to education expenses only. The custodian manages the investments, acting in the best interest of the child. The account’s ownership is in the minor’s name and Social Security number. When the child reaches the age that custodianship ends (21 years old in Wisconsin and 18 years old in Michigan), the custodian is obligated to transfer assets to the child. As you can see, investment-based college savings programs come in many shapes and sizes. That is why a financial advisor’s insight and guidance is so valuable. He or she will not only help you choose the right savings plan, but can also help you select the plan’s investment alternatives that fit your needs and risk tolerance. ■


Keith is an Associate Vice President - Investments with Wells Fargo Advisors.

The opinions stated herein are not necessarily those of GreenStone Farm Credit Services.

Salted Caramel Maple Pecan Pie Bars

RECOVERING AFTER A WORKOUT Ingredients: Crust • 1 cup all-purpose flour • ¹/³ cup brown sugar, packed • ½ cup unsalted butter, soft Filling Whether you hit the gym, track, or sports field just occasionally or are a committed fanatic, a post-workout rest and recovery should be an essential part to your healthy lifestyle. Incorporating an after-exercise plan will have a big impact on your fitness gains and will allow you to train much more effectively. Post workout plans are crucial to muscle and tissue repair, along with strength building.

• 1 large egg

Here are some tips to get your plans on the right track!

• 1 cup pecans

• ¹/³ cup brown sugar, packed • ¹/³ cup maple syrup • 1 tablespoon vanilla extract • Pinch of salt, optional and to taste • ¼ cup salted caramel sauce for drizzling

Rehydrate Although you should be consuming water throughout the entire day to prepare for your workout, filling up after exercise is an easy way to boost your recovery. Water supports every metabolic function and nutrient transfer in the body, and having plenty of H2O will improve every bodily function, and help replace the fluid that is lost during your workout.

Instructions: 1. Preheat oven to 350F. Line an 8-by-8-inch baking pan with aluminum foil, spray with cooking spray; set aside. 2. Crust - add flour, brown sugar, and cut in the butter using two forks or a pastry cutter in a large bowl. Keep working until butter is evenly distributed and pea-sized lumps and sandy bits form.

Eat healthy recovery foods Ideally, you should consume a recovery snack within 30-60 minutes post-exercise. This time frame optimizes recovery and promotes the desired adaptations to hard training. Your body needs to refuel if you expect it to recover, repair tissues, get stronger and be ready for the next challenge. Have a snack that is two-thirds carbs and one-third protein. Choosing an on-the-go option to pack in your gym bag or leave in the car is a great way to make sure you avoid the post-workout haze!

3. Turn mixture out into prepared pan and hard-pack with a spatula or hands to form a smooth, even crust. Bake for 17-18 minutes or until crust is just set. Do not overbake; pan is going back into the oven after filling is added. While crust bakes, prepare the filling.

Rest and relax

4. Filling - add egg, brown sugar, maple syrup, vanilla, and optional salt to a large bowl and whisk until combined.

Ever heard of the saying, “time heals all wounds?” This is in fact extremely true when it comes to recovering from a hard workout. Resting allows the repair and recovery process to happen at a natural place. Although there is no “one-size-fits all” solution for recovery time, factors such as age and fitness level are important when analyzing how much rest you truly need. If your performance continues to decrease over a series of workouts, it might be wise to make time for a few extra rest days.

5. Stir in the pecans; set aside until crust is done baking. 6. After crust has baked, carefully pour filling over crust, smoothing the pecans with a spatula to distribute evenly. 7. Bake for 16-19 minutes or until center is set. Hint: Use an oven mitt to shake the pan gently starting at about 16 minutes and use your judgment from there; bars will set up more as they cool.

Listen to your body Although it seems obvious, the problem for most is that we do not listen to the warning signs that are right in front of us. If you are feeling tired, sore, or notice a decreased performance, you may need more recovery time, or a break from training altogether. However, if you are feeling strong the day after a hard workout, there is no need to force yourself to go slow. If you pay attention, your body will let you know what it needs and when it needs it. ■

8. Place pan on a wire rack to cool for at least 1 hour before drizzling with salted caramel, slicing, and serving. Bars will keep airtight at room temperature for up to 5 days, or in the freezer for up to 6 months.


Provided by the Michigan Maple Syrup Association

Commodity Cuisine...

Partners Partners— —Spring Spring 2017




TO CONSIDER CROP INSURANCE FROM GREENSTONE By Julie Gardner, Senior Crop Insurance Specialist, GreenStone Farm Credit Services We know you have a lot of options when it comes to selecting your crop insurance provider. But when you select GreenStone Farm Credit Services, you are getting more than just a policy; you are also benefiting from a team of local professionals who are working for you and your unique operation. So, what exactly sets us apart from the competition? Here are the top 10 reasons we think you should consider GreenStone for your crop insurance: 1. YOUR BEST INTEREST– We will offer you products and solutions to meet your individual needs, help you achieve your goals, leverage marketing opportunities and mitigate risk. 2. SPECIALIZATION– Our professionals focus only on crop insurance and do not work on commission. They are experts in their field who understand the needs and dynamics of agriculture today. 3. SERVICE– When it comes to providing a professional response, our team is unmatched in the industry. We serve our customers through a combination of hard work and the latest technology. 4. COMMUNICATION– We work with you one-on-one to review policy changes and determine coverage levels. Throughout the year, our agents will keep you informed and remain available whenever you may need them. 5. AGRICULTURAL PROFESSIONALS– Supporting agriculture has been our mission for over a century. Our team members understand the big picture of crop insurance and leverage that knowledge to help you manage your risks and opportunities. 6. OPTIONS– Offering you a portfolio of products from several companies within the industry allows us to serve your individual needs more effectively. 7. CONVENIENCE– At GreenStone, we offer a wide range of products and services beyond crop insurance, including agricultural loans, equipment financing, tax and accounting services, life insurance and more! 8. MARKETING ANALYSIS– Developing a strategy to take advantage of pricing opportunities when they arise is essential. We will help you understand how crop insurance ties into your marketing plan. 9. STRENGTH AND STABILITY– GreenStone is an $8 billion cooperative that has proudly served the agricultural community for more than 100 years. 10. CUSTOMER OWNED COOPERATIVE– GreenStone’s crop insurance program adds value and income to your cooperative. Purchasing crop insurance with us strengthens and supports the rural communities that we serve. If you think GreenStone might be the right fit for you, contact your branch to meet with your local crop insurance specialist! ■


Spring 2017 — Partners

CROP INSURANCE NEWS: NOW IS THE TIME TO SIGN UP FOR HAIL INSURANCE! Historically speaking, hail storms that used to be considered a fairly rare event seem to have become far more commonplace than even 20 years ago. Federal crop insurance covers hail damage as it relates to yield reduction, but producers can also purchase separate hail coverage for their crops from the same companies that offer federal crop insurance. As an added bonus, your separate hail policy can provide coverage for fire, lightning, vandalism/malicious mischief and transit to the first place of storage. Hail insurance is based on the percent of damage received at a particular growth stage, which allows insurance companies to perform adjustments and pay indemnities during a growing season, without having to wait until harvest. Rates and coverage vary by crop and county. Keep in mind, hail insurance must be purchased before damage occurs. Below are some other important items to note regarding hail coverage: • Most hail insurance covers other perils above and beyond hail damage, such as fire, vandalism and malicious mischief, transit to the first point of storage, and stored grain coverage if you happen to have a bin(s) at home. • Hail coverage is available on most any crop; if you do not have a Federal crop insurance option, you can generally at least get coverage for hail. • A customer is able to carry a Federal Multiple Peril Crop Insurance (MPCI) policy as well as a hail policy, and collect on both in the event of a loss.

• Hail coverage is based on a dollar amount of coverage per acre, with premium generally quoted per $100 of coverage. For example, if someone wanted to cover their corn at $700 per acre, and if the premium was 60 cents per $100 of coverage, their premium for corn would be $4.20 per acre. • One benefit to hail insurance over MPCI is you can insure up to the total expected value of the crop, whereas on MPCI you are limited to 85 percent. • Hail coverage generally has many different endorsements available, including quality endorsements on crops intended for fresh market, canning reject endorsements, etc. To learn more on how a hail policy works, what options are available, and what is covered with a hail policy, contact your GreenStone crop insurance specialist today to set up an appointment to review your options. ■

Crop Insurance Calendar... APRIL

28 29

JULY Deadline for April LGM Applications Production Reporting Deadline for all 2016 Spring Crops



Deadline for May LGM Applications


Oat Acreage Report Due

Forage & Fall Wheat Premiums Billing Date

1 15

Spring 2017 Acreage Reports Due


Deadline for July LGM Applications



Spring Premium Billing Date



Deadline for June LGM Applications

* Please note that dates can vary by county. Please check with your crop insurance specialist for specific dates if you are unsure.

Partners — Spring 2017


Early/Final Plant Dates

First Crop/Second Crop

Early and final plant dates vary by crop, county and state. Coverage levels can be reduced if a crop is planted too early or too late. Please check with your crop insurance specialist or actuarial documents for specific details and dates for your county. ■

If you are planning on possibly removing a first crop to plant a second, make sure you contact your crop insurance agent before doing so. You could potentially be eligible for a claim, but you may forfeit that eligibility if you act before contacting your agent to discuss your options! ■

Prevented Plant or Replant If weather conditions prevent you from planting or you need to replant, you may qualify for a claim. File a claim with your agent before replanting. If you have a prevent plant situation, a claim must be filed within 72 hours after the end of the late planting period which varies by crop. DO NOT replant before calling your crop insurance team. Remember, there is a minimum requirement of 20 percent of the unit or 20 acres for both replant and prevent plant, whichever is less. Some important changes have been made for the 2017 crop year in regards to both Replant and Prevent Plant rules. Depending on the timing of the replant period, weather and field conditions, you could be required to replant. Please contact your crop insurance specialist for the most current rules and guidelines. ■ 2017 Fall Wheat & Forage Claims Appraisals are required when a customer plans to do something with the crop other than harvest in the normal manner. If you do not plan to take your wheat/forage to harvest, we must appraise the acres prior to destruction. ■ Acreage Reports Acreage reports will soon be mailed to customers for 2017 Spring planted crops. It is the customer’s responsibility to report the crop that was planted in each section, the planting date and your percent share of that crop. Reporting your crop accurately and double checking everything is very important. Corrections or changes cannot be made after the July 15 reporting deadline. You do not need to report to FSA before reporting your planted acres to your specialists. If you have any questions, contact your local GreenStone crop insurance team. ■ 33

Spring 2017 — Partners

Enterprise Units Structure The added subsidy on the enterprise unit structure makes it an affordable option for many producers. The downside is, if you do not end up planting the required acreage, your policy can revert back to a basic unit structure, and your premium could increase substantially. There are two requirements to qualify for enterprise units:



According to a recent study published by the AntiPhishing Working Group, nearly one-third of the world’s computers could be infected with some sort of malware or virus. Traditional Anti-Virus (AV) software uses definitions of malicious malware and viruses created by the manufacturer to detect threats. If your computer does not possess AV and no definition has been created, then that potential malware can go undetected for months, lying dormant on your computer.

You must farm in two or more separate sections. and At least 20 acres, or 20 percent of your individual crop acreage, whichever is less, must be planted in that second section. Adverse spring weather has the potential to cause prevented planting, which could take some producers out of enterprise unit eligibility. Make sure to contact your crop insurance specialist if you anticipate any issues with meeting the enterprise unit requirements. ■ Crop Insurance Alerts Crop insurance alert postcards will be mailed to customers on an “as needed” basis. The goal is to communicate any vital information that we receive and feel necessary to pass along to you. The front of the postcard is printed in RED, so when you receive one, please pay attention to its message to ensure any required action on your part can be completed in a timely basis. ■ Organic Crops As a reminder, RMA now requires all insured organic certified producers to provide a copy of their organic crop plan and organic certificate to their agent before the acreage reporting date. ■

Here are few tips to help keep your computer malware and virus free. 1. Install real-time anti-malware protection. Although there is free software that can protect your computer, these tools typically do not provide realtime or active protection from malware and other infections. 2. Keep anti-malware/virus application up-to-date. Since these programs use definitions to protect your computer, you have to make sure they are being updated regularly. Ultimately, if they are not updated, they are not protecting your system. 3. Perform daily scans. On your computer, be sure to enable daily scans of your hard drive. Ideally, schedule these scans to run at night when you are not at your computer. These can be invaluable in detecting, isolating and removing malware/virus injections. These are just a few tips that will go a long way in helping keep your computer free of malware and viruses!

...Tech Tip




The Diversity Advantage

In an era where flexibility and creativity are keys to competitiveness, diversity is critical for an organization’s success and offers benefits to both employers and employees. An environment that is positive and

The Department of Labor issues labor certifications for permanent and temporary employment under the following programs: • Permanent Labor Certification • H-1B Specialty (Professional) Workers

By Rachel Wood, Human Resources Generalist, GreenStone Farm Credit Services Evolving social, cultural, and political norms, as well as changing demographic and immigration patterns, have had an impact on the composition of our population. In turn, business practices have had to keep pace with the changing market needs and the workers who contribute to their success. Diversity in the workplace encompasses a wide-range of visible or non-visible characteristics such as physical (age, gender, race, abilities, personality), cultural (ethnic or national origin, lifestyle, martial/family status, language), and socioeconomic (education, profession, job function, social class). All of which contribute to “cultural identity” which shapes the values, attitudes, and behaviors shared by most (but not necessarily all) people within a particular group.


motivating for its people increases worker satisfaction, productivity and retention, in addition to the following added benefits: • Improved employee morale, performance, and productivity through equitable workplace practices that select, develop and treat people based on merit and fairness. • Improved employee creativity, problemsolving, and decision-making through the exposure to new ideas, cultures, and perspectives. • Strengthening of company’s relationship with specific customer groups. • Ability and access to attract and recruit top talent from a larger pool. • Eligibility for government contracts for which minority or gender-balanced businesses are given preference. • Gaining a broader perspective and knowledge supplied by people of different cultures. Promoting workplace diversity has many bottom line benefits, but the hiring process needs to be approached holistically. This is especially true for companies in less diverse regions where relocated minority employees may feel disconnected. First steps include identifying the needs: • Does your workforce resemble the communities you operate in? • Do they match the demographic that you serve or want to serve? If not, develop a hiring strategy to increase workforce diversity by talking to local organizations with connections to your community such as churches, cultural institutions, and colleges, or enlisting the

• H-2A Temporary Labor Certification (Seasonal Agricultural) • H-2B Temporary Labor Certification (Non-agricultural) • D-1 Crewmembers Certification Foreign labor certification programs permit U.S. employers to hire foreign workers on a temporary or permanent basis to fill jobs essential to the economy. Be sure to obtain and fill out the proper form(s)! For more information, visit In addition, the U.S. Citizenship and Immigration Services use Form I-9 to verify the identity and employment authorization of individuals hired for employment in the United States. All employers must ensure proper completion of From I-9 for each individual they hire. For more information, visit

help from nonprofits, websites, or government agencies that offer searchable channels of minority job hunters or migrant labor, but do not limit yourself to only local organizations and schools. If you have something to offer out-ofarea workers, expand your search. An important step that should not be overlooked includes providing diversity training to current staff in your workplace. All employees should understand that hiring decisions are based on finding the best candidate and not by quotas. Making the recruiting process more transparent can help ease the minds of skeptical employees. There are multiple ways to add diversity to the workplace; searching for candidates in multiple categories could be right for your business! ■ Sources:,, Partners — Spring 2017


Organizing Your Farm Finances: Creating and using Financial Reports By Tamara Baker, Senior Credit Analyst, GreenStone Farm Credit Services Financial reports are often seen by farmers as a burden, required by lenders and other strategic partners, but less important than actually running their operations. Such reports can be immensely valuable to agricultural producers, providing important insights into how an operation is performing, and drive informed business decisions for the future. While these insights are important in times of plenty, they become especially critical in challenging times, like those we face today. The U.S. Department of Agriculture’s Economic Research Service reported in February that farm income is expected to drop again in 2017, the fourth year of decreasing income from farm operation and a trend that is expected to continue in years to come, due in part to continued low commodity prices. It is clear that agriculture is facing difficult times, but producers can better prepare themselves to withstand this economic climate by compiling and using these financial reports.

THREE KEY FINANCIAL REPORTS There are three financial reports that, individually and in concert, can help guide short- and long-term decision making, and help target how to most effectively spend resources. The balance sheet shows assets, liabilities and equity. Assets include the current market value of what you own, including current assets like inventory and cash, and long-term assets like facilities and land. Liabilities are what you owe, from current liabilities like loan payments and taxes, to long-term liabilities such as mortgages. Equity is your ownership of the business. One of the most important line items on the balance sheet is working capital, which is the difference between total current assets and total current liabilities. Effectively, working capital is the money you have available to spend; it is what carries you from planting to sale, and allows you to keep your operation going when margins are low. The income and expense report shows your net income after debt servicing, detailing your earnings and operating expenses such as sales of inventories as income, and input costs as expenses. Income and expenses can be reported on a cash basis, when money actually changes hands, or on an accrual basis, when sales and purchase commitments have been made. Most producers report on a cash basis, however lenders typically prefer reviewing financials on an accrual basis as presenting a more accurate and complete assessment. The projection report shows what you expect to produce in the coming year, based on the number of acres being farmed or the number of head being milked or raised. This is a bestguess calculation comprised from past performance, typically a five-year average, and adjusted for current market prices and costs. In short, the projection allows a producer to estimate their margin after their loan payments, foresee whether it is going to be a profitable year or not, and make adjustments to limit loss or achieve profitability. Together, these three reports can provide guidance when making business decisions. For example, if you have a high level of working capital and project a strong year, it may be a good time to consider making an investment in equipment or land. If you are predicting a tighter year, when you will be drawing down working capital, it may be time to fine-tune your marketing plan. TRACK YOUR TRENDS A single report yields insight into the current state of your business, but comparing your reports over time provides additional value. On the balance sheet, look at your working capital compared to the last period you reported. If it has gone down, is it because you have drawn down your inventory, a finite resource? On the income and expense report, has income dropped due to lower commodity prices? On the projection report, is your anticipated income sufficient to cover your costs, including your living expenses? In each of these scenarios, you may need to secure a loan to bridge the gap until profitability returns and working capital can rebuild. ALIGN REPORTS WITH OPERATING CYCLE How often these financial reports should be generated depends on the type of farm operation. With one production cycle,


Spring 2017 — Partners

annually is likely sufficient. A producer with two crop cycles should create reports twice a year; a year-round operation like a dairy, which has monthly income, inventory turnover, and expenses, would ideally review financial reports each month. This can be challenging, as producers are often focused on what is happening on their operation every day. However, spending a little time reviewing their financials can help identify issues more quickly to develop plans to manage through them. For example, if labor costs have increased unexpectedly but income has not, the producer will need to figure out a solution. At the end of the cycle, it is also important to compare the actual results in production, income, and expenses to the projections, and make appropriate adjustments so the projection for the next cycle more accurately reflects reality, and your plans can be built on a stronger foundation. WHEN IT IS TIME FOR A LOAN We anticipate low commodity and protein prices will continue in the near future, at a time when input costs are still high and labor costs

may be increasing. This is putting a strain on farm incomes across the nation. As inventories are depleted, working capital levels can be expected to drop, which may lead more producers to seek financing. Accurate and complete financial reports are a necessity when applying for a loan. They allow the lender to have full understanding of an operation and adequately assess the benefits and risks of approving the loan, so both the lender and borrower make good financial decisions. While financial intuitions are in the business to lending, it is equally a business of relationships built on trust and mutual respect. It is important that lenders work with each client individually to develop a plan that works for them and their business. At GreenStone Farm Credit Services, where our borrowers are also our owners, we take a longer-term view toward supporting our customers’ success while also making decisions that will keep our borrowers and our institution financially healthy. Financial reports are the key for us to make those wise decisions to protect all of our cooperative members. â–

Partners — Spring 2017



The IRS’s Small Business/Self-Employed Division (SB/SE) has issued an internal memorandum outlining a pilot program for auditing farm expenses claimed on Schedule F, Profit or Loss from Farming. Schedule F is used to report farm income and expenses on individual returns (Form 1040), partnerships and LLCs (Form 1065), and estates and trusts (Form 1041). The pilot program is only being worked currently in IRS’s Brookhaven, N.Y. campus. The IRS notes there has been limited audit coverage of the Schedule F in recent years. The IRS also notes there may be compliance issues, such as deducting expenses on the wrong form, deducting expenses actually belonging to another taxpayer, or deducting hobby losses. Among the instructions to auditors are:

By Kelly Tobin, Senior Tax Accountant and Tax Services Product Manager, GreenStone Farm Credit Services

DEPOSITS AND SUPPLIES. Farmers often write a substantial number of checks during the last few days of the tax year to pay expenses. Large disbursements should always be part of an auditor’s examination. The auditor must determine if the disbursement is a tax deductible payment or a nondeductible deposit. Whether an expenditure is a payment or a deposit depends on the facts and circumstances of each case. The following factors are indicative of a deductible payment: • The expenditure is for a specific amount of goods at a set price. The farmer should secure an invoice that clearly defines quantity, quality and unit price for the items purchased. There should be no right to a refund or repurchase noted on the invoice. • The expenditure must be for a business reason and not merely to avoid taxes. Examples of typical business reasons for year-end prepayments include receiving a discounted price on the items purchased, securing access to goods that might be unavailable in future months, or a desire to lock in a price for an item that may be more costly in the future.


Spring 2017 — Partners

Tax Calendar... APRIL


Individuals file a 2016 income tax return (Form 1040) and pay any tax due. If not able to file, file Form 4868 to request an automatic six month extension. If tax is due, it must be paid with the Form 4868. F irst quarter estimate due for 2017 for individuals that pay estimated taxes. Corporations file a 2016 calendar year return (Form 1120) and pay any tax due. If not able to file, file Form 7004 to request an automatic six month extension. Corporations deposit the first installment of estimated income tax for 2017.



• The expenditure should not materially distort income. In general, a prepaid item does not constitute a distortion of income if the item is reasonably expected to be consumed within the next 12 months.


If the expenditure does not include a specific amount of goods at a set price or the purchaser has the right to substitute other goods or products as part of the contract, the expenditure will be considered a non-deductible deposit.


In order to determine that all fuel expenses are for conducting business on the farm, the auditor should ask the following questions: a) Do you have a fuel storage tank on the farm? b) How do you account for personal use of fuel from the storage tanks? c) If fuel is purchased from a gas station, the auditor should request an explanation to ensure the fuel was not for personal use.

 on-farm employers file Form 941 for the second N quarter to report social security, Medicare, and withholding. F orm 5500 due for all employers that maintain an employee benefit plan such as a pension plan.



S econd quarter estimate is due for 2017 for individuals that pay estimated taxes.  orporations deposit the second installment of C estimated income tax for 2017.

• The prepaid amount may not exceed 50 percent of the non-prepaid expenses incurred for the year, which includes depreciation expense.

Farmers may hire individuals or businesses who own equipment that the farmer does not own, such as no-till drills or combines, to perform specific activities on their farms. These amounts are fully deductible as a Custom Hire expense. Auditors should be attentive that amounts paid to employees, whether full-time or seasonal, should not be reported on this line. Employees should receive a W-2 and the deduction for wages is taken on the line for Labor Expense. If an auditor does find employee wages in Custom Hire expense, the memo instructs him to send an email with the employee’s social security number to a specified IRS employee.

Non-farm employers file Form 941 for the first quarter to report social security, Medicare, and withholding.

Depending on the outcome of the pilot project at the IRS’s Brookhaven campus, this pilot program could be expanded to a full-blown national project. The best way to prepare for an IRS audit is to ensure you have an accurate set of records that are reconciled to your cash accounts and reconciled to your tax return. One of the best accounting software programs available is GreenStone’s AgManager records system, which provides an excellent audit trail that makes the IRS auditor’s job easy. GreenStone’s tax accountants have many years of audit experience and are familiar with IRS auditing procedures. If you encounter an IRS audit, consider contacting us to assist you in the auditing process. ■

Partners — Spring 2017


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