Partners - Spring 2016

GreenStone FCS

Spring 2016

Promoting the business success of our customers and the rural community

Log Home Living Fresh Perspectives Search Honorees

BREAKING

INTO ONIONS Reasons to Go “E” With GreenStone

SPRING 16 5 YBSF Feature. Craig and Chris Brandt grew up in farming, and ventured out on their own in 2012, starting Valley Farms. The initial plan was to farm just soybeans; however, the rich, black muck soils were beckoning for a vegetable crop.

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19 GreenStone Story. The Fresh Perspectives search yields four honorees making an impact here in your backyard.

27 Country Living Feature. Not long after Dave and Kathy Holland met, they developed a love for log homes, leading them to today, as they build their dream retirement home.

31 Crop Insurance Feature. Use this comparison to learn which livestock policy is right for you.

35 Tax Feature. It is an emotional time when you lose someone, but you can be more prepared with this helpful information on estate taxes.

3 CEO Comments.

President and CEO, Dave Armstrong, shares his positive outlook as we work together to preserve and protect your businesses.

29 Health and Wellness.

Start your kids off with the right money management tools, and they will thank you later.

33 Guest Column.

9 Guest Column.

Nutrient management is a very significant issue for farmers as they continue to focus on the environment.

11 AgDirect.

GreenStone recently spoke with Scott Welden, AgDirect territory manager, to discuss how members can manage machinery and equipment costs.

13 Market Outlook.

Bob Utterback discusses market timing, the weather and implications of global acres.

El Nin˜ o of 2016 and the potential impact on producers.

37 Careers.

Check references and skills of prospective employees for long-term returns.

16 Member News 17 Pause for Applause 21 Circle of Excellence 22 Behind the Scene 22 Calendar of Events

23 Legislative Matters.

Upgrading to the latest wireless technology is welcome news for cities and rural communities in mid and northern Michigan.

24 PAC Progress.

The 2016 MI GreenStone PAC patronage campaign was largely successful in its third year, with over $23,000 in contributions.

25 Directors’ Perspective.

Four board directors reflect on a century of Farm Credit and share a bit of their own history.

30 Spring Maintenance 30 Commodity Cuisine...

Caramelized Onions

Editor’s Note: Page 29 of this Partners publication offers ideas to help teach fiscal responsibility to your children. I didn’t personally write the article, but as I read it, I found myself nodding my head— sometimes in delight as it spoke to a concept I personally employ with my own children, other times it was a nod in acknowledgement of things I know I should be doing, but haven’t fully embraced.

Of course, there’s no one way to teach, nor execute, financial management...regardless of your age! This continues to be evident in the agricultural industry— diversification, risk management, and business planning are just three of several concepts farmers utilize from year to year. Through the variable livestock years, the challenging field crop times, the volatile specialty crop seasons, and the trying toddler to adolescent years… resourceful solutions keep things moving.

This issue of Partners provides insight into some of those resources to help you manage through it all. From Dave’s genuine CEO Comments, to the Market Outlook’s economic forecast; from the heart of young onion growers and the drive of the Fresh Perspective honorees, to the simple practicality of household tips and advice; all coupled with specifics behind various farm products and individual services; we trust you will find a few nuggets for your resource bank.

After all, life isn’t always fun and easy, but some things are worth working for…at least that’s what I tell my kids when we begrudgingly head to the bank instead of the toy store with their chore earnings!

31 Crop Insurance Calendar 32 Crop Insurance News 36 Tax Calendar 38 Tech Tip

This newsletter is published quarterly for the customers of GreenStone Farm Credit Services.

Partners 3515 West Road East Lansing, MI 48823 517-318-2290 marketing@greenstonefcs.com Let’s Be Social

Connect with us online for news and updates.

CEO Comments:

The Bright Side of Life I HOPE THIS ISSUE OF PARTNERS FINDS YOU WELL AND READY TO BEGIN A NEW CROP YEAR. WHILE YOU HAVE PROBABLY BEEN VERY ACTIVE PREPARING FOR THE 2016 PLANTING SEASON FOR SEVERAL MONTHS NOW FROM YOUR DESK AND/OR TOOL SHED, IT IS THIS TIME OF YEAR—WHEN THE CROP IS FINALLY GOING IN THE GROUND— THAT FARMERS LOOK FORWARD TO. DESPITE ALL THE PESSIMISM AROUND COMMODITY PRICES AND NEGATIVE MARGINS, FARMERS LOVE WHAT THEY DO, ESPECIALLY WHEN THEY CAN BE OUTDOORS FITTING GROUND, PLANTING, SPRAYING, HARVESTING… YOU NAME IT, AS LONG AS IT’S NOT PAPER WORK!

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reenStone continues to work G with our members to manage through these challenges. However, not all is generally ever lost in any difficult situation. So, even if the level of business success hoped for in 2016 doesn’t materialize, don’t forget all of the other things in life there are to be thankful for.

Remember, a person’s net worth never equals their self-worth.

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So, what am I looking forward to? Instead of dwelling on the current and projected financial challenges associated with many of the commodities grown in our territory, I would rather focus on our blessings, both mine and yours, as this crop year officially gets underway.

You might recall a year ago, in the Spring 2015 issue of Partners, I shared a number of ways our members could “preserve and protect” their businesses in the light of the gathering storm clouds on the horizon. At that time, the agricultural economy had clearly started its inevitable decline from years of historically high incomes to revenues that will not likely cover all expenses. I also shared a number of things we were doing, and still are doing, here at GreenStone to prepare for the anticipated storm, by working with our members who may find themselves financially challenged during these times. Unfortunately, the outlook for most commodities is not any better this year and, for some, it is even worse; but as I said above, I encourage us to all dwell on the positives. Besides, as current culture says, “it is what it is” anyway.

For a little optimism, let me begin with the fact that, for most of us, there are many more

things going right to be thankful for than there are challenges. The simple fact that you are able to read this publication means multiple reasons to be thankful (for your health, your education, and even for your Farm Credit cooperative that provided it!). Many of us get up each day in relatively good health (okay, for those like me who are more “tenured,” it may take a little longer and not be necessarily pain free, but it beats the alternative); enjoy time with family, friends, co-workers, and neighbors; engage in hobbies; are able to consume three square meals a day, experience dawn on a clear morning, watch the sun go down at night, and go to sleep knowing we are relatively safe from any kind of physical harm. The list could certainly go on and on, but the point is that all too often we only truly value these “givens” when something tragic happens to somebody else and then reflect on just how good we have it. Then those thoughts quickly vanish and we return to the “rut” of dwelling on the negatives intruding in our life.

I am certainly not advocating the avoidance of reality, bad things can and do happen; but keeping things in proper perspective is critical to our well-being. Many in our industry will

face real pressure with the financial viability of their businesses over the next several years, and will likely need to take prudent steps to overcome them. GreenStone continues to work with our members to manage through these challenges. However, not all is generally ever lost in any difficult situation. So, even if the level of business success hoped for in 2016 doesn’t materialize, don’t forget all of the other things in life there are to be thankful for.

Remember, a person’s net worth never equals their self-worth.

In this Issue of Partners As you browse through the coming pages of this magazine, you will see a great deal of positive and uplifting things taking place within our industry and communities, including several of our employees and members receiving recognition for a wide array of achievements and activities. Plus, there are a number of articles that will inform you, and may even spark an idea you can use to make a positive change in your business and/or busy life.

We truly hope that you find this publication informative and helpful. The feedback you provide about its content has been welcomed, and I encourage you to continually share new ideas or tips you may like to see to help make it even better; after all, we do this for YOU! Best wishes for a positive and safe planting season! All of us here at GreenStone truly value the relationship we have with each and every one of you, and we are very grateful you have chosen us to be your financial provider. As always, feel free to contact me directly if I can ever be of assistance.

Dave Armstrong

517-318-4105 dave.armstrong@greenstonefcs.com

Partners — Spring 2016

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GROW

Breaking Into Onions

By Jennifer Vincent Kiel

WITH A MASTER’S DEGREE IN BUSINESS, CRAIG BRANDT LEFT HIS IMLAY CITY, MICHIGAN ROOTS FOR A JOB SELLING CATERPILLAR FARM EQUIPMENT IN FLORIDA. EVEN SO, HIS HEART REMAINED IN HIS FAMILY’S CARROT FARM THAT ALSO USES SOYBEANS AS A ROTATION. “I HAVE A PASSION FOR FARMING, AND EVEN AS I WAS LEAVING, I KNEW I ALWAYS WANTED TO COME BACK,” HE SAYS ABOUT THE OPERATION HIS DAD, GARY, RUNS WITH HIS BROTHER-IN-LAW, GARY MAKEDONSKY. “IT’S LIKE IT’S IN YOU. BUT THE TIMING WASN’T RIGHT AND THE OPPORTUNITY WASN’T THERE.”

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y typical day might include harvesting carrots M from 5 to 10 a.m., harvesting onions from 10:30 a.m. to 9 p.m. and then running the packing shed from my phone into the night.

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The initial plan was for Craig, 34, and his two brothers to each go their own ways. Chris, 28, also pursued a business degree, while Casey, 31, became a mechanical engineer for the Department of Defense.

At present, the farm has 12 locally-sourced employees.

Craig says they are looking into programs, such as H2-A, to help with labor as the business grows.

Growing onions for the fresh market isn’t easy. “It’s a finicky crop,” Chris says. “But it’s so rewarding when you’re harvesting and packing them in storage.”

But farming kept tugging at their souls. In his sophomore year of college, Chris watched as friends took desk job careers. “I just knew it wasn’t for me,” he says.

A good yield is around 1,200 bushels per acre, according to Craig. “We hit that in spots the first year and more so in the second, as we realized we needed more hand weeders. We are restricted with the type of herbicides and when it can be applied.”

Near the same time, Craig started talking with Marty Kasperski, a senior financial services officer with GreenStone Farm Credit Services. An area farmer was readying to retire. “I started to develop a business plan,” Craig says. “The opportunity was there, and Chris and I decided to go for it.”

The brothers partnered in 2012 to buy the retiring farmer’s equipment, and Valley Farms was established.

“I’ve worked with the family since I started with GreenStone six years ago,” Kasperski says. “The family has strong roots in agriculture, and it’s exciting to see them continuing in the industry. Craig has good business sense, and Chris is a really hard worker and a good operator. They make a great team, and I think they are going to do well.”

The initial plan was to farm just soybeans, which they did the first two years. However, the rich, black muck soils were beckoning for a vegetable crop. In 2014 they pulled about a third of their acreage out of soybeans and into 80 acres of onions, 20 acres of cabbage and 20 acres of herbs.

Last year Valley Farms abandoned cabbage and herbs in favor of growing 200 acres of soybeans and 135 acres of onions, including the addition of red onions. “Those other crops required an immense amount of labor,” Craig says.

“It’s hard to find reliable hand labor—it’s our greatest challenge.”

➡ Craig and Chris Brandt grew up in farming, and ventured out on their own in 2012, starting Valley Farms.

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ut it’s not easy work...

B For us, farming is family.

Growing up I spent more time with my dad than most kids.

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Gearing up for planting, seed orders are finalized in December. “I look over fertilizer blends and what fields need application,” Craig says.

“We’re also rebuilding equipment at that time, getting planters and sprayers ready,” Chris adds. “We are draining and pumping out fields.”

Planting normally starts the beginning of April – it was delayed this year because of the rains. They rake, fertilize, rake again and then plow while seeding barley as a cover crop. An 18-foot planter then beds the onions.

Sourcing his engineering expertise, Casey is also part of both operations. “Any good farming operation is building and modifying equipment,” Craig says. “He’s very important to what we do in that respect.” ➡ Brothers Craig and Chris, with GreenStone senior financial services officer Marty Kasperski, at Valley Farms.

Craig and Chris believe in staying busy. In addition to the farm, Craig is the general manager at Helena’s Imlay City branch. “That has helped me with the work on the agronomy side,” Craig says. “We tissue sample once a week, adding different nutrients along with our spray program. We spoon feed them weekly.”

Both Craig and Chris also work for their dad’s operation, Lindy’s Pre-Pak Carrots, which was started in the early 1960s by their great grandfather, Al Brandt Sr., and grandfather, Lindy. The 600-acre farm is split between carrots and soybeans in a rotation to suppress weeds and disease, while improving soils.

“My typical day might include harvesting carrots from 5 to 10 a.m., harvesting onions from 10:30 a.m. to 9 p.m. and then running the packing shed from my phone into the night,” Chris says.

Onions are packed from August into March from the 160,000 bushels of long-term storage. They are shipped to several large grocery chains.

As much as Chris enjoys harvesting and the rewarding feeling it offers, he gets a personal charge out of the anticipation of spring and planting. “It’s just go-gogo,” he says.

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Straight Talk The brothers are the fourth generation of farmers in the family. “There are definitely some perks of being outside every day and not in an office,” Chris says.

“But it’s not easy work … a lot of people come and go that can’t handle it. For us, farming is family. Growing up I spent more time with my dad than most kids.”

The brothers want to keep growing the business to potentially welcome another generation. Chris is married to Joleana and they are looking to start a family in the future. Craig has three sons, Corey, 15, Collin, 12, and Carter, 11.

GreenStone is sure to be part of that growth.

“We consider GreenStone to be one of our business partners,” Craig says. “As young farmers, we relate to Marty really well. I had many long talks with him while I was still in Florida about what we’d like to do.

GreenStone has been there for equipment purchases, land dealings, and some of our operating funds.

We chose GreenStone because our family had done business with them for several years, but secondly because we trust Marty. He does a good job.”

Out of Craig’s three sons, Carter is most interested in agriculture—“as long as he gets a big truck,” Craig chuckles. ■

With Craig and Chris Brandt

When you were eight, what did you want to be when you grew up?

What is the biggest challenge for young, beginning or small farmers today?

Craig: “I wanted to be a farmer.”

Chris: “The same.”

Craig: “Our biggest struggle has been labor (if you’re in the specialty business).”

When did you first realize that you wanted to be a farmer for a living?

Craig: “I have always wanted to do that. There’s something about being part of a family tradition and keeping that going.”

Chris: ”My sophomore year of college.”

Chris: “For beginning farmers, it’s access to land.”

What advice do you have for young, beginning or small farmers starting out?

Craig: “Make sure you are dedicated and have your heart and soul into what you are doing.”

Chris: “Be prepared to put in a lot of hours and work hard.”

Who do you look up to; who is your mentor?

Craig and Chris: “Our dad, Gary.”

i DID YOU KNOW? – Michigan produces more than 133 million pounds of onions, worth $14.3 million – Most Michigan onions are grown in the counties of Allegan, Barry, Eaton, Ionia, Kent, Newaygo, Ottawa and Van Buren – Fresh onions are available in Wisconsin in late summer and fall, while scallions are available in spring and early summer – Onions are rich in vitamin C, vitamin B6 and potassium

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How Do You Solve a Problem Like… Nutrients?

By Alan Hahn IN THE MUSICAL “THE SOUND OF MUSIC,” ONE OF THE SCORES TALKS ABOUT THE MAIN CHARACTER, MARIA (HOW DO YOU SOLVE A PROBLEM LIKE MARIA?). MARIA IS AN ENIGMA; IS SHE A HEADACHE OR AN ANGEL? A DARLING OR A DEMON? IT’S ALL A MATTER OF PERSPECTIVE. WHILE ARGUABLY NOT QUITE AS HEARTWARMING, NUTRIENTS, IN GENERAL, ARE AGRICULTURE’S “MARIA.” ON ONE HAND, THEY ARE ESSENTIAL AND COVETED FOR THEIR VALUE, YET ON THE OTHER HAND, THEY HAVE BECOME A SIGNIFICANT CHALLENGE AND THE CENTER OF LAWSUITS. IT’S ALL A MATTER OF PERSPECTIVE.

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We have discussed the issue of nutrients in other issues of Partners in the past. Make no mistake, nutrient management will continue to be a very significant issue for farmers. Throughout and across the United States, from the Chesapeake Bay to the Gulf Coast, to the Great Lakes and to Washington State, nutrients are the focus of increased regulation and lawsuits.

To this point, my colleague and senior scientist at Dragun, Jeffery Bolin, recently returned from attending the National Milk Producers Federation (NMPF) Environmental Issues Committee meeting in Washington, D.C. Jeff said the nutrient challenge was one of the main topics of discussion.

The environmental challenge for those in agriculture relates to nitrates, which are relatively mobile (see NMPF webinar: www.j.mp/ NMPFNitrates), and phosphorus, which is relatively immobile.

How nutrients move, change, and interact in the environment is a complicated issue involving many disciplines, including hydrogeology, agronomy, chemistry, biology, and more. There is no easy or “one-sizefits-all” solution. With that in mind, here is a quick snapshot of the current “nutrient landscape” as it relates to agriculture.

Nitrates

Nitrates in groundwater are increasingly becoming the focus of lawsuits and contentious regulatory battles involving agriculture as displayed in Yakima Valley, Washington (Partners, Fall 2015).

In a case that is currently scheduled to be heard August 2016, the Des Moines Water Works (DMWW) is suing three county drainage districts where the DMWW claims nitrate pollution is emanating. According to the DMWW, the source of this nitrate pollution is local farm fields with drainage tiles that are acting as conduits for the nitrates to flow from farm fields to the local waterways.

According to reports, the DMWW is spending $1 million dollars a year to remove nitrates from the city drinking-water supply (the Safe Drinking Water Act has established a limit of 10 parts per million for nitrates). Further, the DMWW also believes they will have to spend $100 million to upgrade their equipment to address the ongoing nitrate problem.

The outcome of the Iowa case will be monitored by agriculture and activists alike, as this could set a tone for future cases involving agriculture, as well as a foundation for calls for additional environmental regulation.

Phosphorus

Phosphorus runoff from farm fields, homes, and commercial properties (e.g., golf courses) has been the focus of attention for decades.

Since phosphorus tends to be less mobile, the runoff of phosphorus is more typically associated with over fertilization and runoff of organic matter.

Locally, phosphorus has been a major concern as Lake Erie has been affected by large algae blooms (Partners, Fall 2014). When excess phosphorus enters the waterways, it can lead to excess growth of plants that, in turn, has led to algae blooms and what is commonly called “dead zones.” These areas where algae blooms persist and water is relatively stagnant have limited oxygen availability for the local ecosystem and can lead to “fish kills.”

Recently, Michigan, Ohio, and Ontario signed the “Western Basin of Lake Erie Collaborative Agreement.” This agreement focuses on the waterquality issue in Lake Erie, which is, in particular, phosphorus.

Impact on Agriculture

As stated earlier in this article, the nutrient issue is very complicated.

And just because you use nutrients on your farm and there is a nearby nutrient problem, it is not an automatic indictment (correlation does not equal causation). After decades of research, we are just now recognizing that “legacy” nitrates are responsible for many of the nutrient issues. With that said, agriculture recognizes that one of the greatest sources of organic nutrients (liquid manure from livestock) will have to be handled differently in the coming years, especially if additional regulation and lawsuits are to be avoided.

From a regulatory perspective, among the Environmental Protection Agency’s eight National Enforcement Initiatives is “Preventing Animal Waste from Contaminating Surface and Ground Water.”

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There are many current initiatives that are focused on finding affordable technologies to recycle manure, as well as looking into nutrient credittrading programs. Newtrient, LLC is jointly owned by several co-ops (including Michigan Milk Producers Association); their focus is on developing cost-effective approaches to better reclaim, handle, and, hopefully, monetize nutrients from manure.

Like the wayward Maria, nutrients can be a blessing and a headache. This much seems certain… the future of nutrient management is likely being shaped by the issues, lawsuits, and research today. ■

ABOUT THE AUTHOR

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

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

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 www.greenstonefcs.com!

• Supporting our Future Farmers Corey Fanslau, GreenStone financial services officer in Clintonville, Wisconsin, talks about GreenStone’s support of local organizations, programs, and initiatives dedicated to advance agriculture – today and tomorrow. FFA is one such organization.

• A Century of Partnership This July, GreenStone will celebrate 100 years… a century of history holding a collection of memories, challenges, and triumphs. As we reflect on what has brought us to where we are today, we can’t help but first recognize the reasons we are here – you, our dedicated, hardworking members. It is because of our cooperative owners that GreenStone has reached this significant milestone, and we are proud to commemorate it together! ■

Partners — Spring 2016

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Managing one of the biggest fixed costs:

Machinery & Equipment GREENSTONE RECENTLY SPOKE WITH SCOTT WELDEN, AGDIRECT TERRITORY MANAGER, TO DISCUSS HOW MEMBERS CAN MANAGE MACHINERY AND EQUIPMENT COSTS.

Owning every tractor and implement used to farm may be the conventional approach to managing a farm’s machinery lineup. However, that may not be the most economical, and can sometimes have lasting impacts on the bottom line. Leasing, renting or custom hiring work could be a more viable, cost-efficient alternative to outright ownership. In general, both strategies have pros and cons – which one works best for you depends on a few key variables. “It’s very easy to justify both sides of the decision,” says Scott Welden, AgDirect Territory Manager based in Jonesville, Michigan. “Equipment today is becoming very specialized. It is a balancing act to optimize the use of your resources, capital, labor and time. Those factors all contribute towards determining whether somebody should own or lease equipment, or hire custom-work.”

AgDirect makes it very convenient and easy to purchase, lease and refinance equipment.

Comparing Costs

A cost comparison is typically the first basis farmers calculate when determining whether to buy, lease, or rent a piece of machinery or finding someone who will do the job for a fee. But, that comparison needs to account for more than just the sticker price and how much capital it requires to get the unit. Hidden costs, that may not be apparent at first glance, often play an important part in the consideration—costs like cash flow, trade-in value variables and soft-costs for associated equipment. These factors should all be accounted for in determining when buying, leasing, or custom hiring is right for your farm’s financial health, according to Welden.

There’s a ripple effect: Some equipment is dependent on other equipment, which may also require additional labor that is added to the overall consideration. The owner of a manure tanker or dragline system, for example, might at first overlook the additional needs required for the equipment and set-up to support the manure application system. Does the existing tractor have the ability to efficiently operate the manure application equipment? Are there other pumps, motors, etc. needed? Likewise, does the dairy farmer have the time and labor needed to get the job done and still manage the rest of the day-to-day farm duties?

defer payment to a later date. The implications to financing at a later time when cash flow is stronger may outweigh any potential increase in total cost.

“You may have the money to buy inputs, but hiring somebody to custom spray and pay for it in July might not work with today’s cash flow. But, you could buy a sprayer and defer the payments to December,” Welden says. “That allows you to use the equipment during a time of cash flow tightness and delay payment versus paying at the time of service. Cash flow is a big factor and sometimes can be very critical. With AgDirect, our flexibility with payment options and annual installments is very helpful.”

Look ‘Underneath The Financial Statement’

Examples like these underscore the need to closely examine your machinery needs and the costs before you make a decision whether to buy or use custom work.

Welden recommends to look “underneath the cost analysis” to throw light on the factors that can impact your operation’s financial health in both cases.

For example, consider the milk producer who handles and applies his own manure vs. the dairy farmer who custom-hires their manure handling. Growers recognize the increased depreciation this task has on their fleet of equipment. “Should the re-sale and trade-in value of the farmer’s line of tractors be considered in the cost analysis… absolutely!” says Welden. Gains or losses associated with trade-in values contribute to the overall cost.

There’s a ripple effect: Some equipment is dependent on other equipment, which may also require additional labor that is added to the overall consideration.

“The farmer will have to spend additional capital on that infrastructure and labor to efficiently handle his own manure,” Welden says. For that reason, milk producers may choose to custom-hire a manure handling service.

Helpful tools, like the newest version of AgDirect Mobile, are available for Apple™ and Android™ devices to help with such a task. AgDirect added a new functionality calculating “Cost Per Acre” on a purchase or lease. If you do not have the AgDirect Mobile app downloaded, now is the time to do it.

So, what is the best choice between buy, lease or custom hire? It really depends on each operation and its best use to generate the highest return on investment, Welden says.

“It is all about asset utilization and using it to its fullest extent— optimizing resources, money, time and human capital.”

When buying or leasing is right for you, be sure to ask your local equipment dealer about AgDirect financing. ■

AgDirect is an equipment financing program offered by GreenStone Farm Credit Services.

Cash Flow Considerations

In other cases, cash flow—which can fluctuate for some operations depending on the time of the year—could be a major deciding factor. For example, a custom fieldwork operation may occur during a time of year when capital is limited or being used to plant the crop. In this scenario, the cost of paying a custom operator during the growing season may be more financially burdensome than paying the same amount or more to purchase the equipment and

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Market Outlook

By Bob Utterback

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Spring 2016 — Partners

Most producers have heard the positive and negative arguments for feed grains and oilseeds, but are still wondering what to do. The problem is current selling prices for old and new crop corn, soybeans and wheat are at cash values below the total cost of production of many producers. This is a big departure from what they have seen the last several years prior to spring planting. So producers are selling only when they have to in order to raise capital. This leaves them still holding a lot of unpriced inventory for both last year and this year.

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Many producers are betting on a seasonal pattern of higher prices from April to July. It is at this time when the greatest uncertainty exists as to how many acres will be planted.

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Many producers are betting on a seasonal pattern of higher prices from April to July. It is at this time when the greatest uncertainty exists as to how many acres will be planted. Will there be any delayed spring planting scares, and will it turn from cool and wet to hot and dry? Bottom line: The dominate play during this time period is a weather scare and hopefully it happens to somewhere other than one’s own farm.

but are willing to buy more on the open market. While it will take a while to work down their internal stocks, it will be setting the stage for a significant pricing event in the future. Essentially, once we get global acres contracted due to poor profitability, increased demand, and finally governments strapped for cash flow cut programs on storage, we have all the makings for an explosive price outlook if it is dovetailed with a continued easy money policy by central banks around I am not going to tell you I have any the world. The final element will be a special gift in relationship to predicting weather event. The only problem is these weather. I watch the weather forecaster elements are not in place for this year and just like you. It seems this year’s strong El Nin˜o is not going to shift into a La Nin˜a maybe not even 2017. The big payoff, however, is if producers can maintain fast enough to really impact the weather in the main production regions from May their liquidity and be in position to buy each fall, eventually all the positive to July. I tend to side with the opinion factors will merge to create a good buying that, if it is going to get dry, it will most opportunity. likely be in late summer and fall. In fact, I suggest the odds are looking good it So my answer is “No,” you should not could have a more negative impact on simply produce and store it hoping for a crops in 2017 than in 2016. While I really price event play. While I do believe it will would prefer it to be postponed until be seen in the future, it is still far enough 2018 to allow more corn and soybeans away that good financial management acres to be taken out of production, I will dictates selling the seasonal highs and not fight it. then simply buying it back on fall lows.

So the big question now is: Do producers CORN sell during the seasonal strong time I am expecting 92.2 million corn acres period [April to July] or do they wait and a 165+ yield. With below projection until harvest and hold the crop unpriced exports, I fear corn carryover will be all the way to the summer of 2017?

Anyone following my comments over the well in excess of 2.0 billion bushels.

This means we will see wide basis, big years knows I strongly favor selling and reowning rather than storing and hoping. carry and the risk of lead month lows testing the low $3’s this fall. I suggest I know it will hurt, but I truly believe selling December corn between $3.85 and in the long-term it would be in the best $3.95. If this sale is made before midinterest of all producers if the grain July, I would like to maintain flexibility markets experience two years of below by buying deep-in-the-money puts and cost of production prices, to reduce acres rolling up. The logic is, if the market does both domestically and internationally. rally, you will have the ability to improve Once acres have been reduced and the selling price, which does not exist demand has had time to stabilize and with a straight cash sale or short futures. build, we will have an excellent base Once we get into mid-to-late May, I to rally prices from the fall lows. The Chinese recently decided to start dumping suggest looking for price weakness to buy short-term call protection against any cash their corn inventory, which is expensive or futures sales for the June to mid-July and going out of condition. The talk time period in the September contract. is they will still support their farmers,

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ith big global supplies, it will be extremely difficult W to rally wheat excessively. However, I believe we will see a lot of speculative interest in buying wheat and selling corn as a speculative trade if the position can be implemented below $1.

SOYBEANS

MEATS

I believe the February/March bounce in soybean prices will eventually help stabilize soybean acres in excess of 84 million acres. If we assume slightly less than trend line yields, the carryover is still pegged to exceed 450 million, with possible higher levels if exports fail to keep pace with USDA expectations.

I hope producers have cleaned up most of their old crop inventory and are now actively looking at pricing up to 50 percent of their expected 2016 crop.

Since there is still a considerable amount of the growing season, I like buying deep-in-the-money soybean puts for the same reasons as outlined earlier for corn.

The cattle and hog markets have experienced a seasonal bounce from last fall’s lows, but are now entering a critical time period for highs. Recent hog and pig reports indicate numbers are more than adequate for current needs. In fact, if we do see lower grain values this fall, one has to assume that total tonnage will

WHEAT

We are approaching the seasonally weakest time period for wheat prices.

Granted, there are some problems with wheat areas, but overall it appears the crop is going to be average. With big global supplies, it will be extremely difficult to rally wheat excessively.

However, I believe we will see a lot of speculative interest in buying wheat and selling corn as a speculative trade if the position can be implemented below $1. Overall, I cannot give any great encouragement to storing wheat, other than to capture the carry that exists.

If anyone is storing wheat, I believe it needs to be forward sold. Then use futures or calls to buy if, and only if, the market is able to close above overhead resistance. I also suggest restricting how much is spent on a reownership strategy to no more than twice what would have been spent on storage.

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Spring 2016 — Partners

increase as producers take advantage of cheap grains. I have suggested price protection for the fourth quarter 2016 and first quarter 2017 cattle and hog prices on any price bounce seen in the upcoming time period. However, I believe it will be extremely difficult getting prices to levels that motivate a lot of producer pricing. ■

ABOUT THE AUTHOR

Bob Utterback is the Farm Journal Economist and President of Utterback Marketing in New Richmond, IN. Call Bob for strategy updates at 877-898-4324. Email comments on Outlook to utterback@utterbackmarketing.com.

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.

CONNECT

NEWS:

TOP FOUR REASONS TO GO “E” WITH GREENSTONE Access your account information and reduce clutter by taking advantage of GreenStone’s electronic resources, all available in your My Access portal.

1. Easy Online Banking with My Access. Manage your account and payments, and opt to receive your bills and statements electronically by enrolling in GreenStone’s secure online portal, My Access.

2. Exchange Information Securely. Similar to an email system, the File Exchange function within My Access allows you to communicate and send documents with GreenStone staff, all through a secure portal.

3. Eliminate Clutter. By enrolling in E-Consent and signing up for email communications, you can electronically receive required notices, disclosures, appraisals, and approvals, reducing the amount of paper in your postal mailbox from GreenStone.

4. Efficiency. Using My Preferences in My Access, you can establish how, when, and where you want to receive communications, including custom email and text alerts, and email subscriptions.

Getting started with My Access is easy! Go to www.greenstonefcs.com and click “Enroll in My Access” in the upper right hand corner of the homepage. ■

Best and Brightest The National Association for Business Resources (NABR) has named GreenStone as one of the Best and Brightest Companies to Work For in the country. This marks the third year GreenStone has earned this honor at the national level, also taking home an award in 2012 and 2014, in addition to regional recognition in 2011 and 2012.

The competition identifies and honors organizations that display commitment to excellence in operations and employee enrichment that lead to increased productivity and financial performance. GreenStone was assessed on points such as compensation, employee engagement and retention, education and development, and work-life balance, among other measurements. Staff participated in an employee engagement survey as part of the application process, which measured how meaningfully and personally connected they are to their work and to GreenStone. ■

Partners — Spring 2016

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Pause for Applause...

1. Congratulations

to GreenStone board member, Hank Choate, for receiving the Dairy Farmer of the Year Award presented by the Michigan State University Department of Animal Science. The award recognizes his passion for promoting the dairy industry, and teaching consumers about modern day food production in a positive way.

2. Gov. Rick Snyder recently announced the appointment of several Michigan producers to

the Michigan Bean Commission. Newly appointed is James Roggenbuck, and reappointments include: Greg Ackerman, Neil French and Clinton Stoutenburg.

3. Congratulations to GreenStone customers, Delbert Crumbaugh of Ashley, Michigan, and

Brian Haskin of Lake Odessa, Michigan, on being recognized as the 2016 Michigan Master Farmers for a lifetime of achievement. Andy Welden of Jonesville, Michigan was also honored with the award.

4. Melissa Humphrey, GreenStone regional vice president of sales and customer relations, has received the 2015 Farm Credit Council Phelps-Martin Award. The national award is presented annually to individuals who have demonstrated exceptional efforts in volunteer work and community services.

5. Congratulations to all of Michigan Farm Bureau’s 2016 Young Farmer contest winners: • Agriculture Achievement: GreenStone customer, Josh First, Ionia County, Michigan. Josh manages a high-production herd of 320 dairy cows, and raises 800 acres of field crops.

• Agriculture Leader: Ed McBroom, Dickinson County, Michigan. Ed and his wife, Sarah, have a 120-cow dairy and raises 600 acres of alfalfa, corn and wheat near Vulcan, Michigan. Ed is also the Dist. 108 State Representative in the state House of Representatives, representing constituents in Delta, Dickinson and Monominee counties.

• Agriculture Employee: Nick Schweitzer, Kent County, Michigan. For 15 years, Nick has worked as operations and technology manager for an apple and pear orchard in northern Kent County.

• Excellence in Agriculture: Seth and Lyndsay Earl, Mason County, Michigan. Seth is a district conservationist with the Natural Resources Conservation Service, manages the USDA Service Center in Scottsville, and is active in local chambers of commerce. Lyndsay is a member representative for Michigan Milk Producers Association, serving 70 dairy farms in Mason, Oceana, Muskegon and Newaygo counties.

6. The 63rd annual Wisconsin

Outstanding Young Farmer award was presented to GreenStone customer, Mark and Angie Ulness, of Valders, Wisconsin. Winners are selected based on progress in their agriculture career, soil and water conservation, and contributions to their community, state and nation.

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7. Recently, the Michigan Commission of Agriculture and Rural Development elected new officers. GreenStone customer, Fred Walcott, was elected to the chair position.

8. Heidi McNaughton,

GreenStone financial services officer, was named Paul Harris Fellow by the Rotary Foundation of Rotary International. This organization is involved in numerous humanitarian activities including eradicating polio and promoting understanding.

Have an applause to share?

Submit your story to: Partners 3515 West Road East Lansing, MI 48823 -ormarketing@greenstonefcs.com

Office/Facility Updates • Traverse City, Michigan– Interior remodeling of the current branch location concluded February of this year.

• Ann Arbor, Michigan– A new office opened March 15, located at 7530 Jackson Rd., stop in and see us!

• Allegan, Michigan– A building addition and interior remodeling of the current branch location will begin this summer, and is expected to conclude early 2017.

• Clintonville, Wisconsin– Construction is expected to begin in the fall of this year, with an anticipated completion of summer 2017. ■

NAMA Award GreenStone was recently honored by the National Agri-Marketing Association (NAMA) with a first place award at the regional Best of NAMA competition. GreenStone came out on top in the “direct mail – directed to farmers, growers and ranchers – three dimensional” category for the “GreenStone Distinction” gift campaign.

Karen Spaeth (35) Mary Stevens (30) Antonia Sorenson (10) Mary Paquette (10) David Bristol (10) Lisa Stachnik (10)

JEFF PAVLIK, SVP CAPITAL MARKETS

In this role, Jeff will be responsible for building on a strong history of developing and implementing new product solutions to deepen client relationships. He will lead GreenStone’s capital markets team of lending and credit officers, whose specialized experience provide unique and complex financing solutions to middlemarket, large agribusinesses, and corporate agricultural clients.

Help GreenStone congratulate and thank these staff who are celebrating an employment milestone. From five to 35, the years represent the dedication and service all employees provide our members.

April:

This award program honors the best work in agricultural communications; as a regional award recipient, the entry advances to the national competition. National winners will be announced later this month at the 2016 Agri-Marketing Conference in Kansas City, Missouri. ■

Jeff Pavlik has been named senior vice president and managing director of capital markets for GreenStone.

He assumes this new role following the retirement of its predecessor, Al Compton, who provided 14 years of leadership and growth to GreenStone’s capital markets team.

SERVICE ANNIVERSARIES

“Al’s knowledge and mentorship has led this team to be recognized as a premier unit in the capital markets industry. I am pleased to have Jeff’s strong client history and years of lending experience to continue our focus on quality investments tailored to meet the evolving needs of our capital markets clients and partners,” said Randy Stec, executive vice president and chief sales and marketing officer. “The work of this team further diversifies GreenStone’s lending portfolio, ultimately benefiting the risk management, and provides the opportunity to generate additional earnings for the cooperative, helping to ensure GreenStone remains a strong, reliable lender for all of its members.”

Most recently, Jeff served as GreenStone’s vice president of capital markets, and has held progressive credit and lending roles with the association over the last 13 years. ■

May: Mark Thieleke (35) Kevin Emison (30) Jeffery Sommerfield (30) Deborah Teller (25) Clint Huhn (10) Mark Klett (10) Brian Polega (10) Michelle Backhaus (10) Beth Emelander (5) Kay Cooley (5) Matthew Bowen (5) June: Ralph Wesoloski (35) Dave Armstrong (35) Heather Sackett (30) James Byars (30) Melissa Koehler (30) Shelia Duncan (20) Rita Robinson (15) Tara Ozbat (10) Kathy Beebe (10) Bill Eva (10) Amber Schultz (10) Nichole Wilcox (10) Michael Spalding (5) Tara Parr (5) Geri Turner (5)

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GreenStone Story:

TO COMMEMORATE OUR CENTENNIAL ANNIVERSARY, FARM CREDIT SET OUT TO FIND 100 TOP LEADERS IN AGRICULTURE, WHO ARE ENHANCING THE FUTURE OF OUR INDUSTRY, THROUGH THE FRESH PERSPECTIVES PROGRAM. THE NATIONAL SEARCH BEGAN LAST SUMMER AND THE TOP HONOREES WERE RECENTLY ANNOUNCED ON NATIONAL AG DAY AT THE NATIONAL PRESS CLUB IN WASHINGTON, D.C. GREENSTONE IS PLEASED TO HAVE FOUR OF THE 100 HONOREES MAKING AN IMPACT HERE IN YOUR BACKYARD. Amanda Zaluckyj, blogger, The Farmer’s Daughter USA, Coloma, Michigan In 2012, Amanda Zaluckyj began blogging to show the real face of American farmers.

She conceived The Farmer’s Daughter USA to promote and explain modern agricultural production, and found that consumers were looking for the information she was presenting, and farmers appreciated the communication tools she provided. “I think the future of agriculture is bright and has the potential to expand into areas that aren’t even on our radar right now,” Amanda says. “We have to be our own ambassadors and then we’ll see agriculture progress and meet the needs of the future.” Amanda’s recognition was in the “Community Education and Impact” category of the Fresh Perspectives search.

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Spring 2016 — Partners

Adam Montri, owner and operator of Ten Hen Farms, Bath, Michigan Adam Montri has devoted himself to building his own farm near Bath, as well as to helping farmers across the state and country by advocating for programs that support agriculture and rural communities. “I hope that as farmers we achieve strong, economically viable farming communities that support business development and job opportunities at local, regional, national and international levels,” Adam says.

“When we are successful in creating these communities, we also strengthen the social connections between our rural, suburban and urban areas.” Adam was honored for the “Urban and Rural Connection” category of the Fresh Perspectives search.

Alex Bryan, director of Agriculture for the Greater Lansing Food Bank, Lansing, Michigan Alex Bryan is the director of agriculture at the Greater Lansing Food Bank and manages the Garden Project community garden and the Lansing Roots farm business incubator, of which he was co-founder. “I’m working to create a future where more of our population is linked to agriculture and all of our community can access the fresh food that farmers grow,” says Bryan. Alex serves on the board of Michigan Food and Farming Systems that focuses on increasing farmers’ ability to earn a living, particularly historically underserved and beginning farmers, with a focus on financial literacy, food safety, partnerships with USDA and connecting farmers to buyers through multiple statewide events. Alex was also honored within the “Urban and Rural Connection” category of the Fresh Perspectives search.

Addy Battel, student, 4-H and FFA leader, Cass City, Michigan At age 13, Addy is already a driving force in her community where she’s helped start a junior high FFA chapter and a 4-H club, serving as president for both. Addy also has been instrumental in starting a hunger relief project, a dairy education clinic, and her own maple syrup and meat businesses.

“I believe the future of agriculture depends on our future generations, the agriculturalists like my friends and me who are still young,” says Addy. “But we don’t need to wait to make a difference. Even if we can’t vote or drive, we are agvocates and we can educate and create a better future now.” Addy’s recognition was within the “Youth Leadership (Under 21)” category of the Fresh Perspectives search.

“

GreenStone FCS, Thanks for going paperless with statements.

It saves me filing time and storage.

”

— Kim Martin, customer of GreenStone’s Hart, Michigan branch

“

“Farm Credit has supported rural communities and agriculture for a century, and while we are excited to mark this milestone, we are focused on what the next 100 years will hold.” said Dave Armstrong, GreenStone President and CEO. “We are proud to honor these individuals whose fresh perspectives are shaping the future of the agricultural industry and promoting the success of our rural communities.”

GreenStone FCS, Amanda Kroll, who is based out of your Little Chute, Wisconsin office, is an amazing lender!

She treats us like we are her only customer and I know that’s not the case. My husband and I have worked with her for over five years now.

She lives the ‘ag’ life and provides excellent advice. I’m proud to say she’s become a close friend as well. A++ service and customer satisfaction by us. You are very fortunate to have her on your team. Thank you, Amanda!

”

— Tracy Blattner, customer of GreenStone’s Little Chute, Wisconsin branch

The honorees were selected by a panel of experts from a nationwide pool of approximately 1,000 nominations.

Visit farmcredit100.com/top100 for a complete list of the Farm Credit 100 Fresh Perspectives honorees, as well as more details on these four Michigan ‘agvocates.’ ■

...Candid Comments

Partners — Spring 2016

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CIRCLE OF EXCELLENCE RESULTS ALL STAFF AT GREENSTONE STRIVE TO PROVIDE THE BEST ADVICE AND SERVICE TO OUR CUSTOMERS; GREENSTONE’S SALES STAFF ALSO WORK TO BE RECOGNIZED AS A TOP PERFORMER WITHIN THE COOPERATIVE. THE CIRCLE OF EXCELLENCE REWARDS AND RECOGNITION PROGRAM IS A WAY TO ACKNOWLEDGE THESE LEADING INDIVIDUALS AND THEIR SUPPORT TEAM. VARIOUS CRITERIA SUCH AS LOAN AND REVENUE GROWTH AND NEW BUSINESS ARE USED TO MEASURE PERFORMANCE. Gold Award Winners Agricultural Financial Services Officers: The following outlines the top GreenStone staff being recognized this month as the 2015 Circle of Excellence platinum and gold award winners.

Platinum Award Winners Agricultural Financial Services Officers: • Nicole Ladd, Hillsdale, Michigan • Luke Bakker, Grand Rapids, Michigan • Wayne Sevilla, Bay City, Michigan • Mark Buuck, Adrian, Michigan • Lee Rodgers, Schoolcraft, Michigan • Peter Hirschman, St. Johns, Michigan

Country Living Financial Services Officers: • Samuel Schafer, Ann Arbor, Michigan • Brian Peariso, Bay City, Michigan • Cynthia Cole, Ionia, Michigan Commercial Lending Vice President: • James Byars, East Lansing, Michigan Sales Leader • David Ballman, East Region

• Michelle Backhaus, Little Chute, Wisconsin

Commercial Lending Vice President: • Thomas Wilson, Sturgeon Bay, Wisconsin Sales Leader:

• Brian Polega, Bad Axe, Michigan

• Benjamin Spitzley, Commercial Lending Dairy

• Laurie Schetter, Manitowoc, Wisconsin

Crop Insurance Specialists:

• Martin Kasperski, Lapeer, Michigan • Ashley den Dulk, Ionia, Michigan • Travis Bratschi, Traverse City, Michigan Country Living Financial Services Officers: • Brent Voss, Traverse City, Michigan • Emelee Rajzer, Schoolcraft, Michigan • Amanda Kroll, Little Chute, Wisconsin

• Scott Schmidt, Bay City, Michigan • Adam Duncan, Sandusky, Michigan • Kristen King, Charlotte, Michigan Tax and Accounting Specialists: • Ralph Wesoloski, Coleman, Wisconsin • Keri Holder, Sturgeon Bay, Wisconsin • Cory Dykhuizen, Grand Rapids, Michigan Achievement Award • Ashlee Guerrero, Country Living Financial Services Officer, Ann Arbor, Michigan. ■

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Spring 2016 — Partners

BEHIND THE SCENES– FACILITIES TEAM Clint Huhn, Facilities Manager East Lansing, Michigan

to the top of the roof… the view above all the trees was amazing.

What is your favorite part of a new construction or renovation project?

What do you like to do outside of the office?

I enjoy searching for new office property and visualizing what the site and building will look like on each property.

What is your most memorable moment while on the job?

My most memorable moment was standing on the roof of the corporate office while it was being constructed in 2010. I realized with the roof structure we designed, that would likely be the only time I would have access

I love being extremely active in my kids’ activities and sporting endeavors.

I’ve coached both my sons and daughters soccer and basketball teams. We run various 5ks together. I’m also the mechanic and crew chief for their four quarter midget race cars.

I love being able to work as a team with each of them to compete and achieve successes and learn from our failures.

Colleen McDonough, Facilities Project Manager East Lansing, Michigan What is your favorite part of a new construction or renovation project?

In a renovation, it’s watching the transformation take shape. I get to witness the planning, design and coordination unfold into something that is improved upon, fresh and updated.

Plus, seeing the positive reactions from those who will be occupying the space is always rewarding.

What is your most memorable moment while on the job?

With GreenStone, it would probably have to

be standing alongside the old Schoolcraft building as it got torn down in a matter of hours. It was eye-opening to see how fast, and how easily, a building can be leveled to the ground.

What do you like to do outside of the office?

I love to explore new places with my husband, work on our house, garden and spend time up north as much as possible.

Kevin Keller, Facilities Project Manager East Lansing, Michigan What is your favorite part of a new construction or renovation project?

My favorite part of a project would be the firsts.

Whether it is the first bucket of dirt, first crash of demo, the first walls erected or the first trusses in place, the anticipation of the new project is always

exciting to me.

What is your most memorable moment while on the job?

My most memorable moment of my job would be the demo of the old Schoolcraft office. It was my biggest large scale demo at GreenStone and it was intriguing to watch the excavator tear through the building and sit on top of the rubble in less than an hour.

What do you like to do outside of the office?

Outside of work, my time is primarily spent with my children. With two boys in travel soccer and a foster daughter, my wife and I spend a lot of time chasing kids. When we are not in sports, we enjoy spending time at the lake in the summer, playing on the water. ■

Mark Your Calendar...

APRIL

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25

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

5 12

30

Breakfast on the Farm Event •O utagamie County, Freedom, WI •M anitowoc County, Two Rivers, WI

MAY

9

Breakfast on the Farm Event Brown County, Greenleaf, WI

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

•O conto County, Oconto, WI

13

Wisconsin State FFA Convention (13-16) Exhibition Hall at the Alliant Energy Center, Madison, WI

14 19

GreenStone Election Ballot Deadline Voting polls close end of business day Breakfast on the Farm Event • Kewaunee County, Kewaunee, WI • Waupaca County, Weyauwega, WI

22

4-H Exploration Days (22-24) Michigan State University, East Lansing, MI Family Fun at

25 the Farm

Clinton County, Westphalia, MI

Breakfast on

26 the Farm Event • Marinette County, Crivitz, WI • Shawano County, Bonduel, WI GreenStone Election

29 Results mailed to members

JULY

3

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

4

GreenStone Offices Closed In honor of Independence Day

Partners — Spring 2016

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Legislative Matters:

INCREASING BROADBAND ACCESS FOR MICHIGAN COMMUNITIES

By Rep. John Moolenaar FAST INTERNET SPEEDS ENHANCE THE QUALITY OF LIFE FOR RESIDENTS; UPGRADING TO THE LATEST WIRELESS TECHNOLOGY IS WELCOME NEWS FOR CITIES AND RURAL COMMUNITIES IN MID AND NORTHERN MICHIGAN. We use the Internet for almost everything we do now, from keeping up with far-off relatives and distant friends, to ordering new products and watching our favorite shows.

Access to the Internet is also an important part of continuing Michigan’s leadership in agriculture and helping our students connect to the world.

In Michigan’s Fourth Congressional District, broadband helps 15,000 farmers connect to the world economy.

They sell approximately $1.7 trillion in products across the country and around the world. It is imperative that they are on a level playing field and have the same information as their competitors. Being able to quickly check market conditions helps them make the best business decisions and the profits they earn come back to our communities.

Broadband is also essential for students in our communities. Students can use technology to learn and take classes remotely, and schools can access a wide variety of learning resources. Increasing broadband means more opportunities to learn and to be prepared for the jobs of the 21st century.

It is crucial that we expand broadband access across the rural communities in our state, including many of the 15 counties in my district. Already, 88 percent of Michigan residents have access to broadband, but more needs to be done to make connections available to all residents.

AT&T has been doing this in Michigan. In January, it announced that it would bring faster speeds to 340 cell sites. The upgraded sites are located in various communities including Big Rapids, Mount Pleasant, Cadillac, and the Great Lakes Bay Region.

The federal government has also been working to expand broadband access.

When the most recent Farm Bill was passed in 2014, it recognized how important broadband is to agriculture and authorized the Rural Broadband Access Loan and

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Spring 2016 — Partners

Loan Guarantee program. This program is authorized through 2018 and Congress appropriated $24 million in funding in 2015.

Of course, GreenStone has also played a key part in expanding broadband, and has worked to provide millions in additional funding.

GreenStone is a vital partner in bringing greater broadband accessibility to mid and northern Michigan.

Michigan workers are among the brightest and most talented in the world and they must have the access to connect to broadband Internet. Increased access allows them to contribute their talents and products to the global conversation and economy. I am encouraged by the commitment from the federal and local governments, as well as the business community, to make broadband available to all in Michigan. ■

PAC PROGRESS: THANKS TO THE EXTRAORDINARY SUPPORT OF MEMBERS, DIRECTORS, AND EMPLOYEES… THE 2016 MI GREENSTONE PAC PATRONAGE CAMPAIGN WAS LARGELY SUCCESSFUL IN ITS THIRD YEAR, WITH OVER $23,000 BEING CONTRIBUTED

BY MORE THAN 330 MICHIGAN GREENSTONE CUSTOMERS. This is an increase of over $8,000 and 80 contributors more than last year’s campaign. Now, your board of directors and management team are diligently evaluating legislative leaders. Our focus with each of them will be sharing the importance of the Farm Credit System, and connecting legislative networks with GreenStone employees and members.

In Wisconsin, state legislative office visits took place on March 1, 2016 with a focus on obtaining support for clarifying regulation on high capacity wells (Assembly Bill 874), as well as raising awareness of Farm Credit’s centennial celebration. The WI Farm Credit PAC

and Conduit will continue disbursing financial support for Wisconsin state legislators that are supportive of agriculture and the Farm Credit System.

Nationally, the 2016 Farm Credit PAC drive competition between the 16 AgriBank district Farm Credit associations brought in more than $190,000 in contributions. Over 200 GreenStone employees and directors directly contributed nearly $17,000 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.

Also, the federal House and Senate Resolutions were introduced in January to commend the cooperative owners and the employees of the Farm Credit System for their continuing service in meeting the credit and financialservices needs of rural communities and agriculture. Since then, the majority of Michigan and Wisconsin legislators have become co-sponsors of the resolutions.

These positive efforts and stories are not possible without your engagement.

Agricultural-minded legislators commend your initiative, and thank you for your support of their work as well as for being a champion of the agricultural industry. ■

Partners — Spring 2016

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Directors’ Perspective:

Gene College

GETTING STARTED CONTINUING ON THE THEME STARTED IN THE LAST PARTNERS ISSUE, WINTER 2016, AS PART OF GREENSTONE’S 100TH ANNIVERSARY, WE HAVE ASKED EACH OF YOUR BOARD OF DIRECTORS TO SHARE A BIT OF THEIR PERSONAL HISTORY WITH FARM CREDIT.

Take a minute to hear from four more directors as they share how they started with Farm Credit, why they continue to choose GreenStone as their financial partner, and even some of their favorite memories working with the association. Check each issue of Partners this year to hear this same perspective from other directors as we reach this centennial milestone!

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Spring 2016 — Partners

100 years—WOW! My experience with Farm Credit started in 1974 when I took the chief financial officer (CFO) position with another association. I retired after 32 years of service, and was then appointed as an “outside” director by the GreenStone board of directors in 2009. It has been an awesome experience to have been both an employee and a director of two great Farm Credit organizations.

Farm Credit is unique to other financial organizations. Two major distinguishing words that often come to my mind are “care” and “service.” GreenStone employees and directors are entirely committed to serve its customers in a very professional and caring manner. As a cooperative, we are owned by our customers and our mindset is just as much focused on the success of our member as the success of the organization. We truly do care for individual customers! GreenStone continues to earn extremely high customer and employee satisfaction scores. A major reason that endures is the constant effort to “do what is right.”

My career within the Farm Credit System, both as an employee and a director, has been extremely rewarding. I can proudly say that GreenStone’s honesty and integrity is impeccable, and its focus will continually be to serve, in a very caring manner, for the next century!

Bruce Lewis

Christine Crumbaugh

My husband, Clay, and I started our careers in agriculture in the 1980s. Even though agriculture was struggling and we didn’t know how we would ever pay for that $1,000/acre ground, we made the decision to purchase our first farm in 1989. True to their mission, Farm Credit was there to extend credit to a young and beginning farmer in some tough economic times.

Over the past 27 years, Farm Credit has become an integral part of our farm operation; not only as a reliable and competitive source of credit, but their expert staff can also be relied upon for sound business advice. With GreenStone’s help, we have been in the process of expanding our operation in preparation for our two sons joining us back on the family farm after graduation from MSU. This is a challenging process with land prices at historically high levels, but GreenStone has been with us every step of the way as we work to manage our capital and cash flow needs for the expansion.

I have served on the board of directors at GreenStone for four years. It is a privilege to have the opportunity to give back to the Farm Credit System, whose mission I strongly believe in. “Supporting rural communities and agriculture with reliable, consistent credit and financial services today and tomorrow,” is an important role that GreenStone plays in helping our rural economies thrive!

Darl Evers

It was during the mid-1980s when I went to the local Production Credit Association office to get my first loan. I was the first generation to work with GreenStone, at that time it was West Michigan ACA. I’ve said it before and I believe it today, Farm Credit was, and is, the best place to go for financial needs!

In my view, the best thing GreenStone has done since then, was to merge the four lower Michigan associations together to form GreenStone, followed by the merger with the UP and northeast Wisconsin. Those actions have resulted in really good things for our customers. The Farm Credit System, including GreenStone, is run by directors (borrowers) just like each member reading this article. Through the ups and downs of the financial markets, Farm Credit has survived for 100 years. Mergers, management decisions, and a focus on the customer got us here, and I’m sure Farm Credit will be here for 100 more.

My family’s earliest experience with the Farm Credit System was when my parents became borrowers in 1960. When I became old enough to look for my own loan, the local bank had no interest in helping young, beginning farmers, like myself. It was then I realized the Farm Credit System was there for me. As a result, I have been a proud member since 1984.

After experiencing firsthand how a local bank, that had been involved in agricultural lending, could decide to no longer be involved in the agricultural industry, I knew I had the right partner with Farm Credit. For the last 100 years, they have always been there, and I have no doubt GreenStone will be here long into the future.

GreenStone has the capacity to deal with all agricultural lending from large to small loans, and the custom financial solutions in between.

With the skill sets of their workforce, they are able to analyze and understand the needs of modern day agriculture—regardless of how it is defined, and adapt to the rural needs for country living.

I recommend GreenStone to anyone who is seeking a steady, reliable partner who will help assist you in your personal needs, and the growth of your business. ■

Management and directors are committed to the future and to making it the place for you to get the necessary funding. I am very proud of the fact that GreenStone has consistently remained a strong organization, allowing us the opportunity to provide patronage distribution.

The driver of our success is that we stay focused on our customers and their needs.

We will be here for many years to come, and GreenStone will continue to be a dependable source of credit for you, your grandkids and mine.

Partners — Spring 2016

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LIVE

Log Home Life When Dave and Kathy Holland first met, they were college students at Michigan Technological University (Michigan Tech) in Houghton. Not long after, the couple came upon a model log home in Marquette nestled along the shore of Lake Superior. Seeing that house was the start of their lifelong love of log homes, leading them to eventually buy and then build two of their own. “We fell in love with it and knew we had to have one,� said Dave. He grew up in Troy, but despite being a city kid, always loved hunting and fishing.

Living in the Upper Peninsula during his college years fueled his passion for the outdoors even more. After graduating from Michigan Tech, the couple purchased their first log home. They loved it, but when their jobs took them out of state, they moved to a house in the suburbs. Kathy says that living in the subdivision made life easier raising their four children, as they could be close to school and other activities. As the kids got older, life in a country home became appealing again.

This time, the couple built their log home from the ground up and learned a lot about the process along the way.

After a few years in their new home, the couple decided it was time to move back to Michigan to be closer to family. They were able to transfer their jobs back to Michigan, and started the search for vacant land. The Hollands bought 40 wooded 27

Spring 2016 — Partners

acres near Metamora and have gradually made progress towards building their dream retirement home. The first task included enlisting the help of friends and family to clear trees for the half mile long driveway that leads up a winding, hilly path to the home site. The 4,600 square foot home, which is under construction, will feature six bedrooms, 3.5 baths, two screened porch areas and 21 foot cathedral ceilings in the main living area. Large windows overlook a pond surrounded by woods and will be accented by a stone fireplace.

A finished walkout basement will provide an additional living area, and space for their children and grandchildren to spend time when

visiting. The acreage provides ample room for the family’s three Labrador retrievers to run and play in the two ponds on the property.

As Dave and Kathy plan for their retirement, they are designing the home to have accessible features that will make life easier for them down the road. The home’s master bedroom will be on the first floor and the dogs will have their own space at the back of the house with easy access to an outdoor kennel. “We want to design the house so that it is as easy as possible for us to get around as we get older,” said Dave.

The home is built with full white cedar logs that the couple sourced from Maine.

They chose cedar over pine because, after their first build, Dave realized the pine did not hold up as well against insects as he would have liked. They even visited the manufacturer, Katahdin Cedar Log Homes, in Maine and toured the mill.

The custom home is full of personal touches, including a copper-topped cupula that will sit atop the garage with a copper weathervane adorned with a Labrador cutout.

Dave and Kathy have enjoyed seeing the construction progress over the last few months. It was exciting for them to see the large logs put into place, all of which were measured and hand cut by their builder. “He is incredibly meticulous,” says Dave. “He is always five steps ahead.” The construction is fully contracted to Andrew Green of Barna Log Homes in Mayville, Michigan, but the Hollands plan to do some of the finishing

i

touches themselves. “We are planning to install the hardwood floors and do all the staining ourselves,” said Kathy.

Dave noted how much he has enjoyed working with GreenStone on the project.

One of the vendors he was working with early on suggested he investigate Farm Credit for financing. After researching a variety of options, Dave realized GreenStone would be best suited to finance the construction. Dave and Kathy met with GreenStone senior financial services officer, Sandy Arnold, to get the ball rolling. “Working with the Hollands has just been fantastic,” said Sandy. She is equally as excited to see the home progress and was a key resource for the couple when they needed a reference for a local builder.

The Hollands anticipate construction will be completed this summer. “It is going slower than I thought, but I would say it is going right, and that’s more important to me than the speed,” Dave said. The couple acknowledges that a log home isn’t for everyone, but the time and cost that goes into the construction is more than worth it for the both of them.

➡ Dave and Kathy Holland are building their dream log home on 40 acres near Metamora, Michigan.

“When I was a junior in high school, I remember seeing a house about a mile from here and thinking, ‘this is it – this is where I want to be.’ This is our dream, and GreenStone has been a big part of that.” ■

FOLLOW ALONG ON THE OPEN FIELDS BLOG GreenStone publishes regular updates on our Open Fields blog. Check out some of the posts you may have missed at www.greenstonefcs.com!

• The Benefits of Buying Your Own Hunting Land: Mike Kennedy, GreenStone financial services officer in Ionia, Michigan, talks about his passion for the great outdoors, and shares his thoughts on the benefits of buying your own hunting land.

• We Know Country Living: When you think about GreenStone Farm Credit Services, you probably think about agriculture. The word “farm” is in our name, after all. For a century, we have been known throughout the state of Michigan and northeast Wisconsin as the agriculture lending experts and supporter. When you think GreenStone, you should think “agriculture;” but you should also think about rural communities, country living, and even outdoor recreation. ■ Partners — Spring 2016

28

HELPING KIDS LEARN GOOD MONEY HABITS RAISING FINICALLY SMART CHILDREN CAN BE A TRUE CHALLENGE. FROM AN EARLY AGE, THEIR LIVES ARE FULL OF MATERIAL DESIRES AND INFLUENCES FROM THE MEDIA, PEERS, AND A VARIETY OF SOURCES. ACCORDING TO THE NATIONAL ENDOWMENT FOR FINANCIAL EDUCATION, PARENTS ARE THE BIGGEST INFLUENCES ON THEIR CHILDREN’S FINANCIAL HABITS, MORE SO THAN WORK EXPERIENCE OR LITERACY COURSES. THIS MAKES IT IMPORTANT THAT YOU PERSONALLY HELP YOUR KIDS MASTER ESSENTIAL MONEY SKILLS. Kids are extremely perceptive; therefore a good first step to raise financially smart children is to practice smart finances yourself. It is difficult to teach your children a life-lesson that you do not follow. Focus on spending less than you earn, getting rid of debt, working towards large financial goals, and sharing all of this with your children. You do not need to get into the specific details, but explain to them the importance of smartly managing debt, and what is going on in the family’s financial world, including the steps you are taking to overhaul your own financial habits.

There are two sides to every story, and the same can be said for establishing an allowance for your children. On one hand, people claim that allowance is essentially paying children for household chores they should do anyways; however, others argue that it teaches children the cycle of money management. If you decide to set up an allowance program, it is important that you remain consistent, and come up with a well-implemented plan that teaches kids that work is worthwhile, and mimics money matters that adults face throughout their lives. Once you have decided on a policy, it is recommended to stick with it for at least a year so your children can see the full benefits and drawbacks.

Regardless if your children are getting a regular allowance or not, when they receive money from any source (birthdays, graduation, et cetera), a good rule is to require them to put aside some for the future. Once the habit is in place now, they are likely to do it automatically once they are older. Many families establish a “spend, save, give” system; kids learn to spend wisely, save for goals, and give generously. Have your children put a certain percentage into saving and giving, and then leave the rest available for “fun money.” From here, you can also teach them how to shop wisely using the money they saved.

It is also important to realize that part of growing up, is learning from mistakes. One example is to allow your child to spend his or her allotted amount of savings however they would like. They will learn money management skills, it helps prevent the ‘gimme’ attitude, and it also allows for the opportunity to make money mistakes. They will learn a valuable lesson if they purchase cheap items that break almost immediately, or if they choose to spend everything on a single, higher-end item. However, it is important to draw the line, and figure out the exact dollar amount to allow. Is a $100 mistake too large, or is $20 enough? This can depend on your parenting style, and age of your child. Regardless, letting your children make financial decisions they will regret later is one of the best ways to teach them about proper money management.

Teaching your children the lessons needed to achieve financial success down the road is an important responsibility as a parent. Talk about money with your kids, and help them avoid making a detrimental financial mistake in the future! ■ Source: www.money.usnews.com, www.afcpe.org

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Spring 2016 — Partners

Caramelize Onions

SPRING HOUSE MAINTENANCE

Ingredients: • 2-4 yellow onions After a dark winter, the spring sun and warm winds have arrived!

We all know the saying “spring cleaning,” but it is also important to pay attention to the outside maintenance that may need to be done.

• 2 tbsp butter, extra-virgin olive oil, or a mix

Inspect the roof

• Salt to taste

• 2 tbsp white or red wine, vegetable or chicken stock, balsamic vinegar, or water

Your roof is your home’s first line of defense against water damage.

Rather than climbing up on the roof, you can probably spot the trouble using binoculars. Do you see any shingles that may be shifted, buckled, cracked, or missing? If so, it might be time to schedule repairs, or start budgeting for a replacement.

Instructions: 1. Slice the onions: Trim the tip and root from the onions, cut them in half and remove the skins.

Slice the onion from root to stem into thin slices.

(Alternatively, you can dice the onions.)

Check the gutters

2. Melt the butter: Place your skillet over medium heat and melt the butter.

Gutters direct rain away from your roof and home, protecting both in the process. Check to see if any are loose, leaky or clogged; and be sure downspouts drain away from the foundation, and are free of debris.

3. Add the onions: Add all the onions to the pan and stir them gently to coat with butter.

Examine the chimney

4. Caramelize the onions: Check the onions every 5 to 10 minutes for 35 to 40 minutes. Stir the onions and scrape up any fond that forms on the bottom of the skillet. Exact cooking times will vary with the number of onions you’re cooking, their liquid and sugar content, and their age. When done, onions should be deep golden brown in color, and have a jam-like consistency.

If you have a masonry chimney, check the joints between the bricks or stones. Look for missing pieces, vegetation growing, and efflorescence (a white calcium-like deposit). These can indicate water infiltration, or your masonry joints are no longer repelling water. This may request you to reseal the masonry, or hire a professional.

Decks and patios Keep an eye out for warped, loose, or splintered boards, and clean away any leaves or debris by sweeping or power washing the surface. If your deck is wood, and there appears to be extreme fading, make a plan to stain and reseal it. A stone patio may simply require a wash to keep it maintained.

5. Deglaze the pan and salt the onions: When your onions have finished cooking, pour 1/4 cup wine, broth, balsamic vinegar, or water. As the liquid bubbles, scrape up the fond and stir it into the onions. Use additional liquid as necessary to scrape up all the fond. Salt the onions to taste.

Seals around windows Leakage around windows will let cooled indoor air escape, and warm spring air in, causing an increase in your air-conditioning bill. Check that any caulking and weather stripping you have in place has remained intact. If you noticed condensation inside the glass of your windows during the winter months, the seal has likely been compromised, and either the glass or whole window may need to be replaced.

6. Cool and store the onions: If you’re not using the onions immediately, let them cool in the pan, then transfer them to a storage container. Caramelized onions can be kept refrigerated for around a week or frozen for up to three months.

Foundation vents

Provided by the Michigan Onion Committee (courtesy of www.thekitchen.com).

A house with a crawl space has vents along the foundation walls, which provide circulation that helps dissipate excess moisture and prevent mold growth. Covering the vents are screens that will need to be cleaned either by hand or with a shop vacuum. Also, check these for damage, and if needed, replace to avoid unwanted critters in your home. ■

Commodity Cuisine...

Source: www.hgtv.com, www.usnews.com

Partners Partners— —Spring Spring 2016

30

LEARN

CROP INSURANCE:

By Brandon Walters, Crop Insurance Specialist We all know about the traditional multiple peril crop insurance policies that cover a fixed percentage of a farmer’s actual production history; they have been around for years, and participation in those programs is widespread throughout the United States. These policies provide a safety net for producers should they experience a negative event(s) that contribute to a drop in either yield, revenue, or both. That being said, there are other, less well known policies out there that can offer the same type of protection for livestock producers. There are currently two different types of livestock policies available to producers in our territory, and I will touch on both of them briefly.

LIVESTOCK RISK PROTECTION (LRP)– Available for purchase daily, the LRP policy allows a producer to protect a percentage of an attractive futures price (between 70-100 percent), letting the producer set a floor for future sales but without limiting the upside potential of a price upswing.

The trading volume for the current day helps determine the number of coverage options available. This policy is available for cattle, swine and lambs. Cattle has the potential to bind coverage up to 52 weeks out from sale, while swine and lambs can bind coverage up to 26 or 39 weeks from sale, respectively. This policy is very similar to purchasing a put option for livestock, but grants more flexibility in coverage, and like mentioned previously, it does not limit your upside potential. With the LRP policy, the only decision you need to make is, how many head to cover.

LIVESTOCK GROSS MARGIN (LGM)– Unlike LRP, LGM is only available for purchase once per month, on the last business traded Friday of the month. The LGM policy uses futures prices for both livestock as well as corn and soybean meal to establish a covered margin that represents a guarantee of income over feed costs. The LGM Dairy policy is by far the most widely utilized, but there is also a

LGM policy for cattle and swine as well. The 2014 Farm Bill established the Dairy Margin Protection Program (DMPP), a dairy disaster program that is administered through the Farm Service Agency (FSA). Some publications have gotten the two programs confused; it is important to remember there are two separate programs and they do not operate the same. Currently, if a producer is enrolled in the DMPP program through FSA, they are prohibited from purchasing an LGM-Dairy policy.

Both of these policies have been around for a few years now, but not all agents offer them; Risk Managment Agency requires additional policy training for the agent to be qualified to offer livestock coverage. If you have had negative experiences in the past with purchasing livestock options, or if you would just like to discuss either of the policies in further detail, please contact your GreenStone crop insurance specialist. ■

Crop Insurance Calendar...

APRIL

29

JUNE Production Reporting Deadline for all 2015 Spring Crops Deadline for April LGM Applications

24

Deadline for June LGM Applications

JULY MAY

27

Deadline for May LGM Applications

31

Oat Acreage Report Due

1 15

Forage & Fall Wheat Premiums Billing Date Spring Acreage Reports Due

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

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Spring 2016 — Partners

15

Spring Premium Billing Date

CROP INSURANCE NEWS: NOW IS THE TIME TO SIGN UP FOR HAIL INSURANCE!

• Most hail insurance covers other perils above and beyond hail damage. Beyond hail, policies also cover fire, vandalism and malicious mischief, transit to the first point of storage, and stored grain coverage if you 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.

What used to be considered a fairly rare event historically speaking, it seems like storms that are capable of producing hail are becoming far more commonplace in our area of the country than years ago. Hail is a separate policy from your multi-peril crop insurance coverage. 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 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. It is important to keep in mind that hail insurance must be purchased before damage occurs. Here are some other important items of note regarding hail coverage:

Early/Final Plant Dates 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. ■ 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. ■ 2016 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 2016 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

• 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 you covered your corn at $700 per acre, and the premium was 60 cents per $100 of coverage, your premium for corn would be $4.20 per acre.

• One benefit to hail insurance over MPCI is that 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, et cetera.

To learn more on hail policies or what options are available and covered with a hail policy, contact your GreenStone crop insurance specialist today to set up an appointment to review your options. ■

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. ■ 1st Crop/2nd Crop 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! ■ 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: 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. ■ Partners — Spring 2016

32

El Niño: What does it mean for crop production?

By Agribank

EL NIÑO 2015-16: WARMTH ON TARGET, BUT PRECIPITATION DELIVERED SURPRISES Boosted by great meteorological expectations about its strength, the most recent El Niño event was widely chronicled by media organizations as early as summer 2015, largely due to its potentially dramatic effects on U.S. weather. This recurring climate phenomenon, otherwise known as ENSO (El NiñoSouthern Oscillation), is characterized by rising sea-surface temperatures, generally in the equatorial latitudes of the central and eastern Pacific Ocean. According to the National Oceanic and Atmospheric Administration (NOAA), those surface temperatures peaked in November 2015 at approximately 2.3 C above the average Oceanic Niño Index (ONI). This mirrored the ENSO event of 1997-98 as one of the strongest on record.

Due to the increase in ocean temperatures, ENSO events tend to shift the jet stream to a more southerly track during winter.

Typically, this results in wetter conditions for California and the southern United States, while the Pacific Northwest, Northern Plains, Midwest, and northeastern U.S. generally enjoy a warmer and drier winter season.

The current ENSO event, however, has jogged a bit further north than normal. This has delivered more widespread – and in some cases, unexpected – wet weather across the country. Consider: • The Pacific Northwest was pounded over the winter of 2015-16, with Seattle receiving over 38 inches of rain to post its wettest cool season on record.

• While California received heavy rains early and late in the winter cycle, overall rainfall has been below expectations.

In fact, the best ENSO hope for the drought-stricken state may well be the accumulating snowpack in the Sierra Nevada Mountains. However, despite the potent ENSO cycle, mountain snows had reached only 78 percent to 87 percent of normal in early March, which may not provide enough meltwater to adequately refill the state’s dwindling reservoir supplies.

• While the Midwest has met the typical ENSO projection of being warmer than average this past winter, much of the region has received much higher than expected precipitation. In fact, a broad swath of Iowa and southwest Wisconsin had record precipitation from December 2015 through February 2016, and sections of eastern Nebraska, central Missouri, central Illinois and northern Michigan were well above average.

Looking ahead, NOAA forecasts that seasonal temperatures will remain above normal through April, except for extreme southern Illinois and southern Missouri, where temperatures are expected to fall in the normal range. Meanwhile, forecasters believe the ENSO precipitation pattern will shift a bit east, with eastern Wisconsin, northern Indiana, northwestern Ohio and all of Michigan having the best chance for above-normal moisture.

By early summer, ENSO’s effect on U.S. weather is expected to subside, which is consistent with the typical nine to 12 month duration for this climate phenomenon.

Climate experts define El Niño or La Niña events by calculating how far above – or below – sea-surface temperatures move against long-term averages. Since 1950, there have been seven

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Spring 2016 — Partners

moderate El Niño events, which are defined by climatologists as water temperatures of 0.5 to 1.5 degrees C over the average ONI. Those events were followed by four La Niña cycles of weak to moderate intensity.

with the highest confidence for that forecast in eastern Wisconsin, Michigan, northeastern Indiana and northern Ohio. Meanwhile, southern Michigan, northern Indiana and all of Ohio having the strongest odds for drier conditions.

In the three strong El Niño cycles over the past 65 years, only one resulted in an equally potent La Niña event the following year (1972-73). While the 1997-98 cycle was very similar to the most recent El Niño in terms of sea-surface heating, the follow-on La Niña event was much more temperate.

During a recent agricultural outlook forum, USDA officials said that while the El Niño weather pattern would likely persist through the spring, it has yet to materially affect price futures on grains and oilseeds. Taken as a whole, this scenario does not support any strong upward price moves for the upcoming season.

In its most recent forecast discussion, CPC researchers concluded that a La Niña event was likely to develop in fall 2016 and last through the middle of 2017. However, using regression analysis all the way back to 1950 to calculate probable intensity, the “best guess” was for Pacific sea-surface temperatures this fall to settle in a range of 0.5 to 1.0 below the average ONI. If accurate, that would translate into a relatively weak La Niña phenomenon.

While USDA’s February forecast called for overall net cash receipts to drop 2.5 percent, cash income from crop sales is projected to fall just under 1 percent. For corn, cash receipts are expected to fall as much as 36 percent through 2016, as high inventories and weak pricing will offset any potential production gains. The news is slightly better for soybean producers, who may see a 1.5 per cent rise in cash receipts for their crop, and much better for rice farmers, who could receive a 31 percent bump in cash receipts for this growing season. ■

AN EL NIÑO TO LA NIÑA TRANSITION: POTENTIAL EFFECTS ON PRODUCTION, PRICES As El Niño gradually gives way to an expected La Niña event later this year, the key question is this: Will weather fluctuations disrupt crop production?

In its most recent long-term projection, CPC projects that temperatures from May through July will remain above normal,

ABOUT THE ARTICLE

The content herein was provided by Agribank. Agribank is one of the largest banks within the national Farm Credit System.

Under the cooperative structure, Agribank is owned by the 17 associations within its district, including GreenStone.

Typical El Niño Winters

Source: noaaclimate.gov

Partners — Spring 2016

34

DEATH & TAXES

By Mark Koester, Tax Accountant, CPA IT IS AN EMOTIONAL TIME WHEN YOU LOSE SOMEONE CLOSE TO YOU. IT IS SAD, TRAUMATIC AND CAN BE OVERWHELMING. NOT ONLY DO YOU NEED TO DEAL WITH THE EMOTIONAL STRESS BUT YOU ALSO NEED TO HANDLE THE FINANCIAL ASPECT. DEPENDING ON THE SIZE OF THE ESTATE OF THE DECEASED, YOU COULD RUN INTO COMPLICATED SITUATIONS THAT REQUIRE LEGAL AND/OR PROFESSIONAL ASSISTANCE.

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Spring 2016 — Partners

A popular question is: if you are receiving some assets, are they taxable to you? Well, just like any other part of the tax code, it depends. So what does it depend on? The most important factor is what type of asset did you inherit? Here are answers for some of the most common inherited assets: • Cash you receive as a beneficiary is not taxed.

• Retirement accounts and annuities are generally taxable if these were tax deferred accounts, like a traditional IRA or 401k. The government did not tax these accounts while the departed was living, which is why it is taxed now.

• Stocks or bonds are not taxable to the beneficiary.

• Real estate is not taxable to the beneficiary.

• Business interests are not taxable to the beneficiary.

One thing that needs to be given much consideration is the stepped basis at death, especially if there are appreciated assets. So let’s go over an example:

{ } Your Dad bought 80 acres of farm land in 1986 for $400 per acre. Today in 2016, it is worth $4,000 per acre. Dad’s basis in the farm land is $32,000 ($400 per acre x 80 acres). If Dad sells the property he would have a capital gain of $288,000 ($320,000 $32,000). This would mean Dad would most likely pay about $60,000 in income tax on the sale. If Dad gives the land to his children, then they get Dad’s basis in the property. So if they ever sell it, they will also have a large taxable gain because their basis will only be the $400 per acre that the property was purchased for. However, if the children inherit the property, then they could sell the property the following day and have no gain on the sale. This is because the beneficiary receives a stepped up basis to fair market value at the date of death. So the beneficiaries basis would be $4,000 per acre.

Tax Calendar...

APRIL

18

F irst quarter estimate due for 2016 for individuals that pay estimated taxes.

Partnerships file a 2015 calendar year return (Form 1065). Provide each partner with a copy of Schedule K-1. If not able to file, file Form 7004 to request an automatic five month extension.

Corporations deposit the first installment of estimated income tax for 2016.

MAY

2

Some states still have inheritance tax, but Wisconsin and Michigan are not included in the list. While inheritance is not taxable income, it is considered household income for calculating the Michigan homestead property tax credit and the Michigan farmland tax credits.

I ndividuals file a 2015 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.

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

JUNE

15 There are two different kinds of estate taxes that could be possible: excise tax and income tax.

S econd quarter estimate is due for 2016 for individuals that pay estimated taxes. orporations deposit the second installment of C estimated income tax for 2016.

1. There is an excise tax if the size of the estate exceeds $5.45 million for 2016. For a married couple, their exclusion would be $10.9 million ($5.45 x 2).The size of the estate is a total of all of the assets that belong to the estate (cash, vehicles, homes, real estate, et cetera).

AUGUST

1

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.

2. There is also income tax on an estate. The income tax is only on income that the estate receives. For example, the estate owns farm land that is being rented. The rental income would belong to the estate. Estate income tax rates increase drastically for relatively low income compared to individual or corporate tax rates. You have the option to distribute the income to the beneficiaries on a Schedule K-1, just like you would with a pass through entity like a partnership on a Schedule K-1. Then the individuals are taxed on the income and the estate is not.

SEPTEMBER

15

T hird quarter estimate is due for 2016 for individuals that pay estimated taxes.

Corporations file a 2015 calendar year income tax return (Form 1120) if you requested an automatic six-month extension.

S Corporations file a 2015 calendar year income tax return (Form 1120S) if you requested an automatic six-month extension.

Partnerships file a 2015 calendar year income tax return (Form 1065) if you requested an automatic five-month extension.

As you can see, there are many different tax laws that can apply when dealing with an estate and beneficiaries; do not be afraid to seek professional advice and guidance. ■

orporations deposit the third installment of C estimated income tax for 2016.

Partners — Spring 2016

36

CAREERS

REFERENCE CHECKING AND PRE-EMPLOYMENT TESTING

By Beth Barker, Chief Human Resources Officer

Many may think the practice of employment reference checking, and pre-employment testing is either a thing of the past or only for bigger businesses.

Regardless of your business size or perspective, if you want to ensure a good fit between a job candidate and a vacant position, these are two options well worth the effort. How often have you gotten down to the final candidates and thought, “Any one of these individuals would work out just fine.” Employment references and other forms of screenings could be the determining factor you need.

The purpose of the reference checking process is to confirm the accuracy of a resume and/or job application, as well as gain insight into the applicant’s work ethic, attributes, and experiences as they relate to the position at hand. You want to be able to predict how a person will perform in the workplace. After all, hiring and training staff is time

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Spring 2016 — Partners

intensive and expensive. One of the most important business decisions a manager or small business owner makes is who to hire – and it does not matter if the job is big or small.

Before you sit down for the interview, preemployment tests can be used to assess cognitive abilities, knowledge, work skills, physical and motor abilities, personality, emotional intelligence, and even integrity. These tests can help you further identify candidates that will most likely perform well on the job, as they can predict future performance, explore honesty and trustworthiness, along with verify an applicant has the skills mentioned on his or her resume. These tests can help save money in the selection process, decrease turnover, and even improve morale.

After an interview, you should have formed an opinion on the candidate at hand, and this is typically when employment reference checking is done. Applicants will provide a list of people who are strategically selected,

i

and should speak highly of them. In order to obtain the most accurate assessment from these individuals, briefly explain the demands of the job, and a few key skills that are critical to success. Personal references from friends, co-workers and/or relatives on the other hand, might not be as helpful. Although they may speak to the person’s character, how they perform on the job is most likely unknown.

Beyond this, it could also prove to be beneficial to use your industry contacts to speak with someone who the candidate may not have listed, but could have worked with them previously in some capacity, and one simple call to a college can also verify the accuracy of the potential employee’s educational credentials.

At a minimum, be sure to contact each former employer listed on the candidate’s resume.

It is important to note the potential problems companies need to understand prior to implementing any type of pre-employment test. The issue of validity; whether or not the test measures specific criterion it is supposed to, reliability; the test should consistently

measure traits, and issues involving Equal Employment Opportunity (EEO) laws; making sure the test does not violate federal, state, or local EEO laws. To help ensure pre-employment tests deliver the outcome you desire, conduct thorough research if you plan to purchase tests from outside companies, avoid questions that are overly personal in nature or could be considered offensive, and do not rely solely on test results to choose candidates for your business.

As a business owner or hiring manager, completing the reference checking process can give you valuable insight into a candidate’s past work history, job performance, and other aspects that go beyond what is listed on his or her resume. In addition, correctly administering pre-employment tests can help save time and cost in the selection process, decrease turnover, and increase productivity. Taking the extra effort in administering these two practices is a great way to ensure you have the best match for the position, and the candidate will positively impact your business! ■

MANAGEMENT SOFTWARE...

In today’s agricultural market, it is increasingly more difficult to achieve your business and financial goals. Moving away from Excel spreadsheets, and implementing modern agricultural management software can help. Many new software packages include all the common modules like accounts receivable, accounts payable, and payroll, plus unique modules for the agricultural industry. New modules often include crop, livestock, fertilizer, and equipment inventory management, crop target planning, market tracking, as well as advanced reporting and analysis. Robust financial, operational, and agronomic data will allow you to make faster and better decisions for your operation.

When searching for new agricultural management software, consider vendors that offer a hosted or cloud solution.

Typically these can be accessed from smartphones, tablets, or laptops anywhere you can get an Internet connection.

Looking for a management software? GreenStone offers AgManager as an on-farm solution that is available in different packages based on your needs, and can assist with achieving your business and financial goals. To learn more, contact your GreenStone tax and accounting specialist today!

EVALUATION CHECKLIST • Does the software support your type of operation?

• Does the system have easy to read dashboards?

• Are thorough reporting and what-if analysis tools provided?

• What types of service and support is offered?

• How customizable is the system?

• How often is the software updated?

• Are there charges for the updates?

• What devices does the software support?

• Ask for references.

...Tech Tip

Partners — Spring 2016

38

3515 West Road East Lansing, MI 48823

The next step is within reach.

This spring, if you are looking to add more land, buy a new home, or start that next project, GreenStone has you covered. For a century, we have been providing the financial tools needed to get the job done.

To work with a specialty lender you can trust, contact your local GreenStone branch today!

800-444-3276

www.greenstonefcs.com