Page 1

GreenStone FCS

Fall 2017

Promoting the business success of our customers and the rural community

+F  all 2017

Market Outlook

+O  utreach &

Engagement Involvement

+N  avigating Tough Financial Times


PATH Bontrager pg. 5

FALL 17 5 YBSF Feature. This past August, Joe and Leah Bontrager celebrated their fifth wedding anniversary and are managing a 9,600-head hog finishing operation in Sherwood, Michigan.






25 GreenStone Story. Ultimately, we cannot control the market or the income for farms, but we do have tools to help customers sustain their businesses in tough times.

37 C  rop Insurance. Demand for organic products has led to the expansion of programs offered by the USDA and administered through the Risk Management Agency (RMA).

39 Tax Feature. With the increasing use 29 Country Living Feature. When Pete and Tammy Olsen set out to build their new home, on land they purchased 10 years prior, they found the process to be as smooth as it could be.

of shared services for everything from cars and homes to technology, most people will likely either use or provide a shared service at some point throughout the year.

3 CEO Comments. President and CEO, Dave Armstrong, shares some of the results of GreenStone’s 2017 annual Customer Satisfaction Survey. 9  Guest Column. Alan Hahn shares an update on regulations affecting agriculture, as well as an observation on a potential external influencing factor. 11 Market Outlook. We are now in a time period where harvest pressure will keep a lid on prices, but concerns about lower yields may actually be confirmed.

33 Health and Wellness. It is only a few months into the school year, and if you are beginning to dread packing school lunches—or your children dread eating them—it might be time to switch to some more enticing options.

Publisher’s Note:

36 Dairy Industry Outlook.

Results: Dave digs into GreenStone’s recent Customer Satisfaction Survey in his CEO Comments; GreenStone’s team of appraisers outline real estate trends found through our recent benchmarking analysis; and your directors’ share the depths of which they plow as an Audit Committee.

The recent announcement from the USDA notified dairy producers currently enrolled in the margin protection program (MPP) they now have the option to enroll or opt out of the MPP for 2018.

14 Blog Brief

While it’s harvest time for many of you, it’s planning time for us at GreenStone. Like you do for your business, we look at our recent historical results, input needs for both the team and the products offered, and the means by which we will plant and fertilize growth in 2018 and beyond. Looking over the next 42 pages here in Partners, you’ll see we’ve captured these same things here for you.

Inputs: The fall Market Outlook gives guidance for the upcoming months; fertilize your life through a few tips to Be Grateful each day; and realize the copious options we employ working with our members during these more economically challenging times through The GreenStone Story.

19  Outreach. To fulfill our Farm Credit mission of sustaining the rural communities we serve, GreenStone’s outreach and engagement involvement will target four focus areas.

15 Member News

23 PAC Progress. Throughout the course of the year, action has been taken through the PACs to disburse funds.

22 Calendar of Events

Planting: Success starts with the people, including the interns who grow with us as showcased in the biannual Careers article; Crop Insurance helps protect your results, and knowing your options is essential; and supporting rural communities and agriculture is our mission, nourishing the seeds to help them grow and thrive is not only our commitment, but also our invitation to you—submit your vote on how we can further strengthen our Outreach and Engagement efforts.

31 Commodity Cuisine... Grill-Roasted Apple and Pumpkin Bisque

The most exciting times come when you reap the rewards of the cooperative efforts. We hope this issue of Partners, like all those before and yet to come, provide you value in your own lives and businesses, as well as with your GreenStone partnership. Have a grateful, fruitful fall!

32 Being Grateful

— Melissa

24 Legislative Matters. The first choice often is whether to put yourself in the room, and if so, what role do you want to play. 27 Directors’ Perspective. After focusing on the Executive Committee and the Compensation Committee in the spring and the Legislative and Public Policy Committee this summer, this fall you will hear from the directors on the Audit Committee.

18 Pause for Applause 18 Candid Comments 21 Behind the Scenes

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

34 Crop Insurance News 35 Crop Insurance Calendar

Editorial Mackenzie Jandernoa Laura Moser Melissa Rogers

Art & Design William Eva Jackie Sanch

40 Tax Calendar 41 Interns 42 Tech Tip

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

CEO Comments:

2017 Customer Satisfaction Results IN THIS ISSUE OF PARTNERS, I WOULD LIKE TO SHARE SOME OF THE RESULTS OF OUR 2017 ANNUAL CUSTOMER SATISFACTION SURVEY. THIS YEAR’S RESULTS WERE FINALIZED IN JULY AND CONTINUED TO SUPPORT A HIGH LEVEL OF MEMBER SATISFACTION WITH GREENSTONE. This year’s survey resulted in 94.1 percent of the respondents rating their level of satisfaction as either “satisfied” or “very satisfied,” which compared very favorably to last year’s rating of 95.2 percent. There was a slight increase in the number of “indifferent” responses from last year (4.9 percent versus 4.7 percent), while the number of “dissatisfied” members remained the same, at just 1 percent. To put this level of satisfaction into perspective with other U.S. financial institutions, a Consumer Reports evaluation in 2015 indicated the four largest U.S. banks have an average customer satisfaction rating of 69 percent, while U.S. credit unions have a 93 percent. Credio, a financial internet site for data-driven analytics and articles, reports in their 2015 analysis that customer satisfaction rates for the 10 largest U.S. banks range from 69 percent to 92 percent. Although these survey results are not directly comparable with the GreenStone survey because of different services offered as well as different survey methodologies, it is clear GreenStone’s 94 percent aggregate customer satisfaction rating is a strong performance.


Fall 2017 — Partners

This survey has been conducted using a very consistent format and methodology for over 20 years by an independent consulting firm owned by two professors at Michigan State University. GreenStone staff work with the consulting firm to develop questions about various areas of particular interest to us, but the core questions that drive the overall satisfaction results have not changed. This standard process provides results year in and year out that are free from survey format fluctuations. Based on the consultant’s statistical methodology, the survey results are accurate within +/- 2 percent at the association level. Of course, that accuracy rate drops off significantly as they are broken down to regional and branch levels, due to relatively smaller sample sizes. We invest in this level of effort and mathematical rigor to ensure unbiased accuracy, because we genuinely use the data to find areas to improve our level of service to you, our owners. These results are not simply for advertising, or a feel good “gimmick” that has no basis. We are committed to a high level of transparency with our members, regarding every facet of the association’s performance, and take the trust you have placed in us very seriously. While the prudent extension of credit is critical to the long term performance of any lending institution, very few of the other key indicators of performance can be obtained without a strong level of customer satisfaction. Obtaining credit is not an underserved market in this country. There are many choices for businesses and consumers to select from, which makes it very important to differentiate ourselves from the competition. We understand the money we lend looks and spends just like that of our competitors, but GreenStone’s money comes with a heightened level of knowledge in agricultural and rural lending—the kind of experience necessary to provide sound credit and financial services to our customers. And, most importantly, no one else has our people! Yes, they have people who serve their customers, but not our people! Many of GreenStone’s team members grew up on a farm, or live in the country, and have a deep passion for rural communities and agriculture. Although this experience is important for many roles at GreenStone, the real differentiator is our culture of service that we have set as the foundation of everything we do. Our hiring process uses several methods to identify people who have a proclivity to help and serve others. The technical aspects of our business can be

 his high level of satisfaction is T the key to GreenStone’s success. Without it, we would not have one of the highest market shares of any association in the Farm Credit System, our earnings and growth would be mediocre.

taught, yet the innate characteristic of serving others is something much harder to learn without that “something special” inside.

ours seriously, and genuinely want to be able to accurately understand how you believe we are doing.

In fact, data over the years from this satisfaction survey shows three of the top five performance dimensions, which determine performance relative to expectations, include people. These are 1) Having effective support staff (branch and administrative support), 3) Having effective credit staff (financial services officers), and 4) Being a lender that values you as a customer.

I hope you found this satisfaction survey information of interest. I hope you will also appreciate my future comments in Partners, when I plan to share other aspects of the survey results, including some verbatim comments we received, plus provide answers to a few commonly asked questions members raised.

In other words, those respondents that give us the highest ratings in either “exceeding or meeting” their expectations rank these three areas the highest at GreenStone. Conversely, customers that are least happy cite the competitiveness of interest rates on both real estate and equipment loans.

Best wishes for a safe and productive harvest! Feel free to contact me if I can ever be of assistance. Thank you for your business!

This high level of satisfaction is the key to GreenStone’s success. Without it, we would not have one of the highest market shares of any association in the Farm Credit System, our earnings and growth would be mediocre, we would not attract the high level of talented team members who serve your needs each and every day, nor would we have the solid reputation that we have worked hard to obtain and you—as owners—expect. So, if you receive a customer satisfaction survey next year, please take a minute to complete it—go online and submit it, or fill it out and mail it in. We count on it, along with our daily telephone and face to face communications with you, to stay as connected to you and your needs as possible. I understand you get bombarded with surveys, but we really do take

Dave Armstrong


Partners — Fall 2017




A commonality between Joe and Leah was a drive to pursue something more than the jobs they both held at a local trailer factory in Middlebury, Indiana. It was not exactly love at first sight. As teenagers, Leah says, “I didn’t like him much at that time.” She references a time when they were 16 years old and because their fathers knew each other, Joe was invited along on a trip to Maine to help Leah’s father establish a maple syrup business. A few years later though, both Joe and Leah started working at the same business. Then, in April of 2012, Leah and Joe again made the trip to Maine to help her father. Four months later they were married and bought a house in Sturgis. Joe had seven years in at the trailer factory. “I was making decent money, but I really wanted to do something else. To own my own business,” says Joe, who is now 28, and Leah, 29. The opportunity was closer than they imagined and about to happen quicker than they thought possible. Leah’s sister, Mary, and her husband, Matt Yoder, are owners of Twin Maple Farm in Sherwood. They farm about 1,900 acres of cash crops. A house the Yoders own was about to be empty. “Matt said he would hire me, and we could live there, with the idea being we would eventually branch out and add a confined animal feeding facility on his property,” Joe says. The Bontragers sold their house in Sturgis and moved to the home in Sherwood. They would use that equity to invest in this new joint venture with the Yoders, which was yet to be defined. Originally, they considered chicken barns, but they couldn’t pull permits for what they were thinking on Matt’s land. “We started thinking hogs, and we talked with Ryan Hunter, owner of H&H Farms,” Joe explains. H&H Farms operates a feed and grain mill out of Vicksburg, is a large hog producer and an investor in Clemens Food Group, which recently opened a 550,000 square-foot fresh pork processing facility in Coldwater. Joe grew up working on small farms, but readily admits he had no real experience in raising hogs in large facilities. However, being a hog finisher, their responsibilities would include feeding and caring for the animals in their barns, as well as manure disposal, while H&H would provide feed, medical attention if ever needed, and transportation. “We felt good about the contract, and was cautious, yet optimistic, about the investment,” Joe says. ➡ Top: Joe and Leah Bontrager gave up their jobs to be contract hog finishers with Leah’s sister, Mary Yoder and her husband, Matt. ➡ Right: Just outside their home in Sherwood is a grain storage system.

Partners — Fall 2017


“He’s more of a risk taker than I am,” Leah says about Joe. “I wasn’t thrilled with the idea just because of the smell, initially. And, even more so, I was concerned about having a partnership with my sister and her husband… with family. I didn’t want there to ever be any ill feelings or daily drama.” The arrangement has worked out really well for both couples. Matt makes decisions about the farm and Joe makes decisions about the hog operation. “My first priority is to take care of hog barns,” Joe says. “The rest of the time, I work for Matt.” And Leah is now the full-time administrative professional and bookkeeper for YB Farmin. Construction Begins

Once approved in Dec. 2014, construction started in March of 2015 on two 100-foot by 200-foot hog barns.

 e looked at what they were W projecting for expenses compared to what other contract growers were projecting. With the partnership, the contract with H&H, and the historical strength of Matt and Mary’s operation relationship with GreenStone, there were no problems

The Bontragers and Yoders established YB Farmin LLC for the hog operation. They formed a 5050 partnership and started discussions about financing four hog barns in the summer of 2014 with GreenStone financial services officer, Nicole Ladd, based out of Hillsdale. Financial statements were prepared and analyzed for the proposed investment. “We looked into the integrator, H&H, as well as the contract compared to payments,” Ladd says. “We looked at what they were projecting for expenses compared to what other contract growers were projecting. With the partnership, the contract with H&H, and the historical strength of Matt and Mary’s operation relationship with GreenStone, there were no problems.” 7

Fall 2017 — Partners

Natural gas, power accessibility and compliance with the state’s Generally Accepted Agricultural Management Practices seemed to work out perfectly, Joe recalls. The partnership shaved a good amount off the cost of the project by doing the excavating themselves. “It got a bit stressful as the schedule tightened up, but it worked out,” he says. “We still have some landscaping to finish up.” The first two barns were completed and filled in August 2015. A little over a year later, the second two barns were operational. Piglets come in at 45 pounds and go out at 280 pounds three times a year. Joe and Leah, and Mary, when she’s not busy tending to one of her six children, load and unload. It takes about a month for the process to empty the barns, clean and repopulate, Joe says.

Joe spends a couple hours in the barns each day checking on the condition of the pigs and making sure all systems are go. He’s aided by the additional investment to incorporate the latest technologies. Everything is remote controlled through cell phones and computers. “I can start feedlines on and off from my phone,” he says. “I can be in Florida and control it. I can turn fans on and off. The system will send me an alarm on my phone if the temperature gets two degrees hotter in any room. It also lets me know if any of the fans are pulling too many amps.” Contract Farming

A contract with H&H provides a consistent income, while minimizing risk, Joe says. The decision to build the hog barns was made before the announcement of the new Clemens Food Group plant. “That only made the decision better for everyone,” he says. The loan is a 12-year term, but the debt doesn’t bother Joe and Leah, who say the pig barns should be good for 30-40 years, allowing for additional profit during those years. “It was really easy to work with GreenStone; we never had any choke ups,” Joe says, while giving credit to Mary and Matt and their existing relationship with GreenStone.

“I really don’t think about the fact that we are in debt because we have a contract,” Leah says. “I don’t see myself growing for anyone else because H&H has treated us really good,” Joe says. “I’m pretty happy being a hog finisher versus an owner.” For the future, Joe wants to invest in farmland. “When the hog farms are paid for, I would like to be farming like 300 acres. I can take a little more time off, and still take care of the hogs and farm.

➡ Above: All four of the new hog barns have automatic feeders that can be monitored and controlled remotely. ➡ Opposite page: Joe and Leah Bontrager worked with GreenStone financial services officer, Nicole Ladd (right) to secure funding for four hog barns.

“Having your own business has a lot of benefits. Even though it’s more stressful, it’s also more flexible.” For farmers just starting out, Joe says you need the ambition to take the risk. “With the risk is reward,” he says. “But, you can’t just throw money out there either – it needs to an educated and calculated risk.” Meanwhile, Leah has learned to tolerate the smell – as long as clothes come off in the back room. She’s learned to embrace Joe’s saying, “It smells like money.” ■

Partners — Fall 2017


The Changing Environmental Regulatory Landscape for Agriculture By Alan Hahn



Fall 2017 — Partners

Waters of the United States, aka: WOTUS

In our 2015 update, we shared that the “final” WOTUS rule had been published on June 29, 2015. The 800-page final rule set out to clarify the definition of a regulated water under the Clean Water Act. It was widely criticized, and legal action quickly followed. Shortly after the final WOTUS rule was published, it was stayed (on Oct. 9, 2015) by the U.S. Court of Appeals for the sixth district. Defining what is and is not a water of the United States has been debated and contended for just about as long as I have been working in the environmental business (well, maybe not that long). There have been three different U.S. Supreme Court Rulings related to WOTUS. My colleagues provided scientific support for one of those rulings (Rapanos).

Agricultural groups had several concerns with the WOTUS rule. One of the more contentious concerns was the inclusion and ability to regulate low spots where water collected, ditches, and intermittent drains. This was made possible when the final rule removed the term “navigable waters” that had always defined a WOTUS and replaced it with language that, for many, created more ambiguity, confusion, and the likely potential to regulate more farms and farmland. Fast forward to this year when, on Feb. 28, the president of the United States issued an Executive Order directing the United States Environmental Protection Agency (EPA) and the United States Army Corps of Engineers to review and revise or rescind the rule. As this article is being drafted, there is a notice in the Federal Register outlining the schedule of public webinar dates to hear recommendations from stakeholders for revising the definition of WOTUS. Expect a new attempt at defining WOTUS sometime in the near future. Comprehensive Environmental Response Compensation and Liability Act (CERCLA)/Environmental Planning and Community Right to Know Act (EPCRA)

CERCLA provides a “Superfund” to clean up hazardous waste sites and other environmental emergency cleanups. When Superfund was amended in 1986 under the Superfund Amendments and Reauthorization Act (SARA), it created Title III within SARA called EPCRA. The “right to know” part of EPCRA was created so communities and emergency responders would know what chemicals are present at a facility. Sites with regulated chemicals above certain thresholds have to submit this data to local emergency planners so they know what types of chemicals they could encounter in the event of an emergency. So what does this have to do with farming? Farms (more notably, manure on farms) emit substances that are regulated under EPCRA—hydrogen sulfide and ammonia. However, according to the EPA, this was not a concern to them. On Dec. 28, 2007, the EPA stated, “EPA has not initiated a response to any… notifications of ammonia, hydrogen sulfide, or any other hazardous substances released to the air where animal waste at farms is the source of that release.” And in 2008, EPA


Farming has always included keeping an eye on the barometer. Now, as evidence in recent developments, it also includes keeping an eye on the environmental regulatory barometer as well.

finalized a rule that exempted agriculture from reporting under EPCRA. However, environmental groups sued the EPA, essentially stating they did not have the authority to create the exemption for agriculture. The long-standing litigation was settled on April 11, 2017, when the U.S. Court of Appeals for the DC Circuit “struck down” the EPA 2008 final rule. The EPA requested and received a stay (until Nov. 14, 2017) of the April 11, 2017, ruling.

Activist Funding and Other Issues

As is often the case, environmental regulations are the result of the activists taking legal action. According to at least one report, activist groups had a spike in donations following the elections last fall. Donations were up 100 to 700 percent for some groups. It is anticipated that the environmental groups will use these funds to bring additional legal action to further their causes.

What else should you watch? Nutrients (see Partners, Spring 2016 and Spring 2017), potential application of Clean Air The EPA said that they need additional Act regulations, as well as application of time to develop guidance to assist the Resource Conservation and Recovery farms that will be affected by this rule Act at agricultural sites (also covered (estimated to be about 64,000 farms). in Partners, Fall 2015), to name a few. While there could be legislation to amend Farming has always included keeping an this rule, stay in touch with your co-op, eye on the barometer. Now, as evidence Farm Bureau, or environmental advisors, in recent developments, it also includes as this could create some new reporting keeping an eye on the environmental obligations for your farm. regulatory barometer as well. ■


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.

Partners — Fall 2017


FALL 2017



As we moved through the summer, a rally was expected to appear just around the corner if weather got worse. For the corn, soybean, and wheat markets, the desired impact on yields was not as bad as the trade expected. Subsequently, even as late as the September supply/demand report, their carryover was increasing rather than decreasing and prices disappointed the grain bulls.


Fall 2017 — Partners


So what’s the next phase for the market? We are now in a time period where harvest pressure will keep a lid on prices, but concerns about lower yields may actually be confirmed. I believe very strongly the October and November supply/demand reports will show modest yield declines which will help stabilize all feed grains and oilseeds prices. By late October, I believe the flat price lows will be in and a gradual uptrend will be developing for all feed grains and oilseeds; the upside potential of the entire complex is very limited due to the large amount of domestic and global supplies. I expect corn will seasonally rally into early December, at which time I believe producers should aggressively have all flat price decisions made for necessary January to March of 2018 required corn, soybeans and wheat cash sales. The next selling window will most likely be the seasonal June/July time period. Overall, I feel producers have done a better job of selling new crop soybeans than corn, implying supplies and basis will be much tighter for soybeans as we move into next summer. In regard to corn, I sense that the bins are filled to the brim and not much has been forward sold. This implies it may be difficult to have any type of significant rally from January to May since any moderate price gains will be met with significant cash selling. This suggests time value delay strategies will have the best results from October to May of next year since a sideways trading situation is expected for corn.

So what’s the next phase for the market? We are now in a time period where harvest pressure will keep a lid on prices, but concerns about lower yields may actually be confirmed. I believe very strongly the October and November supply/ demand reports will show modest yield declines which will help stabilize all feed grains and oilseeds prices.

As we start the 2018 marketing year, there will be plenty of inventory in the bins for corn and wheat, which implies planted acres domestically and globally must be aggressively monitored. At the time of this writing, the “talk” is that South America and even China could reduce corn acres. This will help long term corn prospects. Soybean acres are expected to be up, which offsets much of the expected increase in demand. In the end, 2018 could be another year where the fate of sharply higher prices lies in the hands of a yield reduction event. Unless they change their decision making process, producers will not be any more successful selling in a weather stress year in the future than they have been in the past. Start planning now on how to sell 2018 inventory. Sell cash and defend with a long call and/or crop insurance, or buy an in the money put and roll up. Corn Recommendations for October to November 2017: During this time period,

active new selling is not recommended. Instead focus on maintenance of current hedge positions. At this time, with the big carry being offered clear to the 2018 crop, I suggest rolling all futures hedges to the December 2018 contract at 42 cents or better. If anyone is in forward cash contracts, consider rolling to the expected time period you want to move cash inventory. In regard to basis management, no decisions are expected in this time period against existing open cash contracts. Those using commercial storage are aggressively encouraged to take advantage of any rally in December 2017 to $3.90 to move inventory. If reownership is desired, act immediately or you will have to wait for the January/February cash flow movement time period. Based on previous recommendations, I assume feed buyers aggressively forward bought most of their first half of 2018 feed needs in the lead month contract during late August to mid September. If anyone finds themselves reading this copy and having not bought 2018 feed needs and the December corn contract is still below $3.50, aggressively lock up at least the spring/summer feed needs. Also, focus on buying meal before the October supply/demand report. If you don’t like forward contracting meal in the cash market, consider buying November 2018 soybeans between $9.50 and $9.30.

Partners — Fall 2017



There is sufficient grain supply globally and without some form of yield reduction, be it weather or a reduction in acres, there will be a minimal price recovery in 2018. Marketing and using the futures market to take advantage of early spring highs will be imperative to the bottom line, in my opinion.

We find ourselves now in a very flat wheat market searching for a bottom and seasonal bounce, but understand the upside is really limited for Chicago wheat prices due to more than adequate supply. If anyone is still holding old crop inventory, I believe the only recourse at this time is selling during the February to March 2018 winter injury scare time period. Time of year will become the determining factor to sell, not the absolute price which I fear will be a serious disappointment to most producers. Bottom Line: This has been a difficult marketing year with many assuming yield was not there and the market

would rebound. With the September supply/demand report now behind us and the USDA implying that, even with weather issues, there is still a good crop, one must assume a limited price rally once the bins doors shut if they are correct. Any rallies will be limited in strength with many producers going to market looking for some relief from low prices. With more on farm storage out there, next year does not look any better. There is sufficient grain supply globally and without some form of yield reduction, be it weather or a reduction in acres, there will be a minimal price recovery in 2018. Marketing and using the futures market to take advantage of early spring highs will be imperative to the bottom line, in my opinion. ■


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

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


Fall 2017 — Partners



GreenStone publishes regular updates on our Open Fields blog. Check out some of the posts you may have missed at There are five key considerations to creating an effective plan. The first and most important is to make sure all the stakeholders, regardless of whether they are an active part of the operation, are aware of the plan and buy into it. The second step is to develop, in writing, the business objectives and the specifics of the plan: who will be the production manager or the financial manager, do you want to continue the same crops, and are you working toward growth or stability? Next, the operator should compile comprehensive and accurate financial information, especially a balance sheet that identifies assets, liabilities and owner’s equity. Succession Planning Farmers and ranchers work incredibly hard over many decades to build their businesses. In order to pass along the full value of all they have achieved to the next generation, it is imperative they also focus on creating a succession plan to protect their assets and maintain family harmony. Succession planning is often associated with retirement and is therefore put off as a task for the future. It is important to recognize, though, that not all succession comes at retirement: death, disability, disaster, divorce and disagreements can also lead to the need to transition an operation, and all five of these “Ds” should be addressed in the plan. For these unexpected reasons, succession planning should start early, even as soon as operation begins.

The fourth important consideration, and one that is sometimes challenging, is to seek and pay for the necessary professional advice. The fifth and final step is ongoing: once the succession plan is established, it needs to be revisited periodically as things change. Outside of an unexpected event, we recommend beginning to transfer management responsibilities at least 10 years before a planned transition, allowing the next generation the opportunity to experience the full cycle of the sector—good times, bad times, economic cycles, possibly even natural disasters—and learn from the experts in the family how to respond. During this period, the transfer of assets and creation of business entities, following the plan devised with support from your legal and tax advisors, should also be initiated.

Understanding Operating Loans Farming is a capital-intensive business, with land, equipment and facilities that can run into millions of dollars. Beyond these capital expenses, farmers face annual input costs for seed, fuel, chemicals, etc. These inputs are often needed at the beginning of the growing season and paid for with proceeds from the sale of crops months in the future. To bridge this gap, many farmers utilize an operating loan, which is a revolving line of credit for the business. Learn the ins and outs of operating loans from senior financial services officer Martin Kasperksi.

Dairy Industry Outlook: Neutral to Slightly Positive Through 2018 According to market analysis by AgriBank, the general outlook for the U.S. dairy industry is neutral to slightly positive through 2018. However, substantial downside risks remain. Overall profitability for dairy farmers is contingent on many factors with significant risks and opportunities. In an effort to help you stay informed of continual changing market conditions, this blog provides an outlook on the dairy industry. ■

Partners — Fall 2017





GreenStone Analysis Shows Land Prices Beginning to Soften By Joe Hickey, GreenStone’s Vice President and Chief Appraiser

The diversity of land in GreenStone territory offers a variety uses to producers purchasing acreage in Michigan and northeast Wisconsin. This diversity, along with varying populations and income levels, requires land appraisals be analyzed on a localized level. To better understand the various land values, our team of appraisers conduct an annual benchmark analysis of select parcels throughout our territory. Land parcels analyzed include those for residential building, a wide variety of agricultural production, recreational endeavors, as well as commercial and industrial developments.


Fall 2017 — Partners


This year we found the year-over-year change in valuations ranged from an increase of 6.7 percent in the transitional land around major cities like Green Bay, Grand Rapids, the Howell/Ann Arbor corridor and Detroit area suburbs where housing construction continues to surge; to a negative 7.7 percent in southwest Michigan.

Tracking sales in these various purposes gives our leadership team a means to monitor ongoing market based trends. Essential to understanding risk, we further utilize these trends to measure the impact decreasing or increasing values have on the association’s loan portfolio. Analyzing localized sales and applying accepted appraisal methods in the valuation of the selected benchmark farms provides consistency to our risk management. Reappraising this same real estate year over year, collected since 2006, helps us more accurately identify the market fluctuations. Monitoring the local results with benchmarking from other regional Farm Credit associations also provides more valuable information to better advise our customers in their purchasing decisions. This year we found the year-over-year change in valuations ranged from an increase of 6.7 percent in the transitional land around major cities like Green Bay, Grand Rapids, the Howell/ Ann Arbor corridor and Detroit area suburbs where housing construction continues to surge; to a negative 7.7 percent in southwest Michigan. Only three of the 14 benchmarks showed an increase in land value, with the common thread being non-agricultural influence. Considering current and historical data, GreenStone’s appraisal team believes land values will continue the regional benchmark trends of the past two years, with declines for uses for production agriculture. Class A soil remains in high demand while lower quality land values will continue to soften as they have these past two years. Traditional Crop Land GreenStone’s benchmarking includes several traditional row crop parcels across the

Lower Peninsula of Michigan and northeast Wisconsin. After five years of fairly stable prices, results show we are beginning to see a softening of cash crop land values, with moderate declines or staying stable, including cash rents, but not to the level anticipated given the three-year weakening in farm commodity prices. The region in the western portion of GreenStone’s northeast Wisconsin territory saw the second consecutive year of stable benchmark value, following consistent growth the previous nine years. Since 2006, this land has increased from $197,000 to today’s value of $375,000. In the southeast part of the northeast Wisconsin territory, crop land value decreased for the second year after 12 and 18 percent increases in 2014 and 2015, to today’s appraised value of $534,000. In Michigan there was a 7.7 percent decrease in the southwest and 7 percent decrease in mid-Michigan, bringing their values to $384,000 and $424,000 respectively. Cash crop land in southern Michigan went unchanged for the second year holding at $280,000, a 40 percent increase since 2006. Michigan’s northern thumb area continues to hold the highest value of the regions at $622,000 ($7,780 per acre), marking a 1.2 percent decline from 2016. The Saginaw Valley cash crop land, on a per acre basis, had a 2.9 percent drop to $6,419, coming down from the highest value recorded in 2014 at $7,406. Dairy The appraisal of the Michigan dairy with 1,550 free stalls on a 40-acre site showed a 7.6 percent decline to $4,760,000, down from the 10-year high of $5,200,000 in 2015. The 60 tie-stall and 40-acre site in Wisconsin showed no change, holding at $318,000.

Recreational The 80-acre recreational benchmark land surveyed in northern Michigan saw a slight increase in value after two years of decreased value, coming in at $128,000 ($1,600 per acre) up from $120,000 in 2016. The upswing in recreation land value can be attributed to a stronger overall economy and increasing interest in recreational land, particularly with water frontage. Transitional GreenStone monitors three areas in the transitional land category: southeast Michigan; Lapeer County, Michigan; and Brown County, Wisconsin. Transitional land is defined as a property between uses with the current use likely to change. The 40-acre tracts in Michigan showed modest gains with the land in the southern part of the state increasing 5.3 percent over 2016, to a value of $316,000; this increase follows double digit growth in 2015 and 2016. Transitional land in Michigan’s thumb (Lapeer County) showed a slight up-tick of 3.4 percent to $163,000, reversing the decline in prices the past two years after the 10-year high of $191,700 in 2014. The 40-acre plot of transitional land in northeast Wisconsin continued a three-year trend of remaining flat at $400,000, following significant growth in 2011, 2012 and 2013. If you would like more information on our appraisal services, or this specific benchmark study, please contact a GreenStone appraiser at your local branch. ■

Partners — Fall 2017



John Norkus– VP and Commercial Lending Group Manager John Norkus has joined GreenStone as a vice president and commercial lending group manager. In this role, Norkus will specialize in assisting large nursery, greenhouse, fruit, and vegetable producers and processors with their lending and financial needs. As a group manager, he will provide leadership to members of the commercial lending unit team, being responsible for their training and development.

In the annual survey conducted by Michigan-based Advantage Research and Analysis, GreenStone continues to score above industry averages with a 94 percent customer satisfaction rating. The 2017 rating marks 13 consecutive years of a 94 percent or higher grade for the member-owned cooperative. “As a cooperative, we are charged with meeting and exceeding our member-owner expectations in the products and services we deliver to rural communities,” says President and CEO Dave Armstrong. “I am proud of the commitment of our team in their continued delivery of exceptional customer service. Achieving consistently high marks encourages our staff to continue to be innovative in refining and improving our service to members. While the feedback through the research is overwhelmingly positive, hearing directly from our members also allows us to find areas of improvement to meet the evolving needs of our customers.” The continual high scores posted for 2017 are a reflection of GreenStone’s ability to meet and exceed customer expectations during difficult times on the farm. GreenStone’s expertise in understanding market trends and conditions helps customers prepare for economic fluctuations. One respondent in the survey commented, “We appreciate all that our loan officer and GreenStone have been able to help us accomplish in our business. We have always gotten prompt answers and anything that was agreed upon has been followed through on. This has made business planning easier, especially during rough times.” The country living customer segment mirrors the same high level of satisfaction as the association’s traditional farm customers. All segments, including GreenStone’s young, beginning and small farmer customers, showed even stronger results from new customers who indicate 94.4 percent satisfaction. “We value our country living and young, beginning and small farmer customers, and are encouraged by the equally high satisfaction from our traditional agricultural customers,” Armstrong remarks. “These rankings reinforce our team’s ability to serve a variety of customers and their unique needs.” ■ 17

Fall 2017 — Partners

Norkus brings more than 19 years of commercial lending experience to GreenStone and possess an extensive sales and credit background working with clients in the agribusiness industry. For the past eight years, Norkus held the position of chief restructuring officer at a consulting firm where he was responsible for leading client relationships and developing and implementing financial, marketing, and operational strategies to best meet their needs. In addition, he has earned both a Certified Turnaround Professional and a Charter Financial Analyst designations. ■ Office Update Hillsdale, Michigan – New building construction began July 2017, with an anticipated completion toward the end of this year. ■ Quarterly Financial Update GreenStone recently released its second quarter stockholder report, detailing earnings of $33.4 million for the three months ended June 30, 2017, showing a 19 percent increase over the second quarter of 2016. Year-to-date earnings for the first half of the year are $71.4 million, a 15 percent increase over the same period in 2016. These earnings are driven by owned and managed loan volume totaling $8.1 billion at the close of June.

“The diversity of GreenStone’s member base continues to be a key factor in the financial strength of the organization,” says Travis Jones, GreenStone’s chief financial officer. “While many of our members continue to be challenged by low commodity prices, other members have been able to expand their operations. This has allowed GreenStone to grow its total loan balance nearly 6 percent over the last 12 months. At the same time, all our members are working hard every day to meet their financial obligations and allowing our association to maintain solid credit quality.” Other indicators to note from this quarter’s stockholder report include: • Operating expenses remained well-controlled as our efficiency ratio improved to 34.9 percent • Acceptable loan credit was 94.6 percent • Total member equity exceeds $1.5 billion ■ GreenStone Connect Reception Visit GreenStone at the 2017 Great Lakes Fruit, Vegetable and Farm Market Expo, Dec. 5-7, at the DeVos Place in Grand Rapids, Michigan. Stop by our booth during the show and join us for an evening reception where you will hear from GreenStone leadership about the year in review, have the opportunity to ask questions, and connect with your local GreenStone experts. More details will be provided online as we move closer to the event. Also, keep your eye out for additional opportunities to stay up-to-date with GreenStone during customer receptions at other industry events in 2018. These will be your unique opportunity to hear stockholder information and stay connected with GreenStone. ■


Pause for Applause... 1. Congratulations to GreenStone

customer, Kevin Small of Curran, on receiving Michigan Cattlemen’s Association Member of the Year award for his contribution and dedication to the cattle industry!

2. The National FFA Organization

selected 16 students from throughout the United States as finalists for its 2017 top achievement awards. Congratulations to Loren King, one of GreenStone’s 2016 scholarship recipients, for being selected as a finalist in the Star in Agriscience category!

Help GreenStone congratulate and thank these staff who are celebrating an employment milestone. From five to 25, the years represent the dedication and service all employees provide our members.

3. GreenStone customers,

Nathan and Jennifer Elzinga of Zeeland, Michigan, were selected as the 2017 Michigan Milk Producers Association (MMPA) Outstanding Young Dairy Cooperators (OYDC). The couple will represent MMPA at various industry and association activities throughtout the year. All Top 10 MMPA OYDCs will be officially recognized at MMPA’s annual meeting to be held in March 2018. Congratulations to all!

Jessica MacDonald (GreenStone financial services officer) was very knowledgeable and pleasant to work with. The entire GreenStone team was always on top of things and provided quick responses!

November: Stacy Carpenter (20) Gina Alatalo (20) Marcia Bredahl (15) Jonna Meyers (10) Amanda Kroll (10) Paula Rohrer (10) December: Dan Gitter (20) Michael Thompson (20) Scott Schmidt (5)

Thank you for your support at the Michigan Livestock Expo Sale-abration! Without you, this would not have been possible.

—Emily Mead 2017 Showcase Market Lamb

—Berrien Springs Branch Customer

October: Dawn Iott (25) Duane Paturalski (25) Louella Ulsh (20) Peggy Parkhurst (15) Keri Holder (15) Angela Brown (15) Brian Peariso (5) Josh Oele (5) Courtney Ross (5) McKinley Hixon (5)

Thank you so much for the generous purchase of my 2017 Showcase Market Steer. Your continued support of 4-H and the Michigan Livestock Expo is greatly appreciated. This event is a great opportunity for all 4-H members. I am currently a freshman at Michigan State University and your purchase will assist with furthering my education. Thank you again and we look forward to your continued support!

Thank you very much for purchasing my Grand Champion Market Hog at he 2017 Michigan Livestock Expo. I will be putting this money toward my college fund.

—Brenna Mortensen 2017 Grand Champion Market Hog

—Spencer Fisher 2017 Showcase Market Beef

Thank you so much for purchasing my Reserve Grand Champion Market Goat the Michigan Livestock Expo. It’s supporters like you that help kids like me continue on in this industry. The money I made from the sale is going toward my future college education.

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

—Emma Darrow 2017 Reserve Grand Champion Market Goat

...Candid Comments

Partners — Fall 2017


OUTREACH & ENGAGEMENT INVOLVEMENT GreenStone understands serving rural communities and agriculture means more than financing, and as such, our commitment extends beyond providing financial services. We work to support our communities and actively demonstrate our efforts through time, resources, and financial contributions.


Fall 2017 — Partners

To fulfill our Farm Credit mission of sustaining the rural communities we serve, GreenStone’s outreach and engagement involvement will target four focus areas:


Agriculture Advocacy, Customer and Industry Relations, and Producer Leadership Development and Education Industry support is an important part of our broader mission in rural America. We advocate for agriculture by connecting the value of farming and our customers to the non-farm public and key stakeholders, along with supporting causes that further develop relationships with our members.

2 3 4

Young, Beginning, and Small Farmers  y investing in projects and programs that B help remove financial barriers and provide educational opportunities for those developing a career in the industry, and to those sustaining diversity through initiatives such as urban agriculture, we can assist the roles these individuals play in sustaining rural communities and agriculture. Youth Education and Agriculture Awareness We aim to help educate future generations and develop industry leaders in agriculture and rural communities through supporting youth educational programs, financial contributions, volunteer efforts, and financial resources and training programs. Rural Community Engagement T o enhance and impact the quality of life in the rural communities we serve, GreenStone provides support to local and regional organizations whose efforts are aimed at building vibrant communities where we work and live in the following categories: health and wellness, hunger and nutrition, local disaster relief, sustainability and the environment, and human services. Through this focus area, we will partner with you, our members, to make a positive impact and fulfill our mission to service rural America through our new Member Grown Outreach program.

Being involved in the industry and our communities is a commitment we continue to make to the rural life we all value. Our hope is these investments will provide a meaningful difference in addressing the challenges you, our customers, face and improve the quality of life in your surrounding area. ■

Your Voice Matters!

As part of our support to rural communities, each year we will give YOU, our members, the opportunity to select the specific category GreenStone will concentrate efforts on through our new Member Grown Outreach program, as part of our Rural Community Engagement involvement. Votes are being taken now through Nov. 30. Complete the ballot and return it by mail, visit your local branch and cast your ballot in person, or vote online at:

Member Grown Outreach

CAST YOUR VOTE! Select the category you would like GreenStone to focus our Member Grown Outreach on in 2018: ❑ Health & Wellness (hospitals, mobile health screenings, cancer prevention, etc.) ❑ Hunger & Nutrition (food banks, hunger-relief, food pantries, etc.) ❑ Local Disaster Relief (tornadoes, flooding, ice storms, etc.) ❑ Sustainability & the Environment (conservation, etc.) ❑ Human Services (homeless shelters, family/child support, foster care, etc.) Please provide a specific example of an organization within the category you selected above:

My example above is: ❑ National ❑ State ❑ Local I am a GreenStone customer: ❑ Yes ❑ No If yes: ❑ Agricultural (farmer, agribusiness, etc.) ❑R  ural (home owner, currently building, land owner, etc.)

Mail completed ballot to: GreenStone Farm Credit Services Attention: Marketing and Public Relations 3515 West Road East Lansing, MI 48823

Partners — Fall 2017


BEHIND THE SCENES– GreenStone’s team of in-house appraisers contribute to the one-stop experience for our customers. They utilize their expertise in agriculture to provide fair and accurate evaluations. Andrew A Warner, Appraisal Group Manager, East Lansing, Michigan Describe how your role carries out the GreenStone mission of supporting rural communities and agriculture. My role is to deliver accurate estimates of collateral value to support sound lending decisions. My group is also responsible for training staff on personal property valuation and providing ongoing guidance into equipment value trends, commodity values, livestock values, etc. Together, these functions help to deliver reliable and consistent credit by providing our decision makers with meaningful estimates of collateral. What do you enjoy most about your role at GreenStone? A great deal of my time is spent outside the office, interacting with our broad range of customers. I particularly enjoy the conversation that accompany these interactions, which always results in learning something new about equipment or agricultural production! My position offers variety: I may be at a dairy farm in Wisconsin one day and a fruit processing facility in Michigan the next.


Fall 2017 — Partners


My role is to assist the credit team by establishing values for land and buildings offered by our borrowers as collateral.

What changes have been incorporated in your role to meet evolving customer needs? During my five years, I have been given various opportunities to be exposed to differing types of agriculture that I was not familiar with while growing up in the Thumb of Michigan. This exposure has required efforts to enhance my knowledge of ever-changing production types and practices in order to accurately estimate collateral value for the corresponding property.

What do you enjoy doing in your free time? My “free time” is currently occupied with caring for our daughter, who was born in July. My wife and I are still getting accustomed to our newest family member, but it has been a fun and tiring experience so far! I also enjoy spending time with family and friends, traveling, and outdoor activities.

Jamie Renner, Appraisal Group Manager, Mt. Pleasant, Michigan Describe how your role carries out the GreenStone mission of supporting rural communities and agriculture. My role is to assist the credit team by establishing values for land and buildings offered by our borrowers as collateral. I regularly appraise cash crop farms, dairy farms, orchards, recreational land and part-time farms. The type of properties used as collateral are highly specialized, so a key part of my role is to continually gather information on market conditions, trends, and recent sales. I also collaborate with other appraisers to ensure our appraisals are as accurate as possible. What do you enjoy most about your role at GreenStone? I was raised in a farming family, but never saw an opportunity for me to become involved on that level. Working at GreenStone allows me to be a part of agriculture. I enjoy getting to know the borrowers and their families, and watching their operations change over time. What changes have been incorporated in your role to meet evolving customer needs? Our department has worked hard in the last several years to reduce the amount of time it takes to have an appraisal completed. This is one component that will help reduce the time from application to close, which our borrowers really appreciate in certain circumstances. What do you enjoy doing in your free time? My husband and I have two young children. I’ve become a fan of little league softball/baseball and expect sports will only continue to take up more of our free time. I also enjoy gardening, reading, camping and spending time with friends and family. ■

Mark Your Calendar... NOVEMBER


Michigan State University AutumnFest Michigan State University Pavilion, East Lansing, MI


GreenStone Offices Closed (23-24) In honor of Thanksgiving


Michigan Farm Bureau Annual Meeting (28-30) Amway Grand Plaza Hotel & DeVos Place, Grand Rapids, MI



Wisconsin Farm Bureau Annual Meeting and Young Farmer and Agriculturist Conference (1-4) Kalahari Resorts and Conference Center, Wisconsin Dells, WI


Great Lakes Fruit, Vegetable and Farm Market Expo/Michigan Greenhouse Growers Expo (5-7) DeVos Place Conference Center, Grand Rapids, MI


Michigan Junior Livestock Society Winter Classic (8-10) MSU Pavilion, East Lansing, MI


GreenStone Offices Closed (22 & 25) In honor of Christmas Eve and Christmas Day



GreenStone Offices Closed In Honor of the New Year


Michigan Sheep Breeders Association Shepherd’s Weekend (5-7) Crowne Plaza Hotel, Lansing, MI


Dairy Strong Conference (17-18) Monona Terrace, Madison, WI


Great Lakes Crop Summit (31-Feb. 1) Soaring Eagle Resort, Mt. Pleasant, MI

Find us on social media for the latest events, member updates and industry information.

Partners — Fall 2017


These discussions center around providing education on the structure and value of GreenStone and the Farm Credit System, and challenges our rural communities and agriculture currently face.

PAC Progress:


In Michigan, nine meetings have occurred with Senators and Representatives at our local GreenStone branches or legislative fundraisers. Michigan legislators also expressed deep appreciation for the relationships built to provide trusted resources in the constantly evolving political landscape, and for the financial support provided through the MI GreenStone PAC. In addition, in September the Michigan House of Representatives Financial Services Committee invited and heard from our President and CEO, Dave Armstrong. His testimony was focused on GreenStone’s structure, products and services, and the outlook for agriculture. It was followed by great questions that offered further opportunities to share the importance of agriculture and rural communities to the state.

In Wisconsin, State Representative Gary Tauchen met with the Clintonville office in early September. Numerous legislative items were discussed, including the state budget, the high capacity well permitting legislation that was signed into law, and the proposed changes to the cooperative statute. Tauchen is the author of the High Capacity Well Act and the proposed cooperative statute modernization legislation. Federally, over 45 meetings have taken place with U.S. Senators and Representatives to communicate the importance of the Farm Credit System. The focus has been and continues to be on providing education around why the Farm Credit System was chartered over a century ago, and how GreenStone and the other Farm Credit associations still carry out the mission in the ever changing business environment. Other on-going issues that have been discussed include Dodd-Frank consumer compliance, crop insurance, and immigration. As stewards of the Farm Credit System and partners in the Michigan and Wisconsin agriculture industry, the highest importance is placed on ensuring the future of agriculture is bright. The strong relationship foundations being built will help ensure support for rural communities and agriculture. Your support is commended and appreciated by our elected officials. ■

Look for it! Watch Your Mail! The 2018 MI GreenStone PAC and WI Farm Credit PAC drives will be taking place Jan. 1-31, 2018. Be sure to look for the voluntary pledge and contribution card in your mail toward the end of December.


Fall 2017 — Partners

Legislative Matters:

In the Audience or on the Stage


The first choice often is whether to put yourself in the room, and if so, what role do you want to play: to be on the stage with a voice, or in the audience to participate with cheer. Both roles are important. To begin this process, the House Committee on Agriculture began its set of listening sessions across the country. In total, 9,942 miles were traveled by this Committee to listen to over 14 hours of testimony with more than 1,100 people attending. There were over 302 speakers presented to 29 congressional House members for the purpose of listening to prepare to form sound policy for the future of American agriculture and the people it affects. It was no surprise to the Committee to hear that many farmers are struggling to feed the world. They heard that crop insurance is necessary to allow farmers to survive, the importance of bringing capital to the marketplace, and the changes in the industry requiring adjustments to the Farm Bill. There are direct connections between farmers and consumers that are required to be recognized and supported. Food for Americans is the lowest cost for its citizens in the world and that is a huge benefit to the people of America and the economy. Supporting a strong Farm Bill, that includes safety tools for farmers, benefits the entire country. These were discussed at these hearings, but the message needs to be sustained.

Trade and research remain highly discussed topics, along with supporting all types of agriculture (for example: rural and urban, large and small, science based and organic). The Committee heard many different opinions on a variety of Farm Bill related topics, as did the Senate Committee on Agriculture, Nutrition, and Forestry, in their own set of hearings. A key part of the discussion may once again be on the Nutrition Programs; and both the House and Senate Committee are fully engaged to listen. We are once again reminded that the purpose of the nutrition programs is not about long term dependency, but rather giving aid in times of trouble. It is important that the hearings review and verify these programs are running properly and meeting the needs for these programs, as with any agriculture related program authorized in the Farm Bill. The House and the Senate Committees provide oversight and perspective to make certain all Farm Bill programs meet design requirements and policy purposes, ensuring they are effective and efficient, and are best designed for improved integrity and reduction of waste, remain enormous challenges. It starts by listening to those who are engaged in the business and practices that serve agriculture. The volume of voices, whether on the stage or in the audience, remain critical to making sweet music. Stay engaged and play a role. â–

Partners — Fall 2017


GreenStone Story:



Fall 2017 — Partners

Ultimately, we cannot control the market or the income for farms, but we do have tools to help customers sustain their businesses in tough times. Not all customers may choose to, and unfortunately some may not be able to, withstand these economic challenges. For those that are willing and able, there are a variety of options we can assist with to make the changes necessary to withstand this time. While the pressure is building on balance sheets, we believe the majority of our customers will be able to survive the lower prices. The exceptionally high commodity prices leading into the downturn, combined with low interest rates and increasing productivity, set the stage for farms to continue operating. However, if one of the other factors turns in a negative direction, more farmers may face difficult times than we are seeing today. As part of the Farm Credit System, we have a deep interest and obligation to work with all cooperative members in developing a plan, including the opportunity to rebalance current debts. Our ability to present viable options ultimately depends on individual factors. Listed here are several ways farmers can navigate tough times, and options we are able to present as your financial partner. Options for Navigating Tough Financial Times: 1.Develop a Trusted Lender Relationship: To effectively work with customers who may be going through stressful times, we must first have a trust relationship between our team and the business. Establishing a trusted relationship requires honest, forthright and transparent conversation. At GreenStone, we build teams around each customer so we can provide the best match for all our members. 2. S  eek Help Early: Once you begin having difficulty meeting routine obligations or are exhausting your working capital, it is important to contact your GreenStone team member to begin working on a plan or looking for options. Many times we have tools to help free up working capital by rebalancing existing loans. 3. K  eep Good Financial Records: To get a full and complete picture of the financial position, we need to have good, accurate financial records. These need to include actual income and expense records, rather than tax statements. Financial records should be used on a monthly basis to manage the business, not just for annual tax reporting. Our staff can help you design a plan to accurately look at your business on a month by month basis.

 s part of the Farm Credit A System, we have a deep interest and obligation to work with all cooperative members in developing a plan, including the opportunity to rebalance current debts.

4. Be Transparent with your Lender: To offer effective solutions, all information needs to be shared that impacts the financial position. Many times, information withheld is critical to a complete understanding of the financial situation and eventually conflicts with our ability to help.

8. B  uild Working Capital: “Cash is king.” If cash was used for major purchases, such as equipment, we may be able to convert some of the assets to a debt position to provide working capital. Rebalancing debt between short-term and long-term financing can also generate more working capital.

5. Keep an Open Mind: GreenStone can offer a number of ways to help businesses, but it may involve making changes to assets or production methods. Our team of experts will review your records with you and help you determine the productivity of your assets in relation to your overall business, to assist you in making the right business decisions. We will never attempt to manage your farm for you, only offer suggestions on how you can capture more working capital and rebalance debt.

9. U  tilize Risk Management Tools: Having a marketing plan for commodities, including the use of crop insurance and programs like the Livestock Gross Margin program, can help you capture the most for your products. Risk management tools and marketing plans also provide for more consistent cash flows.

6. Develop a Plan: Structuring a plan with realistic production and income goals will help you track progress and set goals for the future. Using your past records and production levels, coupled with our deep industry knowledge and experience with a variety of agricultural enterprises, we can help design plans that reflect current industry benchmarks and expectations.

Regardless of the customer or situation, there is no one plan we follow. We work with each member individually, and consider a variety of options to help them manage the times. Our priority when working with our customers is always to develop a win-win-win solution: one where the customer wins, GreenStone wins, and ultimately the 24,000 members of GreenStone win as well. ■

7. Limit Unsecured Debt: Relying on credit cards and other unsecured debt can quickly become a long-term challenge. High levels of unsecured debt can hinder abilities to obtain other financing if needed. If using unsecured debt, be sure to have a repayment plan in place.

Partners — Fall 2017


DIRECTORS’ PERSPECTIVE AUDIT COMMITTEE As part of their election to the board of directors, GreenStone’s board members also serve on a focused committee. Throughout this year, the Directors’ Perspective in each issue of Partners will highlight these committees and the directors who serve on them, to define the purpose, and more importantly the value, of each of these teams. After focusing on the Executive Committee and the Compensation Committee in the spring and the Legislative and Public Policy Committee this summer, this fall you will hear from the directors on the Audit Committee, whose purpose is to provide oversight for the financial reporting process, internal controls, and audit process for your association.

Gene College, Committee Chair

It has been a wonderful opportunity to have served on the Audit Committee for the past eight years. This committee can be referred to as the “eyes and ears” of the financial aspects of the organization. The primary function of the four person committee is to approve the published quarterly and annual financial reports, and to oversee the system of internal controls, the process for monitoring compliance with laws and regulations, the standards of conduct, and the code of ethics. We have quarterly meetings as well as several conference calls throughout the year with GreenStone’s chief internal auditor, Melissa Stolicker. We work closely with her in the development of the internal audit program and review each internal audit report. We also have ongoing conversations with the external auditing firm, as well as our association’s regulator, and review their reports. We ensure appropriate actions have been taken with respect to reports from all such sources. Although nothing is “fool-proof,” as a result of committee involvement, GreenStone’s customer/stockholders should have a high level of confidence that the organization has a good system of internal controls, appropriate audits are being conducted, is operating in a sound business manner, and the financial statements are accurate.


Fall 2017 — Partners

Dale Wagner, Committee Vice Chair

I am now going into my third year on the Audit Committee. One of the responsibilities of the committee, and the entire board for that matter, is to monitor financial reporting. Financial reporting is described as the process of producing statements that disclose an organization’s financial status to management, the board, shareholders, and government regulators. These reports include a balance sheet, which consists of all assets, liabilities, and equity. It is a snapshot of GreenStone at any given time. A profit and loss, or earnings statement, done on a monthly basis, is also generated by GreenStone’s chief financial officer, Travis Jones, and his team. All these financial reports are reviewed by Melissa Stolicker, along with the Audit Committee. We will ask questions, voice any concerns, and then approve a quarterly report which is available to all stockholders on GreenStone’s website. I encourage all customers to take a look at them. Management uses this information to make business decisions. Two of the most important of these include: provisions for loan losses and earnings available for patronage refunds. Both of these need to be approved by the Audit Committee and ultimately the whole board. This information is also provided to the Farm Credit Administration, our regulator, and we have the opportunity to meet with them to discuss any potential concerns. The bottom line is we all work as a team to make sure GreenStone is a safe and secure source of credit for our members in Michigan and northeast Wisconsin.

Darl Evers

I am just beginning my second year on the Audit Committee after having spent a few years on the Finance Committee and 20 years on the Executive Committee. As part of our responsibilities, we review all external and internal examination reports. We meet separately with the external auditors to discuss any matter the committee or auditors believe should be discussed. Audits are done by our internal audit department, and AgriBank also performs their own

Scott Roggenbuck

This is my second year on the Audit Committee; I have also served on the Finance, Compensation, and Executive Committees. Audit is a busy committee, tasked with working with the internal auditor, Melissa Stolicker, to review the various audits and internal controls to ensure the safety and soundness of the association. During these meetings, we will have members of GreenStone’s executive team available for portions of the meetings that pertain to their area of responsibility. Staff members who

review. Additionally, the Farm Credit Administration does an independent exam on GreenStone as well. Our committee provides assurance that the association’s audits, both internal and external, are properly auditing the association. We obtain reports on significant findings and recommendations, as well as a report of GreenStone’s management responses. As part of the committee structure, it is required that at least one member be designated by the board as a “financial expert.” For GreenStone, Gene College is an appointed outside director selected for his financial knowledge and expertise.

regularly attend the meetings include the chief credit officer, Paul Anderson; chief financial officer, Travis Jones; and the chief information officer, Steve Junglas. The Audit Committee will also meet via conference call with members of the Farm Credit Administration (FCA) the system regulator, and PricewaterhouseCoopers (PWC), the outside auditing firm for the Farm Credit System. It may surprise customers to know just how many audits take place during the course of the year at GreenStone. The truth is, audits are constantly taking place. The number performed annually is around 25. The lion’s share of these are performed by our Internal Audit

Team to test the safety and soundness of our procedures and the performance of our staff. These internal audits also prepare the association for the regular examinations from the FCA and PWC by finding and correcting issues prior to an expensive and time consuming external audit. In addition, GreenStone’s information technology is also audited extensively. Cyber security is a very important issue to a financial institution. Now, something that 20 years ago didn’t even exist, gets as much scrutiny as the financials. ■

Editor’s Note: In the Summer 2017 issue of the Directors’ Perspective, an incorrect edit was made within Dennis Muchmore’s comments when referencing Lynn Gould. The correct statement for the article is: “…Lynn Gould (chair of the Building Committee at the time)…” Our apology to Dennis and Lynn for the error!

Partners — Fall 2017


From Financing to Friendships:

Building a Dream Home Building a new home, located an hour from your current residence, is often a stressful time for homeowners as they manage budgets, construction schedules and the endless decisions needed for your dream home. But not for Pete and Tammy Olsen. When they set out to build their new home, on land they purchased 10 years prior, they found the process to be as smooth as it could be. “We had always talked about building one day on the land, and when the time came it was a wonderful experience,” says Tammy Olsen. “We spent years planning our dream home. It was so much fun putting it all together—especially the decorating.”


Fall 2017 — Partners


Over the years, Tammy and Pete kept a notebook of decorating ideas and special touches they wanted to incorporate into their home. Bringing it all together, with family heirlooms and other sentimental pieces, make their new home a special place for their family to gather. “We kept some of the pieces from our old home but also incorporated new things to make it feel new. Each room has a different inspiration. The screened in porch, where we spend most of our time, is designed after a porch on a vacation cottage we used to visit in Door County, Wisconsin. The fire place mantel is constructed out of old barn beams and the dining room houses furniture from each of our parents,” Tammy explains.

 he counsel we get from GreenStone T in managing the financing of the property and the barn, and eventually the house, was exceptional. They have worked with us every step of the way, and have been very instrumental in making this a wonderful experience for us.

Adding to the sentimental value of their new home was the opportunity for Pete’s parents Ted and Bea Olsen to be a part of the building process. “Pete’s dad was here every day watching the process and supervising the work. He was our biggest cheerleader through this process. Both he and Pete’s mom died within months of us moving into our home. We were so fortunate to have the time with them during the building process,” Tammy says. One reason the Olsens believe their experience was so positive, was the decadelong relationship they have established with the team at GreenStone’s Schoolcraft branch. “When we first bought the land in 2006, I did a lot of research on who we should work with to finance the land. We considered a land contract with the current owner, but after learning more about GreenStone and their expertise, we decided to use them for the first loan. We had no idea that land financing would lead to a long-term friendship,” says Pete Olsen. The Olsens purchased the 43 acres in Lawton initially as a place for Pete and his two sons to hunt and enjoy the out of doors. They found themselves spending most of their time on the property, and two years later built a pole barn to establish more of a “deer camp” environment. Again, they turned to GreenStone for the financing. “The counsel we get from GreenStone in managing the financing of the property and the barn, and eventually the house, was exceptional. They have worked with us every step of the way, and have been very instrumental in making this a wonderful experience for us.”

Beyond the expertise, it is the relationship and genuine sense of caring that developed over the years that they truly appreciate. “Living in a rural area is all about community,” Tammy says. “Working with GreenStone and the friendships we have developed all adds to the sense of belonging to this community.” That sense of belonging reaches to the friendship developed between the Olsens and Emelee Rajzer, senior financial services officer at the Schoolcraft branch.

➡ Above: Doing business with the GreenStone team led to a decade-long relationship between Tammy and Pete Olsen (pictured left) and Emelee Rajzer (pictured right), senior financial services officer at the Schoolcraft office. ➡ Opposite page: After enjoying the property for hunting, the Olsons built their dream home in Lawton, Michigan, incorporating family heirlooms and years of decorating ideas.

“Where else but at GreenStone will you find a lender that stops to give you a scouting report on deer and turkey she sees, or shares pictures with you of a bald eagle on your property? Or sends sympathy cards when you experience a loss? We would have never developed this sense of community or relationship with a big bank or other lender,” Pete says. ■

Partners — Fall 2017


Grill-Roasted Apple and Pumpkin Bisque Ingredients: • 2 Granny Smith apples, halved and cored

• 1 can (15 ounces) pumpkin

• ½ cup (1 stick) unsalted butter

• 1 quart heavy whipping cream

• 1 rib celery, diced

• 1½ teaspoons ground allspice

• 1 small onion, diced

• 1 teaspoon ground nutmeg

• 1 small carrot, diced

• Kosher salt

• 1 quart apple cider

• Freshly ground black pepper

Instructions: 1. Prepare the grill for direct cooking over medium heat (350° to 450°F). 2. Grill the apple halves, cut sides down, over direct medium heat, with the lid closed as much as possible, until nicely browned and the skins start to pop off (10 to 15 minutes), turning once. Remove from the grill, let cool, remove the skins, and chop into large pieces. 3. In a large saucepan over medium heat, warm the butter and sauté the celery, onion, and carrot until the onion is translucent (around 10 minutes). Add the apples and cider. Simmer until the vegetables are soft (5 to 10 minutes). Stir in the pumpkin and cream; return to a simmer and then add the allspice and nutmeg. 4. Using a hand blender, puree until smooth (or strain the solids, place the solids in a blender, puree, and add back to the liquid). Heat through. Season with salt and pepper. ■ Source:

Commodity Cuisine...


Fall 2017 — Partners


i With the holiday season right around the corner, the spirit of giving begins to fill the air. While it is important to give back this time of year, what about practicing all forms of gratefulness on a more regular basis? Between our busy lives and the stressors we each face, it is easy to understand how this might take a backseat. However, research is continually finding that people who regularly express thanks and acknowledge the goodness in life, are generally healthier and happier. Keep a Gratitude Journal Establish a daily practice of spending five to ten minutes to remind yourself of the gifts, benefits and good things you enjoy. Setting aside time to recall moments of gratitude associated with ordinary events, your personal qualities, or valued people in your life gives you the positive motivation to weave a sustainable life theme of gratefulness. Do Not Avoid the Negative While we often associate gratitude with focusing on the good and avoiding the bad, it is also important to remember the hard times you once experienced and acknowledge how far you have come. Chances are you will feel proud of what you have done and be more grateful for your current situation. Know the Value of the Little Things Small acts of kindness make a big difference when it comes to cultivating gratitude. Offer a compliment, help out with a task, or give a small gift or flowers “just because”—make a habit to acknowledge the little things and routinely find ways to pay it forward. Spend Time with Loved Ones Gratitude helps us connect with people and strengthen relationships. Thankful people realize they did not get to where they are by themselves, and make it a priority to spend time with those who matter most. Allow others to see how you look at them by expressing appreciation through your words, actions, or simply time together. Join a Cause Important to You This can be through donating money, time, or talent. Examine your own talents and passions, and use these to help others. When you see the positive impact of your efforts, you can lower your feelings of depression and overall well-being, especially when it is for something near to your heart. Practice Mindfulness To do this, you must immerse yourself in the present, making it difficult for your brain to race ahead and worry about the future, or become bogged down in the past. For example, while going for a walk, notice all that is around you – color of the sky, shape of the clouds, and sound of the wind. By remaining in the moment, you are giving thanks to the “now.” ■ Sources:,

COUNTRY LIVING – OPEN FIELDS BLOG BRIEF GreenStone publishes regular updates on our Open Fields blog. Check out some of the posts you may have missed at! • What to Expect During Closing Successfully navigating the home buying experience requires an understanding of all phases of the process. Knowing the expectations of a smooth closing process can help both buyers and sellers have a positive experience as they close an important financial transaction. In this animated video blog you will learn the key expectations of closing a real estate loan. • Understanding Collateral Purchasing a home or vacant land is one of the biggest decisions you make. Understanding some of the basics of financing can help ease concerns you may have and properly prepare you for the financing process. In this video blog, GreenStone senior financial services officer, Cynthia Cole, explains the ins and outs of collateral in financing. • Group Land Purchase: Consider This! Gathering friends or family members together to purchase land for recreational purposes can be a good way to enjoy outdoor activities without carrying the complete financial burden of the land. However, successful group purchases of land require thoughtful planning and often times the establishment of a Limited Liability Corp (LLC) or other type of holding group. In addition to payment of the loan, there are other considerations to take into account when group purchasing land. In this blog post, financial services officer, Tom Peterson, offers some tips on how to successfully purchase and enjoy your recreational land. ■

Partners — Fall 2017


SECRETS TO MAKING HEALTHY AND FUN SCHOOL LUNCHES Secrets to Making Healthy and Fun School Lunches It is only a few months into the school year, and if you are beginning to dread packing school lunches—or your children dread eating them—it might be time to switch to some more enticing options. This is not always an easy task; it takes time, planning, and there is no real guarantee that just because you pack it, your kids will actually eat it. However, that does not mean filling their lunches with pizza and cookies is a good option either. Here are a few ideas to help get your kids look forward to eating what’s in their lunchboxes! Pick a Theme Tap into your kid’s creative side by following a theme, such as Mexican food Mondays by letting your child build healthy burritos or tacos with: whole-wheat tortillas, lettuce, salsa, brown rice, and any other fixings they enjoy. Or, when you have time for a nice breakfast on the weekend, make extra food and save the leftovers for lunch—think hardboiled eggs, pancakes, and sausage. Keep it Interesting Pack a small amount of many foods, use cookie cutters to cut sandwiches into fun shapes, give food cute faces with stickers by wrapping tightly in plastic wrap and stick’em on, use kid-friendly skewers to make kebabs, add colorful fruits and vegetables in different sizes, or pack yummy dips such as yogurt or hummus. Get Creative with Drinks Most kids’ drinks contain almost as much sugar per ounce as soft drinks. Instead, pick a beverage that has zero or few calories, added nutrition, or both. Water, lightly sweetened ice tea, milk or 100 percent juice drinks are good options. Try making a smoothie using fresh fruit blended with yogurt—while sneaking in extra veggies like spinach. If water is too boring, throw in a few pieces of frozen fruit to sweeten it up. Try a Sandwich-Free Lunch Day after day of eating the same lunchtime sandwich can leave kids a little bored. Instead, mix it up by using whole-wheat or grain varieties (such as pitas or tortillas) and try a new filling. If your child loves PB&J, make a peanut butter and banana roll-up by spreading peanut butter on a whole-grain tortilla, add a sliced banana and roll. Or, think outside the bun by rolling sliced deli meat around cheese sticks, cream cheese, and greens—it can help change the way your kiddos think about a traditional sandwich. Pack Their Own Lunches Sticking a helpful step-by-step guide with options on the fridge to remind your kids what should go in their lunch every day is an easy way to have them do their own assembly before bedtime every night. • Step 1: starch + protein – turkey sandwich, PB&J, cheese quesadilla, hummus and crackers • Step 2: fruit – apple, peaches, grapes, blueberries, applesauce • Step 3: veggie – carrots, celery, broccoli, cucumbers • Step 4: snack – string cheese, yogurt, air-popped popcorn, pretzels, almonds and raisins, homemade trail mix • Step 5: drink – water, milk, 100 percent fruit juice It might take an extra minute, but mixing it up helps to keep the healthy options interesting for the rest of the school year! ■ Sources:,,


Fall 2017 — Partners


CROP INSURANCE NEWS: Apple Reminders November 20, 2017 is the sales closing deadline to change your current coverage or take out a new policy for the 2018 crop year. Premiums are not billed to you until Aug. 15, 2018 and are due Sept. 30, 2018. Your current coverage will carry over for 2018 if you do not change anything in writing by Nov. 20, 2017. Jan. 15, 2018 is the acreage and yield reporting deadline for fruit. Please report acres and production as early as possible! 2018 prices will be included in your renewal information ■ Fresh Apple Reviews

APH REVIEWS– Recently, the Risk Management Agency (RMA) increased the threshold for an Actual Production History (APH) policy review from $100,000 to $200,000 on a per crop per county basis. With the weather conditions experienced by some counties this year, it is likely many producers could meet or exceed this amount. An APH policy review is simply the process of verifying the accuracy of the insured reported production, share and acres. Accurate and complete records will simplify the process, along with following these guidelines: • P roduction records must be separated by crop, practice, type, unit, and the actual crop year. •R  ecords must be sorted by the 578 producer prints, settlement sheets, and soft records. • T he insured must keep three years of production records. • L ivestock feeding should be recorded daily.

• Comingled production needs to be measured by a disinterested third party. • The insured should keep original records and provide the Approved Insurance Providers (AIP) with copies. Hard records are production records that prove the final disposition of the total crop, and are verifiable by a third party. Soft records are the documents an insured must provide if production is separated by unit, practice, type, or variety. Soft records must include all units; missing or incomplete soft records may result in comingled production and the loss of optional units. This may result in a lower guarantee. If you think you will be submitting a claim that will be above the $200,000 threshold, please contact your agent to begin the APH review process. Most claims will not be paid until the review is completed. The earlier the process begins, the earlier a claim can be paid. For more details, please contact your local GreenStone crop insurance specialist. ■

Please remember, a fresh apple policy can be singled out for a fresh review at any time during the year or at claims time. You will be asked to prove that you have sold your apples as fresh and at what price they were sold. The requirement is that 50 percent or more were sold as fresh, at a fresh price in at least one out of the last four years. Call us if you need more information regarding what documents can be submitted and what information needs to be included on those documents. If you cannot prove fresh sales, RMA requires that your apples be changed to processing for the current crop year. ■ Co-Mingled Production Please be aware that any production from 2016 being carried over into the 2017 harvest needs to be measured or marked by an adjuster prior to adding the current year’s production. Added production needs to be kept separate by unit through bin markings. If Optional or Basic Units are being combined, the insured may mark the bin themselves. ■

• P rinted combine monitor records should be stored with settlement sheets. • T he insured cannot split truckloads, tickets, and bins between units without proper soft records for comingled production.

Partners — Fall 2017


Accounting & Billing:

Crop Insurance Claims & Income Taxes

Premium bills were due before Oct. 1. Starting with the earliest Premium Bill date, payments are applied as follows: A) any unpaid finance or interest charge, B) unpaid administrative fees, and C) unpaid premiums. Please keep in mind accrued interest on uncollected premium is included, according with the terms of the Standard Reinsurance Agreement, and CANNOT be waived by the agent or AIP. ■ End Of Insurance Period Insurance ends on each unit or part of unit at the earliest of: • Total destruction of the crop • Harvest • Final adjustment of loss • Applicable calendar date in the crop or special provisions • Abandonment • Or, as otherwise specified in the Crop Provisions Provisions require a Notice of Loss within 72 hours of damage discovery, but not later than 15 days after the end of insurance period. Revenue losses must be submitted no later than 45 days after release of harvest price. ■ Acreage & Production Reports It is the customer’s responsibility to report the crop that was planted in each section, the planting date, the percent share of that crop, and the quantity harvested. Reporting your crop accurately and double checking everything is very important. Corrections or changes cannot be made after the reporting deadline. If you have any questions or would like assistance, please contact your local GreenStone crop insurance team. ■

Some producers could be receiving crop insurance revenue payments this year, which could trigger an unexpected tax liability, especially if producers sold 2016 crops in 2017. In other words, some producers could almost be receiving two years worth of income in one year. Farmers who normally sell at least half of their crops the year following their harvest, and use cash accounting, might be able to roll crop insurance benefits into the 2018 tax year. A crop insurance payment cannot be split between two tax years. The benefit will need to be taken as income in one of the two years. If you receive a crop insurance payment in 2018 for the 2017 crop, none of your payout has to be claimed for 2017, regardless of whether you normally sell your grain in the following year or not. For a detailed analysis, please contact your GreenStone tax accountant for a tax planning appointment to help you make an informed decision on how to treat your crop insurance proceeds. ■

Crop Insurance Calendar... OCTOBER




End of Insurance Period (loss reporting deadline) for Apples


End of Insurance Period (loss reporting deadline) for Spring Crops

Wheat Final Plant Date*


Wheat Production Reports Due


December LGM Sales Close Date


October LGM Sales Close Date


Wheat and Forage Acreage Reports Due


End of Insurance Period (loss reporting deadline) for Fall Crops


Final Claim Reporting Date for Sugar Beets


Final Claim Reporting Date for Dry Beans


November LGM Sales Close Date


Forage Underwriting Report Signature Due Date




Fruit Acreage/Production Reports and Pre-Acceptance Worksheets Due


January LGM Sales Close Date

Fruit Sales Close Date and End of

20 Insurance Period for Grapes

*Please note some dates vary by county, especially in Wisconsin. Please check with your crop insurance specialist for specific dates.


Fall 2017 — Partners

MARGIN PROTECTION OPTIONS FOR DAIRY PRODUCERS THE RECENT ANNOUNCEMENT FROM THE USDA NOTIFIED DAIRY PRODUCERS CURRENTLY ENROLLED IN THE MARGIN PROTECTION PROGRAM (MPP) THEY NOW HAVE THE OPTION TO ENROLL OR OPT OUT OF THE MPP FOR 2018 (HTTP://BIT.LY/2Y3EYDX) SETS THE STAGE FOR YOU TO EVALUATE OTHER MARGIN MANAGEMENT OPTIONS. One program available is the Livestock Gross Margin for Dairy program (LGMDairy), an insurance plan for you to protect from declining gross margins when feed costs rise or milk prices drop. LGM-Dairy has proven to be a useful tool for insuring margins. Gross margins are determined by the market value of milk minus feed costs. For LGM-Dairy calculations, future prices for corn, soybean meal, and milk are used to determine the expected gross margin. Using LGM-Dairy is similar to purchasing a call option to limit higher feed costs and a put option to set a floor on milk prices. Your costs for LGM-Dairy are determined by the dollar deductible you choose (ranges from $0 to $2 in $0.10 increments), the higher the deductible, the lower the premium. In addition, the LGM-Dairy premiums depend on the hundredweights you cover, number of months included, deductible level, and futures and price

volatility. If you are considering enrolling in the LGM-Dairy program, here are a few facts for you to consider: • How and When to Opt Out: To opt out of the Margin Protection Program, farmers should not sign up during the annual registration period. Those interested in participating in LGMDairy will be able to purchase coverage beginning with the November 2017 sales period, with coverage taking effect in January 2018. • Funding is Limited: The USDA has a set amount of funds allocated to this program. The funds are distributed on a first come-first served basis each month. Producers looking to participate in the program should be ready to enroll on sign up day, which is the last business Friday of the month. • LGM does not cover Producer Price Differentials (PPD): Prices for the LGM-Dairy are based on simple averages

of Chicago Mercantile Exchange Group futures contract daily settlement prices and are not based on local payments or deductions. •T  iming is Key: Due to limited funding, those considering enrolling in the LGMDairy should meet with their specialist ahead of time to begin the application process and have records ready. Because enrollment begins on Friday, specialists must be available to enter in the information Friday afternoon and many times on Saturday. • LGM Sets a Floor, Not a Ceiling: When considering enrollment in LGM-Dairy, it is important to remember the program sets a floor on your prices, not a ceiling. If market margins exceed your coverage level, you will still receive the market margin. However, if margins fall below your coverage level, you are protected at the level you have secured through LGM-Dairy. •U  SDA Resource: More information regarding the LGM-Dairy program is available at: If you have interest in discussing the best margin protection options for your operation, give us a call or stop in to your local branch to speak with your financial services officer or crop insurance specialist. ■

Partners — Fall 2017


MANAGING RISK WITH ORGANIC AGRICULTURE By Mike Fisher, GreenStone’s Crop Insurance Specialist

The demand for organically grown food has created one of the fastest growing segments of production agriculture in recent years. This has led to the expansion of programs offered by the USDA and administered through the Risk Management Agency (RMA) to help producers minimize risks associated with the production of these organic commodities through crop insurance. More specialty and organic crops are covered now, and the availability of programs like Whole Farm Revenue Protection has widened the scope of coverages, lowered the financial risk for producers, and created both challenges and opportunities for producers and crop insurance specialists. Along with new crops being available for coverages, yields have been established for those with transitional (T) acres to more closely reflect the value of those planted acres until full organic status is achieved. Since 2014, some county T yields have also been separated from traditional yields as more data has become available to the USDA, especially on corn, soybeans, wheat and dry beans. When adding a commodity to any policy that has not had organic coverage since before 2014, one must scrutinize Actual Production History (APH) carefully as lower APH’s are not uncommon as T yields will generally reflect historically lower county organic yields. Contract pricing options are now available on many organically grown crops. Producers should always check the actuarials to be sure contract pricing is available and to understand how maximum contract prices are calculated and the effect they have in a claim situation. Copies of the contracted commodities are due with the


Fall 2017 — Partners

acreage reports to be able to set the proper guarantees for the policy. Be sure to specify the correct Type and Practice for each commodity as in the case for soybeans and other bean varieties. There are many different types with varied prices for coverage. RMA’s web resource, https://webapp.rma., has helpful information in the types/practices and the price for the individual covered commodities. The contracts signed by producers to market their commodities will usually specify what type of commodity is contracted to be grown and delivered. For example: Large seeded food grade, small seeded food grade, commodity, all other food grade, low linolenic acid, low saturated fat, and high protein, are all different types of soybeans with various price guarantees that are specified within the RMA site for soybeans in Michigan. Producers also want to make sure that organic, or transitional organic practices, are specified on the applications in the spring and again on the acreage reports to ensure correct guarantees can be applied. A copy of the operation’s

Organic Certificate is also required at acreage reporting time. Whole Farm Revenue Protection has the ability for organic operations to cover commodities that generate revenue in an operation yet may not otherwise have individual coverages available. Crops like spelt, organic beef cattle production, organic milk, fresh vegetables, and many others, may not have coverage available in certain counties, but may be covered on a Whole Farm policy as long as all the criteria are met for levels of revenue, and there are no other restrictions to coverage. Even if coverage is available individually for some crops, but contract maximum prices limit coverage, Whole Farm might be a policy to look at to ensure a value closer to the expected levels of revenue normally generated by growing these high revenue earning commodities. Hail insurance can also be a very effective risk management option for organic crops. Insurance providers can alter the maximum insurance per acre (IPA) levels for some organic crops. This will require a written application to expand the IPA, and APH

levels and contract price information will need to be submitted with the application or exclusion. This will help identify the needed levels of coverage for the insurance provider to authorize. Most organic producers are more than willing to share insights with other producers, there are organic trade organizations within each state, and local Farm Service Agency’s often have programs related to organic practices. Including a cost share program for producers to help with the cost of their organic certification that is required for each operation annually. It takes different skills, knowledge and commitment to produce organic commodities. The same is true for someone to guide you through your options with managing risk on those generally higher value commodities. If you are currently growing organic crops, or are thinking about getting into an organic operation, be sure to evaluate what it takes to go organic, and make sure your crop insurance specialist is there to help manage the higher level of risk associated with organic production. ■

Partners — Fall 2017


How is the Sharing (GIG) Economy Taxed? By Kelly L. Tobin, GreenStone’s Senior Tax Accountant



Fall 2017 — Partners

Shared Economy The sharing, or gig, economy allows individuals and groups to use the internet or other technology to arrange business transactions generating revenue from their assets, such as cars and homes, or from services they provide, such as household chores, delivery, or technology services. The sharing (gig) economy can also be used to connect workers and businesses for short-term work. Like other contract work, income received is generally taxable, even if the recipient does not receive a federal Form 1099, W-2, or other income statement. Depending upon the circumstances, some or all business expenses may be deductible.

Income Recognition Federal gross income includes compensation for services realized in any form. It encompasses nearly every type of increase in wealth that is not specifically excluded. So, individuals who participate in the sharing (gig) economy and receive compensation in return for the goods or services they provide, receive gross income in the amount of that compensation. Persons who are paid for their services with property or stock, or who exchange their services for the services of another, must generally treat the value of the property or services received as income. Compensation for services includes not only common items like wages and salaries, but also vacation allowances, bonuses, commissions, tips, fringe benefits, severance pay, rewards, and other similar items. As my early tax career mentor, Kenneth J. Tomes, CPA, CFP, MBA, would say “If it feels good, it’s probably taxable.” Employee Vs. Independent Contractor An individual sharing (gig) economy worker is typically going to be treated as an independent contractor for tax purposes. Because a business does not have payroll tax obligations on compensation it pays to independent contractors, it is important to distinguish employees from independent contractors. • An individual is an employee if the service recipient for whom the individual performs the services has the right to control what work will be done and how the work will be done. • An individual is an independent contractor if the service recipient for whom the individual performs the services has the right to control or direct merely the result of the work, but not the means and methods of accomplishing the result. Employees receive W-2s from their service recipients (employers). The W-2s provide the taxing authorities the employee’s earnings and tax withholdings. Anyone who pays an independent contractor $600 or more during the calendar year must file Form 1099-MISC, which provides the taxing authorities the independent contractor’s earnings.

There are severe penalties for not filing W-2s or 1099s. The IRS compares the information reported on W-2s and 1099s to an individual’s income tax return. Employers pay one-half of social security and Medicare taxes for employees. Independent contractors pay 100 percent of Social Security and Medicare taxes through the 15.3 percent self-employment tax they pay on their business profits. Independent contractors may also have to pay quarterly federal and state estimated income tax payments to avoid an underpayment penalty when they file their federal and state income tax returns. Employers are required to withhold federal and state income taxes on their employees. Available Deductions Individuals working in the sharing (gig) economy may deduct all ordinary and necessary business expenses incurred in their trade or business, as long as the expenses are reasonable in amount.

limitations if the house is used for personal purposes. Home Office Some home-related expenses may be deductible business expenses if they are allocable to the individual’s home office. There are two methods for calculating the home office deduction: the simplified method and the actual-expenses method. Under the simplified method, the taxpayer simply deducts $5 for each square foot of the home office, up to a maximum of 300 square feet. Thus, the home office deduction under the simplified method cannot exceed $1,500. Under the actualexpenses method, expenses must be allocated between the home office and the remainder of the home, based on the square footage used for the office compared to the total square footage of the house. In order to take a home office deduction, the room must be used exclusively as the business office. If you are considering offering or using sharing services and are not sure about the proper classification as an employee or independent contractor, contact your local Greenstone tax accountant. We are happy to assist you in this important classification and also help you to account for your business income and expenses. ■

Deductions Specific to Ride Sharing

Individuals who use their automobiles to earn income through ride sharing have two options for deducting expenses. An individual may use the actual cost method and deduct all costs related to operating a vehicle. To deduct these expenses, individuals must substantiate car expenses by keeping an exact record of the amount paid for gasoline, insurance, and other costs. In lieu of calculating the operating and fixed costs allocable to business purposes, individuals may use the OCTOBER standard mileage rate method. Individuals file a 2016 income tax return Under this method, individuals (Form 1040) if an automatic six month may deduct a fixed amount for extension was requested. all substantiated miles driven for Corporations file a 2016 calendar business purposes (53.5 cents per year income tax return (Form 1120) if mile in 2017). you requested an automatic 6-month Deductions Specific to Home extension. Sharing Non-farm employers file Form 941 An individual who rents out for the third quarter to report wages his or her home (or a portion paid, and social security, Medicare, and of the home) may be able to income tax withheld from wages, and deduct rental expenses. If the compute employer matching social individual has a net profit from security payments. the rental activity (that is, if rental income exceeds all deductions, DECEMBER including depreciation), the individual deducts all of the C-Corporations deposit the fourth rental expenses. Expenses must installment of estimated income tax for 2017. be allocated between rental and nondeductible personal expenses if only a portion of the home is rented. There are rental loss

Tax Calendar...




Partners — Fall 2017


INTERNS By Jonna Meyers, GreenStone’s Human Resources Generalist

THIS SUMMER, GREENSTONE HOSTED 10 INTERNS IN OUR CREDIT, CROP INSURANCE, MARKETING, AND TAX AND ACCOUNTING DEPARTMENTS. These students worked with their mentors on a variety of real-world projects, and also had opportunities to visit farms and sharpen their presentation skills. As part of their experience, the interns also participated in a series of blog posts chronicling their journey with GreenStone. Visit our Open Fields blog at to read each intern’s personal story. Although classes seem to have just resumed for college students, GreenStone is already searching for our summer 2018 interns, as well as potential career opportunities for recent and upcoming graduates. We have been hitting the road this fall visiting university career fairs talking about the opportunities at GreenStone.

Career Fairs:


Fall 2017 — Partners

As the area’s leading financial resource for rural communities and agriculture, we offer a variety of careers in various locations, giving employees the opportunity to demonstrate their passion for agriculture and commitment to rural America. GreenStone provides a work environment that will demand your best and in return offer personal fulfillment, challenging opportunities and financial rewards. While we hire many employees with a background in credit and finance, lending is not all we do, and our career opportunities reflect it. In 2018, we will be expanding our intern program, this year looking for approximately 22 interns in our appraisal, credit, crop insurance, human resources, information services, marketing and tax departments. Next

year’s intern program will run from May 14 through Aug. 31, 2018. The requirements for consideration for GreenStone’s internship program are to be a college student between their sophomore and senior year (graduating in Dec. 2018 or later). All students must have a GPA of 3.0 or above and their major must be relevant to the internship they are applying for. Come join us! More information on internships and other open positions are available at ■

Members of GreenStone’s human resources team regularly attend college career fairs and recruitment events! Earlier this fall we participated at various universities throughout Michigan and northeast Wisconsin. Coming up, we will be at Northern Michigan University on Oct. 18, Grand Valley State University on Oct. 19, and at Western Michigan University’s Finance Career Night on Oct. 26.

i DATA BREACH By Steve Junglas, GreenStone’s Executive Vice President and Chief Information Officer Matthew Cosgrove, GreenStone’s Information Security Manager

Although being proactive is easier said than done, when you hear about a data breach at a company you do business with, there are other steps to take, quickly, to protect yourself. 1. C  hange Login Information Change your username and passwords on accounts with the affected company, and if you have used the same credentials on other sites, change each of those to something different as well.

According to the Identity Theft Resource Center, data breaches reached an all-time high in 2016, and during the first half of 2017, were up 29 percent from the same period last year. As these become more and more widespread, it is important to take proactive steps to protect yourself. By the time you hear about a breach, it is usually too late to react and keep thieves from using that data.

2. A  gain, Monitor Accounts Keep an eye on any financial accounts associated with the breach for fraud. Your liability could depend on how quickly you spot and report suspicious transactions.

1. L imit What you Provide Since you are unable to control how companies protect your data, try to limit the data they have. Take a moment and think before you share sensitive personal information, like your Social Security number, even when it is a legal entity asking. You may find sometimes it is not mandatory to provide that information. When it is required, seek understanding by asking for details on why it is required, how it will be stored, and who will have access.

4. F ree Credit Monitoring Take advantage of any free credit monitoring offered by the affected company to catch new accounts opened in your name.

2. M  onitor Accounts Routinely look for suspicious transactions on existing accounts, as well as new accounts in your name. Opt for text or email alerts on attempted logins, big-ticket purchases, and account changes. Also, to help avoid a lag in time until you find out about a breach, keep tabs on your data by pulling your free annual credit report. 3. Increase Account Security Whenever possible, enable two-step verification. This requires users logging in to also enter a code sent to a cellphone or email address linked to their account. With this in place, someone would have to compromise more than one account to succeed. 4. S  ecure Your Devices Keep the operating systems and software on your phone, computer, and other devices up-to-date. Be sure to password-protect them and if you are not the only one using a device, do not set sites to automatically log in or save credentials.

3. W  atch out for Other Attacks Thieves often use news of a breach to generate new attacks—like phishing – posing as the affected company to trick consumers into giving up personal information.

5. F reeze Your Credit This prevents anyone, even yourself, from obtaining new credit. However, keep in mind that depending on circumstances, you may pay a fee each time you place, lift, or re-place the freeze. This would not affect the companies you already have accounts with, but any time your credit would need to be pulled, you would need to unfreeze (completely removes the hold) or thaw (temporarily lifts the freeze). To learn more about a credit freeze, visit At GreenStone, the security of your data is always top of mind. Whether online or at our physical locations, we take security seriously and are constantly working to keep our customer information protected and our locations secure. This includes constantly adding new tools to our online defense strategy and continual training of our employees. If you would like more information on the security measures we take to guard your information, refer to the Partners 2017 Winter edition available online at ■ Source:

...Tech Tip

3515 West Road East Lansing, MI 48823

Fall feature highlight... Building a new home, located an hour from your current residence, is often a stressful time for homeowners as they manage budgets, construction schedules and the endless decisions needed for your dream home. But not for Pete and Tammy Olsen. When they set out to build their new home, on land they purchased 10 years prior, they found the process to be as smooth as it could be. Read more on page 29.

Partners - Fall 2017  
Partners - Fall 2017