Promoting the business success of our customers and the rural community
30 FARMING AT
+W inter Market Outlook
+ Patronage Update + 2017 Events
WINTER 16 5 YBSF Feature. Mark Reif always knew he wanted to be a farmer, it was just a matter of how to get there. At 30 years old, he’s incorporated technology, diversified by taking on pickles, become a Pioneer seed dealer, and developed a partnership with nearby farmers.
19 GreenStone Story. The security of your data is always top of mind. Whether online or at our physical locations, we take security seriously.
25 Country Living Feature. Paul and Erin Abueva’s home in southwest Michigan is the area’s first LEED gold certified home.
32 C rop Insurance Feature. When Tim Ostroski purchased crop insurance from GreenStone, he knew he was taking smart steps to protect his assets, but he never imagined Mother Nature would give him her worst. 37 Tax Feature. Partnering with an accounting professional can result in many benefits, both to yourself and to your business.
3 CEO Comments. President and CEO, Dave Armstrong, reflects on 2016 and discusses GreenStone’s proactive approach to meeting customers’ changing needs. 9 Guest Column. Coping with generational differences within a family business is not easy. Here are some ideas to help. 11 Market Outlook. Bob Utterback acknowledges that as new developments unfold, markets will react to changing policy in 2017. 14 MAEAP. The Michigan Agriculture Environmental Assurance Program works with farms across the state to help implement best practices that protect Michigan’s valuable natural resources.
29 Health and Wellness. After the hustle and bustle of the holiday season, many of us might be behind on sleep. Here are some tips to get back on track. 35 Guest Column. Crop land values are now seeing a moderate decline, so what is next? 13 Stress Management
15 Member News 17 Pause for Applause 18 Behind the Scenes 20 Calendar of Events
30 Commodity Cuisine... Potato and Parsnip Soup 31 Winter Weather Tips
21 Legislative Matters. There was a tremendous showing of support for the Farm Credit System and its mission in 2016 with the federal legislators throughout the nation. 22 PAC Progress. Agriculture’s voice and impact continues to be recognized and valued for its contributions to the economy. 23 Director’s Perspective. New GreenStone director Peter Maxwell shares his background and perspective on serving on GreenStone’s board.
33 Crop Insurance News 34 Crop Insurance Calendar 38 Tax Calendar 38 Tech Tip
Editor’s Note: The hum of conversation and common roar of laughter, the sight of mingling with respected colleagues and hugs among friends, and a feeling of trust and open transparency. It’s what you see, hear, enjoy and experience at the GreenStone Connect Receptions. In December, these receptions were back in action for a second year, and from my vantage point, attendees— both customers and staff—thoroughly enjoy themselves. The conversations are personal and the laugher is real. Our financial services officers, as well as our most senior management, personally know the customers and embrace the opportunity to connect in these social settings. Add in a short, but formal, update on both the strong financial standings of GreenStone and the focus for the cooperative in the coming year to effectively continue to meet our member’s needs, all surrounded by food and refreshments, and you’ve got yourself a GreenStone Connect Reception. For me, it is events like this that really bring pride to what I do and who I work for—meeting our customers, learning more from them about the different commodities, hearing the successes and the challenges members face, seeing the hearty relationships, and experiencing the sincerity and passion of our staff. From our sales teams to our CEO, it’s more than a job or a loan, it is very obviously a relationship. These relationships—the value and pride we place in each one—is why you’ll read about the training our staff have been participating in to best service customers in these more challenging economic times. It is also why GreenStone places such high value on the safety and security of your information. It’s the reason we provide guest articles from experts on the market, farm transitions, accounting, and land values. And it doesn’t stop there. Once again, this issue of Partners is filled with customer stories, expert resources, and noteworthy news all designed to provide you with a bit more value in your relationship with GreenStone. Happy Reading…and I do hope you’ll come say “hi” at one of the upcoming GreenStone Connect Receptions! — Melissa Rogers, Publisher
This newsletter is published quarterly for the customers of GreenStone Farm Credit Services. Editorial Lindsey Bliss Mackenzie Jandernoa Melissa Rogers
Art & Design William Eva Jackie Sanch
Partners GreenStone Farm Credit Services 3515 West Road East Lansing, MI 48823 800-444-3276 firstname.lastname@example.org
Happy New Year! years, our ratings would ebb and flow with the financial fortunes of our members. I’m hopeful that we have prepared our staff this time around to work with members in difficult financial situations in a respectful, transparent, fair, and professional manner so that even if the answers are not always what they want to hear, our members understand, feel like they were heard and treated fairly. In the fall 2016 edition of Partners, you may recall I shared things that members who were experiencing financial difficulties could do to “weather” the current economic “storm.” So, I thought it could also be helpful if I shared with you some of the things we are doing internally to help as well.
I HOPE THIS ISSUE OF PARTNERS FINDS YOU RESTED, RELAXED, AND RECHARGED FROM THE HOLIDAYS, READY TO FACE THE NEW YEAR HEAD ON. DESPITE A DIFFICULT AGRICULTURAL ECONOMY FOR MANY, GREENSTONE’S 2016 FINANCIAL PERFORMANCE WAS SOLID. EVEN THOUGH NET EARNINGS WERE LESS THAN 2015 DUE TO HIGHER PROVISIONS FOR POTENTIAL LOAN LOSSES AND THE QUALITY OF THE LOAN PORTFOLIO DETERIORATED SLIGHTLY, THE ASSOCIATION’S RISK BEARING CAPACITY REMAINS STRONG. THIS HAS RESULTED IN YOUR BOARD OF DIRECTORS ONCE AGAIN APPROVING THE PAYMENT OF CASH PATRONAGE TO OUR MEMBERS FOR THE 12TH CONSECUTIVE YEAR—BRINGING THE GRAND TOTAL TO MORE THAN $265 MILLION! While we are exceptionally pleased to provide this kind of monetary value, I am most proud of the customer satisfaction score you collectively gave us again last year. Reaching and maintaining a score of 95 percent satisfied or very satisfied puts our performance in world-class territory. This level of satisfaction is particularly gratifying during difficult financial times. It indicates that even though some of our members are struggling financially, they still rate the interactions with our staff and other aspects of service at a high level. In past 3
Winter 2017 — Partners
If I have said it once, I have said it a thousand times: “the business of lending money is much more a people business than it is the money; it is built on mutually beneficial long-term relationships.” All of the technical aspects of extending credit and providing financial service solutions are very similar no matter who or what firm provides the service. Yet, the one key thing that differentiates one institution from another is the quality of the overall staff each has in serving its customers on a day-today basis. A financial institution can have the lowest interest rates in town, but if its staff treat customers unprofessionally, lack basic knowledge, are unreliable to do what they promise, are disrespectful and rude, or at best are indifferent to a customer’s needs, they will ultimately fail to reach the level of service our customers expect. Don’t get me wrong, I strongly believe GreenStone’s overall value proposition to the market is second to none when it comes to agricultural and rural community lending. Our interest rates are extremely competitive, array of lending products and financial services broad, and convenience of doing business highly rated. But, it is the people who make GreenStone great! Without people who are knowledgeable, courteous, honest, and truly caring about their customer’s well-being, we are only average at best. There are a number of financial and technical tools we are using to assist members experiencing financial stress. Things like the FSA guarantees, interest-only payments, and rebalancing debt to tap equity in real estate for additional working capital, among others, are
ur interest rates are extremely O competitive, array of lending products and financial services broad, and convenience of doing business highly rated. But, it is the people who make GreenStone great!
all vital in structuring financial sustainability. But we believe another significantly important aspect is training and improving our lending staff’s communication and emotional health assessment skills. Those of us who experienced working with difficult financial situations in the 1980s remember the difficulty of interacting with emotionally stressed members with little, if any, training in the “soft” skills that could have helped us help them in a more sensitive and professional manner. During that time, nearly all of the training focused on balance sheets, income statements, debt repayment capacity, chattel and real estate appraisals, classification of risk in loans, etc. Very little attention was given on how to better communicate and assess the physical and emotional well-being of our members. I’m convinced that it isn’t usually the message of bad news that causes stress in people, but rather the way it is delivered. If GreenStone staff become better at these skills, we will enhance the outstanding value they already provide. Beginning in the fall of 2014, we started a series of customer service workshops to train our staff on the finer points of financial risk assessment of challenged accounts. As part of these workshops, some of us who worked through the difficult times of the 1980s shared things we would have done differently if we knew then what we know now, related to the impact emotional stress can have on people. With this in mind, we moved to provide our staff with formalized training to better prepare them to communicate effectively, and identify the signs of emotional stress in individuals experiencing difficult financial situations. The following is a brief summary of some of the workshops conducted: “Collaborating Through Tough Times,” led by Dennis Morris, was held for financial services
officers and credit staff in October. Topics covered leading conversations, the consequences of chronic stress, respect driven communications, accountability and expectations in conversations, financial services officer denial, working with the customer who is not on the same page, and handling avoidance, super optimists, and anger, among others. Training entitled “Working with Farm Families Under Stress” and “Recognizing Common Stressors in Farm Families” was conducted in November by MSU Extension staff members Suzanne Pish and Roger Betz for supervisors and is being organized for other branch staff throughout 2017. “Working with Farm Families Under Stress” is intended to develop the right mindset to engage with customers in difficult situations that may arise from farm financial stress related situations. The skills taught include: how to effectively prepare, actively listen, and recognize verbal and non-verbal signals, along with developing a plan to help maintain the long-term relationship with our members.
In essence, we are asking ourselves the following questions within the association so we can be as proactive on mental health issues as possible, with the well-being of members and staff as the ultimate goal. • What is mental health? • What are mental health problems? • How common are mental disorders? • What is the impact of mental disorders? • Why is it important to have an action plan in place? • What resources and support do we have and need internally? Let me be clear, we do not anticipate the level of stress and financial difficulty in this current economic down turn that was experienced by many during the farm financial crisis of 30 years ago. However, we want to be prepared to provide an extra level of care and concern for members who may be struggling during this down cycle. As I said earlier, this is a people business and we are actively working to promote the emotional health of both our members and our staff. Thank you for choosing GreenStone as your financial services provider of choice. Feel free to contact me if I can ever be of service. Best wishes for a productive and healthy new year!
Farming ranks in the top ten most stressful occupations in the U.S. and “Recognizing Common Stressors in Farm Families” provides ways to identify the signs of chronic and prolonged stress in members with financial difficulties. This portion of the training also provided information on the state of Michigan and Wisconsin’s mental health resources, including suicide hotlines, among others. GreenStone is also considering further training for supervisors on mental health first aid education, which would include comprehensive certification to help identify various forms of mental health conditions, including depression, anxiety disorders, psychosis, substance use abuse, and others.
Partners — Winter 2017
farm full time. He left Indiana for a job back in Michigan at Hemlock Semiconductor in 2010 where he was a reliability engineer. “I really didn’t like being in the office,” says Mark, who was working on whittling down some hefty school loans. “My goal was to make enough to pay off my debt before I was 25, and I did.”
By Jennifer Vincent
ARK REIF ALWAYS KNEW HE WANTED TO BE A FARMER, IT WAS JUST A MATTER OF, “HOW DO I GET THERE,” HE SAYS. “I NEVER WANTED TO RIDE OFF MY DAD’S, UNCLE’S OR GRANDPA’S COATTAILS. I WANTEDTO MAKE MY OWN MARK.” AT 30 YEARS OLD, HE’S FURTHER INCORPORATED TECHNOLOGY, DIVERSIFIED THE FARM BY TAKING ON PICKLES, BECOME A PIONEER SEED DEALER AND DEVELOPED A PARTNERSHIP WITH NEARBY FARMERS TO INCREASE PRODUCTIVITY AND EFFICIENCY WITH SUGARBEET HARVEST.
However, Mark’s footing in the Saginaw, Mich. family farm was a process that started with him moving away. “It was never the plan to just jump into the farm,” says Mark, the oldest of three sons to Gary and Pat Reif. “My parents put an emphasis on education. I needed to go to college and get a job.” Mark chose Kettering University in nearby Flint, mostly because of its co-op program that allows students to work for three months, followed by school for three months. The offschool months of October, November and December meant he’d be home to help with harvest, and then off again in April, May and June to help with planting.
He followed his interest in math and science and pursued a degree in mechanical engineering, graduating in 2008. “That was the time of the economic crash and things were pretty tough in the automotive industry,” he explains. Employment took him out of state to Indiana to work for Cummins—the largest diesel engine manufacturer in the world. He was there about a year and half. “It was a good job, but I wasn’t home,” says Mark, who at that time says he really had no idea if or when he’d be returning to the
Also during that time, Mark had the opportunity to buy 80 acres from an older farmer willing to work with him. He worked through Farm Service Agency’s Young Farmer program to secure the loan with GreenStone Farm Credit Services as a participating lender. The timing was good, as that first crop of soybeans for seed fetched a premium on top of the banner $17 per bushel the market was bearing. “I did really good that year—yield was 69.5 bushels,” Mark says. The path to make his way back to the family farm was beginning to open as his uncle, who partnered with his father, was wanting to step back and enjoy retirement. Concurrently, Mark saw the signs of change as his employer began to make cutbacks. In April of 2013, he was laid off and the transition back to the farm began. “I wasn’t pressured to buy into the farm,” Mark says. “I was an hourly employee for many years.”
➡ Left: Mark Reif is very handson at the farm. Here, he works on installing new sugarbeet topper parts.
Partners — Winter 2017
reenStone has done a lot G for me. They know I have a good plan and have put a lot of trust in me.
Mark now farms in partnership with his father in an LLC, sharing resources, equipment and labor. They are farming 2,900 acres of corn, soybeans, dry beans, wheat and sugarbeets. Pickles were added this year. Mark calls it a team effort. They work where they are most comfortable, but are very interchangeable. Mark mostly runs the sugarbeet harvester and the sprayer, while Gary is often found in the combine. “But we all jump in and help out as needed,” says Mark, referencing his brothers,
Allen and David, who also lend a hand occasionally. No decision is made in a vacuum. “We run ideas by each other and consider all our options before we do anything,” Mark says. He’s starting to slowly take over tasks Gary, 62, has relinquished and says his time with big corporations has been an asset on the farm. He’s brought knowledge of accounting software and data management tools to help with efficiency and profitability. “Having
worked for big companies sitting at a desk, it really makes you appreciate being self-employed and working outside every day,” he says. Stepping into a leadership role and wanting to be a strong contributor to the operation, Mark recently began an aggressive leafspot control program in sugarbeets. “We start spraying early, and we’ve tightened up our spray intervals,” he explains. The result has been a bump in yields the last two years and this year’s harvest recorded about a 2 percent increase in sugar above the factory average. For the third year, sugarbeet harvest was also much smoother. With financing through GreenStone, the Reif Farm partnered with other local farmers to purchase a ROPA selfpropelled sugarbeet harvester to cover their collective 1,000 acres of beets. “GreenStone has done a lot for me. They know I have a good plan and have put a lot of trust in me,” says Mark, who has worked with GreenStone’s senior financial services officer, Wayne Sevilla, to produce some quick turnaround transactions. “Wayne knows how to get things done, and he sees my vision. He sees when things could work, but he also advises when maybe I shouldn’t go in a certain direction.” Mark says the ROPA partnership has been a great decision. “We were able to justify the machine by working with two other partners who are all of similar mindset and understand that we’re all here to get the job done. We all work together pretty well and everybody brings something to the
➡ Left: Mark Reif, 30, left the family farm to obtain a college degree and worked off the farm for a few years before transitioning back to the farm. He is now in a partnership with his father Gary. ➡ Opposite page: Mark Reif is always looking for new opportunities and has helped advance the farm through diversification. 7
Winter 2017 — Partners
I love farming. It’s challenging, but you can see the direct result of hard work. Wayne has been a huge asset in my transition into the farm full time.
table. We never run out of trucks, wet weather isn’t as big of an issue, and sugarbeets aren’t as stressful as they were.” New Opportunities
The farmer partnership worked so well, one of the farmers, who also grows 300 acres of pickles and owns a 10-row self-propelled harvester and dump cart, worked with Mark to get him 80 acres of pickles. “I was looking for another way to diversify the farm,” Mark says. “He farms a lot of ground by himself. He was looking to bring someone on to help. It was a good decision, and we’re hoping to expand further. I like high risk and high reward opportunities, but not having all our eggs in one basket.” Sevilla says Mark is meticulous. “He looks at things from a pragmatic point of view and how changes will benefit
the farm,” he says. “He is very analytical and good at facilitating things to make it happen.” Mark has since sold his original 80-acre parcel and now owns two pieces—95 and 110 acres—closer to home. He bought, fixed up and sold two older houses since he has moved back and is currently renting, waiting for the next opportunity. To supplement his income, in 2014 he took over an existing Pioneer agency through the help of another Pioneer agent he had been working under for a number of years. He also bought 40 acres of sugarbeet shares. “I love farming. It’s challenging, but you can see the direct result of hard work. Wayne has been a huge asset in my transition into the farm full-time.” ■
i Cucumbers are available in Michigan and Wisconsin in the late summer months of July and August. Cucumbers for pickling should be fresh, firm and unwaxed, and washed with cold running water and a scrub brush. For the highest quality pickles, experts suggest pickling cucumbers within 24 hours of picking.
Did you know? • Michigan ranks first in the nation for the production of cucumbers for pickling. • In 2015, Wisconsin produced 32,890 tons of cucumbers for pickles. Sources: Michigan Ag Council, Wisconsin Department of Agriculture, Trade and Consumer Protection
Partners — Winter 2017
The Next Generation is Back. Now What? By Barb Dartt, DVM, MS I MET KAREN FOR COFFEE TO CHAT ABOUT HER FAMILY’S BUSINESS. KAREN’S SON, BRETT, HAD BEEN BACK WORKING FOR THE OPERATION FOR TWO YEARS. PRIOR TO THAT, HE’D COMPLETED COLLEGE AND HAD THREE SUCCESSFUL YEARS AT A CONSTRUCTION COMPANY.
Her husband, John, had been really excited when Brett agreed to return. Brett and John had always seemed destined to work together. They had complementary skills. They respected and enjoyed each other. These days, though, Brett seemed increasingly frustrated. More and more often, he came to his Mom to complain about John. The topics ranged from: Petty annoyances:
He still doesn’t have his spray logs turned in! How am I supposed to take my weekend off and hit the deadline for turning them into the state? Old habits:
He told me that during the winter, Ray reports to me since I’m running the shop. But in the last two weeks, he’s taken Ray four times to work on clearing fence lines without checking to see what I had planned. Long-term, serious topics:
We are talking about purchasing the Anderson ground. I’ve been here two years and I’m not an owner yet. We’re not even talking about ownership. It’s hard to get excited about growth. If you and Dad expand, it just feels like more that I’ll have to turn around and buy from you. “Is this normal?” Karen asked. “Absolutely!” I replied.
Winter 2017 — Partners
Tension between the generations is normal and healthy. The next generation (next gen) almost always wants to proceed at a faster pace than the senior generation. The infusion of their energy, excitement and innovation is an important source of renewal for family businesses. In fact, if they weren’t “nipping at your heels” a bit, you might be concerned about their ability to take on future business management and ownership.
So you have the next gen back in the business. What should you do to set the stage for their eventual business leadership and ownership? Before we talk about what to do next, I’m going to set the stage with a couple assumptions. First, I will assume that your next gen were invited to return because the business needs their valuable skills (and not just their labor). Second, I am assuming that the business is either big
• S ome folks recommend a job description at this point. I wouldn’t disagree with this approach. Typical job descriptions don’t include quite enough detail (e.g. pay expectations) and don’t substitute for actually having the conversation with your next gen. • I f your next gen had a highly responsible off-farm job before returning, they may bypass time spent in an entrylevel role. Even if that’s the case, the need to create and communicate expectations around a clear business role still exists—that role might just start at a higher level. 2. After the next gen has proven
that they are a high performer in an area, give them some control over a portion of the business. • It might be as broad as control of a full enterprise or as narrow as a seasonal project. • Often this step requires two things from one or more senior generation folks. 1. Y ou must give up some control to make space for the next gen to learn and grow.
enough to accommodate the next gen’s compensation OR the next gen came along with a growth plan to which the business is committed. Assuming your next gens are working in your business upon your invitation, their skills bring value to the business and your operation is big enough (or soon will be) to support their compensation, here’s how to set them (and you!) up for success. In my experience, transition works best if you follow these steps in order.
1. Clearly assign responsibility
so your next gen(s) can become a high performing employee. • Create a clear role for your new family employee. Let them know their responsibilities and set performance expectations. Discuss things like work hours, weekend duty, pay and how to earn raises. Talk about leadership behaviors like how you expect them to interact with employees— both family and non-family.
2. Y ou must sit back and watch a less experienced person make poorer decisions at a slower pace than you ever would! It takes patience and a deep commitment to continuity of the business to coach the next gen through this period.
selection? Rotation? Number of part-time truck drivers during harvest? Nothing discourages next gens faster than thinking they have the authority to make a decision —and then having their call trumped by Dad (or Uncle. Or Mom.). 3. Finally, after a next gen has
proven themselves to be a high-performing employee and that they can grow into leadership and control of a portion of the business, they have earned the right to be an owner. Karen, John and Brett were following this progressive approach. Brett was a valued member of the business who’d been invited back. He’d had a chance to perform as an employee and was recently “promoted” to a position that included authority over the sow herd. And yet, he and his Dad (and he and his boss!) had occasional conflict. Brett wanted things to come faster. John, at 56, had lots more wisdom and work to provide. Some tension between the generations is a normal part of family business. But if you are today’s senior generation and want your family business to continue, you have both the authority and the responsibility to create a process within which the next gen has a chance to be successful. As I have said before in this column, it may be the hardest AND the most rewarding work you do on your business. ■
ABOUT THE AUTHOR • This control should include Barb is a consultant with the Family lots of clarity around which Business Consulting Group, working decisions are theirs and which are joint. For example, with families and management teams to help them keep their business if the next gen takes over healthy and the people happy. the cropping enterprise so Barb can be reached at 269-382-0539 you (as the senior generation or email@example.com member) can focus on the The opinions stated herein are not livestock side, do they get necessarily those of GreenStone Farm to make the call on variety Credit Services.
Partners — Winter 2017
My overall guidance for 2017 is to be conservative in all management decisions. This implies keeping a close watch on cash flow exposure of hedge position. Thus I strongly favor forward cash sales and defending with calls, rather than being short futures contracts for the first major part of 2017 sales. CORN:
MARKET The start of 2017 is already shaping up to be unusual in several areas that could impact agriculture. I am referring to the shake-up in Washington, D.C. as the new Trump cabinet takes on the task of “draining the swamp.”
As we enter the New Year, stock projections remain excessive. I expect a slight reduction in the 2016 crop in the January USDA reports, but it will not be enough to influence the next three months from the overall sideways trading pattern. Adequate carry exists for March to July, which justifies holding hedges in place. The level of basis narrowing is expected to be weaker than what most producers have been used to because of big supplies of unpriced inventory in farmers’ control. Overall, I believe the flat price recovery is limited until some type of weather scare event is perceived and/or confirmed. Feed buyers can use seasonal price weakness from January
OUTLOOK By Bob Utterback
With every new development, the markets will be asking how these changes will affect supply and demand.
It will take some time before we see how things shake out. The speculative funds are already making a serious bet that soybeans and corn will be bullish by the very nature of their net long position in these grains as we start the year. This implies to me that the bulls will need a constant supply of bullish news to overpower the big supplies that currently exist for corn and wheat. 11
Winter 2017 — Partners
through February to accumulate long positions. I also suggest that any producer who intends to sell aggressively in the May to July time period, should look at buying out-of-themoney call protection in either the September or December contract. I like buying the $4.10 or higher strike price. If you understand the risk, consider selling deep-out-of-the-money July puts to reduce net cost [including commission and related fees] to an acceptable price. Remember, the purpose of these calls is to have coverage
against a mid- to late-summer weather scare event after sales have been established. I suggest a target price range start slightly over $4 basis for the December contract, and be done pricing by $4.25 or by the first week of July, whichever occurs first. SOYBEANS:
y overall guidance for 2017 is to M be conservative in all management decisions. This implies keeping a close watch on cash flow exposure of hedge position.
It is rumored that producers are strongly considering planting more soybean acres because: (1) of the absolute price of November soybeans as compared to December corn; (2) too much corn was planted last year and they want to get back to a 50/50 rotation; or (3) some producers simply do not want to invest a lot of money in the 2017 crop with all the outside macro uncertainties that are developing for 2017. For whatever reason, I’m working under the assumption that soybean acres will be up at least 3.5 million and could go as high as 5. I also suggest that, under the best of demand assumptions, we only need about 2.5 million acres at 47 bushels per acre. This will set up a situation where 1 to 2.5 million more soybean acres will be in production than we need for 2017. However, similar to 2016, as we start the year the market is also saying by its very nature that it wants acres— November 2017 soybeans is very close to deferred contracts and this is an inverted carrying charge market! The mistake I fear producers will make this year is waiting to price soybeans in the hope they will see $11 on a summer weather scare event, but end up with soybeans below $8.50 on a confirmation of a trendline plus yield. As we start the year I suggest being an aggressive seller of November 2017 soybeans above $10.15 and being done by $10.40. The problem is we are now into the South American production time period. If we do not see any type of production problem developing, I fear the Partners — Winter 2017
hile domestic production W in 2017 is expected to be reduced, will global supplies contract as well? near-term pricing opportunity is behind us. The next seasonal pricing event is not expected until July, which is a trap if no weather event occurs, no pricing opportunity will be seen as well.
ABOUT THE AUTHOR
If inventory has been priced, focus on buying protection in a limited risk vertical call strategy in the November 2017 contract. Focus on buying the $11 calls and selling as high a call as is possible to reduce the cost to one’s personal tolerance. I would not sell puts to help finance the purchase of the call.
The opinions stated herein are not necessarily those of GreenStone Farm Credit Services.
I believe meal buyers should not get overly aggressive in locking up meal. Focus on buying summer commitments from late January to early February. WHEAT:
Wheat producers have been hit hard with low flat prices and wide basis. The net price for many producers has resulted in losses. This was not lost on many winter wheat producers who elected to switch to soybeans. It is still early for spring wheat producers; but, if prices do not improve and the wheat/soybean relationship stays strong, we have to expect reduced acres here as well. This all suggests we are entering the beginning of the end of the wheat bear market. While domestic production in 2017 is expected to be reduced, will global supplies contract as well? My concern is early signs indicate some supply stability, but not as fast as many producers want. ■ 13
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Bob Utterback is the Farm Journal Economist and President of Utterback Marketing in New Richmond, IN. Call Bob for strategy updates at 877-898-4324. Email comments on Outlook to utterback@ utterbackmarketing.com.
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
i HELPFUL TOOLS FOR STRESS MANAGEMENT Farming ranks as one of the top 10 most stressful occupations in the United States. Each day, farm families face a variety of stressors, such as factors vastly outside of their control, including weather, market prices, livestock disease and equipment failures. While it can be easy to allow these to become overwhelming, it is important to remember that having the right mindset can mean the difference between debilitating stress and productive resiliency. Here are three tips to help keep stress in check: Use Self-Talk The body hears what the mind thinks, so choose your thoughts with purpose. Tell yourself that you can overcome any challenge. You can adapt. You have come through rough times before, and you can do it again. You cannot always avoid difficult situations, but you can choose the thoughts you have when experiencing stress. Try choosing three words to repeat to yourself when you want to maintain a positive mindset, for example: calm, capable and controlled. Use Your Breath When faced with a challenge, first use your breath. Deep breathing calms the mind and can help you focus. It can also reduce chronic pain and improve sleep. Try breathing deeply five times, releasing the air slowly. Combine deep breathing with positive self-talk to calm your stress and help you stay on task. Use Acceptance When things are beyond your control, the most productive step you can take is to accept it. Making acceptance part of your mindset can save you time and energy by letting you focus on the solution instead of getting frustrated by the problem. Try making the word “accept” part of your self-talk and using deep breathing as a time to pause, accept what is and begin problem solving. ■ Source: Michigan State University Extension
The path to MAEAP verification will differ among farms, and the system(s) in which the farm is participating. Since the farmer works on addressing risks at a rate that is personally and economically viable for them, the time to achieve verification also varies widely. MAEAP understands the diversity of the agriculture industry, and is prepared to help farmers pursue verification with four comprehensive systems that capture every agricultural niche. These systems include: Livestock, Farmstead, Cropping, and Forest, Wetlands, and Habitat. The local technician also helps farmers create and implement effective management and emergency plans that will meet the producer’s personal objectives, while identifying risks and potential liabilities. It is the goal of the program, the technicians, and the participants to find a healthy balance between sound environmental practices and cost effective management that will benefit the operation’s longevity.
MAEAP: GOOD FOR FARMS. GOOD FOR MICHIGAN. – WITH ABUNDANT NATURAL RESOURCES IN MICHIGAN, ENVIRONMENTAL SUSTAINABILITY IS AN IMPORTANT TOPIC RECEIVING INCREASED ATTENTION THROUGHOUT THE FARMING INDUSTRY, AS WELL AS WITH THE GENERAL PUBLIC. THE MICHIGAN AGRICULTURE ENVIRONMENTAL ASSURANCE PROGRAM (MAEAP) WORKS WITH FARMS ACROSS THE STATE TO HELP IMPLEMENT BEST PRACTICES THAT PROTECT MICHIGAN’S VALUABLE NATURAL RESOURCES. Over 3,700 verifications have already been completed, with the farms displaying “Environmentally Verified” signs to show their commitment to neighbors and communities. Farms of all types and sizes can become MAEAP verified. Whether a small hobby farm or a large dairy operation, MAEAP verification reduces environmental risks by implementing action plans that are custom designed for each farm based on proven scientific standards. A team of technicians are available to confidentially assist farmers pursuing verification. Throughout the comprehensive three-phase process, the local technician works directly with the farmer to determine potential risks on the farm, and develop ways to economically and effectively mitigate those risks.
This voluntary, preventative program protects not only the environment and wildlife, but the farmer and his operation as well. With legislated certainties, verified farmers avoid civil fines and penalties from unintentional accidental discharges to the water or “Act of God Weather Events.” Verification also ensures conformance with applicable Right to Farm Generally Accepted Agriculture and Management Practices (GAAMPs). Started and supported by groups from every facet of the industry, MAEAP has risen as the gold standard in environmental sustainability in Michigan. Verification is proof that a farm is committed to implementing best management practices for environmental protection. When a consumer knows a farm is MAEAP verified, they can rest assured that their neighborhood is being well cared for.
With more than 3,700 verifications to date, MAEAP is building momentum and making an impact by preventing pollution, liabilities, and environmental harm. To take part in this program, contact your local conservation district or visit www.maeap.org. ■
Partners — Winter 2017
NEWS: WAEC SPONSORSHIP The Wisconsin Agricultural Education Center (WAEC) officially broke ground last fall on a world-class, interactive discovery center that will focus on sustainable and responsible farming practices. The groundbreaking ceremony was held at the center’s future site near Newton, Wisc. in Manitowoc County. During the groundbreaking ceremony, Laurie Schetter, WAEC Board Member and senior financial services officer at GreenStone Farm Credit Services, enthusiastically announced Farm Credit’s support of the center’s capital campaign with a $550,000 gift. As GreenStone and the Farm Credit System celebrate 100 years of support to rural communities and agriculture, this gift is a demonstration of Farm Credit’s commitment to supporting organizations, programs and initiatives dedicated to advancing agriculture—today and tomorrow. Led by GreenStone, these organizations came together in Wisconsin to make this generous investment:
AgriBank AgCountry Farm Credit Services AgStar Financial Services Badgerland Financial CoBank GreenStone Farm Credit Services United FCS “The future of our industry depends on a well-informed public and an appreciation for the important role agriculture plays in all our lives,” said Dave Armstrong, GreenStone’s President and CEO. “The Farm Credit System is committed to the prosperity of rural communities and agriculture across our great country.
Together, these five Farm Credit associations and two System funding banks are proud to make this investment in the Wisconsin Agricultural Education Center. It is an opportunity for us to carry out our commitment, and we could not be more proud to support this valuable educational asset.” Construction is anticipated to go through 2017 and WAEC leadership are planning to celebrate a grand opening in spring of 2018. ■
THE SWEET REWARDS OF MEMBERSHIP— GREENSTONE TO RETURN MILLIONS TO MEMBERS As a borrower-owned cooperative system, GreenStone is pleased to announce the return of 25 percent of the association’s 2016 net income to our members on Patronage Day. It is our mission to support rural communities and agriculture, and one of the best ways we can do so is by reinvesting in you, your business and our communities through patronage. This year we are looking forward to celebrating Patronage Day on March 22. We hope to see you in your local branch, picking up your check and connecting with your friends and neighbors. We are committed to sharing profits with our hardworking and dedicated members, and we expect this to remain a benefit of membership for years to come. Through all cycles of the agriculture economy, you can rest assured GreenStone will be there to support our members, today and tomorrow. ■
Winter 2017 — Partners
It’s a wrap…and a launch: Farm Forward Mentorship Program GreenStone recently wrapped up its inaugural year of the Farm Forward Mentorship program, which included 14 producers located throughout the association’s territory. The program officially launched for the seven mentor/mentee pairings with a one-day training event in January 2016. Throughout the year, the program included several coordinated conversations and site visits to the mentor and mentee farms, all designed to foster conversations around business areas the pair prioritized. To conclude, the participants were invited to an interactive lunch with GreenStone’s board of directors where they had the opportunity to share firsthand their overwhelmingly positive experience with the program. For 2017, eight mentor/mentee pairings are ready to take part in the Farm Forward Mentorship
program. Similar to last year’s class, participating mentors will receive the satisfaction of helping and teaching the next generation while learning new ideas, and the mentees will in turn have access to the mentor’s broad knowledge base of industry dynamics and practices. ■
GreenStone’s Third Quarter Stockholder Report Shows Strong Loan Growth GreenStone recently released its third quarter stockholder report, detailing earnings of $34.5 million for the quarter and $96.7 million for the nine months ended Sept. 30, 2016. Comparatively, net income was $30.7 million and $96.5 million for the same periods last year. Owned and managed loan volume totaled $7.8 billion at Sept. 30, 2016. “Our solid earnings during 2016 continue to be driven by strong loan growth,” said Travis Jones, GreenStone’s chief financial officer. “While lower commodity
prices continue to present market challenges, the majority of our customers are managing these challenges well.” Other numbers of note from this quarter’s stockholder report include: • Growth in the loan portfolio over the last 12 months was 8.8 percent. • The permanent capital ratio was 16.0 percent at Sept. 30, 2016. • The loan portfolio classified as adverse at Sept. 30, 2016 was 2.0 percent. The complete third quarter stockholder report can be viewed online by visiting: www. greenstonefcs.com. ■
GreenStone Connect Receptions Join us for your unique opportunity to hear a short update on the year, ask questions, and connect with your local GreenStone team.
2016 DEER CHALLENGE WINNERS This past fall, deer hunters in northeast Wisconsin and Michigan’s Upper Peninsula has the opportunity to enter GreenStone’s 2016 Deer Challenge! Nearly 100 adult and youth hunters entered to win cash and prizes. Congratulations to the winners and thanks to all the hunters who participated in the challenge. ■
Adult Winners • Jim Zierden, First Place, $400 • Ethan Klister, Second Place, $200 • Keith Schultz, Third Place, $100 Youth Winners (17 years and under) • Myia Darga, First Place, $200 • Jocelyn Nueska, Second Place, $100
Great Lakes Crop Summit— • Visit the GreenStone booth at the Great Lakes Crop Summit, Jan. 26 – 27, 2017 at the Soaring Eagle Casino and Resort in Mount Pleasant, Michigan. Also join us at the GreenStone Connect Reception on Wednesday, Jan. 25 from 5:00 – 6:00 p.m.! Great Lakes Regional Dairy Conference— • Also visit the GreenStone booth at the Great Lakes Regional Dairy Conference, Feb. 2 – 4, 2017 at the Bavarian Inn and Conference Center in Frankenmuth, Michigan. On Feb. 2, mingle with us during another GreenStone Connect Reception beginning at 5:00 p.m. We want to hear from you! Email marketing@greenstonefcs. com to submit a question you have about GreenStone, our products or our services, and GreenStone’s senior leadership will answer it during the event. ■
ONLINE LOAN APP– IT’S COMING! If you are ready to live the country life in Michigan or northeast Wisconsin, applying online with GreenStone will soon be more convenient than ever! Using our Online Loan Application, you will soon be able to apply for the following country living loan products: •V acant and recreational land financing • Home site loans •H ome and building construction loans • Country home mortgages At GreenStone, we continue to advance the way we provide services to you, our members. This new, simple online loan application is one of those advancements that will be available in March 2017. Keep an eye out for more information to come! ■
➡ Above: Jim Zierden, first place winner in the 2016 Deer Challenge. Right: Myia Darga, first place winner in the Deer Challenge youth competition.
Partners — Winter 2017
101 Best and Brightest Companies to Work For The National Association for Business Resources (NABR) has named GreenStone one of the
Best and Brightest Companies To Work For® in the country. This marks the fourth year GreenStone has earned this honor at the national level, also taking home an award in 2012, 2014 and 2015, in addition to regional recognition in 2011 and 2012. The 2016 winning companies were assessed by an independent research firm which reviewed a number of key measures relative to other nationally recognized winners. Key measures included:
compensation, and benefits, employee engagement and retention, education and development, diversity and inclusion, work-life balance and strategic company performance, among others. GreenStone staff also participated in an employee engagement survey as part of the application process, which measured how meaningfully and personally connected they are to their work and to GreenStone. ■
Pause for Applause... 1. GreenStone board member, Dennis Muchmore, was recently honored by the Michigan Natural Resources Commission with the Thomas L. Washington Lifetime Commitment to Conservation Award. An avid outdoorsman, Muchmore repeatedly finds ways to bring innovative leadership and a great deal of energy to the programs and initiatives under his direction. Long active with Michigan United Conservation Clubs (MUCC), he was instrumental in implementing a more effective membership rate structure, creating better opportunity for women and young people to grow their careers within MUCC, and connecting youth to the great outdoors. Muchmore also played a key role in bringing to life the NRC Youth Conservation Council that provides a platform for young voices in the conservation conversation, and the Outdoor Adventure Center in Detroit.
Congratulations to David Williams of Elsie, Mich.,Tim Brodbeck of Lake Odessa, Mich., and Ken Wadsworth of Sandusky, Mich, for being recognized as the 2017 Michigan Master Farmers for a lifetime of achievement.
SERVICE ANNIVERSARIES Help GreenStone congratulate and thank these staff who are celebrating an employment milestone. From five to 40, the years represent the dedication and service all employees provide our members. January: Cynthia Cole (35) Cheryl Motz (35) Ellen Clarkson (30) Andrea Garza (15) Sarah Dillon (15) Diane Miller (15) Lyndsy Zeitz (10) Sara Trattles (10) Justine Mancheski (5) Tom Peterson (5) Bill Sinks (5) Dustin Burke (5) Ann Niespodziany (5) Kevin Keller (5)
February: Julie Gardner (20) Nancy Blaauw (15) Cindy Spencer (10) Tammy Lamers (10) David Moll (5) Jeffrey Ginter (5) Corey Fanslau (5) March: Pat Koester (40) Tim Weihing (35) Ben Mahlich (15) Rebecca Burke (15) Robert Netrefa (5) David Ignash (5)
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Winter 2017 — Partners
APPLY NOW! GREENSTONE’S SCHOLARSHIP PROGRAM
GreenStone is now accepting applications for its 2017 scholarship program! GreenStone plans to once again award up to $40,000 to incoming college freshmen pursuing a degree in an agriculture-related field in the amount of $2,000 each to selected students attending a four-year college program and $1,000 each to selected students attending a twoyear college program. For complete program guidelines and application, visit www. greenstonefcs.com. Act now, the application deadline is Feb. 27! ■
2016 ANNUAL REPORT POSTING
This is an official notice that the 2016 GreenStone Farm Credit Services annual report will be available for viewing online at www.greenstonefcs.com by Wednesday, March 15, 2017. In addition, the annual report will be mailed to all stockholders within 90 days of year-end. ■
BEHIND THE SCENES– We take a team approach to your risk management. When you buy crop insurance with GreenStone, you are getting more than just a policy… You are also getting our full-service team to help choose the right coverage for you. At more than 500 strong, our local teams are in the same communities where you work and live. Meet three of our crop insurance experts who are ready to help you manage your risk on the farm. Nancy Kalies, Senior Crop Insurance Specialist Little Chute, WI
Devin Roth, Crop Insurance Specialist St. Johns, Michigan
What is the one factor producers should consider when purchasing crop insurance?
What is the one factor producers should consider when purchasing crop insurance?
Every producer has a different situation for their individual farm. The main thing I tell my customers is to know their production costs. Knowing this helps set the base for choosing the right product to help them manage their risk.
It is most important that producers know their cost of production. As a crop insurance specialist, this helps me properly access the level of insurance they need.
How has the crop insurance industry changed during your time at GreenStone?
The technology available to us is constantly improving and our ability to use it is making crop insurance easier for producers, agents and insurance companies.
I’ve been working with crop insurance for most of my 23 years with the Farm Credit System. With crop insurance being a government subsidized program, we must follow all rules made by RMA (Risk Management Agency) along with the insurance company rules. As change goes, it is just part of our daily routine. The products and plans have changed so much over the years and will continue to change as insurance companies are allowed to offer private products. At GreenStone, we have an advantage because our crop insurance department focuses strictly on crop insurance, allowing us to put our customers first and provide excellent service.
How has the crop insurance industry changed during your time at GreenStone?
What do you enjoy outside of the office? Outside of work, I enjoy spending time with my family, hunting, fishing and visiting my family’s farm.
Louella Ulsh, Senior Crop Insurance Technician Schoolcraft, Michigan What is the one factor producers should consider when purchasing crop insurance? Producers should always consider their various options to manage risk. There are so many options now to make the policies more affordable and to best fit their operations. Our team at GreenStone can help with this by running quotes to compare what best fits their needs. How has the crop insurance industry changed during your time at GreenStone? There are so many more options now compared to 1997 when I started with GreenStone doing crop insurance. Back then there were basically two policies: one for row crop growers and one for fruit growers. Now that there are more policies, we can help find the best fit for a particular farming operation to manage risk. What do you enjoy outside of the office? My husband, daughter, and I enjoy antiquing probably most of all. I also garden, read, travel and do needle work when I have extra time. We also volunteer at the local animal shelter. ■
What do you enjoy outside of the office? Spending time with my family and friends is most important to me. Watching my grandchildren grow and learn always builds new memories.
Partners — Winter 2017
Keeping Your Data Safe and Secure IT SEEMS EVERY TIME YOU OPEN A NEWSPAPER OR TURN ON THE TV, THERE IS A NEW REPORT OF A DATA BREACH THAT EXPOSED THOUSANDS—SOMETIMES MILLIONS—OF INDIVIDUALS’ PERSONAL INFORMATION. FROM NATIONAL RETAILERS TO SMALL NON-PROFITS, NO BUSINESS IS IMMUNE FROM THE THREAT OF A DATA HACK.
Winter 2017 — Partners
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 best keep our customer information protected. As a member of our cooperative, you are guaranteed confidential treatment of your information in our Customer Bill of Rights, and this extends to how we manage and store your data. Customer information is stored securely in our data center, where we use the latest firewall and intrusion prevention systems to keep it safe. In addition, we securely store an off-site backup of data for use in the event of a data hostage situation or other disaster. Furthermore, GreenStone encrypts all company emails that contain any personal identifiable information. This encryption protects the email from being viewed while in transit to the end
recipient. Our My Access system also provides secure online account tools, including File Exchange, which is a two-way communication application allowing documents to be sent and received securely between customers and GreenStone staff. Even with all of these preventative measures in place, the truth is it is still possible for a hacker to gain access. Often, the intrusion is the result of deceptions designed to play on our emotions. “The most common online data security threats come in the form of phishing and spear-phishing attacks,” said Matt Cosgrove, GreenStone’s information security manager. “These attackers attempt to defraud account holders by posing as legitimate companies and asking for personal information. They also usually communicate a sense of urgency, claiming your account will be deleted unless you provide your password or by demanding credit card information.” Spotting phishing attacks can be tricky, that’s why GreenStone has embarked on an ongoing educational campaign to train staff how to detect fraudulent emails and communications to help keep our systems safe. Each month, every GreenStone staff member engages in an online training module that educates them on the ways to help
ensure data remains secure, including how to spot and manage phishing and spear-phishing attempts. Coupled with the training is an assessment to ensure staff demonstrate an understanding of the material. We are proud that our security measures have kept our customer data safe to date, yet we know we cannot let the effort rest. GreenStone is actively engaged in increasing our knowledge of the ever-changing threat landscape. We constantly evaluate and improve our security portfolio by adding new tools to our defense strategy, for both in online and physical environments. “At our brick and mortar branches, we have intrusion alarms, cameras, door access control systems, and locking cabinets and file rooms all designed to keep private information safe,” said Clint Huhn, GreenStone facilities manager. “We train our staff how to spot suspicious activity, and what to do in the event of a critical situation at a branch location.” GreenStone also works on the premise of least-privilege access, granting permissions to only the people that need access to customer data. When it comes to keeping information secure outside of GreenStone, there are also things
users can do to keep their information safe, says Cosgrove. Many online systems enable Two-Factor or Multi-Factor authentication. Currently, Microsoft, Yahoo, Gmail, Dropbox and Facebook are some of the services offering these additional security options. Likewise, password management tools can also help with creating unique, strong passwords for any web site. Keep in mind, GreenStone will never contact you via unsecure email asking for personal or account information. All official business is conducted through one of our secure communication channels, such as My Access, our secure online portal. Customer should also be cautious about opening links or attachments from unknown senders. And while it is a convenient way to get your questions answered, you should never send personal or account information over unsecured networks, using unencrypted email, or using tools like Facebook or Twitter. Lastly, just making sure the sites you access are secure can make great strides in protecting your data —always look for the “s” in the website address (https...).Turn to page 38 to read this issue’s Tech Tip for more ideas on how to keep your data safe online. ■
Mark Your Calendar... JANUARY
16 23 25 30
GreenStone Offices Closed In honor of Martin Luther King, Jr. Day Michigan Farm Bureau Voice of Agriculture Conference (23-24) Grand Traverse Resort, Acme, MI Great Lakes Crop Summit (25-27) Soaring Eagle Casino & Resort, Mount Pleasant, MI Winter Potato Conference (30-1) Soaring Eagle Casino & Resort, Mount Pleasant, MI
Great Lakes Regional Dairy Conference (2-4) Bavarian Inn, Frankenmuth, MI
Ladies’ Day Out Radisson Hotel & Conference Center, Green Bay, WI
Michigan Farm Bureau Young Farmer Leaders Conference (17-19) Amway Gran Plaza Hotel, Grand Rapids, MI
23 Suburban Collection
Wisconsin Ag Women’s Summit (10-11) Madison Marriot West, Madison, WI
Ultimate Sports Show (16-19) DeVos Place, Grand Rapids, MI
Showplace, Novi, MI
MARCH Wisconsin’s Ag Day at the Capitol Monona Terrace, Madison, WI
Farm Women’s Symposium (8-10) Blue Water Convention Center, Port Huron, MI
Michigan State FFA Convention (8-10) MSU Wharton Center, East Lansing, MI
GreenStone Offices Closed In honor of Presidents Day
National Agriculture Day
GreenStone’s Patronage Day Michigan’s Ag Day
22 at the Capitol
The Michigan State Capitol, Lansing, MI Wisconsin Public
28 Service (WPS)
Farm Show (28-30) EAA Grounds, Oshkosh, WI
Partners — Winter 2017
CONSTANT COMMUNICATIONCATALYST FOR CHANGE THERE WAS A TREMENDOUS SHOWING OF SUPPORT FOR THE FARM CREDIT SYSTEM AND ITS MISSION IN 2016 WITH THE FEDERAL LEGISLATORS THROUGHOUT THE NATION. This came in large measure from the efforts of Farm Credit board members, executives, legislative officers, communications/marketing professionals, and others who contacted their members of Congress and urged them to support the Farm Credit Centennial resolutions. This was and continues to be a necessity as government leaders ask questions about the financial institutions serving the nation. Reflecting on a key event supporting the Farm Credit System was the July
Winter 2017 — Partners
17, 2016 American flags flying above the U.S. Capitol to commemorate 100 years of reliable and consistent financial support of rural and farm communities. Witnesses to the display included some of the 183 members of U.S. House of Representatives who co-sponsored a bill “commending the cooperative owners and the employees of the Farm Credit System for their continuing service in meeting the credit and financial services needs of rural communities and agriculture.” In addition, 58 senators co-sponsored a companion bill that passed the U.S. Senate, unanimously. This strong showing of support for Farm Credit and its mission was due. President Barack Obama joined those commending Farm Credit, releasing a statement acknowledging Farm Credit’s “integral role in local economies across the United States.” We fully expect this next administration under President Trump will feel the same way. For the 2017 legislative agenda, the issues remain the same: fair regulation, natural resources with a focus on water, trade, labor and immigration, maintaining the Farm
Credit System amongst attacks by bank lobbyists, crop insurance and other key economic trends the industry needs to manage through which likely could include tax policy. Change in approach to legislation and management of government agencies seems inevitable as a result of the 2016 November election. We have to stay engaged and be prepared for any change. As Farm Credit embarks on its next hundred years side by side with other agriculture and rural interests, we will continue to take our positive message of Farm Credit’s mission to federal agencies, regulators, lawmakers and the incoming administration. Engagement always starts with the day we have before us. Our voices are critical in maintaining constant communication about important issues. It is critical to all of our success and maintenance of support for agriculture interests. Everything changes, and this communication is the catalyst for positive change in making sure that agriculture and rural communities continue to receive the support they need from Farm Credit. ■
AGRICULTURE’S VOICE AND IMPACT CONTINUES TO BE RECOGNIZED AND VALUED FOR ITS CONTRIBUTIONS TO THE ECONOMY. Your MI GreenStone PAC successfully disbursed a total of $21,000 to 35 Michigan Senate and House of Representative candidates who were identified as key leaders who share the importance and value of agriculture by your Board of Directors. In delivery of the PAC proceeds, the cooperative structure of our borrower-owned lending association was communicated, along with the significance of working with other agricultural enterprises, to promote the continued growth of the agricultural industry. Your Wisconsin Farm Credit PAC disbursed $950 to four Wisconsin Senate and Assembly candidates. These legislative officials were recommended by the Cooperative Network and then approved by the Wisconsin Farm Credit PAC Legislative Committee, which includes a GreenStone Executive and Director member.
Do not wait to contribute to the MI GreenStone PAC or the WI Farm Credit PAC. Be sure to send your voluntary patronage pledge before Jan. 31 to direct dollars from your patronage check to the PAC; or you can make a direct contribution to the PAC at any time. Join hundreds of other concerned members in strengthening the recognition of agriculture as a key component to a thriving economy. If you have questions, please contact your local branch. ■
The national Farm Credit PAC also disbursed PAC dollars to federal legislators located in GreenStone’s chartered territory. GreenStone staff and directors directly participated in hand delivering Farm Credit PAC checks to individuals and attending fundraisers with Farm Credit Council staff. All of the candidates running in the November 2016 election supported by the national Farm Credit PAC were elected. We will continue to work to strengthen the recognition of agriculture as a key component to a thriving economy, and your continued support is commended. The message will remain simple and consistent: do not forget about the importance of rural communities and the diversity of agriculture. ■
Partners — Winter 2017
Winter 2017 — Partners
Peter Maxwell, Hope, Mich.
My path into agriculture mirrors that of many others. I was raised on a family farm in Beaverton, Michigan, where we produced a diverse crop mix, including sugarbeets, corn, edible beans, sweet corn and pumpkins. We also had horses and a small herd of beef cattle…which meant summers included baling hay and straw. I was very active in school and loved playing sports. I spent many summers preparing for and exhibiting at the Gladwin County Fair. My time in 4-H taught me valuable life lessons and offered many opportunities to do fun and exciting things as a youth. I went on to Albion College and thought I wanted to pursue a career in medicine. However, the farther away from agriculture I drifted, the stronger my desire to be involved in agriculture became.
Today, my wife Allyson and I have a small cash crop farm as well as two young sons, of whom we are entirely enamored with. I also operate a seed business selling Crystal Brand sugarbeet seed. My sales territory encompasses the West District of Michigan Sugar Company. I have also been employed by my family’s cash crop farm for over a decade.
he more I learn about the T System, the more I realize its value to rural America today and for generations to come. I owe a debt of gratitude to all involved in the various levels of training I have received thus far and will continue to receive. If you know me at all, you know I love to ask questions and am thankful for the many patient and elaborate responses I have received.
My passion for agriculture has opened many doors. When I was asked if I would be interested in being a candidate for a board of director position with GreenStone, I could hardly handle my excitement. GreenStone has such a strong reputation as the premier agricultural lender; I was humbled at the opportunity to serve my fellow farmers and rural community members. I hope I can use this passion Since my election in June 2016, I have been involved in board trainings, new director for agriculture to continue training at the AgriBank headquarters in St. Paul, Minn., board planning sessions, to uphold GreenStone’s solid and meetings, as well as a director training session with FCC Services. There has reputation for many years been a massive amount of information and many intricacies to learn within the Farm to come. Considering my Credit System. The more I learn about the System, the more I realize its value to rural comprehensive sales territory, America today and for generations to come. I owe a debt of gratitude to all involved I plan on being a fresh voice in the various levels of training I have received thus far and will continue to receive. for the many shareholder’s I If you know me at all, you know I love to ask questions and am thankful for the many serve and speak with daily. patient and elaborate responses I have received.
While margins are squeezed on the farm and we approach uncertain times within our industry, the most important thing I have learned is this: GreenStone Farm Credit Services truly is an amazing organization. The management and executive team are highly skilled and believe in the Farm Credit System. The board of directors is a diverse group of successful individuals who take their positions seriously and hold the cooperative’s shareholders in the highest regard. The human capital within the organization is second to none and will ensure its stability for years to come. Once again, I am thankful for this opportunity to serve such a dynamic organization. ■
Partners — Winter 2017
LEEDING THE WAY IN HOME CONSTRUCTION 25
Winter 2017 â€” Partners
➡ Paul and Erin Abueva’s LEED gold certified home, located in southwest Michigan.
home from the ground up, and he hopes to transition the experience to his business, building sustainable homes for others. “It has always been a passion of mine that this can be done. This is my proof of concept to show how efficient a home can be. If you walked around the house or saw it from the street, the energy efficient design features wouldn’t stand out. We wanted it to be appealing to anyone and the systems adaptable to any design.” In Michigan, all public buildings have to be built to LEED specifications, says Paul, but most people don’t realize that they have programs for residential homes as well. In addition to being the area’s first LEED gold home, the Abuevas also set a few records in terms of the home’s energy efficiency. All new homes are given a HER score, or a Home Energy Rating System score. The score determines the home’s energy efficiency on a scale of zero to 130, with a zero indicting a net zero energy home, meaning the house is completely self-sufficient. An average home of any kind would likely fall near the 130 range, while all new homes built to current codes would achieve a score of 100. An Energy Star rated home would earn a score of about 85, but Paul and Erin’s home earned score of 32. “Our home is basically three times more efficient than current homes built to code,” said Paul. The next step in getting their home a zero rating would be to add solar panels, for which the home is already equipped.
Paul and Erin Abueva’s home in southwest Michigan is the area’s first LEED gold certified home. LEED, or Leadership in Energy and Environmental Design, is a system working to change the way we think about how buildings are constructed, with a focus on eco-friendly design. Paul holds a degree in environmental science, and says it has always been his dream to build greener, more environmentally conscious homes. “This was finally my opportunity to put my money where my mouth is,” he said. Paul makes a living as a residential contractor doing primarily remodeling work. This was his first opportunity to build a
When it came time to find a lender for the project, the Abuevas looked at a variety of options. “We were looking for lenders in our area, and we met with a few, but we just didn’t have a good feeling from them,” he said. When a friend suggested they look into GreenStone, the couple went to the Schoolcraft branch to learn about their options. “Ever since our first meeting in Schoolcraft, we have just had a good feeling and great support from GreenStone.” Financial services officer, Emelee Rajzer, worked with the Abuevas on their loan. “Paul’s passion for environmental design was evident from early on,” said Emelee. It’s great to see someone like Paul, who put so much into the design and construction, fulfill his dream and earn the gold certification.”
Partners — Winter 2017
The couple broke ground on their home in October 2014. The majority of the construction took place over the next year, and they moved in the fall of 2015, while still finishing some minor projects. The home was officially LEED certified this past spring, in 2016. The insulation in the home is one of the biggest factors of its energy efficiency. The Abuevas doubled the amount of required insulation when constructing their home. They also added insulation in areas where code doesn’t require it, such as under the basement slab. This level of insulation meant that they could make some interesting choices when it came to the home’s heating and cooling system. “Our home doesn’t have a traditional forced air furnace. We use two mini splits, which are two small heat pumps that are able to keep the house extremely comfortable and consistent,” Paul said. “There are no drafts or cold spots, even by windows.” In addition to the insulation, the home is designed in a way that maximizes its efficiency as well. “Our home is more or less square,” he said. “It’s a simpler design that allows it to be more energy efficient. Any time you have a wall bump out, that just creates difficult spots to insulate or air seal.” Paul estimates the energy saving systems add about 10 percent to the cost of the home, and he says they chose to only incorporate technology that yields a payback of seven years or less. “The additional cost of insulation will be paid back within three years based on our energy savings.” With a background in environmental science, Geographic Information Systems (GIS), and construction, Paul was able to tackle designing and building the home himself. “I was pretty much the jack of all trades,” he said. “I designed and contracted the construction, and did everything down to the material specifications and the engineering of the home.” Drawing nearly every aspect of the home in CAD, Paul had pages and pages of plans, modeling every component of the home down to each and every stud. “We could easily manipulate the model,” he said. “We could see exactly where a plumbing line would run. We knew every detail down to the inch. It really helped avoid potential pitfalls, saving us time and money.”
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The precise engineering also allowed Paul to minimize waste during construction. “Carpet comes in 12 and 15 foot rolls, and isn’t usually recyclable. So, when we designed the house, we made the bedrooms 12 foot wide, so the guy installing the carpet only had to cut the roll to length.”
SAVE ENERGY AND MONEY
“During most home construction projects, builders will park a 30 yard dumpster on site and it will be emptied and refilled two or three times,” said Paul. “We never even had a dumpster at the house. I literally had a two yard open trailer that we emptied every once in a while. We built the entire home and only produced 12 yards of trash.” Not only is the home incredibly energy efficient, it also incorporates a concept called universal design. This means that the home’s features were designed in such a way that navigating the home is intuitive for everyone and also designed to meet ADA standards for accessibility. All doorways in the home are wheelchair accessible, and the garage door is slightly higher than what is standard in order to accommodate a handicap van. The two story home is also designed around a central elevator shaft. “We don’t currently have an elevator installed, but it is framed out and it would be easy to add one later on if it was needed,” said Paul. “Universal design just makes an incredible amount of sense. There is no reason not to do it.” Moving forward, Paul hopes his business will have opportunities to construct residential homes with an eye to energy efficiency. One of the big problems, he says, is with what people perceive to be their return on investment. “There is a gap between what’s affordable and the type of home most people want to live in,” he says. “With the systems we applied in this home, we demonstrated that we could build a traditional looking, energy efficient home in the price range most people are seeking.” ■
Small changes you can make to your existing home! HOME ENERGY AUDIT To find a qualified professional to help, consult the Residential Energy Services Network (RESNET) at www.resnet.us.
STOP ENERGY VAMPIRES Using an advanced power strip can save up to $100 per year by reducing electronic waste when devices are idle.
LIGHTING YOUR HOME FOR LESS Average households dedicate about 5 percent of its energy budget to lighting. By replacing your home's five most frequently used light fixtures or bulbs with models that have earned the ENERGY STAR, you can save $75 each year.
A WELL-DESIGNED LANDSCAPE A well-placed tree, shrub, or vine can deliver effective shade, act as a windbreak, and reduce your energy bills. Carefully positioned trees can save up to 25 percent of the energy a typical household uses.
Partners — Winter 2017
HEALTHY SLEEP HABITS AFTER THE HOLIDAYS AFTER THE HUSTLE AND BUSTLE OF THE HOLIDAY SEASON, MANY OF US MIGHT BE BEHIND ON SLEEP DUE TO FAMILY GATHERINGS, EXTENDED TRAVEL, AND ALL THE OTHER JOYS THAT COME WITH THIS TIME OF YEAR. HOWEVER, ON A REGULAR BASIS, MORE THAN A THIRD OF AMERICAN ADULTS ARE NOT GETTING THE RECOMMEND SEVEN OR MORE HOURS OF REST. IMMEDIATE EFFECTS OF LACK OF SLEEP INCLUDE GROGGINESS, INABILITY TO FOCUS, AND HEIGHTED ANXIETY – JUST TO NAME A FEW. MAKING A LONG-TERM HABIT OF NOT PRACTICING HEALTHY SLEEP CAN CAUSE AN INCREASED RISK FOR DEVELOPING CHRONIC CONDITIONS SUCH AS HEART DISEASE, ATTACK, OR FAILURE, AND HIGH BLOOD PRESSURE, STROKE, AND DIABETES. LUCKILY, THERE ARE STEPS YOU CAN TAKE TO ENSURE YOU REGULARLY GET THE REST YOU NEED! • Power down an hour before bed. The blue light emitted from your TV, laptop, tablet, and smartphone screens disrupts the brain’s natural melatonin production and can trigger alertness, keeping you awake later. Instead, pick a less disruptive way to unwind such as reading a good paper book, doing a physical word or number puzzle, or taking a warm bath. • Avoid caffeine too late in the day. Although this might seem obvious, you should be avoiding caffeine earlier in the day than you think. Some research suggests cutting off consumption at least three hours before bed to as many as six hours. Consider making that after-lunch coffee your last one for the day to ensure it is completely out of your system come bedtime. • Avoid alcohol. Although drinking alcoholic beverages before sleeping can help you fall asleep quicker, it also significantly disrupts and alters quality later in the night; making sleep less restful and restorative. • Stick to a nightly bedtime routine. Develop a relaxing routine that you perform every night 15-30 minutes before bed. Completing the same activities each night will help your body know when bedtime is approaching and help you fall (and stay) asleep. • Shut off your brain. For many of us, as soon as it is time for bed, our brain starts buzzing, and we experience racing thoughts that makes falling asleep
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seem impossible. While there is not one overarching solution to ease your racing mind, some ideas include: write down your worries from earlier in the day and what you are doing about them, practice different breathing techniques, use muscle relaxation methods by tensing and then relaxing each of the different muscle groups in your body one by one, or engage in visualization exercises by imaging a place where you feel happy and relaxed. •B e physically active during the day. While there are many benefits to being physically active, exercising vigorously for 20 – 30 minutes daily by running, jogging, biking, or participating in a group class can help prepare your body for bed. However, be sure to fit in your
daily workout at least three hours prior to bedtime. • Prepare a relaxing atmosphere. Avoid doing work, making phone calls, or paying bills in bed; you want it to be a place of relaxation, not a work desk. Paint your room a calming color such as light blue or gray, install lamps that create soft light, and use scents such as lavender oils or potpourri. Keep your bedroom cool to allow your core temperature to drop, which is necessary to switch on your body’s sleeping mechanism; aim for 64 – 75 Fahrenheit. Lastly, pick a mattress made of breathable, hypoallergenic materials will help your body relax more effectively at bedtime. ■ Source: www.webmd.com, www.time.com
HELP YOUR CHILD UNWIND BEFORE BED Prepare for the next morning. Help your child get ready for the next day by laying out his or her outfit, packing a lunch, and organizing his or her backpack. This will eliminate the morning rush, and also teach your child to be more independent. Keep a bedtime journal. Store a notebook near your child’s bed, and help write down the day’s events, including anything that could be worrying him or her. For younger children, have him or her describe feelings by drawing pictures or using one or two phrases.
Set a timer. Use your microwave or a regular timer to show your child how much time he or she has before bed, or more specifically, how much time is left to complete a certain bedtime activity. This can help to eliminate the battle of “just one more book” or “five more minutes.” Listen to unwinding music. Quiet lullaby music can help your child let go of the racing thoughts in his or her mind, and retreat to a more relaxed state. ■ Source: www.nspt4kids.com
Potato and Parsnip Soup Ingredients: • 4 tablespoons butter • 1 tablespoon garlic, minced • 3 tablespoons flour • 2 parsnips • 2 leeks • 1 small onion, small dice • Heavy pinch kosher salt, plus additional for seasoning
Instructions: 1. Chop the leeks into small dice and wash in cold water. 2. Melt the butter in a six-quart saucepan over medium heat. Add the leeks and cook for three minutes. Add the parsnips and onions and a heavy pinch of salt and sweat for five minutes. Decrease the heat to medium-low and cook until the parsnips are tender, approximately 10 minutes, stirring occasionally.
• 16 oz., or approximately 4 small Michigan potatoes, peels and diced • 1 quart vegetable broth • 1 cup heavy cream • 1 cup buttermilk • ½ teaspoon white pepper • 1 tablespoon snipped chives
3. Add the potatoes and the vegetable broth, increase the heat to medium-high and bring to a boil. 4. Reduce the heat to low, cover and gently simmer until the potatoes are soft, approximately 45 minutes. 5. Turn off the heat and puree the mixture with an immersion blender until smooth. Stir in the heavy cream, buttermilk, and white pepper. Taste, and adjust salt and pepper, if desired. Sprinkle with chives and serve immediately.
Provided by the Michigan Potato Industry Commission
Partners — Winter 2017
WINTER WEATHER PRECAUTIONS As some of us know all too well, winter is the prime time for ice, snow, wind and freezing temperatures to create hazardous conditions that can lead to power outages. Stocking up on non-perishables, minimizing outdoor travel, and making sure there is a backup power source are apparent, but there are some other simple tips to stay safe and warm. Take a look at your windows. Especially on windy days, check for air leaks and make upgrades, if needed. This can be as simple as insulating with plastic for extra heat protection, or installing storm windows for an extra layer. Insulate the attic. Reduce the risk for ice dams, which occur when snow on your roof melts and then freezes near the roof’s edge, by reducing the amount of heat escaping from your roof. The best way to eliminate the risk is to make sure your roof and insulation are in good shape. Know the weather terms. Understand the terms used to describe changing winter weather conditions and what actions to take. These can be used to determine the timeline and severity of approaching storm. • Advisory is used when conditions are expected to cause significant inconveniences that may be hazardous. • When severe winter conditions, such as heavy snow and/ or ice, may affect your area, but the location and timing are still uncertain, the National Weather Service will issue a winter storm watch. • Lastly, a winter storm warning is issued when four or more inches of snow or sleet are expected in the next 12 hours, or six or more inches in 24 hours, or ¼ inch or more of ice accumulation is expected.
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Create an emergency preparedness kit. You cannot predict exactly when a storm will hit, so be sure to put together an emergency kit with the right essentials. It should include food and water (enough for 72 hours), cash, flashlights, a first aid kit, medications, change of clothes, extra batteries, family and emergency contact information, copies of personal documents, and a cell phone with chargers. Install a backup generator. When power is lost, an automatic backup generator makes sure the lights, heat, refrigerator, and other necessities stay on. When looking to purchase a generator, make sure you get one that is rated for the amount of power you think you will need. Look at labels on lighting, appliances, and equipment you plan to connect to the generator to determine the amount of power needed to operate everything. Also, it is important to never use a portable generator indoors due to the risk of carbon monoxide poisoning. Run the water regularly. During a winter storm, your plumbing system is critical and frozen pipes can lead to expensive home repairs. Opening the faucet, even just a drip, provides relief from the excessive pressure that comes with ice blockage and can prevent a burst pipe. Unplug sensitive electronics. In order to protect against possible voltage irregularities that can occur when power is restored, unplug all sensitive equipment including TVs, stereos, microwave, computer, and the garage door opener during the winter storm. ■ Source: www.fema.gov, www.redcross.org
CROP INSURANCE CUSTOMER FEATURE:
KEEPING THE ODDS IN YOUR FAVOR When Tim Ostroski, a dairy farmer from Sterling, Mich., purchased crop insurance from GreenStone, he knew he was taking smart steps to protect his assets, but he never imagined that Mother Nature would give him her worst, triggering payments on all three of his policies in one year. Crop insurance specialist Scott Schmidt works with Tim and other farmers in the Bay City region to choose the right policy for their operation. “As a dairy farmer, Tim understands the importance of insuring his corn,” said Scott. “The quality of your corn will ultimately affect overall milk production. If a farmer has to go out and buy corn due to significant loss, that expense has
to come out of pocket unless there is an insurance policy in place.” “I told Scott I took all of my calamities in one year,” said Tim. “We got 13 inches of rain after we planted 750 acres of corn.” The unusually wet spring caused some of the acres to be replanted, and later that summer the area was hit hard with two separate hail storms. The hail significantly damaged crops and lowered yields. “It was the first time I ever purchased hail insurance, and the first time I had to use it,” he said. As the summer went on, things heated up, and the unusually wet spring turned into a hot and dry summer, which ultimately wreaked havoc on Tim’s corn, causing further production loss.
“Scott has made this easy,” said Tim. “He understands the products he is selling and he can demonstrate what will work best for my operation.” Scott says that he and Tim speak on the phone weekly, discussing markets and running numbers. “I tell Scott, in volatile times, a person’s success can be measured by who he surrounds himself with. The more volatile the times, the more you are dependent on those around you. And the more confident and knowledgeable those people are, the more profitable you’ll become.” Looking to the future, Tim hopes the weather this year is a little friendlier. “What are the odds that this will ever happen again?” he mused. One thing is certain, with the help of GreenStone, Tim will be ready no matter what Mother Nature brings. ■ Partners — Winter 2017
CROP INSURANCE NEWS: WHOLE FARM REVENUE PROTECTION INSURANCE– One of the biggest changes to come out of the 2014 Farm Bill is one that is starting to gain some traction in the countryside. The 2014 Farm Bill called for the creation of the Whole Farm Revenue Protection policy, or WFRP. The WFRP policy is an insurance product that provides revenue protection for all produced commodities under one insurance policy. It is designed to protect commodities that are produced, as well as commodities that are purchased for resale, during the insurance year. For those that are familiar, it is similar to the Adjusted Gross Revenue (AGR) and AGR-lite policies that have been around for a while, but instead of only being available in limited areas, this new policy is available in every county within GreenStone’s territory. The amount you can cover is based on reported revenue on your Schedule F. Coverage levels range from 50 to 85 percent, in five percent increments. Coverage is based on the farm’s five-year historic average revenue, or the farm’s current year projection, whichever is less.
To be eligible for a WFRP policy, the producer must: • Be a U.S. citizen. • Be eligible to receive Federal benefits. • File either a Schedule F tax form, or other farm tax form that can be converted to a substitute Schedule F.
Liability on the policy is limited to $8.5 million dollars, and the only commodities not able to receive coverage are timber, forest and forest products, as well as livestock kept for sport, show, or pets. The sales close date for the WFRP policy will also be March 15 annually. WFRP protection can be purchased as a standalone policy, or it can be bought in conjunction with other Federal crop insurance policies. As an example, a farm that produces corn, soybeans and pumpkins could have a Federal MPCI policy covering the corn and soybeans, and obtain a WFRP policy to cover the pumpkins. In this type of example, the underlying liability on the corn and soybean policies would be removed from the WFRP policy, leaving the protection on the pumpkins.
MANAGING PROFIT STARTS WITH MANAGING RISK
• Have five consecutive years of farm tax history • Have no more than 50 percent of total revenue from commodities purchased for resale. GreenStone is excited about the new WFRP policy because it makes revenue coverage more widely available to those who produce or sell an agricultural commodity. Michigan is one of the most agriculturally unique states; this type of policy will make a safety net available in areas where there historically has been no other option. If you think a WFRP policy may be right for your agricultural operation, don’t wait to reach out to your crop insurance specialist! ■
As you know, production agriculture is a risky business. Input costs seem to increase year after year, with no assurance that the seed you plant will actually grow into a marketable product. Luckily, there are numerous risk management tools available to not only mitigate the risk of production, but also give you opportunities to maximize your profits. Using crop insurance, you can set a bottom line for your operation before your first acre is planted. We offer coverage for a variety of commodities, including the most commonly grown crops to specialty varieties of apples and organic crops. Because multiple peril crop insurance (MPCI) is Federally subsidized, the cost of premium for equal coverage is the same with every agent that offers crop insurance. However, here at GreenStone we believe there are a few other things that set us apart from our competition:
• Custom: We will offer you products and solutions to: meet your individual needs, achieve your goals, leverage marketing opportunities, and mitigate risk. • Specialization: Our insurance professionals focus only on crop insurance and do not work on commission. They are experts in their field who understand the needs of today’s producer. • Service: When it comes to providing a professional response, our team is unmatched in the industry. We serve our customers through a combination of hard work and the latest technology. 33
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• Communication: We work with you one-on-one to review policy changes and determine coverage levels. Throughout the year, our agents will keep you informed and remain available whenever you may need them. • Agricultural Professionals: Our team members understand the big picture of crop insurance, and leverage that knowledge to help you manage your risks and opportunities. ■
Crop Insurance Calendar... JANUARY
Deadline for January LGM Sign Up
End of Insurance Period (loss reporting deadline) for Apples
Deadline for February LGM Sign Up
Final date to sign up or make changes for a Spring 2016 Crop Insurance policy. • If you are interested in changing your coverage level, type, or need to add a crop, please call your GreenStone crop insurance specialist to review your options. Any and all changes need to be completed by the March 15 deadline! • Note: Even if you are not making any changes, we still need your signed application returned to your agent. Your policy will automatically renew at the same level you insured at during the previous year.
Deadline for March LGM Sign Up
Deadline for April LGM Sign Up
Production reporting deadline for Fall 2016 harvested crops.
Optimizing Price Protection The past four to five years have been some of the best for commodity crop prices in recent memory, but like all good things, it appears that time has come to an end, and markets are approaching the opposite end of the spectrum. With these realities, making sure you have a risk management plan in place that guarantees some level of profitability is becoming more difficult. In response to declining market prices, most of the crop insurance companies that GreenStone works with have developed private products designed to optimize the price protection a producer receives on their crop insurance policy. Using corn as an example, a Federally subsidized Revenue Protection (RP) policy uses a projected price that is established based on the average closing for December corn futures during the month of February. A producer could also purchase a private pricing product that would allow them to potentially lock in a higher projected price. While these policies come at an additional expense, it could mean the difference between insuring a breakeven price or insuring a loss. If you may be interested in looking into a private policy that can protect prices above the level available through Federal crop insurance, get in touch with your crop insurance specialist today! ■ Early Plant Dates
• Before you get busy in the field this spring, be sure to have your production reports completed, signed and submitted before April 29. * Please note that can vary by county, especially in Wisconsin. Check with your crop insurance specialist for specific dates if you are unsure.
Early plant dates may have changed and vary by location. Be sure to contact your GreenStone crop insurance specialist to get the specific date for your area. It is important to note that crop acreage planted before the early plant date is not eligible for replant payments, but will still be eligible for insurance coverage. The insurance guarantee
is not impacted as long as producers follow good farming practices. ■ Organic Crops As a reminder, the USDA Risk Management Agency now requires all insured organic certified producers to provide a copy of their organic crop plan and organic certificate to their agent before the acreage reporting date. ■ Contract Price Addendum The Risk Management Agency offers a contract price addendum allowing a producer who receives a contract price for their crop to receive a crop insurance guarantee that is more reflective of the actual value of the crop. Under the addendum, insured producers would have the ability (where available and by choice) to use their personal contract price as their price election, or to use the existing crop insurance price election. If you grow specialty crops under contract and are interested in the possibility to use your contract price to set your crop insurance guarantee, make sure to ask your crop insurance specialist about the new contract price addendum. ■ Person Types & Identification Numbers To better accommodate data reconciliation between the Farm Service Agency and the Risk Management Agency, there have been some changes made to the social security number and employer identification reporting requirements for individuals, estates, and trusts. If you have recently made a change in how an entity has been set up, let your crop insurance specialist know and they will make sure your policy is renewed using the correct identifying numbers. These records need to be updated before the March 15 deadline. ■
GREENSTONE CROP INSURANCE PARTNERS At GreenStone, we choose to partner with a number of top-rated approved insurance providers (AIPs) in order to match you up with the company that can provide you the best crop insurance experience. The providers GreenStone currently works with include: Rural Community Insurance Services (RCIS), Great American Insurance Company, ADM Crop Risk Services, QBE NAU, and Rain & Hail. Each of these companies carry at least an A- (excellent) credit rating with A.M. Best, making them very financially stable. While they each provide great service to their customers, there are some differences in their product offerings. As your agent, GreenStone’s goal is to help you choose the company that best fits your operation and helps manage your crop production risk. If you are ever unhappy with any part of your interactions with an AIP, please let us know and we will help resolve your problem or assist in the transfer to a different carrier. ■
Partners — Winter 2017
Cropland Values Starting to Come Down Moderate Moderate Declines Declines Follow Follow Commodity Commodity Prices Prices Coming Coming Off Off Record Record Highs Highs
DISTRICT FARM REAL ESTATE VALUES Farm real estate values declined 0.6 percent on average across the AgriBank district from 2015 to 2016. The average is a calculation of the benchmark values submitted by the 15 states within the district, including Michigan and Wisconsin. Among the 15 states: • Iowa had the highest average farm real estate value at $7,850 per acre, followed by Illinois ($7,400) and Indiana ($7,150). • Iowa also experienced the largest decline (-$150 per acre) from the previous year, with both Michigan and Nebraska dropping $100 per acre. • Wisconsin, Kentucky, Tennessee, and Missouri all realized increases in average farm real estate value from the previous year.
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In terms of average value per acre, Iowa also was the highest ($8,000 per acre), followed by Illinois ($7,450) and Indiana ($7,000). The lowest values were in the Northern Plains states of Wyoming ($1,370), North Dakota ($2,000), South Dakota ($3,520), and Arkansas ($2,710). PASTURELAND VALUES Arkansas (+7.0 percent) experienced the largest percentage increase, followed by Nebraska (+4.6 percent) and South Dakota (+4.1 percent). As with cropland, states with a strong recreational and urban expansion component tended to do better than others. Also, states with a strong dairy (Wisconsin and South Dakota) and beef industry (Nebraska) presence tended to do better. Illinois (-4.2 percent) had the largest percentage decrease, followed by Michigan (-3.0 percent) and Minnesota (-2.9 percent). In absolute dollar terms; Arkansas (+$160) had the largest increase. In terms of average value per acre, Tennessee was the highest ($3,540), followed by Iowa ($3,400), Illinois ($3,400), and Ohio ($3,100). CASH RENTS: DECLINES FOR BOTH CROPLAND, PASTURELAND
CROPLAND VALUES The Northern Plains states experienced the largest declines in cropland values from 2015 to 2016, while the southeastern states in the AgriBank district and Wisconsin experienced growth. Wisconsin (+$200) had the largest increase (with its strong dairy industry being a contributing factor) and, along with Arkansas, Kentucky, and Tennessee, most likely saw an increase in cropland values due to the strong recreational and urban expansion components in their land markets. Also, the diversity of crop production in these states continues to support values, while states that have cropland concentrated in corn and soybean production (such as Iowa and Illinois) have seen values decline with the lower price levels for both crops.
Cash rental rates typically lag land values by a year or more, but the USDA data indicate rates are coming down. Of note are cropland cash rents declining for the first time in over 20 years, with the district average of $143.47, representing an average decline of $9.82 per acre (or a decline of 6.4 percent). This should be good news for crop producers who rent land, since cash rents are a major component of production costs for most crops. Pastureland rental rates also moved lower, as prices for both dairy and feeder cattle have declined over the past year from their recent record highs.
of borrowers, are expected to slow the adjustments taking place in land values. As has been consistently determined over the past several years, the U.S. farm sector remains strong, despite moderating commodity prices that result in lower net farm incomes. While many key industry barometers reveal a fall from record highs, producers are experiencing a range of market conditions. For example, grain and oilseed commodity prices have moved down significantly from several years ago, which is negative for crop producers but positive for commodity users (at least in the short run). And, for land values, market correction has begun, but some areas still show increases in land values. How can producers navigate this “agriculture efficiency cycle” in which declining net farm income means producers must bring income and expenses in line? Absent rising commodity prices, the solution for many producers is to drive a higher level of efficiency into operations, which can reduce the cost per unit of production. This may include selling unproductive equipment, land or other assets. It may also include negotiating reduced costs for: • Debt payment structures • Family living • Machinery costs • Real estate rental rates • Seed genetics
Meanwhile, producers can expect lenders to engage in disciplined real estate lending practices such as debt caps per acre and percentage loan-to-average-value standards (typically 65 percent for Farm Credit lenders). These practices are designed to help borrowers and lenders alike operate prudently through current and expected market conditions.
The outlook for many producers looks challenging for the next five years with most forecasters projecting corn and soybean prices to continue to stay at or near break-even levels on average. Producers may benefit from USDA commodity title programs that, under the 2014 Farm Bill, could be triggered by lower commodity prices. These programs, combined with disciplined risk management practices and the still generally strong financial condition
The 2016 USDA land value and cash rent data continue to support a “soft landing” in agricultural land values. The 1.0 percent average decline in 2016 cropland values is far short of the average annual declines of 7 to 8 percent during the farm crisis years of 1982 to 1987. While some farming operations may face unique financial challenges in this environment, others may find themselves in a position to take advantage of unique opportunities. ■
Partners — Winter 2017
REDUCE STRESS... OUTSOURCE YOUR ACCOUNTING By Lynette Wood, Tax Accountant It seems accounting is one of those administrative tasks most farmers would rather do without. Whether it is paying the bills, calculating payroll, keeping track of the check register, or inputting information into a computerized accounting system, the accounting work is often viewed by producers as a dreaded time stealer, using up precious hours that could otherwise be spent making progress with the livestock, machinery or other farm needs. As a result, they procrastinate or delegate it to someone else on their payroll. While these actions are well intended, there are many advantages to outsourcing your accounting. Partnering with an accounting professional can result in many benefits, both to yourself and to your business. First and foremost, it can free up your valuable time to put towards those non-administrative tasks that can better your operation. Good bookkeeping takes time to stay on top of receipts, banking, and
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recording all your financial data. By eliminating the distraction and stress from accounting, you can concentrate on other core aspects of your business and spend your time more wisely. It allows you to focus on your own personal strengths and take a load of work off your plate. Another benefit of hiring professionals is having the expertise on your side. You gain access to knowledgeable experts who know the changing laws and regulations, saving you the time and hassle of doing the research yourself. You will also be able to take advantage of the best accounting programs, without the high purchase cost and routine updates. Specifically, working with GreenStone’s professional accountants, your records will be organized with regular backups, ensuring that if you are ever contacted by the IRS for an audit, you will be more than prepared. Surprisingly to some, outsourcing your accounting can also save you money. The bottom line is by outsourcing your accounting operations, you save money on paying full or part-time wages and benefits to your employee you have delegated this work. When hiring a
professional, you only pay for the services you actually need – nothing more, nothing less. While cost savings is a goal, your primary motivation for outsourcing should be getting better financial reporting and guidance. An outsourced accountant will also be more impartial than an in-house person, and will provide unbiased advice. One key piece of advice now could save you tens of thousands of dollars later. Business finances are not something you want to leave up to chance. When choosing an accounting company, look for value in their advice and practices. Local bookkeepers are generally easy to access and aware of local rules and regulations in your area. While the pricing of internet companies may be less expensive, the issues of quality and customer service ultimately mitigate the initial savings. The accountants at GreenStone are aware of local, state, and federal laws and regulations, and can assist you with any of your accounting needs. ■ Lynette Wood is a GreenStone tax accountant based in East Lansing, Mich.
THE CURES ACT BRINGS RELIEF TO EMPLOYERS WITHOUT GROUP INSURANCE
H.R. 34 containing provisions that establish Small Business Health Reimbursement Arrangements (SBHRA) was signed into law on Dec. 13, 2016.
Form 1099 due to recipients of certain payments made during 2016 for interest, rent, contract labor, veterinarian services, etc.
Effective Jan.1, 2017, employers with more than one, but fewer than 50, full-time employees can once again use a Health Reimbursement Arrangement (HRA) to assist employees with health insurance premiums and out-of-pocket medical expenses without sponsoring group insurance.
Provide employees their copies of Form W-2 for 2016. NEW FOR 2016 and FUTURE YEAR FORMS: Employers must file Forms W-2 and W-3 with the social security administration, and payers must file Forms 1099-MISC and 1096 for Non-Employee Compensation with the IRS. In prior years, these forms were required to be paper filed by Feb. 28 or March 31 if e-filed. Penalties will be assessed for not meeting the new Jan.31 deadline.
Prior to this new law, the Affordable Care Act effectively eliminated HRAs for employers with more than one employee. The new law allows small employers to realize significant income tax savings by allowing the reimbursement of medical insurance premiums and some or all of out-of-pocket medical expenses to be deducted as a business expense.
Farm employers file Form 943 to report social security and Medicare wages, and withholdings.
Contact your GreenStone tax accountant today to take full advantage of this new law allowing small employers the tax benefits of HRAs! ■
Non-farm employers file Form 941 for the fourth quarter to report social security and Medicare wages, and withholdings. Employers file Form 940 for federal unemployment tax.
Payers must file Forms 1099 and 1096 (other than 1099-MISC for Non-Employee Compensation, which is due Jan. 31) with the IRS. If these forms are e-filed, the deadline is extended to March 31.
Phishing is a type of ill-intended social engineering with the goal of obtaining personal information, including credentials, credit card numbers, or financial data. The attackers lure, or FISH, for sensitive data through various different methods, but most commonly this is done through email.
Qualifying farmers file your individual tax return (Form 1040) and pay tax due if you do not have a safe estimated tax amount paid in and you owe over $1,000 in tax.
Here are a few things to keep in mind to help avoid getting hooked:
S Corporations file a 2016 calendar year income tax return (Form 1120S). Provide each shareholder with a copy of Schedule K-1. If not able to file, file Form 7004 to request an automatic six month extension.
• Phishing emails often have incorrect spelling or grammar mistakes. • When you hover over a hyperlink URL, it shows a different URL than the shown text.
NEW FOR 2016 and FUTURE YEAR RETURNS: Partnerships and LLC’s taxed as a partnership file a 2016 calendar year return (Form 1065). Provide each partner with a copy of Schedule K-1. If not able to file, file Form 7004 to request an automatic six month extension. These returns were due April 15 in prior years.
• The email urges you to take immediate action. A phishing email tries to trick you into clicking a link by claiming your account has been closed or put on hold. • The email requests your personal information. Remember, reputable organizations do not ask their customers for personal information via unsecure email.
WHAT IS PHISHING? HOW CAN I PROTECT MYSELF?
Individuals file a 2016 income tax return (Form 1040) and pay any tax due. If not able to file, file Form 4868 to request an automatic six month extension. Any tax due must be paid with the extension.
• The email congratulates you on winning a contest you have not entered. The email asks you to make a donation. As unbelievable as it may seem, scam artists often send out phishing emails inviting recipients to donate to a worthy cause after a natural disaster or other tragedy.
First quarter estimate due for 2017 for individuals that pay estimated taxes.
• The email includes suspicious attachments. It is highly unusual for a legitimate organization to send you an email with an attachment, unless it is a document you have requested or are expecting. ■
Corporations file a 2016 calendar year return (Form 1120) C and pay any tax due. If not able to file, file Form 7004 to request an automatic six month extension. Any tax due must be paid with the extension.
Corporations deposit the first installment of estimated C income tax for 2017.
Partners — Winter 2017
3515 West Road East Lansing, MI 48823
Winter feature highlights... Paul and Erin Abuevaâ€™s home in southwest Michigan is the areaâ€™s first LEED gold certified home. LEED, or Leadership in Energy and Environmental Design, is a system used during building construction focused on eco-friendly design.
When Tim Ostroski purchased crop insurance from GreenStone, he knew he was taking smart steps to protect his assets, but he never imagined Mother Nature would give him her worst.
Read more on page 25.
Read more on page 32.