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Winter 2008

Editor’s Note

Editor’s Note

Welcome to 2008…the fresh start to a new year! As we replace last year’s calendar with a

new 12 months of opportunity, let us first take a moment to thank each and every one of you for your commitment and loyalty to GreenStone Farm Credit Services—YOUR financial cooperative. Your success is our success, and we appreciate the opportunity to continuously be your financial partner. We hope that you view this upcoming growing season with excitement and anticipation; and in the meantime, we hope you’ll enjoy this latest issue of Partners. Inside, you’ll find information on this year’s patronage distribution, an article on the Large Dairy Benchmark program, and a feature on how a young farmer’s passion for agriculture has led to success in corn production. Happy reading…and as always, your comments and ideas are welcomed. Published by





Young, Beginning and Small Farmer Focus Even before the price of corn doubled and wheat went to $10 a bushel, Eric Blaine knew the farmer’s life was for him.



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CEO Comments Market Outlook Director’s Corner News Update

Customer Patronage Distribution For the third consecutive year, GreenStone Farm Credit Services is preparing to distribute patronage checks to its loyal customers.



The Strategic Planning Process by Dr. David Kohl


Deeds and Transfers of Title to Land by Timothy Hillegonds, Attorney


Farming & Environmental Protection by Alan Hahn

CEO Comments

CEO Comments by Jim Schiller 2008—A New Year of Opportunity


griculture continues to be a positive part of our economy, both nationally and in the states of Michigan and Wisconsin. This past year finished with good results. While final numbers are not in yet, it appears there will be a new record set for net farm income. Michigan and Wisconsin didn’t necessarily achieve records because of weather-related adversity; however, overall yields were acceptable and prices good. Hopefully those spots of drought were covered with crop revenue insurance to minimize the adverse effect. I continue to be amazed at the improvement in crop genetics that compensates for less than optimum growing conditions. Positive financial performance for our customers helps us to be successful and more efficient. Generally, credit volume grows when economics are good as our customers invest in replacement and new capital expenditures. Opportunities in 2008? All indications look positive and barring significant adverse conditions or a major breakdown in the world economy, we should again see positive results. Opportunities always create challenges, and we must be mindful of the cost creeps that are occurring both in input costs and capital acquisitions, including land and land rent. Some caution is in order to increase working capital to withstand a downturn where those costs remain high and our expected prices received may turn downward. GreenStone Customer Focused and Customer Owned The success of GreenStone mirrors the successes in the agricultural economy. A major strength is our cooperative structure, which helps us maintain that customer focus and be accountable to our customers/stockholders for business performance. This past December we held five stockholder advisory meetings where customers/stockholders held discussions and gave input for us to use for continuous improvement. Our key discussion topics included comments regarding the following questions: • What are the major advantages of doing business with GreenStone? • How do we best communicate with prospective members? • How can GreenStone get quality director candidates? • How effective is GreenStone at providing financial services, including tax preparation and consulting, accounting services, crop insurance, life insurance, and appraisal services. • Who are the competitors for these services and how does GreenStone compare?

• What should GreenStone’s profit expectations be for these services? • What credit products are most valuable and how competitive is GreenStone in the marketplace? The input received is valuable to us to insure we stay focused and achieve sound business results that benefit the agricultural and rural marketplace as well as our current stockholders. If you were unable to attend one of the sessions, please feel free to make your comments directly to your loan officer or to me at the corporate office. We would be happy to hear from you. Stockholder/Customer Value Final numbers are not available as of this writing; however, as of November 30, 2007, GreenStone has: • $4.1 billion of loans • 17,000+ customers • $660 million of surplus • $8.6 million of annual revenue from financial services • And is again providing patronage, which will return on average approximately 0.4% of interest paid. A bit of history shows the following, beginning with the inception of GreenStone on January 1, 2000, and including Northeast Wisconsin statistics, which joined GreenStone January 1, 2003. • Annual growth in loan volume is 12% per year compounded from $1.6 billion to over $4 billion. • Number of customers increased from 14,000 to 17,000. • Net operating cost rate reduced 0.6% +. • Loan spreads reduced 1% +. • Financial services revenue increased from $5.6 million to $8.6 million. • Market share remains over 60% of agricultural lending. Those are impressive results and are of value to our cooperative customers and stockholders. Thanks to a highly energized staff and loyal membership for making it happen and setting the groundwork for continued success into the future. The 2007 annual report will be available and mailed prior to 90 days following the year-end, and will be available on-line March 15. I encourage you to review the financial results and see firsthand the performance of your cooperative. Best wishes for a successful winter season…hoping that it is mild and restful as you prepare for a new planting season. 

Winter 2008 PARTNERS


Market Outlook

MARKET OUTLOOK Winter2008 By Ken Lake


orn prices seem to have settled into a range between $3.30 and $3.80. Large cash supplies seem to have capped rallies, while strong demand lends support. You should expect corn to remain range-bound through the end of the year. It’s difficult to predict prices above $4.25 at this time, but one would expect somewhat of a sell-off in soybeans and wheat with a subsequent money flow to corn in the short term; therefore, rallies in the corn market cannot be ruled out. Likewise, no major drop in corn value is foreseen until a large 2008 corn crop is confirmed next summer. Expect corn to trade in a range of $3.70 to $4.10 basis March futures. Longer term, further ethanol production expansion will determine future corn value. Even though the current economic condition of ethanol plant margin is poor, it is not expected that these conditions will last long and margins will improve, thus allowing future ethanol production expansion to continue and further supporting corn demand in the coming years. January soybean futures made new contract highs late last year at $11.14, with strong energy values and good speculative interest. Strong export shipments and concerns over South American weather also provided support. It is believed that sustained rallies over $11 would be difficult without adverse weather in South America. First support in January futures lie at about $10.25 and a correction below that seems unlikely until a large South American crop can be confirmed. Wheat futures continue to find support on speculative demand. Technical chart gaps were filled recently at December $8.90. Some much needed precipitation fell in the dry areas of the Southwest. Values have reached most analysts’ pricing


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goals and one would expect futures to return to a more bearish stance as new crop wheat futures are overvalued by most fundamental benchmarks. Expect wheat futures to remain highly volatile in a range of $7.50 to $9.

“LONGER TERM, FURTHER ETHANOL PRODUCTION EXPANSION WILL DETERMINE FUTURE CORN VALUE.” Cattle futures recently made new lows with pressure from cash markets and fund liquidation. December Cattle futures traded down to $93.85, with southwest packer bids ranging from $93 to $95. Analysts caution against being overly bearish; however, concern remains over a slowing U.S. and world economy that could drop cash values below $90. Hog futures were range bound recently with the December contract under $55. Processing margins recently were $15-$18 per head and with large supplies of market-ready hogs available expect to see no reason for packers to reduce slaughter rates. Expect values to remain sideways for the near term. 

Ken Lake is the Origination Services Coordinator for Michigan Agricultural Commodities Inc., Lansing, Michigan, and a licensed commodities broker registered with the National Futures Association. The opinions stated herein are not necessarily those of GreenStone FCS.

Farm Management


by Dr. David Kohl


trategic planning should be about anticipating big challenges and trends rather than just budgets and financial forecasting. Yes, budgets and strategy do come together in a strategic plan. However, time must be carved out for discussing the major strategic issues facing your business, or priorities of the CEO and management team in the future. An issue-based approach requires that the right people be at the planning meeting. Time must be spent not only on strategy but also implementation and operational procedures. If your farm and ranch operation has multiple enterprises, strategic planning does not have to be done every year for every enterprise. The strategies you develop for each enterprise should be longer term so that in-depth analysis can be done every three to five years, for a specific enterprise. Strategic decisions should be tracked beyond financial measures and include some non-financial measures. For example: 1. The management team will attend five educational development sessions yearly. 2. Employees will be certified as pesticide applicators in the crop division.


Integrate your human resource teams into the strategic plan. In some cases, compensation can be tied to improved margins, or reduced repair and maintenance cost, or death loss in the herd. Finally, thinking strategically requires one to think about the “what components” of the business. What will you keep? What will you modify? What will you let go? The best part of the process will be finding out what you will create. Remember, for those that develop a strategic plan, implement it, and execute, the strategies are twice as profitable! 

Dr. David M. Kohl is Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship in the Department of Agricultural and Applied Economics at Virginia Polytechnic Institute and State University (Virginia Tech), Blacksburg, Virginia. He has conducted more than 3,000 workshops and seminars for agricultural groups such as bankers, Farm Credit, FmHA, and regulators, as well as producer and agribusiness groups. He has published four books and over 400 articles on financial and business-related topics in journals, extension, and other popular publications.

The opinions stated herein are not necessarily those of GreenStone FCS. Winter 2008 PARTNERS


Guest Column

DEEDS AND TRANSFERS OF TITLE TO LAND By Timothy Hillegonds, Attorney


hen title to land is transferred, the transfer is made by deed. The deed must be in writing. The person transferring the land is commonly referred to as the "grantor." The person receiving the transfer is commonly referred to as the "grantee." The deed must be delivered by the grantor to the grantee and accepted by the grantee in order for title to be transferred. Sometimes, a deed is signed by the grantor but kept by the grantor and not delivered. In that event, title has likely not been transferred and the deed is likely not effective. If the deed is delivered to the grantee and accepted, it must be recorded with the register of deeds of the county in which the land is located. This will protect the grantee from any attempt by the grantor to transfer the land again to another person, or place a mortgage or other lien on the land. This will also protect the grantee from other unhappy events such as a judgment lien recorded by a judgment creditor of the grantor. Believe it or not, these sorts of things do happen. Michigan does protect a grantee from these second transfers, mortgages and liens if the grantee enters into visible possession of the land even if the deed is not recorded. However, recording the deed takes away any argument as to who owns the land. Prompt delivery of the deed to the register of deeds for recording is important. If the grantor files bankruptcy within


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90 days after the deed is delivered (or one year if the grantor and grantee are related), the grantee may be faced with a claim by a trustee in bankruptcy that the transfer was not effective. In general, the grantee must either make sure that the deed is recorded within 30 days after the deed is delivered to the grantee, or the grantee must enter into visible possession of the land within that 30-day period.

“WHEN TITLE TO LAND IS TRANSFERRED, THE TRANSFER IS MADE BY DEED. THE DEED MUST BE IN WRITING.� To be valid, the grantor must be at least 18 years old and otherwise competent to transfer title to the land. If the grantee has any question on the grantor's competency, proof of age or an opinion by a physician should be obtained as to the grantor's competency. Anyone holding title must sign the deed as the grantor, including the wife of any male grantor. If the land is being purchased, the purchase price should be for the fair market value of the land. If the transfer of the land is being made as a gift or for less than fair market value, a trustee

in bankruptcy of the grantor or a creditor of the grantor might be able to set aside the transfer if it can be shown to be a fraudulent conveyance. The laws on fraudulent conveyances can be complicated. This is a topic for another day.

“THE GRANTOR MUST SIGN THE DEED IN THE PRESENCE OF A NOTARY PUBLIC. ADDITIONAL WITNESSES OTHER THAN THE NOTARY ARE NO LONGER REQUIRED.” The deed should have an accurate description. The description can be obtained from several sources, including a title insurance commitment and a survey. The address of the grantee, the name and address of the person preparing the deed, and the marital status of a male grantor are required to record the deed. The deed must have a 2-1/2 inch margin at the top of the first page and be in at least 10 point type to be recorded. If the land is not part of a plat or site condominium, the deed must also have statutory language indicating that the land may be located in the vicinity of farm land or a farm operation, and state whether the grantor is transferring the right to make divisions of the land that are exempt from Michigan's platting requirements. The grantor must sign the deed in the presence of a notary public. Additional witnesses other than the notary are no longer required. There are several types of deeds in Michigan. They are quit claim deeds, warranty deeds and covenant deeds. A quit claim deed conveys all of the right, title and interest that the grantor had in the land at the time of the transfer of title, but nothing else. Therefore, if there is a defect in title, the grantee does not have a claim back against the grantor for the defect. If the grantee is receiving a quit claim deed, the grantee should get a title insurance policy. A title insurance policy insures that the grantee has received good title to the land. If it turns out there is a title defect that is not shown on the policy as an exception to coverage, then the title insurance company will have to remove the defect or pay the grantee for any loss up to the amount of the policy. In a warranty deed, the grantor is promising that the grantor has good title to the land, can transfer title to the land, and can deliver possession of the land to the grantee. Unless exceptions to title are contained in the warranty deed, the

grantor will be responsible to cure any defects in title. For example, if there is a mortgage on the land that is not listed as an exception to title in the warranty deed, the grantor must pay off the mortgage. Of course, claims against a grantor are not going to be worth much if the grantor has no money or is otherwise unable to correct the title defect. For this reason, title insurance coverage should be obtained as discussed above. A covenant deed is somewhere between a quit claim deed and a warranty deed. In a covenant deed, the grantor usually only promises that the grantor has not done anything that would affect title to the land but not from any acts, errors or omissions of other persons such as former owners of the land. Covenant deeds are often given by the trustee of a trust and are sometimes called trustee's deeds. Again, title insurance should be obtained whenever title is transferred by a covenant deed. This article only touches the topic of deeds and transfers of title to land. Whenever you transfer land or are being transferred land, professional advice should be obtained from

“IF THE GRANTEE IS RECEIVING A QUIT CLAIM DEED, THE GRANTEE SHOULD GET A TITLE INSURANCE POLICY. A TITLE INSURANCE POLICY INSURES THAT THE GRANTEE HAS RECEIVED GOOD TITLE TO THE LAND.” an attorney. Note that register of deeds will not give you legal advice and should not be relied upon to assist in the preparation of a deed. I have seen too many deeds prepared by individuals who do not have the necessary expertise. This has often led to unexpected problems. Timothy Hillegonds, J.D., is a partner of the law firm of Warner, Norcross & Judd, LLP, Grand Rapids, Michigan. Mr. Hillegonds practices in the areas of commercial law, including bankruptcy and creditors’ rights and documenting loans, real estate and general business. He currently represents a number of financial institutions, as well as several real estate brokers/agents and numerous small to medium-size businesses. Questions regarding the information contained in this article can be addressed to Mr. Hillegonds at 616-752-2132. The opinions stated herein are not necessarily those of GreenStone FCS.

Winter 2008 PARTNERS


Director’s Corner

MEET LYNN GOULD Your Region I Director

Clare, Michigan is the home of Lynn Gould, his wife Judy, Gould Farm, and Gould Farm Bed and Breakfast Inn. However, this hasn’t always been the case. Lynn attended Michigan State University (MSU) in East Lansing, Michigan, and obtained a bachelors and masters degree in agricultural education. He began his professional career as a vocational agricultural teacher at Ida Public Schools. A few years later, Lynn changed paths and began his extended 27 ½ year career with MSU Extension (MSUE); first with Monroe County for seven years, then as the County Extension Director in Clare County, and the final three years as a District Extension Agent with responsibility in state and local government. It was when he made the move to Clare that he also made good on his dream to farm. Now retired from MSUE, Lynn and his wife have opened a bed and breakfast on their beef cattle farm and continue to raise between 500–550 head of cattle. They rotational graze the cattle and recently changed the operation to run solely from March through December, buying stock in the spring and selling them by the end of the calendar year. Lynn and Judy have three children and nine grandchildren. Lynn has served on the Michigan Livestock Board of Directors, National Livestock Board of Directors, and the Southern States Livestock Divisional Board of Directors. He is currently serving the first year of his second term on the GreenStone Board of Directors and is chairman of the Facilities Committee. 7|

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What is your main goal or issue you’d like to address as a director? As the chairman of the facilities committee, a challenge right now is that we’ve outgrown our Corporate facilities in East Lansing and have had to split the staff up, which doesn’t provide a lot of continuity. As we expand more and need more space, this problem will become a bigger challenge that we need to try to alleviate. We’re a long way from turning the first shovel of dirt, but we have a good team to assist us in identifying and fine tuning our needs and trying to find something that will meet our needs for the future. I see this as one of the issues facing GreenStone right now, but I think the issue that is most important is that we do whatever we can to change the legislative and regulatory aspects of the Farm Credit System to allow us more flexibility and enable us to make loans to traditional agriculture and the balance of rural America. Every co-op member and borrower we have needs to assist the board of directors and staff in trying to get this to occur.

GreenStone FCS customers encompass a uniquely diverse industry of products and services. What do you see as the key to their success into the future? GreenStone has done an excellent job of serving our traditional ag audience and rural Americans since the authorization legislation and its creation, but it’s a cooperative and that cooperative foundation allows us to facilitate grassroots input and direction. I think this is very important if we are going

“GREENSTONE NEEDS TO UNDERSTAND THE NEEDS OF OUR BORROWERS – I THINK THAT’S NUMBER ONE – AND WE NEED TO PROVIDE A DEPENDABLE SOURCE OF REVENUE AT A COMPETITIVE RATE DURING THE GOOD TIMES AND THE BAD.” to stay tuned with the changing times. Traditional ag clientele and rural America have changed over time. GreenStone is going to have to be a part of the changes and that’s a challenge that we see...we’re going to have to modernize in every possible way to meet these changing times for our clients.

What do you view as GreenStone’s strategy to accomplish the mission and ensure the vision of our company? To be the best at providing credit and financial services to our clients, GreenStone needs to understand the needs of our borrowers—I think that’s number one—and we need to provide a dependable source of revenue at a competitive rate during the good times and the bad. This is one of the problems that agriculture has had over time. We’ve had a lot of lenders out there that were interested in providing revenue when times were good, but when times got tough, they shied away and loaned money to other clientele for other purposes. We need to be a strong cooperative with a knowledgeable board, staff and management. We must continue to provide the services to traditional borrowers while exploring new clientele including beginning, young and part-time farmers. To fulfill our vision of being rural America’s first choice for financial services, we also need to identify other current and future needs, and we need to look forward to the opportunity to expand capital and services to anyone who has needs. Outside of traditional agriculture, GreenStone is a well-kept secret. We need to get our message out to the broader base of rural America. The more diversified our portfolio is, the less total risk we are going to have—so it strengthens our financial position.

What has been the most significant advancement you’ve seen in your lifetime in regards to agriculture? The genetic improvement in plants and livestock that has continued to provide increased production. We’re producing more, higher quality and safer food on less land with less labor and fewer inputs. Certainly there are additional challenges with this and one of those is going to be cost. The input costs that production agriculture is incurring in growing crops is going to expand and will be a real opportunity for GreenStone to help meet those additional cash requirements as we move on into the future. We need to continue to provide reliable credit at a fair rate for inputs for the farm and inputs all the way up to the consumer’s table. Traditionally, we’ve catered primarily to production agriculture but I think we need to continue to expand our scope to processing and transportation to get that product to the consumer’s table as a safe and wholesome product at a reasonable cost.

Final thoughts? I think GreenStone is the most knowledgeable, highest quality, and most dependable source of credit in rural America. And I feel great about being on the GreenStone board; I’ve enjoyed every minute of it.  Winter 2008 PARTNERS


Young, Beginning, and Small Farmer Focus

Passion for Farming Mixes Well with Corn Prices and Ethanol for Young Farmer By Dick Lehnert


PARTNERS Winter 2008


ven before the price of corn doubled and wheat went to $10 a bushel, Eric Blaine knew the farmer’s life was for him. “There was never any doubt,” he said, laughing. “It’s all I’ve ever wanted to do. I had other choices. I did well in school. But I wanted to farm. And these prices, they just make it nicer.” Eric is young-only 26-and he farms with his family on “the Prairie” near St. Charles in Saginaw County. It’s some of the best farmland in Michigan, flat and fertile and productive. Corn yields average 175 bushels per acre, and he’s got a strong market in the Michigan Ethanol plant in Caro, 35 miles away. When he was only 22, he purchased a farm of 358 acres, and this year he bought another, adding 115 acres more. That brought the base of land accumulated by himself, his parents and grandparents, who farm together, to 3,100 acres of prime farmland. He is married, and he and wife Kim live in the house originally owned by his great-grandfather. “I like farming. It’s a good life,” Eric said. “I’m the fourth generation of Blaines to farm this land. Someday I will take over the farm.” Eric is too young to remember the heady years of the 1970s, when everything looked so bright for farmers, only to be followed by near despair in the 1980s. But somebody obviously told him about them because he sees the possible parallel between now and then. “I’m cautious about saying prices have reached a new threshold,” he said. “I think biofuels are here to stay. We have better prices than we’re used to. But I’m using the opportunity to pay down debt and improve what we have. We’re tiling land, adding grain bins and improving our efficiency.” For several years, they leased a grain handling system that included 100,000 bushels of storage. Then over the last two years, they added 150,000 bushels of new storage. “Bins are going up everywhere,” he said. When he looks at the numbers—futures prices, the basis, carrying charges—on-farm storage is “a nobrainer.” While Michigan Ethanol is building storage of its own, the basic deal seems to be that the ethanol producers plan to take in corn as needed and farmers need to store it in the interim. Financing for the new grain bins was done through GreenStone Farm Credit Services. Eric farms with his father and mother, Harold and Betty Blaine, and his grandfather, Bill. They hire one full-time employee. His parents spend the winter in Florida, leaving Eric to get all that grain moved from the farm to the market in time to get going again the next spring. Decision-making, however, always remains a family affair. “Decisions go through all of us. Nobody makes a move without everybody being in on it,” he said. It’s been that way for a long time. Eric said he’s always been “kinda management” on the farm.

and each year they plant as many sugar beets as their shares permit. But they’re not renting shares from others or expanding in beets. Of the four crops they grow, only corn is suitable for continuous planting on the same ground without rotation, and they’ve followed corn after corn for four years on some acres. Of their four crops, only corn is expanding. The “recipe” for corn starts with fall tillage with a chisel plow and a onceover pass in spring with a combination disk-harrow-drag. They recently bought a bigger planter that puts in 24 30-inch rows at a pass. Both the tillage and planting system are sized to get corn planted the last two weeks of April. “If we hit that window, we get better drydown and better yields,” Eric said. While corn now looks very favorable from several viewpoints, that balance could shift. One reason is rising costs. Corn takes a lot of fertilizer compared INS ARE GOING UP EVERYWHERE to wheat and soybeans, and HEN HE LOOKS AT THE NUMBERS fertilizer prices are rising. Corn also FUTURES PRICES THE BASIS CARRYING takes more fuel to CHARGES ON FARM STORAGE grow, harvest, dry and transport. IS A NO BRAINER Another questionmark for borer and corn rootworm. Twenty the future is government support. With percent of their corn does not contain Bt higher crop prices, farmers won’t find genes, as the refuge rules require them much use for loan deficiency payments. to take measures against development of But Eric wonders whether LDP levels insect resistance. They are members of will be raised to higher levels as crop the Michigan Sugar cooperative, own a production prices rise. Farmers who rent complete line of sugar beet equipment land are facing higher costs of land rent. Eric was the youngest of four Blaine sons, but—amazingly for Eric—“none of them really wanted to do it.” They all went to college—different colleges, actually—and all got good jobs. Eric went to the land grant university, Michigan State, but quit after a year to come back home and farm. Since then, he’s never looked back. The Blaines grow corn, wheat, soybeans and sugar beets. Corn acreage has increased and takes about 60 percent of their land. While recent corn prices favor growing corn, that was just another piece of good fortune. Corn does best for them. Since the soybean aphid arrived in 2001, Eric said, soybean yields have been erratic. Wheat periodically has “issues” with vomitoxin. “Some of our soils just seem to do best in corn,” Eric said. “And the genetics of corn are really shining. Even with the drought last summer, we got good yields.” All the corn they plant is Roundup tolerant, making weed control easy, and 80 percent of it is “triple stacked,” also containing genes for resistance to corn

“B W

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“I am a landowner,” Eric said. “It’s nice to have that cost fixed. But I rent as much as I own, so I see both sides.” In the winter, Eric hauls corn to Caro “when I have the time. I love being on the road with my truck. But we have to contract a lot of trucking.” Partly that’s because he also spends winter hours on his two side businesses. He is a dealer for Beta sugar beet seed and he is an agent for Spartan Crop Insurance. That is both an indicator of the depth of his involvement in the farming community— and of his intention to stay firmly rooted no matter what the future brings.

Winter 2008 PARTNERS

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17th Annual Farm Women’s Symposium Ladies, mark your calendars for the 2008 Farm Women’s Symposium scheduled for March 12 –14 at the Grand Haven Waterfront Holiday Inn in Spring Lake, Michigan. This is your chance

America’s farmers and ranchers now have the opportunity to make their voices heard and help shape the future of agriculture for years to come. That opportunity is in the form of the 2007 Census of Agriculture. Conducted every five years by the U.S. Department of Agriculture, the Census is a complete count of the nation’s farms and ranches and the people who operate them. The Census looks at land use and ownership, operator characteristics, production practices, income and expenditures and other topics. It provides the only source of uniform, comprehensive agricultural data for every county in the nation. The forms were mailed out by the USDA’s National Agricultural Statistics Service and should have begun arriving in mailboxes in early January. Completed forms are due by February 4, 2008. Producers can return their forms by mail or, for the first time, they have the convenient option of filling out the Census online via a secure web site. Make sure to do your part by completing the Census…remember, when you lend your voice, you help ensure a better future for your operation, your family, and your community.

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to celebrate being a woman, while mingling with others who share an important common connection— a love for agriculture. This year’s featured speaker is Jane Jenkins Herlong, CSP. Jane is a former Miss South Carolina who is

now a singer, published author and humorist. Through wit, wisdom and song, Jane will help us find our personal best—our prime rib in her presentation “Hamburger Helper or Prime Rib”. The bus tour on Thursday will include stops at the Veldheer Tulip Farm, Coopersville Farm Museum and the Dutch Village. Registration materials will be available in late January at your GreenStone office. For more information, contact Sheryl Smith at 517-543-1360, Terri Scheuerlein at 989-671-9134, or Agnes Talaski at 989-269-6581, ext. 22020.


Visit us at these upcoming events...

MICHIGAN DEER & TURKEY SPECTACULAR February 8–10, 2008 Lansing Center, Lansing, MI

OUTDOORAMA SPORT & FISHING SHOW February 28–March 2, 2008 Rock Financial Showplace in Novi, MI


WISCONSIN PUBLIC SERVICE FARM SHOW April 1–3, 2008 EAA Grounds in Oshkosh, WI

A u o Y k n a Th loring

Holiday Card Contest

Holiday Co ants! Card Particip

GreenStone Farm Credit Services would like to thank the youth who participated in this year’s holiday card coloring contest and congratulate the 2007 winners. We received many creative entries and commend all who participated. The first, second, and third place winners received U.S. Savings Bonds, and the first place designs were used on the cover of the branch offices’ holiday greeting cards.


Springs g Contest, Berrien FCS’ 2007 Colorin of GreenStone years old, Winner

Brandon S. Wegner, 11

years old, Winner of GreenStone FCS’ 2007 Coloring

Ouillet, 12 years old



ica Forraht, ng entry by Jess ni in w I, M , gs Berrien Sprin 11 years old 11 Jessica Forraht,

Alpena, MI, winning entry by Caycee

Ryan Rogers, 12 years old, Win ner

of GreenStone

FCS’ 2007 Colorin g

Ann Arbor, MI, winning entry by Ryan

Contest, Ann Arb or Branch

Rogers, 12 years old

Contest, Clintonville

Branch Clintonville, WI, winn ing entry by Brandon S. 11 years old Wegner,

old, Kaylee Aldrich, 10 years

FCS’ Winner of GreenStone

entry Saginaw, MI, winning

2007 Coloring Contest,

Saginaw Branch

by Kaylee Aldrich, 10

years old

Winter 2008 PARTNERS

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Customer Patronage

It’s Here! Take Your Truck, Your Tractor–Walk if You Have To

GreenStone is set to Return Patronage to Customers March 6 For the third consecutive year, GreenStone Farm Credit Services is preparing to distribute patronage checks to its loyal customers. The GreenStone FCS Board of Directors recently approved a payout in cash patronage for 2007 that is anticipated to approach $15 million, over $1 million more than the distribution for 2006. Each eligible customer’s patronage check will be available at their local GreenStone FCS branch on Thursday, March 6, with offices maintaining special hours from 8 a.m. to 7 p.m. on that day only. Those checks not picked up by the end of business on March 6 will be mailed to the respective customers the next day.

March 6

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PARTNERS Winter 2008

The cash patronage paid to each customer will be based on the proportion of net-interest income earned during 2007 on his or her loan to the total patronage based net-interest income earned by the association. Once again, GreenStone’s plan is to not only distribute a qualified cash patronage payment to customers, but also to use non-qualified allocations as a permanent investment in the association to capitalize future growth. Customers eligible to receive the patronage payments include anyone holding stock or participation certificates with GreenStone FCS, which would include rural residential home loan customers. Loan participations either sold or purchased by GreenStone FCS, and any leasing transactions, will not be included in the patronage program. The returns to customers also will not be based on income derived from fees or any of the organization’s financial services. According to GreenStone FCS President/CEO Jim Schiller, the patronage program establishes GreenStone as unique in the financial services industry. “The loyalty and commitment our customers show towards GreenStone is what makes our patronage program possible each year,” said Schiller. “Our stockholders can be assured that their financial cooperative is continuously striving to not only offer our products and services at competitive rates, but also to return a portion of our earnings back in the form of patronage. It’s this type of added value that helps set us apart in our industry.”

Qualified Patronage Distributions Because the cash patronage refunds reduce the association’s capital, the amount of the payout must be in balance with GreenStone’s current capital position. Maintaining a strong capital position benefits all customers because an association is then better able to offer competitive interest rates and ensure a constant supply of credit. The cash portion of the patronage refund is taxable income to patrons. Each January following a year that patronage payments are distributed, GreenStone will send IRS 1099 Forms to its customers. Non-Qualified Allocations GreenStone intends to allocate a portion of net earnings as non-qualified written notices of allocation. These allocations are recorded in each customer’s name in the records of the association; however, the Board of Directors of GreenStone will consider non-qualified retained allocations as earnings permanently invested in the cooperative with no intention of distributing these earnings to customers. If GreenStone Farm Credit Services were ever to liquidate or be purchased by another financial institution, outstanding non-qualified allocations may be subject to distribution in accordance with the association’s bylaws. This non-qualified allocation is not taxable to patrons, unless it is ultimately distributed. More information about this year’s patronage payment distribution will be shared soon with eligible customers. 

Winter 2008 PARTNERS

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Guest Column

by Alan Hahn

Farming and Environmental Protection


hile in Washington D.C. recently, I was having dinner with a colleague from a national association representing livestock. He and I were discussing how easily the general public seems to be swayed by the rhetoric of radical environmentalists and how frustrated we both are by the constant bombardment by special interest groups against modern agriculture. To say there is misinformation being spread about agriculture and the environment is to put it kindly. My colleague said, “Our nation has become scientifically illiterate.” The “anti” mentality, which in many cases is the epitome of the scientific illiterate, has turned its ire on agriculture in full force in recent years and has left many farmers throwing up their collective arms wondering how they can battle irrational accusations of the extremist. The short answer is with good science. Of course realistically, the answer is also political because various laws and regulations that affect agriculture are born in politics. Special interests aside, there is no denying that environmental regulations affect agriculture more now than anytime in history. It’s much more complex than just nutrient management plans and good environmental management practices. The United States Environmental Protection Agency (USEPA) air quality consent agreement is in the early stages of implementation. This nationwide air quality monitoring study at livestock operations will provide data that will ultimately be “applied” at all livestock operations. As data from this study are evaluated, there may be a “host” of environmental regulations affecting farmers including the Clean Air Act, the Emergency Planning and Community Right to Know Act, and the Comprehensive Environmental Response Compensation

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PARTNERS Winter 2008

and Liability Act. Don’t assume that because you are not a large Concentrated Animal Feeding Operation (CAFO) this will not apply to you; some early predictions suggested that medium and small farms will want to pay close attention to this study.

“SPECIAL INTERESTS ASIDE, THERE IS NO DENYING THAT ENVIRONMENTAL REGULATIONS AFFECT AGRICULTURE MORE NOW THAN ANYTIME IN HISTORY.” With these “two fronts” of concern (special interest groups and pending federal air quality regulations), farmers are facing a more complex business model. The challenge will be to run a profitable farming business and comply with new environmental regulations. Bringing scientific literacy into the equation is where we come in. Our staff of geologists, hydrogeologists, engineers, environmental scientists, and soil chemists provide solutions based on facts and proven scientific methods. We work with “the regulated” to find solutions with “scientific teeth” to counter the emotional arguments. For nearly two decades, we have been providing these solutions for our clients around the world and right here in the Great Lakes Area. Thirty plus years ago when environmental regulations were seemingly growing exponentially, the manufacturing companies in the Untied States were overwhelmed with the thought of complying with all the new regulations. In the end,

they figured out how to make environmental compliance part of their everyday practices. The sharp companies figured out not just how to comply, but how to save costs by reducing and recycling. This will be part of the challenge for you— compliance to avoid fines and penalties and to keep the special interests “at bay,” and in the process create ways to save your business time and money.


Don’t let your crops weather the storm alone. Protect them with Crop Insurance from GreenStone Farm Credit Services. GreenStone offers strong coverage that’s tailored to your needs.


Act now! The deadline to purchase a new policy or make changes to your existing policy is March 15.

We are excited about GreenStone’s commitment to provide their members with a resource for answers to environmental issues. We bring decades of practical hands-on experience in environmental permitting and planning, groundwater resources, manure management, and environmental engineering. We are here to help you comply with environmental regulations, so you can focus on running a profitable business. So, if you have questions about environmental issues, your answers may be as simple as a telephone call away.  Alan Hahn is the Business Development Manager at the Dragun Corporation, a Farmington Hills, Michigan-based environmental consulting firm. He can be reached at or 248-932-0228. The opinions stated herein are not necessarily those of GreenStone FCS.

Call us today for more information EOE


New Service Available GreenStone Farm Credit Services is excited to announce a new partnership with the Dragun Corporation, an environmental consulting firm based in Farmington Hills, Michigan. Dragun Corporation has been in business since 1988, and has specialists devoted to providing consultative services in many areas related to agriculture. Among its many environmental services, Dragun representatives can provide assistance with new site development and planning, existing site expansion, manure/silage storage design, manure management plans, environmental permitting and

planning, groundwater supply evaluations, litigation support, and much more. Through the agreement between GreenStone and Dragun, all GreenStone customers have the ability to contact the Dragun Corporation for a free 30-minute consultation on any environmental issue. Additional services beyond the initial contact are then agreed to between Dragun and the customer. The Dragun Corporation can be contacted by calling 248-932-0228. We hope that you find these consultative services to be helpful to your operation.

Winter 2008 PARTNERS

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News Update

News Update 2007 Michigan State Fair Looking for Available Grand Champion Butter Property? GreenStone was proud to be a supporter of the 2007 Michigan State Fair Livestock Auction. The auction, which provides educational funding to support the youth in agriculture, grossed $150,900.

Are you or someone you know hunting for recreational land or other types of rural property? If so, we have a handy tool to help you shop for it on the GreenStone FCS website. Simply go to and click on the “Property for Sale� link. You will find property listings from, the largest rural property listing network in the U.S. with listings in all 50 states including Michigan and Wisconsin. On the site, you'll find rural residential properties with outbuildings, rural land suitable for future home sites, ranches, farms, and waterfront property. If you're interested in financing, you can view interest rates and terms on our interest rate section and you can apply for a loan on the loan application page. The GreenStone FCS website is your one-stop shop for the rural property you've been searching for. 

Pictured are Roger Hull, Jr., MMPA butter packer, and Melissa Rogers, GreenStone FCS Marketing Specialist.

Annual Report Notice

GreenStone supported the event by purchasing the 2007 Grand Champion Butter that was produced by the Michigan Milk Producers Association Constantine Plant. 

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PARTNERS Winter 2008

This is official notice that the 2007 GreenStone Farm Credit Services Annual Report will be available for viewing online at by March 15. In addition, the Annual Report will be mailed to all stockholders within 90 days following the year-end. 

How Does Your Dairy Farm Stack Up?

Dairy farmers, how is your farm’s business performance? Are you turning a good profit? The Farm Credit Large Dairy Farm Benchmark Program is a great way to test your dairy farm’s performance, and show you how your farm compares with over 200 other similar dairy farms in the program. You’ll get answers to tough questions about improving your business in a practical setting. You can learn things like determining how to decrease labor expenses, whether or not you should board out your youngstock, when or if it’s the right time to expand, or why you may have had a large drop in production last year. If you participate in the program, you’ll receive help from a GreenStone Farm Credit Services Commercial Financial Services Officer to compile a worksheet that profiles many aspects of your business, from income to production. You will also need to provide a balance sheet and income analysis. All of your information is kept strictly confidential. Farm Credit Services then incorporates your numbers with data from all dairy farms in the program to produce customized reports and graphs that profile your farm and illustrate how it is performing among other farms of similar size. Participating in a comprehensive, one-day seminar that is customized to the benchmark information from your unique group is another benefit you’ll get. You can ask specific questions on how your farm compares to your peers and take part in practical hands-on exercises to help you improve your farm’s performance. The 2008 seminar will be held April 8, at the Henry Center in East Lansing, Michigan.

Following the seminar, a GreenStone FCS Commercial Financial Services Officer will visit your farm to work directly with you on your business objectives, review your Large Dairy Farm Benchmark Report and develop a personalized action plan on how to improve your bottom line upon your request. Hank Choate, a dairyman from Cement City, Michigan, with a 300 cow herd, has participated in the program for eight years. “Being in the Large Dairy Farm Benchmark Program helps me to analyze my farm’s performance every year. It targets the weaknesses so I can develop strategies to make improvements to increase my net margin and improve my profitability,” said Choate. The deadline to join the program is January 31, 2008. The minimum herd size to participate is 300 cows. For information on program fees, contact: Dana Sue Kirk at (989) 224-9321/800-622-9187, Ben Spitzley at (616) 527-1930/800-968-8421, or Troy Click at (616) 527-1930/800-968-8421.  A few of the many reports you’ll receive are: • • • • •

Key Profit Indicators Your Farm’s Historical Analysis (up to 5 years) Comparative Gross Margin Analysis Financial Ratios Summary Culling, Internal Herd Growth, Calves DOA, Equipment Investment and Feed Analysis • Range of Key Factors for Profitability, Production, Marketing, Cost Control Measures, Labor Efficiency and Financial Factors • Regional Benchmarks for Comparison • Your Farm’s Comparison to Farms of Your Herd Size • Your Farm’s Comparison to Top 20 Farms in Benchmark

Winter 2008 PARTNERS

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TAX HELP RIGHT-ON-TIME That’s GreenStone! Uncle Sam will be at your door to collect before you know it. So be ready. Contact the tax experts at GreenStone Farm Credit Services. They specialize in preparing agricultural returns that could save you hundreds–or even thousands–of dollars this year.

Call us today for more information

800-444-FARM •

This newsletter is published quarterly for the customers of GreenStone Farm Credit Services. PARTNERS PO Box 22067 Lansing, MI 48909 517-318-2290

1760 Abbey Road East Lansing, MI 48823

Partners - Winter 2008  

GreenStone's quarterly agricultural member publication providing association news, guest columns on timely topics, and feature stories on va...

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