Partners - Winter 2009

Winter 2009

FULL STEAM AHEAD– A Message From New GreenStone CEO Dave Armstrong

Editor’s Note

Editor’s Note

Welcome to 2009 and to the fresh beginning of a new year. The previous 12 months were certainly eventful…filled with news of bailouts, recession, lost jobs, and of course volatile commodity prices. What does it all mean for the year ahead? Only time will tell, but at GreenStone FCS, we look forward with anticipation to another successful year for you— our member/owners. As you brave these cold winter months, we hope you have a few moments to enjoy this latest issue of Partners. Inside, you’ll find information on this year’s patronage distribution, an article detailing recent crop insurance developments, and a tribute to our recently retired CEO Jim Schiller. Happy reading…and as always, your comments and ideas are welcomed.

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CONTENTS

WINTER2009

FEATURES

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Customer Patronage set for March 6, 2009 For the fourth consecutive year, GreenStone Farm Credit Services is preparing to distribute patronage checks to its loyal customers.

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2009 Brings New Improvements to Crop Insurance Options There are important changes and improvements to crop insurance that may help your farming operation in 2009.

IN EVERY ISSUE

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CEO Comments Market Outlook Director’s Corner News Update

COLUMNS

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Impact of the Economic Crisis

by Dr. David Kohl

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The Sustainable Employer

by Luis de la Garza

CEO Comments

CEO Comments

by Dave Armstrong

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reetings from your new CEO! My name is Dave Armstrong and I replaced Jim Schiller upon his retirement effective January 2, 2009.

Before I tell you a little more about myself, I would like to take this opportunity to recognize and thank Jim for 36 years of service in the Farm Credit System serving the financial needs of Michigan and northeastern Wisconsin farmers.

Under Jim’s leadership, GreenStone has flourished. Loan assets have grown from $1.6 billion in 1999 to $5.0 billion today, while the number of customers served has increased from 12,300 to nearly 18,000 in 2008. Earnings, credit quality, cost of operations, and customer satisfaction have all performed at a high level.

Today, GreenStone is recognized as one of the top performing Farm Credit associations in the United States.

On a personal note, I will deeply miss Jim’s leadership, sense of humor, commitment to the Farm Credit mission, and friendship.

I have known Jim for over 29 years when he hired me as a Summer Intern at the PCA of Southeastern Michigan in 1979.

My respect for his business acumen, leadership skills, easygoing personality, and humbleness has only grown over the years. Jim has been instrumental in making GreenStone what it is today, and I can only hope that the management team he leaves behind will be able to continue the momentum he started.

Jim, from all of us in the GreenStone organization, we wish you and your wife, Vickie, all the best in the next phase of your life.

We will always remember you!

Now, for those of you who don’t know me I will provide you with a little bit about “the new guy” taking Jim’s place. I was born and raised in Ionia, Michigan, which is 45 miles northwest of Lansing. My mom was an elementary school teacher and my dad worked at a grain elevator/agricultural supply store selling livestock feed, chemicals, seed, and fertilizer. My dad and a partner also owned a pullet raising facility and fed Holstein calves.

Spending many hours tagging along with my dad and working on the “farm” and elevator is where I received most of my ag education.

I graduated from Michigan State University with a BS in Animal Science in 1981 and began as a Loan Officer for the PCA of Southeastern Michigan at the Monroe branch. In 1985, I accepted a Branch Manager position with the PCA of Sandusky in Imlay City, Michigan. From 1988 through 1995 I held several other positions with Farm Credit Services of East Central Michigan becoming the CEO in 1996. In 1999, I became the Executive Vice

President for Customer Delivery at GreenStone and held that position until being selected by the Board of Directors to succeed Jim Schiller. For those of you who are counting, I have over 27 years of experience.

I have been married to my wife, Debra, since 1986 and have one daughter, Lindsey, who is currently a senior at Haslett High School.

Many people have asked me what it feels like to have such big shoes to fill as Jim Schiller retires and the U.S. economy is undergoing one of its longest recessions since the 1930s.

Obviously, it can be a little overwhelming if I allow myself to dwell on it. However, I have a great deal of confidence in the Farm Credit System’s ability—and in particular GreenStone—to continue to fulfill its mission of providing a dependable, competitive, and sound source of credit and financial services to rural America. GreenStone is blessed to have some of the most competent and dedicated people I have ever had the pleasure of knowing. Their collective focus on serving the needs of you, our members, in a professional and financially responsible manner is the key to the System’s success over the past 92 years.

Jack Kelly is a great example of the quality people GreenStone possesses who are dedicated to exceeding customer expectations.

Jack has been selected to replace me in my former position as Executive VP of Customer Delivery effective January 2. Jack’s knowledge of the business, desire for excellence, and focus on customer satisfaction, make him well qualified to assume his new role. Jack also has over 22 years of experience with the Farm Credit System, most of which have been here in Michigan with FCS of Mid Michigan, North Central Michigan, and Farm Credit Services of Michigan’s Heartland. Jack has served as a loan officer, branch manager, Director of Internal Audit, Director of Information Services, SVP—Customer Support Systems and most recently, SVP/Chief Information Officer for GreenStone. As Executive VP, Jack will be responsible for all branch operations, new business development, customer satisfaction, and marketing, along with responsibility for all of GreenStone’s market segments and financial services.

Jack and his wife, Julie, have been married 19 years and reside near Laingsburg, Michigan with their sons, Ross and Vince. Please join me in congratulating Jack on his new position.

Despite a rocky end to 2008, GreenStone experienced one of its best years ever with over 19 percent loan growth and strong net earnings of more than $75 million. Yet, the initial “squalls” of what may be an intense and long lasting storm began to buffet the economy and financial markets in September. So far, this “storm’s” only impact on GreenStone has been a higher cost of funds for longer-term interest rate products (from 3-30 years) due primarily to the usual investors in Federal Farm Credit Consolidated debt bonds not buying. Even though the Farm Credit System has continued on page 6...

Winter 2009 PARTNERS

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Market Outlook

WINTER 2009

OUTLOOK

MARKET P

By Ken Lake

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PARTNERS Winter 2009

roducers face a tough decision going into the spring of 2009 planting season. As a Global recession destroyed demand for commodities, the massive spec-long position is being liquidated. And, all the while lower commodity prices and higher production input costs are discouraging plantings. The winter months will be filled with discussions and decision making in regards to planting decisions, but at this point it looks like more soybean acres and less corn.

We do, however, have the acres for an increase in both if producers so desire. Nearly a million CRP acres, coupled with a dramatic decrease in wheat seedings, should open up acres in the corn-belt next spring. There are also early ideas that cotton acres in the south may be available for corn and soybean planting.

The demand destruction has been evidenced in the livestock sector as well, and demand recovery in the sector may be the most important factor to watch in 2009. Cattle on feed inventories as of November 1 were down 6.8 percent. Pork production is expected to drop under year-ago levels. The weekly Broiler Hatchery Report showed that commercial hatchery egg sets were down 7 percent from last year. It all adds up to continued demand decline for corn and soybean meal going into the first quarter of 2009.

If you consider the supply/demand balance sheet for soybeans, you will see the potential bearish impact of lower soy demand. Even if demand remains steady and we see a normal yield, ending stocks could become burdensome.

November 2009 soybeans could be significantly overvalued if producers decide that corn is too expensive to plant and they increase soybean acreage accordingly.

Fertilizer prices are beginning to fall and studies show that producers can make money on both corn and soybeans in 2009, but it’s difficult to tell just how anxious producers will be to risk a much higher input cost to plant

corn. Given that profits are at hand, producers should consider hedging their 2009 corn and soybean profits.

Export sales for soybeans have been strong, with China being a big buyer. For corn, the opposite is true. Cumulative sales are at 37 percent of the USDA forecast versus a five-year average of 43 percent. Ethanol demand would indicate further cuts may be in store. As a result, expect to see ending stocks to jump to 1.3 billion bushels and stocks to use ratio of 10.5 percent.

Regarding the 2009 price outlook, while one could make a case for firmer corn values, one would also find it difficult to rationalize $10 soybeans. Unless there is a major weather issue in South America, supply is on the rise. With that rise in supply and what looks like continued demand erosion you should expect to see soybean value erode. The next leg down takes us to $7.50, and then $6.50.

For corn, as long as Washington remains a supporter of ethanol, expect demand to remain steady and prices should firm. However, the current trend is clearly down and I would expect to see December 2009 corn futures trade at $3.95, with vulnerability to $3.50. As I write this, crude oil has traded at a three-year low and global economic weakness continues to pressure all markets. One cannot expect much of a recovery until either outside economic pressures subside, or agricultural commodities detach themselves from those pressures…there has been little sign of that thus far. I am not going out on a limb today to predict corn value over the coming months, but I will offer this…one of my most trusted sources who projects long-term value sees average corn prices through 2018 between $4.25 and $6.00, as long as the ethanol industry remains viable.

Ken Lake is the Originations Services Coordinator for Michigan Agricultural Commodities, Inc., working out of its Global Ethanol office in Riga, Michigan. He can be reached at 517.486.6190 ext. 107, or at kenlake@michag.com.

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

Farm Management

FARMERS &RANCHERS: How Will the Economic Crisis Impact You?

By Dr. David Kohl

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hat a roller coaster ride for the past several months!

Big bank failures, stock market crashes, and posturing politicians attempting to get media sound bites have dominated the news headlines. These are turbulent economic times with extremes in volatility. When the dust settles, what does it mean for your business, family, and personal lives?

First, most regulated banks and the Farm Credit System did not participate heavily in these extremes in lending and financial investing. Regulatory change, political pressure and domestic and global economics created the perfect bubble with shadow banks.

As farmers and ranchers, you will need to make your lender confident. How does one do that?

• Provide solid financial preparation including three-year trends on balance sheets, income statements and projected cash flows.

• Have a sound risk management plan including due diligence on contracts, marketing agreements, and insurances.

• This would be an excellent time to work with the Business Management Center, farm management instructors, and consultants to map out priorities, goals and expectations, and establish strategies given numerous economic scenarios.

Lending institutions I talk to across the nation are in the “hunker down” mode and many farmers and ranchers are following suit. Does this mean you will experience tighter

credit? The answer is yes and no. Yes, if you are a customer with marginal credit.

However, if you have a stellar record of positive earnings, growth of earned net worth on the balance sheet, good cash flow, and a strong repayment record, credit will most likely be available at competitive rates. Farmers and ranchers who will be vulnerable will be the millionaires on paper who have not earned a dollar. Next, producers that consistently have carryover debt that needs to be refinanced could be vulnerable. Low credit scores - below 650 - by either spouse will be closely examined. Build-up of accounts payable and unfavorable trends in profits and/or cash flow will be a recipe for higher rates and tighter credit. The bottom line is to start building your case because it will not be business as usual.

Comments?

Please send your remarks to AgGlobeTrotter@accountlist.com.

I would like to know what you are thinking.

–David Kohl

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 2009 PARTNERS

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Customer Patronage

Madness ARCH

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or the fourth 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 2008 that is anticipated to be approximately $13.5 million. Each eligible customer’s patronage check will be available at their local GreenStone FCS branch on Friday, March 6. Those checks not picked up by the end of business on March 6 will be mailed to the respective customers the next business day.

The cash patronage paid to each customer will be based on the proportion of net-interest income earned during 2008 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 Dave Armstrong, the association was committed

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GreenStone Set to Return Patronage to Customers Checks Available at Branches on March 6

to continuing to distribute cash patronage despite the recent volatility and uncertainty in the financial markets.

“GreenStone remains a strong and healthy financial cooperative—thanks in large part to the continued loyalty and commitment of our customers,” said Armstrong. “In addition to this added value that helps set us apart in our industry, we also remain very focused on doing everything we can to maintain truly competitive interest rates in our markets.”

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.

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...CEO Comments continued from page 2

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Non-Qualified Allocations GreenStone intends to allocate a portion of net earnings as nonqualified 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 nonqualified 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 nonqualified allocations may be subject to distribution in accordance with the association’s bylaws. This nonqualified 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.

remained in a safe and sound position through the present credit markets meltdown, these investors’ uncertainty about the future have caused them to hang on to their cash or invest in very short term U.S. Treasuries. In addition, uncertainty regarding future loan portfolio performance has created the need for GreenStone to build capital through earnings and minimize potential loan losses by closely adhering to underwriting standards. The current outlook suggests that the System will have an adequate supply of funding indefinitely for the variable rate product, but access to longerterm fixed rates is less clear into the future. Hopefully, actions taken by the world’s central banks will begin to have a positive impact on credit markets by improving investor confidence so they will come back to the market in a buying mood.

Even with the present financial volatility and future marketplace uncertainty, I am pleased to report that GreenStone’s Board of Directors was able to approve another patronage distribution from 2008, albeit slightly less on a percentage basis from 2007. This is another indication of the financial stability of your association in the midst of a full-fledged credit market crisis. Input received from members at our stockholder advisory meetings held in December indicated their desire for GreenStone to keep interest rates as low as possible while maintaining access to credit even if it means a reduction in patronage in these difficult times. Your board and management appreciate this input and will operate with these priorities in mind.

Another priority that the board has been working on over the past year includes the analysis of our corporate office space needs. Due to over 12 percent compounded annual growth over the past eight years, we have had to add a number of new staff members and rent space off site from our current headquarters. This project was discussed at the Stockholder Advisory meetings in December of 2007.

Based on the input received at these meetings and the results of a

comprehensive space analysis study completed last winter, the board moved forward with a plan in February 2008 to build a new corporate facility. Since that time, the association has purchased approximately 16 acres located about onequarter mile north of the current office location along West Road in East Lansing.

Building design work is nearing completion as is municipal site plan approvals, etc. While all work necessary to begin construction is not yet done, the board plans to continue to move forward with the design and permitting process until this spring. At that point, the current economic environment, current costs of construction vs. budget, association financial performance, etc., will be reassessed before any decision is made to either proceed with the project or put it on hold until the economic environment improves. Decisions like this are not taken lightly; however, the financial analysis of the project has indicated it would have a very minimal impact, if any, on GreenStone’s overall financial position or ability to continue to fulfill its mission over the next several years. The board and management will continue to keep you informed about this initiative as decisions are made.

In closing, I want to thank you for your business and loyalty to your association.

While the future holds some uncertainty, I remain optimistic about agriculture’s ability to not only weather the storm, but thrive in the future as the world’s demand for food and fuel continue to increase.

These times will require superior management practices and risk planning strategies, but to those who are successful, the opportunities will be abundant.

Please feel free to contact me anytime if I can ever be of service at dave.armstrong@greenstonefcs.com or 517-318-4105.

Winter 2009 PARTNERS

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Director’s Corner

MEET BILL OEMICHEN Outside Director

Each year, GreenStone members vote to determine who will represent their needs and views on the GreenStone Board of Directors. The elected directors then go one step further, and select two additional experts in the field to serve as Outside Directors. The appointed Outside Directors, one based in Michigan and the other in Wisconsin, also serve three-year terms, are non GreenStone members, and bring specialized expertise to the board.

Meet Bill Oemichen, your northeast Wisconsin Outside Director. Bill has a diverse background that is rooted in agriculture and brings his vast finance, legal, and accounting knowledge to the board. After obtaining a law degree in addition to a bachelor’s degree in economics, he began his professional career as a cooperative attorney. He then served as the Deputy Minnesota Agriculture Commissioner; as the top Trade and Consumer Protection official in the Wisconsin Department of Agriculture, Trade and Consumer Protection; and worked for the U.S. House of Representatives in Washington, D.C. Currently, Bill is the President and CEO of the Cooperative Network, formerly known as the Wisconsin Federation of Cooperatives and the Minnesota State Cooperative Association.

Bill has served on the GreenStone Board of Directors since 2002, starting on the northeast Wisconsin board until the formal merger a few months later. In addition to serving on the GreenStone Board of Directors and chairing the board’s audit committee, Bill is the incoming chair of the Board of Visitors for the College of Agriculture and Life Sciences at University of Wisconsin–Madison; the Board Treasurer of a large hospital and clinic system in southern Wisconsin and northern Illinois; and is the Vice Chairman and a trustee of Wisconsin’s $2.4 billion college program savings fund, known as EDVEST. A farm kid at heart, Bill is proud to say the outdoors is where he finds comfort, “Whatever I can grow, I grow.” His family, wife, Mary Anne; daughter, Amy; and son, Will, are never surprised to find him working outside past midnight. He is involved with a neighboring farmer in raising around 80 head of beef cattle and the forage crops. And, taking after his father, he also spends considerable time planting and raising Christmas trees.

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As an Outside Director, what is your role on the board; what expertise do you bring to GreenStone FCS? The Outside Director’s role is to bring into the boardroom an outsider interest and view and to bring in an expertise that is different from the rest of the board. The board looks to me for my finance, legal, and accounting experience; and to help understand, in a more specialized way, what impact our actions have on the finances of GreenStone.

I am firmly grounded in Wisconsin and have a broad and deep understanding of what is going on around the state and am very involved in Wisconsin agriculture. Because of my current position working for over 400 cooperatives in Wisconsin, I travel the whole state, including northeast Wisconsin.

GreenStone FCS customers encompass a uniquely diverse industry of products and services. Pulling from your professional knowledge and foresight, what do you see as the key to their success in the future?

The key to our member/owner success is that GreenStone remains a strong cooperative lender for Wisconsin and Michigan agriculture. When I worked with both the Wisconsin and Minnesota agriculture departments, I often saw banks coming into agriculture lending, and when times got tough, they left.

That is why it is so important for GreenStone to be there, not only for competitive reasons to get the best pricing, but to ensure that there is a dependable source of lending. GreenStone is owned by its members, and because it is owned by the members,

“The key to our member/owner success is that GreenStone remains a strong cooperative lender for Wisconsin and Michigan agriculture” it is particularly responsive to the needs of its members. We don’t have the typical stockholders who are only interested in short term profit; our members are interested in not only us being profitable, but also in us being here for the long term.

Furthermore, I know from my state Consumer Protection experience, if a consumer had a complaint with a large corporation, they couldn’t pick up the phone and talk to the CEO, but at GreenStone you can, and our members do! That is what makes coops so unique, the executive management and the

board have to pay attention to our customers because they are our owners—it is a very different and unique relationship.

What do you view as GreenStone’s strategy to accomplish its mission and ensure the vision of the organization is achieved?

As I said before, during these uncertain financial times, it is very important that GreenStone remain financially strong. I believe the board and management have developed the appropriate strategies to ensure just that. As other financial institutions pull back from lending to agriculture, farmers can

“If a consumer had a complaint with a large corporation, they couldn’t pick up the phone and talk to the CEO, but at GreenStone you can, and our members do!” feel confident and be assured that GreenStone will continue to be there for them. I would admit to be the guy in the boardroom who is always reiterating that “we are a co-op and our customers own us.” The board members don’t need a reminder, but it is always useful to keep in the forefront that we are very different from the rest of the corporate world.

From your vantage point, what has made the most significant impact on the agricultural industry during your professional career?

That’s a tough question, but to me, I think it is all part of a puzzle. One of my most recent activities was to create a health care cooperate for farmers, called the Farmers Health Cooperative of Wisconsin. As we all know, it is a substantial need for farmers to have affordable quality health insurance. I was also very involved in writing and passing the Wisconsin Dairy and Livestock Investment Tax Credits, which has helped dairy and livestock farmers to reinvest and modernize their farm operations. I’ve also been very involved in livestock siting and “Right to Farm” cases to help producers. All of these things are part of an overall puzzle to make Wisconsin and Michigan a very desirable place to farm, to continue farming, and to pass the farm on to the next generation.

Winter 2009 PARTNERS

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Guest Column

The

Sustainable Employer

By Luis de la Garza

We have heard and seen the word sustainable everywhere; it is in the fresh market, retail store, grocery store and even in furniture store advertising. But what does sustainable mean? Some people try to define it so it can be measured and applied like a carbon footprint or food-miles. While difficult to measure, in general, sustainable can be described as making sure today’s resources would be available, in the same or better condition, for future generations.

To remain sustainable, today’s agribusinesses need sound, transparent relationships with customers, employees, managers, owners, land owners and suppliers to ensure they will be there in the future. These relationships, founded on trust, are crucial to staying afloat or even to surviving in volatile markets.

Trust needs to be earned and it is a two-way street. That means employers must earn trust of employees just as employees demonstrate their trustworthiness through their work. One area that can make or break that level of trust between employee and employer is the interpretation of compensation, or rewards offered by the employer.

Compensation is more than just the usual wages and benefits.

It also includes the difficult to measure categories of work-life balance, performance and recognition initiatives, and career opportunities. All together, these five areas make up a compensation package.

Wages and benefits often get all the attention when thinking about compensation. Is pay competitive in the market? How can we make sure to pay our top performers well without triggering too much tax liability? How do we get employees to

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share in the high cost of benefits and still make it a “benefit”?

However, the entire compensation package talks about you and your company—the time and effort you spend on developing a coordinated package reflects on the culture of your business. Many times, it is the harder to define parts of the compensation package—work-life balance, performance and recognition initiatives, and career opportunities—that really show your employees how valuable they are to you.

Let’s talk about each of these three practices and discuss how they have been put to work in other ag businesses.

Work-Life Balance can be described as the balance between an individual's work and personal life. It is a term heard frequently in the media—it might even be a bit overused. And sometimes work-life balance is hard to think about in relation to agriculture. The family-owned businesses in ag really live their work and it is sometimes impossible to separate what’s being done for the business and what’s being done for one’s personal interests. For the employees of ag businesses, however, it may be a different story. These employees can be very engaged and interested in the work they do for your business while still needing to care for themselves and their families. One of our clients actually started a day care in the town where he does business to ensure his employees had a nearby, safe place to leave their children. If that doesn’t strike a chord, note that others have sponsored sports teams coached by their employees.

Performance and Recognition Initiatives cover the attention employers provide employees for reaching predetermined

goals. This is an area you can use to really reinforce your values and culture. For example, if you strongly value longterm stability in your employee force, you may decide to celebrate employees’ employment anniversaries—cake at the 1-, 5-, 10- and 15-year milestones. We have one client who provides meat for employees but only after one year of employment. In contrast, you could choose to emphasize performance over tenure by celebrating an employees’ completion of a skid-steer driving course (or maybe one week with no broken gates!). General recognition and team-building events also fit here—Christmas parties, summer picnics and fishing trips.

“Employers must earn trust of employees just as employees demonstrate their trustworthiness through their work.”

Career Opportunities are the actions or plans implemented to help employees enhance their skills and abilities so they can advance in their careers within the organization or outside into more responsible positions. We currently work with a dairy going through an expansion. The owner sees great potential in one of his long-term milkers and is promoting him to parlor supervisor in the new, larger operation. This employee is somewhat nervous about his new role but the encouragement provided by his employer and some training have given him a chance to grow personally and professionally. Without that

chance, he may have looked elsewhere for those challenges.

Providing career opportunities in ag business can sometimes be difficult—many times the business isn’t big enough or doesn’t have enough diversity to provide developed “career paths”. However, the challenge is to think about how this might fit for your business. Could you partner with a neighbor to get some of that diversity? And consider long and hard the complaint that providing employees “lots” of training only prepares them to leave after you’ve invested in them. Are the employees you hire worth investing in or not? If they are, figure out how much training and development works for your business. If they are not, maybe you are not hiring the right folks.

Albert Einstein said, “Not everything that can be counted counts and not everything that counts can be counted.” Money is a good motivator but by itself is not sustainable. No matter what an employee’s background, it is human nature to have a need for affiliation, pride in your work and to feel that you are contributing. Investing money in human capital pays back!

Developing or enhancing your entire compensation program can provide you the platform to build these kinds of sustainable relationships with your employees. Where people are happy, businesses are happy too!

Luis de la Garza is a Sr. Business Consultant with Lookout Ridge Consulting (formerly Salisbury Management Services), a division of AgStar Financial Services, ACA. Luis provides the consulting team with bilingual people oriented services to help agricultural producers grow their businesses while keeping their business healthy and the people happy. Luis can be reached at ldelagarza@salisbury-management.com or at 800.663.5608.

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

Bring your Farm Management Team down to our exhibit booth at one of these events in 2009 Huntin’ Time Expo January 23-25, 2009 Delta Plex Arena, Grand Rapids, MI

The Ultimate Sports Show March 19-22, 2009 DeVos Place, Grand Rapids, MI

Wisconsin Public Service Farm Show March 31, April 1&2, 2009 EAA Grounds, Oshkosh, WI

Michigan Deer & Turkey Spectacular February 13-15, 2009 Lansing Center, Lansing, MI

Michigan Horse Council International Stallion Exhibition and Trade Show March 13-15, 2009 MSU Pavilion, Michigan State University, East Lansing, MI

Ag Expo July 21-23 Michigan State University Expo Grounds, East Lansing, MI

Outdoorama Sport & Fishing Show February 26-March 1, 2009 Rock Financial Center, Novi, MI

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Farewell Jim

We say farewell to our Leader, Teacher, and Friend ...

James F. Schiller - Over 36 years of service to the Farm Credit System 1972-1973 1974-1975 1975-1980 1981-1984 1985-1999 1999-2000 2001-2008

Loan Officer, Production Credit Association of Lansing, Charlotte Branch Credit Manager, Production Credit Association of Bay City General Manager, Production Credit Association of Southeastern Michigan President, Production Credit Association of Southeastern Michigan Chief Executive Officer, Farm Credit Services of Southeastern Michigan Chief Operating Officer, GreenStone Farm Credit Services President/Chief Executive Officer, GreenStone Farm Credit Services

Thank you, Jim, for your guidance. Enjoy retirement!

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News Update

News Update Annual Report Notice This is official notice that the 2008 GreenStone Farm Credit Services Annual Report will be available for viewing online at www.greenstonefcs.com by March 16. In addition, the Annual Report will be mailed to all stockholders within 90 days of year-end.

18th Annual Farm Women’s Symposium The Farm Women’s Symposium will head to Chelsea, Michigan this year and hold its 18th annual program at the Comfort Inn on March 11-13, 2009.

This program brings together women that are

A Jolly Farewell In 2008, GreenStone marked the final year of our holiday card coloring contest. GreenStone would like to bestow a special “Thank You” to all the youth who participated and helped to make the finale a success. The first, second, and third

Allegan Branch winning entry by Megan Compagner

involved in agriculture to share in fun, learning, and fellowship. Participants create valuable networks, renew friendships, share information, and prepare for the start of another year in agriculture.

The program will feature LaDonna Gatlin, sister of the famous Gatlin Brothers. LaDonna will share seven key principles that gave her the courage to take a giant leap of faith, find her own voice, and “sing a different song” apart from her brothers.

The bus tour on Thursday will include visits to the Chelsea Teddy Bear Factory, Chelsea Milling—home of Jiffy Mix, and United Producers in Manchester.

Scholarships are available for GreenStone Farm Credit Services members; contact your local GreenStone office for details. For more information, contact Sheryl Smith at (517) 543-1360, Julie Schwab at (989) 846-4764, or Agnes Talaski at (989) 269-6581, Ext 3.

Clintonville Branch winning entry by Brandon Wegner place winners received U.S. Savings Bonds, and several first place designs were found on the branch holiday greeting cards. As seen in these select samples, participants put a great amount of time and imagination into their “holiday on the farm” entries.

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GreenStone FCS Recognizes American Star in Agribusiness GreenStone Farm Credit Services is proud to recognize the achievement of a local FFA national award winner, Jason Handstedt.

Handstedt was awarded the American Star in Agribusiness at the 2008 National FFA Organization convention in late October. He is a resident of Pulaski, Wisconsin, about 20 miles northwest of GreenStone’s De Pere office.

Recipients of the National FFA Organization’s top awards have developed outstanding agricultural skills and competencies through their career development programs; demonstrated outstanding management skills; earned the American FFA Degree; and met other agricultural education, scholastic and leadership requirements. Handstedt’s recognition is the result of his work in establishing Handstedt Wood and Recycling, a self-owned tree removal and wood recycling business.

GreenStone is a strong supporter of the FFA, contributing upwards of $25,000 of the more than $930,000 collaboratively donated annually by the Farm Credit System.

Ladies Day Out— February 13 The 2009 Ladies Day Out event will be held in Green Bay, Wisconsin at Rock Gardens Banquet and Conference Center. This annual event provides women in agriculture and agribusiness a chance to get together and enjoy a morning of fun, food, and laughter. The speaker this year is Susan Carnahan who will be sharing with us her fan favorite presentation, “Dumb Mistakes Smart Women Make”.

Invitations, with a schedule of the morning’s events, will be mailed to northeastern Wisconsin and Michigan Upper Peninsula customers in early January 2009. Remember to reserve your spot by calling your local GreenStone Farm Credit Services office.

Hope you can join us!

RAINS IT POURS

WHEN IT

Crop Insurance provided by GreenStone.

Expert advisors providing complete coverage tailored to fit your needs.

Call your local GreenStone Farm Credit Services branch for more information.

800-444-3276 • greenstonefcs.com

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PARTNERS Winter 2009

Crop Insurance

2009 Brings New Improvements to Crop Insurance Options There are important changes and improvements to crop insurance that may help your farming operation in 2009. The Risk Management Agency has made changes to try to improve your options, and the adjustments and new policies are the result of feedback from crop insurance companies, agents, and producers.

Some of the key changes for 2009 spring planted crops include: • The changed harvest price increase limitation for Crop Revenue Coverage (CRC), Revenue Assurance (RA), and Group Risk Income Plan (GRIP) is now 200% of the Spring Price. There is no limit on decrease.

• The administrative fee for Catastrophic (CAT) coverage is revised to $300 for each crop in the county. There is no cap if a producer insures multiple crops with CAT coverage.

• Premium subsidy factors were reduced around 4 points for GRIP policies which may result in higher premiums.

• Premium subsidy factors for Enterprise Units for CRC and RA policies increase substantially. This is

available at all coverage levels with the largest change (22 points) at 75% coverage level. This will reduce premium costs for Enterprise Units considerably. The subsidy factors for Basic Unit and Optional Unit did not change.

• The Pilot Biotechnology Endorsement (BE) is new to Michigan and Wisconsin corn producers for 2009 who plant specific hybrids. This is available for non-irrigated corn for grain on Actual Production History (APH), CRC, and RA policies at the buy-up level only. Sign up occurs at acreage reporting when planted acres are reported on a unit by unit basis.

Premium savings per unit may range from $2 to $4 per acre.

The use of technology in crop insurance continues to improve.

Congress approved funding to update Farm Service Agency (FSA) and Risk Management Agency (RMA) technology which will improve information and data sharing between RMA and FSA programs.

Correct planted acres, entity, and proper tax ID information are critical for program compliance and eligibility.

The new Supplemental Revenue Program (SURE) and Average Crop Revenue Election (ACRE) programs, which are administered by FSA, have many connections to your crop insurance policy including price election, yield information, coverage level, and in most cases, all significant crops must be insured for eligibility.

The most significant change for 2009 may be the commodity prices, which affects the amount of coverage you can purchase.

Established prices for APH products are initially released in December and may be updated as late as early March. CRC, RA and GRIP prices are established during the month of February. There is no change to the price discovery process.

GreenStone has a team of qualified crop insurance specialists that can assist you with your crop insurance needs. We strive to help you understand your needs and then match up the right crop insurance products and coverage amounts to manage your risk and protect your income. For more information about crop insurance, contact your local GreenStone office.

Winter 2009 PARTNERS

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RIGHT ON

THE MONEY

Tax Preparation provided by GreenStone.

Don’t question it...be sure this year. Let us help you strategize to maximize your tax savings.

Call your local GreenStone Farm Credit Services branch for more information.

800-444-3276 • greenstonefcs.com

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

PARTNERS PO Box 22067 Lansing, MI 48909 517-318-2290 jim.nowak@greenstonefcs.com aaron.classens@greenstonefcs.com bill.eva@greenstonefcs.com melissa.rogers@greenstonefcs.com

1760 Abbey Road East Lansing, MI 48823