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GreenStone FCS

Spring 2014

Promoting the business success of our customers and the rural community







NOTE Spring 2014 Published by:

GreenStone Farm Credit Services

2 Comments from CEO Dave Armstrong Dave Armstrong shares his thoughts on recent industry developments, acknowledges the hash winter, and his optimism for spring and the potential it holds.

During these last few weeks, I have been trying to convince my parents to hunker down in the warmer south for a bit longer than normal, while we wait for the snow storms to come to an end and for the frost to bid farewell to the depths of the ground. Like most farmers this time of year, it is no surprise to hear my dad all but licking his chops not so patiently waiting to get the tractor tires back into the rich black soil. I cannot say I blame him; the thrill of farming is only amplified each spring as you look down the perfectly straight rows and see the green hue coming from the first two leaves poking their way out of the ground, one plant after the next—a rebirth of possibilities. So of course he is excited to get the process started, I am too! While the soils are warming and the trees are budding, we hope you will take a minute to enjoy this latest issue of Partners, filled with association news, staff and member awards, industry hot topics and legislative updates. Patience, safety and success to each of you this 2014 growing season!

14 Legislative Matters

3 Market Outlook Agricultural economist, Bob Utterback, plots the path to navigating the "what if's" of the markets and cautions on timing your decisions.

9 GreenStone's Story Making sure agriculture has a voice is a key component to ensuring its success. Here is an update on how your association is managing this important task.

10 Circle of Excellence GreenStone recently recognized its top performing sales staff. Learn who earned top honors.

The new Farm Bill has finally arrived, offering updated options for producers and support for rural communities.

15 Directors' Perspective Curious about the tasks board members tackle on behalf of GreenStone customers? Three directors share some insight.

17 Guest Column Water supply will always be a concern, but focus on the facts and solution rather than mass hysteria.

Spring Notes 6 News Update

7 Calendar of Events

16 Pause for Applause

7 Tech Tip

11 YBSF Feature Article Bringing a start-up dairy operation online is no small task. Chad Vogel, has put in a lot of long hours both on and off the farm, but he has brought early goals he laid out for himself in his teenage years to reality.

This newsletter is published quarterly for the customers of GreenStone Farm Credit Services. Partners, 3515 West Road, East Lansing, MI 48823 • 517-318-2290 •


From CEO Dave Armstrong


he calendar says spring but it will likely be several more weeks before the piles from this winter’s record breaking snow fall will be gone for good. While the winter sports enthusiasts and businesses that depend on snow and cold to pay the bills may be sad to see the winter of 2014 fade away, many of our members are not, especially those who have livestock to care for. This winter was particularly rough on these operators as they worked in the numbing and bone chilling cold to deal with dilemmas like frozen water lines, manure handling issues, and snow plugged roads that had to be opened to get feed in and commodities out. This is not to say that others were not similarly impacted, I just know caring for livestock in these conditions, week after week, is often harder on the human beings than the animals they are caring for. Of course, while the snow and extreme cold should be gone soon, the effect it had on buildings and roads is significant. We will likely be repairing roofs, pipes, driveways and roads for months to come. This pothole season alone will be one for the record books! Make sure to let your elected officials know that they need to get serious with fixing our roads before they are completely impassable.

I was honored to have testified on behalf of GreenStone at that field hearing, and attend the bill signing on Feb. 7. Whatever your political affiliations might be, the signing of this Farm Bill was a historic event. It is not every day that the President of United States visits your community, let alone signs an important piece of legislation like this. Like most legislation, the Agricultural Act of 2014 is not perfect and certainly does not please everyone. Yet, on balance, our industry has another five years of programing that runs the gambit of providing a safety net for a broader array of crops and livestock to conservation, energy, rural development, and nutrition programs. In truth, the Agricultural Act of 2014 is somewhat of a misnomer as 80 percent, or $765 billion, of the $956 billion proposed to be spent over the next 10 years is for Supplemental Nutrition Assistance; this is something that those in agriculture already know but is not widely understood by our fellow non-farm voters. Unfortunately, the media typically reports about the massive subsidies farmers receive and fail to compare and contrast where all of the spending really goes. Nonetheless, the legislation will provide a level of certainty for producers over its term so they can plan and run their businesses accordingly. While strong markets and better varieties have reduced many

Farm Bill While the snow and polar vortex occupied most of the news this winter, there was one bright spot. After nearly three years of debating, wrangling, and negotiating, Congress passed a Farm Bill which is titled the Agricultural Act of 2014 and was signed into law on Feb. 7 by President Barack Obama in East Lansing on the campus of Michigan State University (MSU), the nation’s first land grant university and the alma mater of Sen. Debbie Stabenow, chairwoman of the Senate Agriculture Committee. Sen. Stabenow, along with her staff, worked tirelessly to get a Farm Bill done and one that was favorable to the broad array of commodities grown in our territory of Michigan and northeast Wisconsin. In fact, the signing came full circle as Sen. Stabenow held her first field hearing at MSU on May 31, 2011.

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Spring 2014



Spring weather, as well as summer heat and rains will have the most immediate impact on determining near-term price direction. The concern going in is that the Central and Eastern Corn Belts are wet and cold while the Western Corn Belt is dry. Essentially, the longer we have to go into spring to get the crop planted, the more bullish it can possibly be. The only problem is I suspect there is still a large amount of unpriced corn that must move into the marketing channel this summer. This implies that, as soon as the trade becomes comfortable that the crop getting planted and crop progress suggest a close of 165 rather than 150 trend line yield, the market will start to slide. As usual, timing is critical!



Spring Market Outlook By: Bob Utterback Finally, it is spring and we can get back to one of the things we love about being a farmer— planting. Spring is a period of birth and great possibilities. As we progress through the year, the growth of our labor can be seen in the fields, but many factors will have a big impact on what type of price producers end up with.


PARTNERS Spring 2014

The bulls will argue that demand is strong, which is quite valid for old crop soybeans. I grant you that we are feeding hogs and cattle to heavier weights. And ethanol profits are high; we are actually exporting to other countries. Finally, I will also affirm that exporters are getting more interested at lower prices. The problem, however, is that supply growth will trump these positive near-term demand fundamentals if Mother Nature gives us an average crop. CORN I suggest the April to June time period is more important to pricing than the June to July time period for getting old crop priced and start aggressively working to get a floor under the 2014 crop. Old crop: not only lock in the flat price, but lock up basis as well. Those with hedge-to-arrive contracts on the books should not move much beyond late May before locking up all cash contracts. New crop: attention should be placed on getting all pricing done for off-thecombine cash sales by no later than the June supply/demand report. I have encouraged many producers to be very aggressive in getting a floor under a large part of the anticipated 2014 crop.


A floor implies a base price, but the ability to improve the selling price if prices rally using a put strategy. Do not aggressively use net short cash or short futures until we get into late June to early July. As we move into late May to early June, take profits on all call protection. In fact, selling calls as a way to enhance cash sales or paying for crop insurance should be given strong consideration once we get closer to pollination. The United States Department of Agriculture (USDA) is suggesting that the yearly average cash price for expected 2014 corn production will average around $3.65. To many this is unrealistically low, but this is the real danger the USDA is suggesting. They are on record as suggesting that the 2015 marketing year will see cash values drop to $3.30. The implication is clear; U.S. farmers have painted themselves into a corner. While demand is solid and growing, we must have a weather yield reduction event to ignite prices back to what was seen in 2012. While I am not going to say it cannot happen, I do suggest the odds are better for an average yield and heaven help us if we have a bumper crop. If we do experience a cold, wet spring, I suggest using it to start getting a solid base under the December 2015 corn contract around $4.85 to $5.25. SOYBEANS Old crop soybeans experience an exceptional rally from mid-January into late-February on very strong Chinese buying. In fact, if no Chinese cancellations develop, the USDA will have to significantly increase the export expectations for the 2013 marketing season. This bullishness helped push old crop to $14. I have to say this was a surprise for me since I recommended emptying the bins above $13.25; but I stand by my recommendation. At this time old crop should be moved aggressively and focus should now be on the new crop.

The talk going into spring was that the trade wanted more planted acres than 79.5 million acres. I believe the close to $1 rally in November 2014 soybeans has accomplished this target. If cool weather were to develop this spring and limit corn plantings even more, I would not be surprised to see soybean plantings eclipse 81 million acres. This type of supply increase needs to be protected. Actively buy the November put at market strike price. To reduce the net cost I suggest selling out-ofthe-money old crop puts at least 60 to 80 cents below the market. The objective is for the short puts to reduce some of the time value cost of the long puts. While the long puts provide a floor under the market, one still has the ability to roll up positions if a summer weather event occurs. Granted, if nothing is done, one saves the expense of the put strategy but he has to be absolutely right about the weather event. Final Note: The USDA is suggesting yearly average cash soybeans will be at $9.65 and 2015 could actually be lower. While these are early numbers and subject to change, they really indicate the direction of prices unless we have an exceptional weather yield reduction event. WHEAT Seasonally the time for fireworks should be over by spring’s arrival. By now the trade has factored in most of the impact of the hard, cold winter on wheat stands. I would not be surprised to see some wheat plowed up in the eastern Corn Belt due to winter injury kill. While on the surface one would think this would give wheat a lot of upside price push, I must be quick to remind everybody that the world stock levels are indeed adequate. Remember we produce less than 9 percent of the world wheat supply. So while our crop is important to us, in relation to the global supplies, it is not the primary price mover.

â€&#x; I have encouraged many producers to be very aggressive in getting a floor under a large part of the anticipated 2014 crop.ËŽ

I hope producers have priced a lot of their 2013 inventory by now. If there are hedges in place, be in the July contract now while waiting for carry to increase into the market as harvest pressure approaches. If anyone has been long puts, they need to roll into straight cash sales or futures positions to avoid time value decay cost. Anyone looking for a revenue enhancement strategy can focus on selling $1 out-of-the-money fall and winter calls on an overbought situation as we move into the April to May time period. I would expect the reason for some rally would be bleeding over strength from corn if a cold, wet spring is experienced. HOGS While the hog flat price is at exceptionally high prices, I have kept my overall rank at a modest seven because we are experiencing a very abnormal event in hogs. The loss of piglets will impact marketings for the next six months. While overall pork supplies can be stabilized to some extent by feeding to heavier weights, the total supply available will tighten significantly. The trade has done a very good job of anticipating the strength for the spring months, but the August to December contract prices are still historically discounted to nearby values. I have to suggest prices will remain very strong until we confirm some type of herd expansion or resumption back Spring 2014



‟ I will also affirm that

exporters are getting more interested at lower prices. The problem, however, is that supply growth will trump these positive near-term demand fundamentals if Mother Nature gives us an average crop.ˮ to normal marketing numbers. This is the big question ahead. How much longer will the piglet loss continue? I am assuming producers are going to quickly get a handle on the disease and warmer weather will help to slow down its progress; but at the time of this writing this is only a hope. So what one marketing strategy works in such markets? The key is not to limit one’s upside potential by being net short cash or futures; but at the same time assure a floor under the market with a long put or a very firm commitment to rehedge when prices start to crash. I believe the real challenge for producers will be to start preparing for the eventual demise of the great bull market of 2013. If anyone has been farming for quite some time, they know all bull market sow the seeds of their own death by rationing usage and stimulating production. At the top it looks like a correction can never happen. All I can suggest to all hog and cattle producers is talk to grain producers and ask them what has happened to them since the summer of 2012. The responsibility is now on every producer’s shoulders to start building a plan to protect the great profit margins of late 2015 into 2016 5

PARTNERS Spring 2014

when I expect expansion will show up and feed costs will start to bounce back aggressively under the weight of improving demand due to lower cash prices.

CATTLE The cattle market is just entering the historic seasonal time period for highs. I see no reason to doubt that the pattern will not repeat itself again this year. With cattle prices at all-time highs, it is always difficult to see the downside risk. But the real concern that will start to develop later in the year will be on the demand side of the equation that is tired of paying high prices for beef when poultry will be much cheaper. Second, while it is going to be slow, I believe placements were bearish for June and will persist through the fall. Finally, if rains return to the western states and pastures start to stabilize, cattle producers do have the financial incentive to expand. What does this all mean? Be very careful with pricing expected inventory for most of 2014. If there was ever a time when producers need to remain flexible on pricing, now is the time. This is when paying $2 to $3 for a put to have a floor is much better than selling cash or short futures and losing out on $10 to $20 of upside potential in the fall and winter contracts. Finally, all livestock producers need to focus in on locking up their yearly feed needs from September to October. However, I would not move into a multiple-year feed buying campaign until the fall of 2015. If prices head to where the USDA suggests, it would then be time to lock up feed for as long as cash flow can be stretched.

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

ABOUT THE AUTHOR Bob Utterback is the Farm Journal Economist and President of Utterback Marketing in New Richmond, IN. Call Bob for strategy updates at 877-898-4324. Email comments on Outlook to The opinions stated herein are not necessarily those of GreenStone Farm Credit Services.


NEWS UPDATE SPRING 2014 Randy Stec Named Executive Vice President and Chief Sales and Marketing Officer As GreenStone’s executive vice president and chief sales and marketing officer, Stec will serve as the leader of many of the cooperative’s customer-facing workgroups. In addition to being responsible for oversight of sales and support for all of GreenStone’s products and services at each of the 36 local offices, he will also now lead the organization’s Capital Markets team and Commercial Lending Unit, as well as the in-house Marketing and Public Relations department.

GreenStone Hosts CLU Customer Forum

“Throughout his career with GreenStone, Randy has served in a number of diverse roles that have allowed him to build a tremendous amount of experience and industry knowledge to prepare him for this position,” said GreenStone President and CEO, Dave Armstrong. “His leadership ability, attention to detail and commitment to putting customers first will be an asset to all GreenStone employees and members, and I look forward to having Randy as part of our executive management team.”

GreenStone staffers recently took part in a two-day event that featured an in-depth look at credit analysis and underwriting of the dairy industry, followed by a customer forum that helped bring to light what members are looking for from their lender.

“I am humbled and honored to have the opportunity to lead a number of GreenStone’s outstanding employees throughout Michigan and northeast Wisconsin,” said Stec. “My focus in this new position will be to ensure that we remain a trusted resource for our customers and continue to make their individual needs the number one priority for all of our staff members.”

The event was well attended with approximately 100 individuals in attendance. In addition to the cooperative’s CLU staff, many other departments and several of GreenStone’s partners were represented at the event to learn more about the challenges facing producers in today’s complex agricultural environment.

Stec, who began his career as a financial services officer, has held a variety of positions with GreenStone during his 30-plus year tenure. He most recently served as senior vice president of sales and customer relations overseeing sales at each of GreenStone’s 36 locations.

Stutzman Reelected Bill Stutzman, of Lenawee County, Mich., and current GreenStone board member, was recently reelected to the AgriBank board of directors. Stutzman, a lifelong cash-crop farmer, is vice president of Stutzman Farms, Inc., president of Farm Resource Management, Inc. (cash grain/ grain marketing) and president and CEO of rural telephone and internet service provider Ogden Communications, Inc. He has

served on the AgriBank board since 2003 and is vice chairman of the Farm Credit Foundations board of directors. Having been a member of GreenStone’s board of directors since 1987, he ends his term this year as new requirements restrict AgriBank directors from holding dual board representation. GreenStone thanks Bill for his many years of service to GreenStone, and congratulates him for his continued contributions to the AgriBank board.

GreenStone customers Bart DeSaegher, Jim Ostrom and Gert van Loon took part in the event, which was hosted by GreenStone’s Commercial Lending Unit (CLU) team. The panel provided a background of their respective operation, and focused on three primary topics: challenges and opportunities facing producers, risk management plans for dairy operators, and credit/loan products used and producers’ relationships with their lender. By attending this event, GreenStone staff members were able to gain a better understanding of the challenges facing producers. The dialogue also helped staff learn what producers desire from their lender and how they can better serve customers.

Spring 2014



GreenStone Scholarships GreenStone Farm Credit Services is proud to offer six $2,000 scholarships to graduating high-school students who are pursuing their agricultural interests at the collegiate level. GreenStone’s scholarship program aims to assist deserving students with continuing their education in order to prepare for a career in production agriculture or agribusiness. Michigan State University GreenStone will award a combined total of $10,000 to incoming freshman that have applied to Michigan State University (MSU) and have selected a major preference in the College of Agriculture and Natural Resources. MSU will automatically send applications to eligible students. Further details about the scholarship and deadline to apply can be found on the application. University of Wisconsin One scholarship will be awarded to an incoming

University of Wisconsin freshman that has selected a major preference in the College of Agriculture and Life Sciences. Applicants must meet specified criteria found on the application form. For additional scholarship information, eligibility requirements, or to print out a University of Wisconsin application, visit scholarships.

GreenStone’s Annual Meeting Approaching GreenStone’s annual meeting is slated for Monday, April 28 at 3:00 p.m. at the corporate office in East Lansing, Mich. Stockholders are invited to attend and participate in the approval of 2013’s annual meeting minutes, candidates for the board of directors in regions three and four, and candidates for the 2015 nominating committee for all regions. Tours of the corporate office building will be available at the conclusion of the meeting.





[28]  GreenStone Annual Meeting

[17]  GreenStone Election Ballot Deadline



[26]  Memorial Day  GreenStone Offices Closed

[4]  Independence Day  GreenStone Offices Closed

PARTNERS Spring 2014


Keep your family safe online • Talk to your children about going on the Internet, just like when they leave the house. Find out where they are going and who they are talking with. It would be beneficial to explore the Internet sites your child frequently visits. • Develop rules with your child about what is acceptable and reinforce safe behaviors for all social media. Parents should “friend” their children on Facebook, follow them on Twitter, and know who they connect with online. Remember, once something is on the Internet it is nearly impossible to remove and can have severe consequences. • If your child’s computer is in their bedroom, move it to a public area in the house so their behavior can be more easily monitored. • Parents should check the browser history to know what sites their children are visiting. Do not allow the browser history to be cleared without parental consent. If you find the browser history empty, that may be a sign that unapproved sites are being visited. • It is a good idea to Google your family member’s names. This may reveal inappropriate behaviors or posts. You may be surprised at the amount of information available that you or your family did not intentionally post.


producers reliance on farm programs for assistance over the last several years, the fact still remains that this is a volatile business that can change on a dime. Having a responsible back stop in place to minimize the financial impact of various economic and natural disasters serves not only producers, but the consumers of our products as well. Consumer Financial Protection Bureau In addition to the brutal weather and signing of the Farm Bill this winter, another little known but far reaching event also occurred in January—implementation of several new regulations from the Consumer Financial Protection Bureau (CFPB). This federal government agency was created as part of the Dodd Frank legislation that was born out of the financial crisis of 2008-2009 to further regulate financial institutions due to the behaviors of a few bad actors that contributed to the credit meltdown. Unfortunately, while the Farm Credit System was exempted from nearly all of the Dodd-Frank provisions (because it was not a part of the crisis), its member institutions must comply with the rules of this new agency. GreenStone has always taken any law, rule, or regulation seriously and does its utmost to comply; yet, the cost and effort is becoming more and more difficult. Let me explain. Effective Jan. 1, 2014, GreenStone and any lending institution servicing 5,000 or more loans is required to comply with six new federal regulations around loan transactions. These six regulations resulted in 23 new or revised policies and procedures for GreenStone. The cost of which to analyze, interpret, develop or modify internal processes, change forms, update information systems, design tracking and monitoring tools, train staff, and implement has, conservatively, cost your association more than $350,000 to date. On top of that, we are just starting on the compliance process for two new

CFPB regulations that go into effect in the middle of next year. Even with this additional regulation and cost of implementation, there is little in terms of transparency around each and every lending transaction that will change for those lending institutions that have always done the right thing by complying with existing regulations. As a cooperative, our customers are our owners. Even if there were not regulations on loan transactions, GreenStone would want to make sure its members completely understood all of the details related to their individual situation. That is just good business because nobody likes surprises! This latest move by the federal government to further “protect” the public will ultimately cost you in terms of reduced patronage, increased transaction processing time, loss of flexibility in the closing process, and of course several more forms at loan closing (I know, you already think we have too many!). By the way, if you are thinking that, because the CFPB agency has “consumer” in its name, none of this applies to full time farmers, think again! Transactions for farm loans will be subject to many of these new rules if your residence in on the property being mortgaged. Do not get me wrong, the consuming public should expect transparency and truth in lending transactions. The problem arises when well-intentioned politicians overreact to situations after the fact on the premise that you can never get too much of a good thing! Political Actions As evidenced above, our industry continues to be influenced by the political system at all levels. Some legislation is welcomed (i.e. the Agricultural Act of 2014 and the State of Michigan Low Interest Loan program) while some of it is not (i.e. Affordable Care Act, water usage regulations, livestock siting, etc.)

which only serves to reinforce GreenStone’s efforts to work on your behalf and with our other industry partners to have a voice, and hopefully some influence, in a consolidating industry. The 2012 Agriculture Census was released in late February and once again indicated that the number of farms was down more than 4 percent nationally since 2007. We now only number about 2.1 million across the country in a population of more than 315 million. This does not bode well for agriculture. In fact, we saw how our industry’s influence has been diminished through the political theatrics and negotiations with the Farm Bill. I can only imagine what it will be like when the current law expires. To that end, we must work even harder together to educate our political leaders at all levels about the importance of a dependable, affordable, and safe food supply. Based on how you responded to our recent call for political action committee contributions, you overwhelmingly agree! In the last few months more than $31,000 was contributed by members, directors and staff for the MI GreenStone PAC and the Farm Credit PAC. I encourage you to read more about the details regarding these initiatives in the "GreenStone Story" article included in this edition of Partners, but I wanted to take this opportunity to thank all of you who participated and assure you we will put your money to good use in carrying out this important mission. As always, we appreciate your business! Please do not hesitate to contact me directly at dave.armstrong@greenstonefcs. com or 517-318-4105 if I can ever be of assistance.

Dave Armstrong Spring 2014



Agriculture Committee chairwoman, Debbie Stabenow (D-MI) and House Agriculture Committee chairman, Frank Lucas (R-OK). Like the MI GreenStone PAC and Wisconsin Farm Credit PAC, the Farm Credit PAC also relies on contributions; however, only eligible Farm Credit employees and directors are able to give to this PAC. GreenStone employees and directors recognize the importance of this PAC and recently contributed $14,610 from 236 participants (that is almost 50 percent staff participation).

ADVOCATING FOR AGRICULTURE As anyone involved in agriculture knows, the business of providing the world’s supply of food, fuel and fiber is a complex business. With so many unknown factors like weather and volatile markets affecting a producer's bottom line, it is important to work tirelessly on the variables that can be affected by influence. GreenStone plays an active role in advocating for agriculture and members throughout Michigan and northeast Wisconsin. One of the most critical ways in which the cooperative is helping to promote the business of agriculture and our members is by working directly with both federal and state legislators. Through our efforts, GreenStone has helped to increase awareness of the importance of agriculture in Michigan and Wisconsin, as well as the United States as a whole. To help further the legislative influence of GreenStone, the cooperative works with political action committees (PAC) to engage with lawmakers who are supportive of agriculture and policies that will benefit our members. GreenStone utilizes the MI GreenStone PAC in Michigan, and the Wisconsin Farm Credit PAC in Wisconsin to build relationships with state lawmakers and educate them about the vital role agriculture plays in local economies. These PACs rely on the generosity of GreenStone members, employees and directors to operate. Through a recent PAC fundraiser drive, members in Michigan were able to allocate a portion of their patronage refunds to support the MI GreenStone PAC. This successful drive raised more than $17,300 to help further our legislative outreach efforts. On a federal level, GreenStone works with the Farm Credit PAC to promote agriculture to lawmakers in Washington, D.C. The relationships built through this PAC were especially important in recent months during the final stages of the 2014 Farm Bill negotiations. GreenStone has relationships with many legislators who played a critical role in getting the legislation passed, including Senate 9

PARTNERS Spring 2014

In addition to supporting candidates through various PACs, GreenStone also plays an active role in industry events that bring agriculture and key decision makers together. Many GreenStone directors, executives and staff members recently took part in Michigan's Ag Day at the Capitol event. The day includes the delivery of Michigan agriculture themed gift baskets to legislator’s offices in downtown Lansing and a GreenStone display setup in the Capitol building alongside numerous commodity groups. The day is capped off with a reception for agricultural stakeholders and legislators hosted by GreenStone. As agriculture continues to evolve, it is more important than ever that the industry’s collective

During the AgriBank annual meeting, GreenStone board members accepted three awards for the association’s support of the 2014 Farm Credit PAC drive, including highest number of contributors, highest percent increase in number of contributors, and highest percent increase in total dollars contributed.

voice is amplified. GreenStone will continue to take an active role in doing our part to advocate for agriculture and our membership. You can keep up-to-date on the latest happenings in Lansing, Madison and Washington, D.C. in the Legislative Matters section in each issue of Partners.


GreenStone Recognizes Top Sales Staff of 2013 While offering competitive financial products and services to more than 23,000 members is important to GreenStone’s bottom line, building meaningful relationships with those members is equally important. The sales staff at GreenStone takes great pride in being more than a lender for our customers. For many members, our staff is an extension of their operation and a trusted resource. GreenStone recently recognized its “best of the best” in sales performance for 2013 with the Circle of Excellence awards.

Platinum Award Winners Traditional FSOs Luke Bakker, Grand Rapids, MI David Meyering, Cadillac , MI Lee Rodgers, Schoolcraft, MI Duane Paturalski, Berrien Springs, MI Tyson Lemon, Berrien Springs, MI Martin Kasperski, Lapeer, MI AgriConsumer FSOs Andrew Kudwa, Ann Arbor, MI James Cole, Howell, MI Melissa Humphrey, St. Johns, MI Commercial FSO Gayle Olson, Little Chute, WI Sales Leadership Tim McTigue, Southwest Region

The Circle of Excellence program is a way to recognize and reward those lending and financial services staff members who are the top performers within the association.

Gold Award Winners

Each winner, along with the support staff, was recognized at the eighth annual GreenStone Circle of Excellence awards banquet Feb. 28 in East Lansing, Mich. The following GreenStone staff members represent the 2013 Circle of Excellence Platinum, Gold and Achievement award winners.

Traditional FSOs Wayne Sevilla, Bay City, MI Larry Sheridan, Mason, MI Peter Hirschman, St. Johns, MI Laurie Schetter, Manitowoc, WI Kim Knoerr, Bay City, MI Dave McKenny, Lakeview, MI AgriConsumer FSOs Ann Klemp, Clintonville, WI Brent Voss, Traverse City, MI Ashlee Minnick, Monroe, MI Commercial FSO Troy Click, Ionia, MI Crop Insurance Specialists Amanda Kutchey, Lapeer, MI Earl D. Zelmer, Berrien Springs, MI Amy Stottlemyer, Charlotte/St. Johns, MI Accounting & Tax Specialists Ralph Wesoloski, Coleman, WI Barb Martell, Sturgeon Bay, WI Nicole Wesoloski, Little Chute, WI Sales Leadership Jim Nowak, Mid-East Region

Achievement Award: Maryann Steimel, Traverse City, MI

Spring 2014



Today, Chad and his wife, Leslie, own and operate a 150-head dairy operation in Minden, a small berg nestled on the east side of Michigan’s Thumb.

START-UP SUCCESS STORY By: Jennifer Vincent Kiel

Bringing a start-up dairy operation online is no small task. To make it profitable, that requires a vision… a goal grounded by a whole lot of hard work, ambition, determination and ultimately, endurance. Chad Vogel, 34, has put in a lot of long hours both on and off the farm, but he has brought early goals he laid out for himself in his teenage years to reality.

Shannon Arbaugh, GreenStone financial services officer says, “Chad and Leslie make a fantastic team, and teamwork is absolutely one of the attributes contributing to the success of their operation.” At the age of 17, and after raising hogs, sheep and steers to show at the county 4-H fair, Chad realized he eventually wanted to be a full-time farmer. Not coming from a farm family, he knew that would be a challenge. But, even before he set his goal to be a farmer, he had a different aspiration. As a young lad of 8 years, he had a love for animals and taking care of them. “I looked up to our vet Duane Schroeder, and he really influenced me,” Chad says. “I liked learning how to make things better. It made me want to be a vet.” The 5 a.m. alarm to feed the calves did not derail his enthusiasm, and when, at age 11, his cousins needed help on their farm, he was happy to be on-call. “They were milking about 200 cows and needed some help with hay. They called for my older brother, Curt, but he wasn’t around, so I offered,” Chad says. “I was ready and willing to stack hay, which eventually led to more employment and by the time I was 13 or 14, I was helping with the calves and scraping the barns.” It was the diversity of not only cropping, but also having animals that peaked Chad’s interest. “I learned so much,” he says. “This was a real business and their sole income. If there was something broke, you fixed it.” He later became full time at the dairy, serving as the herdsman in high school. After graduating from Deckerville High School, and after fleeting thoughts of possibly pursuing a career in engineering, Chad started at Michigan State University pursuing a degree in animal science and agribusiness. “Engineering intrigued me, but I didn’t want to be in an office behind a desk, and I didn’t want to leave the country life,” he says. On weekends he would return to work on his cousins’ dairy. In the fall of 2000, on a night off while attending a wedding, he met his future bride, Leslie, who grew up a town over. The courtship began. After getting his bachelor degree he took a year off school before returning to graduate school to become a vet. A year away from graduation and with help of his parents, Larry and Suzette, he bought an old dairy operation just a couple miles south of where he grew up. It had been out of production for a few years, but the buildings and 20 acres showed promise.


PARTNERS Spring 2014


A year later in 2007, after graduating and signing on as an associate vet for the Thumb Veterinary Services, Chad obtained a loan for tractors and other equipment from GreenStone. Through a Farm Service Agency loan, he moved the farm into his name and began cropping soybeans and corn on 90 acres. “I did that for a couple of years, but my goal was to set up a dairy,” he says. Leslie, who became his wife in 2008,

was aware of his farming passion and accepted it, “but was a bit nervous,” Chad says. And, who would not be? Shortly after the wedding bells stopped ringing, Chad was back at FSA for a loan to buy heifers and concrete. “The place needed some work and I wanted to buy 60 heifers to start with,” he says. The loan was approved, work was completed and shortly before buying the heifers, the market crashed. “I was

already in with both feet. There was no looking back now, even though the price of milk was below production,” explains Chad, who started utilizing operating loans from GreenStone in 2009. “The one good thing about the situation and the depressed prices was I was able to buy 90 heifers to start with. I figured it had to get better.” And, it did. But life just got busier. Spring 2014



‟I typically put in 40 to 50

As a vet, Chad calls on about a dozen herds in a three-county area regularly, in addition to being on-call. “I split my time between being a vet and a dairyman pretty evenly, but it’s a lot of work,” he says. “I typically put in 40 to 50 hours as a vet and 60 to 80 hours as a dairyman. It’s average to have an 120-hour work week. It takes a hardy person and the conditions are not always the best (referencing pregnancy checks in the dead of winter ), but it’s what I want to be doing… maybe just a little less in the future.”

hours as a vet and 60 to 80 hours as a dairyman.ˮ

Arbaugh says, “Chad is one of the hardest working people I know. I truly don’t know when he sleeps, but he always has a smile on his face and you’ll never hear him complain. I’ve enjoyed working with him over the past few years and watching his operation grow. I’m excited to see what the future has in store for him. His work ethic is certainly one of the keys to his success.” Eventually, Chad says he would like to build the herd to 200 cows, milk with robots and expand his cropping systems to produce all his own feed. “Right now we’re milking three times a day and nobody likes the night shift.” Chad has three full-time employees and one part time, but says maintaining good labor in the dairy industry is sometimes difficult. “I understand that moving forward, dealing with unexpected labor issues will continue to be a challenge.”

Busy on the farm, off the farm and in the house. Chad Vogel and his wife, Leslie, who works as an occupational therapist, have three young children— Owen, 4, Gage, 9 months, and Allison, 3.

From an early age, Chad has not shied from hard work and lofty goals. The dividend… he is a first generation dairy operator—not a simple feat and not a title many can claim these days. “It’s not an easy life, but it’s a good life,” he says. “This is where I want to be.”



When you were 8, what did you want to be when you grew up?

Chad: “ A vet”

Q: When did you first realize that you wanted to farm for a living?

Chad: “When I was 17” Q: W  ho do you look up to; who is your mentor?

Chad: “My cousins, Gary and Tom Vogel and Duane Schroeder, who is a vet”


PARTNERS Spring 2014

Q: What is the biggest challenge

for young, beginning, or small farmers today?

Chad: “The economics. Producing the volume to cover costs. Also, land availability.”

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

Chad: “Be open to change and adapt as

you need to. Set goals and strive to achieve—it’s how you get there.”


Keeping up with the Farm Bill

crops, organic farmers, bioenergy, rural development, and beginning farmers and ranchers. This was all accomplished in a mere 357 pages of legislation. Read it in its entirety at: Breaking down projected outlays of the act, the Congressional Budget Office projects that 80 percent of outlays under the 2014 Farm Bill will fund nutrition programs, 8 percent will fund crop insurance programs, 6 percent will fund conservation programs, 5 percent will fund commodity programs, and the remaining 1 percent will fund all other programs, including trade, credit, rural development, research and extension, forestry, energy, horticulture, and miscellaneous programs.

The 2014 Farm Bill is designed to provide more choices for producers. For example, crop producers will have the choice between the Price Loss Coverage option, which better handles heavy losses over multiple years and works in tandem with crop insurance, or the Agriculture Risk Coverage, which is a more traditional insurance approach with shallow-loss protection based on price and yields. Generally, the bill adds these crop insurance options, makes major changes in commodity programs, streamlines conservation programs, modifies key provisions of the Supplemental Nutrition Assistance Program, and expands programs for specialty

Significant for agriculture and for the state of Michigan, a new farm law, the Agriculture Act of 2014 (also known as the 2014 Farm Bill) was signed on Feb. 7, 2014, and it will remain in force through 2018. The United States addresses agricultural and food policy through a variety of programs, including commodity support, nutrition assistance, and conservation. The primary legal framework for agricultural policy is set through a legislative process that occurs approximately every five years, and such culminated in this 2014 Farm Bill. Separating political issues and pulling individual relevance from the act into individual action means some time should be spent keeping up with implementation actions which will follow by the United States Department of Agriculture (USDA).

The USDA presents many resources to provide assistance in understanding the legislation and its implementation plans. There is a resourceful tool they have made available called the Economic Research Service (ERS); you can sign up for the ERS Farm Bill e-newsletter at ERSFarmBillNewsletter to be alerted to a broad base or a targeted individual area of interest for your operation. Through these resources you will find a tremendous amount of additional information designed to add value to your decision making processes for programs and practices. Keeping a watchful eye on implementation of the 2014 Farm Bill is the next important step to make certain new rules and provisions will be workable for farmers in our Michigan and northeast Wisconsin territory. All indications point to the fact there is a lot of opportunity for the bill to have a positive impact on agriculture and rural communities. Of course, there is nothing within the ERS resources and the USDA implementation plans that serve as a replacement for the hard work on the farm that you do to make yourself successful.

Spring 2014



Directors’ Role Have you ever questioned the primary role of the board of directors, wondered how involved they are in the day-today operations, or even pondered what some of their biggest challenges might be? We know some of our members have asked these exact questions, which is why three directors are helping to answer them. What is your role and responsibility on the board of directors? What do you see as some of the most significant challenges facing the directors? How is the role different from what was anticipated? And for one, how has the role changed over the years?

Andy Snider THE FARM CREDIT ADMINISTRATION STATES THE BOARD OF DIRECTORS IS RESPONSIBLE FOR THE FOLLOWING: • Establishing policies • Providing strategic direction • Hiring the CEO and providing for a plan of succession • Overseeing management • Overseeing all major institution functions

Board governance training and experience on other boards has taught me that our responsibility is to protect the asset to the company, hire our manager who then in turn hires his team, and then set policy, direction, and vision for our future. This should be a well-run profitable association. As a director, we do not have access to customer personal files, loan documents, or any other personal financial information of members. We are not involved in loan determinations... day to day operations are the staff's responsibility. As a member of the


PARTNERS Spring 2014

Audit Committee, on a quarterly basis, directors may see a list of any large delinquent loans and the action being taken by our credit officials. As a responsibility to my fellow members of the association, it is my goal to do my part to ensure dependable, affordable, and available financing for us now and for the next generation. This role has unfolded mostly as anticipated, however there is a lot to learn about the more macro concepts of the financial world and all of the regulations included. I continue to work at this and believe that I learn something at every board meeting.


Pause for Applause

Dale Wagner In my opinion, the role of the director consists of three major parts. Number one being to hire the CEO and hold him accountable to the policies and direction the board has set for GreenStone. The second is to make sure those policies and directions are in the best interest of the shareholder members. Number three is to monitor the financial health of GreenStone by reviewing the audit, finance, credit, and human resources reports, along with other reports from the senior leadership team to ensure we

continue to be a safe and sound source of credit. There are many other responsibilities as a director, including but not limited to approving patronage distribution, being involved in legislative and public policy that affects agriculture and rural businesses, communicating with members, and providing a positive image for GreenStone and the Farm Credit System. I think it is necessary the board is made aware of potential problems, but I believe it is equally as important the board is not involved in the day to day operations and loans decisions.

Cathy Webster When I became a director in 1992, I had no certain expectations. I had worked in the financial field for 25 years at that time and I felt I had the experience needed to make good decisions and looked forward to meeting whatever challenges there might be. I think that one of the biggest challenges is to make the right decision in selecting the CEO and also in regard to mergers. If your decision turns out to be wrong, it could be damaging to GreenStone and all of the member/borrowers. Director responsibilities have changed some over the years. We have become politically active in the past few years to advocate for agriculture, our farmers and ranchers, and for the Farm Credit System. Farm Credit Administration (FCA) now requires you to have a Compensation Committee and also an Audit Committee. In addition, GreenStone has a Finance Committee, a Legislative and Public Policy Committee and an Executive Committee. FCA would also like to see more direct involvement of directors in the business than in prior times. But we must also let management manage and not try to micro manage the business. Other than questions about interest rates, the question that surfaces the most from members is in regard to director involvement in approving loans and our access to member loan files. The only time a director has any involvement in a loan is when a borrower requests an appeal hearing in regard to their loan. Then, and only then, a director is asked to be a part of the hearing; yet, there is no access to the loan file. The director is given only the information needed to understand what is happening, and the information does not leave the office.

Several GreenStone customers were recently honored as Platinum award winners at the National Dairy Quality Awards. Congratulations to: Donald Beattie, Gordon Dick, Duane and Janet Molhoek, and Dennis and Doris Tubergen. Congratulations to GreenStone customers Paul and Renee Schmidt of Bonduel, Wisconsin, who recently received the Wisconsin Master Agriculturist Award. GreenStone operations intern, Jasper Cunningham, recently competed in the American Farm Bureau Collegiate discussion meet. The event was held in Virginia Beach, Va. in conjunction with the Young Farmers and Ranchers Leadership Conference. Jasper competed in two preliminary rounds and advanced to the sweet sixteen (semifinals)—receiving a scholarship from the CHS Foundation. Congratulations Jasper! Geert and Gertie van den Goor of Marlette, Michigan, were recently recognized for their outstanding achievements with the 2014 Michigan State University Dairy Farmer of the Year award. Congratulations Geert and Gertie! GreenStone customers Scott and Alissa Ferry of Litchfield, Mich., were recently selected as national winners at the National Outstanding Young Farmers Awards Congress. Congratulations Scott and Alissa! GreenStone member Ben LaCross had the honor of introducing President Barack Obama prior to the Farm Bill signing at Michigan State University. Thanks for representing Michigan agriculture at this important event, Ben!

Have something to share? Submit your "Pause for Applause" to: Spring 2014



Have you heard about the thirsty future? By: Alan Hahn

Remember the drought in 2012? It pushed some water supplies to dangerously-low levels and raised concerns about future droughts. Drought conditions were again in the headlines recently with the stressed conditions in the western United States.


PARTNERS Spring 2014


In order to raise awareness, last year the United Nations declared 2013 as the “International Year of Water Cooperation.” There have been numerous articles that have discussed future forecast of water supplies and growing populations, and most of these articles do not have a favorable outlook. According to some sources, water is becoming an endangered resource. The United States State Department said, “The need for fresh water will exceed the supply by 40 percent by the year 2030.” In a March 22, 2013 article in the Washington Post, author Steve Traction writes, “The indisputable fact is that water scarcity is rapidly becoming a significant factor in the way of life in the U.S…the problem will become critical in just a decade or two…the range of effects may include…long-term restrictions on home and community water usage; significant declines in agricultural outputs as well as meat and dairy

‟Problems are

averted and solutions are found when we use science, ingenuity, and creative minds in a free market.ˮ

produce that require huge amounts of water for irrigation and sustenance of livestock; shortages of just about every product made using waterdependent manufacturing processes… and disruptions or complete shutdown of several critical sources of hydroelectric power.” More bad news on the water front: The Christian Science Monitor (referencing a report in the Journal

‟ Water use in the United States peaked in 1980 at 440 billion gallons per day. Twenty-five years later, we are using less than 410 billion gallons a day, even though our population increased by 70 million people.ˮ

of Science) reported a few years ago that the snowpack along the Rocky Mountains is as low as it has been in the past 800 years. But the population and demands are far greater now than they were in the 1300s and 1400s… including irrigation and power generation needs. The future of water supply looks bleak... Before we resign to an unquenchable thirsty future, there is some good news. In a recent book, The Big Thirst: The Secret Life and Turbulent Future of Water, Charles Fishman looks at the global water issue. Interestingly, Fishman explains that Americans use less water today than we did in 1980, not just in per-capita terms, but also in absolute terms. Fishman notes water use in the United States peaked in 1980 at 440 billion gallons per day. Twenty-five years later, we are using less than 410 billion gallons a day, even though our population increased by 70 million people. Water conservation practices and new drought resistant crops have helped us get the most out of the planet’s fixed amount of water. Dire news about water supply and environmental disasters are not new. There have been plenty of predictions of certain environmental/ecological doom. Paul Ehrlich warned in his 1968 book “The Population Bomb” that, among other things, nothing could curtail the pending mass starvation in the 1970s. He was

wrong, as have been a litany of environmental prophets of doom. While droughts and all genuine environmental threats should be taken seriously, we need not get caught up in the doom and gloom of the environmental naysayers. Problems are averted and solutions are found when we use science, ingenuity, and creative minds in a free market. So, should agriculture be concerned about water supply? Yes, we cannot afford to ignore any environmental threat. But focus on the facts and solutions, rather than hysteria. As the late economist Julian Simon said, “There’s nothing wrong with worrying about new problems, we need problems so we can come up with solutions that leave us better off than if they’d never come up in the first place.” Also see, “Drought Planning: Maintaining Agricultural Production with Less Water,” Fall 2012 Partners (Dr. Michael Sklash).

ABOUT THE AUTHOR Alan Hahn is an Environmental Professional and Business Development Manager at The Dragun Corporation in Farmington Hills, Michigan The opinions stated herein are not necessarily those of GreenStone Farm Credit Services.

Spring 2014


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Partners - Spring 2014  

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