Promoting the business success of our customers and the rural community
+W inter 2018
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Accounting Services Feature
+2 017 Patronage
A LEGACY OF
LOGGING Harmon pg. 5
WINTER 18 5 YBSF Feature. Time spent together in the is treasured by many families each year. For the Harmon family, their time together in the woods not only creates memories, but a business passed down for generations.
21 GreenStone Story. Ultimately, we cannot control the market or the income for farms, but we do have the expertise to help you manage the financial aspects of your business.
27 Country Living Feature. When Rick was looking to relocate, he had a shortterm goal of finding a place to set up his home, with a long-term vision of having a special spot of his own to hunt.
34 Crop Insurance. Changes to the crop insurance provision of the 2014 Farm Bill allows farmers with qualifying crops in eligible counties to exclude low yields in exceptionally bad years from their production history.
37 Tax Feature. Don Morse has never been afraid to try new things on his farm. But thereâ€™s one area he will leave to the experts: his accounting and tax preparation.
3 CEO Comments. Dave Armstrong addresses feedback from the 2017 customer satisfaction survey. 9 Guest Column. If your goals include healthy family relationships and transition of the business to the next generation, consider the addition of an in-law to your family to be a great opportunity. 11 Market Outlook. It is a new year with new challenges, new opportunities and time to review how to improve one’s overall marketing plan. 15 Patronage Returns. Being a member-owner of GreenStone means you share together in the success of your cooperative. 23 Legislative Matters. GreenStone’s voice for rural communities and agriculture continues to be recognized and valued. 24 PAC Progress. Today, we see an abundance of policy issues that need attention for the growth and sustainability of a sound agricultural industry. 25 Directors’ Perspective. To round out our series on board of director committees, we present the final committee focus in this issue: the Finance Committee.
31 Health and Wellness. As everything settles down, going back to work after the holidays and readjusting to “normal” life can also cause heightened emotions and an overpowering feeling of stress. Consider these tips to help cope with the transition. 30 Living Tips. Regardless if you exceeded your holiday budget or not, these tips can help keep your finances in shape for the New Year and beyond!
14 Blog Brief
16 Member News 18 Great Lakes Leadership Academy 18 Candid Comments 19 Behind the Scenes 20 Pause for Applause 20 Calendar of Events
31 Blog Brief 32 Commodity Cuisine... Overnight Blueberry French Toast
33 Tech Tip 35 Crop Insurance Calendar 36 Crop Insurance News 38 Tax Calendar
Publisher’s Note: Surprise, it’s a new year! All right, that is certainly not a surprise any more, but it doesn’t change the fact that each year seems to move surprisingly faster than the last one. Why? Why do the days fly by and the weeks turn to months at such a speedy pace? For many of us at GreenStone, I believe it is the result of a personal and professional drive deep down to continually improve—to do better, a never ending churning of new ideas, a culture to be an engaged part of a positive future, and maybe even a little bit of desire to simply be the best. When you add these things up, it is no wonder our days fly by as we work to accomplish the goals we have set for ourselves, and the excitement of it all has us looking with haste to the future. So here we sit in January 2018, and the following pages of this Winter issue of Partners contain a sampling of some of those exciting results of 2017’s race. • Our new Grow Forward Grant program provides financial support to young, beginning and small farmers for educational and business initiatives. • A series of Producer Forums will be held throughout 2018 to provide relevant market and technology information for your farm and business. • Our enhanced tax and accounting team is in full force to provide you a tailored approach to the financial services you need. • And what better way to celebrate the race of 2017 than by benefiting together through a $50 million patronage return to our members in March. Think about your 2017, and all the plans you are implementing to do even greater things here in 2018. Then, I hope you will take a much deserved break to appreciate your own accomplishments while you read this issue of Partners. Best wishes for a strong, speedy, and positive 2018! — Melissa
This newsletter is published quarterly for the customers of GreenStone Farm Credit Services. Editorial Mackenzie Jandernoa Laura Moser Melissa Rogers
Art & Design William Eva Jackie Sanch
Partners GreenStone Farm Credit Services 3515 West Road East Lansing, MI 48823 800-444-3276 email@example.com
Customer Feedback Focus GREETINGS FROM GREENSTONE, I HOPE YOU HAD A JOYOUS HOLIDAY SEASON! IN THE FALL ISSUE OF PARTNERS, I PROVIDED AN OVERVIEW OF GREENSTONE’S 2017 CUSTOMER SATISFACTION SURVEY METHODOLOGY AND RESULTS. MY PURPOSE WAS TO PROVIDE YOU WITH A HIGH LEVEL OF TRANSPARENCY REGARDING HOW YOU, OUR MEMBERS, RATE OUR LEVEL OF SERVICE. TO RAISE THE TRANSPARENCY LEVEL FURTHER, I WILL NOW DIG INTO SOME OF YOUR COMMENTS... THE MEANS BY WHICH WE HOPE YOU WILL CONTINUE TO PROVIDE US FEEDBACK YEAR-ROUND.
While the 2017 satisfaction survey resulted in a strong 94 percent satisfied or very satisfied rating, it leaves 6 percent of the respondents having a lower level of satisfaction. Naturally, it would feel good to only talk about the highly satisfied ratings. However, we learn the most about how to improve from those members who unfortunately had a less than acceptable experience with us. As mentioned in my last article, I know you get many surveys and the last thing you want to do is complete another one, but you did complete ours in relatively high numbers which tells me you care about your cooperative and want to make sure your voice is heard to make us better, and for that we are truly grateful! In fact, of the 1,658 surveys returned, 1,319 of them included comments, which means nearly 80 percent of those who returned a survey also took additional time to explain how they felt about our service. While these comments were overwhelmingly positive, it is the 93 respondents indicating some level of dissatisfaction that I want to address. The areas cited most frequently as reasons of dissatisfaction included: 1. Too much time between application and loan closing. 2. Slow to return calls or no return call at all. 3. Interest rates are not competitive. 4. Loan statements are confusing and hard to understand. 5. Issues using the online banking system, including the secure portal, My Access. 6. Underwriting process requires too much collateral or financial information.
Winter 2018 — Partners
Two other issues of concern included: 1. GreenStone mailings whereby the document was only addressed to the husband in situations where both spouses are coborrowers. 2. The number of women in leadership roles with the organization as well as the board of directors. While this article does not allow me to review each of these issues in depth, I will address a few of them. First, not returning a phone call, e-mail, text, or other form of communication (when requested) is not acceptable! Our staff are trained to get back to members within 24 – 48 hours or any other timeframe agreed upon by both parties. Of course, we are human and certainly make mistakes, but not responding to a member’s communication is not our standard operating procedure! Based on GreenStone’s market share, loan growth, and overall customer satisfaction survey responses, I believe GreenStone offers very competitive interest rates over a wide range of terms to meet the many diverse needs of its members. That does not mean in every situation we have the lowest rates. Yet, when the overall value proposition is considered, GreenStone is more often than not selected as the provider of choice over its competitors. Remember, interest rates have been at historical lows over the last several years with short-term rates in particular beginning to increase with the Fed Funds rate hike of 0.25 percent in December 2015 and 2016, followed by three more in 2017. The current forecast predicts additional rate increases. If you are sensitive to a rising rate environment, you may want to look at fixing interest rates to minimize your exposure to a rising rate environment. Also, remember to consider the impact of your patronage refund when comparing your interest rate to competitors. On average, the patronage refund reduces your effective interest rate by about a half a percent. Finally, ensure you are appropriately comparing other terms and conditions of your loan to competing products, considering things like prepayment penalties, loan purpose, term, length of amortization, collateral required, etc. Contact your financial services officer to further review these factors. While few in number, I also want to address comments regarding why only the husband’s name is used in the address field on certain types of association correspondence when both husband and wife (or significant other)
Local Contacts 800-444-3276 Bad Axe, Bay City, Caro, Sandusky: Dave Ballman Ann Arbor, Howell, Lapeer, Mason: Jim Nowak Adrian, Concord, Hillsdale, Monroe: Erin DuBois Allegan, Berrien Springs, Schoolcraft: Tyson Lemon Charlotte, Grand Rapids, Hart, Hastings, Ionia: Melissa Humphrey Alma, Corunna, Lakeview, Saginaw, St. Johns: Cindy Birchmeier Alpena, Cadillac, Escanaba, Mt. Pleasant, Traverse City: Luke Bakker Clintonville, Coleman, Little Chute, Manitowoc, Sturgeon Bay: Nicole Wesoloski Commercial Lending Unit: John Jones
are co-borrowers. The default process at GreenStone for recurring correspondence like bills, statements, and rate notices is to use the person’s name designated as the “primary” borrower by both co-borrowers. If members choose to have, for example, both the husband and wife’s name on these type of correspondence, contact your local branch to have your account changed to include both borrowers’ names. Finally, I also want to address the lone comment received regarding the lack of gender diversity in GreenStone’s workplace. The following statistics represent the number of female employees at GreenStone in all levels of leadership including the board of directors as of Dec. 1, 2017. Female representation on the seven member Executive Leadership Team may seem somewhat limited with 3 females, but equates to 43 percent of the team. Representation at the next level of organizational leadership is similar with 36 of our “extended” leadership team members being female or 44 percent. GreenStone’s board of directors is comprised of 16 positions, of which 14 are elected by the membership and two appointed by the board. Today, GreenStone has three elected female directors which is 19 percent of the entire board and 21 percent of the elected positions. GreenStone is very committed to a diverse workforce that truly represents all demographics in the territory it serves and will continue to seek additional diversity wherever possible. As I mentioned earlier, while it is impossible for me to address each of the 93 dissatisfied comments made about various areas of our service, I ask that you reach out to either me directly or your regional vice president (see above) should you ever encounter a situation you have concerns about and/or are dissatisfied with. Be assured your concerns will
be taken seriously and you will receive personal attention. If we are unable to resolve the concern to your satisfaction, we will give you an honest and direct explanation as to why. We truly value your business but, more importantly, we value our relationship with you! I hope the information in both my Fall 2017 comments and this article provided you with a balanced, informative view of our customer satisfaction process and results while shedding some light on a few comments raised by members in the survey. We may fumble from time to time like all human beings do, but we believe the key is how we recover and what we take away from these opportunities to learn how not to make the same mistakes over and over. Let me close by thanking you for making GreenStone your financial services provider of choice. Please feel free to contact me directly if I can ever be of assistance.
Partners — Winter 2018
A LEGACY OF
LOGGING THE FORESTS AND WOODLOTS OF NORTHERN MICHIGAN SERVE AS FAMILY GATHERING SPOTS FOR MANY MICHIGANDERS. FROM CAMPING AND HIKING TO HUNTING AND FISHING, TIME SPENT TOGETHER IN THE WOODS CREATES MEMORIES FOR HUNDREDS OF FAMILIES EACH YEAR. FOR THE HARMON FAMILY, THEIR TIME TOGETHER IN THE WOODS NOT ONLY CREATES MEMORIES, BUT A FAMILY BUSINESS PASSED DOWN FOR GENERATIONS.
Winter 2018 â€” Partners
“If the kids wanted to spend time with their dad, they knew they needed to be in the woods,” says Mary Harmon, who with her husband, Chuck, were the third generation to own the family business, Harmon Logging. “It was the same when our son, Greg, had small children. It’s just in their blood. It’s where they want to be.” Today, Greg and his wife, Anne, and their children, Kyle and Brooke, are the owners and operators of the business. Together, they work six days a week, year round, to meet the demands of the timber industry in northeast Michigan. Based in Mikado, Michigan, the Harmons are in the heart of state and federal lands supplying them the work they need to keep their business growing. “We will work with larger mills to fulfill their contracts or we will work with private land owners to help them with their forestry management,” says Anne Harmon. “There is a lot to managing the
forests, either clearcutting to replant or thinning areas. The foresters have management plans in place that we help them with.” Forest management can include replanting trees to support endangered species like the Kirtland Warbler or Eastern Massasauga rattlesnakes, or simply clearing areas to promote natural regeneration to maintain a healthy forest. The trees removed are sold to mills or other processors. “We will use the whole tree,” Anne adds. “If the mill only wants the logs, we will chip the tops and branches and send them to another processor. We may work with three or four processors on one parcel.” In addition to working with state and federal foresters, the Harmons work with private landowners looking to manage their own lands. Regardless of the contractor they work with, the Harmons use sustainable management practices and focus on leaving the area in better condition than they found it.
Partners — Winter 2018
I like what I do as much today as I did 30 years ago when I started working with my dad,” Greg says. “I worked in the oil fields for a couple years after college, but that wasn’t for me. I want to be out here in the woods.
“We will turn work down if we are asked to do something that is going to harm the area or our equipment,” says Greg Harmon. “Part of our job is educating the customer on what our equipment can and can’t do, and the best practices when it comes to forestry management.” When they work on public lands, they work closely with the forester involved. The Harmons will coordinate their plans with the forester and then the forester will make routine visits while the work is being done. They also participate in the Sustainable Forestry Initiative to keep up to date on information and best management practices through continuing education courses and other information. Greg and Anne assumed the family business in 2012 after being in a partnership with his parents for several years. Working with GreenStone, the Harmons were able to put together the financial plan needed to transition the business to the next generation. “Harry (Tope) was really good at understanding our business,” Greg says. “He could understand more than what we put on the paper. He understood how our business operates; he did more than just look at our application.” GreenStone has worked with logging and timber industries for several years and sees great potential in the industry with the additional processing coming into the state. Currently, the timber industry creates 96,000 jobs and adds $20.3 billion to the state’s economy. “It is an exciting time for Michigan’s timber industry with the new Arauco plant coming on line in Grayling in 2018. They are going to need a lot of product. It has given new energy to those in the industry,” says Harry Tope, GreenStone financial services officer. For the Harmons, the increased processing and continual work with the public lands gives them optimism for the future. “Our business is in step with the economy,” says Greg Harmon. “When the economy slowed and the housing market was bad in 2009, our business suffered. But now with a stronger economy and more building going on, we are busy.” Like so many other businesses, speed and efficiency is the key to the Harmon’s success. Their efficiency is garnered by
Winter 2018 — Partners
working with the latest equipment and technology available. They rely on a fleet of John Deere equipment programmed with JDLink to manage their equipment. The JDLink technology helps them troubleshoot potential problems before they happen so the equipment and crew can keep running. The fully automated processing increases the level of safety for the workers, and lowers insurance costs. “Once someone picks up a chainsaw our Workers Compensation jumps to about 30 cents for every dollar we pay in payroll,” Anne says. “We can’t run a business like that, so nobody picks up a chainsaw except Greg.” The Harmons run their operation with primarily family members and two truck drivers. The heavy family involvement means time off from the business is rare. “We’ve never taken a family vacation,” Greg says. “This isn’t the type of work we can just hand to someone for a few days while we are gone. And, finding capable, willing employees is hard. It is one of our biggest challenges.” The improvements in equipment allow the Harmons to work 2530 acres of trees a week. Improvements in technology allow Greg to manage his business while in the woods. “It’s my rolling office,” Greg says referring to his equipment. “With bluetooth and my phone, I can keep running the business while I’m out here working. It does get kind of loud, but we manage.” Managing the business, means organizing logistics between job sites, coordinating deliveries to three or four processors at a time and maintaining relationships with customers. The Harmons, and the timber industry overall, are well established so maintaining existing relationships is important to their business.
“We have a reputation of doing the right thing and we have to protect that. Most of our work is within an hour of where we are, so people know us and the type of work we do,” Greg says. Overall, for Greg and his family, working together, and doing something with a passion, is the mark of success. “I like what I do as much today as I did 30 years ago when I started working with my dad,” Greg says. “I worked in the oil fields for a couple years after college, but that wasn’t for me. I want to be out here in the woods.” Those working with the Harmons, including the GreenStone team, appreciate the dedication they have to their industry. “Working with the Harmons has been a rewarding experience because this family knows its business and they are eager to share that knowledge,” Harry says. “Their entire family has a rich history in the industry and when you work in an environment that is your passion, positive results are a foregone conclusion.” ■ ➡ Above: Adding new equipment and technologies helps the Harmons increase efficiencies. ➡ Opposite page top: Greg and Anne Harmon recently took over the ownership and management of the family business. ➡ Opposite page bottom: Siblings Brooke and Kyle Harmon work alongside their parents every day.
Partners — Winter 2018
The In-Law Advantage By Barb Dartt, DVM, MS
IMAGINE A NEWLY MARRIED COUPLE, JOE AND JANE. YOUNG AND IN LOVE, THEY LIKE TO SPEND TIME TOGETHER AND SHARE EXPERIENCES. HERE IS THE SCENARIO:
Joe’s job is a demanding one. His hours are long and many days he can’t say when he will be home. Over the last three months, he actually missed the supper Jane prepared every single time he told her he “thought he would be home” by a particular time. Joe really loves the company he works for and often has ideas to improve the business. He has tried to share these ideas with his boss, Bill. But Bill is often unavailable (he works long hours, too). When they are together, and Joe has a moment to share a new approach, Bill has not shared
Winter 2018 — Partners
Joe’s excitement. Usually, he says, “We have tried that before, Joe. That just won’t work around here.” Joe has been in this job for three years now. He is doing about the same work as when he started. He had been hoping to take on some additional responsibilities. In fact, those were some of the ideas he shared, the ones that seem to get shot down by Bill. Joe is making the same pay he did the day he started. Jane’s good friend just got a job at a similar business – and he’s making 25 percent more than Joe does right now.
If you can share the perspective of the family and the business with your in-law, she (or he) are not limited to their spouse’s perspective as the only view of the business.
Joe has a co-worker, Ted, who has been working at the business for eight years. Ted has a young family and his wife has a demanding job. Ted leaves work three days per week at 5 p.m. sharp to pick up his kids from daycare. Any task that is not complete falls to Joe on those days – and this has been part of what has led Joe to be regularly late for supper. Joe is beginning to get frustrated with his job – even though he really loves the company. As a young husband, Joe shares his frustrations about his boss, Bill, and his coworker, Ted, with Jane. Jane, a young wife, is very supportive and sympathetic. She can’t believe how mistreated Joe is. He cares so much about the company and no one will listen to him or acknowledge his contributions. As you may have figured out by now, Joe is working in his family’s business. Bill is his father. Ted is his brother. And Jane is the new daughter-in-law. Within family businesses, daughters-in-law sometimes are perceived as adversaries. Intruders into a system who just don’t understand the intensity, the seasonality, the sheer force of will it takes to make a farm business successful. (Son-in-laws can be also be caught up in this perception.) Jane’s scenario left her in a tough spot. Young and in love, she wants to support her husband and be in his corner. The only view of the business she has been afforded was what Joe told her. And boy, does it seem like he’s being wronged! Joe is working long hours for low pay, cleaning up after a coworker who has a lot more flexibility than he does and having his innovative ideas ignored. That’s Joe’s view, anyway. And, now, it is also Jane’s view. You can see how easy it might be for her to believe that the business – and by extension, Joe’s family – does not have she and Joe’s best interest
in mind. In fact, it is starting to look like he is being punished for being in a role that he loves with a family he enjoys. Now, we all know that there are always two sides to a story. And, that some of the conditions I have described are pretty normal in a new job – any new job. But, Joe and Jane may not know that. If your goals include healthy family relationships and transition of the business to the next generation, I urge you to consider the addition of an in-law to your family to be a great opportunity. Here’s what you can do to capitalize on the addition of an in-law to your family: Communicate – right from the start! If you can share the perspective of the family and the business with your inlaw, she (or he) are not limited to their spouse’s perspective as the only view of the business. When a next-gen employee of the business gets engaged, schedule some time between the business leaders and the new couple. Talk about their spouse’s role in the business. Include what they are responsible for, when their busy times are, how much flexibility they will have and how their pay is determined. Talk about where your business is headed. You don’t have to share numbers here. Just talk about the key challenges you are facing currently and what your plans are for the next year. This can be quite general and requires no documented plan. Communicate again! Have an annual all-family meeting at which the business leaders give a “state of the business” update. This meeting could be as short as 30-60 minutes. Again, it doesn’t need to have documentation or be complicated. Set the expectation at the beginning that this is an update meeting and you will
take questions. This is not a time for making decisions. When you reach out to in-laws and family not employed in the business, you accomplish a few things that will increase the odds that your family business will have a successful transition. First, you give a broader perspective of the business. An in-law is no longer confined to their spouse’s perspective as their sole view into the business. This allows the in-laws to be supportive and challenging. They know their spouse’s view may be narrow. And some in-laws can challenge their spouse to find a solution rather than continue complaining. Second, you create a feeling of belonging. In-laws are very important in supporting their spouse. We all know that working in farming can be demanding and challenging. By feeling like they are part of the system, in-laws are better able to encourage their spouse. Third, we know that many times in-laws often spend more time with their children than do our family employees. To shape that next generation of family owners and employees, it is very helpful to have parents that see the business positively – in-laws have a huge influence on the next-generation’s values, particularly around work ethic. Farming is hard work. Family business is challenging. Adding in-laws to the family (and to the family business) represents a real opportunity to get clear on your direction and expectations, and then share them with the new family members. This particular type of communication can make a big impact on the odds that your family business will continue to be family owned and managed. ■
ABOUT THE AUTHOR
Barb is a consultant with the Family Business Consulting Group, working with families and management teams to help them keep their business healthy and the people happy. Barb can be reached at 269-382-0539 or firstname.lastname@example.org
The opinions stated herein are not necessarily those of GreenStone Farm Credit Services.
Partners — Winter 2018
MARKET OUTLOOK By Bob Utterback
IT IS A NEW YEAR WITH NEW CHALLENGES, NEW OPPORTUNITIES AND TIME TO REVIEW HOW TO IMPROVE ONE’S OVERALL MARKETING PLAN. UTTERBACK MARKETING’S OBJECTIVE IN WORKING WITH FARMERS HAS ALWAYS BEEN TO HELP THEM SELL THEIR CROP AT THE BEST PRICE WITH THE LEAST AMOUNT OF RISK POSSIBLE. THERE IS AN UNDERLYING PROBLEM WITH THIS TYPE OF OBJECTIVE; IT CONFLICTS WITH ITSELF. TO GET HIGHER PROFIT POTENTIAL, MOST OF THE TIME SOME TYPE OF HIGHER RISK MUST BE TAKEN. IN MY OPINION, THE KEY IS TO BALANCE THE RISK OF LOSS WITH FUTURE PROFITS. LET’S REVIEW A FEW OF THE BASIC ASSUMPTIONS I BELIEVE YOU SHOULD USE TO DEVELOP A MARKETING OUTLOOK FOR 2018 AND BEYOND.
Winter 2018 — Partners
There are seasonal patterns in agriculture production and the greatest price uncertainty exists from April to August when the crops get planted and grow throughout the season. This is when weather has the biggest impact on future yield potential and the subsequent supply/ demand balance. A basic tenet of our suggested marketing plan is selling production from May to July when the greatest upside potential exists and buying feed needs from September to November when inventory is being harvested. This strongly implies that, as a producer, one does not buy corn and soybeans in July because of a weather event. Use the strength of the markets to be an aggressive multiple year seller of inventory. Learn to love the bear rather than the bull! So, the basic questions one should be asking at this time are: 1. Are the corn and soybean stocks
situation adequate for current needs? This may be a simple question, but it can be a very involved fundamental argument. However, we suggest the tone of the corn market is more than adequate, while the soybean market has a much tighter stock situation next summer.
Use the strength of the markets to be an aggressive multiple year seller of inventory.
Learn to love the bear rather than the bull!
2. Will producers change their crop mix? At the December 2017 low corn and soybean
values, producers were being pushed to plant the crop that has the least cash flow but best return possible. This most definitely favors soybean plantings. When this outlook was written, current estimates for soybean planted acres are expected to grow to over 91 million with expected wheat plantings being down. This implies those lost wheat acres will go to soybeans. The only issue we foresee is the basic 50/50 corn/soybean rotation that most producers like and how many acres of corn will drift into soybean production? Producers may say they are going to change in January and/or February, but if weather is good going into May, we could still see adequate corn acres planted. Leading consulting firms are already suggesting an equal split of 90 million planted corn acres and 90 million soybean planted acres in 2018. This could keep a lid on prices for both corn and soybeans until the June to August weather risk time period. 3. The other side of the equation is demand. At the end of 2017, corn exports were
lagging behind 2016 figures, while soybean exports were stable but not exceeding expectation. Thus demand was stable, but no big surprises exist. My real concern about demand is simple: The driving force of demand growth from 2000 to 2014 was ethanol, but that demand explosion is not there now. Right now, the big hope in the future is China’s corn demand will grow because they will allow ethanol growth to explode. While it does sound exciting, we question if China will allow itself to become hostage to the U.S. corn supply like the U.S. became hostage to the Mideast for crude oil during the 1980s. Conclusion: Soybean demand is better than corn demand as this outlook is written. It
appears in the future corn and soybean demand will be stable, but the growth rate of the last few years for corn will be difficult to repeat. This places much more responsibility on the supply side for price improvement potential. Weather outlooks suggest some dry conditions for Argentina as the growing season starts. The real impact will be if dry conditions affect the growing season in February and March when double‐crop corn planting starts. Remember, just a couple years ago the Brazilian double‐crop corn was hurt and we had some spring weather uncertainty that allowed December futures to push the corn price to $4.40. The only problem is the market started from a much lower ending stocks level. So far, the weather outlook for the U.S. has no adverse reaction for agriculture, so no real assessment of summer moisture conditions can be made other than to assume average and defend against the exception. A long time ago, a grain trader told me that markets first look at basis improvement, then spread decline and finally at flat price action. Many producers store corn and soybeans in the bin unpriced, which is nothing new, but it highlights the fact that when
Partners — Winter 2018
supplies are adequate, the ability of the futures price to rally is a struggle. A lot of corn is now being stored in the bin unsold hoping for higher flat price potential even though overall yields are better than expected. At the end of 2017, the December 2017/December 2018 corn spread was around 45 cents and the December 2018/December 2019 corn spread was 30 cents. What does this mean to a producer? If you agree with my bias that corn supplies are more than adequate, corn acres could fall slightly and average yields should keep stocks more than adequate. Finally, if there is no solid summer run-up in prices and a normal crop size occurs in 2018, corn production could be held into the new crop season resulting in the possibility of very wide basis and low prices at harvest next fall. Thus, I believe one should lay off some risk on your crop insurance bushels but still maintain flexibility to react to a yield reduction event. To see December 2018 corn move above $4.10 and November 2018 soybeans above $10.50, some type of weather event that currently cannot be projected is needed. If normal yields are seen in 2018, future prices could possibly get below $3.20 in corn and $9.20 in soybeans with wide basis and big carry incentives at harvest. Conclusion: Can producers really afford to take the risk of holding a large percentage of expected 2018 production “unpriced,” hoping a major yield reduction weather event will occur? I say no; accept the fact that 2018 downside risk is greater than the upside potential and earlier rather than later action is required. How aggressive and how much flexibility is desired? Sell the deferred contract that offers a carry incentive in corn; soybeans are
Winter 2018 — Partners
If normal yields are seen in 2018, future prices could possibly get below $3.20 in corn and $9.20 in soybeans with wide basis and big carry incentives at harvest.
not attractive but deferred selling is still recommended. Specifically, I suggest placing all expected 2018 corn sales in the December 2019 contract between January and July and roll back to the September 2018 contract on the tightest spread possible during summer weather concerns. The objective is to stay short in the nearby contracts and wait for carry to come back into the market. This strategy implies using a paper trade [Chicago Board of Trade] rather than a cash position at the elevator in order to have the ability to back roll. More advanced marketers can focus on buying September corn calls and November soybean calls on a technical breakout after the March Supply/Demand Reports. Hold the position at least until mid‐July as a defensive insurance‐type policy. The final and most aggressive strategy would be to focus on selling lead‐month out-of-the‐money puts to enhance the overall position after the October Supply/Demand Report. In the future, producers should look at managing their flat price decisions based on seasonal bias, manage their basis exposure by storing on farm, roll their hedges backward and forward to optimize spreads, and value enhance their short position by selling puts after the seasonal low is in place. By doing all these facets of marketing, I believe producers have a better chance of achieving the best returns possible with the least cash flow risk possible. Good luck! ■ ABOUT THE AUTHOR
Bob Utterback is the president of Utterback Marketing in New Richmond, IN. Call Bob for strategy updates at 877-898-4324. Email comments on Outlook to email@example.com.
The opinions stated herein are not necessarily those of GreenStone Farm Credit Services. This material has been prepared by a sales or trading employee or agent of Utterback Marketing Services, Inc. and is, or is in the nature of a solicitation. This material is not a research report prepared by Utterback Marketing Services, Inc. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction without registration, the market commentary in this communication should not be considered a solicitation. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Utterback Marketing Services, Inc. believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.
AGRICULTURE – OPEN FIELDS BLOG BRIEF
GreenStone publishes regular updates on our Open Fields blog. Check out some of the posts you may have missed at www.greenstonefcs.com/openfieldsblog.
‘Tis the Season – Preparing Year-End Financials For many agricultural producers, the end of the year brings a welcome transition from the long hours of harvest and winter preparation. However, the work is not done. Arguably, the most important part of a business is analyzing the past and planning for the future. In this article, Moriah Brey and Kimberly Clum, assistant vice presidents of credit, focus on the three main reports that, when used together, will allow you and your lender to thoroughly analyze your business.
What 4-H Means to Me “Effective and timeless, with a simple mission to help make the world a better place. Teaching practical skills, and ultimately setting the stage for success in the lives of many. In a general sense, that’s what 4-H is, but that’s only the beginning of what it means to me.” In the spirit of National 4-H Week, we asked some GreenStone team members to share their experience with the organization, either as a member, a parent, or a volunteer. As you read the five-part blog series, it is evident that 4-H has a positive impact on many people in many different ways!
Measuring Operational Efficiencies In challenging economic times, like those being experienced today, it is more important than ever for producers to monitor their operational efficiency by paying close attention to the imperative information that reveals the financial condition of your operation. Learn the financial data needed to measure your operating efficiency from Jim Byars, vice president of commercial lending, and Steve Zimmerman, tax and accounting manager. ■
Partners — Winter 2018
Together Celebrate the $50 million benefits of being a memberowner of GreenStone March 15 on Patronage Day Being a member-owner of GreenStone Farm Credit Services, means you not only receive the products and services tailored to your agricultural and rural living needs, it also means you share together in the success of your cooperative. Throughout 2017, GreenStone held firm to its mission of supporting rural America and agriculture, providing creative solutions and resources to our members to help them manage the challenges of the current agriculture economy. These efforts, coupled with internal efficiencies and strong overall financial performance of GreenStone and our funding bank, AgriBank, led us to end 2017 in a strong position. As a financial cooperative, it is very important for GreenStone to generate strong earnings and maintain adequate capital levels to help ensure it can be a dependable source of credit for years to come. Having GreenStone in a strong financial position allows the board of directors to approve healthy patronage payments to our members. As a result, we will return $50 million back to our members in patronage on March 15, 2018. “We believe that by staying true to our mission and core values, we can continue to support our member-
Winter 2018 — Partners
owners with not only the products and services they need, but with additional resources generated by working together and sharing our success,” says Dave Armstrong, GreenStone president and CEO. “That’s why we’ll return nearly one-third of our net profits back to our members.” A portion of GreenStone’s earnings this year are attributed to success of our funding bank, AgriBank. Like GreenStone, AgriBank is also a cooperative and as such, also returns patronage payments to its members. In 2017, AgriBank paid over $35 million back to GreenStone. This will represent a portion of the patronage paid to our 24,000 members on March 15. “Just as our members share together in our success, we too share in the success of AgriBank, and can pass those earnings on through to our members,” Armstrong says. “Particularly in times like this in rural America, it is essential we provide the resources our members need while maintaining our financial strength and security so we can best support our members for generations to come.” We will celebrate the benefits together on Patronage Day at each of the local GreenStone branches on March 15. Notification letters will be sent to all eligible members in mid-February. ■
Mark Your Calendar! GreenStone’s Producer Forums Take advantage of one of these educational forums designed to provide you the resources you need on the latest topics relevant to your farm business. GreenStone will be hosting four Producer Forums in 2018 at various locations throughout Michigan. These one-day events will feature crop-related topics in the morning, and dairy-related topics in the afternoon, with lunch included. Your are welcome to attend the portion of the day most relevant to your business, or take advantage of the whole day. Topics include: • Technology - crop and dairy • Commodity marketing - crop and dairy • Succession planning • Crop insurance Locations and dates: • Jan. 16, 2018 MSU Pavilion, East Lansing • Aug. 8, 2018 Franklin Inn, Bad Axe
• Aug.15, 2018 Pinnacle Center, Hudsonville • Dec. 12, 2018 Comfort Inn, Mt Pleasant To RSVP, please visit bit.ly/GreenStoneRSVP. ■ GreenStone Connect Receptions Join us for your unique opportunity to hear a short update on the year, ask questions, and connect with your local GreenStone team. •V isit the GreenStone booth at the Great Lakes Crop Summit, Jan. 31 – Feb. 1, 2018 at the Soaring Eagle Casino and Resort in Mount Pleasant, Michigan. Be sure to join us at the GreenStone Connect Reception on Wednesday, Jan. 31 from 5– 6 p.m. •V isit the GreenStone booth at the Great Lakes Regional Dairy Conference, Feb. 8 – 10, 2018 at the Soaring Eagle Casino and Resort in Mount Pleasant, Michigan. On Thursday, Feb. 8, mingle with us during another GreenStone Connect Reception from 5 – 7 p.m. ■
TOUGH ECONOMIC TIMES– OUR STAFF ARE PREPARED
2017 Deer Challenge Winners This fall, 100 hunters in northeast Wisconsin participated in GreenStone’s Deer Challenge at each branch in Wisconsin and Michigan’s Upper Peninsula. “Our staff and customers have a lot of fun with the big buck challenge,” says Ann Klemp, GreenStone financial services officer at the Clintonville, Wisconsin branch. “It is exciting in the branches to see the entries come in and hear the hunting stories that come along with them.” All entrants were also included in a drawing to win a game camera or Cabela gift card. Thanks to all the hunters who participated in our annual Deer Challenge! Adult Buck Winners 1st: Joe Sawyer, $400 2nd: Don Olson, $200 3rd: Joanne Bongle, $100 Junior Buck Winners 1st: Brayden Nueske, $200 2nd: Austyn Neubert, $100
Cabela Gift Card Drawing Winners Marcus Carlson Kavit Beyersdorf James Kapolnek Kyle Biese ■ Farm Women’s Symposium The annual program will be held on March 7-9, 2018 at the Doubletree by Hilton in Grand Rapids, Michigan. The Farm Women’s Symposium is designed to strengthen agriculture by addressing the ever-changing needs of farm families. It will provide women opportunities for leadership and development, enhance communication and management skills, build effective family and family teams, and develop a network of supportive friendships. Visit the website for more information, www. farmwomensymposium.com, or inquire at your local Michigan GreenStone branch. ■
equipped with the tools to help identify farmers and farm families with symptoms of high stress and assist in weathering these economic challenges. In partnership with Michigan State University Extension (MSUE), GreenStone staff proactively attended and promoted training sessions developed by the MSUE Farm Stress Team specially designed for those who work with agriculture producers and farm families. These workshops are developed to spot the signs and symptoms of stress, depression, self-harm, and mental health issues (that may or may not be a result of the current farm conditions), how to communicate effectively with those in distress, and to gain knowledge of the variety of resources available.
It is no secret that farm families face a variety of stressors, including weather, market prices, livestock disease and equipment failures. However, the current economic downturn has placed even greater financial and emotional stress on agriculture producers, farms, and farm families. Ultimately, we cannot control the market or income for farms; however, there are a variety of resources and trained professionals available to help. GreenStone staff are
Game Camera Drawing Winners Lee Petrina Charles Nett
GreenStone staff continue to employ the tactics of maintaining open and transparent communication as we work with all our customers. We understand the positive impact proactive and effective communication can have when dealing with tough situations. If you, or a family member would like more information on managing stress on the farm visit http://msue.anr.msu.edu/program/info/ managing_farm_stress. ■
As a result of our support for these workshops, GreenStone was recently honored with the Epsilon Sigma Phi Friend of Extension Award at the 2017 MSU Extension fall conference in Detroit. This award is presented annually and recognizes individuals who helped promote programs, represented MSU Extension as lay leaders, or served as key program developers or collaborators.
Partners — Winter 2018
GROW FORWARD GRANT PROGRAM
GreenStone recognizes the importance of young, beginning, and small farmers and the role urban food production and diverse producers play in sustaining rural communities and agriculture. We also believe in the value of education to prepare these producers to successfully compete in a highly competitive global marketplace. This fresh program will support their education initiatives provided through a variety of partner organization opportunities. To help producers gain the education or experience needed, we are launching the Grow Forward Grant program in 2018, providing up to $40,000 in grants to young, beginning, and small farmers: up to $1,000 to current customers and up to $500 to non-GreenStone customers. Eligibility • Young, beginning or small farmer – 18-35 years of age, or – Farming for less than 10 years, or – Sustain annual gross sales from agricultural production of less than $250,000 • Must be eligible to be a member of GreenStone (reside in Michigan or northeast Wisconsin) Intended grant use must fall within one of the following categories: • Agricultural programs/events: educational course/program (on-site or online), conference fees, etc. (Program/event not required to be in GreenStone’s territory) • GreenStone resources: accounting and tax services, technology support, etc. (Available for first time use of service only) • Non-GreenStone services: business and farm consultants, etc. Interested in applying? Grants up to $1,000 are available and the application can be found at www.greenstonefcs.com/growforwardgrant. ■
Outreach and Engagement Committee Members In the fall issue of Partners, we highlighted GreenStone’s Outreach and Engagement involvement including the four focus areas. As a way to ensure GreenStone aligns support in the areas most important—and impactful – to you, our members, we have also developed a cross-functional Outreach and Engagement Committee. This team consists of GreenStone leadership, branch staff members, a Board of Director member, and two of our customers. We will continue to provide updates on the actions of the committee throughout the year! 17
Winter 2018 — Partners
Apply Now! GreenStone’s Scholarship Program GreenStone is now accepting applications for its 2018 scholarship program! GreenStone plans to once again award up to $40,000 to incoming college freshmen pursuing a degree in an agriculture-related field in the amount of $2,000 each to selected students attending a four-year college program and $1,000 each to selected students attending a two-year college program. For complete program guidelines and application, visit www.greenstonefcs.com. Act now, the application deadline is Feb. 28! ■ Zagar Joins GreenStone as Vice President and Managing Director of Tax and Accounting Chad Zagar has joined GreenStone as the vice president and managing director, leading the association’s tax and accounting initiatives to meet the changing needs of the cooperative’s customers. Zagar is leading GreenStone’s implementation efforts to provide additional accounting and tax services to the association’s current and prospective customers. Additionally, he oversees the day-to-day functions of the department as well as providing direction and support to the team. “As we looked across our customer base, we saw a strong need for increased depth of our tax and accounting services and capabilities,” said Ian McGonigal, senior vice president of regional sales. “We are looking to meet demands by enhancing our current offerings, which Chad will lead. His previous experience in the financial services industry, coupled with his leadership abilities, will help GreenStone continue to be a specialized resource to our customers.” Zagar brings more than 16 years of accounting and consulting experience to GreenStone,
having most recently served as a senior manager in the business risk consulting group at a public accounting, consulting, and technology firm. In this role, he was responsible for assisting clients with risk assessments and audit planning, managing audit execution and reporting, and leading consultative projects in order to meet their business needs. ■ Ladies’ Day Out The 2018 event for GreenStone customers will take place on Feb. 14, 2018 at the Radisson Hotel and Conference Center in Green Bay, Wisconsin. This year’s agenda includes comedian Leslie Townsend Norris. Her blend of stand-up comedy, music and audience participation will move you from tears to laughter! GreenStone’s Wisconsin and Michigan Upper Peninsula customers recently received an invitation in the mail with the necessary details to RSVP for the event. Contact any of our Wisconsin branches for more information! ■ Lemon Promoted to Regional Vice President of Sales and Customer Relations Tyson Lemon has been promoted to regional vice president of sales and customer relations for GreenStone, and will oversee the sales teams within three of the cooperative’s branch locations in southwest Michigan. In this position, Lemon will serve as the leader of the financial services officers in the Allegan, Berrien Springs and Schoolcraft offices. He will be responsible for the customer service from this group, and for the guidance and development of the sales team. Lemon began his career with GreenStone’s Berrien Springs branch in 2005 as a crop insurance specialist. He later transitioned to a financial services officer, spent time as a vice president of commercial lending, and most recently as a senior financial services officer. ■
GREAT LAKES LEADERSHIP ACADEMY–
similar interests, backgrounds and viewpoints as our own. Through the GLLA experience, participants take a deeper dive exploring their own perspectives and learning to appreciate other points of view.” As a recent graduate of the 18-month program, Brent believes the insight and learnings he gained will benefit him in all aspects of his life. “Through the 18-month program, many of my beliefs about people and why they behave the way they do was challenged,” Brent says. “I believed for a long time that people’s circumstances were often the result of making bad choices. What I never took into consideration is they may have made the best choice they had given their individual situation and choices presented at the time.”
Sharpening individual leadership skills can be done through a variety of activities, experiences and learning opportunities all targeted to developing leaders capable of leading teams to success. When Brent Voss, senior financial services officer with GreenStone, participated in the Great Lakes Leadership Academy (GLLA), he put all the learning opportunities together to strengthen his abilities in personal interactions and leadership. His experience through GLLA, he believes, will benefit him professionally, but more importantly personally.
“As a leader, it is important to know what motivates people, why they do what they do,” Brent says. “This program made me a better listener, to ask more questions and to help lead for the common good.” The program curriculum includes classroom and hands-on learning with exposure to emerging issues in Michigan and the Great Lakes region. Regional teams are created to work with local leaders to asses a particular area in Michigan, including agriculture and food systems, natural resources and environment, business and manufacturing,
“We have been a long-time supporter of GLLA because we believe it touches on issues important in the agriculture industry, as well as issues important to the citizens of Michigan,” says Beth Barker, GreenStone’s chief human resources officer. “Most of the time we are involved in discussions with a very homogenous group – people with
What a fantastic company! I am not sure how many people work here, but I always deal with Tracy, Courtney and Gina; they are ALL so nice and beyond helpful. One Monday, I called Tracy about some hunting property, and on Friday of the same week, I set up my tree stand—awesome! I highly recommend this company.
—-Allen Jewell, Lapeer branch customer
“Helping our employees capture new experiences like participation in GLLA, helps them develop their own skills and benefits them, their team at GreenStone, and most importantly the customers they serve,” Beth adds. ■
During the GLLA leadership program, Brent had the opportunity to interact with individuals from different business sectors, cultures and backgrounds. Understanding viewpoints based on backgrounds and experiences opened up Brent’s mind when it comes to leading discussions and other personal interactions.
The GLLA is conducted by Michigan State University Extension. Its mission is to promote positive change, economic vitality and resource conservation, and enhance the quality of life in Michigan by encouraging leadership for the common good. GreenStone has been an active partner in the GLLA both through program participation and sponsorship.
and the strength of the communities. Based on the analysis of the region, the teams engage in a local project with existing groups.
We have been in a good working relationship, even through a change of [financial services officers], and they have always been honest, dependable, and available.
The GLLA leadership programs are designed for agricultural producers and others involved in agribusiness. GreenStone members interested in participating in one of the GLLA programs can apply for a scholarship to help offset costs. For more information on the leadership programs, visit the GLLA website at http://www.glla.msu.edu/.
Thank you again for taking time to visit our MSU Agriculture Seminar class. You were looking at the faces of the agriculture’s future in this county and beyond. We especially appreciate your willingness to come on a busy Monday morning. GreenStone offers an essential service to our farming and rural communities. Today may have been the first time some of the students made that connection between their dreams and the financial backing that will make it a reality. The material you presented was exactly what they needed to hear.
Program Coordinator, MSU Institute of Agricultural Technology —Regarding Mark Oberlin, financial services officer with GreenStone’s Lakeview branch
—Mary Zuiderveen, Cadillac branch customer
Partners — Winter 2018
BEHIND THE SCENES–
Curt Flammini VP of Capital Markets 10 years of service Located in East Lansing Describe how your role carries out the GreenStone mission of supporting rural communities and agriculture: For the most part, I work with companies across the food chain but outside of our local territory. This adds diversification to GreenStone’s loan portfolio and revenue stream. Some of these industry sectors are not commonly found in our region. Other sectors may be represented in our region, but by lending in other geographies, we are able to diversify or portfolio and extend our knowledge. In all cases, these lending activities advance our mission by providing capital to maintain or build processing plants, thereby creating jobs in these communities and supporting markets for agricultural commodities. What do you enjoy most about your role at GreenStone? In my position, I have the opportunity to travel around the country meeting with new and prospective customers.
Winter 2018 — Partners
I enjoy meeting the families and individuals that own these businesses, learning about their individual stories and the history of their businesses. I appreciate being a financial partner with these businesses and have a great respect for their sense of family, work ethic and values. What changes have been incorporated in your role to meet evolving customer needs? Like other areas of the association, our division continues to evolve. This year, we have devoted time to meet with our customers and deepen relationships on a one-onone basis. In doing so, we are providing more personalized service and learning more about the particular needs of our customers so we can better serve them. What do you enjoy doing in your free time? I play the guitar and am active in my local Knights of Columbus council.
Brad Hibbert VP of Capital Markets 5 months of service Located in East Lansing Describe how your role carries out the GreenStone mission of supporting rural communities and agriculture: In my role, I assist Greenstone in investing capital to finance agribusinesses who operate pre- and post farm gate. Types of industries we finance include crop supply and grain companies, processors in the poultry, swine, and beef and dairy industries, sugar beet processors, and many other industries within the food chain. What do you enjoy most about your role at Greenstone? This position provides me the opportunity to travel rural America and meet the people who own and operate these businesses. Many of the companies we finance are privately owned and the people and families who built and grew the business usually still run the company. These fascinating people are visionary, driven, and calculated risk takers who are living examples of how hard work, focus and determination translates into success.
What changes have been incorporated in your role to meet evolving customer needs? Our ability to be responsive and efficient are critical to delivering timely financial services to these businesses. What I have observed in my short time at GreenStone is a dedicated team who are committed to the development and success of rural America. What do you enjoy doing in your free time? Being new to Michigan, we have a lot of exploring to do. My wife, Glenda, and I like to go on weekend drives discovering the local areas and small towns. We are looking forward to heading “up North” and seeing all that we have been hearing about. In the summer time, we like boating and being near the water. ■
Hillsdale To Jonesville Office Move GreenStone’s Hillsdale branch is moving into a new building located at 500 Olds St. in Jonesville, Michigan. Not to worry, although the town has changed, the office is located only a few miles down the road. We look forward to seeing you at the new location! ■
Pause for Applause...
GreenStone Continues Strong Financial Growth GreenStone Farm Credit Services recently released its third quarter stockholder report, detailing earnings of $42.6 million for the quarter and $114.0 million for the nine months ended Sept. 30, 2017. Comparatively, net income was $34.6 million and $96.7 million for the same periods last year. Owned and managed loan volume totaled $8.2 billion at Sept. 30, 2017. “Our year-over-year increase in earnings in the third quarter was primarily from three drivers: increasing net interest income resulting from loan growth; lower provision for credit losses as credit quality has remained stable; and increasing patronage from our funding bank, AgriBank,” said Travis Jones, GreenStone’s chief financial officer. “These results reflect our employees continuing to put our members’ best interests first and our members continuing to honor their obligations in this challenging economic environment in agriculture.” Other numbers of note from this quarter’s stockholder report include: • Growth in the loan portfolio over the last 12 months was 5.2 percent. • Total member’s equity as of Sept. 30 is $1.6 billion up $89.2 million from Dec. 31, 2016. • Acceptable loan credit quality was 94.4 percent after beginning the year at 95.4 percent. View the complete third quarter stockholder report by visiting: www.greenstonefcs.com. ■
SERVICE ANNIVERSARIES Help GreenStone congratulate these staff who are celebrating an employment milestone. From five to 40, the years represent the dedication and service all employees provide our members. January: Michael Kennedy (40) Anita Roos (40) Rick Dennison (25) Patti-Kay Niemi (25) Thomas Moskal (20) Dalene Strong (20) Cheryl Campbell (15) Michelle Difranco (15) Steven Kluemper (15) Moriah Brey (10) Dan Kaufman (10) Lori Dupuis (5) Brittany Pohl (5) Corey Polega (5) Sheryl Walstad (5) Andrew Warner (5) Gina Weber (5)
February: Diane Prior (35) Stephen Junglas (15) Kimberly Nelson (10) Kimberli Rybicki (10) Ashlee Gibson (5) March: Trisia Edwards (15) Steven Schaper (10) Chasity Taubert (10) Shannon Arbaugh (10) Michael Forst (5) Amy Roberts-Heaton (5)
Mark Your Calendar... JANUARY
15 24 31
GreenStone Offices Closed In honor of Martin Luther King, Jr. Day
Wisconsin Ag Day at the Capitol Monona Terrace Convention Center, Madison, WI
Great Lakes Crop Summit (31-1) Soaring Eagle Casino & Resort, Mount Pleasant, MI
Great Lakes Regional Dairy Conference (8-10) Soaring Eagle Casino and Resort, Mount Pleasant, MI Michigan Farm Bureau Young Farmer Leaders Conference (9-11) Radisson Plaza Hotel, Kalamazoo, MI Winter Potato Conference (13-15) Holiday Inn Hotel and Conference Center, Big Rapids, MI
Michigan Deer and
16 Turkey Expo (16-18) The Lansing Center, Lansing, MI GreenStone
19 Offices Closed In honor of Presidents’ Day
MARCH Outdoorama (1-4) Suburban Collection Showplace, Novi, MI
Farm Women’s Symposium (7-9) Doubletree by Hilton, Grand Rapids, MI
Ladies’ Day Out Radisson Hotel and Conference Center, Green Bay, WI
Michigan State FFA Convention (7-9) Michigan State University, East Lansing, MI Michigan’s Ag Day
13 at the Capitol
The Michigan State Capitol, Lansing, MI
15 GreenStone’s Patronage Day Sports 15 Ultimate Show (15-18) DeVos Place, Grand Rapids, MI
20 National Agriculture Day Wisconsin Public Service
27 (WPS) Farm Show (27-29) EAA Grounds, Oshkosh, WI
Partners — Winter 2018
Tax & Accounting Services CHANGES IN THE AGRICULTURE ECONOMY, COUPLED WITH CONTINUAL CHANGES IN TAX AND ACCOUNTING RULES, CREATES AN INCREASING NEED FOR YOU TO WORK WITH PROFESSIONALS WHO UNDERSTAND YOUR BUSINESS AND THE COMPLEX TAX AND ACCOUNTING RULES. AT GREENSTONE, WE SEE THE CONTINUAL NEED OUR CUSTOMERS HAVE IN THIS AREA, AND AS SUCH, HAVE ENHANCED OUR FINANCIAL SERVICE OFFERINGS THROUGH STRATEGIC HIRES AND UPDATES IN TECHNOLOGY. “We find for most of our farming customers, given a choice, they would prefer to be on a tractor or in a barn rather than in the office doing bookwork,” says Chad Zagar, vice president and managing director. “We want to partner with our customers doing what we do best, financial services, letting them focus on farming.” Through our financial services offering, our customers have access to a team of professionals, including CPAs, to help them manage the business aspects of their farm. Our services in the area of accounting, taxes, and payroll provide support to customers in a timely, professional manner at the level each needs. Customers utilizing our accounting services choose the level of engagement they prefer with the team. You can give our tax accountants access to your accounts and authority to make transactions on your behalf. Or, you may choose to handle the transactions on the farm and then pass on the details to us to generate financial reports.
Winter 2018 — Partners
We have positioned our services in a way that lets the customer choose the level of involvement we have managing their books... We have some customers that utilize our team as full-service accountants doing all the data entry and report generation, others that we work with once a year to prepare their taxes, and some in-between.
“We have positioned our services in a way that lets the customer choose the level of involvement we have managing their books,” Chad says. “We have some customers that utilize our team as full-service accountants doing all the data entry and report generation, others that we work with once a year to prepare their taxes, and some in-between.” Recent system enhancements internally allow our team to work with a variety of financial management software programs. Customers can use the system of their choosing at their home or business, and still integrate with our platforms. If customers are using our full-service accounting they may not need to obtain in home software, saving them the cost of the software and continual upgrades. In addition to general accounting services, we also offer a complete payroll package including wage calculations, report generations, quarterly and annual income tax filings, deductions, and other services as needed. Our payroll
specialists save customers’ valuable time and help assure that all complex governmental payroll laws and regulations are being met. Like the accounting services, payroll services are tailored to the individual needs of the customer. Some prefer to simply turn in the hours for each employee and have our team execute the checks, filings and reporting. Others may choose to have us simply do the payroll calculations and withholdings and then the customer handles the check writing and report filings. “The continual changing of federal, state and local tax regulations governing employees and their wages, can be challenging and burdensome to all business owners,” Chad says. “Using our payroll services can eliminate the worry of whether or not you are doing everything correctly – nobody wants to pay late penalties or other fines. When considering the time savings and possible penalties for noncompliance, our customers find outsourcing payroll to be a way to
save money and gain efficiencies in other areas.” Tax planning and preparation is often viewed as one of the most critical financial activities a business performs. Understanding the rules, laws, and regulations and how each applies to farms and agricultural business is critical when completing tax planning. Often, tax planning is a year-round activity and is best when using a preparer that understands your business. Collectively, our team has decades of experience in helping customers implement tax saving strategies and business efficiencies.
service make business planning, payroll, taxes and financing more easy, local and convenient.” Customers interested in our financial services should contact a local branch to learn more. ■
“We have designed our financial services offering to meet the overall business needs of our customers,” Chad says. “In addition to providing services to help them manage their business, we can also help them create the financial records needed to maintain or secure financing. With a customer’s permission, we can provide seamless transfer of financial records, as needed, to our loan officers and crop insurance specialists. Our “one-stop shop”
Partners — Winter 2018
PLANTING POSITIVE POLICY MICHIGAN AND NORTHEAST WISCONSIN HAVE SOME OF THE BEST AND MOST DIVERSIFIED FARMLAND IN THE COUNTRY. DIVERSE CROPS LIKE CRANBERRIES, BLUEBERRIES, AND FLOWERS TO THE MORE TRADITIONAL ROW CROPS, DAIRY, SUGAR BEETS AND CUCUMBERS, ALL CONTRIBUTE TO OUR RURAL ECONOMIES AND QUALITY OF LIFE. ALL OF IT REQUIRES ATTENTIVENESS AND EDUCATION TO UNDERSTAND AND MAKE SOUND POLICY DECISIONS.
Winter 2018 — Partners
Today, we see an abundance of policy issues that need attention for the growth and sustainability of a sound agricultural industry. It is clear, the bounty is being grown in the same environment chaired by delegated legislative leaders that need to be fertilized with knowledge. Certainty on the law and regulation needs to be established so the business of farming and the opportunity for rural communities can grow. Finding ways to establish minimally acceptable service levels to stabilize the needs of rural communities with things like broadband would help. Areas that need to be further addressed include tax reform, farm bill, immigration reform, and regulatory reform in areas such as Farm Service Agency programs and guarantees, mediation programs, environmental concerns, food labeling, rural broad band, infrastructure needs, food safety and an array of other opportunities to benefit the growth of agriculture.
What grows in the fields of agriculture truly affects the health and welfare of our nation. Speaking to and educating the policy leaders will continue to make a difference – it is a requirement of good stewardship. Recognizing George Washington’s statement, “agriculture is the most healthful, most useful and most noble employment of man,” we all have a role to continue to share knowledge and experience with those who rely on the gifts of agriculture so that policy leaders may make the most informed determinations on policy that will impact us now and into the future. Growing sound policy for the solid soils of America make for good economics, and the health and wellbeing of its citizens. ■
GREENSTONE’S VOICE FOR RURAL COMMUNITIES AND AGRICULTURE CONTINUES TO BE RECOGNIZED AND VALUED. Your MI GreenStone PAC finished 2017 strong with meetings and checks delivered to both Michigan Senate and House of Representative legislators and 2018 candidates. In these meetings, connections where made, the cooperative structure of your borrower-owned lending association was communicated, and the significance of working with other agricultural enterprises to promote the continued growth of the agricultural industry was conveyed. In Wisconsin, planning and meetings for 2018 took place. Conversations continue to take place with the other Wisconsin Farm Credit associations and the Cooperative Network uniting and expanding our individual and collective legislative outreach efforts. Our goal is increasing the awareness of the overall value of rural communities and the agriculture industry to the state’s economy and Farm Credit’s vital role, while building relationships for future support. At the Federal level, the legislative happenings are across the board. From tax reform to infrastructure to the Ag Guestworker Act. The Farm Credit System, through individual associations and the Farm Credit Council, has been able to provide perspectives on issues of importance and will continue
to do so. In addition, a GreenStone customer was invited to participate in a Washington, D.C. panel to highlight the role of technology in agriculture. None of this would be possible without your engagement and commitment to raise legislative awareness of rural communities, agriculture, GreenStone, and the Farm Credit System. We continue to work to strengthen the recognition of agriculture as a key component to a thriving economy, and your continued support is commended. The message will remain simple and consistent: do not forget about the importance of rural communities and the diversity of agriculture. Join hundreds of other concerned members in strengthening the recognition of agriculture as a key component to a thriving economy. By contributing to the MI GreenStone PAC or the WI Farm Credit PAC. Be sure to send your voluntary patronage pledge before Jan. 31 to direct dollars from your patronage check to the PAC; or you can make a direct contribution to the PAC at any time. If you have questions, please contact your local branch. ■
Partners — Winter 2018
DIRECTORS’ PERSPECTIVE FINANCE COMMITTEE As part of their election to the board of directors, GreenStone’s board members also serve on a focused committee. Over the last year, the Directors’ Perspective in each issue of Partners has highlighted these committees and the directors who serve on them, to define the purpose, and more importantly the value, of each of these teams. After focusing on the Executive Committee and the Compensation Committee in the spring, the Legislative and Public Policy Committee this summer, and the Audit Committee in the fall of 2017, we present the final committee in this issue: the Finance Committee. These directors share the purpose of the committee, and highlight their responsibilities that are most impactful to our members.
Matt Berge, Committee Chair
I have had the honor of serving on GreenStone’s Finance Committee for my entire tenure as a GreenStone director, and most recently, I serve as the chairperson of the committee. The purpose of the Finance Committee is clearly stated in the committee’s charter: “The Finance Committee assists the board of directors by monitoring the association’s financial and capital planning, asset/liability management and funding, and investment activities. The committee members are a resource to the board by maintaining a more indepth knowledge of the association’s financial activities.” My interpretation of this purpose is that our committee is tasked with communicating with GreenStone’s chief financial officer, Travis Jones, and his staff throughout the year as to the financial health of the cooperative, ensuring that the goals of the members are being met in a fiducially sound manner. I feel the committee members, Travis, and his staff, all work well together. Everyone in the room is comfortable having open and honest dialogue about GreenStone’s financial performance, and about expectations moving forward. These committee meetings allow for a very thorough review of financial performance, and any concerns that arise during these meetings can be brought forward to the entire board for discussion. It is under this structure that we as a committee, and thus the entire board of directors for GreenStone, can ensure our members of the financial strength of the organization. This allows our fellow members to feel comfortable knowing GreenStone will be a stable source of credit for the long run.
Winter 2018 — Partners
I am in my fourth year serving on the Finance Committee and the GreenStone board. Using monthly reports, the committee monitors the cost of the money the association loans to its members. Those reports allow the committee to analyze the margin between the cost of the dollars and the rate on customers’ loans. To determine the rate of interest, GreenStone looks at the purpose of the loan (home, land, machinery, operating, etc.) and the loan term. It
The review of the financial reports provides an opportunity for management to explain the historical numbers along with upcoming plans, as well as the effect they believe those plans will have on the association’s financial and capital position. For example, if substantial growth is planned, the committee ensures there is an adequate capital plan to supplement that growth. As a committee member, I am particularly interested in any negative trends or emerging risks, along with management’s response to mitigate those risks. In addition, as business owners, the committee provides management with updates on the economic realities of the current agricultural environment. The committee may have experiences or see emerging trends in the sector that may provide insight to management and allow them to get in front of potential opportunities or threats.
The challenging times agriculture is facing is a testament to GreenStone and other Farm Credit associations. Other lending institutions may back away from agriculture in times like these, GreenStone remains committed to its mission and continues to serve agriculture through “thick and thin.”
The Finance Committee is responsible for approving policies that include appropriate risk limits and monitoring guidelines for the financial, capital, and balance sheet position of the organization. Four times per year, the committee meets to review reports with management such as the Key Results and Projections, Basis Risk Report, Key Indicators, Permanent Capital Ratio Trend, and Risk Score/ Corporate Performance Differential (CPD) Points. These condensed reports provide a complete overall financial position of the organization.
is also important to know the financial status of the borrower. There are several types of interest to consider, which is why it is important for the borrower to think of their position of risk when getting a loan. Do you want a fixed or adjustable rate; how many years do your need the loan for; etc. All of this is taken into account when establishing the rate of interest on a loan.
The committee structure used by GreenStone allows the board of directors and management team an efficient opportunity for an in depth, comprehensive review of critical components within our association. I am currently serving my second term on the Finance Committee. As a committee, our meetings with GreenStone’s chief financial officer and controller are used in part to discuss key metrics directly pertaining to GreenStone’s financial health and ability to source funds from AgriBank. Part of the committee’s charter is to review the balance sheet. We review the current month and year-to-date balance sheets, compare them to the annual budget as well as the balance sheet from the previous year. The upcoming year’s budget, which begins taking shape at our August meeting, also stems from the current balance sheet. There are several key metrics taken from the balance sheet that develop a “Risk Score” we commonly review. This risk score is one of the main components that allows GreenStone to source funds from AgriBank in accordance to the General Financing Agreement. I am proud to assure you GreenStone scores very highly on this scale, scoring 500 out of a potential 500 points during my entire tenure. GreenStone members may be interested to know there is extensive discussion that occurs in our committee meetings directly pertaining to Federal Reserve press releases, specifically monetary policy and the Federal Funds Rate. ■
Partners — Winter 2018
SETTING YOUR SIGHTS 27
Winter 2018 â€” Partners
➡ Shortly after buying his property, Rick shot a 96 inch buck.
He initially came across an older farmhouse situated on four acres with a couple hundred acres surrounding the home site. Unsure if the surrounding land would ever be available, Rick took a chance and bought the smaller parcel with hopes of someday having more land. “When I bought the house and four acres, I was gambling on more land coming available,” he says. “There is a 21-acre tract alongside my property I was hoping I would someday be able to purchase.” The land did come up for sale shortly after Rick moved in, which he was able to purchase. Then this past summer he bought another 17 acres attached to the other parcels. “Once my neighbor and I agreed on a price, I went to my credit union to finance a portion of the land,” Rick says. “But was surprised to learn they wouldn’t finance vacant land unless I was planning to build on it. I was told to see Tom (Peterson) at GreenStone.” Working with Tom, Rick was able to purchase the 21-acre tract. When another 17-acre parcel came up for sale this past summer, Rick again turned to Tom to help with the financing. For most hunters, and others that enjoy the out-of-doors, having a special tract of land, out of the way place to hunt, or space to just enjoy nature is the ultimate dream. However, finding that spot, with the right location and the right setting, can be a challenge. When Rick was looking to relocate in southern Michigan, he had a short-term goal of finding a place to set up his home, with a long-term vision of someday having a special spot of his own to hunt and enjoy.
“After closing on his first property, Rick would stop by every few weeks and run a scenario past me regarding the property next door,” says Tom Peterson, GreenStone senior financial services officer. “He wanted to be sure his financing was in place before he made an offer on the property. After a few weeks of negotations with the sellers, Rick showed up with a signed purchase agreement. Three weeks later he closed on the property.”
Partners — Winter 2018
With a total of 42 acres surrounding his home, Rick now has his own special place to hunt and enjoy the out-of-doors. “Before I had my own land, I would hunt on public land or other places with friends,” Rick says. “Now I can walk out there and hunt when I want. I probably hunted 60 days this year.” The ultimate reward came this fall, shortly after acquiring the last parcel, when Rick and his sister, Cindy, and friend, Eric, were out bow hunting and Rick shot a 96 inch buck on the property. “He wasn’t the biggest buck I’ve seen around here, but he is still decent size for this area,” Rick comments. “The advantage we have is that the 400 acres or more surrounding my land only has four people hunting on it. Plus, we are close enough to the state land that when there are a lot of hunters out there, the deer push toward our area.” Rick, who has lived in the Upper Peninsula as well as southern Michigan, is an avid hunter who tries to practice
Winter 2018 — Partners
good quality deer management to keep the population in check. “My dad worked in wildlife management and taught us about population control,” Rick says. “An ideal herd will have one buck for every doe. Around here I see about four does for every buck. I try to only take mature animals.” Since acquiring the additional land, Rick has focused on improving the land by planting trees and clearing areas with overgrown vegetation. “I see myself as a steward of this land,” Rick says. “I plant around 250 trees a year on the property, both seedlings and 2-3 foot trees. I’m working to clear out overgrown areas where apple trees are so they can produce fruit.” Rick hopes to continue improving his property so he can enjoy both the wildlife and the beauty of the property for several years. ■
SAVING MONEY AFTER THE HOLIDAYS AND FOR THE NEW YEAR The holiday season has ended, by now you are starting to bounce back from those second, third, and fourth helpings of delicious treats, your house is slowly being put back together, and you may even be starting to feel comfortable using the new gadgets you received. As you reflect on the past month, you realize one of the real joys of the season is showering friends and family with thoughtful gifts to demonstrate how much they mean to you. However, you may be left with the present of a largerthan-normal credit card bill. Remember that perfect cashmere sweater with a cat on the front that Aunt Linda would just love, but cost twice as much as you planned to spend? Yeah, that might have done it. Regardless if you exceeded your holiday budget or not, these tips can help keep your finances in shape for the New Year and beyond! Review your holiday spending.
The first thing you should do is review your holiday spending. Look at how much you charged to credit cards or spent from the checking or savings accounts. Categorize your spending: gifts, food, and entertainment, etc. Doing so will give you a good starting point.
Take a moment to sort through unwanted items and raise some extra cash by selling them online. This will not only help declutter your space, but you can earn funds to help pay down your credit card balance, or increase your savings account.
Start a budget plan.
Team up with friends.
It is easy to quickly spend more than you have coming in (regardless of the holidays), which can lead to overdraft fees or credit card charges. Your budget should outline how your expenses measure up to your income. In addition to your necessary costs (mortgage or rent, home and car payments, weekly groceries, etc.), be sure to factor in those that occur regularly, but not necessarily monthly, such as car maintenance. Then, look at your “wants” and align an appropriate amount of what is left toward these. With a budget in place, it is easier to focus on getting your finances back in shape.
If you have friends who share similar financial goals, as in saving more money, then getting together regularly to discuss your progress can help keep you all on track. You can learn from each other’s mistakes, take inspiration from the progress you each make, and keep one another accountable. Stay focused on goals. It is natural to be excited about your new goal and spending plan early in the year, but keeping that motivation going is the real challenge. To do so, write out your goals or even create a visual representation of them. If you want to take a dream vacation, for example, keep photos of your potential destination handy so you can pull them out as a refresher when you are tempted to spend money on something you do not need. ■ Source: https://money.usnews.com/
Partners — Winter 2018
STRESS MANAGEMENT THE HOLIDAYS ARE A WONDERFUL TIME TO GATHER WITH FAMILY AND FRIENDS, TAKE A BREAK FROM WORK, AND INDULGE IN ENDLESS TREATS – ‘TIS THE SEASON, RIGHT? As everything settles down, going back to work after the holidays and readjusting to “normal” life can also cause heightened emotions and an overpowering feeling of stress. It is normal to feel stress from time to time - it can even be healthy as it may motivate you or keep you safe when you feel a threat. However, severe or long-term stress may lead to health problems: a rise in blood pressure, weakened immune system, and trouble sleeping. Due to its many sources, you may not be able to entirely remove the stress in your life. However, there are ways to help control and reduce it. • Breathe. Before reacting, take a minute to pause – breathe in and out. This allows your mind to take a break so it can process what is going on. That way, you will then have a clear mind and be able to respond.
• Exercise. We have all heard it before, exercise can improve your health. However, in addition to the many physical benefits of being active, it can also help you feel better by lowering your stress. Take a walk, run, dance or do yoga. The options are endless to stay active and release the “feel good” hormones.
• Set priorities. Instead of reacting and rushing around at the last minute, it can help to think and plan ahead. Make a list of the tasks you need to do, and prioritize what is most important. Then, you can start accomplishing them. • Set limits. Going above and beyond to tackle that extra work project or promise to run errands for your family is great, but try to end that knot-inyour-stomach feeling. Notice when you strive to take on more than is humanly possible, and be realistic so you can avoid unnecessary pressure and stress.
• Talk to someone. Speaking to someone you trust can do wonders for lowering stress, and it may even help you solve a problem. If your stress becomes overwhelming, consider talking to your doctor or seeking counseling. ■ Source: www.mayoclinic.org
COUNTRY LIVING – OPEN FIELDS BLOG BRIEF GreenStone publishes regular updates on our Open Fields blog. Check out some of the posts you may have missed at www.greenstonefcs.com/openfieldsblog.
Winter 2018 — Partners
Down Payment Options
Documents for a Smooth Loan Process
Securing the right assets for a down payment requires flexibility and understanding the options available. GreenStone’s expertise and experience in rural communities affords you options in securing the necessary down payment needed to complete your financing. In this v-blog, GreenStone financial services officer Ashley den Dulk discusses down payment options customers may have.
For most people, assuming a home mortgage or refinancing an existing home involves a number of important documents and information. Ensuring the purchase process goes smoothly requires an involved and informed lender prepared to work with you through the transaction. The first step is having the right forms ready to go. In this animated blog, you will learn the documents needed for a smooth lending process. ■
Overnight Blueberry French Toast Ingredients: • 12 slices day-old bread, cut into 1-inch cubes • 2 (8 ounce) packages cream cheese, cut into 1 inch cubes • 2 cups fresh blueberries • 12 eggs, beaten • 2 cups milk
• 1 teaspoon vanilla extract • 1/3 cup maple syrup • 1 cup white sugar • 2 tablespoons cornstarch • 1 cup water • 1 tablespoon butter
Instructions: 1. Lightly grease a 9x13 inch baking dish. Arrange half the bread cubes in the dish, and top with cream cheese cubes. Sprinkle 1 cup blueberries over the cream cheese, and top with remaining bread cubes. 2. In a large bowl, mix the eggs, milk, vanilla, and syrup; then pour over the bread cubes. Cover and refrigerate overnight. 3. Remove the bread cube mixture from the refrigerator about 30 minutes before baking. Preheat the oven to 350 degrees F.
4. Cover, and bake for 30 minutes. Uncover, and continue baking for 25-30 minutes, until center is firm and surface is lightly browned. 5. In a medium saucepan, mix the sugar, cornstarch, and water. Bring to a boil. Stirring constantly, cooking 3 to 4 minutes. Mix in the remaining 1 cup blueberries. Reduce heat, and simmer for 10 minutes, until the blueberries burst. Stir in the butter, and pour over the baked French toast.
Partners — Winter 2018
BUYING PRE-OWNED COMPUTERS AND SMARTPHONES The cost of purchasing a new smartphone or computer has increased dramatically over the years, costing as much as $1,000. Because of this, consumers are searching internet classified sites, like Craigslist and Facebook Marketplace, to purchase used devices. However, as with anything that is pre-owned, there is always a chance the item could be counterfeit or stolen. Luckily, there are things you can do to help protect yourself when buying pre-owned devices. 1. Research the particular device you are thinking about purchasing. Use a search engine to review the price and what the hardware specifications are for that machine. Also, know what operating system was originally installed with the computer. This will help you identify if the system has been downgraded or modified and what price is fair to pay. 2. Power on the device. With any purchase, make sure you see the device powered up for a period. During this time, it is a good idea to open up a web browser and other applications to make sure everything is functioning as you expect. In addition, make sure the device does not power off on its own after a few minutes. 3. Bring a friend. If you do not know about the type of device you are purchasing, bring a knowledgeable friend or family member to help you determine the quality. Regardless if you have never met the seller before, it is always a good idea to bring someone else along with you. 4. Check for Activation Lock before you buy (iPhone). Make sure the device is erased and most importantly no longer linked to the previous owner’s account. Ask the seller whether they have disabled Activation Lock (Find my iPhone). If Find My iPhone is still turned on, you will be unable to activate the device after you purchase it. 5. Check for water damage (iPhone). Liquid contact will void any warranty that might be left on your pre-owned device. However, there is a Liquid Contact Indicator (LCI) that is located behind the SIM Card and if the device has come into contact with liquids this indicator will be red. While there can be considerable savings when purchasing a pre-owned device, it is important to do your research and protect yourself against the risks. ■
Winter 2015 — Partners
CROP INSURANCE EXCLUSIONS:
What are the benefits of APH Yield Exclusion? Using the APH Yield Exclusion, when applicable, will remove a poor performing crop year from your 10-year production average, preventing it from lowering your production history and potentially adversely affecting your coverage. When are crop years eligible for the APH Yield Exclusion? Crop years are eligible for APH exclusions when the average per planted acreage yield for the county was at least 50 percent below the simple average for the previous 10 consecutive years. A crop year determined eligible for exclusion for a crop in a county will also be eligible for exclusion in contiguous counties, as identified in the actuarial documents. What data is used to determine yields?
YIELD EXCLUSIONS Changes to the crop insurance provision of the 2014 Farm Bill allows farmers with qualifying crops in eligible counties to exclude low yields in exceptionally bad years from their production history when calculating yields used to establish crop insurance coverage. This provision is the Actual Production History (APH) Yield Exclusion (YE). Understanding how the exclusions impact your coverage is important when determining your crop insurance coverage. The following addresses frequent questions to the APH YE.
The Risk Management Agency (RMA) is the primary data source for determining the average per planted acre yield for the county and the simple average for the previous 10 consecutive crop years, if sufficient data exists. If RMA data is not sufficient, National Agriculture Statistics Service (NASS) is used. An online map viewing tool is provided on RMA’s website to help identify eligible crop years in one or more counties for producers’ crops and irrigation practice. How does the APH Yield Exclusion impact premiums? Electing APH YE will likely have higher approved yields and increased insurance coverage. These increases will likely result in a higher premium rate to account for the increased risk of loss. What crops are eligible? Eligible crops and crop years for exclusion will be identified in the actuarial documents. The number of eligible crops has been expanded since 2015. Producers who have either Catastrophic Risk Protection or buy-up insurance policies can use this program. Partners — Winter 2018
Crop Insurance Calendar...
How do I select the APH Yield Exclusion Option? The APH YE option must be selected by the closing date for your insurance policy. The option is continuous and as such, must be cancelled by the sales closing date if you wish for the coverage to end. When you choose the option, it will automatically exclude all eligible crop years from your actual production history database. You can choose to opt out of an exclusion for a specific crop year because you wish to retain your yield for an eligible crop year in your actual production history database.
JANUARY Deadline for January LGM Sign Up
FEBRUARY Sales Close Date for Onions
Which exclusion should I apply? You may choose the Actual Production History (APH) Yield Exclusion (YE) option and the Yield Adjustment (YA) option and/or Trend Adjustment (TA) option within an actual production history database. You can only apply one option, either yield exclusion or yield adjustment, to an actual yield for an eligible crop year within an actual production history database.
Deadline for February LGM Sign Up
MARCH Final date to sign up or make changes for a Spring 2018 Crop Insurance policy.
When an actual yield in an eligible crop year is excluded, the excluded yield is not considered for trend adjustment.
• If you are interested in changing your coverage level, type, or need to add a crop, please call your GreenStone crop insurance specialist to review your options. Any and all changes need to be completed by the March 15 deadline!
What if I have less than four years of actual production history? If you choose to exclude an eligible crop year(s) and it lowers your actual production history to less than four crop years of production history in your actual production history database, the applicable transitional yield will be substituted for the excluded crop years to establish a minimum base period of four crop years.
• Note: If a signed application is not returned, your policy will automatically renew at the same level you insured at during the previous year.
Deadline for March LGM Sign Up
Your GreenStone crop insurance specialist can help provide growers with information on how YE can impact individual policies using actual policy data. YE Helper will analyze an individual policy/APH database to optimize policy coverage using the available options. Your GreenStone team can assist growers with determining which options to utilize in your their risk management program.
Where can I find more information? Specific details regarding the use of APH YE in your crop insurance coverage can be obtained by contacting a GreenStone crop insurance specialist at your local branch. ■
Deadline for April LGM Sign Up Production reporting deadline for Fall 2017 harvested crops. • Before you get busy in the field this spring, be sure to have your production reports completed, signed and submitted before April 29.
* Please note that dates can vary by county, especially in Wisconsin. Check with your crop insurance specialist for specific dates if you are unsure.
This example is for educational purposes only. Weighed
This is an estimate and does not constitute a binding offer of insurance. Actual crop insurance premiums may differ based on final variables which include, but are not limited to; high risk acres, written agreements, supplemental rates, actual production history, options, acres planted, units, and Practice/Type/Variety. Illustrations may not qualify for Enterprise Units once acreage has been reported. If the Farm Service Agency determines that the policyholder, or a substantial beneficial interest holder in the policyholder, is ineligible for premium subsidy as a result of any violation of 7 CFR Part 12 (Conservation Compliance), including, but not limited to, failing to file any required AD-1026 Form by June 1st of the preceding reinsurance year, the policyholder may be required to pay the Total Premium rather than the Producer Premium. Coverage Analyzer November 27, 2017 for corn in crop year 2017.
Winter 2018 — Partners
CROP INSURANCE NEWS: RMA CHANGES FOR THE 2018 CROP YEAR– The Risk Management Agency (RMA) has changed the 10 percent yield limitation (cup) procedure from automatically applying to the Actual Production History (APH) yields to now being an option that has to be elected by the applicable sales closing date for the insured crop(s). Your crop policy has automatically been updated to add the Yield Cup (YC) option for the 2018 crop year. If you wish to cancel the YC option for the 2018 crop year, you will need to do so prior to the applicable cancellation date. In addition, you may also elect to maintain the YC option and choose to opt out of having the cup apply to a specific APH database no later than the applicable production reporting date. The RMA has removed the Prevented Planting +10% Option (PT) for the 2018 crop year. The Prevented Planting +5% Option (PF) remains a valid option for the 2018 crop year. All of your crop(s)/county(ies) in which you have previously elected the PT option have been automatically changed to the PF option for the 2018 crop year. If you wish to cancel the PF option for the 2018 crop year, you will need to do so prior to the applicable cancellation date. ■
Early Plant Dates Early plant dates may have changed and vary by location within the state. Be sure to contact your GreenStone crop insurance specialist to get the specific date for your area. It is important to note that crop acreage planted before the early plant date is not eligible for replant payments but will still be eligible for insurance coverage. The insurance guarantee is not impacted as long as producers follow good farming practices. ■ Power of Attorney (POA) and Signatures Crop insurance documents requiring a signature must be signed by an authorized person.
The Crop Insurance Handbook says that for a spouse or others to sign for the insured, they must be authorized by a POA or other legally sufficient document. Even if the person is listed as an SBI on the application. Signature statements on the application or policy change form can serve as a legally sufficient document. For specific details, please consult your specialist. ■ Person Types and Identification Numbers To better accommodate data reconciliation between the Farm Service Agency and RMA, there have been some changes made to the social security number and employer identification reporting
requirements for individuals, estates, and trusts. If you have recently made a change in how an entity has been set up, let your crop insurance specialist know and they will make sure your policy is renewed using the correct identifying numbers. These records need to be updated before the March 15 deadline. ■ Contract Price Addendum The Risk Management Agency offers a contract price addendum that would allow a producer who receives a contract price for their crop to receive a crop insurance guarantee that is more reflective of the actual value of the crop. Under the addendum, insured producers would have the ability (where
available and by choice) to use their personal contract price as their price election, or to use the existing crop insurance price election. If you grow specialty crops under contract and are interested in possibly using your contract price to set your crop insurance guarantee, make sure to ask your crop insurance specialist about the new contract price addendum. ■ Organic Crops As a reminder, the USDA Risk Management Agency now requires all insured organic certified producers to provide a copy of their organic crop plan and organic certificate to their agent before the acreage reporting date. ■ Partners — Winter 2018
LEAVING IT TO THE EXPERTS Don Morse has never been afraid to try new things on his Birch Run, Michigan farm. From the initial challenge of starting a farm in the mid-70s, Don has embraced change and looked for innovative ways to manage his farm including being one of the first in his area to adopt no-till practices, and more recently, using cover crops to manage soil health and nutrients. But there’s one area he will leave to the experts: his accounting and tax preparation. “When I first started farming, I got a ledger book from the bank that we used to record everything and it would all fit in one book,” Don says. “By the mid-1990s, we were filling up over two and half ledger books in a year and we knew we had to do something else.” Don initially met with his local GreenStone branch to establish a better system. The tax accountant at the time helped Don set up QuickBooks on his computer to handle the data entry and then Don brought the files in each month. As Don’s business grew and GreenStone’s systems evolved, Don turned to them for more, including payroll and tax preparation.
Winter 2017 — Partners
“Everything is so much more complicated,” Don says. “With the farm, my seed business and stock in an ethanol plant, I can’t just turn this all over to [just anyone]. The people I work with need to understand my businesses and the different structures of each of them.”
Tax Calendar... JANUARY
In addition to Don’s evolving farming and seed business, changes in tax laws and filing requirements make it challenging for Don to stay current on the necessary paperwork required.
Today, Don works closely with Cindy Maciag, one of GreenStone’s tax and accounting managers, who prepares monthly profit and loss statements as well as coordinating his tax preparation.
Form 1099 due to recipients of certain payments made during 2017 for interest, rent, contract labor, veterinarian services, etc. Provide employees their copies of Form W-2 for 2017. REMINDER FROM 2016: Employers must file Forms W-2 and W-3 with the social security administration, and payers must file Forms 1099-MISC and 1096 for Non-Employee Compensation with the IRS. Penalties will be assessed for not meeting the Jan. 31 deadline.
“I trust Cindy and the GreenStone team completely,” Don says. “Having everything in one place: my loans, accounting, and crop insurance, makes everything easy to manage. I like that I can walk in one end of the office and by the time I reach the other end I have everything taken care of. Plus, it makes it so much easier when Wayne (Sevilla) needs new financial information - it is right there.”
Farm employers file Form 943 to report social security and Medicare wages, and withholdings. Non-farm employers file Form 941 for the fourth quarter to report social security and Medicare wages, and withholdings.
“Don is an absolute pleasure to work with,” says Wayne Sevilla, Don’s financial services officer. “His progressive tendencies always keep me on my toes to gain the knowledge required to give him quality feedback.”
Employers file Form 940 for federal unemployment tax.
The respect between Wayne, Cindy and Don is mutual, creating a trusted relationship that benefits both Don and the GreenStone team. “For instance,” Don explains, “when we had to make decisions regarding our investment in the Poet Ethanol plant, Cindy was able to do some projections and analysis to help us make the best decision concerning our stock position. It was relatively quick and easy for her to do because she had all our information. It was the same when we needed to file PA 116 on some land we recently bought- they were able to quickly do the filing because between the loan documents and our records, they had all the information needed to file the form.”
Payers must file Forms 1099 and 1096 (other than 1099-MISC for Non-Employee Compensation, which is due Jan. 31) with the IRS. If these forms are e-filed, the deadline is extended to March 31.
The need for more specialized accounting and tax services has been evolving over time and is an area GreenStone is investing additional resources to enhance current offerings.
Qualifying farmers file your individual tax return (Form 1040) and pay tax due if you do not have a safe estimated tax amount paid in and you owe over $1,000 in tax. S Corporations file a 2017 calendar year income tax return (Form 1120S). Provide each shareholder with a copy of Schedule K-1. If not able to file, file Form 7004 to request an automatic six month extension. REMINDER FROM 2016: Partnerships and LLC’s taxed as a partnership file a 2017 calendar year return (Form 1065). Provide each partner with a copy of Schedule K-1. If not able to file, file Form 7004 to request an automatic six month extension. These returns were due April 15 prior to 2016.
“As changes take place in tax and payroll regulations, and farms become more complex, we continually see a need among our members for more assistance in the area of accounting and tax services,” says Chad Zagar, vice president and managing director. “To help us meet those changing needs, we are enhancing our team of tax and accounting specialists and investing in new resources to provide the best experience for our members.”
For Don, not spending his free time doing books is the added bonus of working with the GreenStone team.
Individuals file a 2017 income tax return (Form 1040) and pay any tax due. If not able to file, file Form 4868 to request an automatic six month extension. Any tax due must be paid with the extension. First quarter estimate due for 2018 for individuals that pay estimated taxes.
“I still write all the checks so I can see where the money is going, but having Cindy work up the monthly statements and handling everything for taxes saves me a lot of time that I can spend on the farm or with my seed business.”
Corporations file a 2017 calendar year return (Form 1120) C and pay any tax due. If not able to file, file Form 7004 to request an automatic six month extension. Any tax due must be paid with the extension.
“We like to say that GreenStone is a one-stop shop for our members,” Chad says. “It is nice to see when members like Don see the efficiencies and convenience to be had in using GreenStone’s integrated services.” ■
Corporations deposit the first installment of estimated C income tax for 2018.
Partners — Winter 2018
3515 West Road East Lansing, MI 48823
Winter feature highlight... When Rick was looking to relocate in southern Michigan, he had a short-term goal of finding a place to set up his home, with a long-term vision of someday having a special spot of his own to hunt and enjoy. Read more on page 27.