Partners Fall 2019

GreenStone FCS

Fall 2019

Promoting the business success of our customers and the rural community

+F all 2019

Market Outlook +F ruit Crop Risk management

THE FRESH APPROACH

Anderson and Girls pg. 5

FALL 19 5 YBSF

Feature. In the 1980s Terry and Gwen Anderson chose to consolidate their land by selling some acreage and turned their attention to the orchard and farm market they had just purchased.

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23 GreenStone Story. As the business of farming becomes more specialized, it is becoming more difficult to find the “Swiss Army knife” person who can meet all the needs of each customer.

27 Country Living Feature. Will and Nancy Heiden are the new owners of a log cabin on nearly 200 acres on the Manistique River in Michigan’s Upper Peninsula.

33 Crop Insurance. For the Schilling family, they embrace the tools available to help with planning, to make the right decisions and protect their investments.

35 Accounting Feature. While there are many things impacting your business, you can gain control of your tax situation if you plan ahead.

3 CEO Comments.

President and CEO, Dave Armstrong, looks at the challenges members have overcome in 2019 and counts the steps toward a brighter future.

9 Guest Column.

The truth is, whether it is a man-made or naturallyoccurring chemical, climate, or a number of other potential threats, risks are everywhere.

11 Guest Column.

To help farmers deal with conditions such as harsh weather, Michigan State University (MSU) Extension spearheaded educational efforts dedicated to assisting farmers under stressful conditions.

13 Market Outlook.

Despite fears about escalating trade tensions, slowing global growth, and an inverted yield curve, the macro-economy has been surprisingly resilient during most of 2019.

15 Guest Column.

By being sound managers and forward thinking in their planning, these GreenStone Farm Credit Services customers have successfully completed the acquisition of their farm.

22 Directors’ Perspective.

Newly elected Director Troy Sellen shares his path to becoming a GreenStone Board Member.

25 Legislative Matters.

The hemp plant, non-THC variety, may be in your sight.

26 PAC Progress.

Strong relationship foundations continue to be built to support rural communities and agriculture.

29 Health and Wellness.

Rural homeowners must balance caring for their property with the needs and desires of the family, all while remaining financially agile to react to the unpredictability of the country.

30 Fall Family Fun. Make the most of your weekends with family activities that you can scaffold up or down to align with your children’s interests - and the seasonal weather!

8 Blog Brief

Publisher’s Note: “I always work from the philosophy of the customer first.”

That statement, shared by one of my Wisconsin teammates during a recent training, stuck with me. It’s not that it’s a new concept or something I haven’t thought before – in fact, it’s one of GreenStone’s core values. But as I’ve replayed the words over and over again the last few days, I realized it was the sincerity in what she said that made the difference this time. It was off the cuff; a matter of fact reference.

The sincerity is what made me understand she wasn’t just repeating a catchy expression. Buried deep in those words was reference to the team she works with at the branch who ensures you, the customer, gets presented every option to consider for your decision; it was a glimpse into her prioritization of your needs over the day-to-day work necessities; and her words dripped with a desire to grow and improve in order to turn around and do it even better for the next customer tomorrow.

21 Behind the Scenes

As you’ll read in the GreenStone Story on page 23, she’s not the only person zeroed in on this value. All our teams have evolved to best meet our customers’ needs – our groups of staff are empowered through compounded talent and experience, and elevated technology and services. They are the teams that serve you every day, including those customers featured throughout this magazine. And, they are the teams that you may not see in person, but that work together behind the scenes always thinking of the best way to support your needs – like my team that uses the skills and resources of many to pull together this Partners for you.

29 Blog Brief

While we all believe in GreenStone’s Core Four Values, we dig deeper as a team and embrace what it takes to truly live them.

31 Commodity Cuisine...

Bacon Wrapped Apple Chicken

As you dive deeper into the fall, we hope you’ll feel that sense of team as you read this issue of Partners, and as you embrace your own team at home. Happy reading!

17 Member News 18 Pause for Applause 19 Calendar of Events 19 Grow Forward Grants 20 Community Garden 20 Candid Comments

– Melissa 32 Crop Insurance News 34 Crop Insurance Calendar 36 Tax Calendar 37 Intern Wrap Up 38 Tech Tip

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

Editorial Laura Moser Melissa Rogers Amber Echlin Jean Macleod

Art & Design William Eva Annah Horak

Partners GreenStone Farm Credit Services 3515 West Road East Lansing, MI 48823 800-444-3276 marketing@greenstonefcs.com

CEO Comments:

Fall Has Arrived UNFORTUNATELY, THE “NEWS OF THE DAY” CONTINUES TO BE COMMODITY MARKET UNCERTAINTY AND ANXIETY AROUND FINAL YIELDS, PRIMARILY FOR CORN AND SOYBEANS. BASED ON MY TRAVELS AROUND OUR TERRITORY THIS SUMMER, I CAN SAFELY SAY THAT YIELDS WILL BE ALL OVER THE BOARD VARYING BY NOT ONLY REGION BUT WITHIN THE SAME FIELD!

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Fall 2019 — Partners

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We recognize how stressful this year has already been, of which its affects will linger on well into 2020 and likely beyond. GreenStone is well positioned to work with our financially challenged members as they work to transition to better economic times.

Many people ask me “so how does it look for farmers this year?” And I have to answer, “It’s too early to tell.” In fact, no one will really know until harvest is complete, but we do know that most everyone is praying for a late freeze to get as much of the late-planted crop to maturity as possible.

As the wheels turn through the fields, GreenStone is embarking on another round of proactive outreach to many of our members.

With the goal of being informed and prepared, our teams are listening and learning from members on their current conditions, and discussing any special financing needs that would best assist them.

Although we understand many farmers will not yet know how their year is going to turn out, by continuing these conversations we can be personally engaged in assisting in their financial planning process and helping them evaluate areas that might not yet be top of mind. The earlier we start evaluating possible financial outcomes, the better prepared we all can be - our members and our staff - to implement timely solutions for possible cash flow and earnings shortages resulting from the poor yields and/or commodity prices.

This also allows our GreenStone team to plan ahead and model different income and expense scenarios that will give us an indication of what may be necessary later on to implement any required assistance once a member knows their financial results. Being prepared and able to provide the thoughtful, timely service each customer deserves is an important part of GreenStone’s proactive and transparent customer meetings.

We recognize how stressful this year has already been, of which its affects will linger on well into 2020 and likely beyond. GreenStone is well positioned to work with our financially challenged members as they work to transition to better economic times. Yet, we

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also understand in some situations losses can be so significant that lower interest rates, interest-only payments, spreading out losses over future year payments, or any number of tools we may have to assist will not return the farm business to viability. In these situations, we owe our members our honest, balanced view and advice regarding their finances, even when it’s the most difficult solution to discuss, to help our members while there may still be equity to recover. Coming to a reality of this nature takes a clear focus on what’s best for the farm family both now and in the future.

Ultimately, the members of GreenStone also expect us to do what is in the collective best interest of all cooperative members.

Minimizing loan losses, retaining a sustainable level of capital, and preserving credit quality are all contributors to those expectations.

Times like these are very challenging for both farmers and lenders. Often there are no easy answers. We pledge to give all our members honest, timely feedback in a professional, respectful manner even when it may not be what any of us want to hear.

While it is human nature to dwell on challenges, it is important to recognize the majority of our members will have average, to above average financial results for 2019. The diversity of our agricultural industry embraces the profitability and success some members saw in other commodities. Many of the core row crops were able to be planted relatively timely and received key rains throughout the growing season that should produce decent yields. Even some that were unable to plant any crop had the solid crop insurance coverage in place that will bridge them into next year. Dairy prices have been improving throughout 2019 with a positive outlook extending into 2020. Interest rates have declined and the outlook appears to be stable to possibly even lower over the next few months. In addition, GreenStone’s financial

performance should meet or exceed its key business plan targets for 2019, which bodes well for a solid patronage payment back to our members once again!

I share these rays of sunshine not to diminish the difficulty some of our members will experience, but rather to remind us not all is shadowed. We are blessed; keeping our mind pointed toward the opportunities is important no matter what stress we encounter.

Together, let’s support each other in counting our blessings and keeping our challenges in perspective.

In closing, I encourage you to check out all the great information in this issue of Partners.

You may find the stories on the “Depth of the GreenStone Team,” “Customer Satisfaction Results,” “Grow Forward Grant Update,” “Crop Insurance Member Meetings,” and an array of customer success stories.

Remember that we are much more than a lender! We are your cooperative, working to support your success.

We are the largest crop insurance agency in our territory and represent a variety of insurance companies to bring you more options to meet your specific needs through a talented group of specialists. Plus, we have expanded the number of CPAs in our tax and accounting team who specialize in farm accounting practices and tax laws to provide you with the knowledgeable and timely service you require.

Thank you for your business and as always, please contact me directly if I can ever be of assistance.

Best wishes for a safe and productive harvest season!

Dave Armstrong

517-318-4105 dave.armstrong@greenstonefcs.com Partners — Fall 2019

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FRESH APPROACH A FARM’S EVOLUTION OFTEN CORRELATES TO THE ECONOMIC AND MARKET FORCES HAPPENING AROUND THEM. FOR MANY, THE TOUGH FARM ECONOMY OF THE 1980S FORCED FARM OWNERS TO MAKE DIFFICULT BUSINESS DECISIONS CHANGING THE TRAJECTORY OF THE FARM. MANY FARMERS CHOSE BETWEEN A SHARPER FOCUS ON ONE OR TWO AREAS OF THE FARM, VERSUS A DIVERSE FARM BUSINESS.

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Yet for others, it was adding diversity and new business entities to sustain the farm. For Terry and Gwen Anderson, new owners of an apple orchard in the 1980s, they chose to consolidate their land by selling some acreage and turning their attention to the orchard and farm market they had just purchased.

“We made more money in the first year of business than we did in the next 10,” Gwen says.

“We bought the farm in 1978 after working in partnership with the owner, Orville Trebian, for a couple of years. The 1980s were rough for us, but we made it through by selling some land and focusing on the areas that were making some money, like the farm stand.”

Realizing the potential for success was in the farm stand rather than simply growing more fruit, the Andersons focused on keeping the farm stand successful. Gwen’s off-farm job as a distributer of supplies to other on-farm markets gave her unique insight to how others were positioning their business.

When the next generation, Alan and Amy Laper (the Andersons’ daughter) began working at the farm, the Andersons took the opportunity to again respond to outside influences – this time to the positive impacts of a growing desire to buy local. They used it to propel them into the next phase of their evolving farm business.

Using their acreage to grow strawberries, peaches, apples, cucumbers and pumpkins, they can supply their own stand as well as local markets with fresh seasonal produce. The apples, though, are the backbone of the farm.

“We want to plant and raise what we can put through the market,” Terry says. “We haven’t added a lot of new technology or varieties, because we can’t risk spending 3-4 years growing an apple variety that won’t sell.

Quality is number one – there is no room for mediocre in the fresh fruit business. Customers only want a perfect apple.” ➡ Right: Keeping a well-stocked farm market with fresh produce, homemade baked goods and unique gifts, makes Anderson and Girls Farm Market a popular destination. Pictured (l-r) are owners Gwen and Terry Anderson and Alan and Amy Laper.

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Quality is number one – there is no room for mediocre in the fresh fruit business. Customers only want a perfect apple.

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Today, Anderson and Girls Farm Market and Petting Zoo is a popular destination for school groups, local families and “Up North” travelers.

Located on the outskirts of Stanton, Mich, on M-66, the farm market features a variety of fresh fruits, bakery and other farm products, as well as an extensive gift selection, ice cream shop and a treasured petting zoo.

From April to December, the farm stand welcomes hundreds of visitors looking to enjoy a day in the country, buy fresh produce and visit the animals. Like many apple markets, cider and doughnuts are a big draw. The demand for doughnuts can easily surpass their ability to keep up, with 300-500 dozen doughnuts sold during the weekend.

The diversity of the farm market gives each family member the opportunity to focus on their particular area of interest. Terry, the selfproclaimed animal lover, oversees the petting zoo, which is home to a variety of animals including monkeys, goats, prairie dogs, reindeer and other unique animals. He also manages the orchard and is the apple cider maker.

Partners — Fall 2019

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Gwen is the baker and buyer for the gift shop. She starts her day making dozens of fresh donuts, breads and other items for the store. The fresh baked goods tie in well with the fresh cider.

Amy is the overall manager of the market, managing all employees and the record keeping, as well as running the ice cream shop. Alan, who also owns a trucking business, works closely with Terry on the orchard work and the tree production.

➡ Top of page: Terry Anderson travels around the state and country to find new additions to the petting zoo.

Starting with a few goats and a Jersey calf they now have several different animals on their farm creating a popular destination for families and school groups. ➡ Above: Among the exotic animals, the goats remain one of the favorites for visitors. Some visitors make routine visits throughout the week to check on “their” animals.

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Fall 2019 — Partners

While the farm appears to have many moving parts, the focus stays on providing families and others a place to build memories and relive childhood moments.

“We have young parents come out with their children because they remember coming to the farm when they were young,” Terry says. “It

is surprising how many people we see every year. The petting zoo is a big draw. We have people that come on a regular basis to visit the animals and develop an attachment to them.”

The petting zoo, which started with a couple of goats and a Jersey calf, has become its own destination for families and school groups. Terry’s passion for the animals and curiosity is a gateway for many animals to find a new home. His enthusiasm for new animals is often tempered by his family.

“We can’t let him go on his own anymore,” Amy jokes. “He is always finds something new to bring back.”

Terry’s curiosity stems past the animals to all areas of the farm business, as he continually looks for ways to improve and asks “what if.”

Amy, on the other hand, is the more pragmatic one of the group, there to counter the ideas with the more practical and numbers-focused questions.

“Terry is like Walt Disney – always with a dream,” Gwen says. “Amy is like Roy Disney, his brother, who was Disney’s CEO and put Walt’s dreams into reality.”

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Farm Credit has worked with us through good and bad years,”.... Mark (Oberlin) is like an extension of our business. He has experience working with others that we can use. He has helped us out a lot and made things easier for us.

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And like Disney, the Andersons are always thinking about the customer -- what will bring them in and what will they buy. From the right apple variety to items in the gift shop and ice cream flavors, they are always looking for the right connection to their customers.

“We have learned to offer items grandparents will buy for their grandchildren in the gift

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shop,” Gwen says. “Items like Anderson and Girls sweatshirts are also popular with visitors wanting to bring back a souvenir of their time here.”

One thing they won’t charge for is admission to the zoo. While it takes a lot of resources and time to manage the zoo, they believe having a free attraction is more beneficial to the rest of the business.

Throughout the farm’s evolution, one area has remained constant - their relationship with Farm Credit. From the difficult years at the beginning to the addition of new enterprises, the Andersons have relied on Farm Credit for financing and more importantly, counsel.

“Farm Credit has worked with us through good and bad years,” Terry says. “Mark (Oberlin) is like an extension of our business. He has experience working with others that we can use. He has helped us out a lot and made things easier for us.”

While the Andersons are not sure what the next dream will be, they are sure the orchard and farm market will continue to evolve to meet customer desires while making the most of their resources.

“It’s a balance between what we want to do and what works for us, as well as having the employees and resources to make it all work here,” Amy says. “We will push through the next 8 to 12 weeks of our busy fall season and then start planning for next year.” ■

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.

Growing Forward with his Community Starting a new business goes hand in hand with perseverance, hard work and risk; but in agriculture, that’s an understatement. With this in mind, GreenStone customer and YBSF, Adam Beckta, uses resources like the Grow Forward Grant to take farm management courses and drive his farm’s future success.

Dollars and Sense: Optimism Coming through Dairy Markets for Remainder of 2019 Dairy market activity this summer has been impacted by a number of factors including weather, trade and overall milk production, making forecasting the remainder of 2019 more difficult, but the trend is pacing upward – a welcomed relief for many dairy farmers.

USDA Announces Details of Support for Farmers To support farmers impacted by retaliatory tariffs, the USDA is offering up to $16 billion in aid through the MFP. Program signup will run from July 29 through December 6, and the first tranche of payments will begin in midto late-August. ■

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Navigating and Mitigating the Risks to Human Life

By Alan Hahn

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THE TRUTH IS, WHETHER IT IS A MANMADE OR NATURALLY-OCCURRING CHEMICAL, CLIMATE, OR A NUMBER OF OTHER POTENTIAL THREATS, RISKS ARE EVERYWHERE. ARE WE FACING MORE RISKS TODAY THAN IN THE PAST?

It seems as if the threats are becoming more numerous and ominous. But are they? How concerned should we be about these risks? Some perspective may be helpful.

Environmental and Ecological Risks

Environmental risks are not new; they are, however, more quantifiable.

Environmental risks used to come from naturally-occurring toxins that were not understood (e.g., lead, mercury, etc.).

Nature presents us with risks in the form of extreme weather – hot, cold, rain, snow, floods, droughts, etc. These, too, are far better understood, forecasted, tracked, and mitigated through, among other actions, sheltering and controlled indoor climate.

We tend to forget those risks we have successfully mitigated because we are too focused on some other potential risk. For example, death by extreme weather events in the United States has dropped from 94 people per million in 1900 to 5 people per million currently.

Put another way, global deaths from natural disasters peaked in 1931 at 3.71 million people; in 2018, it was 10,809 people (see ourworldindata.org).

When we consider potential risk from chemical exposure, it is based on toxicological data, models, etc. And typically, this includes “safety factors” to account for uncertainty in the analysis. In other words, it is hypothetical and based on good science, but it is hypothetical, nonetheless.

Putting Chemical Risks into Perspective

Dr. Bruce Ames is a name very familiar to anyone involved in Establishing Environmental Risk evaluating chemical risks. Dr. Factors Ames developed the Ames test Our environmental agencies for chemical mutagens. He has (federal and state) typically devoted much of his career to establish standards based on risk understanding cancer and aging. factors. Usually, the question In 1989, the American Council when establishing these risks is, on Science and Health, with “How much risk is acceptable?” journalist Walter Cronkite, Should the risk be established produced a video called Big Fears, such that only 1 in 100,000 Little Risks. Dr. Ames points people might get cancer from out that we face many risks, but the exposure? Maybe it should lifestyle, including smoking and be 1 person in 1,000,000? These diets, are the biggest risk we face are social decisions based on and can control. environmental and economic Dr. Ames also points out that factors. while many people believe that The additional risk is considered carcinogens are rare – they to be acceptable or “de minimis” are not. Naturally-occurring if it is less than 1 in 1,000,000, pesticides produced by plants which equates to 0.0001%. If as a mechanism for survival are the overall risk of developing ingested by humans every day. cancer in one’s lifetime is 25% Dr. Ames has maintained that (or 0.25), the environmental cancer is a degenerative disease contaminant would raise one’s risk to 25.0001%, or negligible. of old age. The fact that cancer rates were rising in the latter The decision of how much part of the 20th century, Ames cleanup is necessary also argued, was not the result of involves risk. For example, an increase in pollution but of if a chemical is in the soil the fact that people were living and groundwater and the longer. remediation efforts have Talking about how plants use successfully reduced the natural, carcinogenic pesticides chemical concentrations such to survive, Dr. Ames said, “Do that the risk is 1 in 100,000, we want to worry about low what has to happen to reduce doses of carcinogens…I think that risk to 1 in 1,000,000? probably not. In any case, manWhatever actions are required made pollution is tiny, very tiny to reduce that risk carry compared to the background of risk. Removal of additional natural substances. If you are contaminants may mean really worried about tiny doses more trips to a landfill with of carcinogens, which I’m not, “contaminated soil.” This one would look at these natural drive time and use of heavy things first.” equipment involves risk.

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Our environmental agencies (federal and state) typically establish standards based on risk factors.

Usually, the question when establishing these risks is, How much risk is acceptable?

Everyday Risks to Our Lives

While we may be concerned when we are told of the impending weather system or the findings of the exposure to a chemical, we give little consideration to everyday risks.

These are genuine risks for which we have mortality data.

The National Safety Council has a long list of risks and associated accidents and the “lifetime odds” of mortality associated with these events.

These risks are far greater than 1 in 100,000 people or 1 in 1,000,000 people.

• There is a 1 in 242 chance of dying in a car accident (though declining steadily over the decades). If you are an occupant of a “special agricultural vehicle,” then the chances of a fatality are 1 in 13,114.

• Falling will claim 1 in 269 people. Your odds are better if this fall involves a bed, chair, or other furniture; 1 in 5,508.

• Eating is essential for our life, but it, too, carries risk because 1 in 4,812 will die from “inhalation and ingestion of food causing obstruction of the respiratory tract.”

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• While, as every farmer knows, honey bees and other pollinators are an essential part of growing crops, 1 in 66,297 people will die from contact with hornets, wasps, and bees.

Since the dawn of our existence on this planet, humankind has navigated and attempted to mitigate (in many cases successfully) countless risks that threaten our livelihood and lives.

The reality is, our lives are at risk from the moment of our birth until that final moment when one of life’s many risks finally catches up with us. While news of the most-recent risk to our stay on the planet may sound plenty scary, the real risks we face are far more pedestrian and, as Dr. Ames points out, within our control. ■ ABOUT THE AUTHOR

Alan Hahn is an Environmental Professional and Business Development Manager at The Dragun Corporation in Farmington Hills, Michigan.

The opinions stated herein are not necessarily those of GreenStone Farm Credit Services.

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Resources to Help Farmers with Stress, Planting Challenges By: Becky McKendry and Mindy Tape, Michigan State University Extension Communications

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Our Extension staff, working with researchers and campus-based specialists, are able to develop and distribute research-based information to support farmers who are making decisions about crop maturity, using alternative feeds and managing finances.

The demands of farming are plentiful— unpredictable growing seasons, equipment breakdowns, animal health issues and more. Unfortunately, these demands take a toll on the dedicated people who drive our agriculture industry, which can lead to stress, mental health issues and even suicide.

This season has been particularly challenging—as of August 2019, the USDA estimated more than 880,000 acres of cropland in Michigan alone were not planted in time to meet insurance final plant dates, or were not planted at all.

Thousands of acres were planted so late that farmers are concerned corn may not mature enough to yield minimal returns before a killing frost.

To help farmers deal with conditions such as harsh weather, Michigan State University (MSU) Extension spearheaded educational efforts dedicated to assisting farmers under stressful conditions. For the past three years, MSU Extension has been developing a suite of resources to help farming professionals and their families take care of their physical and mental health. MSU Extension has also collaborated with GreenStone and other agricultural institutions to develop materials, deliver information, and host events for the farming community.

In 2016, MSU Extension developed “Communicating with Farmers Under Stress,” a workshop for agribusiness professionals who work with farmers and farm families. In 2018, MSU Extension began offering an additional curriculum for farmers called “Weathering the Storm in Agriculture: How to Cultivate a Productive Mindset.”

“Bury Seeds, Not Stress,” which addresses everything from signs of stress in farm youth to the mental health stigma facing men.

“It’s essential that we are attentive to the mental health impact of a variety of stressors to farmers, including weather,” said Cheryl Eschbach, director of health and nutrition programming for MSU Extension. “We need to support them to make decisions and to seek help when distressed. We also want to teach others how to support farmers under stress.”

In addition to farm stress resources, MSU Extension’s statewide network of agricultural educators have addressed the delayed planting season by tracking growing conditions, working individually with farmers, hosting crop update sessions and writing educational articles. These articles have covered topics such as how farmers can adjust to inhospitable conditions, make difficult choices and apply for crop damage assistance.

“The 2019 growing season has been difficult,” Marilyn Thelen, associate director of MSU Extension agriculture and agribusiness programming said. “Our Extension staff, working with researchers

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and campus-based specialists, are able to develop and distribute research-based information to support farmers who are making decisions about crop maturity, using alternative feeds and managing finances.”

The impacts of MSU Extension’s programming to date have been great: 91 percent of participants in the farm stress management curriculum have learned to better recognize signs of depression, suicide and mental illness, and 94 percent reported improved understanding of current agricultural financial situations.

“We know we can’t control the weather,” MSU Extension Director Jeff Dwyer said in his August testimony in front of the Michigan House and Senate Ag Committees. “But we can help farmers take control of how they deal with the weather by continuing to offer research-based education in production and financial management.”

For more information about MSU Extension’s farm stress resources, visit canr.msu.edu/managing_farm_stress. For more information about MSU Extension’s delayed planting resources, visit extension. msu.edu/delayedplanting. ■

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Other available resources include online factsheets, a pilot text messaging program, and a recent, free webinar series called

We know we can’t control the weather.

We can help farmers take control of how they deal with the weather by continuing to offer research-based education in production and financial management.

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Market Outlook Fall DESPITE FEARS ABOUT ESCALATING TRADE TENSIONS, SLOWING GLOBAL GROWTH, AND AN INVERTED YIELD CURVE, THE MACRO-ECONOMY HAS BEEN SURPRISINGLY RESILIENT DURING MOST OF 2019. OUTSIDE OF SOME RELATIVELY MODEST VOLATILITY, EQUITY MARKETS HAVE PERFORMED WELL, WITH THE S&P 500 UP 19% YEAR-TO-DATE.

Trade tensions and their impact on global growth are expected to weigh on U.S. economic growth in coming quarters.

Forecasted 2019 real GDP growth was recently revised down 0.1%, and now stands at 2.2%. Projected real GDP Growth for 2020 has been revised down by 0.5%, and now stands at 1.8%.

That being said, unemployment remains low and consumer spending, which drives two thirds of the U.S. economy, is growing solidly. Additionally, core inflation is at a decade high.

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On September 18, the Federal Reserve opted to cut its target interest rate range by an additional 0.25%, bringing it to the 1.75%-2.00% range. This represents the second 0.25% rate cut since late July. Although most major economic indicators have remained solid, inflation continues to run below the 2% target, which has spurred the Federal Reserve’s efforts to stimulate the economy.

Federal Reserve Chairman Jerome Powell cites global uncertainty and its subsequent impact on business investment and export markets as among the primary suppressants to inflationary pressure.

It should be noted that there was some disagreement among federal officials over the September decision to cut rates. Three committee members voiced concerns that the economy isn’t in need of an extra boost from a rate cut and conversely, one official favored a deeper cut of 0.50%. Investors appear to have been hoping for a more severe rate cut, as evidenced by equity markets declining immediately following the announcement. Committee members are also split with regards to the appropriate course of action in the immediate future, with seven out of 17 officials projecting another rate cut in December.

Much of the uncertainty that is said to be hindering growth in recent months stems from escalating trade tensions, largely between China and the United States. Evidence of this uncertainty can be found in financial market

volatility, which has increased due to, among other things, earnings concerns for multinational corporations with a heavy international presence. It is difficult to assess the progress being made behind closed doors with regard to trade talks between China and the United States; however, both sides recently took steps to ease tensions.

In mid-September, President Trump announced he would delay raising previously announced tariffs in an effort to not disrupt the 70th anniversary of the People’s Republic of China.

In response, Chinese authorities announced they would consider resuming purchases of American agricultural products, while also naming a wide range of U.S. goods that will be exempt from tariffs enacted last year.

Given these measures, markets have renewed optimism a trade deal will be reached.

While the general economy appears to be holding up reasonably well amidst the ongoing trade uncertainty, its adverse effects are becoming increasingly apparent in the agriculture, manufacturing and transportation sectors. Recent tariffs imposed on goods in these sectors pose a threat to consumer spending, which is likely to contribute to slowing economic growth.

Global economic growth has also maintained a positive, but slowing, rate. In addition to ongoing trade tensions between the U.S. and China, Brexit issues remain unsolved and monetary easing by several major central banks has yet to have much effect in terms of stabilizing and strengthening global economic activity. Global GDP growth estimates have been revised downward to 3.0% for 2019, 3.0% for 2020, and 3.2% for 2021. The United States and Europe are not the only contributors to slower global growth, however. Key emerging economies, such as China and India, have shown signs of slowing as well, as export growth has underperformed expectations.

Throughout much of 2019, the housing market has exhibited few signs of benefitting from the Fed’s monetary policy easing. However, recent data indicates housing demand may be on the upswing. Permits for future home construction have risen to levels not seen since 2007, and housing starts in August jumped 12.3% to a seasonally adjusted annual rate of 1.364 million units, representing year-over-year growth of 6.6%. Single-family homebuilding, which accounts for the largest share of the housing market, increased 4.4% to a rate of 919,000 units in August, the highest level since January of this year. Starts for the volatile multi-family housing segment soared 32.8% to

a rate of 445,000 units in August, reversing the prior two months’ declines.

Though rental inflation has slowed in recent months, this trend is not expected to continue as rental vacancy remains very low.

With regards to the agriculture sector in particular, on August 30 the USDA revised its forecast for 2019 total net farm income to $88.0 billion, a 4.8% increase over 2018 (2.9% if adjusted for inflation). If realized, in inflationadjusted terms, 2019 projected net farm income of $88.0 billion would be 35.5 percent below the peak net farm income of $136.5 billion reported in 2013. It would also be below its 2000-2018 average of $90.1 billion.

Much of the rise in forecasted net farm income for 2019 can be attributed to production expenses only rising 0.4% (a 1.3% decline on an inflationadjusted basis).

More specifically, rising costs of feed and labor are expected to be offset by reduced spending on seed, pesticides, fuel/oil, and interest. Farm sector equity is also trending upward, with the USDA forecasting 1.8% growth, to $2.67 trillion, by the end of 2019. Much of this reflects a projected 1.9% rise in farm-sector real estate values during 2019. Total farm debt in nominal terms is forecast to increase by $13.7 billion (3.4%) in 2019, led by an expected 4.6% rise in real estate debt. The farm sector debt-to-asset ratio is expected to rise from 13.31% in 2018 to 13.49% in 2019. Working capital, which measures the amount of current assets available to cover current liabilities, is forecast to decline 18.7% from 2018.

Many local agricultural producers have faced uncertainty of their own, given the cold and wet conditions that lasted through much of the spring.

As a result, days suitable for fieldwork throughout the planting season were limited and, given the widespread impact of the historically wet planting season, December corn futures rose sharply from the range of $3.65-3.75 per bushel up to as high as $4.73 per bushel in June. Much of this market reaction was due to the expectation that many farmers would plant soybeans instead of corn, driving planted acreage and the overall harvest lower for the year.

Throughout the summer, however, the USDA provided upward revisions for both planted corn acreage and yields, which indicated a larger harvest than was originally anticipated. According to the USDA, trade tensions with China (historically the largest purchaser of U.S. soybeans) may have influenced many farmers’ decision to plant corn instead of soybeans. As such, soybean production is now forecast to be down nearly 1.0 billion bushels, or 20%, from 2018. In total, the trade impasse with China, and subsequently lower soybean prices, led to 12.5 million fewer soybean acres being planted this year.

Michigan-based milk producers continue to face mailbox milk prices ($16.06/cwt) well below the national average ($17.39/cwt) due to a shortage of processing capacity in the state. That being said, the overall dairy market trend is favorable, as Michigan producers were receiving mailbox milk prices of $14.06/cwt in April 2018 and $15.72/cwt in April 2019. Milk prices have rebounded as several months of herd reduction driven by rising cull rates has put downward pressure on production levels. As this rally continues, it is important to track the industry’s appetite for capacity expansion, which may drive prices lower once again. Based on the cost and availability of forage, as well as the anticipated scarcity of heifers in the coming months, it appears unlikely that we will see a meaningful herd expansion in the immediate future.

The fourth quarter will shed light on some of the uncertainties weigh on the agriculture sector, including crop yields and federal legislation around tariffs and other trade negotiations. How any positive market movement gained through these activities is offset by input costs will impact producers profitability in 2020. ■

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Growth Opportunities in Organic Production By: Jerry May

Stewart Farms of Bannister, Mich. is now a sole proprietorship fully owned by Caleb and Teresa Stewart. By being sound managers and forward thinking in their planning, these GreenStone Farm Credit Services customers have successfully completed the acquisition of their farm from Caleb’s parents.

In 1987 Caleb’s parents, Jim and Carol, sold their small dairy herd and Jim went to work off-farm as a truck driver. Jim, and his three sons Jake, Caleb and Zack, continued farming part-time the 150 acres he had previously used to raise feed for his cows. When the boys graduated from high school, Jim and Carol decided to move on, too, and rented out the farm, much to Caleb’s dismay.

In 2004, Caleb graduated from Michigan State University with a degree in agribusiness. He moved back home and convinced Jim they should form a partnership and start farming together.

During these initial years, Caleb worked as a consultant for Dennings and Associates of Elsie, Mich. and Jim continued with his off-farm job.

By 2007, the farm had grown to over 650 acres.

With this growth came the continuing quest for other farm-related opportunities. As a college class project, Caleb and two of his friends studied the economic feasibilities of contract swine finishing. When a local farm was expanding sows, and adding contract growers, Caleb and Jim seized the opportunity and built their 4,800 head contract finishing barn. Brent Skinner, one of the other students who worked on that class project, had already built his own contract barn. While planning and starting up their barn, the Stewarts were now able to draw on Brent’s experiences, in addition to those modeled by the class project.

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“

Timing is everything, even more so with organic crops. Even in a normal year, planting doesn’t actually start until at least midMay. We don’t want weeds to get a head start.

”

The contract barn proved to be a wise investment. Initially, the barn provided consistent income for the growing farm. As the construction loan was paid down, the Stewarts were able to use equity to secure financing for additional opportunities. The barn and pigs require about 1½ to 2 hours of labor a day, which at the time, meant Caleb could easily continue with his offfarm employment.

Caleb and Jim also realized the benefits of swine manure in their crop fertility program. According to Caleb, “5,000 gallons of swine manure and 10 gallons of liquid 28 percent nitrogen at planting was all we needed to produce a crop of corn with enough residual phosphorus and potassium remaining in the soil to raise a crop of soybeans the next year.”

They believe the 10 gallons of 28 percent at planting provided just enough nitrogen to get the crop started and keep it growing until the small corn plants established a root system capable of utilizing all the manure nutrients in the soil. By 2010, the farm had grown to about 950 acres with the pig barn providing almost all of the farm’s fertility needs.

After commodity prices peaked in 2012, grain prices drifted lower, and the Stewarts began looking for additional ways of adding value and maintaining income, while staying within their current acreage base. As in many areas, Caleb reports intense local competition made “adding more acres a difficult option.”

Knowing that organic crop prices are typically 2½ to 3 times the prices of conventionally raised crops, and if 5,000 gallons of manure and 10 gallons of 28 percent nitrogen were adequate to raise a crop of corn, the Stewarts determined they could learn to raise corn without the added nitrogen and be ideally suited for organic production. Because swine manure is an acceptable crop amendment in organic certification programs, removing the 28 percent nitrogen was the only adjustment to their fertility program the Stewarts needed to meet organic standards.

Giving up herbicides and switching to mechanical means of weed control was a more difficult transition. “Timing is everything, even more so with organic crops,” Caleb says. “Even in a normal year, planting doesn’t actually start until at least mid-May. We don’t want weeds to get a head start.”

Ideally, the soil needs to be warm enough so corn comes up in 7 days or less. Once the crop is in the ground, the intensive weed control practices begin. During a typical growing season, corn may need up to five weed control passes: 1 to 2 times with a tine weeder prior to emergence, then a rotary hoe once the corn emerges and finally, 1 to 2 passes with a cultivator.

Depending on conditions, soybeans may get up to six passes with a weed control tool. The Stewarts plant and cultivate using 24 row, 20 inch spacing on all their equipment. Having everything on 40 feet passes, combined with RTK auto steer technology, makes all the weed control operations possible. The 20 inch row spacing also provides a quicker crop canopy which helps reduce weed pressure.

Like many other Michigan farms, 2019 has been a particularly challenging year for Stewart Farms. In addition to being late May before any corn was planted, the weather continued to be cool and fields remained wet. Corn emerged slow and uneven. Continual rain prevented early passes with any type of weed control tool.

Compaction, weeds and nitrogen losses, due to the spring rains, have plagued this year’s crop. Many of the farm’s soybean acres were unable to be planted.

Stewart Farms continues to be committed to organic production.

“If a farmer’s goal is to have the cleanest fields and highest yields, then they probably don’t want to be organic farmers,” Caleb says. “An organic farmer will probably average at least a 20 percent lower yield and have more weeds in their

fields. The increased value of the harvested crop more than makes up for those inconveniences.”

Having a ready source of swine manure from their contract finishing barn allows Stewart Farms to garner the increase value of organic farming, without increasing the cost of the farm’s fertility program.

GreenStone has been an important partner in the growth and transition of Stewart Farms. Caleb credits the cooperative for being available to help them from the very beginning and continuing to provide financial services today. GreenStone was there to help secure financing to build the contract finishing barn. As the farm transitioned to organic production and Caleb quit his off-farm job to concentrate on the farm and his growing equipment sales business, GreenStone continued to be a trusted partner. Then again in 2018 as Jim and Caleb dissolved their partnership, allowing Jim to spend more time enjoying grandchildren, GreenStone provided financing to allow Caleb and Teresa to form their sole proprietorship. Caleb feels these are all services no other local lending institution would have been able to provide. ■ ABOUT THE AUTHOR

Jerry and his wife, Kathy, live on their small farm in St. Louis, Mich where Jerry raises cash crops and has a contract swine finishing barn. Jerry is also the sole proprietor of Pleasant Valley Farm Consulting LLC, providing services to farmers interested in becoming contract swine finishers.

The opinions stated herein are not necessarily those of GreenStone Farm Credit Services.

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CONNECT

NEWS:

GreenStone’s 2019 Deer Challenge

CUSTOMER SATISFACTION SURVEY RESULTS In an annual survey conducted by Michigan-based Advantage Research and Analysis, GreenStone Farm Credit Services continues to score above industry averages with a 94 percent customer satisfaction rating. The 2019 rating marks 15 consecutive years of a 94 percent or higher grade for the member-owned cooperative.

“These results are a reflection of the priority we place on meeting and exceeding our customers’ expectations,” says President and CEO Dave Armstrong. “Our customers continue to tell us we provide the personalized relationships, customized products and services and financial stability they need, particularly in these challenging economic times.”

The annual survey provides in-depth analysis of the ongoing customer experience from relationships with team members to the availability of products and services. It also provides insight into key focus areas for the future. The survey gives our customers the opportunity to comment on their individual experience with the cooperative.

One respondent in the survey commented, “GreenStone helps us build a financial strategy for success. I consider GreenStone to be our partner in business. They never discourage our new ideas. They do, however, help us to streamline our ideas to get them in line with modern day business.” ■

This hunting season, win dollars with your deer in GreenStone’s Annual Deer Challenge. Hunters throughout northeast Wisconsin and Michigan’s Upper Peninsula are invited to participate in the challenge for a chance to win cash prizes. The challenge runs through Sunday, December 1.

The contest features an adult class, as well as a junior buck class for hunters 17 years of age and younger. Grand prizes will be awarded in each class: Big Buck Contest Adults (18 years and older)

94 percent

• First Place - $400 • Second Place - $200 • Third Place - $100 Junior Buck (17 years and younger) • First Place - $200 • Second Place - $100 Along with the grand prizes, all entrants who harvest a deer with any legal gun, bow, muzzleloader or crossbow will be entered into a drawing to win a game camera or a $25 Visa gift card. Trophies will also be awarded to junior hunters who harvest their first deer.

To qualify, entrants must bring their deer or completed entry form with witness signature and photo to GreenStone’s Clintonville, Coleman, Little Chute, Manitowoc or Sturgeon Bay branch during normal office hours.

Onsite deer will be photographed and scored by the GreenStone staff, and stories will be documented. ■

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Young, Beginning & Small Farmer Meeting

2019 Fruit and Specialty Crop Grower Meetings

Helping young, beginning and smallscale farmers obtain resources they need to overcome challenges is one of GreenStone’s top priorities. To continue fulfilling this commitment to the next generation of farmers, GreenStone recently hosted a young, beginning, and small farmer educational seminar on September 23.

GreenStone’s team of crop insurance experts are dedicated to providing unparalleled service and a variety of products to meet the diverse needs of customers. To ensure growers are aware of the latest fruit and specialty crop market updates, GreenStone will host informational meetings this fall:

The event provided guests insight from keynote speaker, Mark Jewell, on how different generations can work and thrive together. Topics also included farm lending tools, understanding ratio and benchmark numbers and how to minimize risk in today’s tax laws.

Pause for Applause...

1. The Michigan Farmer’s Hall of Fame

honored five families by inducting them into the Michigan Farmer’s Hall of Fame in September 2019. Congratulations to Elgin and Jeanne Darling of Willis in Monroe County; Dale and Sara Stuby of Centreville in St. Joseph County; Jan and Nellie Vosburg of Climax in Kalamazoo County; Norman “Norm” Veliquette of Elk Rapids in Antrim County; and Wayne H. Wood of Marlette in Sanilac County. They were recognized for their significant contributions to the advancement of agriculture and their work in their respective community in many areas.

• October 25 – Berrien Springs • November 1 – Traverse City • November 5 – Hart • November 6 – Grand Rapids Formal invitations were mailed in September. To learn more, contact your local GreenStone team. ■

Attendees included young, beginning and small farmers as well as members from GreenStone’s Farm Forward Mentorship program, which provided an opportunity for networking and collaborating in addition to the education and knowledge shared during the seminar.

For more information on the Young, Beginning & Small Farmer Program or the Farm Forward Mentorships, visit www.greenstonefcs.com/ybsf. ■ GreenStone Connect Reception at Great Lakes Expo We support families and farm businesses through our commitment of being a reliable and consistent lender and are grateful for our member’s dedication, allowing us to continue serving our communities.

We invite you to connect with your local GreenStone team at the GreenStone Connect Reception this December.

Join us for the GreenStone Connect Reception on December 10 from 4:00 – 6:00 p.m. at the Great Lakes Fruit, Vegetable and Farm Market Expo/Michigan Greenhouse Growers Expo, in the Monroe Room of the DeVos Place. Customers are encouraged to stop by to connect with your GreenStone team and enjoy refreshments as we thank you for your ongoing partnership and provide a cooperative update. ■

2. Recently, The Michigan Department of

Agriculture and Rural Development awarded Sklarczyk Seed Farm of Johannesburg, Michigan, with the 2019 Michigan Agriculture Exporter of the Year Award.

SERVICE ANNIVERSARIES QuickBooks Training Session

Help GreenStone congratulate and thank these staff who are celebrating an employment milestone. From five to 40, the years represent the dedication and service all employees provide our members.

Whether you are a new to QuickBooks or a long-time user looking for advice, GreenStone’s free QuickBooks Training Session can help you manage your farm business. Join our tax and accounting team this fall and hear tips from experts on getting the most out of your software.

Information provided will meet the needs of new users as well as those more experienced. Attendees will also be eligible for a special QuickBooks Pro 2019 offer.

• October 16 – Sandusky, 9:30 a.m.

• November 12 – Bad Axe, 9:30 a.m.

• December 12 – Mt. Pleasant, 9:30 a.m.

Space is limited, please RSVP with Tracy Koch at 989-686-5100 or tracy.koch@greenstonefcs.com.

Additional training sessions may be available, contact you local branch for availability. ■

October: Ursula Bartsch Sandra Albrecht Angela Garvin Katie Kanitz Heather Gorey

(20) (15) (5) (5) (5)

November: Lisa Blaska Shane Kenner Mark Oberlin

(15) (15) (5)

December: Yvonne Visger Gordon Waltz Daniel Muhlenbeck Lori Woolever Carol Harris Devin Roth

(30) (20) (10) (10) (5) (5)

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To be eligible for a Grow Forward Grant, • Must be a 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, residing in Michigan or northeast Wisconsin Intended grant use must align with one of the following categories:

assistance to strengthen their business, expand their knowledge and better manage their farm through the Grow Forward Grant program.

GROW FORWARD GRANT PROGRAM Despite a lifelong passion for farming or years of experience working on a farm, establishing a farm in today’s challenging economy is no easy task. That’s why GreenStone believes in offering young, beginning and small farmers financial

Each year, the program provides up to $40,000 in grants to offset costs and promote the success of young, beginning and small farmers. Current GreenStone customers are eligible for up to $1,000 each year and nonGreenStone customers can receive up to $500 per year.

• Agricultural programs/events: educational course/program (on-site or online), conference fees, etc.

• GreenStone resources: first time use of accounting and tax services, technology support, etc.

• Non-GreenStone services: business and farm consultants, etc.

GreenStone looks forward to helping many young, beginning and small farmers navigate their farm journey. For more details on the grant or to apply, visit www.greenstonefcs.com/ybsf. ■

Mark Your Calendar...

NOVEMBER

9

Michigan State University AutumnFest Michigan State University, East Lansing, MI

13

Making it in Michigan Conference Lansing Center, Lansing, MI

28

GreenStone Offices Closed (28-29) In honor of Thanksgiving

DECEMBER

3

MI Farm Bureau Annual Meeting (3-5) Amway Grand Plaza Hotel & DeVos Place, Grand Rapids, MI

6

WI Farm Bureau Annual Meeting and Young Farmer and Agriculturist Conference (6-9) Kalahari Resorts and Conference Center, Wisconsin Dells, WI

6

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Michigan Junior Livestock Society Winter Classic (6-8) MSU Pavilion, East Lansing, MI

Great Lakes Fruit,

10 Vegetable and Farm

Market Expo/Michigan Greenhouse Growers Expo (10-12) Michigan State University, East Lansing, MI

10

24

GreenStone Customer Connect Reception 4:00 – 6:00 p.m.

Monroe Room, DeVos Place Conference Center, Grand Rapids, MI GreenStone Offices Closed (24-25) In honor of Christmas

JANUARY

1

GreenStone Offices Closed In Honor of the New Year

3

Michigan Sheep Breeders Association Shepherd’s Weekend (3-5) Crowne Plaza Hotel, Lansing, MI Dairy Strong

23 Conference (23-24) Monona Terrace, Madison, WI Great Lakes Crop

29 Summit (29-30)

Soaring Eagle Resort, Mt. Pleasant, MI

GREENSTONE COMMUNITY GARDEN Empowered by the support of local FFA members and a mission to give back, Wisconsin’s Timber Rattlers and GreenStone’s Little Chute branch teamed up to strike out hunger through the GreenStone Garden.

Located directly behind left field in Fox Cities Stadium, the GreenStone Garden provides a variety of fresh vegetables and healthy food options to St. Joseph’s Food Pantry in the Fox Valley. Despite this year’s heavy rainfall and harsh planting conditions, the garden’s harvest was still flush with tomatoes, cucumbers, onions and different types of squash.

Grown by the community, for the community, it is a hands-on summer project for many.

Organized by Seth Merrill, Timber Rattler’s corporate marketing manager, with help from Master Gardeners, Paul and Fonda Larson, the garden serves individuals in need while also giving FFA members an opportunity to serve. Each year the Freedom FFA chapter, led by Paul, helps maintain the garden to ensure donations to the food pantry are bountiful. Seth, who has helped with the garden for many years, enjoys being able to work outside while contributing to a greater cause.

“We are a community-owned baseball team, so we find it imperative to give back any way we can,” Seth explains. “Due to a cold May and June this year, the garden didn’t start producing anything until July, but we have already donated over 200 pounds of food and are still going strong.”

“

Thank you for your donation toward our FFA Chapter. The FFA is a national organization that promotes premier leadership, personal growth and career success, and without generous businesses like you, we would not be able to provide these opportunities to our members.

”

— Owen Petrich, Denmark FFA Chapter Treasurer

“

Kim went above and beyond in helping us - her customer service was excellent and she always made sure to fulfill our needs at every step of the process. She is very highly recommended!

— Cadillac Branch Satisfied Customer

“

”

Thank you for sponsoring the 2020 Northern Michigan Small Farm Conference. Your continued support means a great deal to us at Crosshatch and brings world-class food and farming education to families that grow clean food right here in northern Michigan.

”

— Amanda Kik, Co-Founder and Co-Director of Crosshatch

As a member-owned cooperative, GreenStone values the opportunity to continuously volunteer and give back to the community. 2019 marks the cooperative’s sixth year sponsoring the garden and GreenStone Financial Services Officer Riley Koller’s first year helping with the garden.

Have a comment to include in the next issue of Partners? Share it with us on social media.

“It was a gift to give back to the community we serve while being involved with a sports team,” Riley says.

While the season of gardening is wrapping up, GreenStone’s commitment to rural and agricultural communities is not taking a timeout. The cooperative will continue to uphold its mission of giving back and supporting local initiatives with organizations like the St. Joseph’s Food Pantry and Wisconsin Timber Rattlers.

“We very much appreciate the partnership with GreenStone Farm Credit Services,” Seth says.

“And we are grateful for the opportunity they provide us to give back to our community through the garden!” ■

...Candid Comments Partners — Fall 2019

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Doug Abel Credit Manager East Lansing, Michigan 3 Years of Service Describe how your role carries out the GreenStone mission of supporting rural communities and agriculture:

BEHIND THE SCENES– Providing sound lending decisions to our customers requires a team of individuals who review and analyze our customer’s businesses and individual financial situations.

The team includes credit analysts, credit managers and vice presidents of credit.

Collectively, they work with the financial services officers to provide the best financing solutions for our customers and all of our 24,000 members. In this behind the scenes, we meet two credit managers.

Sarah Morack Credit Manager, Little Chute, Wisconsin 14 Years of Service Describe how your role carries out the GreenStone mission of supporting rural communities and agriculture: Growing up on a dairy farm, I recognize the tremendous commitment our customers make to agriculture. They put their hearts and souls into their businesses. As a part of the credit department, my role is to help customers achieve their goals with access to debt capital. Sometimes we’re helping a business plan for growth or plan to bring in the next generation. Sometimes we’re helping find ways through a challenging situation. It is truly rewarding to show our commitment to agriculture and help these businesses grow and be successful.

What do you enjoy most about your role at GreenStone?

The part of my role that I enjoy the most is the relationships I have made over the years. Our customers are the most genuine down-to-earth people and it is

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a pleasure to work with them. My fellow teammates in Little Chute are such a great group to work with and share a passion for agriculture. Our team strives every day to bring value to our customers and do the right thing. Knowing we’re all working together to get our customers what they need is a great feeling at the end of the day.

What changes and or technologies have been incorporated in your role to meet evolving customer needs?

No matter how fast or complex changes in technology come, maintaining communication with our customers will always be what’s important to me.

Technology provides us so many different avenues to connect.

What do you enjoy doing in your free time?

In my free time, I enjoy spending time with my family. There always seems to be something going on with little kids!

I enjoy cooking and baking, taking the kids to the park, and keeping busy in the garden. I also enjoy heading back to the farm with my kids for a little excitement.

In my role, I am working with a team of GreenStone employees, including financial services officers, credit analysts and customer service representatives to proactively support the proper financing of larger agribusinesses and farms. Our work is to understand the borrower’s operation and provide loans and services that meets their needs now and down the road.

What do you enjoy most about your role at GreenStone?

I enjoy working with a motivated team that is always willing to help me learn something new. I also enjoy the opportunity to learn about customers’ operations first hand and gain an understanding of what it takes to get their product on the grocery store shelves.

What changes have been incorporated in your role to meet evolving customer needs?

It seems like so much has changed in a short time. From paperless files, to improved systems where we can view customer requests and plan ahead, GreenStone is always looking to find a better solution for their employees and customers. There are a number of upcoming initiatives to help us serve our members more efficiently that should really “move the needle” in 2020 and beyond.

What do you enjoy doing in your free time?

In my free time I enjoy kayaking, fishing, or anything that gets me outside. I also enjoy spending time with my family, especially playing sports with my boys, Ivan and Keller, or watching their sporting events. ■

Director’s Perspective– Troy Sellen, Oconto County, WI My Path:

In May 2006, I returned to the family farm with a dairy science degree from the University of Wisconsin – River Falls. At that point, my parents were milking about 150 cows, raising 100 dairy steers and cropping roughly 600 acres. Gradual changes over the last 13 years have seen Valley Line Dairy grow to its current 650 milking cows and 1,250 acres of cropland. Along with the dairy, my own family grew as my wife Patty and I welcomed three children: Hailee, Lindsay and Owen.

I once heard a dairyman reflect upon his younger years that with his unlimited fresh enthusiasm he planned to “set the world on fire, only to find out his matches were wet.” This resonates well with me as I reflect over the first decade of my farming career.

I still have some of that eagerness, but the market, labor, weather and industry consolidation challenges our family has faced have tempered and refined my farming philosophy.

I asked GreenStone shareholders for the opportunity to serve them as

a board member because I felt this cautious enthusiasm could be an asset as GreenStone identifies the needs farmers have as they navigate these unprecedented difficulties. As the dairy industry evolves and new challenges develop, one of the best allies for a dairy business to have is a lending institution that can adapt quickly to provide financial solutions that meet these problems head on.

Much of my career as a dairyman and as a member of GreenStone are still ahead of me. Therefore, I hope my own daily observations as a dairyman “in the trenches” serve to support GreenStone in reading the headwinds of change and responding to our members quickly.

3 Months of Perspective:

I admit, it was intimidating for me to share the ballot with three other patrons from my region who were so highly qualified for this board position.

It felt even more unnerving to attend the first board meeting alongside those who had distinguished, broad backgrounds and years of experience.

Because of this, my biggest surprise has been how grounded and relatable the discussions have been, regardless of experience level. No matter your age or farming background, the board

conversations revolve around issues or concerns I or any other member have had as a customer and farm operator.

GreenStone is truly guided by grassroots direction.

Additionally, it was interesting to learn how self-reflective GreenStone is through peer benchmarking, just as most of us practice through our own businesses. Indicators that track operational expenses and overall customer interest rates after patronage consistently place GreenStone near the top of peers in the lending industry. I believe this is an important quality to our members, who know there is no room for inefficiency or excess in our own operations.

I encourage all members to never hesitate to reach out to me or any director if you have a concern, question or idea regarding your relationship with GreenStone. We, the board of directors, exist as both a governance and a sounding board to see that your voice is heard on an organizational level, and to be sure GreenStone does not lose focus on providing service and lending to the same rural communities and businesses that helped to build it to what it is today. I’d love to hear from you. ■

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The GreenStone Story:

Strength in Numbers AS THE BUSINESS OF FARMING BECOMES MORE SPECIALIZED AND DEPENDENT ON A VARIETY OF SKILLS AND TECHNOLOGIES, IT IS BECOMING MORE DIFFICULT TO FIND THE “SWISS ARMY KNIFE” PERSON WHO CAN MEET ALL THE NEEDS OF EACH CUSTOMER. THAT IS WHY OVER THE PAST SEVERAL YEARS GREENSTONE HAS EVOLVED THE DELIVERY OF OUR PRODUCTS AND SERVICES INTO A TEAM-BASED APPROACH.

While we still prioritize one-on-one meetings with customers, when the employee returns to the office there is a team of people ready to help meet the customers’ needs. This approach allows us to hire specialists in all areas from credit and lending, to crop insurance and tax and accounting, and beyond. By building a team around our customers, we air to align the right resources with the right project, tailoring the team to each individual customer’s needs. Ultimately, our goal is to meet and exceed all of our customers’ expectations.

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Lending: Having a team surround customers also

assures that not one person makes critical decisions impacting a customer’s business. In the area of credit, for example, one loan application may be reviewed by a financial services officer, credit analyst, a credit leader and ultimately the Credit Committee before a decision is reached. This process creates accountability throughout the team, ensuring we maintain fair and ballanced lending practeces providing the best solution for the customer.

Insurance: Taking this team approach to our crop

insurance teams allows us to leverage individual strengths and knowledge in a particular commodity across our entire territory. We recently united our crop insurance specialists working with fruit and specialty crop growers into one collective unit to serve all fruit and specialty crop growers. This gives us the latitude to pull expertise from any geography into one area where it best serves our customers. The team working together with the customer also provides continuity for our

customers should any member of the team transition into another position.

provide consistent, exceptional service to all customers.

Financial Management: Early

individuals across several departments have worked together to revitalize our online offerings, including the forthcoming launch of an online loan request for our farm customers, and improvements to our My Access platform. These services provide safe, secure and convenient access for the customer to their account information and communication with their local branch team.

last year, we shared details behind our enhanced financial services offerings provided through a reorganized tax and accounting team and new technology solutions. Through those accounting, payroll, tax planning and preparation offerings, our customers continue to have access to a team of agricultural focused accountants helping to manage their farm accounting, taxes and payroll. Much like our crop insurance fruit team and lending teams, this group works together, pulling on the cumulative 300 years of department experience to provide customers with expert support and stability.

When we harness the collective energy, vision and experience of our staff, we are able to

Online Service: Recently,

The use of more online and digital services provides customers the ability to work with our team members in the manner they prefer – from the seat of their tractor, in their home ‘office’ or at one of our local branches. As we continue to evolve our online and digital platforms, our

goals are focused on meeting our customers’ needs by strengthening our ability to provide convenient ways to do business with our customers.

Tools: Additionally, we often

receive suggestions from our customers on tools they use in their business to be more productive and we, in turn, make those tools available to others. Thanks to the curiosity of GreenStone customer Julie Taylor, GreenStone has made available resources offered by Iowa State University to help farmers prepare their financial information.

Located in both the Resource Library on our website and linked with our My Access customer portal, customers can click through to the tool on the university’s website.

The template provides a format to calculate your net worth as well as to build a financial statement and balance sheet.

This information gives you important insight into the financial standing of your business. The tool also aligns with the financial information GreenStone requests of members when reviewing your account and evaluating future financial plans. Using File Exchange in My Access, you can securely send these completed documents directly to your financial services officer. Information on how to access the template, complete the worksheet, and send the information to your GreenStone team is available in My Access: www.mygreenstoneaccess.com.

We invite you to call on your local GreenStone team anytime we can provide you with the products and services you need to better manage your business.

Additionally, we learn from you as well and welcome your ideas and input on how our team can better serve you. ■

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Legislative Matters:

PIONEERING INTO INNOVATION: HEMP-ON DOWN THE ROAD AS WE LOOK OUT OVER THE AGRICULTURAL LANDSCAPE, THE SIGHTS AND SMELLS OF FALL HARVEST ABOUND DESPITE THE CHALLENGES FARMERS AND RANCHERS FACED IN THE 2019 GROWING SEASON DUE TO WEATHER. IN THE HORIZON YOU MAY SEE A FIELD FULL OF AN UNUSUAL FRAGRANT FLOWER FILLING UNIQUELY GREEN PLANTS THAT REPRESENT THE PROCESS OF A NEW FRONTIER. THE HEMP PLANT, NON-THC VARIETY, MAY BE IN YOUR SIGHT. Then again, depending on the agronomy practices of the farmer, some pollination may have occurred and the crop has failed. As with most any new adventure, there are significant risks in managing this hemp crop, and this first legal year of growing the crop under the 2018 Farm Bill has brought as much uncertainty as it has excitement.

The rising hemp acres within Michigan and Wisconsin, as part of the 46 states that have licensed the pilot growth of hemp, can be sensed by a careful observation of farm fields. It has been reported that there has been 128,000 acres of hemp grown in this first growing season across the country. Unfortunately,

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Fall 2019 — Partners

due to the nonexistence of adequate processing facilities, it is believed most will not get harvested or processed to gain the promised value. That fragrant smell of a hemp crop will more likely turn into the odor of field rot. Whether a farmer gains from the sweet dreams of hemp prosperity or the nightmares of hemp disparity may have all been dependent on factors outside the growers control. This was of course known going into the growing season and hope remains plentiful for this future crop.

Many of year one’s unknowns will be answered as harvest is completed and processing occurs. However, there may still be more questions than

answers. Who grew hemp for CBD oil, which can garner up to $66,000 an acre, and which started with hemp for fiber at a bargain paycheck of $850 per acre? For those with oil in the plan, how do you get the oil out of the plant?

Who has the equipment for such extraction, and will it be tested and approved in time for year two? As of now, only 10% of the equipment in place for processing has met the standards for extraction.

And maybe most importantly, who are the experts farmers can rely on to help make the best decisions for 2020?

Importantly there has been a new resolve to create a regulatory framework that farmers and ranchers may depend on to make decisions in the future. Leadership for this regulatory framework is being shared by the USDA and FDA. Recently, comments made to the FDA by the National Association of State Departments of Agriculture called for action to develop a

structure to bring economic viability of hemp forward.

They stated, “Hemp will only become economically viable to American farmers and ranchers in the United States if a well-defined regulatory framework for its products is developed. Consistency will be a key factor for development of a market for this emerging commodity.” A patchwork of rules will not help the industry advance. Standards and definitions so consumers can understand their purchases will be absolutely necessary.

The FDA is in the process of identifying pathways for hemp ingredients in food and supplements. This will lead to opportunities for innovation and growth.

It will remain very important for farmers to stay engaged in the development of this commodity. Communication is paramount as the pioneering moves forward. The sweet dreams and aroma of the future may be better found through a cooperative network of relationships. ■

In Wisconsin, numerous legislative items are being tracked and discussed, including the livestock siting rule, water quality initiatives, and the bipartsian “Our Farms, Our Future” bill package. In addition, the priority lien status for Farm Credit institutions legislative provides an unique opportunity for System associations to be more efficient and effective in delivering credit in Wisconsin.

PAC Progress:

LEGISLATIVE OUTREACH: Strong relationship foundations continue to be built to support rural communities and agriculture.

Throughout the course of the year, action has been taken through the PACs to disburse funds. This has allowed your GreenStone team, board of directors, and fellow members to be involved in dialogue with legislative leaders interested in and eager to support the agricultural industry.

Discussion centers around providing education on the structure and value of GreenStone and the Farm Credit System, and the importance of rural communities and agriculture.

In Michigan, 30 meetings have occurred with senators and representatives at branches or fundraisers. Michigan

legislators also expressed deep appreciation for the relationships built to provide trusted resources in the constantly evolving political landscape, and for the financial support provided through the MI GreenStone PAC. In addition, in August the Michigan House of Representatives Financial Services Committee invited and heard from Dave Armstrong. The testimony was on GreenStone’s perspective and outlook for agriculture. It was followed by great questions and offered further opportunities to share how the recently passed Ag Disaster Relief Bill might be tweaked to help producers across the state.

Federally, over 30 meetings have taken place with U.S. senators and representatives to communicate the importance of the Farm Credit System.

The focus remains on why the Farm Credit System was chartered and how GreenStone and the other Farm Credit associations continue to carry out the mission in the ever changing business environment. In addition, a special Farm Credit marketplace reception took place in Washington, D.C. where Michigan and Wisconsin dried cherries where given to legislative attendees, showcasing the diversity of GreenStone’s members. It was a great opportunity to share a product that not everyone has had the pleasure of tasting, and more importantly, educate on its contributions and challenges in the domestic and international trade economy.

As stewards of the Farm Credit System and partners in the agriculture industry, focus continues to be placed on communicating the importance of Michigan and Wisconsin agriculture to our communities, country, and world. This is not possible without your support and we thank you for it.

Strong relationships will continue being built to help ensure support for rural communities and agriculture for years to come. ■

Headsup that the 2020 MI GreenStone PAC and WI Farm Credit PAC drives will be taking place January 1-31. Be sure to watch for the voluntary pledge and contribution card at the end of December 2019.

Partners — Fall 2019

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LIVE

The

Getaway Place “WE’VE DONE A LOT OF CAMPING,” WILL HEIDEN SAYS, “AND WE LIKE TO HUNT. MY FAMILY HAS BEEN ALL OVER MICHIGAN AND ONTARIO AND WE WERE LOOKING TO SET UP OUR OWN PLACE. THIS PROPERTY GIVES US A HOME BASE. IT’S MEANT FOR THOSE TIMES WHEN YOU THINK ‘OH, I DON’T WANT TO PULL THE CAMPER, BUT I WANT TO GET AWAY!’”

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Fall 2019 — Partners

➡ Below: Two yellow chairs invite visitors to focus on the “big screen” in front of them. Sitting by the river is a relaxing way to start an up north morning, or to wind down the day.

Will and Nancy Heiden are the new owners of a log cabin on nearly 200 acres on the Manistique River in Michigan’s Upper Peninsula.

“The cabin is rustic,” Will admits. “But it has solar power, a large woodburning stove and it sits right on the river.”

Despite having to do some heavy cleanup involving lots of spiders and mice, the cabin was in good shape. Situated about three miles from Seney National Wildlife Refuge, the surrounding woods are full of grouse, deer and even bear. The Heiden’s have witnessed Trumpeter Swans, osprey, loons, beavers, and a bald eagle landing on a branch next to their car window.

Living close to wildlife was part of Will’s getaway plan, but he was having difficulty finding a lender with the expertise to finance large amounts of recreational acreage. Referred to GreenStone Farm Credit Services, Will and Nancy met with Senior Financial Services Officer Kim Cool.

“Our loan situation was complicated by several factors,” Will admits. “There was an old house on the property, the drivable access wasn’t deeded, and we added some family members to the initial purchase. We worked through the hiccups with Kim and the GreenStone process went very smoothly.”

Kim Cool agrees. “This loan application process was challenging for sure -- although, I do love this sort of challenge as it tends to push me into some critical thinking and always teaches me something new.” Kim appreciates Heidens’ patience, and the collaboration between the credit and appraisal teams at GreenStone’s Cadillac branch that ensured the smooth loan delivery.

Nancy Heiden discovered the cabin’s history as she washed the inside of the cabin’s log walls. Inscribed on the logs are the names, dates and home locations of all the cabin visitors since the 1920s!

“This place was really hopping in the 1940s,” she notes, and adds that she was very careful not to erase the signatures from long ago.

The two yellow chairs parked in front of the cabin overlooking the ➡ Opposite page: The Manistique River flows through the Heiden’s property, offering opportunities to spot and photograph wildlife like swans, loons, osprey, beaver and bear. ➡ Above: Ready for hunting and fishing, the rustic cabin is outfitted with solar power and a large wood-burning stove.

Nancy is ‘camp cook’ and looks forward to their first fall season with visiting friends and family.

Manistique River are another hat-tip to the past. Growing up, Nancy remembers her grandfather often sitting in a yellow metal chair on the high bank of the Pigeon River in Indiana; she found similar metal chairs for Manistique Rriver watching and painted them yellow in his honor.

However, Will and Nancy are more often fishing or kayaking in the river than watching it. Adventuring by kayak north to the wildlife sanctuary and even southeast to the Mackinac Bridge, the Heidens are both awed

by Michigan’s natural beauty and happy to return to their new home base in the woods.

The Heidens’ German shorthaired pointer, Gus, is an avid bird dog, and Will anticipates working him this fall hunting grouse and woodcock.

Nancy is quick to join in, carrying equipment and managing the dog gear, which allows her to get outside and walk the beautiful, secluded wilderness surrounding the cabin.

“I’m looking forward to hunting season,” says Nancy. “I love to cook, and will enjoy the opportunity when the weather is cooler and hunters visit.”

Both Will and Nancy are excited to invite friends and family to their new property, and hope to create a place where everyone feels comfortable and welcome. The cabin’s big draw may be hiking, hunting, fishing and kayaking, but daydreaming in a yellow chair in front of the river has a classic, rural allure for both of them! ■

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COUNTRY LIVING: YOUR ANTI-STRESS SKILLBOX CHANGING CLIMATE, CONFLICTING FAMILY SCHEDULES, ACRES OF PROPERTY MAINTENANCE, HEALTHY LIVING, MILES OF SNOW COVERED ROADS…A COUNTRY LIFESTYLE COMES WITH SOME UNIQUE STRESSORS AMID THE OPEN SPACE GRANDEUR. Rural homeowners must balance caring for their property with the needs and desires of the family, all while remaining financially agile to react to the unpredictability of the country.

Your country home is your oasis of personal space. The outside stressors can become personal, too. Developing a skillbox to resist everyday stress is one of the most important (and overlooked) tools homeowners can use to safeguard their own health while embracing country living challenges.

What is in your anti-stress skillbox? Largely, it is the conscious ability to control personal responses to negative actions by outside influences.

Sean Brotherson, North Dakota State University Extension Service family science specialist, identifies three areas people can control: 1. Your attitudes and mindset: Set realistic goals and expectations daily; dwell on turning current challenges into opportunities.

2. The way you respond to stress: Create a work/life balance and incorporate regular fitness activities, relaxation or meditation. Cultivate a friend to talk to, or seek professional support.

3. Events occurring within your setting: Reduce the “pile-up” of stressful events by planning and scheduling ahead, setting priorities, simplifying life, and defaulting to a sense of humor (versus irritation) when things go wrong.

Focusing on influencing just these three areas can help bring relief through re-patterning mental and physical responses to stressful circumstances and by placing a measure of control back into your own hands. The areas actively support healthy attitudes and resilient responses to negative situations.

As Larry Tranel, psychologist with Iowa State University Extension and Outreach

i

The tools in an anti-stress skillbox may help you and your family roll with seasonal weather or family events while protecting your long-term appreciation for country living. Dealing with chronic stress may mean reaching out for professional help for depression or anxiety. The National Suicide Prevention Lifeline offers immediate emotional support. The call is free, confidential and available 24/7 across the USA. “Talking with someone about your thoughts and feelings can save your life.”

Call 1-800-273-8255 or Text “CONNECT” to 741741 ■ Sources: https://ucanr.edu/sites/placernevadasmallfarms/files/135674.pdf www.extension.iastate.edu/agdm/articles/others/TraApr19.html

COUNTRY LIVING – OPEN FIELDS BLOG BRIEF

GreenStone publishes regular updates on our Open Fields blog about current events, community engagement, tips for country living homeowners, advice on financing your own outdoor retreat and more. Check out some of the posts you may have missed at www. greenstonefcs.com.

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points out, resiliency can be a learned life skill. “Stress can weaken a person’s spirit, appetite, physical stamina, focus, relationships, decision-making ability, and dampen happiness and satisfaction in time.” He adds, “life skills can help deal with it.”

on what you can do to improve your financial situation and get approved.

5 Things to Know Before Buying Vacant Land Regardless of whether you are looking to purchase a piece of land to build on, hunt or use as recreational property with the family, there are some things you should consider before buying.

How to Make a “NO” a “YES”

Shade of Lavender Farm: Where Peace and Beauty Flourish

Being turned down for financing can be disappointing. Fortunately, the answer no doesn’t have to mean you will never get approved, just not right now. GreenStone employees offer tips

After purchasing their home and 10 more acres than they had use for, Janene Rawlinson decided find a way the extra land could work for her and her husband. After a little research, optimistic

Fall 2019 — Partners

perseverance and 1,200 lavender plants, Janene quit her full-time job and is now a lavender farm and shop proprietor.

Inspiring Agriculture at the IQhub What began as a museum dedicated to displaying antique tractors, Troy and Jill Bancroft, owners of AgroLiquid in St. Johns, Michigan, saw as opportunity to provide agricultural education to the community and bridge the gap between producers and consumers. With this vision in mind, the IQhub, was created and now provides free, fun learning to schools, families and the public about agriculture. ■

FALL FAMILY FUN IN MICHIGAN & WISCONSIN MAKE THE MOST OF YOUR WEEKENDS WITH FAMILY ACTIVITIES THAT YOU CAN SCAFFOLD UP OR DOWN TO ALIGN WITH YOUR CHILDREN’S INTERESTS - AND THE SEASONAL WEATHER! OUTDOOR FUN • Visit a zoo or wildlife sanctuary – fall and Halloween themed weekends are extra fun!

• Hike a downtown city trail • Seek the perfect pumpkin at a local patch • Go apple picking • Test out your family’s skills in a corn maze • Plan a Dark Sky park visit (magical!)

INDOOR FUN • Attend a hockey, basketball or football game • Experience a musical or play (check your local high school’s performance schedule)

Family fun is successful when expectations are aligned with the age and interests of the family. A sports game might run too long for a younger child, but attending is still a fun experience. Scaling it to their age might mean you plan ahead to leave at half-time.

Another sure win is to build food into every activity! Apple picking is even better when your pickers are rewarded with cider and donuts.

When adventuring, keep an extra set of kids’ clothes in the car, along with boots and rain ponchos, because nothing says fun like stomping through a big mud puddle or the simple joy of skipping stones on the autumn shoreline of a Great Lake. ■ Find detailed information about our indoor and outdoor suggestions on the websites serving Pure Michigan and Travel Wisconsin: www.michigan.org/destination-finder and www.travelwisconsin.com/ family-getaways.

• Visit a child-friendly museum • Break out of an escape room • Laugh through a game of laser tag

Partners — Fall 2019

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Commodity Cuisine...

Bacon-Wrapped Apple Chicken If you are looking for a sweet and savory slow cooker recipe to enjoy on chilly autumn days, you can’t go wrong with the trio of bacon, apples, and chicken! With only six total ingredients and a great reason to take a trip to your local apple orchard, this recipe will quickly become a fall favorite.

Instructions: In small bowl, combine apples, BBQ sauce, brown sugar and lemon juice.

Wrap each chicken breast with 2 slices of bacon and place in greased slow cooker. Pour the BBQapple mixture over the chicken and cook on low for 8 hours or until chicken is done. ■

Prep time: 30 minutes Cook time: 6 – 8 hours

Ingredients: • 4 boneless, skinless chicken breasts • 5-6 apples, peeled and cubed • 8 slices of bacon • 1 cup BBQ sauce • 1/4 cup brown sugar • 1/8 cup lemon juice

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Source: www.chef-in-training.com

LEARN

CROP INSURANCE NEWS:

APPLE REMINDERS November 20, 2019 is the sales closing deadline to change your current coverage or take out a new policy for the 2020 crop year. Premiums are not billed to you until August 15, 2020 and are due September 30.

Your current coverage will carry over for 2020 if you do not change anything in writing by November 20.

January 15 is the acreage and yield reporting deadline for fruit. PLEASE REPORT ACRES AND PRODUCTION AS EARLY AS POSSIBLE! The County Transitional Yield (T-Yield) and 2019 prices have not been announced at this time. That information will be included in your renewal information. ■ CO-MINGLED PRODUCTION Please be aware that any production from 2018 being carried over into the 2019 harvest needs to be measured or marked by an adjuster prior to adding the current year’s production. Added production needs to be kept separate by unit through bin markings. If Optional or Basic Units are being combined, the insured may mark the bin themselves. ■ ACCOUNTING AND BILLING For the 2019 crop year only, accrual of any interest on unpaid crop insurance premium is deferred to the earliest of the applicable termination date or until November 30, for all policies with a premium billing date of August 15, 2019. This means producers get an extra two months to pay the premium before interest attaches. For any premium not paid by November 30, interest will accrue with the terms of the policy.

APH REVIEWS– The Risk Management Agency (RMA) threshold for an Actual Production History (APH) policy review is $200,000. With the weather conditions experienced this year, it is likely many producers could meet or exceed this amount.

An APH policy review is simply the process of verifying the accuracy of the insured reported production, share and acres. Accurate and complete records will simplify the process, along with following these guidelines: • Production records must be separated by crop, practice, type, unit and the actual crop year.

• Records must be sorted by the 578 producer prints, settlement sheets and soft records.

• The insured must keep three years of production records.

• Daily livestock feeding should be recorded daily.

• Printed combine monitor records should be stored with settlement sheets.

• The insured cannot split truckloads, tickets and bins between units without proper soft records for co-mingled production.

• Co-mingled production needs to be measured by a disinterested third party.

• The insured should keep original records and provide the Approved Insurance Providers (AIP) with copies.

Hard records are production records that prove the final disposition of the total crop and are verifiable by a third party. Soft records are the documents an insured must provide if production is separated by unit, practice, type or variety. Soft records must include all units and missing or incomplete soft records may result in comingled production and the loss of optional units. This may result in a lower guarantee.

If you think you will be submitting a claim that will be above the $200,000 threshold, please contact your crop insurance specialist to begin the APH Review process. Most claims will not be paid until the review is completed.

The earlier the process begins, the earlier a claim can be paid. For more details, please contact your local GreenStone crop insurance specialist. ■

For example, without this change, policies with an August 15 billing date would have interest attach on October 1 if premium was not paid

by September 30. However, under this change, policies that do not have the premium paid by November 30 will have interest attach on December 1, calculated from the date of the premium billing notice.

Payments are applied as follows: A: any unpaid finance or interest charge, B: unpaid administrative fees, and C: unpaid premiums.

Please keep in mind that accrued interest on uncollected premium is attached, according with the terms of the Standard Reinsurance Agreement, and CANNOT be waived by GreenStone or the AIP. ■ END OF INSURANCE PERIOD Insurance ends on each unit or part of unit at the earliest of: • Total destruction of the crop • Harvest • Final adjustment of loss • Applicable calendar date in the crop or special provisions • Abandonment • Or, as otherwise specified in the Crop Provisions Provisions require a Notice of Loss (NOL) within 72 hours of damage discovery, but not later than 15 days after the end of insurance period.

Revenue losses must be submitted no later than 45 days after release of Harvest Price. ■ ACREAGE and PRODUCTION REPORTS It is the farmer’s responsibility to report the crop that was planted in each section, the planting date, the percent share of that crop and the quantity harvested. Reporting your crop accurately and double checking everything is very important. Corrections or changes cannot be made after the reporting deadline. If you have any questions or would like assistance, just contact your local GreenStone crop insurance team. ■

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HIGH RISK – HIGH REWARD THE SCHILLING FAMILY USES CROP INSURANCE TO OFFSET RISK IN FRUIT PRODUCTION. The southwest corner of Michigan is home to the most diverse farm production outside of California. The diversity of the crops growing creates a wider-range of opportunities for farmers, as well as risks. Growing high-value crops, like fresh tomatoes or new varieties of apples, also carries high rewards and high risks. Balancing between the two takes careful planning, a sharp focus and maybe even a bit of luck.

For the Schilling family, they embrace the tools available to help with that planning, to make the right decisions and protect their investments.

The first step for them as they make tree buying decisions, is projecting 5 to 7 years into the future when the trees will mature into full production.

As suppliers to the fresh apple market, as well as managing farmers market stands in the Chicago area for one of their farms, they need to be prepared to meet changing consumer demands.

On the other hand, crops like peaches, apples, cherries and tomatoes are highly dependent on the right weather at the right time. A poorly timed freeze or warm period can devastate an entire crop in a matter of days. Being prepared for these kinds of risks is also important, which is why the 33

Fall 2019 — Partners

Schillings are proponents of using fruit and specialty crop insurance to protect against uncontrollable risks.

“We have benefited from purchasing crop insurance the past two years,” Bae Schilling says. “Last year we lost our entire crop of fresh Honeycrisp apples, and this year we lost 30 acres of peaches due to a bad winter. Having crop insurance made a big difference!”

In addition to using crop insurance, the Schillings believe it is important to self-insure against many of the risks they face with proper management and smart business decisions. Having diversified crops is one way they balance the risk, along with planting strategies and proper crop management.

Bae and her husband, Ben, are the most recent family members to join the multi-generational farm, first started in 1864. They, along with Ben’s brother, Mark, and his wife, Abby, bought the farms last year. Although Ben grew up on the farm, he and Bae (who is from Australia) each had corporate careers with global businesses, most recently in Canada and before that, Germany.

Leaving their corporate careers to join the family business was a decision they did not take lightly.

“When my dad and uncle said they were wanting to retire, we knew this was our only chance to join the business,” Ben says. “It was a big decision to leave our careers and lifestyles and move here to buy and manage the farms.”

While there are many differences in their day-to-day work today compared to two years ago, they rely heavily on the business and management experiences they both have to manage the farm operations.

“There is a big difference between working on the farm and running the farm,” Ben says.

“It’s been like drinking from a fire hose as we try to learn everything there is to know about the farm. Thankfully, my dad and uncle have stayed on as consultants to us.”

Today, Schilling Family Farms consists of nearly 1,000 acres and is one of two farming operations the four own and operate.

The bulk of the crop is sold to grocery stores and wholesalers throughout Michigan, Indiana, Illinois and Wisconsin, as well as providing for farmers market stands and delivery routes to Chicago restaurants and breweries each week. Meeting the standards of the fresh market requires stringent compliance for quality control, food safety and crop management criteria to maintain their relationship with the buyers. The record keeping ➡ Above: Ben and Bae Schilling are learning first-hand the risks and rewards of managing a diverse fruit and vegetable operation. ➡ Opposite Page: Running the farm is a family affair for Ben and Bae Schilling and Mark and Abby Schilling.

CROP INSURANCE CREATED FOR YOUR UNIQUE FARM MANAGEMENT NEEDS

required with the compliance standards correlates well with the records needed for crop insurance.

Over the years, the farm management has evolved to include high-density trees, allowing for more trees in the same amount of land.

Treatment protocols, variety selection and labor management have also been revised to meet current market demands.

“There is more business behind farming than most people realize,” Bae remarks.

“We spend a lot of time managing the business, the employees and the marketing of our products. With well over 100 employees at the peak of production, we have a lot of people depending on the longevity of the farm. We have to be very careful when we are weighing the risks versus the rewards of our decisions.”

Regardless of the management strategy and business experience, the first year

for Ben and Bae on the farm was a trying one. From crop damage to weak markets, the Schillings felt the impact of many forces beyond their control.

“Last year was a tough year to get into farming,” Ben says. “Hopefully, the weather can’t get any worse than that – it will take a few years to judge our success.”

Although their indoctrination to the farm was a bit rocky, they are grateful for the neighbors and others who have been welcoming and supportive of their new adventure, including working with GreenStone Crop Insurance Specialist Earl Zelmer.

“Earl probably knows this farm better than I do,” Bae says. “He has worked with the family and in this area so long; he knows a lot about what we are hoping to do. GreenStone has been a great resource of information to us, and they are all good people with great customer service. They just get it!” ■

Implementation of the 2018 Farm Bill provides new opportunities for fruit and specialty crop growers to implement a wider range of risk management tools in 2019 and beyond. Understanding the options and how they best fit existing crop and marketing plans requires a thorough understanding of the fruit and specialty crop industry and the mechanics of smart crop insurance planning. Realizing the need to serve customers with a team of experts, GreenStone Farm Credit Services offers a fruit and specialty crop insurance team to leverage the expertise and experience of team members throughout Michigan and northeast Wisconsin, including Earl Zelmer, the crop insurance specialist who works with Schilling Family Farms.

“Realizing the diversity of the Michigan and Wisconsin farms, growing everything from apples to zucchini, we want to provide the best team of experts to meet the everyday needs of our customers. Using the team-based approach for our fruit and specialty crops allows us to provide a variety of products and services to our customers,” says Ben Mahlich, GreenStone’s VP of crop insurance. “Our portfolio of crop insurance products reflects the diversity and individuality of the customers we serve.”

Current crop insurance tools include commodity-specific plans as well as coverage for the overall farm management plan, such as whole farm revenue protection.

Growers looking for risk management plans tailored to their unique crops and farming practices are invited to visit a local GreenStone branch office or www.greenstonefcs.com. ■

Crop Insurance Calendar...

OCTOBER

15

Forage Underwriting Report Signature Due Date

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DECEMBER

NOVEMBER

5

End of Insurance Period (loss reporting deadline for Apples)

10

Wheat Final Plant Date*

14

Wheat Production Reports Due

JANUARY

31

End of Insurance Period (loss reporting deadline for Fall Crops

15

Wheat & Forage Acreage Reports Due

31

Final Claim Reporting Date for Dry Beans

15

Final Claim Reporting Date for Sugar Beets

20

Fruit Sales Close Date & End of Insurance Period for Grapes

15

End of Insurance Period (loss reporting deadline) for Spring Crops

Fruit Acreage/Production Reports & Pre-Acceptance Worksheets Due

*Please note that some dates can vary by county, especially in Wisconsin. Please check with your crop insurance specialist for specific dates if you are unsure.

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Getting Started

Tax Planning: More Important Now Than Ever!

By Chad Zagar, VP and Managing Director of Financial Services THIS YEAR DEFINITELY HAS ILLUSTRATED THE NUMBER OF FACTORS INFLUENCING YOUR PROFITABILITY THAT ARE SEEMINGLY OUT OF YOUR CONTROL. AND WHILE THERE ARE MANY THINGS IMPACTING YOUR BUSINESS, YOU CAN GAIN CONTROL OF YOUR TAX SITUATION IF YOU PLAN AHEAD. WHETHER YOU BELIEVE YOU MADE LITTLE INCOME OR A LOT IN 2019, YOU WILL FARE BETTER WITH PRE-PLANNING. ADDITIONALLY, SINCE THIS IS THE SECOND YEAR OF THE NEW TAX LAWS, PLANNING MAY BE MORE IMPORTANT THAN EVER BEFORE!

It is important to understand the goal of tax planning is to minimize tax liabilities and ensure all available allowances, deductions, exclusions and exemptions are working together in the most tax-efficient manner, reducing the total income tax paid to an amount you are expecting. Tax planning does not remove obligations or change requirements, but can help eliminate any surprises at tax time.

Effective tax planning helps businesses achieve their financial goals and plan for their upcoming needs. When done properly, it should lower taxable income, reduce tax rates, provide for greater control of when taxes are paid, and maximize deductions and credits whenever possible.

To the right is a simplified illustration showing the importance of tax planning.

In both scenarios, the two year combined farm net income is $150,000 (average of $75,000 per year). In Scenario 1, no tax planning was completed and a significant loss was recognized in year one. This led to the income tax benefit of adjustments and standard deductions being wasted and the taxpayer paying $7,535 more in income tax over a two year period than in Scenario 2.

Effective tax planning, when possible, should avoid situations like the illustration on the right.

Your Responsibilities While tax accountants are knowledgeable and generally well-versed in tax laws – they are not magicians, nor can they read minds. Therefore, it is critical you stay engaged in the tax planning process and provide the necessary information in order to receive efficient and effective guidance.

A few tax planning tips: • Have your records in order: Having an accurate set of financial records is critical for

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Summer — Partners Fall 20192018 — Partners

a tax preparer to work with – preferably, not a shoebox of receipts. A computer program or a worksheet that reconciles back to your bank and debt statements is best. This is generally the first step in good financial planning and a piece that should not be ignored.

If this is not something you want to do, it may be best to hire a bookkeeper or accountant to assist you.

• Don’t procrastinate: Waiting until the last minute to get your records in order is a big no-no. Waiting until December to start your bookkeeping for the year leaves you scrambling to complete activities to help your tax situation.

• Get off autopilot: It is not uncommon to see businesses make financial decisions that they shouldn’t have made because their books are not up to date. Examples include buying the same amount of prepaids as last year, or making a capital expenditure because you had to last year – only to find out that neither were necessary because you were in a different position than a year ago.

• Nothing is irrelevant: Make sure you tell your tax preparer about all equipment purchases. For instance, if equipment is dealer- or manufacturer-financed, it may not show up in your bank accounts if no payment was made in the tax year. That can be a sizeable capital expenditure your tax accountant doesn’t know about unless you tell them.

• Meet with your tax accountant early: Meet before the end of the year to discuss your current financial situation and what tax bracket you will likely be in.

Allow enough time to bring in additional income if facing a net operating loss or to make additional purchases if your income is too high.

Descriptions Farm income NOL Adjustments: IRA, 50% Self-employement tax Retirement contributions Adjusted Gross Incmoe Standard decuctions Taxable income (loss) Tax Self-employment tax Total federal tax

Frequent Tax Planning Strategies

• Election to capitalize repairs rather than expensing them – it can be adjusted annually.

Methods to decrease taxable income: • Farm income averaging: averaging all or some of your farm income using rates from the three prior years.

Tax Calendar...

OCTOBER Individuals file a 2018 income tax return (Form 1040) if an automatic six-month extension was requested.

Corporations file a 2018 calendar year income tax return (Form 1120) if you requested an automatic six-month extension.

Non-farm employers file Form 941 for the third quarter to report wages paid, and Social Security, Medicare, and income tax withheld from wages, and compute employer matching social security payments.

DECEMBER

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(26,377) 48,623 (24,400) 24,223 2,519 10,598 $13,117

An IRA to Roth IRA conversion generates taxable income on the tax return, but the earnings are tax-free. Any farm losses may be offset by the income generated from the rollover and no income taxes would be owed on the money rolled into the IRAs.

Methods to increase taxable income:

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(27,605) 122,395 (24,400) 97,995 13,497 20,497 $33,769

LOST (150,000) (24,400) (174,000)

• If a farm loss is inevitable, common ways to increase income include: IRA distributions, IRA to Roth IRA conversions, sale of non farm capital assets (i.e. stocks), etc.

There are a few tax planning strategies worth mentioning that, while they may not be applicable to every business, they are good reminders and important to keep on your radar.

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2019 $75,000

Scenario 2

2020 $75,000

(26,377) 48,623 (24,400) 24,223 2,519 10,598 $13,117

Total Federal Tax $33,769 $26,234 $7,535

2 year tax total paid Scenario 1 Scenario 2 Difference

• Maximizing depreciation methods, including direct and bonus expenses – try to never depreciate your way out of standard deductions and exemptions.

Scenario 1 2019 2020 $150,000 $300,000 (150,000)

• Common expenditures to reduce taxable income: prepaying inputs and other allowed items, capital expenditures, and retirement contributions.

• Healthcare deductions: creating an employee benefits deduction to allow for business deduction of these expenses.

• Crop insurance deferrals: this likely will be more common this year given weather-related circumstances. Internal Revenue Code Section (IRC §) 451(f) provides a special provision that allows insurance proceeds to be deferred if they are received as a result of “destruction or damage to crops.” Other required criteria to defer proceeds are as follows:

1) the taxpayer uses the cash method of accounting; 2) the taxpayer receives the crop insurance proceeds in the same tax year the crops are damaged; and 3) the taxpayer shows that under their normal business practice they would have included income from the damaged crops in any tax year following the year the damage occurred.

• Selling under a deferred contract: you can sell grain before the end of the year, but not be paid until after the first of the next year.

You then have flexibility to decide, after the fact, if you need additional income in the year that the crop was sold. Make sure you sell in several small contracts rather than one large contract to provide more flexibility for when to show income. Also, consider the risk of collection in your decision making process.

As we approach the end of the year, it is good to remember the importance of tax planning.

Strategies listed within this article are commonly used; however, everyone’s situation and position is unique. Going into your tax planning sessions well-prepared, and with the mindset that nothing is irrelevant, will help position you well for tax time.

Reach out to your local GreenStone tax and accounting professional if you need assistance with your bookkeeping or to set up a tax planning meeting. Our team is always available to help you with your financial planning needs! ■

Corporations deposit the fourth installment of estimated tax for 2019.

Partners — Fall 2019

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INTERN WRAP-UP

it was a stepping stone to greater things in their career. Intern roles varied from preparing tax and accounting financial statements, analyzing credit summaries, appraising farm equipment and properties, filming and creating videos and organizing intern events, just to name a few.

As GreenStone’s 2019 class of interns head back to school this fall, they are taking with them more than a beefed-up resume, they are carrying with them new skills to last a lifetime. All summer, interns were challenged with collaborating on group projects, strategic problem-solving and putting skills gained in the classroom to the test.

The 22 interns were able to share their summer projects and responsibilities during the internship final presentations. Presentations ranged from discussing peer comparison reports, social media strategies, software development, job shadows and how each intern brought value to their team.

From May to August, GreenStone’s largest and most diverse group of interns had the chance to work alongside industry professionals and learn what it’s like to work with leaders in their field. Ranging from incoming college sophomores to graduate students, for some, this internship was the first opportunity to work in a professional setting and for others,

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Fall 2019 — Partners

“The final presentation gave us an opportunity to work together one last time while highlighting our accomplishments,” says marketing intern, Amber Echlin. “It was a great way to wrap up our summer and I am extremely grateful for the professional development GreenStone provided me.”

Interns were also able to gain insight on the agricultural industry by touring a local dairy

farm, visiting a GreenStone branch and talking with crop insurance specialists. These events, integrated with their daily responsibilities, allowed each student to gain a comprehensive understanding of the role GreenStone plays in agriculture and rural communities.

As a cooperative, GreenStone also takes pride in giving back to the communities it serves.

This value is upheld through the internship program by incorporating a team volunteer opportunity, this year at Potter Park Zoo in Lansing, Michigan.

“GreenStone really encourages their interns to get involved, as it’s one of our four core values,” says human resources intern, Philip Sloss. “I really enjoyed volunteering at the zoo and it was nice working together toward a common goal.”

While getting experience in your field is considered crucial by students for future career opportunities, GreenStone believes knowing professional etiquette is also important.

With this in mind, another event offered to the

“

Everywhere you go you’ll have to work as a team, whether it’s at school or at a full-time job, and GreenStone is no exception.

”

interns is an etiquette lunch and presentation. The students learned about proper dining behavior and manners, followed by a chance to test their new knowledge at a lunch prepared by a Michigan State University master chef.

“Just knowing how to conduct myself during a business outing with the proper manners is very valuable to learn,” says systems administrator intern, Robert Dunne. “The etiquette presentation gave me confidence to go out and have lunch with people who were higher up and know how to impress them.”

As the summer came to a close and GreenStone’s 2019 class of interns returned to class, it is apparent the students are better prepared for the next chapter in their lives. Although responsibilities vary, teamwork plays a pivotal and consistent role at GreenStone and the internship program is no exception. Being able to work with other interns, supervisors, different departments and the leadership team prepares interns for a successful future and helps to set them above their peers.

“Everywhere you go you’ll have to work as a team, whether it’s at school or at a full-time job, and GreenStone is no exception. But the teamwork here is something that is going to help you be able to talk with different people in different roles,” explains Caitlyn Meyers, credit intern.

“Everyone here is more than willing to help you and you won’t work with nicer people.”

Congratulations to the summer 2019 class of interns and best of luck on your future endeavors. GreenStone is now recruiting for 2020 summer internship opportunities. If you or someone you know may be interested in a collaborative yet challenging experience, visit greenstonefcs.com/careers. ■

i TARGETED PHISHING ATTACKS (SPEAR PHISHING) In the last issue of Partners, Summer 2019, we dove into how to spot a phishing email. Most phishing emails contain the same indicators of compromise that help us determine the message is a phishing email. However, there is another type of phishing attack that is harder to detect – Targeted Phishing Attack, also known as a Spear Phish.

These types of messages contain information meaningful to the recipient. In some cases, these messages might contain an old password the phisher or ‘bad actor’ retrieved from breached websites, or personal information gleamed from social media sites like Facebook or Instagram. Using information that is relevant to us makes us more likely to open and take action on the phish.

The goal of these targeted attacks is the same as a normal phishing message, the bad actors want to compromise your personal information and gain hidden access to your computer.

These attacks can be more difficult to identify due to the very personalized information that they contain. Fortunately, targeted phishing emails have similar characteristics as normal phishing emails. Recognizing these tactics can help you identify the attacks: • The email might include a suspicious attachment.

• The email urges you to take immediate action.

• The email urges you to pay ransom, or else….

If you were not expecting the email, even if it may appear to be from someone familiar with you, or if the message is urging you to act or pay ransom, report the message as junk. If you believe your account(s) could be compromised, refer back to the Summer 2019 Tech Tip (available on the GreenStone website under ‘Partners’) for more details on updating your passwords and enabling two-factor authentication. ■

...Tech Tip

Partners — Fall 2019

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3515 West Road East Lansing, MI 48823

Fall feature highlight...

Will and Nancy Heiden are the new owners of a log cabin on nearly 200 acres on the Manistique River in Michigan’s Upper Peninsula. Situated about three miles from Seney National Wildlife Refuge, the surrounding woods are full of grouse, deer and even bear.

Read more on page 27.