MKC Connections - Spring 2015

Connections

Spring 2015

Cultivating the Next Generation Page 11

Connections “Like” us on Facebook: Mid Kansas Cooperative Follow us on Twitter: @midkscoop Read our Blog: www.midkscoop.blogspot.com Watch us on YouTube: www.youtube.com/midkscoop

CONTENTS SPRING 2015 IN THE COMMUNITY

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Editorial Staff

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Management

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MKC P.O. Box D Moundridge, KS 67107 620-345-6328 www.mkcoop.com Our vision: MKC will be a highly valued, customer-focused business engaged in profitable relationships with high business ethics and employee satisfaction.

Connections

Cooperative Principle Demonstrated Through Recent Donations Two organizations are the recipients of financial support from MKC in March 2015.

EDUCATION

Kerry Watson Director of Communications Nichole Gouldie Communications Specialist

Dave Christiansen President and CEO Danny Posch Senior Vice President and CFO Dave Spears Senior Vice President and CMO Erik Lange Vice President of Southern Area Operations Steve Peterson Vice President of Northern Area Operations Darin Marti Vice President of Eastern Area Operations Dave Sell Director of Energy Operations Kerry Watson Director of Communications Brett Myers Director of Human Resources and Development

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Cooperative Movement A cooperative’s charter board member shares his unique perspective on the vision for a local co-op in the late 1950s.

Ease of Doing Business Producers share their experience of convenience and more through the use of their online portal accounts.

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Are you Missing Out on a Tax Deduction?

Grain farmers take advantage of tax deduction through the domestic production activity deduction.

FEATURE

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What Makes Great Boards Great Cooperatives, as with all businesses, depend on effective leadership to enhance their success in a competitive marketplace.

FROM THE FIELD

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That’s a Tall Order

Agribusiness leaders particpate in Tomorrow’s Agribusiness Leaders Program.

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Cultivating the Next Generation MKC hosts a unique opportunity for the next generation of farmers and ranchers.

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Getting the Grain on the Train MKC loads out 400,000 bushels of sorghum on train to Texas Gulf on the first shuttle in December 2014.

STRAIGHT TALK

PRESIDENT’S COLUMN By Dave Christiansen

Defining Quality Service

It wasn’t long ago I found myself in a conversation with a friend and fellow cooperative manager whom I respect.

We came around to the topic of the advantages and disadvantages of cooperatives with the size and scale some are becoming today. As we continued the conversation, it soon turned into more of a debate. The debate being, what place does size and scale have in the ability to offer the greatest quality of service to your customer?

That conversation really sent me thinking. What is the definition of quality service today and has it changed?

And more importantly, how has the expectation of customers changed over the past 20 to 40 years? The more I thought about it, and in discussing the question with others, I firmly believe the service our customers expect has certainly changed over the past several decades.

I think we would all agree, however, the fundamentals have not changed.

Honesty, dependability, employing friendly people, having products on hand when farmers and ranchers need them, and having space to deliver harvested crops are just some of these fundamentals. The list can go on but certainly the foundation of quality service that everyone recognizes and expects remains as valuable as it ever was.

In addition to these fundamentals, there is another level of good quality

service which is in the process of being redefined in an unprecedented way.

It is much more challenging than ever before to try and rise to the task of providing it. I will say that sometimes customers have been kind enough to lower their expectations until they are finally met, but that doesn’t happen much today.

When most agricultural businesses began, specifically cooperatives, the strategy was to be a warehouse. In its simplest form, we built warehouses that allowed the farmers to collectively buy fertilizer, and store and market grain. This system worked very well at the time and provided a lot of value for the members who owned them.

Good quality service, in addition to the fundamentals, was defined as having the products on hand and space required when the member-owners needed it. Many might say they had simple expectations established during simpler times. Then production agriculture, like every other aspect of our lives, began evolving with some serious speed. Even for the most committed producer or cooperative, keeping up is a challenge.

Technology creation and adoption tests us all. Over the years we have seen equipment used to harvest crops outpace the dump speed at many elevators. We have seen the amount of time it takes a farmer to plant the crop cut in half. Risks we couldn’t dream of

are now part of our everyday vernacular.

Environmental and regulatory concerns are around every corner. Input and equipment prices are much higher, demanding more scrutiny, precision and collaboration. But this is just a small sample of the world our growers live in today. I’m convinced this is where growers, in recent times, have begun redefining “good quality service”. I’m also convinced in order to remain relevant to the farmers and ranchers of today, our cooperative must redefine what relevance means to us.

Sure, the fundamentals I listed earlier have remained the same. The difference today is progressive growers are certainly needing more from their trusted partner. Let me cover some of the areas I believe are critical to providing good quality service today.

Precision agriculture is a topic in the forefront of virtually every farm publication today, but it’s a topic a lot of people still have a hard time defining. MKC believes it is imperative for us to have people with the expertise to not just explain what it means, but to help you utilize all that precision technology can do for you. For us, we have to take it in manageable bites that can make an immediate impact on your farm.

Due to rising cost of all inputs, the need and demand for precision placement of those products is increasing fast. Making certain you get the right Continued on page 14

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IN THE COMMUNITY

Cooperative Principle Demonstrated Through Recent Donations

By Nichole Gouldie, Communications Specialist

In many ways, a cooperative is similar to a community, with members committed to the communities’ success, sharing in its financial standing, electing its leadership and expressing their needs; therefore, it should be no surprise cooperatives are committed to the communities they work in. Concern for community is one of the core principles and values that MKC operates with.”

MKC strives to give back to local communitiess of organization. financial support. MKC is proud to support organizations who demonstrate excellence in the areas of agricultural education, community safety, alleviating hunger and leadership development. The following financial contributions took place in March 2015.

BUTLER COUNTY RESCUE SQUAD The Butler County Rescue Squad added grain engulfment rescue equipment to their array of tools for disaster response through the financial support of MKC along with matching funds from the Land O’ Lakes Foundation. Together, MKC and Land O’ Lakes donated $3,000.

After proper training, the grain engulfment rescue equipment will help assist first responders in preventing fatalities that result from victims being trapped in grain bins.

“MKC puts safety first and we strive to take an active role in the safety of our communities,” says Spencer Reames, Benton location manager. “This donation will assure area farmers and cooperative employees that the proper equipment is in place to increase the chance of survival in the case of a grain

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engulfment,” The Butler County Rescue Squad is composed of volunteers from Butler County, Kansas. Providing rescue services to the citizens of Butler County, the members are based out of El Dorado with mutual response agreements with area fire departments.

MKC has helped purchase four grain engulfment rescue tools. “We hope the equipment will never be used except for training purposes,” Spencer says.

KANSAS FOUNDATION FOR AG IN THE CLASSROOM A $2,000 contribution from MKC to the Kansas Foundation for Agriculture in the Classroom (KFAC) was recently presented to use for increasing agricultural literacy in the state. This is the fourth year the cooperative has made this kind of donation to support KFAC. “MKC is proud to support KFAC. Many individuals and organizations involved in agriculture know it is vital to educate and teach school children about the importance of agriculture,” says Darin Marti, vice president of eastern operations.

The financial support of MKC was matched by the Land O’ Lakes Matching Funds Program. The financial support will help KFAC in hosting an opportunity for Kansas teachers to receive hands-on lesson plans, visit agricultural operations

and learn from others how they can incorporate agriculture in their classroom. The 3 ½-day summer institute allows the teachers to experiment and adapt the lesson plans according to their needs. According to Natalie Anderson, the foundation’s goal is to connect Kansas agriculture to the classrooms of 100 teachers through the institute.

Benton Location Manager Spencer Reames presents the Butler County Rescue Squad a check to assist in the purchasing of grain engulfment rescue equipment. Squad members receiving the check include (l-r) Travis Unruh, Brice Denton, Steve Ash, Frank Williams and Danny Williams.

KFAC representative Natalie Anderson accepts a $2,000 donation from Darin Marti, vice president of northern operations for MKC. The mission of the Kansas Foundation for Ag in the Classroom is to connect classrooms to Kansas agriculture.

EDUCATION

Cooperative Movement

By Nichole Gouldie, Communications Specialist

A Marion County native all his life, Arnold Voth has been immersed in farming and raising cattle for nearly a century. At the age of 92, Voth brings a unique perspective to the cooperative world as a charter board member of Farmers Grain Cooperative located in Walton.

On their family farm near Walton, the Voth Family was involved in as much as they possibly could be in their rural community. Voth’s father, John, had shares in the local elevator, Farmers Grain Company. Although it had 60 members, the elevator was privately owned and the facilities were very outdated.

“Management of the elevator and area farmers saw the need to turn the local elevator into a cooperative,” Voth says. It was with this idea that Marvin Esau, E.J. Brubaker, Voth and a few others organized local farmers to invest in a co-op.

“People in the country were very suspicious of a co-op really because they didn’t know anything about them,” Voth says. The group of farmers selling the idea of the co-op in the country used talking points of more service offerings, more buying power and patronage.

Voth recalls it taking nearly 9 months of selling common stock of $100 to officially form the co-op. The farmer’s co-op wasn’t the first co-op in the area. “There was a propane co-op in Newton at the time,” he says. “But it was to be the first ag coop in the area.”

To recruit farmers to become stockholders, Voth says meeting were held to educate them about cooperatives. “Many farmers thought the entire idea of a co-op was complicated and some even sat there with

their mouths open. It was a new venture but we knew it could be successful,” Voth explained On March 4, 1958, the charter of Farmers Grain Company was amended to become Farmers Grain Cooperative, bringing it under the Cooperative Marketing Act. Esau, the manager at the time for Farmers Grain Co-op Farmers Grain Cooperative in Walton as it was in the early in Walton, was retained as the 1960s. manager of the new cooperative. plant was constructed. Along the way, In 1959, the original wooden elevator the coal business went away. was replaced with a new concrete A director for more than 10 years, elevator and later an annex was conVoth remembers their board meetstructed. ings distinctly, “To start the meetVoth recalls critical issues ings we would talk about farming for facing farmers at the time and hours,” he says. “We would finally get the reasons why the co-op was down to business and wouldn’t get formed. “One reason was to ship home until 10 p.m.” It was his first exlarge quantities of grain on the perience with serving on a board and railroad and another was to see working with this type of business he more volume,” Voth commented. said, but he grinned as he commentIn reflecting on the type of busied, ‘The wife would hassle me about ness the co-op was in the 1960’s, Voth what time I got home from the board says things were changing fast. The meetings.” cooperative’s staff in the early stages The Farmers Grain Cooperative included a general manager, one fullhosted their annual meetings at the time and one part-time employee.

Walton School. “The gym was nearly During his tenure on the board, Farm- full and people enjoyed the meal,” ers Grain Co-op started selling fuel.

Voth recalls. “On the menu was ham “We purchased the fuel station across sandwiches and potato salad for nearthe street and started delivering fuel ly 30 years.” to farmers. “That high priced 11 cent Very in tune to what the coopfuel,” he laughed. erative is today, Voth noted the Like today, meeting the needs of success the co-op is seeing today, the members was at the forefront for especially related to the rail termithe board of directors. “We wondered nal. “That is what you call moving,” who was going to purchase the grain,” Voth chuckled.

Voth says. “At one time, we started Merger agreements between discussing whether or not to start sell- Farmers Grain Cooperative and ing fertilizer beyond bagged fertilizer. MKC were signed in January 2002.

These concerns weren’t going away so Locations in the merger included we had to address them.” In 1964, a Peabody, Florence, Burns, Newton, bulk fertilizer facility was constructed Whitewater, Benton, Walton and and in 1967 an anhydrous ammonia Wichita.

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EDUCATION

SPRING

Ease of Doing Business

Manage your online portal account 24/7

By Nichole Gouldie, Communications Specialist

It wasn’t that long ago your doctor walked into the exam room with a laptop instead of that thick, awkward file they normally carried. This signaled a new era in medical practice. But that isn’t the only field the virtual world is making business easier in.

Agriculture has seen technology introduced in many arenas. To meet the customer’s needs, MKC saw the need to offer technology to help customers manage their accounts and have the information easily accessible at times when it is convenient for them.

For Les Wedel, the online portal certainly makes non-field work easier.

“With everything going on, anything that makes something more convenient is a great thing,” Wedel says.

“And that is exactly what the online portal provides.”

Wedel signed-up for MKC and Team Marketing Alliance online portals two years ago. After attending a workshop at his nearby location and some practice, he was soon paying bills online and checking purchases.

“The website is very user friendly and easy to access,” Wedel says.

He was also checking grain tickets at his convenience. “After deliveries, I can check grain tickets in the evening or first thing the next morning,” he says. “I haven’t had to visit the office to take care of the business I can do online for several years now.”

The Goessel area farmer appreciates how he can use the portal anytime. “I am often on the website late at night after the co-op has closed checking proof of yields or contracts,” Wedel commented. “I schedule the payments of my monthly statement and know that it will be paid on time

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and I don’t have to worry about it later.”

During tax preparation season, Wedel appreciates being able to check figures and download ledger sheets for his inputs. He adds during planting season he uses the portal most often to check prepay.

Burns area farmer John Taylor often doesn’t think to call his MKC location or field marketer until late in the evening. “Instead of having to remember to call the next morning about my questions, I can access my account online and see if I can answer my question through the information available to me there,” Taylor says.

Like Wedel, Taylor uses the portal to review his statement and pay his bill. He also easily extracts proof-ofyield information needed for farm programs and looks at his grain contracts.

“All of this information is at my fingertips,” Taylor says. “The information can be itemized and I can go back six months, even a year, to review information that is critical to my operation.”

Taylors says sometimes the need arises to review this information with his field marketer. Prior to Taylor’s online portal account, they would have to sort through statements and pull everything out. “Now my account can be quickly accessed on a computer and my questions can quickly be answered by looking at my online account together,” he explains.

Both Wedel and Taylor encourage producers to take advantage of this technology. “It sure makes doing business a lot easier than it was 10 years ago,” Wedel says.

MINERAL

SALE

Purchase 10 BAGS of MINERAL, GET ONE BAG FREE. Promotion available through May 16, 2015

MKC IS PROUD TO OFFER THE QUALIFYING MINERALS: • Purina Wind and Rain • Land O’ Lake Pro Phos • Most locally mixed mineral Custom mixed minerals do not qualify for this promotion.

Contact Your nearest MKC Location to take advantage!

EDUCATION

Are you Missing Out on a Tax Deduction?

Members take advantage of the Domestic Production Activity Deduction

By Nichole Gouldie, Communications Specialist

Everyday is an excellent time to make sure you are maximizing profit and taking advantage of all potential deductions available. One deduction available to farmers which MKC can pass through to its’ members is the Domestic Production Activities Deduction (DPAD). Grain farmers can use this deduction to reduce the total income tax they must pay to the federal government.

According to tax professional Jim Graber, the DPAD has saved his clients well over $100,000 in the 2014 tax season with his average client saving approximately $1,000 through the deduction. Graber sees both sides of this deduction as he is also a producer near Newton.

One concern Graber’s has is some producers and tax preparers don’t understand how the per-unit retains is to be reported. Graber says if done correctly the per-unit retains is reported on the dividend line along with the dividend and then subtracted from the grain sales line. “The DPAD is then placed on the form 8903 and added to other DPAD the farm may produce,” he says. “If someone says the per-unit retains and the DPAD is increasing taxes, something isn’t being done right.” Graber comments besides lowering the tax, the DPAD can also result in increased earned income credit, retirement savers credit, less of social security taxed, and many other benefits that result when Adjusted Gross Income is lowed.

Graber encourages all MKC members to take advantage of this opportunity to maximize their deductions. “A benefit of doing business with MKC compared to other businesses is sharing in the profits through patronage refunds and also sharing in the DPAD deduction the co-op has been able to pass back to its patrons,” Graber says. Graber encourages all producers to do the math when deciding where they choose to haul their grain. “This deduction also has a significant positive financial impact on the local communities and MKC members,” he says.

HOW IS THE DPAD CALCULATED? According to TMA Controller Tricia Jantz, the tax benefit is a separate calculation from patronage and is available to co-op members who delivered and sold grain through the co-op. The following is a sample scenario showing the impact DPAD would make on an individual’s taxable income.

A farmer sold 20,000 bushels of grain that was delivered to an MKC facility for the twelve months ending on February 28.

At year end, MKC declared a patronage rate of 20 cents per bushel and a domestic production activities deduction of 15

cents per bushel. Assuming this producer was a member of MKC, the producer would receive $4,000 through patronage and a $3,000 Domestic Production Activities Deduction.

MKC includes the amount of DPAD deduction on the 1099 PATR mailed in January. The 1099 PATR includes the amount of patronage dividend the co-op distributes as well as the amount of DPAD that is passed back to the patrons.

SECTION 199 REVIEW In the summer 2013, MKC announced they would be passing this significant tax deduction to producer members through DPAD. Often referred to as the Section 199 Tax Deduction, DPAD is a special federal income tax provision allowing a cooperative to allocate to its members a tax deduction generated by “qualified production activities.” Jantz says producers will automatically be included in the deduction as long they are a member of MKC, have signed a Master Marketing Agreement required by the IRS, sold grain to the co-op and initiated grain settlements either by check or ACH. “One requirement we get a lot of questions about is the Master Marketing Agreement,” Jantz says. “The agreement is between the member and cooperative that outlines and documents the terms, obligations, warranties and remedies in regards to sales and purchase contracts. It also acknowledges that grain purchases between the cooperative and member constitute “per unit retain allocations” for the purposes of calculating the deduction.” Jantz noted a similar Master Marketing Agreement is already included with all TMA grain purchase contracts and is a very quick and easy process that can either be done electronically or as a printed agreement. According to Jantz, 2,178 MKC members participated in the DPAD for tax year 2014.

DPAD FOR MKC MEMBERS “I am extremely grateful for this tax deduction as a producer and for the amount of money it saves the clients I work with,” Graber says. “I appreciate the work many MKC and TMA employees did to make this deduction possible.”

Although it may seem complicated, the Domestic Production Activities Deduction can prove beneficial in reducing income tax liability from your farming operation. If you still need to meet all of the requirements to take advantage of the tax deduction, please contact Sarah Unruh staff accountant, at 800-864-4428.

Please consult with your tax advisor for further information on DPAD and how it applies to your individual situation.

www.mkcoop.com

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By Nichole Gouldie, Communications Specialist

Cooperatives, as with all businesses, depend on effective leadership to enhance their success in a competitive marketplace. Leadership for cooperatives is provided by an elected board of directors and a management team. But have you ever thought about what it takes for a director to help lead the cooperative today?

First and foremost, a director needs to put the membership and cooperative’s interests first, says Brian Briggeman, director of the Arthur Capper Cooperative Center (ACCC) at Kansas State University. The discussions and thought process in the board room are always to enhance member value.

Briggeman says it is important for directors to take off their farmer hat as they come into Brian Briggeman the board room. “Directors are having discussions about what is important to the co-op and how it brings value to the owners and this can be difficult as these discussions might not always benefit that director’s operation personally,” he commented. “But driving value to the majority of members is clearly the most important thing.”

Alta Vista rancher and MKC director, Hal Meyer, echoes Briggeman’s thoughts. “A board always has to do what is best for the patrons,” he says. “This often requires me to take off my rancher hat and make decisions that are best for other patrons and the cooperative’s future.”

Meyer joined the Farmers Cooperative Association Board of Hal Meyer

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Directors in 1987 and through the FCA merger Meyer was appointed to the MKC board for a one-year term.

Today the agricultural industry is changing very rapidly and directors need to be willing to adapt to the changes. “Directors can never take their site off of driving member value but have to realize there are things happening today that they have to move with, change with and adapt to,” Briggeman says.

It is this change cooperative directors must prepare for and can do so in a number of ways. Briggeman says reading and hearing information on current issues facing Kansas farmers, U.S. agriculture and global agriculture is one way. “Discovering what issues others are facing or what they see in the future for agriculture is also important,” he says. “But this will only take you so far. Today’s director needs to understand the types of questions to ask.

Often, to know what questions to ask, directors need to get out, Briggeman says.

“Meaning they have to get out of their communities and hear great speakers and interact with other co-ops from across Kansas and the nation if at all possible,” he says.

“You can bring new ideas to the table and ask additional questions to drive member value from these experiences.” A director should also be an independent thinker CJ Blew and be willing to speak up.

In addition to Briggeman’s suggestions for what it takes to be a director, MKC chairman CJ Blew says understanding the fiduciary responsibility to the company is critical. “Directors should understand not only the importance of making sound fiscal decisions to ensure the longevity of the coopera-

FEATURE

tive, but also the significance of a director’s obligation to protect member equity,” Blew says.

Blew, a producer in the Castleton area, says directors need to do everything they can to sharpen their ax. “No one can predict or look into the future, but we can stay in tune to potentially what could be happening down the road so we can make the best decisions when we are in the board room,” Blew says. He also comments directors need to have integrity, good listening skills and ask important questions.

Briggeman says it is very important producers know that as a director they have a duty to the members to think about the future to ensure cooperative success.

Briggeman who has worked for ACCC for nearly four years and has spent a lot of time working with cooperative leaders on issues relative to cooperatives says today’s producer is very different than 30 years ago, but the board has to continue to meet their needs.

A director needs to make sure the cooperative is relevant for tomorrow’s producer and this can often be one of the most difficult challenges, Briggeman says.

“Often producers tend to think about next year’s crop, but a good director is not only thinking about next year but really has his or her sights on three, five and even 20 years down the road,” he says. “I don’t care who you are or what business you are in, that is difficult.

A passion for the cooperative system is another quality a director needs to lead the co-op, Blew says.

Probably not unlike many producers today, he recalls when he came back to their family’s farming operation he knew his family was loyal to the co-op but he didn’t really know why. “I had the opportunity to serve on the board and truly discover the many reasons why it is important to have a local co-op. It is important for the co-op to be viable, relevant and be there to have farmer ownership in the marketplace,” Blew says. “Not everyone will come with that passion for the board right away but I feel it is important to understand why the cooperative system exists before dedicating yourself to become a director.” This passion for the cooperative system helped lead Blew to serve as a director for CHS. Through his experience on the MKC Board of Directors and as a director for CHS, Blew says being open

minded with a progressive and visionary attitude is critical. “Decisions made today will have an impact on future generations and the relevancy of farmer-owned cooperatives in the future,” Blew says. “Not making decisions or being unwilling to make the changes necessary as a director will make the cooperative irrelevant over time.”

While serving on a cooperative board, working through challenging situations are a given. Meyer has seen a couple during his tenure including hiring a CEO and a merger. “After MKC and FCA merged, I was really able to see how size and scale play a huge part of a cooperative’s ability to quickly make decisions that are in the best interest of the patron,” he says.

Blew says it is difficult to balance revolving equity and make investments to insure the long-term success of the company. “But this balance goes back to allowing us to be relevant in the future and we always have to pay close attention to this balance,” Blew comments.

While having prior experience before seeking nomination and election for a board of directors is great, Briggeman notes being able to bring new information to the board, having a commitment to the membership and a vision for long-term, sustainable growth for the co-op are important. A director should also be a loyal customer and truly believe the co-op’s strategy and vision are what is best for the customer.

Meyer encourages farmers and ranchers who have an interest in serving on the cooperative board to visit with a current director and think about what you could bring to the board meeting table that would be different from someone else. Meyer comments the experience is worth all of the time and energy you put into it and finds the director role thoroughly enjoyable. “If there would ever come a time for a director when it isn’t enjoyable, it would probably be time to no longer serve.”

Be prepared to give the time you should, Blew says.

Finding time can be a challenge, but it is imperative that a director be willing to devote the time that is needed to the board. Briggeman encourages cooperative members to always remember highly successful co-ops have highly successful directors that find ways to drive member value.

www.mkcoop.com

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FROM THE FIELD

That’s a Tall Order Much has been talked about regarding the chalabout the roles and history of the associations. Parlenges agriculture will see in the next 50 years. The ticipants also received training on effective lobbying global population is rising and our climate is warmmethods and put those into practice during the 2015 ing. Productive farmland is being lost. Food proLegislative Action Day hosted by KGFA, KARA and duction is changing at a rapid pace, and too many the Kansas Cooperative Council. The group enjoyed consumers do not understand it, causing fear and a policy breakfast with Kansas Attorney General resulting in misguided information.

Derek Schmidt, received a unique perspective on One issue of concern not getting as much attention legislature and statehouse administration from Asis where the next generation of agricultural leaders sociated Press Member John Milburn, and gained a will come from. Because of all of the challenges agbetter understanding of the regulatory process at the riculture is facing, the future generation will need to statehouse through a presentation by Kansas Debe better educated, more partment of Agriculture articulate, more fluent in Assistant Secretary Chad having conversation with Bontrager. consumers and be more The class will travel adaptable to change when to Washington D.C. in circumstances arise. You July for Session II. During could certainly say that is a their visit to D.C., they tall order to fill. will gain experience and Fortunately, there are contacts that will allow efforts underway investing them to grow profesin the future generation to sionally and add to their meet our challenges. One respective companies, example is Tomorrow’s industry and associaAgribusiness Leaders (TAL) tions. During their time Program. This leadership in D.C., participants will development program, make personal visits to jointly coordinated by the Kansas Congressional During Session I of the 2015 TAL program, members visited the Kansas Kansas Grain and Feed AsDelegation on Capitol sociation (KGFA) and the Capital Building. Participants toured the newly renovated building, Hill, visit National Agrivisited with legislators about policy important to Kansas agriculture Kansas Agribusiness Rebusiness Association and listened to a committee hearing. tailers Association (KARA), headquarters in addition is an intensive leadership program designed to to touring several historical monuments. Following teach members of the associations about the state the July session, the class will reconvene in Sepand federal legislative and regulatory process and tember for Session III to work towards becoming an how to be a better leader within the agricultural informed and confident agribusiness leader. The industry. class graduation will be held in conjunction with the Nichole Gouldie, communications specialist for Kansas Agri Business Expo in November.

MKC, was recently selected as one of the 10 memMKC and TMA employees who are TAL alumni bers of the 2015 TAL class. Fellow classmates include include: James Bettenbrock, field marketer; Doug agricultural sales specialists, cooperative location Biswell, TMA grain merchandiser; Erik Lange, vice managers and insurance representatives to name a president of southern operations; Doug Wright, few. The roster includes individuals from all across purchasing manager; Kerry Watson, director of comthe state with one prominent passion, agriculture. munications; Kyle Adams, TMA commodity marketing The first session took place in Topeka in January manager; Devin Schierling, TMA grain marketing manduring which the class received KGFA and KARA ager; Ted Schultz, TMA chief executive officer; and staff briefings on the legislative process and learned Matt Friesen, director of information services.

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FROM THE FIELD

Cultivating the Next Generation

A unique opportunity for the next generation of farmers and ranchers

By Nichole Gouldie, Communications Specialist

They are decades younger, two or three decades to be exact, than the average American farmer, but more optimistic and dedicated to the future success of their operations than most. This is an accurate description of producers and guests at the 2015 Emerging Producer Program hosted by MKC. The second annual Emerging Producer Program was held March 13-14. The program, held at the Hilton Garden Inn in Manhattan, was a time for producers to learn from experts in agriculture and share stories of life on the farm and ranch with more than 80 producers and guests.

The program is designed for growers between the ages of 22 and 40 who are interested in gaining information on workable solutions affecting agriculture, gaining cutting edge information through networking and gaining education while growing with

other like-minded young producers. It also allows them to learn more about their cooperative and gained access to expert perspectives.

The line-up of speakers included KFSA Insurance Agency Commercial Account Manager Bob Standage. Standage provided a look at insurance coverage and encouraged attendees to evaluate their current coverage and risk potential. Richard Fagerlin with Peak Solutions challenged producers and guests to protect that work life balance, and Diversified Services Rich Morrison presented on the volatility in the markets and encouraged producers to really know their costs. To wrap-up day one of the Emerging Producer Program, inspirational speaker Ron “Gus” Gustafson motivated Emerging Producer Program attendees to turn setbacks into comebacks. Gus shared with

As part of the 2015 Emerging Producer Program, Ron “Gus” Gustafson shared a powerful message to producers and guests about never giving up and always facing challenges with courage

producers and guests how he battled for his life at the age of nine following a tractor accident. In spite of his injuries, he excelled in athletics and life.

The second day of speakers included David Parker and a panel of grain and livestock marketing experts. Parker, who has spent his entire 35 year career helping individuals and organizations improve performance, challenged attendees to think about where they want their goals were for their operation and encouraged them to build their business with strategic partners. A panel of experts including Devin Schierling, Team Marketing Alliance, Mark Hobrock, Sunrise Ag Services, and Glenn Tonsor, Kansas State University Department of Agricultural Economics, provided answers to their questions about grain and livestock marketing risk management.

Attendees at the second annual program network amongst their tables. More than 80 agricultural producers, spouses and guests under the age of 40 attended the event.

www.mkcoop.com

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FROM THE FIELD

GETTING THE GRAIN ON THE TRAIN

By Kerry Watson, Director of Communications

MKC loads out 400,000 bushels of sorghum on train to Texas Gulf On Sunday, December 28, MKC loaded its first shuttle at the Canton Grain Terminal. The 109-car train pulled into the facility early Sunday morning as scheduled. The on premise loop track has room for up to 120 boxcars to transport the grain farmers deliver to MKC to facilities in the Gulf Coast, Pacific Northwest and more Seven MKC employees and three employees from the Kansas Grain Inspection Service (KGIS) met onsite at 6:00 a.m. and held a 15-minute safety meeting to go over the plans for the day. Following the safety meeting, the group undertook the first task of sealing the bottom hoppers of the 109 cars in the shuttle. To guarantee the quality of the product and avoid losses of the grain in route to its final destination, numbered zip tie style seals were used to secure each hopper from tampering.

Prior to sealing the bottoms of the cars, the cars were inspected and the train was maneuvered into position for loading the first car. At approximately 8:15 a.m., employees loaded the first draft into the first rail car. By 8:19 a.m. the first car, roughly 4,000 bushels of grain, was loaded.

While the process may sound pretty simple, there is a lot more going on behind the scenes. “The first part to a successful shuttle is knowing what you have and where it is in your elevator,” said Erik Lange, vice president of southern operations for MKC. As the elevator was filled with sorghum (milo) earlier this fall, every load was carefully graded for quality. Specifically, different moistures and test weights were divided into different bins. Additionally, any other factors that would result in less than a #2 sorghum were isolated into a blending bin separate from the ordinary sorghum.

The next step in successfully loading the shuttle is to

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know exactly what the end customer wants. Once this is determined, employees blend the commodity to meet the customer’s specifications. The terminal’s first shuttle had seventeen different bins of milo to choose from to meet its customer’s needs. “When you are moving grain at over 60,000 bushels per hour into the rail cars, a small misjudgment of a blend can result in a big mess and in a big hurry,” said Lange. Lange went on to explain if grain was ran for just one minute at the wrong blend, potentially more than 1,000 bushels of grain would have not met the customer’s specification.

During the entire shuttle loading process, one employee is dedicated to running the elevator and adjusting the blend to make sure the grain stays on specification. This employee is responsible for communicating with the employees from KGIS as well. This employee can control the blending at one of three places through a state–of-the-art automation system used to control the facility, including the main office, the truck unload control area/KGIS grading room, and the rail control room. This allows the employee to move throughout the facility and do his job and other tasks during the shuttle loading process.

Once the employee running the blend starts the grain stream, it flows out of the bins into a mixture of four possible grain legs elevating the grain into the top garner. The top garner is roughly a 7,000 bushel bin that holds the grain until it can be weighed at the scale. Lange noted if all four legs were utilized at 100 percent, the grain could flow as quickly as 100,000 bushels per hour into the top garner. At this point, the employee responsible for loading the cars controls the entire process through the automation system.

As each specific car is pulled into place, a radio frequen-

FROM THE FIELD cy identification (RFID) card on the specific rail car is read by the automation system. This RFID card identifies the rail car to the terminal’s computer and preloads the net allowable weight of the specific car into the scaling system. (The operator of the loading system does not have to manually enter any information about the car or weights, saving a significant amount of time scaling the car.) Once the car is in the correct place under the load out spout, the process of weighing six independent drafts of grain to fill the car begins.

Lange explained the draft process as a very fast way of continually flowing grain into each rail car without having to shut the grain off in the elevator. As grain flows into the top garner bin from the legs, a hydraulic gate separates the grain in the top garner from the scale. When the draft starts, the hydraulic gate opens and allows grain from the top garner to flow into the scale at over 10,000 pounds per second.

At approximately 30,000 pounds, the hydraulic gate begins to close automatically. Once the scale has stabilized, the draft is weighed. Once the weight is recorded, a gate on the bottom of the scale opens automatically and the grain leaves the scale at over 10,000 pounds per second into the bottom garner. The weighing process begins once again.

Between the scale and the bottom garner there is also an automatic sampler set on a timer which is evenly pulling a representative sample at predetermined intervals. These samples are then pneumatically conveyed to the KGIS lab for official grading.

The bottom garner can hold two drafts and is the last step before the grain leaves the elevator through the rail loading spout into the rail car. If two drafts are in the bottom garner, the automation system will weigh a third draft and hold it until the bottom garner has enough room to hold the next draft. If for some reason the car cannot be loaded for some time, there are sensors in the top garner that will automatically shut off grain flow from the elevator if a certain level is reached. The elevator operator and the rail loader operator can both slow down or shut off the grain flow manually.

At the bottom of the bottom garner is one last hydraulic gate manually controlled by the rail loader operator and can be opened or closed at any time to evenly fill the car

as it is pulled through by the locomotive. “If all goes right, this process takes three to four minutes,” said Lange. “In those three to four minutes, 4,000 bushels of grain or about 224,000 pounds of grain has been moved from the elevator onto a rail car.”

As each independent car is pulled through, the car lids are opened as they approach the load out spout. On the back side of the load out spout there is a second employee closing the lids and attaching more seals to provide security to the grain that has been loaded. Lange noted these two jobs are probably the most physically challenging as well as the most dangerous in the whole operation. “Both of these employees are tied off from above to the fall protection equipment to protect them from falling off the railcars.

These jobs are made more challenging as the train typically does not stop moving throughout the loading process, so they are often working from a surface that starts and stops continuously.”

The last employee on the crew is the locomotive operator. This person has a critically important job of listening closely to commands from the rail loader operator and the rest of the crew to steadily move the locomotive. Communication is critical as the locomotive operator can’t see what is occurring almost a mile behind them.

While the first shuttle loading experience at MKC went very smooth and was completed in a very reasonable amount of time, Lange commented there is always room for improvement. “Our goal is to make some small, easily controlled changes on future shuttles, measure the effects, and then either adopt them or try additional changes,” Lange said. “Any changes made should result in improved employee safety, efficiency, shuttle load time and additional profitability to our customer/owners.”

www.mkcoop.com

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STRAIGHT TALK

President’s Column Continued from page 3

product, in the right place, at the right time and at exactly the right rate has to be your goal today and helping you do that has become another definition of providing good quality service. Precision agriculture is better for the environment, increases production and is better for your wallet all at the same time.

The expense of putting in a crop today demands capital in amounts we never imagined. Our input financing programs provide flexibility, allowing our customers access to capital at a reasonable rate. It also allows the customer to take advantage of opportunities in the market as they come about. You simply do not know when inputs and outputs can be locked in to capture the profit needed to achieve your individual farm’s return on equity or profit goals. We are working with people today, who not only have goals for each farm, but now each field and soon each acre.

The need for flexibility today is why MKC offers crop input and energy contracts 12 months or more in advance.

A producer’s desire for flexibility is why we offer 28 grain contracts to meet the different needs and risk tolerances each customer may have. At the same time, we began ramping up our crop insurance efforts so you would rarely have to take unnecessary risk. Allowing our customers to take unnecessary risks would not be providing good quality service.

The ability to provide our customers with timely and valuable information has also been redefined when thinking of quality customer service. There is no doubting our efforts over the years. Being one of the first to offer customer portals where customers saw value in creating ease of doing business. To be able to view online all billing and grain contracts, sort and print them was, and is, a very valuable tool today.

Those services have simply served as a launch pad for many of the things we offer for customer convenience. Customer convenience includes online grain offers to take advantage of market moves, ACH for grain payments, automated fuel delivery and multiple text notifications regarding grain markets and application services. I can assure you we are currently working on a number of other communication methods on products and services to make your day more convenient.

Again, this is all with the intent to meet the changing expectation of what good customer service is.

The technology embedded in equipment today has created a demand for people who can utilize it and get all the value it can deliver. All of the information being generated can be overwhelming to most of us. Having people you can work with who understand how to utilize all of the big data

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being gathered to optimize production on your farm is, in my opinion, becoming more critical to your success. The ability to work with people who not only understand the economics of farming, but also understand and share your concern with the environmental and safety aspects of everyday life in production agriculture. Having those people available to you who understand big data is good customer service.

Probably the most visible and most effective driver of providing good quality service has always been the people we select to spend time with our customers every day. There is an exponential difference between the skill set of the people required to run the warehouse model of yesterday and the quality of service progressive producers expect today. At MKC we understand having people on staff you trust to help make these daily decisions is not an option. The days of the progressive producer chasing us down to do business is in the past. Our focus is to do as much of our business at the farm gate and to do so with people who have the expertise to make a tangible difference on your farm. In each of our core businesses - energy, agronomy, grain, feed and risk management - we have people with expertise who can help you make some of your most critical decisions. We believe that is good quality service.

All of these efforts are not done necessarily to help us execute on our strategy. They all begin with our intent on helping you execute your strategy. This is about helping our growers be more successful. We believe if you are more successful, we as well, get to share in that success. Clearly a leading indicator in our success is the success of the people who choose to do business with MKC. Yes, the traditional definitions of quality customer service are very applicable today. I will say, however, if those are the only qualities we are delivering to our customer today, we are not doing all that we should. It takes intent, board support, good execution and a true desire to insure the success of our customers. Our growth over the years, driven by members who shared a vision, has given us the scale to be on the leading edge of services which progressive producers expect today.

To end where I started, yes, I do believe growth has allowed us to offer services required today to our customer we simply couldn’t offer when we were a smaller organization.

The expectation of what defines “good service” has been, and continues to be redefined by our customers. We need to make certain at MKC we’re in a position to respond to our customers ever changing needs. Be safe.

307 W. Cole P.O. Box D Moundridge, KS 67107

Grain Elevators Help Feed the World

By Devin Schierling, TMA Grain Marketing Manager

It is evident in today’s world consumers want to know the food they bring home to their family is healthy and safe. While this is important to many consumers, some hear and read this information from so-called experts who know nothing about agriculture.

Due to these perceptions, it has become increasingly important for the agricultural industry and producers to provide accurate information. Many people in agriculture are working to make this happen through association presentations, classroom presentations to youth, tours of facilities and many more one-on-one opportunities.

It also important for those in agriculture to understand that in the eyes of our consumer grain is not just grain but food to be consumed by humans. This particular thought is also being emphasized by the government in a program called the Food Safety and Modernization Act (FSMA). The very nature of the program is that over time products such as grain will be tracked from field to table. Consumers are demanding to know where their food comes from. Many products are already meeting these standards and other products such as grain will be phased in over the coming years.

A problem which we have had for years is adulteration of grain. Adulteration is putting anything in or on grain that does not belong naturally. One of the biggest culprits of adulteration is treated grain which was supposed to be used for planting. Treated grain left over from planting should never make it to a grain handling system.

If delivered to an elevator, dumped into a bin, and caught within the system, treated grain can cause all of the grain in the bin to be impounded. Considering the size of some bins, this can be very costly.

It is very important for all of us in agriculture to be responsible parties. Together we should live and tell our story to all of those not involved in food production.