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Board of Directors December, 2011

District 1

Contents Living their dream Women make up approximately 26,800 of Kansas’ 70,000 farm operators and an even smaller number are considered the principal operator of the farm. . . .Pages 6 & 7 Myron Voth Vice Chairman

Cecil Wiebe

District 2

David Mills Secretary

Duane Johnson

District 3

C J Blew Chairman

Jason Gaeddert

At Large

Dixie Mattas (shown with her husband, Gary) is part of a growing trend of women in agriculture today.

Unique revenue program

Energy markets

First-of-its-kind risk management program mitigates risks for revenue and weather for double crop soybeans . . . . . . . . . .Page 4

Director of Energy Operations, Jason Creed, discusses factors driving energy markets . . . . . . . . . . . . . .Page 5

Community news

Neal Beam

Keith Becker

Associate

Randy Ellwood

MKC donates to local emergency management services; scholarship information and other local news . . . . . . . . . . . . . . . . . .Pages 8 & 9

MF Global Bankruptcy TMA discusses affects of MF Global bankruptcy . . . . . . . . . . . . . . . . .Page 10

President & CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Dave Christiansen Vice President & CFO . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Danny Posch Vice President & CMO . . . . . . . . . . . . . . . . . . . . . . . . . . . . .David Spears Director of Energy Operations . . . . . . . . . . . . . . . . . . . . . . . .Jason Creed Director of Southern Operations . . . . . . . . . . . . . . . . . . . . . . .Erik Lange Director of Northern Operations . . . . . . . . . . . . . . . . . . . . .Steve Peterson Matt Brack

MKC Connections Managing Editor . . . . . . . . . . . . . . . . . . .Kerry Watson Mid Kansas Coop Association P.O. Box D • Moundridge, KS 67107 • 620-345-6328 www.mkcoop.com

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Optimistic about our future I recently attended a conference where the speaker stated that pessimism has its pleasures. He stated that while we’re right much of the time, we’re actually quite pleased even when we are wrong! I think he was joking but I found it interesting and I think we all know people who revel in being “that person”. I’m typically an optimist. While I generally try to be a rational one, I am an optimist, none the less. I suppose it’s one of those things you grow up with or are conditioned to early in your life or career. Or maybe it’s simply innate. Whichever it is, it’s been reinforced by observing firsthand what a group of engaged individuals with a common mission and purpose can accomplish. At MKC we’re blessed to have a group that works together quite well and it all begins with trust. We have each other’s backs and we know it. And just so you know, we have your back as well. We constantly strive for a higher level of engagement and continue to help all of our stakeholders, whether they work at MKC or depend on them daily - to understand just how critical each one of them is and how what they do on a daily basis is relevant to helping each other be more successful.

mission to renew our infrastructure with as little interruption as possible cannot waiver. We have contingency plans in place should the drought turn out to be more than a one-year event. Our projects continue to progress with the majority of them being on schedule. The addition of approximately one million bushels of space and high speed receiving was recently completed at Burns which was a location that continued to be short on space for fall harvest. Our crop production and seed warehouse at Groveland includes state-of-the-art crop nutrient loading and is virtually complete. The new grain office and scales worked well for fall harvest based on the feedback we received. Bin liners are being installed in a number of our elevators. This is quite an expensive undertaking but necessary in order to not only maintain the elevators, but for some, to keep them usable. Additionally, FarmKan’s new warehouse was recently completed and all of their operations have moved to that location north of Halstead.

The evidence of this collective effort is clear again this year. Through the first eight months of our fiscal year we are on pace for another year of record earnings. While there are numerous events that can occur in the next four months, I’m confident we will finish the year very strong.

These improvements in our infrastructure don’t account for the normal $3 million worth of other items such as tip tanks for crop nutrients, larger (1500 gallon) Nh3 trailers, and assorted rolling stock. Additionally, something that at times flies under the radar for members is the $300,000 to $500,000 spent annually on regulatory, safety and environmental compliance. I can assure you we’re doing all we can to minimize our environmental impact and to make sure our facilities are as safe as possible. Every new project is designed with both of these elements as priorities.

We all recognize that next year’s earnings may not be another record simply due to the shortfall of bushels across much of Kansas. We have had many discussions on our plans when dealing with a drought and the likelihood of it being a one (or more) year event. In all of our discussions and in all the modeling we have done, the conversation still comes back to the fact that our

This past year saw another major undertaking with the recent implementation of an entire new software platform. While employees and customers are both still going through a learning curve, we will be infinitely better when the dust all settles on this particular project. The information our customers and employees have immediate access to will make conducting business

By Dave Christiansen, President & CEO

and looking at history significantly easier. While the road can have a few bumps in it, we are certainly pleased with the management information we are receiving in order to serve you better and faster. With the pace of change today, we need dashboards that provide quicker information. Our grain project located between Canton and Galva continues to move forward. Cont. on page 10

Communicating through social media By Dave Christiansen, President & CEO

I hope by this time many of you have enjoyed MKC’s efforts to travel down the social media path. Social media is not a fad that will go away if we drag our feet long enough. It, or something like it, is going to be with us from here on. People want to connect with people. While we live in a world where face-to-face communication is becoming increasingly more challenging for a whole host of reasons, we still feel that need to connect and be part of something bigger than ourselves. In the true cooperative spirit I will say, social media is right up our alley! Since the inception of the first cooperative, the need to communicate our purpose to those not participating has always been a challenge. Today, that challenge is bigger than ever before. If you’re not telling your story, someone else will. Our effort today is to make sure we give one more chance for your story to be heard. Feel free to participate in our effort and let us know how we can continue to improve our effort by following us on Twitter, Facebook, LinkedIn and YouTube.

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Producers benefit from unique revenue program By Kerry Watson

Traditionally producers in less than 10 Kansas counties have had access to federal crop insurance for double crop soybeans. No other program was available to the producer. Until this year. In keeping with their mission of helping farmers to be more successful, MKC management set out to find a risk management tool that would mitigate the risks for revenue and weather for growing double crop soybeans. Dave Spears, Vice President and Chief Marketing Officer for MKC, has had an ongoing relationship with Swiss Re for the past ten years and had worked with the company on other types of risk management tools for production ag. “We needed a company that had the financial strength to back stop the risk,” stated Spears. “Swiss Re has a history of providing sound risk management tools and is financially strong.” In order for Swiss Re to be comfortable with the amount of risk and commit to the program, MKC needed to provide the appropriate data and analysis that demonstrated the need and justification for the program.

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“Our field marketers and managers spent a great deal of time gathering production history on double crop soybean yields,” stated Spears. Spears commented that although conditions at wheat harvest were dry, Swiss Re agreed to offer the program based on the detailed analysis and prior production history that was submitted. “Our diligence paid off and Swiss Re agreed to provide a program that was a first of its kind offered in the United States,” Spears stated.

program, MKC field marketers and managers had to work quickly to market the program. The result was close to 18,000 acres enrolled in the program. New seed was sold to approximately 10,000 of those acres. The program offered producers two options. The first was $150 per acre that would cover all production costs including the option fees or the choice of $200 per acre that essentially guaranteed a profit per acre. Unfortunately, the worst drought in six years persisted and we all know the results. And even though MKC entered into the contract with the producer, all of the risk was passed on to Swiss Re. Producers who participated in the program will benefit greatly as Swiss Re will pay out approximately $3 million to those who participated.

While eleven counties were eligible to participate in the program, the drought did prevent some from being able to participate. Reno, Kingman and Sumner counties were not eligible as the drought had already set in and field conditions did not allow emergence of the plant. According to Spears, the other counties were eligible as it was deemed that crop conditions - even though deteriorating - did warrant the planting given climate normal rainfall for the summer.

According to Spears, the drought hasn’t stopped Swiss Re from considering another program next year.

MKC received final approval from Swiss Re to move forward with offering the program on June 17. With a final planting date of June 30 to be eligible for the

“Even with this year’s drought, Swiss Re wants to expand the program next year,” commented Spears. “Some aspects, however, may change or be adjusted.”


Fuel prices driven by various factors The phrase, “remember when”, has commonly been used all throughout history. As the speed of available information increases and the world continues to change, it is probably safe to say that “remember when” used to mean 20, 30 or 50 years ago. Today it can easily mean a year or less. Many of us remember when the price of fuel changed a couple times a month (at most). We also remember when a change of 10 cents over a month’s time was a big deal. Back then we would have been shocked to know that the market could fluctuate more than 10 cents in a single day. So what is driving the change in price? According to Jason Creed, Director of Energy Operations for MKC, supply and demand is still driving the change in price just as it did years ago. Today, however, it’s happening on a much larger scale. “Prices used to be determined by what the supply and demand picture looked like locally,” stated Creed. “Today, it has expanded to include the global scene.”

by Kerry Watson

While there are a number of things affecting today’s energy markets, Creed believes supply source, market spreads and diesel exports are making the biggest impact.

ple refinery closings,” stated Creed. “These closings are creating an imbalance in supply and demand and therefore playing a role in prices.”

Product Exports Source The United States produces 5.5 million barrels of crude oil while it consumes 14.7 million barrels per day resulting in the need to import crude oil. This imbalance has caused the U.S. to rely heavily on foreign sources for crude oil. Most people would be surprised to learn that OPEC is no longer the major source of oil for the U.S. but rather Canada, Mexico and Saudi Arabia are.

Markets The two most heavily traded crude oil markets are West Texas Intermediate (WTI) and Brent. While these two markets typically trade close to the same value, the Libyan uprising and demand from China has caused Brent crude to trade at a substantial premium.

Exporting refined products such as diesel is also playing a role in pricing. The value of the dollar has allowed refiners on the gulf coast to export fuel to other countries for a greater profit compared to trading locally. According to Creed, exporting refined products has contributed to current inventory supplies of diesel to drop at a steady pace which in turn gives support to prices. Will we ever see prices similar to those of 10 years ago? Probably not. One thing for certain, though, is the pace of information and the complexity of the global economy will not slow down. “We’ve entered a new age,” said Creed. “And some day in the near future we will probably once again say, remember when.”

“Refineries on the east coast who import Brent crude are experiencing poor margins or losses which has resulted in multi-

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Living their dream

by Kathy Hanks, Freelance Writer

minutes for him, because her family didn’t own a typewriter. Today she continues serving an integral part of the farming operation with Gary. He considers her a huge asset with her record keeping skills and tenacity with balancing the books. But, she also continues working as she did growing up, helping where ever she is needed on the farm. However, Gary says her forte is managing the operation. He attributes the couple’s successful farming operation to his wife’s excellent bookkeeping skills.

Dixie Mattas utilizes the customer access feature on MKC’s web site for proof of yields and ledger sheets.

Fall crops had been delivered to Mid Kansas Coop at Castleton when Tina Collins started cleaning machinery and building fence in preparation for the cattle she would be bringing home for winter on her Reno County farm. At Dixie Mattas’ farm the routine is about the same, down to the waxing of the combine. While Mattas farms with her husband Gary, just north of Lindsborg, in McPherson County, Collins works solo, having taken over her family farm four miles south of Pretty Prairie. Collins and Mattas make up about 26,800 female farmers out of Kansas’ nearly 70,000 farm operators according to the recent Census of Agriculture. Meanwhile Collins is part of an even smaller group of 7,943 women who are considered the principal operator of the farm. Despite different farming operations, the two women share a passion for their work and an appreciation for MKC and how the cooperative has enhanced their lives in several ways.

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Both women were raised on farms, and helping out was just always a part of their childhood. “I loved it,” Mattas said of growing up on her parent’s farm near Bridgeport. The granddaughter of Swedish immigrants who lived in a dugout near Bridgeport, she says her roots run deep in central Kansas. Mattas was thrilled whenever she could help out, running to the cooperative elevator to pick up the feed or picking up the parts to repair the tractor in town. She learned at an early age how integral the cooperative was to the farming operation. Her early memories were of her father serving on the Lindsborg Co-op board back when it was the Farmer’s Union Elevator. That was the place where her mother brought her eggs to sell and her dad butchered meat in the locker plant. Her father served as secretary of the Coop board and she would hand-write the

“There’s a lot to know and she does all the bookwork,” Gary Mattas said of their operation that includes 1,500 acres of both dryland and irrigated wheat, corn, beans, milo and alfalfa. Every decision the couple makes is done jointly. “The implement dealer knows he’s selling the equipment to both of us,” Mattas said. “Gary looks at it from the perspective of what the equipment will do; it’s size and how fast. For me, it’s how much will it cost?” Prior to retirement Dixie worked for 30 years for General Motors Acceptance Corporation. At one point she traveled to eight states for her work. Back then she even took vacation time to help Gary during harvest. “I was always the truck driver,” she said. “Sometimes I wonder how I did it all. I drove the truck, but I made sure that we had a noon meal. Then I would stop by with meals.” Now, retired from GMAC, her full energy goes 100 percent into the couple’s farm. For Mattas, the MKC webpage enhances her farm work in a very positive way. She


appreciates the fact that she can use it anytime. Even late at night, long after the elevator is closed; she can pull proof of yields off the computer or download ledger sheets for the landlords. “I dot every ‘I’ and cross every ‘T,’” she said. “I can’t be off a penny. Everything must balance and be reconciled.” She has been using a computer software program known as “Farmworks,” which allows her to keep track of all the expenses in each field. “Even when we disk a field we can determine the cost of disking per acre,” she said. At the end of every month she prints off profit and loss records so Gary can go over them and know their profit and loss for the month and year to date.”

weekends to help her dad farm. It’s not an easy life. She works hard every day, from sun up until sundown. But, as a single mother, she makes a point of taking time for Copper. While Collins and Copper live in Pretty Prairie, Copper rides the school bus out to the farm every afternoon. The first grader works on her homework and tends to her 22 New Hampshire red chickens and kittens. “There’s nothing I can’t do on the farm,” Collins said. “With dad you just got in and did it. I’m grateful they let me do it.” Now she’s planning for a future and knows that record keeping is just as important as the labor.

cattle and update the equipment, Collins said. “But, it will take a few years.” She has never felt limited as a woman; she can tear machinery apart with the best of mechanics. She appreciates MKC’s Castleton Elevator which is just 10 miles from her fields. “The employees at the elevator are helpful,” she said. They treat her with the respect they treat any customer, and they handle all the spraying and fertilizing from the elevators at Castleton and Haven. “I’m living my dream,” Collins said. “If I had to go to work in an office I couldn’t survive.”

“I’d like to expand with more acres and

Tina Collins shares Dixie’s passion for farming. However, on her Reno County farm she is a one-woman show except for during harvest when an aunt comes to drive a grain cart and a neighbor lends a hand. She has taken over her parent’s, Jim and Trudy Heimerman’s, farm since her father’s death in 2007. In 2009 she bought equipment from her mother, and now she’s going it alone overseeing three irrigated circles of corn and soybeans and dry land wheat. “I’m really thankful that the landlords have given me this opportunity,” she said. Collins, who is raising her 6-year-old daughter, Copper, admits she has just experienced her toughest year because of the drought. She recalls when she was about Copper’s age that she did everything with her father. “He was old school,” she said. He didn’t ever make a big deal about Tina being a female farmer. “I just did it,” she said. Even while she was a student at Kansas State University she came home most

Tina Collins takes time from her busy schedule on the farm to spend with her daughter, Copper.

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Community News by Kerry Watson

MKC assists local EMS Mid Kansas Cooperative recently donated $500 to Moundridge EMS to help offset costs to purchase a SafeGuard Child Transport and a Pedi-Mate. The two pieces of equipment will aid the department in the transportation of injured infants and children.

Brad Wedel, MKC Location Manager for Moundridge, presents $500 to Angie Vickery, Moundridge EMS Director.

According to the National Center for Statistics and Analysis (NCSA), the most common type of injury accidents involving children are those that involve motor vehicle collisions. Moundridge EMS Director, Angie Vickery, commented that the department currently transports infants and young children in their infant/car seat by using rolled

MKC to improve recycling processes Recycling has always been a matter of helping the environment and the process of recycling has been around for thousands of years. In ancient times it was a common occurrence to melt down swords, pots and other metal items that had served their purpose. After the melting process, new items such as coins, statues and other household items were made. Products were not nearly as abundant in ancient times as they are now, so resources were hardly ever wasted. Folks from those times would likely cringe if they saw the amount of recycled materials the general public wastes today. Recognizing a need to improve

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upon the existing recycling program at MKC, members of the MKC Way Committee, a leadership program at MKC, have taken the initiative to do just that. Tires, scrap iron, paper, cans and bottles are just some of the processes that will be improved upon or put into place. “We recognized that we didn’t have a coordinated effort when it came to recycling,” stated Tara Struber, a member of the committee. “Some of our locations have processes in place and we wanted to take their programs and implement them throughout the entire company. Our goal is to make recycling a habit and join other leaders in our communities who recycle.”

blankets and towels to stabilize and limit their mobility. “Not only did MKC’s contribution help us meet our financial goal to purchase the equipment that will provide a much safer means to transport the children, it helped us exceed our goal,” stated Vickery. Vickery commented that extra monies raised will be applied towards the purchase of a traction device used for stabilizing fractures. The contribution was part of a matching funds program available through Land O’ Lakes Foundation.

Benisch to lead MKC’s Precision Ag Services

Ross Benisch has accepted the position of Precision Ag Marketer and will be leading the company’s precision ag program. Benisch comes to MKC after spending two years in the crop consulting business. He is originally from Quinter, Kan and earned a degree in geography with an emphasis in geographic information systems from Fort Hays State University. Dave Spears, Vice President and Chief Marketing Officer for MKC, commented that producers will benefit from Benisch’s unique skill set and knowledge. “I am confident that Ross will take our precision ag program to the next level in terms of products and services offered to the producer,” stated Spears.


Community News (continued) by Kerry Watson

MKC launches new web site; embraces social media MKC launched their completely redesigned and enhanced web site in early October. With a totally fresh appearance and format, MKC’s new web site embodies the coop’s forwardthinking vision. “We believe the changes made to the web site have resulted in a significant improvement in the areas of content, navigation and design,” stated Kerry Watson, Communications Specialist for MKC. Notable content changes include the addition of on-line registration for MKChosted events, yield plot data, an on-line application process for employment opportunities and a completely redesigned on-line customer account system. New sections added to the web site include precision ag and input finance. Also new to the web site is a “live help” button located at the top right of the home page. The process is similar to instant messaging and an MKC representative is available to research and answer customer questions through this service during business hours.

According to Watson, the new web site, www.mkcoop.com, was the first step in a significant shift in the coop’s approach to the company’s digital future including social media. “We recognized the need to keep up with the latest trends in

Scholarships available to high school seniors Mid Kansas Cooperative Association will once again award nine scholarships valued at $500 each. The scholarships, available to to high school seniors graduating in the spring of 2012 within MKC’s trade territory, will be awarded based on academic achievement, activities and an essay about the value of the cooperative system. “This is our opportunity to recognize outstanding students in our communities,” states Kerry Watson, Communications/Administrative Specialist for MKC.

technology when communicating to our customers,” stated Watson. “Utilizing Facebook, Twitter, YouTube and LinkedIn will help us deliver time-sensitive information to our readers in a more efficient manner.”

Conway and Inman agronomy services moved The agronomy sales and services previously provided at MKC’s Conway and Inman locations transitioned to the new state-of-the-art agronomy center in Groveland on December 1.

Seniors who plan to attend an accredited university or college including junior, community, vocational or technical schools are eligible to apply. Applications are available online at www.mkcoop.com and are also available through area high school guidance counselors’ offices. Application deadline is March 15, 2012.

The Conway facility will be operated on a seasonal basis for grain and anhydrous services and Inman will be utilized as a maintenance facility for MKC’s equipment. MKC service and sales professionals at Groveland can be reached at 620585-6649 or 888-993-2667.

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Separating ourselves from the competition By Devin Schierling

For years, the crop insurance industry has been stuck in a status quo where applications are mailed to the producer, checks are written, and the policy is perpetually renewed. The lack of personal touch and communication to producers who rely on federal crop insurance for a revenue floor has exposed the status quo. While federal crop insurance is a uniform offering to all individuals who own or rent farm ground, what “separates the milk from the cream” in this industry are the services and tools offered to the producer.

Cont. from Page 3

of complexity in making the right crop insurance decision for your operation. TMA’s ability to help producers manage the price portion of their crop insurance revenue policy through grain marketing contracts is another tool that a traditional insurance agent cannot provide. We can provide a total revenue plan that cannot be duplicated by offering additional risk management tools designed to complement the producer’s crop insurance policy.

Focusing on what we can control Service brought to the farm gate Team Marketing Alliance (TMA) brings the personalized tools and service to the producer’s kitchen table. Every customer has a different need and that is why TMA personally reviews every policy with the customer each season. Keeping up with the constant changes of crop insurance can seem daunting. TMA’s agents are experts in their field and insurance is their primary responsibility. Our agents are focused on maximizing the producer’s revenue potential and not on writing loans or selling other types of insurance.

Understanding the complete revenue picture The increased volatility in today’s weather and commodity markets has raised the level

TMA’s focus is to help producers improve their profitability by helping manage their crop inputs, grain sales, and crop insurance decisions. This focus allows us to holistically look at a producer’s option instead of focusing on the individual parts. For example, an 85% Revenue Assurance Policy that costs $25 per acre isn’t the wrong decision if it allows you to insure a guaranteed profit on your farm while providing more guaranteed bushels to potentially forward contract. TMA’s ability to have Crop Insurance Specialists who can synthesize all the individual decisions into whole- farm profitability is what separates us from our competition.

MF Global bankruptcy not interfering with TMA business MF Global’s bankruptcy filing in late October created quite a stir in the ag industry and caused some local producers to wonder how it was affecting their cooperative. Team Marketing Alliance (TMA), an LLC wholly owned by four central Kansas cooperatives, had used Man Financial Group, Inc., a subsidiary of MF Global, as a clearing firm and reports that the bankruptcy has not interfered with TMA’s daily business. Ted Schultz, Chief Operating Officer for TMA commented that although MFGI was the clearing firm for their futures

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Optimistic about our future

By Kerry Watson

transactions, TMA’s positions have been moved to a new futures commission merchant. “We are trading business as usual,” stated Schultz. “Only a small percentage of our margin money was transferred with the positions”. According to Schultz the balance of the money is tied up waiting on the bankruptcy trustee to release it to accounts like TMA. “The majority of the funds have been accounted for and awaiting distribution with the exception of a small percentage that is still being reconciled,” stated Schultz.

You don’t rush this type of financial investment when most of it is in concrete and steel. We have spent and are still spending time with designers, consultants and people who have done it before us to make sure your investment is done in the most prudent manner. All of these investments are a wager on the future. For those who are insecure about their future, it may appear as gambling. For those of us who believe it will take an extraordinary effort to make sure we are in a position to feed the ever-growing world population, there is no question in the merit of our endeavors. We have little choice. Just like any business, we have economic goals. The problem is they don’t provide the passion to be the driver of our efforts. The thought of all our stakeholders joining in an effort to ensure everyone in the world has access to a safe, dependable and reasonably priced food supply and that we can all participate in the spirit of shared success is an inspirationally driven vision.


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December 2011