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Summer 2011

Managing Risk in Today’s Volatility


yields

Summer 2011

FEATURE STORY > 4 Northwest FCS recently collaborated with other Farm Credit associations in a coffee shop talk with producers across the country. These Farm Credit customers shared their insights on managing risk in today’s volatility.

Who we are: Northwest Farm Credit Services is a customer-owned, financial services cooperative, providing more than $9 billion in credit, crop insurance, and related services to farmers, ranchers, agribusinesses, commercial fishermen, forest products producers, equipment dealers, chemical suppliers, part-time farmers, and country homeowners.

Board of Directors Kevin Riel, Chair, Yakima, WA Karen Schott, Vice Chair, Broadview, MT Rick Barnes, Callahan, CA Christy Burmeister-Smith, Newman Lake, WA Drew Eggers, Meridian, ID Jim Farmer, Nyssa, OR Mark Gehring, Salem, OR Dave Hedlin, Mount Vernon, WA Herb Karst, Sunburst, MT Ed Malesich, Dillon, MT Bruce Nelson, Spokane, WA

What’s Keeping Producers Up at Night.

Dave Nisbet, Bay Center, WA Julie Shiflett, Spokane, WA Shawn Walters, Newdale, ID

About Yields Yields is produced for stockholders of Northwest FCS, an Agricultural Credit Association. Comments and story ideas can be sent to the Marketing Department, c/o Northwest FCS,

New Risk Management Planning Guide > 9 2012 Crop Insurance Deadlines > 10 Debt Protection Coverage > 11

P.O. Box 2515, Spokane, Washington 99220-2515.

Northwest Farm Credit Services is an equal opportunity employer and does not discriminate on the basis of race, color, religion, sex, national origin, marital status, age, disability,

Farm Real Estate Trends > 15

disabled veteran, Vietnam era or other eligible veteran status.


Managing Risk with Balance and Common Sense Phil DiPofi, President and CEO

The disciplines of risk management are part of any well managed business. With extreme economic volatility and uncertainty over the past several years, business owners are enhancing their risk management practices to not only help them manage risk but to also position themselves to seize opportunities. For those who want to survive and prosper, risk management will always be top of mind. At Northwest FCS we look at managing our risk in the context of the entire organization. We have methods and processes to identify reputation, operational, financial, credit, and marketplace risk. For example, we became the first and only Farm Credit association to certify our financial statements and internal controls on a quarterly basis. Under the Sarbanes-Oxley Act of 2002, both the CEO and CFO are certifying that the internal controls and the processes related to those controls have been reviewed and are correct. In 2011 we named a Chief Risk Officer to an executive level position within the organization. This not only emphasizes the importance of risk management, but focuses our attention even more on credit underwriting standards, portfolio management, stress testing, risk ratings, and determining allowance for loan losses. We utilize a sophisticated economic capital model to assist us in our portfolio risk analysis. From an asset liability perspective, we work closely with CoBank on our funding and utilize state-of-the-art asset liability management modeling to assist us in this very important area. Looking forward, businesses involved with agriculture will have many exciting opportunities, but the environment will be more volatile. Businesses with strong leadership and risk management practices will be well positioned. Those without, will be left behind or in extreme cases, will not remain in business. At Northwest FCS our responsibility is two fold – to ensure we run the association in a safe and sound manner providing exceptional service to the marketplace, and to provide constructive advice to our customer-owners regarding your risk management practices to help you survive and thrive in the future. The cooperative business model is all about balance. Like most areas of business and life in general, managing risk is always about balance and common sense. We appreciate the opportunity to serve you and look forward to another successful year.

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Financial Insights Net Income

Loan Volume

(in millions)

80

$77.8

(in millions)

10000

$74.8 $69.7

70

$8,181.7

$8,215.7

11 Actual

11 Budget

8000

60

$7,959.6

$8,068.2

10 Actual

10 Budget

$53.8

50

6000

40

4000

30 20

2000 10 0

11 Actual

11 Budget

10 Actual

10 Budget

0

Nonaccrual Loan Volume & Acquired Property

Related Services Income (in millions)

10

(in millions)

350

$9.5 $9.0

300

$8.1

$285.8

$300.1

$287.8

8

$259.9 $6.8

6

250 200 150

4

100 2

50 0

11 Actual

11 Budget

10 Actual

10 Budget

0

11 Actual

Core Capital Ratio 100 13.6%

13.6% 12.8%

12.3%

12

80

9

60

6

40

3

20

11 Actual

11 Budget

10 Actual

10 Budget

10 Budget

0

7.9%

8.5%

5.6%

6.5%

86.5%

85.0%

2011

Acceptable

(May 31, 2011, and 2010)

3 | Nor thwest Farm Credit Ser vices

10 Actual

Credit Quality

15

0

11 Budget

2010

OAEM

Substandard


Managing Risk in Today’s Volatility What’s Keeping Producers up at Night No matter what business owners have accomplished in the past, their ability to stay ahead of the curve by constantly adapting to change is what matters most today. Navigating this complex business environment is like changing the tires on a tractor while plowing a field. Producers are running faster than just one decade ago and finding they must learn to deal effectively with rapid change in the midst of daily production.

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“Change is so fast and risk is just a part of it,” says Northwest Farm Credit Services customer and Oregon apple producer Ron Brown. “Our former 10-year business plan is now a threeyear plan because of constant change. We used to think some varieties would be in the ground for 20 years and now we’re pulling them out after seven years because of changing tastes.” Northwest FCS recently collaborated with other Farm Credit associations in a coffee shop talk with top producers representing diverse industries across the country. These Farm Credit customers compared notes on a variety of risks that keep them up at night and their strategies for mitigating those risks. The four producers included Ron Brown of Earl and Sons, Inc., in Milton-Freewater, Ore. Ron Brown, an apple and vineyard grower from Milton-Freewater, Ore.; Joey Airoso, a dairy producer from Tipton, Calif.; Dennis Baumert, who owns a grain, swine and cow-calf operation along with a grain elevator in Scribner, Neb.; and Jeff Crist, a wholesale apple producer in Walden, N.Y. The producers agreed that being proactive, rather than reactive, reduces the likelihood of something going wrong in their business. Proactive management allows them to innovate and respond to changing market opportunities. And they agreed it is more important than ever to manage today’s risks as well as to anticipate possible risks down the road. While each producer identified numerous risks they face, their biggest concerns centered on market risk, weather, government regulations and labor issues.

Market risk Maintaining a viable market for their product — in an era of price and cost volatility — is high on these producers’ minds. Both creative and visionary, they apply an array of proactive measures to ensure that their operations are less vulnerable to risk so they can deliver a better product to their markets. 5 | Nor thwest Farm Credit Ser vices

Joey Airoso, of Airoso Dairy Farms, in Tipton, Calif.

According to California dairy farmer Joey Airoso, “I have to be honest that the corn price has kept me up over the last few months. It probably allows my fellow roundtable participant, Dennis Baumert, and other grain producers to sleep better, but the ethanol mandate as well as diesel costs have been game changers for the California dairy industry.” Joey added, “2009 was a blood bath for us. With the collapse in the economy, we lost up to 40 percent of our export market and operated at $5 per hundredweight under costs for 18 months.” It is no secret in the dairy industry that profit margins are squeezed as corn and fuel costs stay high. With volatility of milk pricing, locking in profitable margins has become critical on dairy farms. That’s why producers, like Joey Airoso, are managing more than just the milk price to protect their profit margins and minimize the impact of soaring input costs. “Looking forward, we want to establish trading and hedging accounts to give us a firmer grasp on our expenses and profitability,” Joey said. We are also considering locking in interest rates for a period to ensure a solid margin.” Rapid change is the name of the game today. Nebraska grain and livestock producer Dennis Baumert said his team has changed its strategy more in the last five years than at any time in the previous 40. “Our process used to be simple,” he said. “In the past, we didn’t pre-sell our crop, but now we lock in a price on 20 percent in the fall, rather than gamble on price later in the season. We feed 40 percent of our crop to our hogs and cattle and sell the balance to ethanol plants. We buy inputs in the fall and have GPS-guided irrigation for all our ground.”


significant positive impact on business growth and marketing capabilities and may even be essential to their survival. The producers consider crop insurance an absolute must for their operations. Jeff Crist said, “Expenses are too high and the risk is too great to lose a crop, especially since the government at the most-use level of fresh fruit option for the apple industry pays 67 percent of the premium, which is hard to walk away from. Premiums are significant, but we buy crop insurance to remain viable.”

Dennis Baumert, of Bob Den, Inc., in O’Neill, Neb.

Food safety is another market risk that tops some producers’ lists. To mitigate their concerns, some work with third-party auditing companies to gain certification which demonstrates their products are produced using agricultural practices that inspire consumer confidence and ensure access to additional markets. New York apple producer Jeff Crist said, “A challenge is to satisfy the increasing number of third-party audits that customers require. A University of California professor is working with the apple industry to harmonize audits, which would be a huge advantage for us.” Oregon producer Ron Brown added, “We worked very hard to achieve the Global Gap Certification. We lowered our chemicals into the Walla Walla River by 300 percent and are fully salmon safe. We also run a complete Integrated Pest Management system with chemicals that have no effect on the environment. While Global Gap forced us to hire a full-time person to manage the program, it has also allowed us to ship to European countries, which added $1 million in sales in our first year alone.” Brown brands his wines and ciders with the Salmon-Safe label to open markets to his products and to demonstrate his operation’s strong commitment to environmental awareness and sustainability while producing premium apples, world class wines and award-winning hard apple cider.

Weather Weather risk is pervasive across agriculture and has producers, like those on the coffee shop roundtable, sleeping with one eye open. These producers recognize that strategies to manage production risks may be costly. But these strategies can have a

Jeff Crist, of Crist Bros. Orchards, in Walden, N.Y.

To reduce water costs, Nebraska grain producer Dennis Baumert invested in a central pivot irrigation system with GPS pivot design. For example, during a rain storm, Dennis can shut pivots off from his home, rather than driving a 50-mile radius to do so, which he says he probably wouldn’t do. With diesel fuel climbing, the family also switched many pivots to natural gas which reduced costs by half, from up to $75 an acre to $25 an acre. Dennis says, “In a normal growing year, we raise 80 additional bushels per acre with irrigation so while $90,000 was a huge investment, it didn’t take us long to get our money back.” Oregon apple producer Ron Brown installed weather stations throughout his 1,100 acres to control costs and provide information at critical points in the growing cycle. For example, sensors indicate dew points that determine when to operate wind machines for frost control. Ron also uses modeling from the weather stations to time sprays to egg hatch. In addition, neutron probes in the ground help to reduce the amount of

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water needed to irrigate tree fruit and wine grapes and return 30 percent of their water consumption back into the river. When asked about the added cost, Ron replied, “The project cost $3.5 million and we borrowed additional funds for wells to protect ourselves in case the river used more water than we had on the farm. Without taking on these projects, we probably would not be in business today. We find that many situations force us to do things that we don’t want to do, but we do them to stay in business. That is the cost value for us, to be here or not.”

Labor For decades, agriculture has been eager to overcome the tough issues surrounding immigration in order to achieve a reliable labor force. According to California dairy farmer Joey Airoso, “Workers are not standing in line to milk cows or pick produce. We need an ag labor program to assist us if we are to continue to grow food in this country.” The agriculture industry has worked through trade associations and organizations, such as the Agriculture Coalition for Immigration Reform, for a resolution and a better guest worker program. And individual farmers, like Jeff Crist, have worked through organizations, such as U.S. Apple Growers, to educate senators and congressional representatives about what the loss of labor in the United States would mean to agricultural production. Until resolution can be found, some industries look to mechanization and automation as a means to mitigate labor risks.

Government regulations The producers are unanimous in citing that ever-changing government regulations can stand in their way of doing business. In spite of heavy government regulations placed on farmers over the years, these four producers mitigate those risks by following the rules. For Ron Brown, Oregon’s Clean Water Act is a constant battle. He said, “We draw 50 percent of our water from the Walla Walla River. Instead of fighting regulation, we spent millions of dollars to conserve 30 percent of our water that we put back into the river.” Joey Airoso and other California dairy farmers in the San Joaquin Valley formed a monitoring coalition that gained approval from the water board. They agreed to install monitoring wells in 100 dairies as a self-monitoring program through a third-party engineering firm. While this measure 7 | Nor thwest Farm Credit Ser vices

will cost the industry $10 million, the alternative was for every Central Valley dairy to add monitoring wells at a cost of $50,000 per facility, which would have been cost prohibitive for smaller dairies.

Farm Credit helps producers manage risk The producers unanimously agreed that having a good solid relationship with Farm Credit is a key strategy to managing risk. “It is vital for us,” said Northwest FCS customer Ron Brown. “We have such a great relationship with our Farm Credit banker that we are able to sit down annually and analyze the challenges for our operation three years down the road. If you work with the big megabanks, they don’t have a clue. It has been a blessing for our family operation to have people who understand what we are and where we are going. It is a partnership for the future.” Joey Airoso agreed, “We have been a Farm Credit customer for more than 30 years because they understand agricultural cycles and their rates offer a competitive advantage.” “Farm Credit is a true partner and ahead of the curve as a lender,” said Jeff Crist. Their representatives are facilitators, not road blockers. Crop insurance, credit availability tied with competitive interest rates and regular patronage refunds have positively impacted our business. We could not have carried out our projects in the last year with any other lender.”

Insights from the Coffee Shop Roundtable Top risks · Price volatility · Increasing input costs · Weather · Food safety certifications · Labor availability · Government regulations · International markets · Lack of understanding of modern agriculture

Strategies for mitigating risk · Proactive management · Hedging strategy to lock in margins · Crop insurance · Aggressive strategy to gain third-party certifications · Mechanization to reduce labor needs · Active in organizations that protect farm interests · Time-sensitive financial analysis · Educating nonfarm public · Crisis communications planning


Ron Brown

Dennis Baumert

Member of Northwest Farm Credit Services

Member of Farm Credit Services of America

Farm: Earl Brown and Sons, Inc.

Operations: Bob Den, Inc. and Scribner Grain

Location: Milton-Freewater, Ore.

Location: Scribner, Neb.

Business: A three-generation family operation with Dennis, his father, two brothers, a sister, two of Dennis’ sons and a nephew

Business: A family corporation, with Dennis, his wife, Jeanne, and their son, daughter, son-in-law and grandson

Operation: Grow, pack and ship 1 million boxes globally; 1,100 acres of fresh market apples; 100 acres of wine grapes; 25 acres of cider apples; Watermill Winery; and a 100,000 gallon hard apple cider operation

Operation: Bob Den, Inc. farms 15,000 acres, including 6,500 acres of irrigated corn and soybeans; 2,000 cow-calf operation; and a 2,000 sow-to-finish hog operation. Scribner Grain is a 3-million bushel grain elevator/merchandising business.

Varieties: Cider varieties-Winesap and Newtown Pippin; fresh marketFuji, Gala, Red Delicious, Jonagold, Granny Smith, Golden Delicious

Joey Airoso

Jeff Crist

Member of Farm Credit West

Member of Farm Credit East

Farm: Airoso Dairy Farms

Farm: Crist Brothers Orchards, Inc.

Location: Tipton, Calif., Tulare County, the largest dairy county in the United States

Location: Walden, N.Y.

Business: Sixth-generation family operation

Business: Fourth-generation family farm in business since 1883. Today’s team includes Jeff, his wife, Joy, and their daughter, Jennifer.

Operation: Two farms, 2,500 cows (75 percent Registered Holsteins) and 1,500 acres of alfalfa, corn and wheat for feed as a hedge against high feed costs. The family also markets Registered Holstein genetics domestically and globally as a sideline to help maintain cash flow and offset downturns in milk prices.

Operation: A wholesale operation with 600 acres of apples marketed through two wholesale apple marketers. Recently built a new state-of-the art packing facility to be competitive for 10 to 25 years. The family outgrew their old facility which could handle 15,000 bins. Today they ship 25,000 bins. Varieties: Gala, Fuji, Pink Lady, McIntosh, Empire, Red Delicious, Golden Delicious

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New Risk Management Planning Guide Now Available In today’s global agricultural economy, risks to producers, processors, and marketers are expanding and surfacing in many ways – exposing everyone to more unfavorable circumstances and increasing uncertainty. Finding ways to minimize risk and exposure given increasing uncertainties is critical for long-term business success. The new Risk Management Planning Guide offered by Northwest FCS provides basic steps for developing a risk management plan. Ultimately, the details and execution of the plan will depend upon your industry and your operation’s unique circumstances. Regardless of the situation, developing a risk management plan should begin by better understanding your operation and goals, and the available tools and resources.

In this new Risk Management Planning Guide you will find helpful steps to better manage your risk including: 1. 2. 3. 4. 5. 6. 7.

Evaluate your operation’s strengths, weaknesses, opportunities, and threats Develop short- and long-term goals and action plans Practice sound financial management Develop a cash flow budget Understand costs of production and breakeven points Manage margins and exercise discipline Complete a risk assessment for your operation

To receive a copy of the new Risk Management Planning Guide email farm-credit@accountlist.com or visit our Resource Center at farm-credit.com and look for Business Management Center publications.

AgDirect® Equipment Financing Service Introduced in Northwest Farm Credit Services Territory Farmers and equipment dealers in Idaho, Montana, Oregon, and Washington now have a new financing option from a source already familiar to many Midwest producers. Through a partnership with Northwest Farm Credit Services, AgDirect® now offers its services to dealers and their farmercustomers. AgDirect is known for competitive rates, fast decisions and flexible terms. A product of Farm Credit Services of America (FCSAmerica), AgDirect has provided dealer-originated customer financing in Iowa, Nebraska, South Dakota, and Wyoming since 1998. Last year, it was successfully launched through Farm Credit associations in Michigan and Wisconsin. “Financing applications can be submitted online or by fax at the dealership, and most credit decisions take two hours or less,” said Marnie Vandenberg, Northwest FCS Senior Vice President - Specialized Lending and Central Servicing. AgDirect offers financing, refinancing and leases starting at $10,000 with up to seven-year financing terms and delayed first payments of up to a year (subject to credit qualification). “Other options include fixed or variable rates and no prepayment penalties, with no manufacturer rebate restrictions,” Marnie added. “Overall, we expect that farmers and their dealers will find that the simplicity and flexibility of AgDirect will make the financing of equipment sales easier on customers and dealership staff,” Marnie said. For more information about AgDirect, contact your local Northwest FCS representative or call 1-888-525-9805. 9 | Nor thwest Farm Credit Ser vices


Managing Risk with Crop and Livestock Insurance Let’s face it, business owners aren’t usually thrilled about paying for insurance. Sometimes getting a loan to fund growth or expansion is much more fulfilling. But, when things go wrong, like they’re known to do, insurance can mean the difference between paying the bills and closing the doors. As one customer aptly put it, “Insurance doesn’t make you rich, but it sure helps pay the bills.” As the largest crop insurance provider in the Northwest, Northwest FCS provided approximately $1.9 billion in total coverage to customers during the 2011 crop year. Included in this total was $53 million in coverage for dairy producers through the new federal Livestock Gross Margin program. According to Dean Benson, Senior Vice President, Insurance Services, “We’re here to provide customers with a risk management tool to protect against loss – whether it’s a revenue loss or a production loss. We know this money helps customers in their day-to-day operations and keeps them farming. That’s something we can all be proud of.”

2012 Federal Crop Insurance Deadlines August 31

Fall canola

Idaho, Ore., Mont., Wash.

August 31 and February 1

Onions

Idaho, Ore., Wash.

September 30

Wheat and Forage

Mont.

September 30

Wheat

Idaho, Ore., Mont., Wash.

September 30

Alfalfa seed

Idaho, Ore., Mont., Wash.

September 30

Mint with winter option

Idaho, Ore., Mont., Wash.

October 31

Wheat and forage

Utah

November 20

Perennials – tree and vine fruits

Idaho, Ore., Wash.

November 30

Pasture rangeland forage

Idaho, Ore., Mont.

January 31

AGR and AGR-Lite Renewals

Idaho, Ore., Mont., Wash.

March 15

Spring wheat

Mont.

March 15

Spring crops - barley, oats, canola, beans, peas, potatoes, sugar beets, corn, sweet corn, mint, mustard, flax, safflower, or sunflowers

Coverage varies by state. Contact a Northwest FCS agent to learn about the coverage offered in your area

March 15

Forage seeding

Mont.

March 15

New AGR-Lite policies

Idaho, Ore., Mont., Wash.

May 1

Nursery

Idaho, Ore., Mont., Wash. Nursery coverage is also available throughout the year

Livestock coverage available throughout the year – contact your Northwest FCS agent regarding deadlines

Fed and feeder cattle – LRP Lamb – Livestock Risk Protection Swine – Livestock Risk Protection Dairy – Livestock Gross Margin Cattle – Livestock Gross Margin Swine – Livestock Gross Margin

Idaho, Ore., Mont., Wash. Idaho, Ore., Mont. Idaho, Ore., Mont., Wash. Mont., Wash. Mont. Idaho, Ore., Mont., Wash.

If your crop is not found on the list, please contact a Northwest FCS agent regarding deadlines in your area.

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Lightning Can Strike Twice Reduce your Financial Risk with Debt Protection How much would it cost to hire someone to do your job if you were injured and unable to work for a period of time? Do you have disability protection in place to cover accidents or sudden illnesses like strokes, heart attacks or rare diseases? If you have a life insurance policy, were you specifically planning to use those funds to pay off your equipment or real estate loans in the event of a premature death? No one likes to talk about death or disability. But the reality is farming is a hazardous profession. That’s why Northwest FCS offers Debt Protection coverage. In the event of a short-term disability the coverage will cancel the minimum annual loan payment, outstanding balance on date of loss, or 20 percent of the initial loan amount. In the event of a premature death the protection will cancel your loan balance altogether. Twin brothers Devon and Darin Michel were two of the first customers to sign up for Debt Protection coverage when the program was introduced in 2008. Soon after, when Devon’s knee was injured and he was unable to work, Debt Protection coverage cancelled more than $127,000 in different loan payments. Unfortunately, lightning did strike twice. Last fall brother Darin fell from a pivot irrigation circle and Darin Michel seriously injured his back. He has been unable to work for more than six months and may soon undergo surgery. In the meantime, the Michels With seven loans had to hire three people to replace Darin. Fortunately, with seven loans protected by protected by Debt Debt Protection, the coverage cancelled Protection, the more than $149,000 in annual loan coverage cancelled payments.

more than $149,000 in annual loan payments.

“We signed up for Debt Protection because of situations like this,” says Darin. “It’s a good investment and a cheap way to provide protection. Your health insurance isn’t going to pay your loans. Beyond medical bills, other costs can add up quickly.”

Brother Devon agrees, “Farmers are often times underpaid expert equipment operators, mechanics, welders, cowboys, electricians, and 11 | Nor thwest Farm Credit Ser vices

CEOs or CFOs of their businesses. You don’t realize how much talent or how many people it takes to replace you until you can’t do the work and have to go out and hire it done. We realized we could not hire all that talent realistically part-time ever.” Customer Dan Kimm remembers the date of his injury well. It was September 14. Thunderstorms cut harvesting short for the day and on his way home Dan noticed the lid of his grain bin open. Cautiously, he climbed an extension ladder and was standing on the top rung when he felt something shift. Dan fell some 20 feet to the ground and landed on his shoulder, snapping it from the socket. It took surgeons four hours to repair. While Dan has made good progress with physical therapy, some eight Dan Kimm months later he is still unable to lift his right hand over his head. As a result, he was forced to hire another full time person, his brother-in-law, to help on the farm.

Debt Protection

“Two years ago we refinanced a loan and added Debt Protection,” Dan said. “I remember thinking cancelled the it was cheap protection – a no-brainer – and to be next loan honest, I never gave it a second thought. Our loan payment of officer called my wife when I was in the hospital $45,000 and reminded her of the Debt Protection. He said if I was going to be laid up for more than six months the protection would cover our next loan payment, which was about $45,000. Right now my out of pocket expenses are probably closer to $100,000 between physical therapy and hiring additional help. I think it’s crazy not to protect yourself with Debt Protection. In our line of work accidents happen all the time and I don’t want to leave my wife saddled with a million dollars worth of debt. I don’t care if you can afford the coverage, or think you can’t afford it, it’s foolish not to have it.” Debt Protection is a voluntary, loan cancellation or payment protection product. For more information and free quotes, contact your local Northwest FCS representative.


National Discounts for Northwest FCS Customers “Membership has its privileges.” As a member of the Northwest FCS cooperative, you can receive discounts on nationally-recognized products and services. It’s our way of thanking you for your business.

Floral Ambiance Go to floralambiance.com or call 800.672.4137. Use promotion code fccsflowers to receive $10 off orders of $30 or more.

Dell Computers Save up to 30 percent depending on configuration. Go to dell.com/farmcredit or call 877.289.9437. Use member ID CS25031329.

National, Alamo and Enterprise Car Rentals • Alamo: Visit Alamo.com or call 800.462.5266 and use Farm Credit ID: 308635. • National: go to nationalcar.com or call 800.328.4300 and use Corporate ID: 5700069. • Enterprise: go to enterprise.com or call 800.593.0505 and use Customer #: XZ12G01. The PIN is: FAR.

Sprint Wireless Voice/Data Services and Equipment Save 12 percent on your monthly service charges. Go to sprint.com/farmcredit or call 866.853.4931. If requested, please reference Farm Credit Council by phone and MFCCS_AAA online.

United Van Lines Includes moves within California, Florida, Texas or Wisconsin, or between any of the 48 contiguous states. Discounts are only available via United Agent, Barrrett Moving & Storage. Call 800.879.1283 or email: fcccustomercare@barrettmoving.com

To receive these discounts, be sure to identify yourself as a Farm Credit customer.

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The Bull Market for Farm Real Estate: At a Crossroads? Dr. Dave Kohl, Professor Emeritus of Ag Finance and Small Business at Virginia Polytechnic Institute and State University Texas Cooperative Extension at Texas A&M University

Is the bull market for farm real estate at a crossroads? First, let us put this question into context. Yes, the bull market in farm real estate is alive and well, particularly in grain and row crop producing areas in the Heartland. However, the bear market is alive and well in regions heavily reliant on livestock, real estate development, and recreational farm ground centered in the sand states of Florida, Arizona, Nevada, and California, among others. For purposes of this article, let us focus on the bull market. Is the bull “long in the tooth” and is the cycle headed for a crash, or will it continue to persist for five years or more? This question makes for interesting discussion and debate amongst producers, investors, and lenders. It is analogous to picking a championship team in a playoff or tournament. Digging deeper into the subject, farm real estate values over the past century have been tilted toward the bullish side of the market. Early in the period up until World War II, the bulls and the bears were approximately equal. Since then, approximately 85 percent of the time the bulls, or the appreciating markets, have beaten the bears on farm land values.

Secular Markets There have been two eras since World War II in which “super cycles” or “secular markets” have occurred. A secular market is a market driven by forces that could be in effect for an indefinite long-term duration, causing the value of certain asset classes or investments to rise or fall over a long period of time. For example, the bull market in farm real estate from the 1950s through the late 1970s consisted of 27 consecutive years of appreciation nationwide. The latest bull market lasted 21 years before devaluation occurred in farm real estate, particularly in the South, but it is still alive and well in the Midwest. This bull market in real estate is driven by numerous “game changers.” One game changer has been export market demand from emerging nations. The Federal Reserve’s strategy to grow 13 | Nor thwest Farm Credit Ser vices

exports and the economy with a low value of the dollar has contributed to the bull market. Increased use of grains for ethanol, weather patterns, which create supply disruptions, along with historically low interest rates have been drivers of profits that have been capitalized into farm real estate. Opportunity investments in stocks, bonds, etc., have seen low returns relative to returns on farm real estate, which has fueled agriculturalists, rural residents, and big block investors to make farm real estate the investment of choice.

Market Cycles Market cycles and psychology are definitely playing a role in this current bull market. The market cycle typically exhibits four phases. The first phase occurred just after the mid-1980s farm crisis. In this period, producers and investors with cash and profits had paper gains, while the pundits stayed on the sidelines. They stayed on the sidelines because they were not convinced that substantial appreciation and profits would be sustainable. During the second phase of the cycle in the 1990s, when the equity markets were hot, producers were cautious and they assessed whether farm real estate could garner attractive returns in the long run. Comparing farm real estate gains against the red-hot stocks and residential and commercial real estate put many producers in a quandary. Phase three kicked in when the equity markets, then residential and commercial real estate markets started to soften and eventually crash. Phase three gained steam when producers and investors were convinced hot real estate markets were here to stay, and other comparable investments had a perceived risk and low returns. The fourth and final stage of the market cycle is when the buyers’ and investors’ exuberance becomes extremely high.


Talk of a “new normal” or a “new plateau” is fueled by profit and cash expectations. Most investors believe that the market can never go down in this part of the cycle. Some will “flip” real estate, in other words, buy it, make minor improvements, and sell it in a short time for a profit.

Looking Ahead

Northwest Land Values Remain Stable, Some Producers are Expanding

So which stage is the farm real estate market in today? The answer is that it depends. In the upper Midwest and other row crop areas with ample water, mineral, and oil assets, the answer may be stage three or four. In coastal and southern areas that are in a secular bear market, the answer is possibly entering stage one, or maybe continuing in the negative bear market.

Unlike the steep price increases for agricultural land through the Midwest, Northwest agricultural real estate prices remain stable, according to the most recent land value survey release by Northwest FCS.

The duration of the third and fourth stages of the bull market is dependent on the “game changers” identified earlier in this article being positive. Continuation of financial stimulus in the United States and abroad; strong economies in emerging markets; subsidies for ethanol and agriculture in general; and, of course, low interest rates are critical for the aging bull market. A convergence of these factors toward the negative would be a lethal combination that could result in a bear market, similar to the mid-1980s farm crisis.

• Strong commodity prices in Idaho have increased the purchasing power of area producers who remain market participants, encouraging them to expand land holdings. While most interest is from established operators, activity from institutional buyers is expected to increase in Eastern Idaho.

How can one navigate the possibility of economic whitewaters? • •

Maintain modest amounts of financial leverage on new land purchases. Generate a positive profit and cash flow in existing businesses to meet financial obligations on new or incremental purchases. Keep an adequate working capital reserve to function as a financial shock absorber that can be turned to cash quickly.

Some of you are on the farm real estate freeway where appreciation is accelerating at a rapid rate, while others are in a bearish market. Consider the factors above, which are necessary for success in a long term investment. Objective financial practices are critical at any crossroads, particularly those in the late stages of a bull market.

The survey is based on real estate and sales activities that are monitored by Northwest FCS appraisers throughout Idaho, Montana, Oregon, and Washington. Some observations shared by Northwest FCS appraisers during the last six months of 2010 include:

• In Montana, agricultural properties in areas outside those affected by development speculation with limited amenities, continue to show stability. Both irrigated and non-irrigated cropland is in demand with most areas reporting that typical buyers are existing operators. • Oregon market activity remains sluggish. Most sales activity is centered on properties with a strong agricultural component, where buyers are typically existing operators. • Washington saw a slight uptick in year-end activity. However, most transactions were between landlords and tenants, with little activity in the open market. • The market for rural residential properties has seen limited activity with mixed reports throughout the region. Current inventory remains high in most areas. • Transactions in 2010 involving recreational properties exceeded those of the prior year. This increase suggests the slide in the recreational market may have halted. “We’re now seeing greater interest from ag producers looking to expand their production acres than we’ve seen in the recent past,” stated Roger Cramer, Senior Vice President-Risk Management and head of the Appraisal Services Department. “With strong commodity prices for many ag industries, producers generally have strong balance sheets and additional income allowing them opportunities to invest in additional acres. Investors have also shown more interest in Northwest ag real estate in recent months.” To read more from the land value survey visit the Resource Center on farm-credit.com.

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Northwest FCS Awards $66,000 in Scholarships Northwest Farm Credit Services is pleased to announce the winners of the 2011 Scholarship Program. Forty-four $1,500 scholarships were given to sons and daughters of Northwest FCS customers in Idaho, Montana, Oregon, and Washington; eight high school students and three college students from each state were awarded $1,500 scholarships.

College Winners

Oregon Gabrielle Schaefer is the daughter of Rick Schaefer

Idaho

of Molalla, Ore. She will be a senior at Oregon State University. She is president of the predental club at OSU as well as the coordinator for the dental education outreach program and participates in intramural sports. She plans to become a dentist.

Taylor Bybee is the son of Chad and DaNeil Bybee of Soda Springs, Idaho. He will be a sophomore at Utah State University. He plans to pursue a career in either engineering or education.

Jared Schaefer is the son of Rick Schaefer of Molalla, Ore. He will be a sophomore at Oregon State University. He was his dorm’s floor council representative and also volunteered for a Boys and Girls Club program. He intends to pursue a career as a physician’s assistant.

Kelsey Molyneaux is the daughter of Earl Molyneux of Kimberly, Idaho. She is a junior at Boise State University. She is majoring in international business with minors in Spanish and human resources.

Morgan Ward is the daughter of Craig and Cherie Ward of Baker City, Ore. She will be a junior at Oregon State University this fall. She is a member of the Phi Lambda Omicron Sorority and an adult leader of a 4-H club. She plans to pursue a career in pharmacy.

Natalie Seegmiller is the daughter of David and Dixie Seegmiller of Meridian, Idaho. She is a senior and on the Dean’s List at Utah Valley University. She is involved in her church’s women’s organization and a member of the American Legion Auxiliary. She plans to pursue a career as an American Sign Language interpreter.

Washington

Montana Jana Haynie is the daughter of Hanz and Janet Haynie of Circle, Mont. She is a sophomore at Montana State University-Bozeman. She is a Sunday School music teacher and is employed by Marsh Laboratory. She is majoring in ag business.

Arryn Davis is the daughter of L. Marc Davis of Coupeville, Wash. She is a sophomore at University of Washington. She is a volunteer at Burke Museum and is majoring in neurobiology.

Reyher of Belgrade, Mont. She is a senior at Montana State University. She is a volunteer at a college rodeo clinic for young women. She is majoring in ag relations.

Nicholas Dufault is the son of Peter and Susan Default of Mattawa, Wash. He will be a senior at the University of Washington this fall. He is a member of his church’s worship team and serves as an usher. He is majoring in mechanical engineering.

Kevin Tweten is the son of James and Ella Tweten

Natalie Gibb is the daughter of Douglas Gibb

of Nashua, Mont. He is a senior at Montana Tech and is on the Dean’s List. He has been awarded a research grant to study the effects of mercury pollution. He is majoring in environmental engineering.

of Ellensburg, Wash. She will be a sophomore at Brigham Young University-Idaho. She is active in her church and also volunteers at a local hospital. She plans to pursue a career as a nurse practitioner.

Sierra Reyher is the daughter of Mark and Jeanne

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High School Senior Winners

Montana Winners Brianne DePuydt is the daughter of Brian and

Idaho Winners Dallas Carpenter is the daughter of Todd and Robin Carpenter of Malta, Idaho. She graduated from Raft River High School. She is the president of her FFA chapter as well as the District secretary and was manager of both the volleyball and wrestling teams. She will attend Utah State University.

Becky DePuydt of Saco, Mont. She was co-captain of the volleyball and basketball teams, treasurer of National Honor Society and vice president of her 4-H club. She will attend Montana State University-Billings this fall and major in accounting.

Taylor Erskine is the son of Ed and Susan Erskine Preston Fischer is the son of Shawn and Julie Fischer of New Plymouth, Idaho. Preston was his school’s Boys’ State Delegate and the vice president of both his FFA chapter as well as at the District level. He will attend California Polytechnic State University in San Luis Obispo.

Tanner Jensen is the son of Don and Laurel Jensen of Montpelier, Idaho. He has been involved in student council, participated in several school plays and is an Eagle Scout. He will attend Brigham Young University – Idaho this fall and plans to major in business.

Cara Pantone is the daughter of Russell and Pamela Pantone of Shoshone, Idaho. She was the senior class president and ASB vice president as well as playing on the basketball team. She is currently the Idaho State FFA Reporter. She will be attending University of Idaho and plans to be a high school teacher.

Anna Pratt is the daughter of Mark and Wendy Pratt of Blackfoot, Idaho. She is currently the Idaho FFA State Vice President and a member of the Bingham Co. Youth Coalition and involved in her church youth group. She will attend Boise State University.

Abigail Toeus is the daughter of William Toeus of Aberdeen, Idaho. She was the chapter president of the Business Professionals of America, National Honor Society vice president, and parliamentarian of her FFA chapter. She will attend University of Idaho and plans to become a surgeon.

of Chinook, Mont. He was president of his FFA chapter, captain of the basketball team, treasurer of Business Professionals of America, and a four-year Academic Olympics participant. He will attend Montana Tech and will study petroleum engineering.

Kyler Johnson is the son of Tim and Tasha Johnson of Dutton, Mont. He was the vice president of National Honor Society, student council and FFA, and served as captain of both the football and basketball teams. He will attend University of Montana-Western and plans to earn a degree in history education. Angella Molvig is the daughter of Rick and Alison Molvig of Glasgow, Mont. She was president of her 4-H club, vice president of the student council, and a member of the cross country team and Key Club. She will attend University of Montana and pursue a degree in liberal arts.

Shelby Murnion is the daughter of Perry Murnion of Jordan, Mont. She served as president of student council and senior class and was the captain of both her volleyball and basketball teams. She will attend Montana State University-Bozeman and plans on becoming a nurse. Austin Reyher is the son of Mark and Jeanne Reyher of Belgrade, Mont. He helped to organize two benefit concerts for two friends with medical expenses, was the bass section leader of the chamber choir and active in his church’s youth group. He will attend Montana State University-Bozeman and plans to major in ag business.

Maggie Weber is the daughter of Patrick and Mary Helen Weber of Colton, Wash. She was the state event director for the WA State High School Rodeo Assn., and a member of FFA and National Honor Society. She will attend Texas A & M University and plans to major in landscape architecture.

Sydne Streich is the daughter of Steve and Jill

Rachel Wemhoff is the daughter of Roger

Brönte Wigen is the daughter of Jon and Carol

and Annette Wemhoff of Grangeville, Idaho. She graduated from Summit Academy with a 4.0 GPA. She was the co-captain of both the volleyball and basketball teams and the student body president. She will attend Benedictine College in Kansas.

Wigen of Great Falls, Mont. She participated in speech and debate, was a member of the swim team and volunteered as a Big Sister, as well as playing piano at a local nursing home. She will attend Hillsdale College in Michigan and major in business.

Streich of Kalispell, Mont. She was a member of the junior trap shooting league and participated in vocal solos and ensembles in the district and state competitions. She will attend Concordia and study graphic design.

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Oregon

Washington Winners Michelle Angel is the daughter of Dave and Joanne Angel of Dairy, Ore. She was the president of the student body as well as of the Future Business Leaders of America. She was on the basketball, volleyball and track teams. She will attend Southern Oregon University and plans to be an elementary teacher.

Brooke Bredeson is the daughter of Chris and Darla Bredeson of Olympia, Wash. She was the senior class secretary and captain of both the volleyball and tennis teams. She was also active in theater and her church youth group. She will attend Whitworth University and major in international studies.

Brent Fessler is the son of Rodney Fessler of

Jenna Kincaid is the daughter of Cris and Pam Kincaid of Pullman, Wash. She was vice president of both the senior class and FFA and played softball. She will attend Western Washington University and will study political science.

Madras, Ore. He was a member of the football team, FFA chapter, National Honor Society and active in his church youth group. He will attend Eastern Oregon University and study ag business.

Justin Gutierrez is the son of Craig Gutierrez of Heppner, Ore. He was a member of the football and baseball teams, active in FFA, National Honor Society and a group leader in his church youth group. He will attend Washington State University and study agriculture.

Lucy Lautenschlager is the daughter of Carl

Brett Harrison is the son of Travis and Kirsten Harrison of Lexington, Ore. He was president of his 4-H Club and FFA chapter, member of the National Honor Society and active in his church youth group. He will attend Washington State University and study ag economics.

Brian Michener is the son of Bill Michener of Grandview, Wash. He was president of his 4-H club and very involved in community service projects through 4-H as well as participating in competitive swimming. He will attend Yakima Valley Community College and study agribusiness.

Jamie Murchison is the daughter of Dennis and Lisa Murchison of Cove, Ore. She was president both of her 4-H club and National Honor Society, and captain of volleyball, basketball and track teams. She will attend Eastern Oregon University and study both business and rangeland management.

Madison Olson is the daughter of Jon Olson of Lynden, Wash. She was a member of the National Honor Society, Vacation Bible School leader, and the captain for both the volleyball and golf teams. She will attend Whatcom Community College and plans to become a nurse.

Lisl Ruckert is the daughter of Roger and Susan Ruckert of Tangent, Ore. She was president of National Honor Society, participated in cross country and her school’s worship team, and volunteered at the Linn County Museum. She will attend Biola University and study art.

Michael Rattray is the son of George and Kristy

Jaime Venegas is the son of Silvestre Venegas of

Matthew Rosman is the son of Garry Rosman of Davenport, Wash. He played football, basketball and tennis. He was the student body treasurer and a member of the swing choir, FFA and National Honor Society and was involved in his church youth group. He will attend Carroll College.

Nyssa, Ore. He was the student body president, a member of Future Business Leaders of America, jazz, concert and honor bands as well as art club. He will attend Willamette University and study physics.

Sydney Owen is the daughter of Paul Owen of Sandy, Ore. She was president of her 4-H club, served as a student counselor for sixth graders at Outdoor School and taught Vacation Bible School. She will attend Linfield College and study both environmental science and international studies.

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Lautenschlager of Endicott, Wash. She was ASB treasurer and member of FFA, National Honor Society and Future Business Leaders of America. She will attend Spokane Falls Community College and study business management.

Rattray of Othello, Wash. He was the president of both the 4-H and FFA and a member of the golf team. He serves as a volunteer fire fighter and a member of a swim team. He will attend Washington State University and study viticulture and ag economics.

Tyler Thornton is the son of Geoff and Dianne Thornton of Tonasket, Wash. He was yearbook editor, church youth speaker, and captain of the baseball team and co-captain of the football team. He will attend Washington State University and study material sciences and engineering.


local

advisors

IDAHO Robert Ball Kent O. Bitter Adrian Boer Doug Carlquist Ray Carlson Bill Clayton Cade Crapo Richard Dalley Ron Elkin Carl Ellsworth David Funk LeRoy Funk Brent Griffin Jeff Harper John Hepton Jackie Hillman Ken Koompin Karen Lustig Marty Lux Dan Mader Kyle Meyer David Mills Greg Moss Kirk Nickerson Jeff Pahl Erick Peterson David Rallison D. Brad Reed Doug Ruff Royce Schwenkfelder Kirt Schwieder Todd Simmons Brent Steffler Ryan Telford Bernie Teunissen James Udy Shawn Webster Mike Wheeler Ann T. Wilson Rulon Wistisen Berkley Wray

MONTANA Hamer Shelley Jerome Eden Blackfoot Wilder St. Anthony Rupert Buhl Leadore Hansen Burley Rupert Mountain Home Nampa Dubois American Falls Cottonwood Nezperce Genesee Rathdrum Malad Ketchum Howe Pocatello Moscow Franklin Idaho Falls Aberdeen Cambridge Idaho Falls Terreton Firth Richfield Caldwell American Falls Rexburg Declo Hammett Bancroft Blackfoot

73 Fort Hall Avenue, Suite A American Falls, Idaho 83211 (208) 226-1340 370 North Meridian Street, Suite A Blackfoot, Idaho 83221 (208) 782-3800 1305 Albion Avenue Burley, Idaho 83318 (208) 678-6650 501 King Street Cottonwood, Idaho 83522 (208) 962-2280 2225 West Broadway, Suite A Idaho Falls, Idaho 83402 (208) 552-2300 2631 Nez Perce Drive, Suite 201 Lewiston, Idaho 83501 (208) 799-4800 16034 Equine Drive Nampa, Idaho 83687 (208) 468-1600 102 North State, Suite 2 Preston, Idaho 83263 (208) 852-2145 1036 Erikson Drive Rexburg, Idaho 83440 (208) 656-2100 815 North College Road Twin Falls, Idaho 83301 (208) 732-1000

and locations

Mike Anderson Adam Billmayer Keven Bradley David Broberg Tom Cheetham Don Connelly Bret Conover Calvin Couch Calvin Danreuther Cory Davis Nels DeBruycker Calvin Dereuther Brian Dice Vicki Eggebrecht Conni French Beth Granger John Helle Dale Hirsch Craig Iverson Tim Johnson Liz Jones Delbert Kamerman Alan Klempel Marvin Knutson Paul Kronebusch Bill Lauckner, Jr. Rebecca Lutgen Joe Minnehan Kirk Montgomery Bryan Mussard Tracy Mytty Shawn Rettig Randy Ridgeway Dave Sattoriva Nancy Schlepp Dennis Schmierer Leonard Schock Amy Sinks Kim Skinner Shane Slivka Roger Starkel Larry Steffes Steve Swank Dale Tarum Bob Taylor Miles Torske Carl Traeholt Brian Tutvedt Larry Tveit, Jr. Jeff Volf Mike Wallewein Robert Williams Steve Wood

OREGON Belgrade Hogeland Cut Bank Cut Bank Redstone Valier Broadview Havre Loma Townsend Choteau Loma Volborg Malta Malta Great Falls Dillon Kinsey Winnett Dutton Wise River Manhattan Bloomfield Livingston Conrad Nashua Rapelje Joplin Rosebud Dillon Florence Rudyard Stanford Hingham Ringling Savage Vida Jordan Missoula Winifred Ronan Plevna Chinook Richland Denton Hardin Wolf Point Kalispell Fairview Judith Gap Conrad Joliet Sheridan

Tech Plaza, Building 1, Suite 300 3490 Gabel Road Billings, Montana 59108 (406) 651-1670 1001 West Oak Farm Credit Building, Suite 200 Bozeman, Montana 59772 (406) 556-7300 519 South Main Conrad, Montana 59425 (406) 278-4600 134 East Reeder Street Dillon, Montana 59725 (406) 683-1200 501 First Avenue South Glasgow, Montana 59230 (406) 228-3900 700 River Drive South Great Falls, Montana 59405 (406) 268-2200 1705 Highway 2 Northwest, Suite A Havre, Montana 59501 (406) 265-7878 120 Wunderlin Street, Suite 6 Lewistown, Montana 59457 (406) 538-7737 502 South Haynes Miles City, Montana 59301 (406) 233-3100 3021 Palmer Street, Suite B Missoula, Montana 59808 (406) 532-4900

Headquarters P.O. Box 2515, 1700 S. Assembly St. Spokane, Washington 99220-2515 509.340.5300 | farm-credit.com

Monet Allen Dwight Arnoldus Ed Bair Lori Baley Tim Bare John Boyer Greg Brink Ron Brown Warren Chamberlain Don Coats Dan Dawson Sandy DeJong Mike DeWall Susan Doverspike Rod Fessler Leo Gentry II Skip Gray Dennis Harmon Ron Hjort Gary Hull Matt Insko Paul Kasberger Dave Kauer Mark Krautmann David Kunkel Dan C. Lewis Betty Marguth Scott McClaran Ron Meyer Mark Miller Dan Mills Greg Myers Mary Olson Larry Parker Alan Parks Vikki Price Jim Schaefer Brent Skiles Steven Sugg Anna Sullivan Steve Walker Charlie Waterman Bill Wilber Gary Willis

WASHINGTON Montague, CA Cove Klamath Falls Malin Roseburg Haines Joseph Milton-Freewater Vale The Dalles Roseburg Bonanza Harrisburg Burns Madras Gresham Albany Grants Pass Oakland Lebanon LaGrande Redmond Amity Salem Portland Gaston Junction City Joseph Talent Heppner Echo Tillamook Monmouth Helix Silver Lake Nyssa Molalla Harrisburg The Dalles Hereford Stanfield Bandon Burns Hood River

3370 10th Street, Suite B Baker City, Oregon 97814 (541) 524-2920 2345 N.W. Amberbrook Drive, Suite 100 Beaverton, Oregon 97006 (503) 844-7920 650 E. Pine, Suite 106A Central Point, Oregon 97502 (541) 665-6100 2911 Tennyson Avenue, Suite 301 Eugene, Oregon 97408 (541) 685-6140 300 Klamath Avenue, Suite 200 Klamath Falls, Oregon 97601 (541) 850-7500 378 West Idaho Avenue Ontario, Oregon 97914 (541) 823-2660 12 Southwest Nye Pendleton, Oregon 97801 (541) 278-3300 3113 S. Highway 97, Suite 100 Redmond, Oregon 97756 (541) 504-3500 2222 Northwest Kline Street Roseburg, Oregon 97471 (541) 464-6700 650 Hawthorne Ave. S.E., Suite 210 Salem, Oregon 97301 (503) 373-3000 3591 Klindt Drive, Suite 110 The Dalles, Oregon 97058 (541) 298-3400

Dave Allan Melissa Bedlington-Kleindel Jeff Bosma Russ Byerley Roger Canfield Mike Carstensen Mike Cobb Dain Craver Bill denHoed Richard DeRuwe Frank DeVries Bryan Dobbins Ross Druffel Scott Eschbach Kevin Filbrun Stacy Gilmore Norm Gutzwiler Lori Hayles Gary Kehl Jim Kile Jim Klaustermeyer Dave Klaveano Tristan Klesick Chris Kontos Poppie Mantone Sarah McClure Alan Mesman John Miller Pat Murphy Chuck Podlich Jeff Raap Sara Rolfs Doug Rowell Jeff Schilter Bernie Schultheis Danielle Scrupps Ben Smith Mark Thomsen Mark Tudor Jake Wardenaar Andy Werkhoven Brandy Wigen

Wapato Lynden Outlook Touchet Olympia Almira Ephrata Royal City Grandview Dayton Lynden Cheney Colton Yakima Pasco Pasco Malaga Pasco Quincy St. John Othello Pomeroy Stanwood Walla Walla Bingen Walla Walla Mt. Vernon Toledo Chehalis Orondo Ellensburg Wenatchee Prosser Olympia Colton Ritzville Sequim Waterville Grandview Royal City Monroe Colfax

265 East George Hopper Road Burlington, Washington 98233 (360) 707-2353 1123 South Market Boulevard Chehalis, Washington 98532 (360) 767-1100 224 North Main Colfax, Washington 99111 (509) 397-2840 1501 East Yonezawa Boulevard Moses Lake, Washington 98837 (509) 764-2700 455 East Hemlock Street, Suite D Othello, Washington 99344 (509) 488-2396 9530 Bedford Street Pasco, Washington 99301 (509) 542-3720 1223 Sheridan Avenue, Suite A Prosser, Washington 99350 (509) 786-6400 1900 W. Nickerson Street, Suite 215 Seattle, Washington 98119 (206) 691-2000 1515 S. Technology Blvd., Suite B Spokane, Washington 99224 (509) 340-5600 2735 Allen Road Sunnyside, Washington 98944 (509) 836-3080 1 West Pine Walla Walla, Washington 99362 (509) 525-2400 667 Grant Road, Suite 1 East Wenatchee, Washington 98802 (509) 665-2160 1330 North 16th Avenue Yakima, Washington 98902 (509) 225-3200

123 North Central Avenue Sidney, Montana 59270 (406) 433-3920

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P.O. Box 2515 Spokane, Washington 99220-2515 New address? Please notify your local Northwest FCS office.

Rural Community Grant Program More than $225,000 Awarded Since 2007 Is your community looking for grant money to build or improve facilities, purchase equipment or to fund capital improvements? Northwest FCS is proud to offer grant funds for rural community projects through our Rural Community Grant Program. The goal of the Rural Community Grant Program is to help improve communities in Alaska, Idaho, Montana, Oregon, and Washington. Northwest FCS is looking for creative and collaborative approaches to address emerging challenges and opportunities in rural communities.

Application deadlines are Oct. 1, March 1, and June 1, each year. For more information visit farm-credit.com or contact KayDee Gilkey; 509-340-5303 kaydee.gilkey@farm-credit.com


Northwest FCS Yields - Managing Risk in Today’s Volatility