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Promoting the business success of our customers and the rural community

GreenStone FCS Spring 2012

the ePA wAntsyour infogetting connected – more oPtions thAn ever

sPring mArket outlookyoung, beginning, smAll fArmer focus

is where the heArt is

Home...

2 Comments from Ceo Dave Armstrong

CEO Dave Armstrong shares his thoughts on an early

spring and more.

3 market outlook

Agricultural economist, Bob Utterback, encourages producers to consider marketing strategies before getting into the production frame of mind.

9 Directors' Perspective

Free advise to the younger generation from three directors who have seen more than there fair share of industry changes.

11 YBSF Feature

Five years off the farm gave Matt Wagenson perspective and solidified his future in the business.

15 Political Action Committees (PAC)

Brush up on your PAC knowledge and know your stuff before the fall election season arrives.

17 ePA Seeks more Info on Livestock

The EPA is determined to capture data from approximately 20,000 CAFO's nationwide, but how with this information be

used?

Spring Notes

6 Getting Social

6 Communication Preferences System

7 News Update

10 Scholarships

14 Small Farmer Panel

18 Staff Recognition

15

11

spring 2012

Published by:

GreenStone Farm Credit Services

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

Partners, 3515 West Road, East Lansing, MI 48823 • 517-318-2290 • [email protected]

Please note: GreenStone offices will be closed in observance of the holidays on the following dates:

May-Monday the 28th

Any other year and we would just be starting to gain comfort knowing that winter is slowly drawing to an end. This year, Mother Nature struck again and has instead left us wondering what to expect next week, next month, and even all summer long. Though the following pages won’t necessarily provide any answers when it comes to weather, we do believe you will find value in the industry and association news. This spring issue highlights the future of our industry— young, beginning and small farmers. Of course, you will also find the latest market outlook update and an association overview from your GreenStone CEO. In addition, this spring issue proudly hosts the announcement of our top performers of 2011. As you begin turning soil and welcoming a new growing season, we hope you enjoy sitting down to take a break with this latest Partners magazine. If you would prefer to browse it online in the future, be sure to sign up for our all new Communication Preferences system. As always, your ideas and comments are welcomed!

Editor’s

Note

he warm weather would be universally embraced in states like Iowa and Illinois but, in a

diversified state like Michigan and to some extent Wisconsin, the weather is never ideal for all the different crops that are grown. An early spring warm up may be great for planting sugar beets, but then when the proverbial cold snap happens the fruit industry usually suffers.

If this kind of pattern can be avoided this spring, we may be off to one of our best starts ever. As always, time will tell!

Optimism continues to abound in rural America as the outlook for commodity prices remains relatively good. Most protein markets (hogs, beef, turkeys, and broilers) remain strong, dairy markets have softened due to increased milk output, in part due to the unseasonably warm weather. Prices for feed grains remain solid as do those for most of the “specialty” crops grown in our territory. Input prices for seed, fertilizer, and chemicals are expected to rise anywhere from 5-15 percent with fuel once again being one of the highest cost inputs. Oil prices have been consistently over $100 per barrel over the past few months, causing the price of gasoline and diesel to climb to the $4.00 per gallon range. Fortunately, interest rates will likely remain low for the balance of 2012 and commodity prices remain high enough to cover input cost increases this year. While overall profitability

may not be quite as good as 2011 for some producers, 2012 shouldn’t be a year of despair as long as we can dodge any widespread adverse weather, geopolitical, or financial market events. Given what we have experienced over the last three or four years, this may be wishful thinking!

Tuesday, March 13 was Patronage Day at all 37 GreenStone locations. For the seventh year in a row, your cooperative has paid a cash patronage to its members totaling more than $108 million! This year’s $23.3 million cash payment was record setting, averaging nearly a .50 percent reduction in the interest paid by a typical borrower in 2011. Many members took advantage of the sunshine and stopped by our branch offices to personally pick up their check, while those who were unable to do so had theirs mailed to them. This is a unique advantage of being a member of a financially strong cooperative like GreenStone. While our banking competitors offer many

Spring 2012 PArtNerS 2

comments from ceo dave Armstrong

By the time you receive this issue of Partners, some of you may already have sugar beets planted or possibly some corn. The unusually mild winter and extraordinary early and warm start to the spring should allow ground to be planted much earlier than last year’s late start.

Continues on page 5...

t

Remember, the function of the market going into spring is to get prices high enough to motivate producers to act. Once the crop gets planted, the burden of proof for higher prices falls on the bull to prove there is some reason to be concerned about supply. We call this a seasonal pattern that needs to be respected even if the prices offered are not as high as the return on investment objectives desired. Hopefully while everyone gets ready to plant, they will read this outlook and consider some of

these ideas while bouncing across the fields.

Agricultural markets will be efficient over the long-term in regard to supply and demand. The theory suggests that, once all information is known, the price will eventually reach equilibrium. Producers know that operating at breakeven in a pure competition economy will eventually lead to the poor house, and that’s one reason why we have the farm bill. It is also my contention that agriculture is an

industry that cannot handle exceptional profits for any length of time before supply increases and demand is rationed. Essentially, with too high of a profit margin, supply will be increased and demand will be rationed. This is the heart of the price cycle. The question we are all asking ourselves is where are we on the price cycle?

One of the economic problems we must deal with in periods of good profit is an imbalance or disequilibrium in the markets resulting from those acting in their own self interest eventually making irrational decisions. Examples of this include the housing bubble where banks had money [from China] to loan. Since they had money to loan and the government was pressuring home ownership, banks were allowed to be more aggressive when loaning. This resulted in higher home values and gave them the ability to loan more. At its peak everyone felt house values could not go down and anyone not buying into the housing boom was a fool. As we all know, during the bubble it was hard to see the storm clouds developing; but after the bubble burst, it was pretty obvious.

Corn, soybean and wheat values [and now cattle and hogs] have been in an exceptional profit bubble since 2008. Except for 2009, we have seen three of the highest profit years in history for corn and soybean producers. This is now leading to an increase in land costs, cash rents, equipment costs and just about every item associated with production. What are some of the dangers ahead? I believe debt or leverage is one of the basic building blocks of a bubble. In other words, when too many people have too much money chasing the bull, the market tends to overreach. After the crest it is a big scramble to see who can get to the exits first. We could possibly see a repeat of the 1968 to 1980 price range--a period of excess profit eventually lead to a time like the 1980’s when costs were too high to revenue and producers came under tremendous financial pressure.

market outlook

MARkET OUTLOOk

by: bob utterback

before we know it tractors will be running from dawn to dusk to get the fields ready and planted. the only problem is, when producers are usually the busiest, they should also be thinking about marketing.

3 PArtNerS Spring 2012

The bulls will likely argue that today everything is different and it can never happen again. This is what they will argue as the bubble develops. We have ethanol and China on the demand side for corn and soybeans and, in my opinion, supply simply cannot keep up. Granted, the demand growth over the last 10 years has no historical comparison that I can find. I also agree that China, while it wants to increase its hog production to feed its people, does not want to depend on U.S. corn like we depend on Mideast oil for energy. As end users, they got a strong dose of what high priced corn, soybeans and wheat tastes like and they do not like it. They are already taking steps to diversify their feed source. Chinese government officials are trying desperately to keep domestic prices high in order to stimulate domestic producers to implement better production methods to increase yields. Since their corn and soybean output is way behind that of the U.S., they know they have room for much improvement. Yes, demand will remain strong, but the exceptionally strong growth rate of the last 10 years will be difficult to match. Any slowdown in the global economic system could result in a negative imbalance in the global supply/demand situation for late 2012 and 2013.

With the last two exceptionally profitable years [2010 and 2011] behind us, producers should be in good shape to increase corn and soybean acres for the 2012 season. While stocks should be exceptionally tight into summer, a completely opposite pattern could be seen in the last half of the year, having a dramatic impact on carrying charges, spreads and storage decisions.

corn The March acreage report is behind us. If around 94 million planted acres are seen with a good yield, this could cause carryover to jump to burdensome levels. Crop insurance levels have helped to assure corn as a good crop to plant, so the thing that I believe will impede corn plantings is spring weather. If the corn crop is planted by mid-May, a definite down trend will have started in this complex. Granted, there will be a period of concern as we move into June/July regarding pollination; but if the crop is planted and stands are strong, the pressure will be on the bull to rally this market. The bear will be content to wait on the market to drift lower as the crop matures into summer.

In my speaking engagements around the country the last few months, I got a strong sense that producers want at least $6 cash corn. For most producers this implies December 2012 corn would need to get close to $6.25 to $6.50. I simply don’t see

this level of strength in the corn complex this spring. I believe it will take delayed spring planting and some early dry weather concerns to lift prices. If this occurs, then prices could be higher than expected. That is the catch-22 I sense producers are now caught in. The cash price they want is forcing them to hold off until summer to sell. This implies they will be completely right or very wrong with little room for compromise other than to put it in the bin and hope for a rally.

Strategy Implications: (1) Focus on selling September corn between April and May at 30-plus cents premium to the December and hold onto delivery on the expectation that, as

the crop develops, September will decline to December. This could add 25 to 45 cents to a cash sale. (2) I strongly suggest producers start at $6 and being done by $6.30. (3) In regard to form, I like limited cash flow risk. This means embargoing the use of futures and cash sales until July. This leaves only one alternative—a long put. To keep the time value cost as low as possible, buy a deep-in-the-money put at the maximum cash flow that can be tolerated when the market reaches the desired selling price. This position can give producers most of the benefit of selling futures without the negative unlimited margin exposure. If we do have a weather event, those using this strategy would still be long the cash and able to take advantage of basis narrowing. Again, buy the put in the spring and then roll into

futures or cash (say in late summer) when confident of yield potential. (4) In regard to storage, I have to say that, with the expectation of a big carry and wide basis at harvest, corn will be the commodity producers will want to store this fall.

soybeAnsThe soybean complex had two factors going for it through the winter. The South American crop was hurt due to dry weather. This forced end users to consider buying forward a little more aggressively than they wanted and that has helped our domestic prices. The second is corn prices have been so strong, new crop soybeans have had to rally to keep the acres secured. As new crop soybeans approach $13, I believe it is time to call the elevator and let go of inventory for off-the-combine cash sales. With limited carry in the market, there is little reason to store soybeans; use the bins for corn. If anyone is uncomfortable selling cash in excess of 70 percent of expected inventory, place the last increments in the options market. Again, because of the nature of the early sales, avoid using futures until July to August. Focus on buying long in-the-money puts. Because of concern about market volatility, forget about selling calls until well into July.


MARkET OUTLOOk

excePt for 2009, we hAve seen three of the highest

Profit yeArs in history for corn

And soybeAn Producers.

of the same products we do, they do not share their profits with their customers! I hope you are pleased with the financial return on your GreenStone “investment;” and, more importantly, that you are very satisfied with the service, professionalism, and industry expertise you receive from our staff members. While the patronage payments are nice, you tell us the most important thing about doing business with GreenStone is the trusted relationships you have with our staff. Thank you again for another very successful year!

The first quarter of 2012 has certainly been active. In this issue of Partners, you will learn about our sixth annual Circle of Excellence celebration held in East Lansing, Michigan on February 24 to recognize our top 2011 sales performers and their teams; an overview of a young farmer panel discussion we had between several young farmers from our territory, the GreenStone board, and executive management team; GreenStone scholarship information; and much, much more!

The year is off to a great start. I wish you the best of success with spring planting and urge you to be safe. Farming is a dangerous enough occupation when you are focused, so take your time, slow down, get enough rest, and be careful!

I want to close by thanking you for the trust and confidence you place in us to be your financial services provider of choice. We take this responsibility very seriously and value the business you choose to do with us. As always, feel free to contact me at any time at [email protected] or 517-318-4105 if I can be of service.


MARkET OUTLOOk

wheAtSpring weather scares have passed and the reality of a big crop coming down the pike should be hitting the markets, if it has not already done so. I expect wheat to be the weakest of the grains that I follow. In fact, poor wheat prices that should lead to feed wheat will be one of the factors pulling down corn in the fall. I assume that those following my recommendations have most of their wheat sold. Seasonally, selling wheat during April to May is the wrong thing to do. If anyone has a large amount of unpriced inventory on hand, the only hope is some weather risk hits corn and soybeans. If it does not, I would not be surprised to see cash wheat basis widen out as we move into harvest. Bottom line: If anyone has unpriced wheat, time has just about run out. If prices are below $5.50, go ahead and put it in the bin and hope for a bounce. All I can suggest is learn from this experience and, when prices give a good working margin above costs, forward sell inventory.

cAttle The cattle market has enjoyed a very unusual situation for most of the 2012 season, in that the deferred contracts have been premium to the nearby. This situation should persist well into 2013, but eventually $1,500 and higher breed heifers will entice producers to start expanding. The biggest problem facing the cattle market is consumers pushing away from high prices. With gasoline prices on the rise, stagnant wage rates and unemployment still lagging, one has to question how much room there is to push prices. Do not add extra weight, keep current and look at long-term pricing in the summer and fall of 2013 when the bear market should start for cattle. To help profit margins, create a plan of attack to lock up feed margins from August to October if we get a downside price move in corn. Remember, it is all about locking up the margin, so do not forget to protect input costs.

hogsThe hog market has enjoyed very strong prices. Increased export sales have really helped the hog market, but I have to believe most of the bullish news is now factored into the market. Hogs have the same problem as cattle; how much higher will prices go before consumers switch to alternative lower priced food items? Just like the quarterback on the football field making the call, it is always easier to see what should have been done after the play. All we can say now is profit margins are good, herd expansion is slow. Here again, I am more worried about pricing in the summer of 2013 than most of 2012. Start thinking seriously about buying puts under the market and selling calls above the market to have a floor and a ceiling price close to this summer’s high. As with cattle, very aggressively contract feed needs for the fall of 2012 and especially 2013.

About the Author

bob utterback is the Economist for Farm Journal magazine and President/CEO of Utterback Marketing Services, Inc., located

in New Richmond, Indiana. He has over 30 years of experience analyzing agricultural commodity markets, with special emphasis on the corn and soybean markets. Strategy updates are available by subscribing to Utterback Marketing Services, Inc.’s email/internet services at www.utterbackmarketing.com or by calling 800.832.1488 (ask for Laura). The information provided is believed to be reliable. There is risk of loss associated with trading futures and options. Consult your Risk Disclosure Statements before trading. Commodity trading may not be suitable for recipients of this outlook. To comment on Outlook, email to [email protected].

The opinions stated herein are not necessarily those of GreenStone FCS. dave Armstrong

...CEO Comments continued

COMMUNICATIONS


Facebook: http://on.fb.me/GreenStoneFacebook

From the latest agriculture and country living news, to photos from recent events at your local branch, Facebook keeps you up-to-date and informed! Facebook is also a great place to connect and interact with GreenStone staff and fellow customers!

twitter: http://www.twitter.com/GreenStoneFCS

GreenStone’s Twitter account is a great follow for those looking to stay informed while using a simple newsfeed-like application. GreenStone frequently provides news and insight through its Twitter feed and also shares posts from many other agriculture related entities including Farm Bureau and FFA.

open Fields Blog: http://bit.ly/OpenFieldsBlog

Open Fields is the official blog from GreenStone! Our authors will write about everything from the latest industry news and trends, to family friendly activities that get everyone involved! We also feature a blog with GreenStone president and CEO, Dave Armstrong, where he shares his opinions on the agriculture industry and takes questions from GreenStone customers.

Youtube: http:// www.youtube.com/user/GreenStoneFCS

GreenStone’s YouTube page is your one-stop-shop for all videos related to GreenStone. We will

post video clips used for our Open Fields Blog with GreenStone president and CEO Dave Armstrong here, as well as videos from various events we attend.

LinkedIn: http:// www.linkedin.com/company/greenstone-farm-credit-services

For those interested in connecting with us in a more business-like forum, we have created a LinkedIn page. On our LinkedIn page you are able to get an overview of GreenStone’s products and services and connect with GreenStone staff.

getting social…

Communication Preferences Systemwww.greenstonefcs.com/communicationpreferences

Quarterly publications like Partners provide an outlet to share important news and views about the agriculture industry to our customers and now, for the first time, Partners will be one of many items available via an email subscription.

GreenStone recently launched a Communication Preferences system that is designed to allow customers to select how they receive a variety of marketing communications. Customers are able to select one of three methods to receive marketing communications: email, standard mail or both, email and standard mail.

“The new Communication Preferences system is an important initiative that will help GreenStone better serve our more than 21,000 members,” said Melissa Rogers, vice president of marketing and public relations. “With the option to receive email subscriptions of GreenStone marketing communications like Partners, our customers will be able to stay informed on industry news on the go, while not having to slow down from their busy lifestyles.”

The Communication Preferences system will allow customers to choose if they would like to receive Partners and the Country Minute via email subscription. A new email, called the GreenStone Monthly Update, will also be available in addition to Crop Insurance Alerts

and Notifications, Annual Report and Annual Meeting Information Statement, and GreenStone Career and Internship Postings.

After making the selections, customers will be sent an email verifying their subscriptions. Once verified, subscriptions will begin arriving conveniently in the customer’s email inbox. In addition to customers, non-customers will also be able to register to receive marketing communications to learn more about the products and services offered by GreenStone.

Sign up today! Visit: www.greenstonefcs.com/communicationpreferences.

tell us how you want to stay informed, and sign up to receive a variety of communications by email!


NEWS UPDATE

greenstone Promotes Agricultural industry in michigan’s capital city

GreenStone recently participated in Michigan's Ag Day at the Capitol. To get the day started, GreenStone and Michigan Farm Bureau (MFB) co-sponsored a live radio remote of the Tony Conley Show on WILS 1320 AM prior to the Ag Club breakfast. Several GreenStone and MFB executives and industry leaders were guests on the show, including Frank Engler, chairman of GreenStone’s board of directors, and president of MFB, Wayne Wood.

Later in the day, representatives from several commodity and agriculture groups were in attendance at the state Capitol building to promote their respective commodity and showcase Michigan’s agricultural industry. Many members of both the Michigan House of Representatives and the Michigan Senate visited this well attended event to learn more about agriculture in Michigan and sample a variety of products produced in the state. The event also included an impromptu visit by Michigan Governor Rick Snyder, who visited each booth and spoke with various commodity representatives.

To close out the day, GreenStone hosted a legislative reception in downtown Lansing. The event allowed members of GreenStone’s board of directors and executive team to meet with key state policymakers to discuss the challenges facing the agricultural industry and members of the cooperative.

“This is the second year that we have hosted legislators following Ag Day at the Capitol; it gives us a great opportunity to network with those key decision makers that are writing and

shaping policy that affects agriculture,” said Armstrong. “As an industry, we are very fortunate to have elected officials who are cognizant of agriculture and the important role that it plays in Michigan’s economy.” For photos and videos from these events, visit our Facebook page: http://on.fb.me/GreenStoneFacebook.

GreenStone Farm Credit Services celebrated National Ag day on March 8 at the 2012 Michigan FFA Convention. GreenStone partnered with the Michigan Farm Bureau to host a special reception honoring supporters of the Michigan FFA Foundation before presenting the Michigan FFA Foundation with a check for $25,000 during the State FFA Convention session. GreenStone President and CEO,

Dave Armstrong, was on-hand to make the presentation.

“Supporting the FFA is a natural fit for GreenStone,” said Armstrong. "Future leaders of America may be a more fitting title for the FFA. These young people are incredibly passionate about agriculture; I know our industry is going to be in good hands for years to come.”

Armstrong was also honored by the Michigan FFA Foundation for his dedication and service on the group’s board of directors. He was honored with a replica of Michigan’s Agriculture Heritage license plate that he was instrumental in developing during his tenure as chairman of the board for the Michigan FFA Foundation.

greenstone Pledges $25,000 to michigan ffA foundation; Armstrong honored

NEWS UPDATEsPring 2012


NEWS UPDATE

greenstone’s Annual meeting Approaching

GreenStone’s annual meeting is slated for Tuesday, April 24 at 2:00 p.m. at the Corporate Office in East Lansing, Michigan. Stockholders are invited to attend and participate in the approval of 2011’s Annual Meeting Minutes, candidates for the board of directors in regions five, six and seven, and candidates for the 2013 Nominating Committee for all regions. Tours of the corporate office building will be available at the conclusion of the meeting.

Jones Promoted to senior vice President of greenstone’s commercial lending unit

John C. Jones has been promoted to senior vice president of GreenStone Farm Credit Services’ commercial lending unit. Jones assumed his new role on March 1, following the retirement of longtime GreenStone employee, Rick Schroeder.

As the senior vice president of GreenStone’s commercial lending unit, Jones will manage a portfolio that includes approximately $1 billion of loan commitments. He will also be responsible for expanding the organization’s commercial lending opportunities with eligible agri-businesses, other

Farm Credit institutions, commercial banks, insurance companies, and other agricultural finance firms. In addition, Jones will oversee and help to execute marketing plans targeted at large agriculture producers.

“John’s experience in GreenStone’s commercial lending unit will help make his transition into this new role seamless,” said Jack kelly, executive vice president of customer delivery. “During his time at GreenStone, John has shown he is an exceptional leader and I am confident he will continue to provide our customers with the care and quality service they have come to expect from GreenStone.”

“I am eager to meet the challenges that this new role will bring,” said Jones. “I am proud to have the opportunity to lead a great team of professionals who are all extremely passionate about the agricultural industry and our customers.

“I am also very fortunate to have been able to work with and learn from many great teammates throughout my tenure at GreenStone.”

Jones, a veteran GreenStone employee, has more than 25 years of service with the cooperative. He most recently served as a commercial lending unit vice president and has held a variety of positions during his tenure, ranging from credit analyst to financial services officer.

GreenStone FCS,

“[Tracy Jelinek] is very pleasant to work with, plus all of the other girls in her office Jessica, Gina and Judy.” (Jessica Nicol, Gina Siegrist, Judy Knockeart)

“We are building a new home and these women have been so very nice. My husband and I think they all need a raise.”

— Rodger & Marge Reinke North Branch, MI

GreenStone FCS,

My wife and I wanted to drop a note about the success and enjoyment we got working with Mike Forst and his assistant Kerrie Held out of the Manitowoc, WI GreenStone office. We honestly don’t have one bad thing to say about the service, communication, and outcome of the refinancing we did with Mike. We were extremely happy with the results and the advice and intelligence demonstrated by both Mike & Kerrie.

I will be referring GreenStone to my friends and family because of Mike & Kerrie, but also because it looks like you have a good thing going with your company.

Thank you!

— Brad Weber WEL Companies Sales Development Coordinator

candidcomments...

have something to share? Submit your "Candid Comment" to [email protected]


DIRECTORS' PERSPECTIVE

lynn gould The last few years farmers have benefited from the rising prices of agricultural commodities. The profit margins have been beneficial even with much higher variable input costs, including land costs and rental rates. This rapid inflation makes it a larger challenge for young, beginning and small farmers to get started or to expand. Add to that the uncertainty of 2012, 2013 and beyond—will we have $4.00 or $8.00 corn? We, as farmers, must realize we are in the some very volatile times regarding the world economic situation. We could see slight increases in commodity prices, stability, or substantial reductions while inputs remain at record high levels. This may be a time to be locking in profits

when available even though prices could go a little higher. It could also be a time to pay down debt.

Young, beginning, or even small farmers joining the

industry might find value in looking around at some well-established operators and recalling how they arrived at their current status. I’d suggest spending a few minutes discussing the current economic situation with one or more of these farmers to get their perspective. A lot could be learned when you find out how many paid the highest price for their assets (land and machinery) v. the number who watched and were prepared for opportunities when they arrived. Remember, winning a bidding battle or having the best equipment doesn’t mean you will be a survivor when the smoke clears.

young, beginning and small farmers together account for

approximately 34 percent of greenstone’s total outstanding loan volume. we are proud of these individuals, and of the important role they play in the future of the agricultural industry. that is why we strive to meet the unique needs of these driven producers and are committed to supporting efforts to prepare them to successfully compete in a highly competitive global marketplace.

with over 90 years of combined farming experience, three directors share some of what they have experienced in their farming career and shed a light on the advice they pass on to other young, beginning or small farmers.

young, beginning and small farmer Advice


DIRECTORS' PERSPECTIVE

david rakowski A year or two ago I found an article in our statewide farm paper that gave the results of a brief survey done by Impact Consulting Group, LLC for a presentation they were going to do before a group of bankers in Wisconsin. In summary, these are some of their findings:

"Farming is not just a way of life, it's a business. Because this is your work, take time for your family or family related activities such as school, church or recreation. Don't become a workaholic. Balance your life's activities."

This business of agriculture is a great life and lifestyle. Enjoy the journey.

brent wilson We are presently implementing a transition plan on our farm. We have spent several years with an independent firm who has helped us walk through this process. We did everything from personality profiles to goals, mission statements and farm financials. This process was very important and we made sure to keep spouses informed.

We have two sons who are farming with us. Our oldest, Tyler, is presently a partner in Wilson Centennial Farm, which is the operating entity. His strength is in working with dairy nutrition and cow management. Our other son, Ben, works off the farm as an agronomist for a local company. His strengths

are in the area of the cropping entity. When they decided they wanted to be a part of the family farm, the one thing I encouraged them to do was to go away, get an education and work for another company in order to bring additional value and expertise to our farm operation.

Recently we added a grain dryer system and irrigation. Both of them were instrumental in developing and researching those systems. Each step of the way we met with employees, professionals in the field and held impromptu family meetings. I have allowed them to make major decisions without second-guessing them. Open, honest communication on everything is essential.

university of wisconsinOne scholarship will be awarded to an incoming University of Wisconsin freshman that has selected a major preference in the College of Agriculture and Life Sciences. Applicants must meet specified criteria and submit a completed application form to GreenStone by June 1.

michigan state universityFive scholarships will be awarded to deserving incoming freshman that have applied to Michigan State University (MSU)and have selected a major preference in the College of Agriculture and Natural Resources. MSU will automatically send

applications to eligible students. Completed applications are due to MSU by April 16.

For additional scholarship information, eligibility requirements, or to print out a University of Wisconsin application, visit www.greenstonefcs.com/scholarships.

GreenStone Farm Credit Services is proud to offer six $2,000 scholarships to graduating high-school students who are pursuing their agricultural interests at the collegiate level.

GreenStone’s scholarship program aims to assist deserving students with continuing their education in order to prepare for a career in production agriculture or agribusiness.

GreenStone Scholarship oPPortunities

YBSF FEATURE


agenson grew up 45 miles west of Green Bay in Bear Creek, where his parents, Jerry and Sue, bought and established a 250-acre farm. They slowly expanded the operation over the years, while raising hogs. Their oldest son, Chris, now 43, joined the operation forming a partnership in the mid-1990s. The farm started a transition from hogs to steers in 1991 and the last load of hogs went to market in 1999 selling for a paltry 12 cents a pound.

Returning to His Roots

wby Jennifer vincent

Matt Wagenson has a true appreciation for farming, but it took walking away from it for him to reach that realization...


It was the same year Matt graduated from high school and sought work off the farm at Equity Livestock in the sale barn. “At first, it was nice being off the farm,” he says.

He put a year in and then went to work for Packerland Packing buying cattle for a year. Matt came home to farm for a stint before leaving again to take a job at Peck Meat Packing.

“I really started to miss farming,” he says. “There’s a lot more reward in planting a crop in the spring, working all summer and harvesting in the fall, then getting a pay check each week. It’s more gratifying to put cattle in every winter, feed and care for them, and in the fall see them go to market.”

In 2005, Matt, who is now 31, returned to the farm knowing that’s where his heart and future lies.

“It’s nice working with my dad and brother,” Matt says. “Dad, who is 72, is in Florida right now. He’s more of a bookkeeper these days. In the spring he’s a gopher, who keeps us rolling with seed and fuel. In the fall, he’s in the combine.”

The brothers are more like laborers, Matt says. “We do a mix of everything —we don’t separate jobs.”

Matt is quick to admit his dad and Chris had the “ball rolling” on the farm way before he came back. However, today he’s fundamental to the operation. “All three of us sit at the kitchen table with the seed guy and talk about what we want to accomplish,” he says. “It’s a true 33.3 percent decision. Of course, dad is the elder and still has final say on certain things, but there are other things he looks to us on, especially with equipment. There’s grumblings, of course, but for the most part, it’s all three of us deciding on where to spend money.”

That table is also the place where new

ideas are born. “We discuss things and we’re not afraid to try new things,” Matt says.

That doesn’t mean the Wagenson family takes spending money lightly. The farm has slowly acquired more acreage and forged relationships for rental ground. Jerry had doubled the farm acreage to 500 acres when a sauerkraut factory approached the family in the mid-1990s about swapping land. The factory wanted land for rotation because cabbage can be grown once every five years.

“We went from farming 500 acres to 1,200 acres within a year,” Matt recalls. “That’s about the time that Chris came on board.” Since that time, the farm has acquired another 700 acres.

In 2009, the kraut factory sold 500 of those acres to the Wagensons, who still rent additional ground from the factory.

In total, the Wagensons will plant 1,100 acres of corn and 800 acres of beans within a 20-mile radius and raise about 200 head of cattle. “We’re

always looking at land, but we’re not just grabbing it—we’re looking for profitable land,” he says.

The Wagensons have worked with GreenStone Farm Credit Services to make many of their expansions possible.

GreenStone financial services officer, Dan Gitter, has worked with Jerry for close to 30 years and continues to serve the family with operating loans for their beef and grain operations, as well as capital purchases.

Like many farms, “It’s not always been easy going for them,” Gitter

YBSF FEATURE

there’s A lot more rewArd in PlAnting A croP in the sPring, working All

summer And hArvesting in the fAll, then getting A PAy check eAch week.

says. “But they have conservatively managed and made careful, thought-out decisions. They were not without mistakes, but they learned from those mistakes—learned to make the next decision a better one. In growing the business, they are focused on earnings and growing net worth. Because of that, they have turned the farm into a strong business. Matt knows there is a lot of responsibility in running a business of their size, and he doesn’t take that lightly.”

The Wagensons have turned to GreenStone for equipment purchases. “Both Chris and I like iron,” Matt says. “It’s nice to have good equipment and we both work to maintain it, especially Chris – he’s not afraid to tackle anything in the shop and can fix about anything.”

Matt describes Gitter as a “crucial person,” for his advice on purchases. “We have a good rapport with Dan; he would tell us if our equity to debt ratio is there or not. We’ve known him a long time. He’s not just a lender, he’s a friend. He’s a very good accountant and is very trustworthy.”

However, not all large farm purchases are financed. In 2007 the Wagensons decided to put in a new corn tower dryer that allowed them to go from 500 bushels an hour, to 1,000 bushels an hour. That purchase came from the checkbook. “We also added a large grain leg. Our wet leg can unload a semi in 10 minutes, allowing us to keep up with the combine. We could have gotten by with the old system, but decided to go this route to improve efficiency,” Matt says.

The farm has increased storage, from 14,000 bushels in the 1980s, to 150,000-bushel capacity with expansions over time, including three additional bins and some flat storage.

strides forwardThe Wagensons have stuck to conventional tillage to crack open

and dry its low bottom land, but have progressively gone to assisted steering. “At first we had a yield monitor on the combine measuring moisture and yield,” Matt says. “Then we put a light bar in, and now the tractor drives itself—all over a five year period.”

The Wagensons’ 400-horse-power combine is driven by satellite. “The mapping data is helpful for variety selection for the upcoming year,” Matt says.

Matt doesn’t see an urgency to grow the farm at this point; however, he is growing a family. He married his wife, Elisha, in July of 2011 and they’re expecting their first child this spring.

“My priorities have shifted some… from thinking about new tractors to maybe having something for kids,” says Matt, who recently bought a house using GreenStone financing.

In total, Jerry, Chris, and Matt own about 1,500 acres and at the end of the day they want to be known as stewards of the land. With good tillage practices, tiling of farmland, and prudent fertilizer and herbicide practices, the Wagensons’ goal is to leave the land in better condition than when they got it. “The better you treat the land, the better it’s going to treat you.”


YBSF FEATURE

Q: When you were eight, what did you want to be when you grew up?

matt: “ A farmer. You want to do what your dad does.”

Q: When did you first realize that you wanted to farm for a living?

matt: “ At about 25 years old. Working away from the farm and realizing that there is more rewards at home with family and farming.”

Q: Who is your mentor; Who do you look up to?

matt: “ My dad and brother both. Dad’s an amazing planner. I admire his ability to keep things straight, and I appreciate my brother’s work ethic."

Q: What is the biggest challenge for young, beginning, or small farmers today?

matt: “ Getting established. If you don’t have what I have, a foot in the door, there is poor success rate. You need someone willing to help you, another generation to get established.”

Q: What advice would you give to young, beginning, or small farmers getting started today?

matt: “ Something dad has always said, ‘it takes a lifetime to build a reputation and 10 seconds to ruin it.’ Be a good farmer, practice good farming practices.”

STRAIGHT tAlk


The panel was comprised of several different types of producers, ranging from dairy farmers to timber producers and cash croppers, and included GreenStone customers as well as non-customers. The discussion was moderated by GreenStone board of director member David Rakowski, and was designed to help GreenStone’s board of directors and senior management better understand the needs of today’s young farmer and what they are looking for when searching for a lender.

“The young farmer panel discussion hosted by GreenStone gave us great insight into the challenges this segment of farmers is facing each and every day,” said Rakowski. “We appreciate each of the participants taking time out of their busy schedules to visit with us and help us to understand more about their operations.”

While interest rates were cited by all of the farmers in attendance as an important factor in selecting a lender, many of the participants were looking for more. Building a solid relationship with their lender was a constant theme throughout the discussion. Many young farmers consider their financial services officer (FSO) to be an integral part of their team and look to them to provide financial guidance on a broader scope of issues facing their operation.

Building a trusting relationship with their FSO is something that everyone agreed is critical to the success of their operation. Having a FSO who understands the cyclical nature of the agriculture industry and will be there to support the producer in both good times and bad is of utmost importance. Finally, an FSO with vast industry knowledge is also considered an invaluable resource for producers.

In addition to knowledgeable and experienced staff, interest rates are also important to producers when selecting a lender. GreenStone is able to offer economical interest rates and a unique patronage program, setting the cooperative apart from other lenders. It was encouraging to hear the young farmers recognize

the value of the patronage program. They agreed the program helps GreenStone manage risk and build capital, which in turn allows the cooperative to offer competitively priced interest rates.

Communication and technology was also a hot topic of conversation during the panel discussion.

Many of the participants used a variety of communication methods to keep in touch with their lender and FSO. Email and text messages were popular for quick information exchanges and provided the producer with an opportunity to share the communication with partners and/or spouses and review it when it fit their schedule. While email and texts are great for short, simple messages, everyone was in agreement that maintaining a more personal method of contact is also important. Farm visits and phone calls are critical to building the strong relationship desired by the young farmer.

Following the panel discussion, participants were provided with an opportunity to share feedback on the meeting with the GreenStone staff. Overall, everyone appreciated the opportunity to meet with GreenStone and it allowed them to gain a better understanding of the cooperative and what it has to offer. The meeting also showed the attendees that GreenStone’s executive team is immersed in agriculture and has an appreciation for the challenges young farmers are facing today.

The young farmer panel was a very valuable conversation for GreenStone’s board of directors and the producers in attendance. These young farmers not only represent the next generation of farmers and our customers, but also account for 21 percent of GreenStone's loan numbers. Young farmers are important to our business and our industry, we are glad to have opportunities like this to make sure we are providing them with the most valuable resources.

YOUNG FARMER PANEL

2012 young farmer Panelgreenstone farm credit services recently hosted a panel discussion with eleven young farmers from across michigan and northeast wisconsin. the meeting was held at greenstone’s east lansing, michigan, headquarters and focused on a variety of topics facing young farmers and their operations.


GOVERNMENTAL RELATIONS PROGRAM

what is a PAc? A PAC is the shorthand term for a “Political Action Committee,” which is a vehicle to allow a company or trade union to sponsor, solicit, and aggregate personal contributions to a fund used for political purposes from individuals associated with the sponsoring organizations (employees, executives, officers, etc.). Generally speaking, the funds collected by a PAC are used to make contributions to attend fundraisers and/or contribute to a candidate’s election committee.

PACs can be organized under state or federal law. In Michigan, PACs are technically known as a “separate segregated fund.” A PAC, or a separate segregated fund, is an exception to Michigan’s statutory ban on political contributions by corporations, unions, and federally-recognized Indian tribes. Here, the PAC funds are actually from individuals, but the corporation, union, or tribe can spend resources to solicit, maintain and administer the PAC itself.

what is a super PAc? As stated earlier, many states like Michigan and Wisconsin have a statutory ban on direct political expenditures by corporations and by trade unions. In other words, a corporation cannot contribute directly to a candidate’s committee. Moreover, a corporation under such laws is also prohibited from using corporate resources to buy independent advertising which advocates for or against the election of a candidate.

The now almost 20 year old Michigan Supreme Court case of Austin v. Michigan Chamber of Commerce essentially upheld Michigan’s ban on the use of corporate and union treasury funds to directly support a candidate or to expend funds supporting a candidate’s election or defeat. Despite this, many corporations have been generally allowed to use treasury funds to pay for “issue advocacy.”

What’s the difference? In short, a fictional Corporation X can buy television advertising which supports the President’s position on healthcare, but it cannot buy television advertising which advocates voting for his re-election.

the PAc mentality

if you have been following the ongoing republican Presidential primaries, you have probably heard a lot about so-called “super PAcs.” we thought we would take this chance to provide a brief primer on the role of PAcs, super PAcs, and the mi greenstone PAc in the upcoming 2012 election.


GOVERNMENTAL RELATIONS PROGRAM

The U.S. Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission was a game changer. The Supreme Court held in part that a corporation or a trade union has a right of political speech which in turn allows them to make direct expenditures for political purposes.

In short, corporations and unions are no longer restricted to just administratively supporting a PAC or engaging issue advocacy. They can now also use corporate or union resources to directly advocate for or against the election of a specific candidate so long as it is independent and not coordinated with or funneled directly through the candidate’s campaign.

To go back to the example cited earlier, fictional Corporation X can now purchase advertising to support the President’s position on healthcare and to advocate for his re-election. However, such spending cannot be coordinated with the President’s campaign. Moreover, Corporation X is still prohibited from directly contributing to the President’s re-election committee.

So what is a Super PAC? A Super PAC is a committee which is generally formed to support a specific candidate for office, commonly a federal office such as President. The officers of the Super PAC then solicit funds from corporations, trade associations, and unions which is not personal money (like a traditional PAC described earlier), but money directly from their respective treasuries.

The Super PAC cannot coordinate its efforts with any candidate, but it is often headed up by political operatives who have had a past affiliation with

the candidate they support. The Super PAC then buys advertising to support the election of a particular candidate in a given Presidential primary and/or to attack a rival candidate.

what is the mi greenstone PAc? The MI GreenStone PAC is not a Super PAC. It is a traditional PAC or separate segregated fund organized under Michigan’s Campaign Finance Act.

MI GreenStone PAC does not solicit corporate funds to be used for political purposes. Consistent with state law, limited corporate funds are used to solicit and administer contributions from GreenStone executives, officers, board members, employees and members. Under the supervision of the MI GreenStone PAC board, the funds collected are then given to candidates to support their election for state office.

MI GreenStone PAC is bi-partisan. It is intended to advance and promote the

interests of GreenStone’s members in the state political process. As a result, MI GreenStone PAC focuses primarily on legislative leadership, legislators who serve on key committees such as Agriculture or Banking, and legislators or candidates who come from areas in which GreenStone has facilities.

THE ROLE OF SUPER PACS THIS FALL?

Super PACs will very likely play a large role in the race for federal offices such as President, U.S. Senate, and the U.S. House. It is less clear how large a role Super PACs will play in the race for the State seats, such as the 110 seats in the Michigan House. A prediction would be that several Super PACs will emerge to play a role in State races, but that there could be a bit more caution in this area as compared to what we have seen from Super PAC activity supporting candidates for federal offices.

mi greenstone PAc is bi-PArtisAn. it is intended to AdvAnce And

Promote the interests of greenstone’s members in the

stAte PoliticAl Process.

GUEST COLUMN


Unfortunately, the recent proposal by the Environmental Protection Agency (EPA) does not seem to have helped relieve this issue.

Agricultural groups are not happy with the EPA’s October 21, 2011 proposed NPDES CAFO reporting rule. Those concerned feel that the EPA has simply overstepped its authority as it relates to regulation of CAFOs that do not discharge.

The EPA’s previous attempts to regulate CAFOs that did not discharge nor propose to discharge (these are the key terms) were thwarted in the Waterkeeper Alliance v. EPA and National Pork Producers Council v. U.S. EPA cases. This most recent proposed reporting rule reflects a May 25, 2010 settlement the EPA reached with environmental groups.

confused yet? It might be helpful to take a step back. The NPDES permitting program falls under the 1972 Clean Water Act (CWA). The CWA essentially made it unlawful to discharge any pollutant (without a permit) into surface waters, and established a permitting program for those who would discharge. The NPDES

program regulates “point source discharges.” According to the EPA, a point source is “any discernible, confined and discrete conveyance, including…concentrated animal feeding operations…from which pollutants are or may be discharged.”

Let’s return to the October 21, 2011 proposed rule. Under this proposed rule, the EPA is requiring information to be reported from all large and medium CAFOs, regardless of whether or not they do or propose to discharge. This is significant because there are about 20,000 CAFOs that fall in that range nationwide.

If a CAFO is not proposing to discharge, how is the EPA justifying this requirement? The EPA states that its authority to collect information under the CWA is broader than the EPA’s authority to require and enforce a requirement to apply for an NPDES permit.

What information does the EPA want to collect? Under the proposed rule, CAFOs are to report information such as CAFO location, owner contact information, NPDES permit information, type and number of animals, and descriptions of land available for manure application.

Agricultural groups are concerned with what the EPA will do with the data. The EPA has stated that following receipt of information from state regulators and other sources, it would publish a list of CAFOs. This is a potential concern for CAFO owners, especially in light of some of the recent animal rights activist attacks on CAFOs. All unlisted and listed CAFOs would then be required to submit the requested information.

so, where are we now?Agricultural groups provided unambiguous comments about their viewpoint to the EPA during the reporting rule comment period. The EPA stated that it is committed to take final action on this proposed rule by July 13, 2012. All we can say is stay tuned.

About the Authors

Alan Hahn is an Environmental Professional and Business Development Manager at The Dragun Corporation in Farmington Hills, Michigan. Amy Owen, an Environmental Engineer-in-Training, also works at The Dragun Corporation.

The opinions stated herein are not necessarily those of GreenStone FCS.

ePA wants more information from livestock Agricultureone of the more confusing and contentious environmental issues affecting concentrated Animal feeding operation (cAfo) owners has been the issue surrounding the national Pollutant discharge elimination system (nPdes) program.

TARGETINGEPA

07.2012

DATA CAPTURE


STAFF PERFORMANCE

Platinum Award winners

Traditional FSOsIan McGonigal, Grand Rapids, MI David Meyering, Cadillac, MIGordon Tulgestke, Traverse City, MIWayne Sevilla, Bay City, MILaurie Schetter, Manitowoc, WIkevin Bock, Bay City, MI

AgriConsumer FSOsCynthia Cole, Ionia, MIkim knoerr, Bad Axe, MIScott Sharda, Grand Rapids, MI

Commercial FSOGayle Olson, Appleton, WI

RegionsBert Sheridan, West Michigan

gold Award winners

Traditional FSOsPeter Hirschman, St. Johns, MIMichael kennedy, Ionia, MIDuane Paturalski, Berrien Springs, MIRosanne Bloomer, Ann Arbor, MIJim Byars, Mason, MIDavid Ballman, Lapeer, MI

AgriConsumer FSOsLindsay Garrison, Adrian & Monroe, MISteve Schaper, Saginaw, MIMichael Forst, Manitowoc, WI

Commercial FSOLarry Urban, Allegan, MI

Accounting & Tax Specialistskelly Tobin, East Lansing, MICindy Temple, Bay City, MIBarb Martell, Sturgeon Bay, WI

Crop Insurance SpecialistsBrandon Walters, Charlotte, MIJason Clancy, Caro, MITravis Bratschi, Traverse City, MI

RegionsBen Mahlich, North Michigan

the three additional awards presented during the Awards banquet were:

Rookie of the Year Awardkim knoerr, Bad Axe, MI

Most Improved AwardLuke Bakker, Ionia, MI

Top Cross Sell BranchEscanaba, Michigan

GreenStone recently recognized its “best of the best” in sales performance for 2011 with Circle of Excellence awards.

The Circle of Excellence program is a way to recognize and reward those lending and financial services staff members who are the top performers within the association. Various criteria including loan and revenue growth and number of new customers are used to measure performance.

Platinum awards were presented to the top 10 lenders on GreenStone’s staff as well as the regional vice president with the highest performing region. Gold awards were given to the next 10 lenders and the second place regional vice president. The top three crop insurance specialists and top three tax and accounting professionals were also recognized with a Gold Award. Additional awards were presented to the Most Improved Lender, the Rookie of the Year, and the branch who had the highest percentage of cross sales between lending and financial services.

Each winner, along with the support staff for all Platinum Award recipients, was recognized at the sixth annual GreenStone Circle of Excellence awards banquet on February 24 in East Lansing, Michigan.

The following GreenStone staff members represent the 2011 Circle of Excellence Platinum and Gold award winners.

staff recognition

3515 West RoadEast Lansing, MI 48823

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