Partners - Summer 2009

Summer 2009

Summer feature story...Reinventing the Family Farm!

FEATURES

CONTENTS SUMMER2009

It’s hard to believe that summer is in full swing and that the first half of 2009 is now

behind us…amazing how quickly time can pass us by. We hope that you all are finding

an opportunity during this busy season to enjoy some of summer’s pleasures…warmer

temperatures, longer days, and gatherings with friends and family. We also hope you

will take a few moments to enjoy the latest issue of Partners, which features results of

our recent Board of Director elections, information on upcoming events, and a guest

column that touches on succession planning. Happy reading…and as always, your

comments and ideas are welcomed.

2| CEO Comments

3| Market Outlook

6| Candid Comments

9| Director’s Corner

15| News Update

11| Young, Beginning, and SmallFarmer Focus

As the soybean fields surroundingtheir family dairy farm turned tosubdivisions and the cornfieldsturned to strip malls, Jackie andSteve Good let their imaginationsrun as they looked for ways to keepher family’s farm from becominganother housing development.

Editor’s Note

Editor’s Note

Published by

COLUMNS

4| Starting from Scratchby Dr. David Kohl

7| What IS Succession Planning,

Anyway?

by Barbara Dartt, DVM, MS

IN EVERY ISSUE

hat a “spring” weexperienced…if that’s what

you want to call the weather we hadduring the planting season.Temperatures were below normal whileprecipitation throughout most of ourterritory was well above normal. All ofthis added to the anxiety and angstmany producers are feeling about theeconomy and the overall decline inprofitability forecasted throughout

2009 for agriculture as well.

That being said, the overall economic environment seems tohave stabilized for now with glimmers of light shining through insome areas while others remain mired in financial turmoil andstruggle. Headlines in a recent issue of the Wall Street Journal helpillustrate this dichotomy with the following:

1. “Private sector shed 532,000 jobs”

2. “Car sales show signs of steadying”

3. “Banks telethon is nearly over – Big banks have raised at least$85 billion in just the past month through selling shares toinvestors and other fund-raising”

4. “Refinancing boom aids lenders – The refinancing boom hasbeen good to mortgage lenders. Banks' profits on mortgageoriginations jumped in the first quarter”

5. “Court to hear challenge to Chrysler, Fiat pact”

And, of course, we all know that General Motors just recentlyfiled bankruptcy.

As I have said before, these are uncertain times at best. It is easyto become paralyzed in the midst of so much turmoil where manyof the “old” rules seem to no longer apply. However, I wouldargue that many of the “old rules” DO apply and the fact that theyhave been dismissed over the longest running period of prosperityin our history (1990s – 2006) is the reason we find ourselves inone of the deepest recessions since the 1930s. Things like notspending more than you can afford, being cautious in the use ofdebt, not investing in things you really don’t understand, savingfor a “rainy” day, keeping your investments diversified, and notbeing too greedy are all things that need to be taught andpracticed to help save us and future generations from future “bigboom” followed by “big bust” cycles.

While the economy appears to have found a bottom for now,we are not out of the woods. Our government, along with othercountries, has reacted very aggressively to insure that theircitizens have not had to endure a precipitous drop in their

standard of living like that which occurred during the “GreatDepression.” Unfortunately, the bold actions taken today to savethe “patient” may only create a more aggressive and difficultcondition to treat in the future called inflation. Our country, likeothers around the world, has spent heavily to mitigate the impactof the current financial crisis. The U.S. alone now has the highestfederal budget deficit in history of nearly $2 trillion. How will thisbe repaid? Some level of monetizing this debt will undoubtedlyhave to be done to get it under control, but this will lead toinflation and could very easily put us back on the fast track toanother big boom, ending in an even bigger bust! Time will tell,but each of us needs to do what we can to follow some of the “oldrules” our parents taught us and remember to always run for thedoor the minute someone tells us, “…but it’s different this time.”

GreenStone and the rest of the Farm Credit System continue toweather the storm better than many firms and financial institutions.Our access to the credit markets is better than it was in Decemberof last year, but remains tenuous. The price we must pay as anational Farm Credit System for the funding we raise to loan to ourmembers has softened by about a half to one percent since the endof last year. Fortunately, the general decline in interest rates hashelped soften the impact of this premium to our members.

Year to Date Financial ResultsGreenStone continues to be in relatively good financial

condition despite its exposure to the ethanol, dairy, swine, andtimber industries. At the end of May, the association’s permanentcapital ratio was 12.77% vs. a budgeted 12.66%—and 12.85% inMay of 2008. The System minimum regulatory capital ratio is7.0%. Credit quality (loans that have significant creditweaknesses) has slipped from 1.59% adverse in May of 2008 to4.23% in December, and is now 5.32% at the end of May. Inaddition, non-accrual loans (loans in which the full collection ofprincipal and interest is in doubt) has increased from .68% a yearago to 2.34% in May. Loan delinquencies greater than 30 days areup slightly over last year from 1.14% to 1.86% now. Outstandingloan volume is up nearly 10% over last year, but down by justover .5% since December 2008. Earnings are also behind planyear to date and compared to the same time last year. Pretaxreturn on assets was 1.4% at the end of May versus a budgetedROA of 1.71% and 1.83% in May of last year. This is due toprovisions for loan losses taken (primarily in the ethanol sector)in the first quarter exceeding budget by $7.3 million. Had theseprovisions not been necessary, net earnings year-to-date would be$1.44 million better than budgeted.

Based on our current view of the horizon, I believe we haveappropriately identified the risk in GreenStone’s loan portfolio andare effectively managing it. Financial results thus far in 2009 arenot what we would like to see, but could be much worse given

CEO Comments

by Dave Armstrong

CEO Comments

W

Summer 2009 PARTNERS | 2continued on page 5...

n Friday June 12, corn ended the session on a very weak

note, trading in a 22 cent range to as low as $4.20. Since

the December lows were placed, all these breaks have been met

with Fund buying and many analysts believe this break is no

different and they expect to see continued buying interest with a

topside projection of over $5.00. If you are going to believe

these predictions, you have to understand who the buyer is. It is

not the livestock feeder or the ethanol producer who continues

to struggle with non-existent or negative margins…it is the

speculator who continues to look for bargains in a market that

offers many.

The U.S. crop is entering its important growth phase. I would

expect crop rating to improve as no harmful weather seems to

be on the horizon. You should expect corn price to fade with

improving conditions with the chance of one more spike to the

$5.00 range on speculator interest. If July corn futures cannot

take out $4.50 on the next move higher, then the seasonal high

will have been formed.

Profit taking in the soybean market has been the main feature

recently. Funds have been heavy sellers but continue to hold

large long positions. Cash basis levels are falling as well. The

trade is firmly fixed on the very tight U.S. soybean supply and

that has obscured the fact that U.S. soybean acres are up and

large production is expected. That will not alter the fact that we

need every bushel for the remainder of 2009/2010. Regardless of

where price is today, demand is still good and until we see firm

evidence of demand rationing, price will remain strong. This

market will not die; traders will look for breaks to add to length.

The July 2008 high of $16.45 is a target for traders.

Wheat futures recently ended on a low note, along with the

other grains, with the lack of any fresh news. Funds have been

sellers. There seems to be support at the 50-day moving average

of $5.75. Look for funds to buy support and sell rallies. World

demand is low as most countries are using their own supply.

Look for some short-term support, but all-in-all the highs in the

wheat market should be behind us.

The U.S. Census Bureau reported pork exports for the month

ending April came in at a 6% decline from March. Despite the

decline, the number was ahead of most observers’ expectations.

A number of issues face pork producers; a slowdown in world

economic activity, the mislabeling of the H1N1 virus, and the

subsequent response of foreign end users in closing import

markets of U.S. pork. A silver lining is April’s Mexico pork

imports jumping 55% to 103,000 metric tons. On the other

hand, May exports to Mexico are expected to be down. Pork

prices fell sharply during May; we likely need another quarter or

two to see if pork exports will improve.

The Beef trade was not jolted by the H1N1 event. April

exports exceeded both prior month and year numbers. Seasonal

demand increase is expected in the coming weeks with declining

supplies…any rise in U.S. beef exports will support price.

Market Outlook

Ken Lake is the Originations Services Coordinator for Michigan AgriculturalCommodities, Inc., working out of its Global Ethanol office in Riga, Michigan.He can be reached at 517-486-6190 ext. 107, or at [email protected].

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

PARTNERS Summer 20093 |

By Ken Lake

O

OUTLOOK

SUMMER 2009 MARKET

Summer 2009 PARTNERS | 4

Farm Management

have heard many people say that it is virtually

impossible to start farming or ranching from “scratch”

because of the capital intensity, complexity of the agriculture

industry, and global competition. The following story was

provided by a lender after I asked for “success stories” during a

series of webcasts I conducted with producers in a Farm

Business Management Education Program.

It all began with a 15-year-old boy whose family was not

involved in farming, but he lived on a rural building site. He did

chores and worked in the summer for farmers in the area. Most

all of his earnings went to buy day-old heifer calves and the feed

they needed. By the time he was a junior in high school, he was

milking 17 cows in a rented barn with no pipeline or barn cleaner.

The summer he graduated from high school, he had the

opportunity to rent a 40-cow dairy with 160 acres of land. He

moved his cattle and small line of equipment he had purchased to

the farm and exchanged labor for the field work that needed to be

done. The two years he milked in the first barn, he continued to

buy heifer calves and raise them so he had nearly enough cows

and springers to fill the newly rented barn. He milked in this

facility for several years and continued to grow the dairy herd,

with a group of "outside cows" that were moved through the tie

stall barn for milking.

The farm was put on the market at a price that would not cash

flow for the young producer, so he looked for another alternative

and found a larger farm with an empty barn that could be rented

on a crop/livestock share agreement. After a couple of years he

was milking 80 cows, had a nice set of farm equipment, and 80

acres of land with very little debt. The farm he was crop/livestock

share farming on came up for sale. He purchased it and began

plans to build a 300-cow freestall barn and parlor. After numerous

declines from lenders, he obtained financing and built the facility

on time and on budget. Within a few months the freestall barn

was full of cows in milk and the unit continuously "beat" their

projections.

The unit is now milking 500 cows, has a strong financial

position, and a very competitive cost of production. The unit is

experiencing a "problem" now as their milk production has stalled

out at 93# and they can't seem to get to 95.

Several lessons can be learned from this story. This young

farmer was successful because he invested in productive assets, in

this case, cows. He utilized other producers’ fixed assets (buildings

and machinery) in exchange for labor, keeping his overhead costs

down. He knew enough not to get into debt “over his head” with

the first purchased farm, which demonstrates objectivity over ego.

He built his first barn on time and on budget, and beat his

projections. Even though he was turned down for credit, he never

gave up. His challenges in the future could be possible burnout

and balancing business and personal life.

Yes, you can get started from “scratch” and beat the odds.

However, it takes some “outside the box” thinking and working

with others to utilize resources. Take it a step at a time. It will be

interesting to hear if this producer will do the same for another

aspiring young producer in the future.

Comments?

Please send your remarks to [email protected].

I would like to know what you are thinking.

–David Kohl

I

Dr. David M. Kohl is Professor Emeritus of Agricultural Finance and SmallBusiness Management and Entrepreneurship in the Department of Agriculturaland Applied Economics at Virginia Polytechnic Institute and State University(Virginia Tech), Blacksburg, Virginia. He has conducted more than 3,000workshops and seminars for agricultural groups such as bankers, Farm Credit,FmHA, and regulators, as well as producer and agribusiness groups. He haspublished four books and over 400 articles on financial and business-relatedtopics in journals, extension, and other popular publications.


Starting fromScratchBy Dr. David Kohl


the current state of the economy at large.GreenStone, like the rest of the FarmCredit System, is weathering thiseconomic storm well and continues toserve its mission each and every day bydelivering a dependable, competitive, andconstructive source of credit and financialservices to rural America.

Industry and Economic OutlookAgriculture continues to experience

stress from prices that are below the costof production. The ethanol meltdownearlier this year appears to have stabilizedeven though many plants have either idledoperations, went out of business, or arestill operating at a small loss per gallon.GreenStone, as part of other lender groupsin various ethanol plants, has acquired anownership interest in three plants withone sale pending at or above previouslyestimated values. At least for now, webelieve the worst is behind us in thissegment of the portfolio. Unfortunately,the “protein sector,” particularly dairy andswine, also continues to struggle.

Economists and others continue topredict a return to $16-17/cwt milk by thisfall. In general, most of our dairycustomers have enough equity which willallow them to stay in business until pricesrecover. Yet, there are many who arestruggling during this difficult time andwill have to make some difficult decisionsabout the future viability of theirbusinesses. Swine producers are in asimilar situation as the dairy industry.While prices seemed to be recoveringearlier this year, the outbreak of H1N1 fluseriously set prices back to a level wheremany producers are losing $15-25 forevery hog they sell. While there continuesto be a light at the end of tunnel for dairyprices this fall, some experts believe theswine industry won’t see profitable pricesuntil well into next year.

Interest rates are now at historically lowlevels, due to the government’s

unprecedented infusion of liquidity into themarkets. Rates should stay relatively low aslong as the general economy languishes inrecession for the foreseeable future. Yet,once this massive injection of liquiditystarts chasing a limited supply of goods, asa result of recessionary contraction, themarket will turn its fear of recession intothat of inflation with a commensurate risein rates. Many believe now is a great time tolock in longer term interest rates ahead ofwhat could be a rapidly rising rateenvironment at some point in the future.

No one can ever precisely predictmarket cycles which is why it isimperative for all business owners(especially farmers!) to always rememberthe importance of equity in theirbusinesses and be realistic about theiroperation’s ability to generate earnings ingood times and bad.

Board UpdateGreenStone is very fortunate to have

such a fine group of individuals who arewilling to share their precious time inleading your association. In good times,they rarely get credit for the things most ofthe membership takes for granted i.e., adependable source of funds andcompetitive interest rates, but often catchthe brunt of criticism when things don’t goso well. I want to take this opportunity tothank all of our directors for their serviceand congratulate those who were re-elected to the board this spring. I alsowant to acknowledge and thank all thosemembers who ran not only for boardpositions, but Nominating Committeeseats as well. The foundation of ourcooperative System is based on grass rootsgovernance which cannot exist withoutcompetent and committed people who arewilling to run for positions to insure thatthe association has a deep talent pool fromwhich members select their future leaders.

The board is also currently in theprocess of selecting a new “Outside

Director.” Bill Oemichen, president andCEO of the Cooperative Network inWisconsin and Minnesota, resigned hisposition at the April board meeting. Billhas been an excellent board memberserving on the board of Farm CreditServices of Northeast Wisconsin beginningin 2002 and on the GreenStone Boardsince 2003 when FCS of NortheastWisconsin merged with GreenStone. Billmost recently served as the board’s“financial expert” and Chair of the AuditCommittee where he demonstrated a verybalanced, thoughtful, and detailedapproach to insuring the association wasin compliance with all required policies,procedures, regulations, and laws. Hispassion for the cooperative businessstructure, agriculture, and University ofWisconsin Badgers will be sadly missed.Please join me in thanking Bill for hisyears of service to GreenStone! I lookforward to continuing to work with Bill inhis role at the Cooperative Network ofwhich GreenStone is a member.

Details regarding recent election resultscan be found on page 18.

New Corporate Office BuildingAs I communicated to you in the spring

issue of Partners, your Board voted at itsMarch 2009 board meeting to moveforward with plans to build a newcorporate office facility near its currentoffice building in East Lansing. I ampleased to announce that the GreenStoneboard, at a special June board meeting,unanimously selected The Wieland-DavcoCorporation as the successful bidder tobegin construction of GreenStone’s newcorporate office facility. Wieland-Davco isa well-respected firm headquartered inLansing with over 50 years in theconstruction business. The Wieland-Davcoteam demonstrated a great deal ofpreparation, enthusiasm, and detail intheir bid for our project. The board wasalso very pleased with the fact that 60

...CEO Comments continued from page 2

percent of Wieland’s subcontractors will befrom the mid-Michigan area, furtherhelping to stimulate the local economy.

The new building will consist ofapproximately 77,000 square feet on 15acres situated approximately one quarterof a mile immediately north of our currentlocation just off West Road alongnorthbound U.S. 127. Construction isscheduled to begin as soon as possible inorder to have the steel structure enclosedby November with completion planned forSeptember/October of 2010.

While the board and managementunderstand the economic uncertainty thatsurrounds us today, we still believe this isan excellent time to move forward withthe association’s future space needs.Interest rates continue to be at historicallows, plus the cost to build the structureand excavate the site came in nearly 40percent below the original forecasts due tothe availability of contractors and a declinein the price of raw materials such as steeland concrete. We hope that the decision tobuild is viewed as a positive one by you,our members. The fact that GreenStone isin a financial position to maximize theopportunities this economy presentsspeaks volumes about its financial positionand long-term commitment to Michiganand Wisconsin agriculture.

I want to close my comments bywishing all of you the best and thankingyou for your business. We are strongbecause of members like you, a committedgroup of talented board members, and oneof the best Farm Credit staff teams in thecountry. Enjoy your summer!

CANDIDCOMMENTS:At GreenStone, we value our partnership with you and recognize the importanceof your input. By providing feedback, you help us to better deliver the productsand services you need in the manner you deserve. If you have comments you’dlike to share, please email them to [email protected] or mail to 1760Abbey Road, East Lansing, MI 48823, ATTN: Candid Comments. We look forwardto hearing from you!

A selection of recent comments received are included below.

I have been a client of GreenStone for over nine years now. I have beenblessed to have been working with Kim Cool over the years; she is the BESTat customer support regarding my land loan that I have with your company.I just wanted to let you know that it was because of the magazine that Ireceive from Kim that I was jolted out of my complacence regarding my loanrate and possible refinancing in regard to an article in it. I called Kim and shewas able to lower both my rate and decrease the loan schedule at the sametime. It was an outstanding experience and I just wanted you to know that itwould not have happened except for my reading of the article.I wanted to give you some positive feedback regarding Kim, the magazineand the superb customer support from your company. I will always highlyrecommend GreenStone Farm Credit Services to anyone that could use yourcompany's services now and in the future.Best Regards,Brad Gallup, Cadillac Branch Customer

Thanks so muchfor all the infor

mation you shared at this past

year’s

stockholder meeting in Ann Ar

bor. I feel honored to have bee

n invited to such

a nice event. I am very impressed

with GreenStone’s desire to kn

ow what their

members thinkand how GreenStone can

help us prosper. I always feel w

elcome

and wanted when I visit my br

anch in Adrian.All the employe

es are wonderful

to work with, they know my name, my fa

mily and my interests…they really

care about meas a person and

a client. I reallyenjoy going in

to see Karen,

Roger, Cindy, Garret and all th

e employees there…they do an awe

some job.

You were rightwhen you said

that "people make the differen

ce at

GreenStone". Keep up the grea

t work!

David A. Halsey

Adrian BranchCustomer


Candid Comments


Guest Column

ttending the “Succession Planning” talk at a conference could mean

hearing a speech about which kind of legal entity is right for your

business. Or, it could lead to hearing Jolene Brown or Ron Hanson tell some

highly entertaining stories about dysfunctional farm families. The session could

be a full day on tax planning or an hour on inter-generational relationships.

The Succession Planning speaker could be a lawyer, financial planner, accountant,

tax preparer, counselor, fellow farmer or even a consultant. The easiest definition

of Succession Planning might simply be—complicated!

Succession is complicated. And its intricate, thorny nature is partly to blame

for Farm Journal’s findings last winter. While 79% of their 369 respondents

planned to transfer control of their business to the next generation, only 20%

were fully confident of their succession plan.

Interestingly, in the dictionary, the definition of succession implies an orderly,

linear process. In the corporate world, succession gets a fair bit of attention.

Mainly, corporate succession focuses on a process to recruit and develop

employees to fill each key role within a company. Sounds orderly enough—at

A

What IS SuccessionPlanning,Anyway?

Barbara Dartt, DVM, MSSenior Business Consultant,Lookout Ridge Consulting

My Place

Mom and Dad’s

least within that narrow focus of

management and operations.

But complexity comes when the

dimensions of ownership and family join

operational succession. In a publicly

owned company, what is a

straightforward, linear process suddenly

becomes three dimensional in a family-

owned business. It is no wonder that

sharp, successful operators scratch their

heads when it comes to succession.

In a family-owned business, the multi-

dimensional nature of succession is like

a tangled ball of string. The strings

include family relationships,

management and leadership readiness,

financial health of the business,

ownership structure and others. To

unravel the ball, you must pick up a

string and follow it. But tugging on one

string merely tightens the knot on the

other side of the ball. Where should you

start?

The complexity of succession often

leads business owners to grab the most

straightforward issue (string) there is—

the ownership transaction. Estate

planning, or this ownership transaction,

includes things like development of wills

and trusts. Essentially, estate planning

provides for the ownership transfer of

assets and real estate and, hopefully,

minimizes taxes for the next generation.

During estate planning, progress is

measurable. And, when done with a

capable advisor, estate planning can

address family business dimensions

other than the ownership structure.

However, in many family-owned

businesses, estate planning simply does

not provide enough tools to address the

complexities of the family and

management/operations dimensions.

So, let’s review. Succession:

• By definition, means an orderlyapproach;

• In family-owned businesses is multi-dimensional and therefore,complicated; and

• In family-owned businesses includesthe dimensions of:

– Ownership,

– Management or Operations, and

– Family.

Succession planning, then, is an

orderly approach to the transition of

ownership, management and a family’s

heritage from one generation to the next.

Succession planning certainly includes

estate planning, but also addresses the

people side. And it is this people side—

including family managers and family

not involved in the business—that often

keeps sharp managers from getting a

comprehensive succession plan in place.

So, how do you begin to address the

sticky people issues that are at the heart

of successful succession planning? Ask

yourself the questions in the box at the

right. If you can answer yes to eight of

the 10, you are well positioned to work

on unraveling the “ball of string” that is

your family-owned business. If you

answered yes to seven or less of the

questions, consider finding a trusted

advisor that can provide a non-family

perspective and a proven process for

developing the management and family,

as well as the ownership, dimensions of

your succession plan.


Barbara Dartt joined Lookout Ridge Consulting in September 2001, bringing experience in both financialand production management. Today, Barb assists business owners with financial analysis, businesssuccession, operational and long-term planning as well as other opportunities and challenges unique tofamily-owned businesses. For more information on Lookout Ridge Consulting, please visitwww.lookoutridgeconsulting.com.


Is Your Team Ready forthe People Side ofBusiness Succession?

Answer the questions below.Eight or more yes = your team is wellpositioned to develop acomprehensive succession plan.

Seven or less yes = consider finding atrusted advisor with a proven processto assist you in plan development.

1. Family members understand theirrole(s) within the business.

2. Past conflicts are not hinderingpresent day business activity.

3. Conflicts are resolved directly bythe people that have the conflict.

4. All members clearly understandthe way decisions are made.

5. All family members working in thebusiness would be successfulworking in another business.

6. Tough decisions are made andimplemented in a timely manner.

7. A clear picture of the future isagreed to and understood by all.

8. The successor generation has atleast as much passion for thebusiness as the senior generation.

9. All understand the level offinancial performance it takes tohave a successful business.

10. A clear distinction exists betweenbusiness financial matters andpersonal financial matters.

Director’s Corner


It hasn’t always been pig

rearing and tractor driving for Ed Reed.

Ed began his career in engineering

after graduating from Western Michigan

University with an Electrical

Engineering degree. He spent his first

seven years after graduation working for

a consultant designing waste fuel co-generation facilities and

then at a paper company designing control systems and

managing construction projects.

When Ed’s chosen career started burning his candle from

both ends, he made a sweeping decision to change courses.

In 1993, he joined the industry he had worked for during

college and built a 1,400 head sow farm in Marcellus,

Michigan. The farm now includes 2,000 acres and 2,800 sows,

farrow to finish. “Though the road has been rough, it has

turned out to be one of the best decisions of my life—what a

wonderful way to raise a family,” Ed said.

But that’s not all Ed took

hold of in Marcellus. He is now a 10-year veteran

football and basketball coach, started a rocket football program

four years ago for first through sixth graders, and, in 2003,

built a full-size indoor basketball court at his house where the

local junior pro (third through sixth graders) and varsity

basketball teams often practice. The varsity football team also

feels at home in the court, using its furnished apartment for

pre-game dinners provided by Kelly (Ed’s wife) and to watch

game films of upcoming opponents. Ed takes pride in the fact

that he has been able to coach his sons, Christopher, Eric and

Adam who are 18, 15 and 11 years old respectively. “Being a

father of three boys has presented me with many opportunities

to help coach them, and their friends, into young, confident

adults. Their success is my success. My passion, for sure, is

coaching youth.”

Meet Ed ReedRegion IVDirector


Though Ed has been a GreenStone member for many

years–GreenStone loaned him the money to get started–he is

new to the Board of Directors, elected in 2008. “Being on the

Board of Directors is one way I hope to help the institution

that got me started.” He also serves on the legislative

committee for the GreenStone Board of Directors, is the Vice

President of the Michigan Pork Producers Board of Directors

and is a pork board delegate.

As a relatively new board member, what do you feelyou bring to the board?Although my background may not be the normal path most

farmers take, my time as an engineer gave me the business and

people skills which, I feel, has also helped make me successful

as a farmer. My background and “newness” on the board

makes for a positive dynamic. The board has members who

remember, and managed their business through, the credit

crisis of the 80s; and it has younger members, like myself, who

bring a fresh viewpoint. This helps to give a broad base

perspective to navigate GreenStone through the current

economic times.

What is one main goal or issue you would like toaddress as a director?Tying into my passion for youth development, I’d like to

help with efforts to increase the number of young, beginning,

small and minority farmers—possibly through a mentorship

program. By providing an opportunity for young people to

gain knowledge and interest in agriculture, we can help to

ensure a positive future for our industry. This could also

provide experience for them to get started in contract

production, thereby building equity without undertaking too

much risk. I feel it is part of GreenStone’s responsibility to

keep the ball rolling!

GreenStone customers encompass a uniquely diverseindustry of products and services. In general, what doyou see as the key to their success in the future?The key—a good risk management program! The business

of farming has never been more volatile. Our customers must

know their cost of production and manage margin. On the Reed

farm, hogs are forward contracted with futures and option

strategies. Though I know I won’t be right 100 percent of the

time, I believe you must lock in a profit when possible and

manage margin.

What do you view as GreenStone’s strategy toaccomplish its mission and ensure the vision of theorganization is achieved?GreenStone must retain talented staff and maintain the ability

to access capital at competitive rates. Through the recent credit

crisis, AgriBank (GreenStone’s wholesale lender) has been able

to tell agriculture’s story and continue to sell bonds, thereby

allowing us to provide farmers, suppliers and processors with

operating capital when few other lenders wanted the credit.

This is exactly what I told legislators, on behalf of GreenStone,

during my recent trip to Washington, D.C. GreenStone’s staff,

along with the board, also believe in the cooperative structure

and will continue to strive to be the lowest cost, highest service

provider to its member owners.

What has been the most significant advancement youhave seen in your lifetime in regards to agriculture?The engineer in me loves the precision farming technology,

GPS guided auto-steer, variable rate technology and yield mapping.

But I feel the greatest advancement has been bioengineering.

Genetic engineering—the ability to stack genetic traits for insects,

drought and weed control—are things only a few years ago you

would have seen on Star Trek®. We have seen similar

advancements in the swine industry with genetic markers and

improved vaccines. I don’t know where we’d be without these

advancements, and I can only imagine what will come in the

next five or 10 years.

“Tying into my passion for youthdevelopment, I’d like to help withefforts to increase the number ofyoung, beginning, small and

minority farmers.”

“The business of farming has neverbeen more volatile. Our customersmust know their cost of production

and manage margin.”


TheSustainableEmployer

As the soybean fields surrounding their family dairy farm

turned to subdivisions and the cornfields turned to strip malls,

Jackie and Steve Good let their imaginations run as they

looked for ways to keep her family’s farm from becoming

another housing development.

“We raised our family here milking only 60 cows,” says

Jackie’s dad, Ronald Campau. “You just can’t raise a family like

that now.”

With his children grown and the barns idled, Ron looked to

sell the property. However, Jackie and Steve were not so

willing to let the multi-generation family homestead go.

“When we heard the farm was being rezoned for

development, we began thinking of ways to keep it in the

family,” Jackie says.

Located just 30 miles from the center of Detroit, the Good’s

knew that expanding a dairy farm was not a viable option, but

an organic-based small farm may be a good fit. So in 2000 they

began transitioning the dairy farm into a fruit and vegetable

farm—RC Organic Farms. They are now the only certified-

organic farm in Macomb County.

The Good’s conversion to small-scale organic farming was in

step with the consumers’ desire to buy locally-grown food. In

the first years of their business, the Goods sold produce at

local farmers’ markets and offered a few community shares of

their garden. Today, all of the harvest from their five-acre

garden is sold as shares—anywhere from 50 to 60 a year.

“We were afraid that with the economy this year our

numbers would be down, but we have had more interest than

we can handle,” Jackie says. “People just like to have a

connection to their food. They love coming here each week to

get their box of produce. They tell us it is like Christmas when

they get their box and look inside to see what we have for them.”

ReinventingtheFamilyFarmBy Laura Moser

Young, Beginning, and Small Farmer Focus

The Goods raise over 50 different fruits, vegetables and

herbs in their community garden located in Lenox Township.

Jackie begins the growing season in early March in a small

greenhouse with starter plants. By April they begin planting

the cool-season crops and the work continues through the fall

harvest. They estimate that one acre can feed 10 families.

In addition to raising all the produce, Jackie also runs the

retail side of the business. Over the past few years they have

worked to turn a garage into a sorting and distribution area. A

walk-in cooler was added to keep the produce fresher longer.

A small storage shed serves as a year-round retail shop where

fresh eggs and other organic items are sold.

Their next step will be a U-pick berry patch that should be

in production next summer. The one-acre plot will hold over a

thousand strawberry plants, several currant berry bushes as

well as raspberry plants.

Adding mechanizationAs the community garden expands, the Goods bring in more

pieces of equipment to help eliminate some of the manual

labor. The purchase of an Eco Weeder reduces the need for

hand weeding. They also use equipment to prepare the beds

for planting. In total they use around a dozen pieces of

equipment to run the farm.

Weed and pest control is handled in a natural way using

companion plants to attract beneficial insects. They also soil

test on a routine basis and rotate varieties to balance the soil

nutrients.

“We strategically plant aromatic plants that bring in insects

that will eliminate the pests,” Jackie says.

Jackie, who is trained as an agronomist, has a strong

background in conventional cropping practices but has learned a

lot about organic farming since starting the community garden.

“We only had one class on organic practices when I was at

MSU,” Jackie says. “I have learned a lot from attending

conferences and talking to other growers.”

The Goods work closely with Dave Messing, senior financial

services officer at the Sandusky GreenStone Farm Credit

Services Branch, to finance the farm and needed upgrades.

“GreenStone has been great to work with,” Steve says. “They

have an understanding of what we are doing here and the office

staff is very professional and provides accurate information.”

From Low Cost to High QualityConverting the conventional farm to an organic-based

operation required changing more than equipment—it

required a change in management and mindset.

“We are no longer looking at the least-cost formula based on

quantity,” Steve says. “We are looking at the high-quality

inputs to generate high-quality products and we have found

people are willing to pay for that.”

Steve, who also comes from a dairy farm family, works full

time as an animal nutritionist for Vita Plus Corp. His training


“Converting the conventional farmto an organic-based operationrequired changing more than

equipment—it required a changein management and mindset.”

Jackie grows all the starter plants for the garden in a small greenhouse.

“We were afraid that with theeconomy this year our numberswould be down, but we have hadmore interest than we can handle”


in animal science has helped them incorporate chickens and

turkeys into the farm. They raise several hundred chickens

and 200 turkeys each year. The birds are fed a special blend of

organic feed that Steve formulates.

Educating OthersThis past winter Jackie was invited to participate in an

educators’ tour (EOV) in San Diego, California that was

sponsored by the U.S. Navy. During the tour, she met with

Navy officials to talk about how the Navy could implement

a Community Supported Agriculture (CSA) based idea into

their programs to encourage healthy eating.

“We were told that 70 percent of high school graduates don’t

meet the basic physical and health requirements for military

recruitment,” Jackie says. “They are looking at ways to fit in

something like a CSA on the military bases to provide them

with fresh produce. They asked me to help explain the model

we use on our farm.”

Bringing in the Next GenerationThe Good’s four children: Jeremy, 17; Holly, 14; Brad, 12; and

Riley, 10, all help out on the farm. They also raise 50 laying

hens and sell the eggs at the farm. In addition to teaching the

kids a good work ethic, the Goods are also teaching their kids

the pride that comes from producing good food.

“When we sit down to a dinner of chicken, potatoes and

vegetables it is a wonderful feeling to know we raised the food

ourselves. The kids understand the work that goes into

providing food for us and our neighbors,” Jackie says.

“GreenStone has been great to workwith.They have an understanding of

what we are doing here and theoffice staff is very professional andprovides accurate information.”

SQUAREPEGLENDING FORA

ROUNDPEGWORLD

Rural Financing provided by GreenStone.Would you like to measure your property line in acres rather than

feet? Does your ideal home include a pole barn and a bonfire pit

out back? Most lenders don’t understand. GreenStone not only

gets it, we support it. Our unique financing fits all shapes and

sizes. Call your local branch to explore the possibilities.

800-444-3276 • greenstonefcs.com

More than $60 million in funding is available nationwide this year

through USDA Rural Development as part of the Rural Energy for America

Program (REAP). The funding is to support investments in renewable

energy systems, to make energy efficient improvements, and to conduct

feasibility studies for renewable energy systems for agricultural producers

and rural small businesses.

REAP was established under Section 9007 of the 2008 Farm Bill to

expand and rename the program formerly called the Renewable Energy

Systems and Energy Efficiency Improvements Program, which encouraged

agricultural producers and small rural businesses to create or install

renewable energy systems and/or energy efficiency improvements.

Eligible projects in the 11 technology areas include anaerobic digesters,

biomass, geothermal (including electric generation and direct use),

hydrogen, solar (small and large), wind (small and large), and energy

efficiency improvements. This year’s program includes the technology of

small hydropower projects (30 megawatts or less), which are now eligible

for REAP funding.

Grants can cover up to 25% of total eligible costs. The minimum energy

efficiency grant is $1,500 and maximum is $250,000. The minimum

renewable energy grant is $2,500 and maximum is $500,000. For feasibility

study grants, the maximum award is $50,000 or 25% of eligible study costs,

whichever is less.

Applications for grants must be completed and received at the USDA

Rural Development State Office or Area Offices, no later than July 31, 2009.

Neither complete nor incomplete applications received after this date will

be considered.

Further information on rural programs is available at a local USDA Rural

Development office or by visiting USDA Rural Development’s web site at

www.rurdev.usda.gov.

USDA Rural DevelopmentOffers Funding for REAP


USDA REAP Funding

Join GreenStone onFacebook!GreenStone recognizes that our customers

encompass a wide range of demographics andstrives to use a variety of medias to mosteffectively communicate with, and provideinformation to, our members. Therefore,GreenStone recently launched a Facebook pageas another method to accomplish this objective.

Facebook is an online social networking site thatallows businesses and individuals alike theopportunity to share information and interactwith other users. GreenStone plans to utilize thesite to share details on current events andbreaking news in addition to providinginformative updates.

To find us on Facebook, go to our Web sitewww.greenstonefcs.com and click on theFacebook logo found in the lower right-handcolumn of the home page. Facebook users—besure to select “Become a Fan” from theGreenStone Facebook page in order to receiveinformation and updates as they become available.

FFA Race Day at theMichigan InternationalSpeedwayThe Michigan FFA invites you to join them at a

fun-filled hospitality day during the NASCARNationwide Series race on Saturday, August 15,2009. Special ticket packages are available for $75

and include reserved grandstandseating, free pre-race pit pass,access to FFA hospitality tent,continental breakfast and lunch,opportunity to meet NASCARpersonalities, and the chanceto win one of many prizes.Reserve your tickets beforeAugust 10, 2009 by calling 517-592-6666 and mention you are withthe FFA to receive this special package, or visitwww.michiganffa.com/foundation for moreinformation.

Partners ReceivesRegional RecognitionThat’s right, GreenStone Farm Credit Services

recently received a National Agri-MarketingAssociation (NAMA) Best of NAMA Merit Awardat the regional awards ceremony in Chicago,Illinois. The award was presented for its membermagazine, Partners. The Best of NAMAcompetition honors the best in agriculturalmarketing communications. Over 1,200 entrieswere received nationwide to compete in the sixregions. NAMA is an organization comprised ofmembers from across the nation representingagriculture’s marketing, advertising, publicrelations and media sectors.

Shopping forEquipment atAg Expo?Ag Expo,

Michigan’s largestagriculturalequipmentexposition, willreturn to the

News Update

News Update



Michigan State University (MSU) campus July 21-23, 2009. If you’re in the market for a newtractor, hay baler, or some other type of farmmachinery or equipment make sure you stop andsee us at our exhibit booth #120 on First Streetfor financing. You can take advantage of ourshow special finance rates to save money on fixedrate equipment loans with no loan originationfees. On the Spot financing approvals will beavailable at our booth during the show. Paymentterms from one to seven years are available anditems priced as low as $8,000 can be financed.We also finance pole and hoop buildings andother agricultural assets, plus leases are availableas well.

Examples of items that GreenStoneFCS can finance at the show are:

• Utility Vehicles

• Wood Furnaces

• Zero-turn Mowers

• Skid-Steer Loaders

• Compact Tractors

• Mini-Trucks

• Tillage Equipment

• Grain Bins/Dryers/Augers

• Sprayers

• Portable Sawmills

• Haying Equipment

• Cattle Chutes

Also, it’s back again this year by populardemand…another $500 Cabela’s Gift Card will beup for grabs in the GreenStone exhibit. Be sure tostop by and register for a chance to win this greatprize, plus if you’re feeling like Tiger Woods youcan “Putt for Prizes” at the GreenStone puttinggame at our tent.

Area Producers Receive$422 Million in CropInsurance IndemnityPayments for ’08Many producers realized the value of their crop

insurance policy in the 2008 crop year. Acombination of production shortfalls and a drop incommodity prices resulted in over $422 millionpaid in crop insurance indemnity payments inMichigan and Wisconsin.

Wisconsin, being the largest with 4.4 millionacres insured, received $256 million. Wisconsinproducers paid $102 million in premium aftersubsidies for a payout of $2.50 for each dollar inpremium. Michigan producers, with 3.7 millionacres insured, received $166 million in paymentswith $70.5 million in paid premium for a payoutof $2.35 for each dollar in paid premium.

“A combination of productionshortfalls and a drop incommodity prices resulted inover $422 million paid in cropinsurance indemnity paymentsin Michigan and Wisconsin.”


GreenStone agency policyholders received over$45 million in claims in Michigan, and just over$5 million in the counties served by theassociation in northeast Wisconsin. In addition,there was approximately $1.3 million paid in hailinsurance claims in 2008 to GreenStone agencycustomers.

All of these insurance policies are reinsured.GreenStone is not the insurance company. Theclaims in excess of the premium do not affectGreenStone’s financial position. GreenStone is anagency with staff licensed as agents whospecialize in crop insurance. Commissionsreceived from the insurance companies forinsurance sales are income to GreenStoneindependent of losses.

The Country Minute–Available OnlineGreenStone recently developed a new

publication focused on its rural residentialcustomers, entitled The Country Minute. It isnow available online by visiting the GreenStoneWeb site www.greenstonefcs.com and clicking

on The Country Minute image found in theleft-hand column of the home page. Thispublication, like Partners, is published on aquarterly basis, so be sure to check it out—westrive to provide timely information andresources that you too might find useful!

BETTERTOBESAFETHANSORRY

Crop Hail Protectionprovided by GreenStone.Crop hail protection from GreenStone FarmCredit Services is designed to cover a variety ofcrops including fruits and vegetables. Plus, youcan select the coverage per acre that’s right foryour operation and your claims are paid at thetime of damage.

Hail policies also protect your crops from:

• Fire

• Vandalism

• Loss during transit

Call your local GreenStone Crop Insurance

Specialist for more information.

800-444-3276 • greenstonefcs.com

GreenStone FCS is an equal opportunity provider and employer.


GreenStone CustomerAppreciation Events!Many GreenStone branches are gearing up for

a variety of customer appreciation events thissummer and invites will be hitting the mailthroughout the season. As an added bonus thisyear, customers will have the option to RSVPonline through the new GreenStone eventregistration web page. Look for your invite in themail or ask your branch representative for moreinformation. The following is a list of just a fewscheduled upcoming branch events.

BRANCH DATE

Allegan 7-23

Wisconsin and Upper Peninsula 7-24

Charlotte 7-31

St. Johns 8-7

Corunna 8-21

Ionia 8-29

GreenStone FCSAnnounces Board ofDirector Election ResultsGreenStone Farm Credit Services is pleased to

announce the election results for six seats on itsBoard of Directors along with the NominatingCommittee.

In Region V (Michigan), incumbents FrankEngler, from Isabella County, and Brent Wilson,of Gratiot County, were re-elected for three-yearterms. Engler, a 15-year board member, raisescorn, soybeans, wheat and alfalfa in addition toHolstein heifers and beef cattle. Wilson, a boardmember since 1992, cash-crop farms 3,000 acresof corn, alfalfa, soybeans, sugar beets, greenbeans and wheat, and milks 415 dairy cows.

In Region VI (Michigan), incumbents BrianHaskin, from Eaton County, and CatherineWebster, of Clinton County, were re-elected tothree-year terms. Haskin, a three-year boardmember, operates a cash grain farm, andmanages a drainage contract business and a grainelevator. Webster is a 17-year board member whohas been a dairy and crop farmer for 42 years,raising mostly corn and alfalfa.

In Region VII (Wisconsin), incumbents RaymondDiederich, of Brown County, and David Rakowski,from Oconto County, were re-elected to three-year terms. Diederich has been a board memberfor several years, serving on the FCS of NortheastWisconsin board before the merger withGreenStone; he is a dairy farmer, milking 120cows, raising 120 head of young stock, andfarming corn, soybeans and alfalfa on 420 acres.Rakowski, a 25-year board member who alsospent a portion of that time on the FCS ofNortheast Wisconsin board, farms with his sonand raises approximately 600 Holstein steers inaddition to farming 1,000 acres of corn, alfalfa,wheat, oats and green beans.

The 2009 Nominating Committee includes fromRegion I: Daniel Fisk, Arenac County; DerekLeCronier, Bay County; and Joel Wardin, SaginawCounty; from Region II: Scott Shaw, SanilacCounty; Steven Tait, Huron County; and DavidThuemmel, Huron County; from Region III: StanleyFerris, Hillsdale County; and Bruce Lewis, HillsdaleCounty; from Region IV: Brian Totzke, BerrienCounty; and Jan Vosburg, Kalamazoo County;from Region V: John Crumbaugh, Gratiot County;and Michael Rasmussen, Montcalm County; fromRegion VI: Patrick Feldpausch, Clinton County;and Anthony Jandernoa, Clinton County; andfrom Region VII: Mary Eggert, Outagamie County;and David Goers, Shawano County.

This newsletter is published quarterlyfor the customers of GreenStone FarmCredit Services.

PARTNERSPO Box 22067Lansing, MI 48909

[email protected]@[email protected]@greenstonefcs.com

1760 Abbey RoadEast Lansing, MI 48823

Customer Referral Programprovided by GreenStone.At GreenStone, we know our customers are the reason for our success. That’s why

we developed the Pass-It-On referral program. When an existing customer refers a

friend or family member to us, we thank them with a $50 gift card. Be part of a

company that truly values its customers; contact us today to find how you can start

earning your rewards!

ONEGOODTURNDESERVES

ANOTHER

800-444-3276greenstonefcs.com

*Existing customers will receive one $50 Gift Card only when a prospective customer establishes a new business relationship with GreenStone FCS. Referrals for Residential Mortgages on less than 25 acres are excluded. GreenStone FCS reserves the rightto make case-by-case decisions on the distribution of Gift Cards for referrals. One $50 Gift Card for existing customers per new customer referred, regardless of the number of new products used. Program effective January 1, 2009 and is subject to change.

Documents

Partners - Summer 2009