Winter 2013 Financial Partner Magazine

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insidenews & Views 2 ceO letter 3 cover Story 4

loan tips 10 Photo contest 11OSHa Dairy inspections 12 Webinar Series 13

Sharing their time 14 cSa Profile 15 consulting Profile 16 tax Prep Profile 17

Washington Update 18 community Support 20

learning the ropes

Farming’s next generation prepares to lead

news

&views

what’s new at the Movies?

funding research to advance ne agriculture

Do you have a generational transfer plan in place? Are you confident that it will ensure that your farm’s senior generation will be comfortable in retirement and the younger generation will be prepared for ownership and management of the business?

In “Generational Transfers for Farm Businesses,” business consultant Jon Jaffe takes you through some important steps to understanding the transition process for family businesses. In this five-minute video, Jon explains the challenges that many farm families face in transitioning the business to the next generation. He points out how the generations often have different views on the future of the business and explains how working with an outside consultant can help both generations separate family relationships from their business relationships.

To view this video, go to FarmCreditEast.com/GenerationalTransfer.

This summer, Farm Credit East and CoBank joined New York dairy farmer Sheldon Brown to contribute $600,000 to Cornell University’s ag research and education programs.

The gift will support a faculty fellowship focused on agricultural sustainability, including production practices and opportunities for agricultural growth given increased interest in local foods. In addition, a portion will be used to fund student scholarships.

Farm Credit East and CoBank each committed $250,000 to Cornell, to be paid over the next five years. Brown, who graduated from Cornell in 1968 and previously served on the boards of both organizations, committed $100,000.

“We believe in the future of Northeast agriculture and the need for strong

education, extension and research programs that support success in the farm community,” said Farm Credit East’s Bill Lipinski. “We are pleased to support this unique position because it will help expand opportunities for agriculture in our region.”

Brown, who owns and operates a dairy farm in Salem, N.Y., said he made the contribution out of gratitude for the benefits he received from his Cornell ed-ucation. “Cornell helped me understand that agriculture is and always will be a knowledge industry,” he said. “It is vital that we continue to promote research and education in the field of agriculture in order to maintain the competitive advantage that our nation has built.”

For more, go to FarmCreditEast.com/CornellGift.

Farmcrediteast.com

Bill Lipinski, Farm Credit East CEO; Sheldon Brown, Cornell class of ’68; Kathryn Boor, Ron-ald P. Lynch Dean of the College of Agriculture and Life Sciences at Cornell University; and Scott Markham, CoBank Board member

2 F i n a n c i a l P a r t n e r

CeO’s Message

Bill Lipinski, CEO, Farm Credit East

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I am excited to announce that the

stockholders of Farm Credit East and Farm

Credit of Maine have overwhelmingly

voted to merge our two leading agricul-

tural credit associations.

The merger, which takes effect January

1, 2014, is the culmination of strategic

planning initiatives in both associations

to sustain growth and customer value for

Farm Credit. With this merger comes new

opportunities that include a tremendous

team of Maine employees who will

“deepen our bench” in a variety of job

areas. We will work hard to ensure that

significant financial benefits accrue to our

expanded family of stockholders in the

next several years.

Because both ACAs have had excellent

years and are financially and operationally

strong, the timing for this merger could

not be better. This is a strategic

opportunity to position Farm Credit in

the Northeast for future change and to

maintain Northeast agriculture’s continued

access to global money markets.

In the words of Farm Credit East Board

Chairman Andy Gilbert: “If your business

is not moving forward, then you’re falling

behind.” That principle, in our view, is as

true for our financial cooperative as it is

for any individual business.

The Board challenges me to create

opportunities for our customers as well

as for our employees. The merger of Farm

Credit East and Farm Credit of Maine

achieves many of the Board’s goals. That

is, our merged association will create the

opportunity for enhanced earnings, port-

folio diversification and a stronger capital

base. It will also offer enhanced member

service through an expanded pool of

talent and experience. In 2014, we will

continue to build on those goals as well as

move forward on other positive initiatives

that provide high-value customer service

and expand our diversity of stakeholder

groups.

We know that agriculture goes

through cycles. We’ve demonstrated our

commitment for almost 100 years to fund

agriculture through every cycle. As our

customers tell us, “When you’re in agricul-

ture for keeps, it’s good to know that your

lender is, too.”

Our dedication to providing you with

a reliable source of credit and financial

services will never change. Both boards

look forward to bringing together best-in-

class credit and financial services teams to

deliver long-term value for our customer-

owners and for future generations of

Northeast agriculture. This next chapter

in the Farm Credit East story ensures that

your financial cooperative remains strong

within our marketplace and retains a re-

spected place at the table in national Farm

Credit System discussions.

With this vote, customers of both as-

sociations have expressed their confidence

and trust in the Board and management

of Farm Credit East. Over the next few

years, we will continue to repay that trust

and achieve our goal of “promises made,

promises kept” to our members.

… if your business is not moving forward,

then you’re falling behind.

the Maine pointMerger of two associations brings new opportunities

“

”


“ … i learned that leadership is really about knowing your strengths and weaknesses and showing confidence in your employees.”BEn HuLLHull Forest ProductsPomfret Center, Conn.

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For young farmers ready to take the reins of the family business,

Dad and Mom are invaluable in learning the essentials of operating a

farm. But in the ever-changing world of agricultural business, there’s

no such thing as knowing too much about growing a successful farm

operation.

Farm Credit East’s GenerationNext program deepens young

farmers’ knowledge and helps them hone their management skills.

Held in three one-day sessions over three months, GenerationNext

prepares farmers from the ages of 20 to 35 to effectively manage

employees, finances, marketing and risk to their business in order to

become more effective owners.

Recently, four graduates of the GenerationNext program stopped

by the Farm Credit East coffee shop to chat about their experiences

in joining the family business and how the program has made them

more effective managers.

learning the ropesFarming’s next generation prepares to lead


Michele DuttonBusiness: Sherman Farm, LLC

Location: East Conway, N.H.

Description: “We are an ag retail business that sells farm stand products, vegetables, milk and meat. We grow everything from brussels sprouts to tomatoes and operate six heated greenhouses and seven additional greenhouses for tomato pro-duction. We retail between 24,000 and 30,000 pounds of tomatoes annually. We grow our own beef and pork and sell milk that we glass bottle ourselves.”

Years in business: “All my life and for five years full time”

Position: “I am the head controller and chief financial officer. I also focus on marketing. We do a lot of community outreach in schools to give the public a greater understanding of agriculture.”

Although Ben Hull of Hull Forest Products in Pomfret

Center, Conn., felt comfortable with his knowledge of business

operations, he saw the GenerationNext program as a chance

to increase his comfort with bookkeeping. “I thought it would

be worthwhile as a refresher, but I also needed more depth of

knowledge with accounting concepts,” he acknowledged.

Developing solid accounting and budgetary practices was at

the top of the list for Kristopher Kane of 21 Brix Winery in Port-

land, N.Y. “My mother has always done our farm accounting,” he

said. “But I wanted to see how her system could be utilized to its

full extent.”

Brendan Moquin has been involved in the cranberry-growing

business for as long as he can recall. He now serves as the as-

sistant controller and financial analyst of Morse Brothers, Inc., in

North Easton, Mass. His focus in the GenerationNext program

was on developing solid communication skills to bring back to

the bog. “My biggest challenge is learning how to facilitate com-

munication between the generations in order to help keep the

company running smoothly.”

For Michele Dutton, of Sherman Farms in Conway, N.H.,

the seminars allowed her to think about good leadership on a

day-to-day level. “I was taking over the business end of our farm

from my grandmother and even though we all think that we are

great leaders, I realized that I didn’t understand all aspects of

leadership.” With an entire day’s program dedicated to leader-

ship and employee management, Michele walked away with

plenty of tips to put into practice.

let tHe nUmberS DO tHe talkingAs with most industries, good data has become the name of

the game in agriculture. Michele learned how to do so in practi-

cal terms through the GenerationNext program. “Now I can

use a profit and loss statement to say, ‘This is what we did this

month,’ and explain to others what’s behind those numbers,”

she said. And gaining the confidence to do so goes beyond

simply providing rationale — it has also improved communica-

tion within the family business. “It’s nice to be able to explain

“ generationNext provided me with the education and facts to show that i know what i’m talking about.”MiCHELE DuttOnSherman Farms, LLCEast Conway, n.H.

c o v e r s t o r Y

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to my brother why we can’t get new tires or a new tractor based

on the financial picture. I can say when would be a better time.

It’s made us a more cohesive unit because we understand each

other’s part of the business.”

Knowing how to read the company’s data has also helped

Michele and her family bridge the generation gap. “Coming into

a business as a member of the third generation, the first and sec-

ond generation can still see you as their kid,” she said. “Genera-

tionNext provided me with the education and facts to show that

I know what I’m talking about.”

Playing tHe team tO tHeir beSt aDVantageA key aspect of good management lies in knowing when

to trust the team. Kris acknowledged that the GenerationNext

program taught him the value of empowering his employees

and delegating responsibility. “You tend to think that a leader

goes out and does the task. From this class, I learned that leader-

ship is really about knowing your strengths and weaknesses and

showing confidence in your employees,” he said. “Now when I

hire, I look for people with strengths I don’t have, and surround

myself with a team that I feel comfortable delegating to.”

Ben agreed, adding that his experience with GenerationNext

allowed him to diversify his leadership skills. “I learned that a

leader needs to adapt to the situation. Is this my employee’s first

job or am I directing a 35-year veteran? It requires very differ-

ent leadership styles,” he explained. “A veteran may know more

than I do, so I lead in a more consultative, collaborative way.”

Ben also discovered that good employee management begins

well before hiring. “The program helped me to improve my

development of job descriptions, which I call performance

profiles. If employees are asking you what to do, you probably

haven’t written an adequate description of what is expected of

them.”

talking it tHrOUgHKeeping the lines of communication open can be a challenge

in any business, never mind one that sprawls over 11 locations.

Brendan learned that it was a challenge that Morse Brothers,

Inc. couldn’t ignore. “My biggest lesson from GenerationNext

was the importance of employee buy-in. So we started Monday

morning bog meetings for the foremen. The first few were a

struggle, but before long the foremen would come to the meet-

ings with lists of upgrades or inefficiencies,” he said. “I could see

that they started to work together more effectively and improve

how they kept their properties up — which resulted in a better

crop and a better bottom line.”

Kris also learned the value of good communication. “Every

morning, I work with our production team to compare how we

are doing against our weekly goals, and I ask the team how we

can make those goals,” he said. Kris also emphasized the need

for follow-up, recognizing employees’ efforts with a thank-you

note, pizza party or even a group ski-trip. “It’s good for morale

and we all know it’s good for the business.”

Michele agreed. “Like Kris, we make our employees feel

that they are part of the family. We just started sharing our sales

Ben Hull Business name: Hull Forest Products

Description: “We are a hardwood saw mill and a forest land management service. We conserve for-ests through the sale of conservation easements to organizations like the Nature Conservancy. We have 8,500 acres under conservation easement and about 13,000 acres of company woodlands in Massachusetts, Connecticut and Maine. We also custom manufacture a variety of premium flooring products for wholesale distribution and retail markets.”

Location: Pomfret Center, Conn.

Years in business: “Since I could hold a shovel”

Position: “I focus on marketing and sales as well as developing new revenue streams for our wide-plank flooring products, energy wood and export log sales.”

MiCHELE DuttOnSherman Farms, LLCEast Conway, n.H.


numbers for the month with employees. We say, “This is what

we did for August of last year; how can we do more?” Before

GenNext, we were hesitant to share our numbers with our staff.

Letting go of that is hard, but once you do, it all blossoms from

there.”

gOOD management, gOOD balanceEach member of our coffee-shop talk agreed that Generation-

Next helped him or her develop the management skills they

need to work smarter, not harder — and that translates to a

better work/life balance. “Time management is my biggest chal-

lenge. I have a 17-month-old and a newborn, run two businesses

and work on the farm with my father as he and my mother step

back a little,” Kris explained. “I worry how I will manage all of

these responsibilities, but the answer is found in education like

GenerationNext, where I can network with others in similar

situations.”

Brendan echoed Kris’s praise: “I would definitely take the

class again; knowledge is power.”

Ben added that learning good hiring skills has allowed him

to bring more people on his team which, in turn, frees him up

to spend more time with his wife and three children.

Kris also noted that what he learned from GenerationNext

has proven invaluable. “You won’t find a better program for its

value, or one that brings more confidence to your business,” he

said. On that note, our group took their last sip of joe and head-

ed back to the field, bog, forest and vineyard, respectively. ◆

Kristopher Kane Business: 21 Brix Winery, part of Olde Chautauqua Farms and Olde Chautauqua Vineyards

Description: “We are a 300-acre grape-growing operation with 18 acres of pick-your-own cherries and asparagus.”

Location: Portland, N.Y.

Years in business: “I have been in the business since I was about seven years old, trimming, tying and pick-ing grapes.”

Responsibilities: “I opened the winery in 2011 and eventually want to vertically integrate the two busi-nesses by utilizing most of the fruit from our farm in the wine and opening different channels to sell grapes. I manage and run the winery and am responsible for production management, product and equipment acquisition all the way to front-door sales.”

“ You won’t find a better program for its value, or one that brings more confidence to your business.”KRiS KanE21 Brix WineryPortland, n.Y.

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c o v e r s t o r Y

Mind the (generation) gapBuilding a program for today’s young farmers

With each young farmer that Bill Martin met as a former loan officer and branch manager and today as a Farm Credit East business consul-tant, the problems begin to sound the same: issues with work/life balance, discomfort with financial data and difficulty in maintaining good communication among staff and family members — to name a few.

Along with others at Farm Credit East, Bill and a team of business consultants and branch managers decided to use what they were hearing in the field to promote the GenerationNext program, designed to prepare young farmers for the early stages of leadership and management and help them lay the groundwork for future years of profitability. Not only does the program get participants ready for future opportunities in their business, it helps give previous generations confidence in the abilities and know-how of the up-and-comers.

The program goes beyond providing basic training and best practices in operating an ag business. It also furnishes invaluable networking opportunities and the chance for young farmers to hear that they’re not “the only one” when faced with a particular chal-lenge — and how to best tackle it.

Bill and other organizers spread the GenerationNext program over three months with a one-month break between each of the three sessions. According to Bill, “This allows participants to absorb and apply what they’ve learned about leadership, management and labor.”

If you or a young farmer you know would benefit from in-depth training in running an ag business, go to FarmCreditEast.com/GenerationNext to learn more. Or contact your local branch to find out about the program closest to you.

Brendan MoquinBusiness: Morse Brothers, Inc.

Description: “Morse Brothers owns about 380 acres of cranberries in 11 different Massachusetts towns and 380 acres in Quebec. The company packages fresh fruit for Ocean Spray and supplies stores nationwide.”

Location: North Easton, Mass.

Years with Morse Brothers: 3 years

active in the cranberry industry: “Since I was born.”

Responsibilities: “I am the assistant controller and financial analyst. I work in a variety of areas, from product development, financial planning and forecasting to field work with the guys during harvest season.”

“ My biggest lesson from generationNext was the importance of employee buy-in.”BREnDan MOquinMorse Brothers, inc.north Easton, Mass.


Farm Credit East customers know how to work with loan of-

ficers on their credit needs. But the next generation coming along

may not have that knowledge. We encourage Farm Credit East

members to share this article with our future members — your

children and others who will be your farm’s next generation.

Applying for credit for the first time is a big step. First-time bor-

rowing is often a sign of a business in transition, such as one that’s

just getting started, one that’s outgrown its start-up capital or

perhaps one that’s on the verge of failing. Regardless of the need,

first-time borrowing can be challenging for both the loan applicant

and the lender although it doesn’t have to be if you keep these tips

in mind:

• Know your industry. Come prepared to show your lender

that you understand your business and have the knowledge

that you need to be successful.

• Understand your financial position. The lender’s analysis of

your financial statements should not surprise you. Be ready

to discuss your business profitability and how you acquired

your equity and also be ready to demonstrate that you un-

derstand what effect the borrowed funds will have on your

financials. Keep your income and expense records up to date

and prepare your projections in advance.

• Borrow with purpose and have a strategy. Tie your request

to a specific project or purpose. Demonstrate to the lender

how your request will benefit the business and anticipate

any needs you may have over the next 12 months. Coming

back to the lender multiple times doesn’t inspire trust or

confidence in your overall business strategy.

• Be prepared to offer collateral. This demonstrates that you

are committed to being successful and are willing to put

skin in the game.

• Have a back-up plan. Be prepared to offer a cosigner or to

provide additional collateral if your original request does not

meet underwriting standards. Keep in mind though that a

cosigner is only as good as his or her ability to repay the loan

on your behalf.

• Plan to communicate with your lender — even after your

loan is approved. Keep him or her informed of changes in

your strategy, challenges that you are facing and how your

business results compare to what you anticipated. No sur-

prise lending works well for both the borrower and lender.

• Start early. This doesn’t mean giving your lender extra time

to review your request, even though that is helpful. Be aware

that every action is an opportunity to build your argument

either for or against your creditworthiness. Examples range

from how you manage your credit card debt to how well

you honor your suppliers’ terms or even to whether you

return your neighbor’s equipment on time. Your actions and

how you manage your business relationships go a long way

toward building your reputation as a good risk.

Mike Haycook vice president and branch manager

“ Be aware that every action is an opportunity to build your argument either for or against your creditworthiness.”

tips for first-tiMe loan applicants

“ We encourage you to share this article with ... your farm’s next generation.”

cOngratUlatiOnS

11W i n t e r 2 0 1 3

Each year, Farm Credit East holds our

annual contest for talented photographers

to showcase the diversity of agricultural

operations across the Northeast and life in

the country during all seasons of the year.

More than 700 photos were submitted

during 2013, and our team had quite a

task picking 50 photos for our 2014

Agricultural Views Calendar.

What made each shot a winner?

Technical quality, clarity and composition,

of course, but we also looked for photos

that captured a unique view of Northeast

farming, horticulture, forestry and

commercial fishing or that celebrated

country life across New England, New

York or New Jersey.

We send our sincere thanks to all the

talented photographers who participated

in the calendar contest. Because of your

work, we will very proudly have our calen-

dar displayed in homes and on office walls

across the Northeast in 2014.

We have calendars available in our

branches, so stop by and take one home or

simply enjoy the winning photos on our

website at FarmCreditEast.com/Calendar.

tO all yOU SHUtterbUgSWe hope that you keep getting out

there with your cameras, capturing photos

during every season around the farm,

forest, greenhouse or dock. Go ahead and

dust off your digital cameras during every

month — even the cold winter ones — and

upload your best work to our website.

tO OUr PHOtO calenDar cOnteSt WinnerS

And thank you to all who

participated


The Federal Occupational Safety and Health Administration (OSHA) plans to target

New York dairy farms for inspection starting sometime in 2014. Could your farm be

targeted? And, if so, are you ready for an OSHA inspection?

The initiative will focus on random, unannounced compliance inspections of dairy

farms. Although safety is important for all farm operations at all times, dairy farms

that could be targeted need to get ready to avoid being caught off guard.

WHat yOU can DO nOWOSHA inspections can be painful, but they don’t have to be. Here are a few tips to

help you prepare:

• Know if you fall under OSHA jurisdiction. If an OSHA inspector shows up at

your farm, first determine if the farm is eligible for inspection. If not, inspectors

will depart immediately.

• Go through your farm with a safety mindset and correct any hazards. Use the

“Dairy Dozen” as a handy checklist to help you prepare. Be aware that record-

keeping of employee training is as important as the training itself.

• Designate a company representative (and possibly a backup person) who can in-

teract with inspectors in case the owner is not available. Since most inspections

are unannounced, a designated company representative can keep the inspection

“on track” and avoid an aimless walk around your facility.

• Conduct safety training and keep records of your training. Notify employees

that they have the right to speak or not speak with OSHA inspectors.

• Go to FarmCreditEast.com/Webinars to view playbacks and other presentation

materials from webinars that we cohosted on this subject with Northeast Dairy

Producers Association (NEDPA), New York Farm Bureau (NYFB), New York

Center for Agricultural Medicine and Health (NYCAMH) and Cornell’s

PRO-DAIRY program. They will answer many of your questions and help

you sort out what you can expect:

• Understanding OSHA Requirements for Dairy Farm Businesses

• OSHA Compliance: What Farm Businesses Need to Know

cOUlD yOUr Farm be targeteD?Dairy farms subject to random inspections are those that:

• Have had more than 10 employees, not including immediate family members, at

any time during the past 12 months preceding the day an inspector shows up.

Note that a part-time employee counts as one employee for this purpose.

• Or have provided housing to temporary labor (even one person), at any time

during the past 12 months.

Farms that do not fall into the guideline categories are not subject to inspection.

By the way, OSHA inspectors do not enforce immigration law and will not ask you or

your employees about immigration status.

THe DairY DOzeN:

dairY farMers: are You prepared for an osha inspection?

12 areas of Concern for OsHa

1. Manure storage facilities and collection structures

2. Dairy bull and cow behavior/worker positioning

3. Electrical systems

4. Skid-steer loader operation

5. Tractor operation

6. Guarding of power takeoffs (PTOs)

7. Guarding of other power transmission and functional components

8. Hazard energy control while performing servicing and maintenance of equipment

9. Hazard communication

10. Confined spaces

11. Horizontal bunker silos

12. Noise

“ NYCAMH, NEDPA, PRO-DAIRY and NYFB have formed an OSHA Workgroup to help prepare farms for OSHA’s proposed Local Emphasis Program for dairy farms. The goal is to help the dairy industry by communicat-ing with OSHA and developing and distributing information to address OSHA’s Dairy Dozen target areas of inspection on New York’s dairy farms. The workgroup is coordinating on-farm and off-farm meetings to assist farm owners and management staff better prepare for and understand rights and obligations under the OSHA inspec-tion process. Farm Credit East is also an important partner in this process.”

Karl Czymmek

Senior Extension associate

Cornell university

PRO-DaiRY Program

13W i n t e r 2 0 1 3

areas of Concern for OsHa

HealtHcare reFOrm anD yOUr bUSineSStuesday, December 17, 201310:00 a.m. to 11:30 a.m.

The Affordable Care Act, or Obamacare, is the most

comprehensive overhaul of our healthcare system in a

generation. New provisions of the law will take effect in

2014 and 2015. This webinar, featuring labor law attorney

Robert Noonan, will cover what farm businesses need

to know to comply with the law. Although the employer

mandate has been put off until 2015, there are still things

you need to know for this year.

2014 Dairy OUtlOOkFriday, January 17, 201410:00 a.m. to 12 noon

The 2014 Dairy Outlook webinar will look ahead to

2014 and what’s coming in dairy economics and regula-

tion. This webinar will feature: Mark Stephenson, dairy

economist with the University of Wisconsin; reaction

from Farm Credit East dairy consultants; and an environ-

mental update from Karl Czymmek, Cornell University.

2014 agricUltUral ecOnOmic OUtlOOk anD ag labOr UPDatethursday, February 13, 201410:00 a.m. to 12 noon

This webinar will look at agricultural markets in

2014 and what the road ahead looks like. Following will

be an agricultural labor update, including a look at the

status of the H-2A program. Presenters will be Terry Barr,

economist with CoBank, and Monte Lake, attorney and

agricultural labor expert.

naVigating tHe grant PrOceSSthursday, February 27, 201410:00 a.m. to 12 noon

This webinar will provide answers to questions about

the grant process. For example: What kinds of grants are

available to Northeast producers? Who funds them? What

application processes are like? What can farmers apply

for on their own and when should they engage a grant

writer? What services does Farm Credit East provide?

This webinar features Farm Credit East consultant Nathan

Rudgers.

Fce Financial reSUltS anD neW initiatiVeStuesday, March 18, 201410:30 a.m.

Farm Credit East CEO Bill Lipinski will present an

overview of the association’s financial results for 2013.

tHe nOrtHeaSt Dairy Farm SUmmary releaSe tBD, april 2014

Chris Laughton, Farm Credit East director of Knowl-

edge Exchange, will present the results of the Northeast

Dairy Farm Summary, otherwise known as the “Blue

Book.”

the Farm Credit East Winter Webinar Series presents information about critical topics for today’s progressive agricultural, forest products and commercial fishing businesses. all webinars are

live, free and sponsored by Farm Credit East’s Knowledge Exchange. if you miss a webinar, you can later view it, at your convenience, on the members-only section of our website.

To register for each of the following webinars, go to FarmCreditEast.com/Webinars.

Winter weBinar series


Sharingtheir time In the spirit of agricultural cooperatives, Farm Credit East employees have been giving back to their local communities for almost 100 years. Here is a small sampling of how some employees contribute.

Jan BitterVice president and branch manager, Cortland, n.Y. Steering committee, Northeast Dairy Challenge

“Every fall, more than 100 dairy

science students from 14 colleges and uni-

versities across the Northeast gather for

the Northeast Dairy Challenge. Students

work in mixed-university teams to solve

real-world dairy farm situations that they

later present to the farm family.

“The gathering of the best and bright-

est among future northeastern dairy leaders is run entirely by

volunteers, including agribusiness people, academics, farmers

and students. My 10 years on the committee have been enjoyable,

especially when I hear alumni say how the program opened their

eyes to careers in the dairy industry. That’s what keeps volun-

teers like me coming back year after year.”

Craig PollockVice president and branch manager, Sangerfield, n.Y.President, The Northeast Cooperative Council (NECC)

“During my tenure on the Board and

now as its president, I am proud to say

that NECC has delivered high-quality

conferences to managers and directors

of major cooperatives. In addition, we

have helped prepare young members for

leadership positions in their respective

cooperatives.

“Most recently, we reestablished a course at Cornell on coop-

erative structure. I have always had a soft spot for educational

pursuits. I enjoy working with my fellow board members, who

are thoughtful, accomplished people. In short, I have benefited as

much from being a part of this organization as I hope that I have

given to it.”

Holly WaltersCustomer service, Burrville, n.Y.Leader, 4-H Dairy ClubSecretary, Lewis County 4-H Advisory Committee

“My 4-H leader impacted my life in so

many important ways that I’ve wanted to

help youth enjoy the same opportunities

ever since. As a 4-H leader, I’ve helped

organize our Lewis County Dairy Bowl

team and watched members go to the

state competition.

“As secretary of the dairy advisory

committee, I help organize the annual Dairy Camp, where youth

learn how to wash, bed, clip and show their animals. This year,

we will run our Enhancement Calf Scholarship, which awards a

registered calf to the scholarship winner. I once won this scholar-

ship, which may be why I still show cattle today.”

Brian MoncktonRegional manager, Batavia, n.Y.Director, LEAD NY

“Close to 400 people have gradu-

ated from Lead NY since it first offered

leadership training in 1985. I am humbled

to be one of those graduates and equally

humbled to serve alongside a group of

committed individuals on the LEAD

Board. We strive to build on a program

that develops leaders for the food, agricul-

ture and natural resource industries.

“I chair the finance committee and serve as liaison to the NYS

Ag Society. LEAD recently graduated its fourteenth class. This

class’s field travel experience was in Turkey, which is a country

out of the normal ‘comfort zone’ of prior class trips.”

fce employees invest in their local communities

15W i n t e r 2 0 1 3

The CSA method of farming debuted in the United States in the

mid-1980s when the first two CSAs were created, one in Massachu-

setts and the other in New Hampshire. Since then, this movement

has been ever growing across our 50 states.

When Chris and Katie Cashen first got started farming together

back in 2000, the Farm at Miller’s Crossing was primarily whole-

sale, with a small CSA on the side. But as their business continued

to expand, they started to experience some of the turbulence that

comes with wholesale marketing — price fluctuation and often too

much of a crop they couldn’t sell.

As their CSA continued to develop, Chris and Katie saw an

opportunity to expand this portion of their business. “We realized

the CSA was safer because we had a guaranteed market,” said

Chris. “With a CSA, we essentially enter into a contract with the

consumer so we know the majority of our products are sold before

they’re even planted.”

Over the past 13 years, Chris and Katie say they’ve learned a

lot. Their plantings and harvestings require a great deal of plan-

ning to ensure they have variety available for their members each

week. “Our goal is to give people what they want even though

they aren’t selecting it themselves,” said Katie. “We want our mem-

bers to have variety to prepare meals without excess produce just

sitting in their fridge.”

A typical weekly share consists of 7-to-10 items, including at

least one head lettuce or salad green, one cooking green, one root

crop, one herb and one fruit item, among other items depending

on the season. In addition, the Cashens also offer a grass-fed beef

share, a winter share and a canning share.

Although Chris and Katie have found CSA farming to be less of

a gamble, as with any type of farming, risk can never be eliminat-

ed. You never know when a heat wave might hit or flooding rains

or damaging winds will sweep through the area, destroying the

crop. And, in the Cashen’s case, a crop that has been destroyed by

weather conditions means that it can’t be delivered even though it

has already been purchased.

“That’s where the ‘community support’ idea comes into com-

munity supported agriculture,” explained Chris. “The community

shares our risk. They’re going through the same heat or rain that

the farm experiences, so they understand if we can’t provide a

particular product as we planned.”

cHriS & katie caSHenFarm at Miller’s CrossingHudson, n.Y.Organic CSa, wholesale & retail operationHave worked with Farm Credit East on lending, taxes, consulting and appraisals

Sharing the Risk through coMMunitY supported agriculture

Consultant Services Lead

to Greater Profit for Murcrest

Farms


Lynn Murray will be the first to tell

you: When it comes to managing your

farm, what you don’t know can hurt you.

In 2004, the time felt right for Lynn

and his family to expand their dairy

farm. “We had too much equipment and

labor with not enough cows,” recalled

Lynn. “It wasn’t an efficient size for us.”

But before moving forward with an

expansion, the Murrays brought Farm

Credit East consultant John Lehr into

the fold — and they were glad they did.

“John immediately pointed out that a less

profitable year was the best time for us

to expand, which was a surprise,” said

Lynn. John suggested that the Murrays

would be at less risk in a down year,

given that they were already sacrificing

income. Additionally, they would be bet-

ter positioned to take advantage of the

higher prices in an up cycle once they

completed their expansion.

Looking to the Murray’s numbers,

John also saw several ways to mitigate

the risk of an expansion. The Farm

Credit East dairy benchmark program

focused the Murrays’ attention on their

feed costs, which were higher than other

farms of their size. “We were spending

too much on purchased feed concentrate

mixes. Focusing on that made a big dif-

ference in our bottom line,” said Lynn.

John encouraged the Murrays to

focus separately on variable and fixed

costs to better evaluate their overhead,

and used budget projections in a gross

margin format. “As we did that, we could

model future changes,” John said, “add-

ing cows, getting the parlor up to capac-

ity. The gross margin format was a great

tool to use to visualize changes.”

According to Lynn, Farm Credit East

helped his family to see threats and

opportunities that they may otherwise

have missed during a 10-year period of

growth. “It’s hard to see every detail

when you live the business every day,”

he said. “I am certain John’s work moved

us faster and more profitably through

expansion.”

lOOk beFOre yOU leaP

lynn mUrray anD FamilyMurcrest Farms, LLCCopenhagen, n.Y.Dairy farm

17W i n t e r 2 0 1 3

The Entwistle family will not be using the 1040-EZ tax form

this year … or ever, for that matter. With a farm that includes three

LLCs, a rapidly growing herd and three generations of operators,

tax time can feel like untangling a very large ball of twine.

“We have a complicated business that includes my parents,

Robert and Alma, and my three brothers, Robert, Jr., Steven and

Joseph,” acknowledged Jim Entwistle. “My brothers and I are wind-

ing down our father’s business and growing ours. Our parents also

gifted the rest of the real estate to us last year. It’s taken a lot of

thought.”

To ensure that their tax returns are accurate, Jim turns to

Farm Credit East tax specialist Paul VanDenburgh. “Paul prepares

returns for our multiple entities as well as many of our personal

returns. He’s knowledgeable and keeps us up to speed on tax

laws,” he said.

For the Entwistles, filing annually is only one part of an ongo-

ing process. “We meet with Paul and our loan officer two or three

times throughout the year,” said Jim. “That lets us work together

on what short- and long-term decisions to make and how much

money to spend.”

Jim sites the changing cap on write-offs as an example of how

Farm Credit East helps bring a strategic perspective to the tax pro-

cess. “When the government was trying to stimulate the economy,

you could spend up to $500,000, which you can rapidly depreciate

in one year rather than over 7 or 10. With that in mind, Paul kept

us informed so that we could plan our capital purchases,” Jim said.

Paul stresses the importance of taking the long view with re-

gard to tax liability. “Some clients can be unrealistic about getting

refunds every year. It’s better to pay a little tax all the time than

pay a huge amount one year and none the next,” he explained. “I

like to take the peaks out as well as the valleys.”

For businesses like Entwistle Brothers Farm, LLC, accomplish-

ing that objective can include strategies such as prepayment, capi-

tal purchase decisions or transferring assets from one generation

to another. Regardless of the strategy Paul ultimately recommends,

he focuses on a team approach in creating a plan. “I work closely

with the family’s attorney to minimize eventual estate issues,” he

said. “There’s also close coordination with their credit, records

and tax staff at Farm Credit East. That collaboration makes for

smooth delivery.”

Jim and his family recognize the importance of having an

informed and engaged tax specialist on their team. Farm Credit

East fills that crucial role. “Taxes make up a huge part of our plan-

ning throughout the year,” said Jim. “There’s a lot of trust involved

when you have someone manage your records and taxes. But

honestly, without Paul’s advice, we’d have spent a lot more money

over the years.”

Jim entWiStle anD FamilyEntwistle Brothers Farm, LLCLitchfield, n.Y.Dairy farm

naVigating – the Twists and Turns of – tax law

FCE tax specialists take the mystery out of filing


washingtonUpdate

With 80 percent of farm bill spending

going to nutrition programs, an increas-

ing number of people are asking, “Does

it make sense to combine farm programs

with nutrition programs in one farm bill?”

This option almost became reality this

year as the House moved separate bills on

farm and nutrition programs before the

conference committee was established.

The historical view was that farm pro-

grams and food stamps made a good mar-

riage, because bringing the two programs

together gained support from both rural

and urban members of Congress. With less

than 50 of the 435 House members from

rural/agriculture districts, it made sense to

seek urban/suburban support by tying the

two together.

The fact that the Senate and House

agriculture committees have jurisdiction

for both the SNAP and farm programs is

the underlying reason why the marriage

worked. From a pragmatic viewpoint, agri-

culture committee members who support

farm programs included food stamps in

order to gain backing from urban mem-

bers. The combining of the two interests

has ensured the necessary support to pass

the farm bill.

But the process broke down this year.

As SNAP went from a $25 billion annual

expenditure 10 years ago to its $76 bil-

lion price tag today, it became a red flag.

Many members from rural districts are far

more concerned with increasing federal

expenditures than with farm programs.

Conversely urban members found little

reason to support a farm bill that made

cuts to SNAP.

The reality is that it may be hard to

maintain farm programs unless they are

packaged with something else. Lisa Kelly,

of the National Council of Farmer Coopera-

tives, shared this perspective:

“The farm bill must preserve the long-

standing, rural-urban alliance that reinforc-

es the fact that food security, investment

in rural America and a safety net for those

in need are priorities benefitting the entire

nation. Adding to the importance of this

effort is the fact that rural America’s popu-

lation is, by its very nature, smaller than

that of urban and suburban America. As

such, it is ill-advised to seek a separation

of nutrition programs from the farm bill,

especially at a time when the agriculture

industry is seeking to better connect with

its consumers.

“Should this farm bill put farm policy

and food policy on separate paths, it could

impact farm bill reauthorizations in the

years ahead and farm policy stands to lose

the most in that scenario.”

Note: At the writing of this article,

the farm bill is in a House-Senate

conference committee. While it appears

that nutrition and farm programs will

stay together in this bill if the conference

committee is successful, this issue will

remain a key area of discussion in

the future.

Robert a. SmithSenior Vice President for Public Affairs

Should the Farm Bill include

Nutrition Programs?“ The reality is that it may be hard to maintain farm programs unless they are packaged with something else.”

Farm Credit East is pleased to have a number of members of the House agriculture Committee who have advocated northeast agricultural interest in the farm bill debate. Here are five perspectives on the nutrition/farm program issue. Representatives Gibson, Collins, Kuster and McGovern serve on the House agriculture Committee and Representative Owens previously served on the agriculture committee and now is on the appropriations committee. We thank them for their input on this issue.

“As a member of the House Agriculture Committee, I worked to draft a bipartisan

Farm Bill that was ultimately voted out of committee by an overwhelming majority

vote. Unfortunately, that bill failed to pass the House in June. It became clear to House

leaders that it was necessary to separate the farm programs and nutrition title in order

to get all these important issues to Conference Committee with the overall goal of hav-

ing a comprehensive, five-year Farm Bill in place for the benefit for our farmers, ranch-

ers and producers. I am pleased the Committee is currently working toward making

that a reality.”

- Congressman Chris Collins, R-new York (first elected in 2012)

“Traditionally, the farm bill has been put together with a broad bipartisan coali-

tion. We have an institutional framework in place that addresses nutritional needs

of our vulnerable citizens, while providing a safety net for our farmers and ranchers

who produce our high-quality food. I am hopeful that the completion of the farm bill

will regroup this historic coalition and produce a bipartisan product that remarries

the nutrition title with agriculture programs. Continuing to link these two portions of

the bill will give us the best chance at passing a final bill and thereby reforming and

improving these programs.”

- Congressman Chris Gibson, R-new York (first elected in 2010)

“I strongly believe that farm and nutrition programs belong together in one Farm

Bill. The Farm Bill is intended to ensure that our nation has a robust food system that

supports jobs and provides our families and children with fresh, nutritious food. The

farm support programs within the Farm Bill are important to the rural economy, and

the nutrition programs are equally important because that money goes right back to

the farmers who are providing that nutritious food. If we don’t have both parts of that

equation, then the Farm Bill isn’t going to comprehensively meet the needs of both

farmers and consumers.”

- Congresswoman annie Kuster, D-new Hampshire (first elected in 2012)

“Splitting nutrition programs from the rest of the farm bill would be a very bad

idea —particularly in the current political climate. These valuable programs are under

attack. We have already seen a stand-alone nutrition bill pass the House that would

have slashed $40 billion from SNAP.”

- Congressman Jim McGovern, D-Massachusetts (first elected in 1996)

“A comprehensive Farm Bill unites America’s diverse interests by ensuring votes

from both rural and urban districts. Dividing the bill sets a dangerous precedent for

farmers who count on Congress to deliver the certainty of a five-year bill. This legisla-

tion is too important for farmers, New York’s economy, consumers, and the millions

of vulnerable seniors, children, and veterans who rely on the SNAP program. They

deserve a comprehensive solution, which is long overdue.”

- Congressman Bill Owens, D-new York (first elected in 2009)

The Two Sides of the ArgumentSPlit Farm PrOgramS anD nUtritiOn PrOgramS aPart• Agriculture is only 20 percent of

farm bill funding. We shouldn’t give the public the impression that big expenditures are being spent on agriculture.

• Nutrition programs have social purposes. Farm programs should be viewed as programs that advance food security and economic development.

• Farm programs deserve their own focus.

• Nutrition programs are too controversial and a detriment to agriculture.

keeP tHem tOgetHer• A rural and urban coalition is

essential for building support.

• Farm programs cannot generate necessary support on their own, because there are not enough members of Congress with strong ag interest.

• Agriculture should think in terms of food security at all levels, from production to consumer.

• This gives more authority to agriculture committees and undermining this authority would be detrimental to agriculture in the long run.

Congressional PersPeCtives

19W i n t e r 2 0 1 3

FINANCIAL PARTNER is for the customers, employees and friends of Farm credit east. Farm credit east is a farmer-owned lending cooperative serving the farm, commercial fishing and forest products businesses in new Hampshire, massachusetts, connecticut, rhode island, new york and new Jersey. Part of the national Farm credit System, Farm credit east is a full-service lender dedicated to the growth and prosperity of agriculture.

HOW TO REACH US: Whether you want to praise us, complain, ask our advice or just let us know what’s on your mind, we’d like to hear from you. Write: karen murphy, editor, Farm credit east, 240 South road, enfield, ct 06082-4451. call: 860.741.4380. e-mail: [email protected].

copyright © 2013 by Farm credit east, aca. all rights reserved. Farm credit east is an affirmative action, equal opportunity employer.

Financial Partner is printed on recycled paper.

Farm Credit Northeast AgEnhancement Program

recently awarded a $5,000 grant to the North American

Intercollegiate Dairy Challenge (Northeast Region) to

support a three-day event for agriculture colleges where

dairy students in mixed school teams analyze all aspects

of a dairy farm and make recommendations to a panel of

judges. This gives students the opportunity to develop

skills and provide insights as well as to compete, share

and make contacts within the dairy industry.

According to Farm Credit East’s John Lehr, an active

program leader, “Putting students with different skills

from different schools on a team to find solutions is an

important learning experience. Today’s businesses

require employees to succeed with all types of personal-

ities. The Dairy Challenge teaches technical knowledge

and helps students develop people skills.”

John added, “In addition, the program brings all

aspects of the dairy industry together. It is a tremendous

opportunity for participating dairy farms to receive

consulting advice and for agribusiness sponsors and

students to meet and discuss prospective working

relationships.”

coMMunitYSupport

dairy challenge receives agenhancement grant

Farm Credit East240 South RoadEnfield, CT 06082-4451

Address Service Requested

PRSRT STDU.S. Postage

P a i DPermit No. 690Springfield, MA

For details•BobSmith:800.327.6588

•Emailproposalsto:[email protected]

•Proposaldeadlines:April1,August1andDecember1

•FarmCreditEast.com/Industry-Support.aspx

agEnhancement Grants since 1996 •Totalgrantdollars:$1.473million

•Totalprojectssupported:553

Students ask questions to Lance Rovers, far right, of Rovers Farm in Chazy, N.Y. Fourteen colleges and universities sent 119 students to this year’s Dairy Challenge.

Winter 2013 Financial Partner Magazine

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Transcript of Winter 2013 Financial Partner Magazine