Post on 22-Jul-2016
description
Summer 2015
Summer 2015
FEATURE STORY > 3The U.S. is the largest consumer of sugar globally. We’re also
one of the largest sugar importers. Yet our country has the
most highly developed industries in the world to process
both sugar cane and sugar beets into white crystal sugar
On the cover: Cody Bingham, Jerome, ID.
yields
Who we are: Northwest FCS is a customer-owned
financial cooperative providing financing and related
services to farmers, ranchers, agribusinesses, commercial
fishermen, timber producers, rural homeowners and
crop insurance customers in Montana, Idaho, Oregon,
Washington and Alaska. Northwest FCS provides
approximately $13 billion in loans and is a member of the
Farm Credit System, a nationwide network of borrower-
owned lending institutions that provide approximately
$217 billion in loans to rural America.
Board of DirectorsDave Hedlin, Chair, Mount Vernon, WA
Jim Farmer, Vice Chair, Nyssa, OR
Christy Burmeister-Smith , Newman Lake, WA
Susan Doverspike, Burns, OR
Duane (Skip) Gray, Albany, OR
John Helle, Dillon, MT
Greg Hirai, Wendell, ID
Herb Karst, Billings, MT
Dave Nisbet, Bay Center, WA
Kevin Riel, Yakima, WA
Nate Riggers, Nez Perce, ID
Karen Schott, Broadview, MT
Julie Shiflett, Spokane, WA
Shawn Walters, Newdale, ID
About YieldsYields is produced for stockholders of Northwest FCS, an
Agricultural Credit Association. Comments and story ideas
can be sent to the Marketing Department, c/o Northwest FCS,
P.O. Box 2515, Spokane, Washington 99220-2515.
website: northwestfcs.com
Northwest Farm Credit Services is an equal opportunity
employer and does not discriminate on the basis of race, color,
religion, sex, national origin, marital status, age, disability,
disabled veteran, Vietnam era or other eligible veteran status.
Article quotes have been edited for content and appropriateness.
Supporting Rural Communities > 9
College Scholarship Winners > 11
Global Economic Trends - Dave Kohl > 12
We are fortunate to live and work in the Northwest, a region known for its diversity in agriculture. Our
customers grow and process hundreds of different crops for domestic and global use. As a financial
partner, serving this unique marketplace helps us diversify our portfolio and spread risk across
multiple industries.
While there are many benefits derived from this portfolio and customer diversity, serving a diverse
marketplace also has its challenges. To be an effective financial partner we must deeply understand
the various industries we serve. In the Northwest we export products to 157 countries. This means
we need to understand not only the domestic marketplace but the dynamic, global markets as well.
As you’ll see in this issue of Yields, this is particularly true for commodities like sugar beets, which are
increasingly impacted by U.S. and global trade agreements.
Our commitment to understanding the many industries and markets we serve sets us apart from
other lenders. Our Knowledge Center teams focus on specific commodities, like row crops, dairy
and timber. They gather and synthesize market information from many different sources including
industry experts and successful Northwest producers. We use this information to educate the next
generation of Northwest FCS employees and to help provide advice to our customers through
industry cycles.
These are exciting times for agriculture. We’re privileged to support our customers in the Northwest’s
food and fiber industries who perform a vital role for consumers in the U.S. and around the world.
UnderstandingUnderstandingthe marketplacethe marketplacePhil DiPofi, President and CEO
yields Summer 2015 | 2
Sugar—nature’s natural sweetener. For centuries sugar has been used to make Sugar—nature’s natural sweetener. For centuries sugar has been used to make
nutrient-rich foods more palatable. It’s a strategic food “stuff” that can add nutrient-rich foods more palatable. It’s a strategic food “stuff” that can add
essential calories to the human diet quicker than virtually any other food essential calories to the human diet quicker than virtually any other food
source. Beyond enhancing flavor, sugar also acts as a tenderizer. It speeds the source. Beyond enhancing flavor, sugar also acts as a tenderizer. It speeds the
growth of yeast, coagulates egg proteins in custards, incorporates air into the growth of yeast, coagulates egg proteins in custards, incorporates air into the
creaming process and regulates gelling for fruit preserves. The U.S. is the largest creaming process and regulates gelling for fruit preserves. The U.S. is the largest
consumer of sugar globally. We’re also one of the largest sugar importers. Yet consumer of sugar globally. We’re also one of the largest sugar importers. Yet
our country has the most highly developed industries in the world to process our country has the most highly developed industries in the world to process
both sugar cane and sugar beets into white crystal sugar. both sugar cane and sugar beets into white crystal sugar.
3 | Nor thwest Farm Credit Ser vices
GrowingGrowingU.S. SugarU.S. Sugar
Worldwide, the U.S. typically ranks sixth in Worldwide, the U.S. typically ranks sixth in
sugar production. Brazil is the world’s largest sugar production. Brazil is the world’s largest
producer. Developing countries like Brazil, producer. Developing countries like Brazil,
India and Thailand rely heavily on sugar India and Thailand rely heavily on sugar
production for jobs and a significant portion production for jobs and a significant portion
of their gross domestic product. It’s no wonder of their gross domestic product. It’s no wonder
foreign governments highly subsidize their foreign governments highly subsidize their
sugar industries. So, how do U.S. producers sugar industries. So, how do U.S. producers
compete? First, they work together and speak compete? First, they work together and speak
with one voice. They embrace change and new with one voice. They embrace change and new
technologies, like bio-tech, that have sharply technologies, like bio-tech, that have sharply
increased yields. When it comes to making increased yields. When it comes to making
sugar, U.S. producers offer the finest quality in sugar, U.S. producers offer the finest quality in
the world backed with the science to prove it.the world backed with the science to prove it.
The global dynamics for sugar The global dynamics for sugar
The global sugar industry is vastly different from most com-modities in agriculture. Essentially, the global industry is a managed market with an intricate mix of trade agreements, tariffs and quotas. In fact, U.S. sugar policy can be traced back to 1789 when the first Congress of the U.S. imposed a tariff on foreign sugar.
Today, the U.S. buys more than three million tons of foreign sugar a year, mostly from developing countries. To help support U.S. production and to keep prices in check, the USDA estimates the amount of sugar that will be consumed
by U.S. consumers each year. Eighty percent of this market is allotted to domestic production and the balance is open to approximately 40 other trading partners. Each country is given a certain amount of sugar they can import into the U.S. through a tariff rate quote system so demand and sup-ply are balanced. Yet, it’s never quite that simple.
“The sugar beet market has really struggled the past three years,” says Duane Grant with Grant 4-D Farms in Rupert, Idaho. “We went from all-time highs back to historical lows, prices we were getting back in the ‘70s. It started when Hur-ricane Katrina wiped out most of the sugar cane in the U.S. Sugar prices went up significantly. Then global production ramped up. Mexico was very aggressive. The North Ameri-can Free Trade Act had reached its 10-year phase-in, allow-ing sugar from Mexico to flow unrestricted into the United States. In a grab for market share Mexican sugar companies, many of which are owned by the Mexican government, were selling sugar here far below prices they were willing to sell for in their own country. It turns out that’s against the law. But, it went on for three years and really hurt our industry.”
In 2014, the U.S. sugar industry joined hands and essentially sued Mexico in trade court. An out-of-court settlement is pending. If the trade case with Mexico stands, Mexico will be allowed to backfill any shortage that might develop if domestic producers or trade-partner countries fail to meet their production goals. Sugar production in the U.S. is purposely held below the 80 percent threshold; some years it may be 72 percent. If the industry produces more than 80 percent, and it has happened, they’re required to pay
yields Summer 2015 | 4
Duane Grant and Kalvin Miller of Grant 4-D Farms
the price to store it and reduce production the following year. In the agreement, other countries will import about 15 percent of U.S. consumption. The remaining 5 percent will be sourced from Mexico.
“While we don’t want to increase sugar coming into the U.S. through more free trade agreements, whatever we allow into the country can hurt Mexico.” says Cody Bingham, a young sugar beet grower in Jerome, Idaho. “Mexico has agreed to a fair price now. It benefits them as well. Some people might say governments shouldn’t protect their sugar industries. In the U.S. we want free markets.
As farmers and growers we’re okay with free markets too, but it needs to be fair. If we get rid of all our protections everyone else has to do the same. As sugar producers in the U.S. we know we can out-compete globally and we’re much more efficient.”
Sugar co-ops take the reinsSugar co-ops take the reins
Duane Grant’s family has been growing sugar beets in Idaho for more than 50 years. His dad started farming with just six acres and borrowed equipment in 1961 with help from the G.I. Bill. The family grew whatever they could to make a living back then. His parents raised six kids on only 140 acres of farm ground. Back in the day you didn’t get rich being a sugar beet farmer. But, you could always count on beets to pay the bills.
When Duane officially joined the family partnership in 1981, the sugar refining companies in the U.S. were privately owned. Sugar companies controlled beet production capacity for the factories’ needs based on government quotas. They contracted with growers for a certain amount of acres. The government was still involved in managing the price of sugar, but growers always felt the sugar companies were between them and the marketplace.
5 | Nor thwest Farm Credit Ser vices
Cody Bingham and Northwest FCS Relationship Manager Bill Lickley
Duane Grant and Northwest FCS Relationship Manager Rich Fehringer
Everything changed, about 20 years ago, when grower-owned cooperatives began taking ownership of the beet refining industry. Today, four main cooperatives in the country process and sell the majority of sugar to U.S. food and beverage companies. Amalgamated Sugar Company,
“Snake River Sugar,” is the largest Northwest sugar beet processor, serving growers across Southern Idaho, Eastern Oregon and Washington.
Taking ownership of the company hasn’t always been easy for growers. Sugar markets weakened significantly in 1997, the first crop year they took over, and prices stayed low for years. The young company was saddled with debt. In the early years, owner returns weren’t meeting expectations. But, sugar beet growers like Duane Grant and Cody
Bingham could still see the opportunities of buying-in on the ground level of something big.
Grower strongGrower strongCody bought shares in the new cooperative when he was just 15 years old. Bill Lickley at Northwest Farm Credit loaned him the money. Cody grew up watching his dad grow sugar beets and the two bought their first shares in the co-op together. To be a member, growers buy common stock. Then they’re entitled to grow one acre of beets per one acre of additional stock purchased. The initial offering in the co-op was $400 a share per acre with 200,000 shares per acre available.
Since then, Cody has pursued his passion for farming. He has degrees in agricultural
business and technology with a Masters in international business. He still loves to grow sugar beets. He’s now chairman of the Snake River Sugar Beet Research & Seed Alliance, responsible for overseeing research funding and seed approval for Snake River Sugar’s growing regions.
Duane’s family also bought initial shares in the cooperative back in 1996. He borrowed money from Northwest FCS to buy 1,000 shares and nearly tripled annual production in one year. Duane admits in the beginning they struggled to handle the growth. But, this was a turning point in the family business and their lender stood by them. Slowly, over the years the family acquired more shares. Today Grant 4-D Farms grows 7,200 acres of sugar beets and Duane is chair of the Snake River Sugar Company Board.
Proven science transformsProven science transformsthe the industryindustryScience completely transformed the U.S. sugar beet indus-
try when Roundup Ready™ seed was officially introduced
in 2008. Grower-owned cooperatives across the country
started testing the seed in 2002. Both Duane and Cody sup-
ported early trials on their farms. Duane says from 1996 to
2008 the year-on-year yield for sugar beets only increased
about half-ton per acre. Slow and steady. But with Roundup
Ready™ seed, the year-on-year yield increases doubled!
Sugar content in the healthier beets has improved too,
while labor and input costs decreased.
“Before planting Roundup Ready™ seed, the industry put
together an informal council to talk about how the market-
place would receive bio-tech sugar beets,”
says Duane. “We wanted to make sure we
really understood how the transition to GMO
would affect the market. We gathered sugar
samples from around the world, Russia, Japan
and every factory in the United States. We
initiated a third party, blind study using an in-
dependent lab in Paris. The results came back.
They said, ‘we can’t tell you where this sugar
came from, whether it’s bio-tech, organic or
conventional. It’s all sugar.’ Refined sugar has
“Refined sugar “Refined sugar
has no proteinhas no protein
or DNA, so or DNA, so
there’s no there’s no
difference based difference based
on the sourceon the source
of the sugar. of the sugar.
Sugar is sugar.”Sugar is sugar.”
yields Summer 2015 | 6
no protein or DNA, so there’s no difference based on the source of the sugar. Sugar is sugar.”
So, how does GMO seed help sugar beets? Simply put, it just helps fight the bullies. Weeds are like playground bul-lies. They grow faster and beat up the plants. Roundup™ controls weeds. Genetically modified seed simply protects plants from Roundup™ applications. Without weeds sugar beets get more sunlight. They stay healthier when they’re not stressed and they grow like crazy.
“The industry knew the value of the technology offered and that the marketplace would accept the sugar,” says Cody. “Based on that knowledge, the entire industry, both U.S. and Canada, independently decided to move forward with rapid commercialization the year regulatory approvals were in place.”
Market acceptance for GMOsMarket acceptance for GMOs
Since the introduction of GMO beet seed, the bulk of U.S. food and beverage manufacturers understand that sugar is simply sugar. They know this isn’t a science-based issue. It’s not a health-driven issue. It’s a social media issue. But, some are beginning to ask if Snake River Sugar can source non-GMO too. Brand managers for example, could be getting calls from moms wondering where the sugar in their kids’ cereal comes from. Is it non-GMO? The non-GMO movement has certainly found momentum.
“Some customers are curious,” says Duane. “They wonder if we can source non-GMO sugar if they ever need it. Of course we say, ‘Yes, we can provide you with non-GMO.’ The next question is at what cost. That’s the real kicker. There is a small group of customers who are willing to pay for non-GMO certi-fication and consumers who are willing to pay the price.”
All of Snake River Sugar Company’s members plant GMO seed varieties, so all the sugar produced is derived from biotech beets. But several years ago, Snake River Sugar formed a marketing venture with one of the world’s largest sugar traders. The French company has refining capacity in Russia, but they also buy and sell sugar globally. Despite the fact that the sugar is the same, if customers ask, Snake River Sugar can source and find some of the best prices for non-GMO certified sugar as well.
Looking to the futureLooking to the future
Global human consumption for sugar is expected to increase by 1.6 percent for 2015-16, continuing the steady upward trend that has taken place for more than a decade. Global production has naturally been more volatile. While worldwide production has declined the past three years consumption has been catching up.
Northwest sugar beet producers like Duane and Cody are
optimistic about the industry’s future. Cody says more
than 65 different seed varieties are now being tested for
approval. The seed alliance has reworked the mathematical
side of the formulas, with entry and exit criteria for
approval, to get the best possible seed for growers. If USDA
can administer the U.S. sugar program the way Congress
intended and the trade case with Mexico sticks, the future
is very predictable for the U.S. industry, Duane says. “We’ll
be able to grow strong, healthy plants, pay our bills and sell
our sugar. When the day is done, we’re farmers.”
7 | Nor thwest Farm Credit Ser vices
The High Risk ofThe High Risk ofHotel Wi-FiHotel Wi-Fi
Just because you’re staying at a nice hotel doesn’t mean hackers aren’t around the corner. Identity thieves may be more interested in what’s going over your hotel Wi-Fi connection than what’s in your wallet. Beware of computer attacks via unsecured hotel hotspots. Travelers are targeted through pop-up windows while establishing an Internet connection in their hotel room. A pop-up window prompts users to update a widely-used software product, such as Microsoft, Adobe Flash, Google Toolbar, or other recognizable software. In an attack scenario, however, the “update,” is really a virus or malware that enables the hacker to take control of the victim’s computer.
In fact, always assume you’re not alone on any public Wi-Fi network. Disable file sharing, turn on your computer’s personal firewall, and never send Social Security numbers, passwords or financial information when using an unencrypted wireless connection.
5 Tips to Block Hotel Wi-Fi Malware5 Tips to Block Hotel Wi-Fi Malware
1. Update Before Leaving
Install the latest application and operating system security updates onto your laptop, smartphone, and tablet before heading out. Also, ensure that updated antivirus software is running on the device and is also fully updated. While surfing the Web via hotel Wi-Fi, ignore all unsolicited software-update offers. If updates are necessary, update software directly from the vendor’s Web site.
2. Block Pop-Ups
Never, ever click on a pop-up window. No major, reputable site requires a pop-up to work or function. Configure your browser to block all pop-ups.
3. Handle Free Wi-Fi with Caution
The FBI advises users to treat all free hotspots with caution.
4. Read Hotel Wi-Fi Directions
Fake Wi-Fi access points are designed to look just like real hotel Wi-Fi networks. These “Evil Twins” may even contain a variation of your hotel’s name. Avoid connecting to fake hotspots by verifying which network actually belongs to the hotel. If you do connect to the wrong hotspot, the hacker could see all of your Internet activities, including your log-in information and passwords. A great option is using your phone via 3G/4G as the connection point rather than Wi-Fi.
5. Don’t Be Afraid to Hibernate
If your computer has signs of infection, put it in hibernate or sleep mode until you can get expert help in repairing or restoring the system. Take the system offline as fast as possible to prevent further data exfiltration and damage.
yields Summer 2015 | 8
The Farm Credit System’s mission to support rural America
means more than simply providing reliable, consistent credit
and financial services to farmers and ranchers. Agriculture
relies on infrastructure to be globally competitive –
including dependable and affordable power, water and
communications services. Farm Credit is a longtime source
of financing for these vital industries, providing the financial
resources they need in order to thrive.
One of Northwest Farm Credit Services’ partner institutions,
CoBank, has a rural infrastructure portfolio totaling over
$16 billion. In addition to acting as the funding bank
for Northwest FCS, CoBank serves rural electric co-ops,
communications providers and water systems in all 50
states. CoBank is also a major agricultural lender to farmer-
owned cooperatives and other agribusiness companies.
Many of CoBank’s infrastructure customers operate in
Northwest FCS’ five-state territory. Take Clearwater Power
Company, in Lewiston, Idaho, which has been providing
power to northern Idaho, western Washington and
northwest Oregon since 1937. Clearwater gets most of its
power from hydroelectric dams on the Snake and Columbia
rivers, operated by the Bonneville Power Administration.
Some of those dams are 75 years old or more. Much of
the financing that Clearwater receives goes into regular
maintenance to keep its customer-members consistently
supplied with power. In particular, CoBank has helped
refinance some of the co-op’s debt, saving hundreds of
thousands of dollars in interest costs, and freeing up money
for capital improvements.
CoBank began working with Clearwater in 2010, when the
bank helped the co-op secure a $5 million line of credit. That
has meant upgrades to poles, lines and basic infrastructure.
Farm Credit: Helping to Power the Farm Credit: Helping to Power the Northwest’s Rural CommunitiesNorthwest’s Rural Communities
9 | Nor thwest Farm Credit Ser vices
Cordova, Alaska
yields Summer 2015 | 10
“We even started financing some bucket trucks with vehicle
loans in 2014,” observes John Donner, CoBank’s relationship
manager with Clearwater.
Having access to those improvements is a big deal in
northern Idaho, where the Great Recession lingered much
longer than it had in the rest of the nation. “I would say
that 2014 was the first year since the recession that our
area saw new construction turn around and
increase from the prior year,” says Dave Hagen,
Clearwater’s general manager.
In that sort of environment, Clearwater is
eager to help support its local community
any way it can. The co-op supports such
organizations as the Clearwater County
Economic Development Association, the Latah
County Economic Development Council, and
the Northwest Intermountain Manufacturers
Council. As a good corporate citizen, the co-
op takes pride in not just providing electricity
to its customer-members, but in the overall
economic growth of the area. “We’re finally seeing some
positive movement,” says Hagen.
There’s a similar story up in Alaska, where Cordova Electric
supports its namesake fishing community, a town of 2,316
located at the southeastern end of Prince William Sound.
After the area was decimated by the Exxon Valdez oil spill
in 1989, the community, which had historically relied on
diesel fuel for its power, began searching for cleaner forms
of energy.
CoBank helped Cordova Electric finance two hydroelectric
dams, the Humpback Creek and Power Creek projects.
Humpback Creek became operational in 1991 and was
refinanced in 1999. Power Creek, with nearly five times the
capacity of Humpback Creek, joined it in 2001. Together, the
two hydro plants now supply 70 percent of
the power to the city of Cordova.
Both plants were built with sustainability
in mind, minimizing the impact on the
environment – especially the salmon that
spawn in the creeks – and taking into account
the needs of Cordova’s residents now and in
the future.
“Alaskans have a very independent spirit,”
said Clay Koplin, CEO of Cordova Electric.
“Energy security and independence are
important to us, and we wanted to harness
our local resources to provide that. We are able to protect
and preserve this beautiful place and still support a strong
local economy and the standard of living our members
want and deserve – made possible by locally powered and
delivered energy.”
Without financial support from Farm Credit, these
organizations would be less able to serve their communities,
and the agricultural occupations they support would be in
serious trouble. Life in a rural area relies on more than just
the ranching or farming or fishing, and these infrastructure
projects help sustain a way of life throughout the rural areas
of the Pacific Northwest.
“Good infrastructure is critically important to the U.S. rural
economy and the overall quality of life in rural America,”
says Tom Halverson, CoBank’s chief banking officer.
“Our customers make a huge difference in their local
communities, and we’re proud to serve them and support
their borrowing needs.”
Cordova Electrics’ Humpback Creek Dam project
Agriculture relies Agriculture relies
on infrastructure on infrastructure
to be globally to be globally
competitive competitive
– including – including
dependable dependable
and affordable and affordable
power, water and power, water and
communications communications
services.services.
11 | Nor thwest Farm Credit Ser vices
Northwest FCS Awards 64 Scholarships Northwest FCS Awards 64 Scholarships Totaling $128,000Totaling $128,000Sixty-four scholarships were awarded to sons and daughters of Northwest FCS customers and employees; eight high school students and four college students from each state received scholarships. In addition, eleven college scholarships open to all students were awarded, including eight scholarships for students at land grant universities and three students were chosen as Minority Scholarship winners. All scholarships are $2,000.
College WinnersWashington
Emily Beebe
Pullman, WADavid and Denise BeebeWashington State University
Grace den Hoed
Grandview, WAArchie and Mari den HoedDordt College
Alyxandria Hanson
Elk, WATravis and Lori HansonOklahoma State University
Joel McClure
Walla Walla, WADaniel and Sarah McClureUniversity of Washington
Oregon
Jaimee Brentano
St. Paul, ORJohn and K’Lyn BrentanoOregon State University
Samantha Brentano
Corvallis, ORThomas and Janis BrentanoOregon State University
Garrett Kitamura
Ontario, ORGrant and Carole KitamuraOregon State University
Idaho
Dillan Henslee
Hagerman, IDMark and Brenda HensleeUniversity of Idaho
Ryan Luttmer
Hagerman, IDScott and Sandi LuttmerBrigham Young University-Idaho
Kevin Permann
Rockland, IDAlan and Donna PermannBrigham Young University-Idaho
Montana
Nicole Wemhoff
Grangeville, IDRoger and Annette WemhoffUniversity of Great Falls
Morgan Beckett
Broadview, MTGlenn and Colleen BeckettMontana State University
Dallas Briese
Loma, MTKim BrieseMontana Tech
Dan Johnson
Dillon, MTJeff and Tami JohnsonKansas State University
Brittney Steele
Valier, MTGlenn and Stacey SteeleSheridan College
Katelyn Michaels
Days Creek, ORTroy and Holly MichaelsUniversity of Northern Colorado
Nolan Henry
Camas, WADarin and Monica HenryUniversity of Notre Dame
Hanna Peters
Prosser, WARobert and Frances PetersBrigham Young University
Jordan Sherfey
Chehalis, WAJustin and Debrah SherfeyPacific Lutheran University
Jillian Nielson
Adrian, ORBret and Jennifer NielsonBrigham Young University-Idaho
Quincy Pendergrass
Adrian, ORMichael and Elisa PendergrassBlue Mountain Community College
Meagan McKinney
Wasco, ORBryan and Kimberly McKinneyOregon State University
Alena Zurcher
Mesa, WAEdward and Heather ZurcherUniversity of Washington
Oregon
Jake Fessler
Woodburn, ORRichard and Melanie FesslerOregon State University
Lee McElligott
North Powder, ORMatt and LaDonn McElligottUtah State University
High School WinnersWashington
Benjamin Azevedo
Othello, WALisuarte and Guiomar AzevedoUniversity of Washington
Melody Davidson
Othello, WAMichael and Dana DavidsonBrigham Young University
Dylan Day
Cashmere, WADaniel and Deborah DayUniversity of Washington
Elizabeth DeReu
Greenacres, WABill and Michelle DeReuUniversity of Montana-Missoula
Riley VanderVeen
Sedro Woolley, WALarry and Beth VanderVeenWayne State College
Matthew Warren
Dayton, WABill and Kristine WarrenUniversity of South Carolina
Emma Franklin
Seattle, WADave Franklin and Ruth SolnitNorthwestern University
Maria Thompson
Diamond, ORDavid and Ramonda ThompsonBerklee College of Music
Idaho
Ashlyn Aardema
Kimberly, IDMichael and Sarah AardemaUniversity of San Diego
Madison Behrend
Aberdeen, IDNicholas and Kristin BehrendIdaho State University-Pocatello
Hank De Vries
Buhl, IDGregory and Julie De VriesCalifornia Polytechnic St. University
yields Summer 2015 | 12
Cierra Lamey
Wise River, MTCory and Kari LameyMontana State University-Billings
Tylynn Rettig
Rudyard, MTShawn and Tiffany RettigCarroll College
Amy Riley
Volborg, MTMike and Margie RileyUniversity of Montana-Missoula
Andrew Roluffs
Tigard, ORMark and Sue RoluffsOregon State University
Karen Montes
Hermiston, ORMiguel Montes and Maria Del CarmenOregon State University
Maria Navarro
Toppenish, WAClemente and Maria NavarroWashington State University
Grace Wilkins
Great Falls, MTDan and Diane WilkinsCarroll College
Graduate
Hannah Mamer
Caldwell, IDMarc and Diana MamerUniversity of Idaho
Minority
High School WinnersWashington
Whitney Fredrickson
Troy, IDJames and Wendy FredricksonBlue Mountain Community College
Jonathan Isham
Howe, IDJeffery and Kelly IshamIdaho State University-Pocatello
Caleb Johnson
Blackfoot, IDRobert and Dana JohnsonBrigham Young University-Idaho
Travis Field
Pendroy, MTPatrick and Diane FieldMontana State University-Northern
Kourtney Simonson
Loring, MTMatthew and Heather SimonsonRocky Mountain College
Kendra Starkel
Ronan, MTRoger and Kathy StarkelArizona State University
Sidney Hathaway
Denton, MTKraig and Jodi HathawayMontana State University
Land Grant
Travis Chase
New Plymouth, IDMike and Donna ChaseUniversity of Idaho
Stephanie George
Pullman, WASteve and Ann GeorgeWashington State University
Jenica Hagler
Pullman, WARod Nettinga and Patty HaglerWashington State University
Heidi Jamison
Garfield, WARusty and Sandy JamisonUniversity of Idaho
Veronnaka Klamert
Billings, MTGene and Ronna KlamertMontana State University
13 | Nor thwest Farm Credit Ser vices
Theresa O’Leary
Paisley, ORMike and Mary O’LearyOregon State University
Riane Towery
Salem, ORScott and Julie ToweryOregon State University
Marni Wade
Volborg, MTGary and Linda WadeMontana State University
Newly ElectedNewly ElectedBoard MembersBoard MembersJim Farmer, Susan Doverspike and Duane (Skip) Gray were newly elected to the
Northwest FCS Board of Directors in March. Each will serve a five-year term.
Jim Farmer was re-elected to the Northwest FCS
board and now serves as vice chair. Jim and his
brother operate a 2,000 acre irrigated row crop farm
with operations in Idaho and Oregon. Together they
produce onions, wheat, field corn and dry edible beans
for seed. They also operate a fresh onion packing shed
that markets approximately 1,000 onions annually. Jim
has been a Northwest FCS customer for 33 years. He is
a member of the American Institute of Certified Public
Accountants, the Idaho-Oregon Fruit & Vegetable
Association and the National Onion Association.
Susan Doverspike owns and operates a cattle ranch
together with her husband in the high desert near
Burns, Oregon. They own about 30,000 acres and
manage another 100,000 acres of federal grazing
permits. The cow/calf/yearling operation markets
natural, non-hormone treated, age source verified,
GAP 4, non-GMO cattle. She has been a Northwest FCS
customer since 1994 and served on the Redmond Local
Advisory Committee. Susan serves on the board of
Harney District Hospital, the Oregon Beef Council and is
a member of the Oregon Cattlemen’s Association.
Duane (Skip) Gray is CEO and President of a diversified
crop production business in Oregon that produces
vegetable and flower seeds, processed vegetables,
peppermint, hazelnuts and grass seed. In a typical
year, the operation grows 50 to 60 different crops on
approximately 1,350 irrigated acres. Skip has been
a Northwest FCS customer for 34 years and served
14 years on the Salem Local Advisory Committee.
He is treasurer for the Specialty Seed Growers of
Western Oregon and serves on the Government Affairs
Committee of the Albany Area Chamber of Commerce.
Land Grant
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One of the enjoyments of my relationship with Northwest Farm Credit Services is working with local farmers, ranchers and team members at various educational venues. I have observed the rural, northwestern region of the U.S. as unique because of the general awareness of global trends and how they impact economic well-being, a direct result of this region’s dependence on exports and global markets. Similarly, producers outside the U.S. exhibit the same understanding of consumer trends, value of currency, geopolitical risk and how each of these impact businesses and personal lives. In my travels across the country, I often encounter producers who believe world trends and economics revolve around domestic agricultural production. With 95 percent of global consumers living outside the U.S., we must make ourselves as marketable as possible. By 2050, world demand for food, fiber and fuel will increase by 70 percent beyond current needs, so the ability to think on a global scale and then adjust your operation accordingly has never been as important.
How do global economic trends impact your business? First, examine the central banks abroad and the U.S. Federal Reserve. As a result of the great recession in 2009, the U.S. Federal Reserve developed a very accommodative, easy money policy. This in turn lowered the value of the dollar which encouraged agricultural exports and lowered interest rates. Some economists estimate up to 40 percent of the increase in commodity prices and land values was the result of Federal Reserve action. Today, central banks in Europe, Japan and even China are embarking on an easy money strategy to boost their export potential and assist in increasing equity values. This global change has challenged industries exporting goods and services abroad because of
the strong dollar. These worldwide central bank short and long-term strategies are creating a strong “king” dollar. The duration of the strong dollar will be a global headwind to many in the agricultural industry.
Another global trend is geopolitical risk. Mr. Putin decided that Russia needed to invade Ukraine. In response, Western nations placed economic sanctions on Russia. In retaliation, Russia limited agricultural imports which impacted commodities ranging from wheat to dairy. Because of the basic need for food, fiber and fuel, agricultural exports are historically the first political tool of persuasion in foreign policy. Thus, agriculture is one of the first industries to feel the impact of risk associated with political and military actions.
Recently, I moderated a panel that included dairymen from Ireland and Germany. Elimination of milk quotas in the European region, a significant milk-producing area, is one of the factors currently impacting dairy profits.Today, one in seven days of milk production in the U.S. is exported. This is a significant increase from past years. If the European region expands production and the Irish meet their mandate to increase production by 50 percent by the year 2020, there will be an increase in supply. This can influence prices as well as profits for the dairy industry in the Northwest and throughout the United States.
The West Coast port strike had a devastating impact on the bottom line of those producers that depend on exports. One producer that exports hay to Asia found prices down 50 percent as a result of the strike because his alternative market was the California dairy and beef cattle herds.
15 | Nor thwest Farm Credit Ser vices
Global Economic Global Economic Trends: Trends: Think Think Globally & Act LocallyGlobally & Act LocallyDr. David Kohl
Professor Emeritus, Virginia Tech
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The long-term viability of a market can also be hindered because of an interruption in the supply or supply chain of that product, impacting overall trust in the marketplace. In summary, whether it is a Russian invasion, European market changes, or a Washington state worker strike, each of these events impact agriculture as well as producers’ ability to move their products.
In my educational venues I suggest that producers follow consumer and regulatory trends in the European region because they will likely emerge in the U.S. within a decade. Close observation of Asia is also prudent because this region is so close in proximity to the Northwestern region. Whether it is banking, regulation, food issues, or other challenges, watching both Europe and Asia will be imperative to one’s success.
There is no doubt that the economic growth of the emerging nations, also known as the BRICS and KIMT nations (Brazil, Russia, India, China, South Africa and South Korea, Indonesia, Mexico and Turkey), helped create the recent commodity super cycle which resulted in high profits and asset appreciation for many in the agricultural industry. Subsequently, the slowdown or moderation of growth in the emerging nations is causing economic stress in some agricultural industries. No matter where, once an economic event happens, it can trigger a domino-like effect worldwide.
Demographics is also another major global trend. For example, Japan, Europe and, to some extent, China have aging populations. Contrast this to Mexico where people under 25 years of age number are 45 percent of their population. The agriculture industry and producers in general need to have a keen understanding of demographics, specifically the impact of the millennial generation (18 to 34 years of age). It is this generation that will move consumer, economic, political and social trends worldwide.
Recently, I asked a number of Mexican bankers to name their biggest challenge. The response was dysfunctional government. Does this sound familiar? Almost any professional will list government under their top points of frustration. The message here is to make an effort to understand the challenges and concerns other countries face. You may know how to grow three hundred bushels
of corn per acre, but if you do not understand Indonesia’s increased need for feed and infrastructure, you may miss the opportunity to participate in that market. Today’s producers must stay apprised of global economic events because, as demonstrated, they will likely impact producers’ operations and profits.
Perhaps, there once was a time when everything a producer needed to know to grow and sell a crop was within a few miles from his home. Today, the United States and all its production is only a piece of the multi-faceted and intricate system through which the world is fed and fueled. The agriculture industry is an amazing demonstration of continued progress and production. However, no matter how much we improve technology or production practices, global factors will always impact agriculture’s success. In order to excel in today’s agricultural environment, one must think globally and act locally.
How can you prepare your How can you prepare your business for global impact? business for global impact? • First, educate yourself on global cultures and issues.
Encourage young people in your life to work or study abroad. Experiencing a foreign culture is just as important as understanding a foreign language.
• Second, read international publications. The Economist and the Financial Times are good publications to start with. Both publications discuss world trends and issues from an international perspective.
• Third, do not rely solely on one international market in business planning. Market availability can change rapidly as a result of political, military or regulatory actions. Scenario planning which includes an alternative market is critical in your ability to take advantage of global trends and opportunities.
• Next, participate in an agriculture group that promotes an international business environment. State leadership groups, educational programs and student exchanges can often be valuable in developing a connection or understanding of global components of the economy.
• Finally, acceptance of new paradigms will be critical for success in global markets. New technology, ideas building upon past practices, and connecting with people inside and outside your business as important resources will be imperative in the wild world of global economic trends.
17 | Nor thwest Farm Credit Ser vices
MarijuanaMarijuanaFinancingFinancing
The state-level industries of marijuana production
have created a new challenge for lenders. The crop is
federally illegal and the budding industry is unproven.
Three of the four states who have voted to legalize
production are within Northwest FCS territory. Lending
for marijuana production or marketing, under current
law, could create risks for Northwest FCS.
“We’re a federally chartered entity regulated by the
Farm Credit Administration, an agency of the federal
government,” explained Craig Crider,
Northwest FCS Senior Vice President
of Customer Solutions. “Involvement
in financing marijuana businesses
could result in negative actions against
Northwest FCS and impair our ability to
effectively serve customers.”
Northwest FCS loan documents, for
example, contain provisions stating the
borrower must comply with all present
and future laws. Operating a marijuana-
related business would cause the borrower to be out of
compliance with these provisions on the federal level.
While marijuana laws may have changed on the state
level, they remain subject to enforcement under the
federal Controlled Substances Act.
“There is no established law that says whether or not
marijuana is a crop,” said Terry Schmidt, Northwest FCS
Assistant General Counsel. “The marijuana industry has
little legal or regulatory history. Lenders are concerned
about the effect of tax laws, the level of due diligence
necessary to comply with federal law to extend credit to
the industry and the application of forfeiture laws.”
From a lending standpoint, marijuana production creates
a whole host of risk management concerns beyond the
fact the plant is federally illegal to grow. Flood or crop
insurance is not available to marijuana producers. Since
marijuana lacks specific farm product status and licenses
do not transfer freely, there is no guarantee a lender could
collect in the event of a loan default.
“From a credit standpoint, this is a new
and unproven industry lacking production
history, marketing channel performance
and price history, “said Crider. “If you step
into a new agricultural business where
you don’t have a track record, industry
performance records provide a level of
confidence until the grower can establish
his or her own production and profitability
performance.”
Financing marijuana is a substantial risk both legally and
as an unproven business. If marijuana were legalized at
the federal level, Northwest FCS would re-evaluate this
position. Currently, the best choice is to refrain from
financing marijuana production on any level.
“To do otherwise would put ourselves at risk and
our customers at risk, as stockholders/owners of the
association” said Crider.
“From a credit “From a credit
standpoint, this is a standpoint, this is a
new and unproven new and unproven
industry lacking industry lacking
production history, production history,
marketing channel marketing channel
performance and performance and
price history.“price history.“
IDAHORobert Ball HamerJeff Bartschi MontpelierCody Bingham JeromeJeff Blanksma, Jr. HammettAdrian Boer JeromeRay Carlson BlackfootConnie Christensen BlackfootCraig Corbett GraceCade Crapo St. AnthonyRon Elkin BuhlCarl Ellsworth LeadoreBruce Foster AberdeenDavid Funk HansenLeRoy Funk BurleyBrent Griffin RupertJackie Hillman HamerBrian Huettig HazeltonJoshua Jones TroyBrent Lott Idaho FallsKaren Lustig CottonwoodMarty Lux NezperceDan Mader GeneseeRay Matsuura BlackfootKyle Meyer RathdrumRon Mio FruitlandGreg Moss KetchumLisa Patterson HeyburnGreg Payne CaldwellErick Peterson MoscowRoyce Schwenkfelder CambridgeKirt Schwieder Idaho FallsScott Searle ShelleyTodd Simmons TerretonRobert Swainston PrestonRyan Telford RichfieldBernie Teunissen CaldwellDale Thomas GoodingCamellia Thurgood NampaJustin Tindall BruneauRitchey Toevs AberdeenSteven Toone GraceJames Udy American FallsTodd Webb DecloShane Webster RexburgPete Wittman LapwaiMatt Wolff Boise
73 Fort Hall Avenue, Suite AAmerican Falls, Idaho 83211(208) 226-1340
370 North Meridian Street, Suite ABlackfoot, Idaho 83221(208) 782-3800
1408 Pomerelle Avenue, Suite BBurley, Idaho 83318(208) 678-6650
501 King StreetCottonwood, Idaho 83522(208) 962-2280
1215 Pier View Dr.Idaho Falls, Idaho 83402(208) 552-2300
2631 Nez Perce Drive, Suite 201Lewiston, Idaho 83501(208) 799-4800
16034 Equine DriveNampa, Idaho 83687(208) 468-1600
102 North State St., Suite 2Preston, Idaho 83263(208) 852-2145
1036 Erikson DriveRexburg, Idaho 83440(208) 656-2100
815 North College RoadTwin Falls, Idaho 83301(208) 732-1000
MONTANALes Arthun WilsallDavid Bell Great FallsBill Bergin MelstoneMark Bergstrom BradyAdam Billmayer HogelandBart Bitz Big SandyRyan Bogar VidaJonathan Bolstad HomesteadKeven Bradley Cut BankSandy Carey BoulderCalvin Danreuther LomaNels DeBruycker ChoteauVicki Eggebrecht MaltaWarren Flynn TownsendConni French MaltaJoe Fretheim ShelbyScott Glasscock AngelaBeth Granger Great FallsGreg Grove MoccasinChad Hansen DillonCraig Henke ChesterCourtney Herzog RapeljeDale Hirsch KinseyAlan Klempel BloomfieldSteve Lackman ForsythTim Lake PolsonBryan Mussard DillonCorie Mydland JolietKen Olson RicheyJon Owen GeraldineMiles Passmore SomersTracey Pearce SheridanRobert Peterson HobsonTrudi Peterson Judith GapShawn Rettig RudyardDave Sattoriva HinghamNancy Schlepp RinglingKim Skinner HallCarmie Steffes PlevnaSteve Swank ChinookKurt Swanson ValierDuane Talcott HammondDale Tarum RichlandBob Taylor DentonKelly Toavs Wolf PointMark Tombre SavageMiles Torske HardinBrian Tutvedt KalispellLarry Tveit, Jr. FairviewBruce Udelhoven WinifredMike Wallewein ConradSteve Wood Sheridan
Tech Plaza, Building 1, Suite 3003490 Gabel RoadBillings, Montana 59108(406) 651-1670
1001 West Oak StreetFarm Credit Building, Suite 200Bozeman, Montana 59715(406) 556-7300
519 South Main StreetConrad, Montana 59425(406) 278-4600
134 East Reeder StreetDillon, Montana 59725(406) 683-1200
501 1st Avenue SouthGlasgow, Montana 59230(406) 228-3900
700 River Drive SouthGreat Falls, Montana 59405(406) 268-2200
1705 US Highway 2 Northwest, Suite AHavre, Montana 59501(406) 265-7878
120 Wunderlin Street, Suite 6Lewistown, Montana 59457(406) 538-7737
502 South Haynes AvenueMiles City, Montana 59301(406) 233-3100
3021 Palmer Street, Suite BMissoula, Montana 59808(406) 532-4900
123 North Central AvenueSidney, Montana 59270(406) 433-3920
OREGONMonet Allen Montague, CAReed Anderson BrownsvilleRoben Arnoldus CoveGlenn Barrett BonanzaAlex Blosser DundeeJohn Boyer HainesGreg Brink JosephRon Brown Milton-FreewaterGeorge Bussmann SixesWarren Chamberlain ValeJason Chapman Klamath FallsTim Dahle The DallesDan Dawson RoseburgPaul Denfeld HillsboroKarl Dettwyler SilvertonMike DeWall HarrisburgRod Fessler MadrasTom Fessler Mt. AngelJoe Finegan CorneliusBruce Ford HermistonJavier Goirigolzarri RoseburgDennis Harmon Grants PassMatt Insko LaGrandeKenneth Jensen ValeKyle Kenagy RoseburgAlan Keudell AumsvilleDiane Kunkel PortlandLeland Lage Hood RiverSharon Livingston Mt. VernonBill Martin RufusScott McClaran JosephRon Meyer TalentGreg Myers TillamookDavid Neal TangentLarry Parker HelixAlan Parks Silver LakeAmy Doerfler Phelan AumsvilleJohn Reerslev Junction CityStephen Roth BrothersShannon Rust EchoMarc Staunton MerrillAnna Sullivan HerefordSteve Walker StanfieldEric White Nyssa
3370 10th Street, Suite BBaker City, Oregon 97814(541) 524-2920
2345 Northwest Amberbrook Drive, Suite 100Beaverton, Oregon 97006(503) 844-7920
650 East Pine Street, Suite 106ACentral Point, Oregon 97502(541) 665-6100
2911 Tennyson Avenue, Suite 301Eugene, Oregon 97408(541) 685-6140
300 Klamath Avenue, Suite 200Klamath Falls, Oregon 97601(541) 850-7500
308 Southeast 10th StreetOntario, Oregon 97914(541) 823-2660
12 Southwest Nye AvenuePendleton, Oregon 97801(541) 278-3300
3113 South Highway 97, Suite 100Redmond, Oregon 97756(541) 504-3500
2222 Northwest Kline StreetRoseburg, Oregon 97471(541) 464-6700
650 Hawthorne Ave. S.E., Suite 210Salem, Oregon 97301(503) 373-3000
3591 Klindt Drive, Suite 110The Dalles, Oregon 97058(541) 298-3400
WASHINGTONDave Allan WapatoLoren Beale PomeroyJeff Bosma OutlookRuss Byerley TouchetRoger Canfield OlympiaBill Clark ChelanMike Cobb EphrataBill denHoed GrandviewRichard DeRuwe DaytonFrank DeVries LyndenScott Eschbach YakimaPatrick Escure QuincyKevin Filbrun PascoSteve Fish Sitka, AKStacy Gilmore PascoAlan Groff WenatcheeLori Hayles PascoIan Jefferds CoupevilleCris Kincaid PullmanJim Klaustermeyer, Jr. OthelloTristan Klesick StanwoodChris Kontos Walla WallaSteve Krupke ReardanDavid Lange ColfaxJosh Lawrence Royal CityPoppie Mantone BingenDan McKay AlmiraJohn Miller ToledoPat Murphy ChehalisJerry Nelson BurlingtonBrian O’Leary Kodiak, AKEric Olson Anchorage, AKJeff Raap EllensburgSara Rolfs WenatcheeJason Salvo SeattleDerek Schafer RitzvilleJeff Schilter OlympiaDanielle Scrupps RitzvilleBen Smith SequimJerry Smith Benton CityJim Stone LakewoodLori Stonecipher Walla WallaMark Tudor GrandviewJake Wardenaar Royal CityAndy Werkhoven Monroe
265 East George Hopper RoadBurlington, Washington 98233(360) 707-2353
629 South Market BoulevardChehalis, Washington 98532(360) 767-1100
224 North Main StreetColfax, Washington 99111(509) 397-2840
1501 East Yonezawa BoulevardMoses Lake, Washington 98837(509) 764-2700
9530 Bedford StreetPasco, Washington 99301(509) 542-3720
2157 North Northlake Way, Suite 120 Seattle, Washington 98103(206) 691-2000
1515 South Technology Boulevard, Suite BSpokane, Washington 99224(509) 340-5600
2735 Allen RoadSunnyside, Washington 98944(509) 836-3080
1 West Pine StreetWalla Walla, Washington 99362(509) 525-2400
667 Grant Road, Suite 1East Wenatchee, Washington 98802(509) 665-2160
1360 North 16th AvenueYakima, Washington 98902(509) 225-3200
advisorsadvisors and locations HeadquartersP.O. Box 2515, 1700 S. Assembly St.Spokane, Washington 99220-2515509.340.5300 | northwestfcs.com
local
yields Summer 2015 | 18
Take Your Best Shot - Win $100Win $100 2016 Photo Calendar Contest
Help us fill our 2016 Photo Calendar with agricultural imagery
that illustrates Northwest Farm Credit Services’ purpose:
To serve the people of Northwest farming, ranching, forestry
and the commercial fishing industries.
If your photo submission appears in the 2016 Calendar you earn a $100 cash prize!
Contest EntriesContest EntriesAll entries must include a Northwest FCS customer with their family or a
customer with a staff member. Customers can be photographed eyes to
camera or in a candid presentation. Photos should capture an authentic
image of the operation:
• Planting, timber, irrigation, livestock or harvest scenes.
• Industry shots of vineyards, commercial fishing, dairy farms, orchards, vegetable operations, nurseries, greenhouses, etc.
• Action shots in fields, forests, barns or docks.
• Seasonal photos, such as holiday decorations, 4th of July events,pumpkins, winter scenes, etc.
• County fairs, roadside markets or farmers markets.
P.O. Box 2515Spokane, Washington 99220-2515
New address?Please notify your local Northwest FCS office.
This institution is an equal opportunity provider and employer.
For rules and submission instructions visit:
northwestfcs.com/photocontest
Submit Your Winning Photo Today Submit Your Winning Photo Today The deadline for photos is September 30, 2015.