Recently I received a reminder email from Melissa Rogers, GreenStone’s VP of marketing & public relations, that this quarter’s Partners article was coming due. So, during a short run (very short) this morning I was thinking about what to write about. There are certainly some challenges in the agriculture industry. A handful of those come immediately to mind:
- Highly Pathogenic Avian Influenza (HPAI) – This has been a significant event for our dairy customers, especially in Michigan, that requires added management time and biosecurity measures. It has been much more than that to some of our poultry producers who have faced required depopulation of flocks and major disruptions to their businesses.
- Labor costs – Agriculture leaders are working together to raise the awareness of Congress to the ever-increasing H-2A labor rates as a result of the annual adjustments to the Adverse Effect Wage Rate (AEWR) and the impact the cost is having on many of our growers. Momentum appears to be building in Congress to at least freeze the AEWR rates at January 2023 levels. More permanent solutions are needed but this would be a start.
- California’s Prop 12 – Pork producers and agriculture leaders from throughout the country are generating support for relief in the Farm Bill from California’s Prop 12 law that dictates how pigs must be raised in order to market pork products in California.
- Net Farm Income – As we have discussed, the industry is expecting 2024’s Net Farm Income to be significantly lower than 2023. Current commodity prices are not changing that projection materially.
- Interest Rates – After lots of talk at the end of 2023 and early 2024 of short-term interest rates declining in 2024, any significant movement in rates yet this year would be a surprise.
GreenStone’s management team, like most, spend a lot more time discussing challenges and possible resolutions to those challenges than we do all the good things happening to our organization or “the wins”. I have to continually remind myself of a saying that Jack Koester, GreenStone’s VP of regional operations, uses at the end of meetings discussing a number of our challenges. It goes something like, “We certainly have opportunities for improvement, but don’t forget we have a thousand things going right.” And he is absolutely right. GreenStone has a thousand good things happening. Many of those positives are because of our outstanding employees. They are committed to our Core Four values starting with putting our Customers First. We have the greatest customers/members/owners in the world. The dedication our members have to providing food, fuel and fiber to the world is unmatched. Examples of this dedication are endless but this time of year I’m reminded of more than a few:
- Staying up all hours of the night to be in the fields and beat tomorrow’s rain.
- Forgoing sleep to monitor the cold temperatures to determine if the wind machines should get turned on to protect the budding fruit trees.
- The cows get milked multiple times a day, every day. Every day.
- The huge investments our members put into their farms and businesses, and the risk associated with those investments.
Another positive for all of us is the Farm Credit System (the System). I recently attended a meeting with approximately 25 other CEOs from within the System. Two of the presenters reminded me of how special it is to be part of Farm Credit, whether as an employee or a member/owner.
Tracey McCabe, President and CEO of the Federal Farm Credit Banks Funding Corporation described a number of things going well for the System today.
- The System’s financial position is very strong.
- The System’s cost of funds continues to closely follow the cost of U.S. Treasury debt.
- If the United States has another financial crisis or a significant geo-political crisis arises, the System will have deep access to the capital market to provide funding to our members.
- The funding needs of customers would be met, and the System’s market share would probably rise.
Todd Van Hoose, President and CEO of the Farm Credit Council described the System’s growing strength.
- The passing of the Farm Bill should be a positive for Farm Credit and our members.
- The System’s market share of agriculture lending is up to 46%, an all-time high. Commercial banks’ market share is next highest at 35% of total agriculture lending.
- Farm Credit’s support of rural communities and agriculture continues to grow as the System had a loan balance totaling $398 billion to 604,000 customers at December 31, 2023.
- Total assets of the System would make Farm Credit the eighth largest financial institution in the country (just behind Goldman Sachs and just ahead of Capital One).
- What really makes Farm Credit special is we are owned by our members. None of the other large financial institutions are part of a cooperative system.
In summary, your Farm Credit cooperative is very strong and is here to support you today and long into the future.
By the way, Melissa leads the team that produces our Partners publication. I just think they do a tremendous job each and every quarter. I hope you enjoy this one.
Thank you again for being customers and members of GreenStone! Please feel free to reach out to me any time if I can ever be of assistance.
To view the summer 2024 issue of Partners magazine in its entirety, click here.
