30-year-old Josh Regier returned to farm with hisfather, Gary, following graduation from college.Only a small percentage of principal farm operatorsacross the U.S. are under the age of 35.

Returning to the farmMeet three producers who represent a small

percentage of farm operators who returned to

the farm at a young age . . . . .Pages 6 & 7

Rig technology cutsproducer costsTo provide a level of service unsurpassed by

others in the industry, MKC utilizes rigs with

leading-edge technology . . . . . . . .Page 4

Making a differenceMeet three employees who donate their

time to their communities and charitable

organizations . . . . . . . . . . . . . . . .Page 5

Joining forces for ag educationMKC partners with others in the community

to educate youth about agriculture and

ag safety . . . . . . . . . . . . . . . . . . .Page 8

Schultz discusses impact of aflatoxinTeam Marketing Alliance COO, Ted Schultz,

shares insights on aflatoxin’s impact on the

industry. . . . . . . . . . . . . . . . . . .Page 10

Board of Directors

David MillsSecretary

C J BlewChairman

Jason Gaeddert

Keith Becker Randy Ellwood

Myron VothVice Chairman

Cecil Wiebe

Neal Beam

At Large

District 3

District 2

District 1

President & CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Dave Christiansen

Vice President & CFO . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Danny Posch

Vice President & CMO . . . . . . . . . . . . . . . . . . . . . . . . . . . . .David Spears

Director of Energy Operations . . . . . . . . . . . . . . . . . . . . . . . .Jason Creed

Director of Southern Operations . . . . . . . . . . . . . . . . . . . . . . .Erik Lange

Director of Northern Operations . . . . . . . . . . . . . . . . . . . . .Steve Peterson

MKC Connections Managing Editor . . . . . . . . . . . . . . . . . . .Kerry WatsonStaff Writer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Cassie Wandersee

Contents

Mid Kansas Coop AssociationP.O. Box D • Moundridge, KS 67107 • 620-345-6328

www.mkcoop.com

December 2012

Duane Johnson

Josh Regier takes his four-year-old son, Gentry,with him during fall harvest. Some of Josh’searliest memories of farming were sharing simi-lar experiences with his father and grandfather.

Fourth grade students from EisenhowerElementary in McPherson participate in aneducational program about agriculture.

3

The definition of dedication By Dave Christiansen, President & CEO

For the mostpart, many peo-ple who dedicatea lot of time tosomething theyare passionate

about go without recognition for theirefforts. When one chooses to serveon various boards of directors or inadvisory capacities, he or she has achoice to make. Am I here to representa vocal few or do what is best for theentire company? Do I give all I can ordo I just put in my time and go throughthe motions? I think it’s important torecognize the effort given by MKC’sboard of directors along with the expec-tations they have for themselves and thestandards they hold each other to.

The sheer time commitment to be aboard member who is engaged and “upto speed” regarding industry knowledgeis enough to take most people out of therunning. In today’s business climate thepace of change is incredible and I willcontend agriculture is leading the packwith our rate of change. Not only isagriculture as volatile as any other busi-ness today, but the counter party risk isbecoming increasingly more worrisome.You better have a good understanding ofwhat that risk is and how it could poten-tially impact you. You can’t learn this byonly attending monthly meetings. Youhave to seek out educational opportuni-ties that will expose you to what theexperts have to say.

MKC’s board of directors has met withconsultants who are experts in doing arisk management assessment. Followingassessments of the entire enterprise, theboard believed, and I agree, that wehave a pretty good handle on the moretraditional risks. The board has alsodone an excellent job of making sure wehave policies and procedures in place todeal with what we already know to betrue and potential perils. What keeps usup at night is what we don’t know. Whatpotentially can be lurking in the shadowsand not even be on our radar? Or, if iteven is known, do we have a solidunderstanding of what the implicationsof an event could be. Is it just a speed

bump or does it have the potential oftipping a company completely over?

MF Global is a perfect example ofsomething that certainly wasn’t on any-one’s radar. It never crossed anyone’smind that a commodity clearing housewould experience fraud at such a magni-tude. When you’re suddenly faced withthe potential loss of a few million dol-lars, you review all of your processes.Thankfully, MKC has recovered themajority of its funds at this point, but it did cause us to re-evaluate and altermany of our processes.

Assessing our enterprise risk manage-ment was prudent and provided anexcellent opportunity for the board andmanagement to look into some areas inwhich we may not have understood thefull extent of our exposure. It caused usto assess the way we monitor and man-age risk in many areas of our company.It also forced us to determine just howmuch risk we’re willing and able toaccept as a company. Do most compa-nies do this? Clearly the answer is no,but they should. By going through thisexercise, MKC became a better company.

In addition to meeting with consultants,your board attends a number of confer-ences to learn how others in the industryare managing their own risk. Rarely aretwo situations ever exactly the same.However, by listening and asking greatquestions they get a good direction tolead discussions with management.

The key to gaining the most valuefrom this type of exchange is thecourage to ask questions, the knowl-edge of how to ask the right questionsand the willingness to challenge thestatus quo. When a director observesthe world from a different platform, he understands that continuous changeand constant transformation is theonly way to stay relevant and success-ful. Change is your competitive advantage. So, in addition to seekingout information, you have to be ableto communicate the information in amanner that will be clearly understoodand actionable.

It would be impossible to create thevision for MKC’s future if these stepsweren’t taken. Envisioning our future isone of the primary duties of the board.In addition, your directors work withmanagement to define major objectivesthat help determine a direction in whichto go and create a vision for the future.The board then holds managementaccountable for executing the statedobjectives. This can’t be done unlessthere is a good understanding of what is going on in the world and how youwant to fit.

Another part of each director’s responsi-bility is succession planning. Most people automatically think that a boardfocuses only on CEO succession. Whilethat is a part of their duties, another hasto be succession planning for the board.We’ve taken many steps to ensure othermembers are introduced to the functionsof the board including decision-makingprocesses. Our associate director pro-gram continues to be one of the bestways for younger members who thinkthey may be interested, but are unsure,to gain exposure to the process. If youare someone (or know of someone)who may be interested in this program,please contact a board member or me.The board also opts to send a number of producers to the quality cooperativeyoung leader conferences held each year.The intent is simply to expose more people to the leadership needs and scope of the cooperative system.

I’ve been in the cooperative system longenough that I’ve had the opportunity towatch an evolution take place. I canremember a time when the majority ofboard members of a coop lived in thesame county, many times in the sameneighborhood or on the same section.Many days, most directors would be inthe office in a normal course of businessand it was much easier to keep theminformed.

After the formation of the cooperativesand the initial infrastructure was put inplace, the decisions directors made thenwere generally more operational thandirectional. For the most part, decisions

Continued on page 9

4

Jeff Williams, an MKC producer in theMarquette area, has been doing his busi-ness at the Marquette location since1981. He remained there whenMarquette merged with MKC and in theyears since he has seen many changes.

“The biggest thing we’ve noticed is thenewer equipment, they are more timely,”said Williams.

MKC strives to provide agronomy serv-ices with the latest and best technology,as well as provide a level of service thatis unsurpassed by others in the industry.This goal is accomplished by utilizingthe best equipment and ensuring excel-lent customer service is constantly main-tained.

“The leading technology we offer byhaving these newer rigs allows for moreaccurate and efficient application,” saidNick Mazouch, Agronomy Manager atLindsborg. “Rigs are exchanged everythree to five years for newer models.”

“By trading them every three yearswe stay on top with the latestcutting-edge technology andefficiency,” said DwaineEsau, the AgronomyManger at Walton.

The John Deere 4940sprayers as well as the CasePatriot spray rigs used at MKC’sagronomy centers feature some of thebest advances in spray rig technology.

These advances are based largely inmapping and GPS technology. Maps offields can be directly uploaded to the rigcomputer to provide a detailed guide ofthe field, as well as controlling applica-tion rates based on soil sampling in thefield.

If a rig crosses into an area it hasalready sprayed, sections of the spraynozzles automatically shut off. This feature is known as “Swath Control” on the 4940 and “Accuboom” on thePatriot. Mazouch and Esau both com-mented that this feature is especiallyhelpful when spraying along creek beds,waterways, or anywhere a varying routemust be driven creating a more accurate

application and less waste.

On the 4940 John Deere the accuracyof the sections has increased with elevensections of nozzles that can be automati-cally turned on and off, instead of theprevious seven, creating fewer areas ofoverlap.

Another important aspect of the GPStechnology is auto steer.

“Auto steer makes for more accu-rate applications by avoidingoverlaps and skips,” saidMazouch.

Fewer overlaps helpto keep costs downfor the producer.

The opening round calculates the area(in acres) of the field, so the applicationrate and listed acres on a work ordercan be double checked. Double checkingthe rate to acres ensures the properamount of product is applied so produc-ers aren’t paying for additional product.In addition a crop will not be affectedby applying too much, or too little, product.

Boom size also plays a vital role in theefficiency of the spray rigs; both the Caseand John Deere rigs have 120 foot booms.“The 120 foot booms cover acres fasterand with less passes, leaving less compact-ed tracks in the fields,” said Esau.

“Increased boom size also decreasescrop injury in solid plant fields,” said

Mazouch. This is especially helpful whenapplying wheat fungicide he explained,by causing less crop injury there is lessyield loss.

Each brand of rig is also equipped withthe technology to maintain a constantapplication rate at a specific constantpressure even as sprayer speeds and fieldconditions change.

“The operator can drive accordingto field conditions without worry-ing about pressure deviations, soaverage field speed can vary by 1 to 3 mph, increasing efficiencyand accurate coverage,”explained Esau. “The technologyeliminates unsightly skips in afield.”

The advanced equipment is notthe only thing that makes MKC

agronomy centers some of the topin the agricultural industry, the indi-

viduals behind the equipment are trulywhat make it successful.

“I can contact MKC and we discuss what we want to useand how we want to use it.I use their expertise to helpmake my managementdecisions,” Williams said.

Part of the managementdecisions every producer faces is

determining when the best time tobuy products and services is.

Scott Rolfs, a new customer in theBushton area, said “MKC allowed me to prepay a specific amount of fertilizer.I had anticipated price increases andMKC allowed me to lock in my fertilizerinputs.”

Serving the producer is the number onegoal of the agronomy departments atMKC, and they are constantly lookingfor ways to improve service.

“MKC has management that listens tosuggestions and makes changes toimprove,” said Williams.

Rig technology cuts producer costs by Cassie Wandersee, Staff Writer

5

Making a differenceMKC employees take great pride in donating their time to their communities and charitable organizations. The following are

examples of how some employees are making a difference for others.

Lane AllisonSeed Logistics Coordinator

Jared MillerField Marketer

Debi Lichti Direct Ship Specialist

Debi has donated her hair four times to Locks of Love, a non-profit organizationthat provides hair pieces to financially disadvantaged children in the UnitedStates and Canada. Over the course of her donations, she has donated over 40 inches of her hair.

“A number of years ago a fellow church member, who is a beautician, gave

a presentation at one of the women’s programs in my church about cancer.

As a beautician, most of her presentation was about donating hair for

‘Locks of Love’. I had not heard of it before then and decided from that

presentation I could maybe donate to the cause. So with my daughter’s

encouragement, I made my first appointment with the local beauty shop

and took the plunge. Since then I have donated four different times; the

most recent being on October 27th, donating another 10 inches. Total

inches over the years would probably be about 42 inches. It is such a

wonderful cause and a way I can help someone who is struggling through

a difficult time in their lives.” - Debi Lichti

Lane is very involved within his community through several groups including alocal nonprofit group in Moundridge, Personal Energy Transportation or PET. The organization manufactures and delivers all-terrain, self-powered wheelchairs to people in developing countries. He has delivered 11 of the PET chairs to children and adults during two separate trips to Ethiopia

“I would much rather donate my time and energy in a way that I can meet

the people I am supporting and develop an actual relationship with them

and know exactly to who or what my contribution is going toward. These

trips have allowed me to see the true happiness and joy from these people

simply by receiving the gift of mobility. I am extremely grateful to have

witnessed that firsthand.” – Lane Allison

Jared has been active with the Dickinson County Pheasants Forever chaptersince 2009. He is in charge of youth functions for the chapter which includesan annual youth shoot, an educational afternoon with gun safety, dog training,habitat information, and a youth pheasant hunt.

“I joined the Dickinson County Pheasants Forever to become more involved

in the Abilene Community, and because I have a passion for the outdoors.

I have been a part of the organization since 2009, and I was recently

asked to head up the Youth Division within our chapter. I am responsible

for anything that involves the youth including the yearly banquet and our

largest event, the annual Wade Beemer Memorial Youth Shoot. I enjoy

being a role model for kids.” – Jared Miller

6

The statistics can be grim. There are fewerfarmers every year as young people pullup their rural roots for a future anywherebut on the farm. Even current USDA sta-tistics show that more than a third of U.Sfarmers are 65 years old or older, and halfof the current farmers expect to retire inthe next decade. Across the U.S. only fivepercent of principal farm operators areunder the age of 35.

But around central Kansas there areyoung, determined producers who believetheir family farms are worth saving. Aftercollege they headed back to the fieldswhere they first learned to drive a tractorsitting on their mentor’s lap.

Growing food, raising livestock, living surrounded by nature on the land theirdescendents first owned, gives their lifepurpose. But, they also depend on familyfor their support and the modern technol-ogy provided by Mid Kansas Coop.

Local marketingJason Gaeddert wouldn’t describe hisreturn to the family farm, near Buhler, asfollowing a dream as much as sticking to a plan that has been part of his life.

Today, at 40, he farms with his fatherJohn, Uncle Leon, and his cousin, PhilBurckhart. Some of the ground was theoriginal farm first planted by Jason’sgreat-grandfather. Today Jason can standon one spot of land and be in Harvey,Reno and McPherson County.

Jason was always riding along on the farmas a child, and by the time he was 10 hewas driving a tractor.

“They would open the field for me andturn me loose, and then come back whenthey thought I would be done,” saidJason. “I enjoyed what I did, but wasprobably undecided about farming upthrough high school.”

Growing up he recalls his grandfather and father hauling their crops to MKCelevators. He’d ride along, but never gavethe coop much thought.

But even back then he began to under-stand the marketing side of ag, sellingsweet corn at stands around the area. “Itwas a little extra summer income,” Jasonsaid. Working with his cousins, the sweetcorn venture has grown over the years.

After graduating from Kansas StateUniversity with a graduate degree inagronomy, Jason headed to westernKansas where he worked for Monsanto.

“I wanted a chance to experience something else before I made farming alife-long career,” Jason said.

Things moved quickly and by 2000 whenhe returned to the farm, technology wasrapidly advancing in agriculture.

Now, a decade later he is relying on theexpertise and services of MKC to helphim be more successful in his operation.

He feels it’s important to stay current onthe latest advances in agriculture. Duringthe winter months when things slow downon the farm, he will attend meetings andseminars, some sponsored by MKC. Healso looks to his elders for advice, espe-cially during the current season.

“This is my first bad drought,” Jasonsaid. “My dad remembers the 1980s andsome of the older farmers remember the1950s.”

He is learning that it’s cyclical, and he islearning the importance of knowing howto manage in good times and bad. Whathas been beneficial is utilizing risk man-agement tools, including locking in a prof-it and ensuring there is crop insurance.

MKC’s President and CEO, DaveChristiansen, noted that the utilization of risk management tools is much morewidely accepted by the younger generation.

“This group generally doesn’t have theequity to put at risk like they will whenthey’ve been at it a while,” statedChristiansen. “Our efforts to develop newtools that can help all growers managerisk are another major way the coop hasevolved to serve the needs of the grower.”

Younger generations of farmers are utiliz-ing the lessons learned from their eldersand implementing them into their currentoperation. Gaeddert has also learned aninvaluable lesson, farmers are optimisticabout the future.

“Or you wouldn’t want to stay in it,” hesaid.

Making it happenMoundridge farmer Gary Regier has twodreams.

The first is that one of his two sons, Joshor Nick, would return to his farm nearMoundridge some day and work alongsidehim.

The second dream may take severaldecades to materialize. Gary dreams of farming with one of his grandsons.Currently, Gentry (4), Lantry (5 months),and Mason (1 month old), are all tooyoung to enjoy anything that has to dowith agriculture except perhaps a briefride in the tractor.

Gary’s first dream is becoming a reality asJosh, 30, has returned to the farm. Whilethe first dream is becoming a reality Garyand Josh will tell you they aren’t 100 per-cent there yet, there isn’t enough groundfor Josh to farm full time. So, the KansasState University agronomist works fulltime as a crop consultant with CropQuestand helps his dad on evenings and week-ends.

“He’s working into it, acquiring ground,”Gary said.

But for now he must have the full timejob. Gary says the work Josh does as acrop consultant compliments their farm.

“It works out beautifully with what he isdoing as a crop consultant,” says Gary.“Josh has brought our farm into a newera with a fresh start and new ideas. Ibenefit a lot from it.”

However, Gary jokes, wondering if thereare times the farm is a guinea pig for

by Kathy Hanks, Freelance WriterReturning to the farm

Following graduation and some time working inwestern Kansas, Jason Gaeddert returned to thefamily farm in 2000.

7

Josh’s ideas. But his son has educatedideas.

“I am willing to do this because I haveseen him turn ground into highly produc-tive crops,” Gary says.

Josh grew up on the family farm wherehis great-great grandfather arrived fromRussia in 1874 bringing red turkey seedwheat and settling on a section of groundthat is still in the family. Farming is Josh’slink to family and his past. Some of hisearliest memories were spending time withhis dad and grandfather, Albert Regier.

Gary still does most the work plantingand harvesting wheat, corn, soybeans, andmilo. Josh helps in his spare time, oftenbringing Gentry out to the field with him.

Like his dad and his grandfather, Josh is amember of Mid Kansas Coop. While thename is the same as when Albert Regierwas a member back in the 1960s, MKChas evolved just like the ground they continue to farm.

Josh appreciates the ownership he has inthe coop.

“It’s good to know when you’re payingbills, a portion is going back to you,” Josh said. “We use the coop for most ofour crop inputs, fertilizer, fuel and crop protection products. As well as helpingwith the marketing of grain.”

Josh says people have to love farming tomake it one’s life occupation.

“I can’t imagine doing it only for themoney,” Josh said.

Earning his stripesFour miles south of Abilene, ToddKohman farms his family’s land where he is the fourth generation to live in thesame 100 year-old farmhouse.

Todd’s first lesson on the farm came when he was four. His granddad, HenryKohman, was feeding hay bales to the cattle and told Todd he needed to drivethe truck alongside the bunks, while grandpa stood in the truck bed tossing the bales.

“He told me if I hit the bunk, to just turn the wheel right, and when I got tothe end just turn the key off,” Todd said.

“I thought it was pretty neat.”

Todd successfully mastered his first farmtask, now at 34, the lessons keep coming.

All his life, the farm has been a laboratoryfor learning, with his dad and granddadserving as the instructors. His father,Leon Kohman, encouraged him to gettraining off the farm so he would alwayshave something to fall back on if therewere a few bad years farming. So Toddattended Kansas State Vocational TrainingSchool in Salina and learned auto bodywork. It’s a trade he still works at duringthe slow winter months on the farm.

In today’s world, Todd knows he’s lucky.

“I love to farm and this is what I want todo,” he said. “There is no way I could goout and start a farm on my own.” Heappreciates the opportunity to work withhis father growing alfalfa, wheat, corn,soybeans, and raising feeder cattle.

While there are lessons to be learned,Todd said his dad will “ride him prettyhard.”

“He doesn’t want me to fail,” Todd said,and he respects what his father is teaching.

He also appreciates the knowledge hegains working with employees at MKC.“I like the way they come up with new programs,” Todd said. He appreciates thatthe people he works directly with at MKCare close to his age and they can relate toeach other.

He’s concerned with farmers who are stuckin their ways, “The ones who say I’ve doneit this way for 200 years, and I am going tokeep doing it this way,” he said.

Farmers need to adapt and move forwardwith change and he appreciates that think-ing at MKC. He also appreciates that theytravel out to the farm, ride along in thefields and talk shop about how he canmake certain changes that would helpincrease his yield and increase their bottom line.

The Kohman’s take advantage of MKC’ssoil and tissue sampling and appreciateknowing when they need to up the nutrient levels.

Justin Jenkins, Grain Marketer for TeamMarketing Alliance, comes out when Toddis busy and doesn’t just stand around, he

helps fill the drills. Then the farmer and grain marketer hop in the tractor and as Todd plants the 2013 wheat crop, Jenkinssuggests better ways to market his grains.It’s the same when Jared Miller, his fieldmarketer, comes out to take soil and tissuesamples.

“They do an excellent job and they areboth my age,” Todd said. He likes thatthere is a mutual respect for each other,despite the fact that they are new to thefield.

The kind of service Todd Kohman is coming to expect (or becoming accus-tomed to) has become the company’s standard operating platform, according to Christiansen.

“We have highly skilled people in everydivision of the company that call on ourproducers every day,” Christiansen said.“Their primary responsibility is to callspecifically on the growers farming somany acres that they don’t have the timelike they used to or are less inclined tocome into the coop to get answers. Wemake it easier for the producer by goingto them.”

Christiansen commented that each personwill generally have responsibility for 25 to40 accounts. “Many companies are doingthis today,” stated Christiansen. “It’s notreally that unusual, but to separate our-selves we have to have the best of the bestin these positions and then back them upwith superior execution.”

Dickinson County producer, Todd Kohman, (left) discuss-es business with Justin Jenkins, Grain Marketer for TMA.

8

Joining forces for ag education by Cassie Wandersee, Staff Writer

Educating today’s youth about agricul-ture has become a concern for many inrecent years. Often children do notunderstand that many of the things theyuse every day are products of agricul-ture, nor do they realize the farm equip-ment and products they could encounterhave potential to cause them harm.

Third graders across Dickinson Countygathered earlier this fall in Abilene for“Ag Day” sponsored by the DickinsonCounty Farm Bureau, a day of farmeducation, safety, and fun. MattMcCune, Talmage Location Manager,was on hand to assist Jeff Bathurst, anarea producer, with a station on cropnutrient and crop protection safety.

Bathurst, who farms in the Abilene andTalmage area, has participated in theFarm Safety Day for the past eight yearsand places an emphasis in his farmingpractice on educating kids. McCune sawwhere Bathurst had been recognized inthe community for his involvement inAg Day in previous years andapproached him about MKC gettinginvolved in the education effort. This isnow the second year the two have part-nered to present for Farm Bureau.

“It is important to educate the publicabout chemicals and what we use themfor,” said Bathurst. “Part of MKC’sstrength is they understand the farmerand we appreciate the help in educatingthe public.”

Students were shown the size of an acreof land, discussed safety practices when

dealing with crop protection/nutritionproducts, and had a chance to view oneof the Case Patriot sprayers, with 120foot booms, MKC utilizes in agronomyservices.

The students were amazed to learn fromMcCune that the spray rig could “drive

itself” through the useof GPS technology andauto steer.

“I feel that we need toeducate kids in ourcities and towns aboutfarm safety, becausethere is a high likeli-hood that these kids willencounter farm equip-ment at some point intheir life,” saidMcCune.

Shane Eck, LindsborgLocation Manager,

recently got involved in the effort to helpeducate area youth on agriculture bypresenting a program on the process ofhow food and everyday products travelfrom the farm to their hands.

“I wanted to get involved in classroomeducation because I feel it is importantto teach the next generation about theimportance of agriculture. There are alot of individuals that do not truly real-ize the impact agriculture has on societyand how much we rely on it,” said Eck.

Eck presented to the fourth grade classat Eisenhower Elementary School inMcPherson, beginning his presentationby asking the students what kind ofthings they used every day. Responsesranged from vehicles to breakfast cereals.

Through an image based web map, stu-dents were shown how vehicles could betraced back to the farm by the use ofethanol fuels, a product of corn andmilo, which are made locally in Kansas.Or how the cereal they had for breakfastwas made from a wheat product.

“The class was very involved and recep-tive which helped the lesson progress aswe hoped,” Eck commented.

Students then moved onto building amodel pizza discussing how each ingredi-ent in the pizza from the dough to thetoppings came from agriculture. And asa treat for lunch, pizza was provided tosolidify the idea that agriculture is trulywhat feeds them.

“The agriculture presentation by MidKansas Coop was a very engaginghands-on experience for my class,” saidTiffany Pacey, fourth grade teacher atEisenhower Elementary.

“I felt the program went very well,” saidEck. “Since it was our first time present-ing it I was unsure of how well it wouldbe received.”

Eck commented that he would like tofurther develop the program for middleand high school aged kids with a moreadvanced program that focuses oncareer opportunities in agriculture.

MKC places an emphasis on environ-mental and community stewardships aswritten in its core values. Involvement insafety and education programs is justone way this is demonstrated.

“They learned about where their foodcomes from through a wonderful visualdisplay, and learned about the variouscrops grown in Kansas and their uses,”said Pacey. “My students loved lookingat and touching all the grains that aregrown in Kansas.”

Dickinson County producer, Jeff Bathurst, and Talmage Location Manager,Matt McCune, talk about ag safety with area students.

Shane Eck, Lindsborg Location Manager, explains to4th grade students how food and everyday productstravel from the farm to their homes.

9

The definition of dedication Continued from page 3

were about how many and what kind oftrucks to buy, does the leg in the eleva-tor get upgraded or does a new roof get put on the dry fertilizer shed. Todaythose decisions have been delegated toothers. Decisions now are about whatlocations will be replaced, what assetsare no longer practical (or no longerrequired) to serve customers today andwho should their strategic partnershipsbe with. With today’s volatility and therisk that comes with it, it’s paramountthat we do exceptional analysis to evalu-ate the long-term impact and the returnon future projects when looking at annu-al investments of $5, $10 or $20 million.

Board members are fully responsible forthe fiscal well-being of the coop as wellas the maintenance and growth of thecompany’s equity. They are charged withensuring the cooperative is a perpetualentity. There is no retirement date fortheir company. Boards today deal withmore emphasis and scrutiny than everbefore regarding regulations, environ-mental and safety compliance, legal compliance, fraud, insurance coverage, employment laws and person-nel benefits administration. Althoughadministered by management, the boardhas oversight to insure the company ismanaging all risk properly.

When you have inventory that canexceed $100 million, understanding yourexposure and policies is vital. Liabilityexposure for our company is an entirely

different concern. Each year MKC’sdirectors meet with the insurance andrisk management providers to review anychanges we have made or should maketo our coverage. Proper training tounderstand and perform these functionsis important as legal counsel constantlyreminds our directors that as fiduciariesthey potentially have personal assetexposure.

In addition to serving on our board ofdirectors, we have two directors whochose to be further involved in the influ-ence of the cooperative system. Theycampaigned and were elected to serveon the boards of Land O’ Lakes andCenex Harvest States, both of which aremulti-billion dollar worldwide regionalcooperatives. We take a lot of pride inhaving them in these positions. Theopportunities and experiences they gainfar exceed what our local board partici-pates in. Project analysis takes on anentirely different level at $100 million(plus) and in a foreign country. To bringthat kind of experience back home anduse it on a local level is invaluable. Wealso have directors who serve on theboards of banks, school districts and in various other capacities and theseexperiences contribute to the skill setthey bring to our board meetings.

As you can tell I’m very proud of thejob your board of directors does and theefforts they make to educate themselves.I make this next comment a little

tongue-in-cheek, but it’s true none-the-less. I have a tendency to build a management team of very intelligent,capable people and it takes a directorwith strength, knowledge and confidenceto challenge their thought process. Our current board learns new ways todo that daily. By being able to worktogether in this fashion we generallycome to much better conclusions.

The rules are being re-written daily andyou have to be tactical or deliberate inyour effort to stay knowledgeable. Itdoesn’t happen in the coffee shop or just by attending monthly meetings.You must be dedicated to being a life-long learner. If you aren’t, your abilityto help make the decisions that trulyguide the coop in the right direction willbe of little value. Sure it’s important toremember the past and have a goodunderstanding of corporate history, but today, just doing what you’ve alwaysdone doesn’t guarantee that you willalways get what you’ve always got!

People give of time, their most valuablecommodity, for many reasons. Themajority do it not for the recognition orrewards or to serve a self-interest, butbecause they have a passion for makinga difference. I’m certainly pleased wehave members still interested in doingjust that and who have the passion forpositioning this company to be strongerin the future.

10

Schultz discusses impact of aflatoxin on the industryThe drought of 2012 expanded theissues the agricultural industryfaced in the drought of 2011. “One of the biggest issues facedthis year was the quality of thecorn crop which was greatly affect-ed by aflatoxin,” said Ted Schultz,Chief Operating Officer for TeamMarketing Alliance.

Aflatoxin is a carcinogenic moldthat can be harmful in bothhumans and livestock that consumeit explained Schultz. The Food andDrug Administration places levelsof restriction on the amount ofaflatoxin that are safe for con-sumption. Detection of aflatoxinover certain limits can result in limited use of the product or evendisposal of the product throughburial.

“Feed mills typically need to usecorn with less than 20 parts perbillion (ppb) aflatoxin due to themultitude of feeds they produce,”said Schultz. He went on to saythat, “in several instances acrossthe country, milk was disposed ofwhen aflatoxin was detected in it.In some cases the aflatoxin wastraced back to the feed supply.Along with the dumping of milksupplies, calf abortions have alsooccurred in areas of the country.”

Mills in areas of high aflatoxinconcentration are forced to sourcecorn from areas without the highlevels or that are completely free ofthem. Outside sourcing can drivethe cost up as much as $1.00 perbushel due to the cost of freightand higher prices of “clean” corn.

Ethanol plants have also beenaffected by aflatoxin levels. Levelshave been detected in DDG (drieddistiller grain), a byproduct ofethanol production used to feedcattle. The ethanol making processconcentrates the levels of aflatoxinin DDG up to three times the

detected amount in the corn. Thatmeans the corn with a level of50ppb aflatoxin will produce DDGwith 150ppb, much limiting theuse.

“TMA has faced the loss of one ofthe best markets in recent yearsdue to the need of corn with20ppb or less and the limited sup-ply available. The lack of 20ppbcorn being delivered to TMA hassignificantly reduced marketingoptions,” commented Schultz.

Aflatoxin impacts grain marketsand changes the flow of moneyand grain due to the logisticalissues created. Special rates out ofthe northern area of the U.S. havebeen put in place to route corninto the central Corn Belt in orderto boost good quality corn suppliesfor the year.

Re-routing could cause supplies forNebraska ethanol plants to betougher to acquire, as the bushelsnormally routed into the state arebeing pulled west to replace theloss of bushels there. Bushels inMissouri and Iowa that would typi-cally go east and west are nowmoving south to Texas to meet theneed to feed cattle.

The Food Safety ModernizationAct passed in January of 2011 wasthe first big focus on food sincethe 1938 Food Drug and CosmeticAct. The FDA will now have 50new regulations, guidance andreports to work with under thenew act, which will impact the wayaflatoxin regulations are enforced.

“In the future it will become clear-er as to what kind of impact theact will have as more parts are putinto place,” said Schultz. “We’llkeep you updated as these changesoccur.”

This is the second year that MKC hasworked with Swiss Re to offer a revenue pro-gram designed to assist producers managethe risk associated with the production ofdouble crop soybeans. While MKC promotedthe program to producers, MKC did notassume any of the financial risk associatedwith it.

In 2011, the first year the program wasoffered, Swiss Re paid out over $2.65 millionto 138 producers throughout 11 counties.

MKC was the first in the nation in 2011 tooffer this one-of-a-kind program to producerswhen double crop soybeans weren’t tradition-ally eligible for federal crop insurance.Following the program laid out by MKC, several other vendors in the state adoptedsimilar programs.

During the growing season of 2012, the pro-gram was utilized by over 200 producers in21 counties.

The risk associated with double crop beans istypically weather related, drought being thelargest issue over the past two years.

“Due to unfortunate growing conditions thevast majority of fields have seen yield reduc-tion which will result in a significant numberof customers receiving payments,” said DaveSpears Chief Marketing Officer for MKC.

“While the growing conditions were unfortu-nate, we are fortunate in that we were able tooffer this risk management tool to our mem-bers,” Spears went on to say.

Revenue programprotected productioncosts during drought