heartbeat summer 2011

summer 2011

Focused. Customized. Solutions™

Breaking Ground for the Future.

HeartBeat

FCSF 2011 Summer HeartBeat.indd 1 7/6/2011 2:32:19 PM

2 HEARTBEAT | SUMMER 2011

James Nivens, LaRussell, Chairman

Brian J. Peterson, Trenton, Vice Chairman

Kenneth Bergmann, Walnut Grove

Bruce Bjornson, Oro Valley, Ariz., Appointed

Michael L. Bruce, Nevada

Michael L. Cook, Columbia, Appointed

James Davis, West Plains

Mark DeShon, Clarksdale

CEO: Daryl OldvaderEditor: Amy Wieberg, [email protected]

Printed with farmer-grown soybean ink on recycled paper.

Member CooperativeCommunicators Association

HeartBeat is published three times a year by FCS Financial. Please address any comments to FCS Financial, Attn: HeartBeat Editor, 1934 E. Miller St., Jefferson City, MO 65101. For more information about FCS Financial or to access your account online, visit myfcsfinancial.com

Dan Devlin, Edina

Maurice Glosemeyer, Marthasville

Daniel Hulse, Hannibal

David Meneely, Chillicothe, Appointed

Mark S. Pierce, DeKalb

Gene H. Rademacher, Bland

Rick Rehmeier, Augusta

Bolivar 417-326-4016 1-866-326-4016Cameron 816-632-7265 1-800-225-6949Carthage 417-358-0808 1-866-358-0808Chillicothe 660-646-5044 1-800-264-3276Clinton 660-885-8164 1-866-885-8164Columbia 573-449-5910 1-800-241-5910Farmington 573-756-5747 1-800-276-8120Hannibal 573-221-0273 1-800-798-0273Harrisonville 816-884-3061 1-800-517-3348Higginsville 660-584-7181 1-866-584-7181Jefferson City 573-636-7131 1-800-292-7131Kirksville 660-665-6243 1-800-530-5512Lebanon 417-588-5828 1-866-588-5828Marshall 660-886-6897 1-800-228-6897

Board of Directors — FCS Financial ACA

Office Locations

Maryville 660-582-6464 1-800-813-5722Memphis 660-465-8984 1-800-407-8984Mexico 573-581-3192 1-800-314-3192Mt. Vernon 417-466-7101 1-866-466-7101Neosho 417-451-6084 1-866-451-6084Nevada 417-667-8206 1-888-667-9681O’Fallon 636-327-1787 1-800-379-3276St. Joseph 816-279-2118 1-866-279-2118Sedalia 660-827-5810 1-800-310-5810Shelbina 573-588-2156 1-800-432-2156Springfield 417-862-4158 1-866-862-4158Union 636-583-5400 1-800-583-5480West Plains 417-256-2298 1-866-256-2298

Publication Information

Above: Daryl Oldvader, FCS Financial CEO, shares the vision of FCS Financial during the groundbreaking ceremony at Macon on May 27.

Below: One month later, dirt is moved and construction is in high gear at the site.

Cover: FCS Financial management and directors who served on the site selection committee break ground in Macon. – (l-r) Daryl Oldvader, CEO, James Nivens, Board Chair, Danny Hulse, Dan Devlin, Brian Peterson, Board Vice Chair and Gary Irwin, VP Administration.


HEARTBEAT | SUMMER 2011 3

4 Daryl’s Desk

Youth in Ag10

Dollars & Cents14

Life is Simple

17News Briefs• Online Banking Updates• iPad Winners• Community Support• Macon Groundbreaking• Director Elections

18

Nivens’ Notes

16

Risk Management

23

6 Member Feature

table of contents

Above: Daryl Oldvader, FCS Financial CEO, shares the vision of FCS Financial during the groundbreaking ceremony at Macon on May 27.

Below: One month later, dirt is moved and construction is in high gear at the site.

Cover: FCS Financial management and directors who served on the site selection committee break ground in Macon. – (l-r) Daryl Oldvader, CEO, James Nivens, Board Chair, Danny Hulse, Dan Devlin, Brian Peterson, Board Vice Chair and Gary Irwin, VP Administration.



Daryl Oldvader, CEO

Greetings – Once every five years or so, the subject of the Farm Bill surfaces. This year is no exception as politicians begin laying the groundwork and testing the waters for what could become a very contentious debate for the 2012 Farm Bill. Both Senator Stabenow and Congressman Lucas have expressed the desire to have a Farm Bill drafted from their respective agricultural committees during the scheduled 2012 timeframe. While I certainly do not profess to be a political analyst, I admittedly have reservations pertaining to the timely crafting of this major legislative framework for agriculture. In my view, the final outcome will boil down to three critical issues – federal budget, political climate, and timing. All three could serve to dampen any heightened expectations pertaining to a new Farm Bill. First, unless you have been on the Space Shuttle for the past four to five years, the U.S. budget is in trouble. At this writing, we have a $14.3 trillion debt ceiling that is in certainty to be tapped. What remains uncertain, however, is how “we” will deal with it. In the lending business, total debt may not be all-bad if revenues are adequate to manage timely interest and principal repayment. Unfortunately, a growing $1.5 trillion budget deficit indicates that our current U.S. debt load exceeds our revenue generating capabilities. In

fact, today the U.S. debt now exceeds 95 percent of our GDP. In the lending business, we call this situation “over-leveraged.” Based on this profile of the national budget, it is highly probable that any future budget cuts will include agriculture and crafted into the 2012 Farm Bill. T he s e cond i s sue – wh ich will undoubtedly work against an encouraging Farm Bill outcome, is the current political climate. The most recent turnover in Congressional representation was not by accident. Taxpayers have made their statement to Washington by whisking into office all those who promised to reduce federal spending without raising taxes. Additionally, since all departments within the federal budget are destined to cry foul, why should Congress fret about such a small representation of the economy like agriculture, which appears to be doing very well? This issue becomes even more compounded when factions within agriculture cannot agree. The current political climate could be described as tepid for agriculture. Finally, timing is everything. Like many of our customers, I have seen a few Farm Bills in my 39-year career. To suggest that they do not impact the welfare of the industry would be a gross oversight. I can think back to the ‘80s when the payment-in-kind (PIK) program was utilized to reduce grain surpluses and stabilize farm incomes. Land values did not have a floor until the implementation of the Conservation Reserve Program (CRP) in 1986. More recently, the advent of crop insurance created a major impact for the economic welfare of agriculture. Today, the agricultural industry is viewed as one of the most stable and prosperous segments of the economy. The U.S. net farm income is estimated to be $95 billion for 2010 (the 10-year average is approximately $65 billion) while estimates for 2011 are in excess of $100 billion. Farm debt has remained relatively stable at $245 billion for the

past year as excess cash in the Ag sector has served to manage debt levels. All in all, things have been relatively good down on the farm. On the other side of the coin, things have not been so rosy in the city. Unemployment remains high at nine percent, while approximately 40 percent of all homes are upside down – that is, the mortgage amount exceeds the home value. To add injury to insult, approximately 13 percent of all mortgaged homes in the U.S. are in some process of collection or foreclosure. Not surprisingly, home values continue their downward spiral. My point is that one could hardly make a case for Willie and Farm Aid in the current environment. While there will be undoubtedly fewer dollars available for agricultural programs compared to the past, I think there are also some stark realities as we approach the dawn of a new Bill. First, approximately 80 percent of the current Farm Bill appropriations are for entitlement programs consisting of nutrition (i.e., Food Stamps, which 14.5 percent of Americans utilize) and child nutrition (i.e., school lunch programs). Over the course of the past two decades, the Farm Bill has shifted from that of a commodity support program to a food nutrition program. With that said, margin protection for producers (both crop and livestock) should be a mainstay of any new Ag legislation. This will be instrumental in mitigating the volatility of markets attributed to fiscal and trade policies which seem to hold agriculture hostage. Finally, any new legislation should continue to support young, beginning, small, and minority farmers. Regardless of when and how the new Farm Bill is crafted, the most far-reaching issue is the fiscal responsibility of this nation to manage within an acceptable budget and debt level. The consequences of ignoring the basics of economics will have far greater consequences for agriculture and the nation than any prescribed Farm Bill.

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Over the course of the past few months, Mother Nature has dominated the news with reports of storms, tornados, and floods. We have a number of members throughout the state who have experienced adversity as a result of these natural events. During our 95 year history, FCS Financial has helped many producers regain momentum after tragic losses created from natural disasters. We are committed to providing our members with viable financial options while their businesses return to normalcy. Please contact your loan professional to discuss available alternatives for your particular situation. At FCS Financial, we offer Focused. Customized. Solutions.™

Challenges Ahead

The Missouri Department of Agriculture announced an agriculture disaster relief fund to help Missouri farmers recover from severe storms, floods and tornadoes that have impacted thousands of families and businesses this year. The Missouri Agriculture Disaster Relief Fund will address the immediate needs of farm families, extend grants to non-profit organizations for infrastructure repair and clean up and help individuals or organizations with major disaster grants. Administered by the Missouri Agricultural and Small Business Development Authority, the fund will offer assistance for the following:• Immediate need - This grant

of $500 is available to Missouri farm families recovering from a natural disaster and is designed to help those most devastated by the disaster meet their most urgent needs. The grant may be used for household or agricultural purposes and is available on a first come, first serve basis as long as funding for this purpose is available. The farm family must have been directly impacted by a natural disaster and have suffered

Missouri Agriculture Disaster Relief Fundphysical and/or economic loss.

• Grants to organizations -Up to $5,000 is available for non-profit organizations, counties, municipalities and other political subdivisions for infrastructure repair, clean up or other projects that assist in recovery for the farm community.

• Major Disaster Grant -Funding in amounts greater than $5,000 is available on a special needs basis. Any individual or organization may apply for these grants but organizations who can serve a large number of producers will be given priority.

Those interested in donating to the fund can do so by electronic check or credit card by visiting http://MDA.mo.gov or http://AgriMissouri.com. Donations qualify as a charitable contribution under Section 170 of the Internal Revenue Code. Applications for disaster relief funding can be accessed on http://MDA.mo.gov or http://AgriMissouri.com or contact the Missouri Agricultural and Small Business Development Authority at (573) 751-2129 or [email protected].

sites for updates on mo disasters

Flooding in Missouri http://www.mo.gov/2011mofloods/

Responding to tornadoes in SW Missourihttp://www.mo.gov/05222011joplintornadoes/

Current river levels and forecastshttp://dnr.mo.gov/env/wrc/currentriverobservations.htm.

Road Closureshttp://maps.modot.mo.gov/timi/

Resources for Your Flooded Homehttp://extension.missouri.edu/explorepdf/miscpubs/mp0904.pdf

need assistance

Missouri Disaster Response andRecovery Contacts

Find contact information for SEMA, American Red Cross, Animal Health, MU Extension, water issues and more at:http://extension.missouri.edu/publications/DisplayPub.aspx?P=EMW1001



Bringing far more than credit to the table. Photos and story by Mark Parker

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The bottom line for FCS Financial is a better bottom line for its friends and customers. Delivering dependable credit and solid financial expertise is a big part of that mission but it doesn’t stop there. Information empowering farm business decision-making is another critical component for Missouri’s premier ag lender. Cutting edge intel from some of the nation’s foremost experts was the harvest that FCS Financial shared at a series of eight free ag seminars across the state during February, as well as its commercial farm symposium in Kansas City in January.

For CEO Daryl Oldvader, adding even more value to what FCS Financial offers its customers was the purpose of the informational series. “It’s all about providing tools to help our customers succeed,” Oldvader said. “In today’s agriculture — more than ever before — good information fuels good decisions and that’s what we’re trying to provide for our customers.” Farming the economic landscape of today and tomorrow was a major theme of several of the speakers at the symposium and the seminars. In Kansas City, internationally known economist David Kohl told FCS Financial

farmers that increased volatility offers both income opportunities and cost challenges. The Virginia Tech professor emeritus, who advises businesses, lending institutions and governments, said an increasingly complex global economy delivers demand-driven commodity prices as well as pressuring farm inputs — “The global economy has a daily impact on your farm,” Kohl asserted. And, without a doubt, China is the 800-lb. gorilla in the room. “China and its growth significantly impact Midwest agriculture,” he said, pointing out that economic growth in emerging economies is a double-edged sword,



Above: Dr. David Kohl interacts with the 400-plus participants at the 2011 Commercial Farm Symposium. Kohl reminds farmers to make themselves “farm credible.” Left: Moe Russell speaks about to the same crowd about risk and financial preparedness encouraging them to “bullet-proof your balance sheet.”

driving grain prices higher while also wielding upward pressure on petroleum-based farm inputs. “Eighty percent of farm expenses are linked to oil — you have to put that into your game plan,” Kohl noted. The Virginia economist suggested that farmers must make themselves “farm credible” with good records and sound risk management plans. “The bar is going to be raised,” Kohl said, predicting that credit will be rationed to a greater extent in the future. Maintaining a good relationship with a lender, he emphasized, will be an important component of farm financial success. “Having a very, very stable lender is one of your tools,” Kohl said. “A lender that has deep knowledge of your industry is one of the things that you require but, on the other side, you have got to make yourself farm ‘credible’ and that means good records and utilizing and executing those records.” While several of the ag experts advised farmers to keep a good handle on rising input costs, they were also optimistic about what lies ahead for production agriculture. Although cautioning that, “everyone is downloading risk to the farmer,” Iowa farm business consultant Moe Russell said, “There is more money to be made

in agriculture than any other industry.” Bullish on both crops and livestock, Russell asserted that profitability is a function of neither size nor type of operation and urged financial preparedness: “Bullet-proof your balance sheet and, in the bottom part of the cycle, you’ll catapult ahead.” Calling world demand for soy protein “unquenchable,” Mark Pearson, host of Iowa Public Television’s “Market to Market,” seconded Russell’s optimism:

“There is no better time to be in agriculture,” he told farmers at the ag symposium in Kansas City, “but we have to control and mitigate volatility because it’s something we’re all going to see for the rest of our careers.” Farmers from across the state who attended the series of eight seminars sponsored by FCS Financial also had the opportunity to gain insight from top-notch ag talent. Informa Economics Washington Bureau Senior Vice President Jim Wiesemeyer ran



the gamut of issues impacting agriculture. A frequent contributor to Pro Farmer, the farm policy expert told farmers their industry is entering “a golden age — but it can still be derailed.” Expressing concern about oceans of federal debt, Wiesemeyer noted that the U.S. now spends more on defense than the next 14 nations combined. Social Security, Medicare and Medicaid costs also cast a shadow on the future but market fundamentals look very strong for agriculture. The economic realities of federal budget deficits and ballooning interest of the national debt must be dealt with by Congress and the White House, he said, for the U.S. economy to achieve full recovery. Burgeoning demand abroad and tight global stocks, Wiesemeyer said, bode well for crop prices. With twice as many hogs as the United States, China has a huge appetite for soybeans and corn prices also promise to continue to ride high due to ethanol and other demand streams.

Top: Dr. Barry Flinchbaugh discusses the current ag climate in our nation’s capital and what it means to you back on the farm. Clockwise from top left: Mark Pearson, Dr. Elwynn Taylor, Dr. Pat Guinan, and Jim Wiesemeyer. Each provided their thoughts on today’s agricultural environment during recent meetings for FCS Financial customers and the general public.



And because, “There just aren’t enough acres to go around,” he said. On the livestock side, Wiesemeyer noted an all-time low for the U.S. cow inventory and a strong beef export market that necessitates favorable trade policies for American agriculture. Wiesemeyer told the farmers that the next farm bill will be written against a backdrop of spending cuts. He urged them to employ risk management strategies in order to deal with volatility and not to count on the government for a substantial safety net. “If you think Washington is thinking for you, think again,” he said. At the Kansas City event, Kansas State University Ag Policy Specialist Barry Flinchbaugh echoed that sentiment. “There will be a farm bill and there will be a safety net — but it’s liable to have bigger holes in it,” he said. Flinchbaugh called for sober, fact-based discourse and cautioned that it’s time for the nation to get its economic house in order. “We need a reality check. We need to sober up and solve this deficit,” he asserted. “We need real statesmen in Washington — with the guts to deal with Social Security, Medicare and Medicaid.” University of Missouri Climatologist Pat Guinan provided

a weather update at the ag seminars. He presented a historical view of Missouri weather and identified some recent trends. Four of the five warmest winters, going back to 1895, have occurred since 1990, Guinan pointed out, but the past two have recorded below average temperatures. And although last summer was the seventh hottest on record, the state really hasn’t had an exceptionally warm summer season since 1980 and nothing has come

close to the 60 days of 100+ degrees back in 1936. Regarding precipitation, 2008, 2009 and 2010 have each been 30 inches above normal on a statewide basis. Since the 1960s, Guinan has noted an upward trendline in the number of days with precipitation events as well as a slight upward trend in heavy rain events.

Guinan has put together a long list of weather-related web sites that can be accessed at http://agebb.missouri .edu/weather/wealinks.htm. In a climate of unprecedented risk, Daryl Oldvader related that FCS Financial, as a partner of production agriculture, also takes measures to deal with volatility. His advice for Missouri farmers included creating a financial plan that addresses risk management and vigilant monitoring of that plan. “Traditional farming is no longer traditional,” Oldvader told FCS Financial friends and customers. Driven more by economics, he observed that while there are about 2 million farmers in the country, 10 percent of them produce 90 percent of agricultural value. The changing farm landscape places new demands on farmers as well as their lenders and access to quality economic information is one of the ways FCS Financial and its customers can meet those challenges. Content from the ag seminars is available at the FCSF web site, www.myfcsfinancial.com. Go to the Online Tools link and click on “Educational Materials.”

“...good information fuels good

decisions...” Daryl Oldvader,

CEO, FCS Financial



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Growing up on a beef and grain production farm, I have seen first hand all of the hard work that goes into planting acres upon acres of corn late into the night to beat the approaching storm or feeding cattle, rain, snow or shine, 7 days a week. I have a great respect for this production part of agriculture, but when I left for college my plan was to design fashion magazine spreads or be the next big celebrity reporter. I definitely didn’t see a place for myself on the farm because I couldn’t imagine driving a tractor or working with cattle. Now, 4 years later, my recent job search has really opened my eyes to all the opportunities the agriculture industry has to offer. The intricate web of suppliers, financial advisors and marketing teams among others, all play into this business side of agriculture. I think most college students I know have a misconception about what a college degree in agriculture can really entail. When I was deciding on degrees, I thought the agriculture school was all about how to manage a farm and how

Agriculture is more than meets the eye.to grow seeds with the best yields. Little did I know that the College of Agriculture, Food, and Natural Resources at the University of Missouri alone offers over 15 majors ranging from education, to economics and even journalism. Within an agriculture school it

seems a student can be educated on any possible subject they are interested in and that subject can be related back to agriculture. I just recently graduated with a bachelor’s degree in journalism with an emphasis on strategic communication, which is basically just a fancy way of saying advertising and public relations. Even within this field, there are entire advertising and communication firms that focus on promoting agricultural products. Which just goes to show that careers in ag can reach beyond the traditional ag majors as well. For those students looking into choosing the path of their major, the job market outlook is usually a big factor. This is an advantage the ag

industry has over most. From what I can tell there is an abundance of jobs out there for qualified candidates and often times, not enough college graduates in the field to fill them. A prime example of this is seed and pesticide research. Companies are developing new technology everyday to make seeds tailored to a farmer’s needs. To keep up with the demand, these companies are looking for new graduates to hire as scientists and researchers. Many students are getting science and biology degrees. However, when it comes time to decide which area to focus on, healthcare is often the first choice. So, there are positions open and no one to fill them, which is a good problem to have if you are a student looking for a career path. Only 2% of the ag industry is actually growing crops and raising animals. The other 98% is the support system made up of salespeople, managers, biologists, lobbyists and many more. All of these careers are able to provide for producers and make agriculture one of the largest industries in the United States as well as around the world. With the vast array of opportunities available, college students, with or without a farm background, have potential to impact the agriculture industry with their talents and education.

“...my recent job search has really opened

my eyes...”

By: Heidi Varner, MU Graduate



Meet the 2011 FCS Financial Scholarship RecipientsThrough its scholarship program, FCS Financial has given more than $230,000 to FCS Financial customers’ children and grandchildren in the past seven years. We are proud to recognize and congratulate this year’s recipients. We hope they continue to find success in their education and future careers. The 2012 application will be available at www.myfcsfinancial.com on October 1, 2011, and is due March 1, 2012.

Eli Bartley of Fulton plans on attending the University of Missouri to major in mechanical engineering.

Megan Behring of Hunnewell plans on attending the University of Missouri to major in animal science.

Ben Brown of Appleton City plans on attending the University of Missouri to major in agricultural business.

Dylan Bussell of Rogersville plans on attending the University of Missouri to major in fisheries and wildlife sciences.

Mark Carpenter of Hardin plans on attending the University of Missouri to major in agribusiness management.

Andrew Cauthorn of Mexico plans on attending the University of Missouri to major in agricultural systems management.

Lauren Cofer of Rock Port plans on attending Missouri Western State University to major in nursing.

Ben Delaney of Baring plans on attending the University of Missouri to major in mechanical engineering and agricultural systems management.



Nora Dodd of Leonard plans on attending the University of Missouri to major in agriculture education.

Shelby Esser of Blackwater plans on attending the University of Missouri to major in biochemistry.

Kaitlin Flick of Pleasant Hill plans on attending the University of Missouri to major in agriculture business management.

Sara Gillum of Unionville plans on attending the University of Missouri to major in pre-pharmacy.

Cody Gitthens of Cameron plans on attending North Central Missouri College to major in agriculture business.

Zachary Grossman of Tina plans on attending the University of Missouri to major in agriculture systems management.

Kara Hambelton of Gainesville plans on attending Freed-Hardeman University to major in pre-medicine.

Zachary Henderson of Emden plans on attending the University of Missouri Science & Technology to major in metallurgical engineering.

Ethan Huff of Reeds plans on attending Northeastern Oklahoma A&M College to major in agriculture.

Sadie Kinne of Eagleville plans on attending the University of Missouri to major in agriculture education.

Lauren Kliethermes of Bunceton plans on attending the University of Missouri to major in agriculture journalism.

Andrew Laut of Fredericktown plans on attending Mineral Area College to major in business management.



Travis Luther of Lawson plans on attending the University of Missouri to major in ag economics and business.

Alyssa Mackey of Ozark plans on attending the College of the Ozarks to major in animal science.

Will Moore of Belle plans on attending the University of Missouri to major in ag business management and animal science.

Rebecca Neill of Purdy plans on attending Southwest Baptist University to major in communications.

Emily Paullus of Neosho plans on attending Missouri Southern State University to major in secondary education.

Dustin Stanton of Centralia plans on attending the University of Missouri to major in ag business management.

Jacob Stoll of Conception Junction plans on attending Northwest Missouri State University to major in ag business and minor in agronomy.

John Vogelsmeier of Sweet Springs plans on attending the University of Missouri to major in agriculture systems management.

Megan Voss of Union plans on attending the University of Missouri to major in biology/anthropology.

Zachery Watts of Sumner plans on attending Northwest Missouri State University to major in ag business.

Amy Zuroweste of Truxton plans on attending the University of Missouri to major in ag journalism/management.

Not Pictured: Johnathan Blanchard of Lamar plans on attending the University of Arkansas to major in ag engineering. Kathryn Coon of Bethel plans on attending the University of Missouri to major in ag business & ag education. Dayne Voelker of Perryville plans on attending the University of Missouri to major in biology.



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Everyone is talking about the economy. The other day at Detroit Metro Airport, security guards were having a heated discussion about oil prices as I passed. I have noticed parents are visiting about the federal debt at graduations and wedding receptions. Recently at a YMCA in the Midwest during my early morning workout, I overheard a conversation focused on the future of agricultural subsidies and farmland prices by a bunch of elderly people. Yes, the global, national, and ag economy are top of mind. Let us examine the current and future status of the dismal science and draw some implications to your business strategy. In the agricultural economy, particularly the grain and row crop sectors are in the midst of an eight-year super cycle. For historical reference, over the past 100 years, there have been four super cycles created by market demand, weather, and supply and demand imbalances. The typical super cycle lasts two to three years. This unusually long bull market has been driven by five significant game changers. First, it has been driven by the growth of emerging markets, specifically the BRICS nations.

Growth of these countries, including Brazil, Russia, India, China, and, now, South Africa, has been spurred by the United States and world economic stimulus since the financial crisis in 2008. These countries comprise approximately 20 percent of the world economy, but just under 50 percent of the world economic growth during the last decade. The winding down

of the stimulus programs both in the U.S. and abroad, along with a tightening of government economic policy in China and some of the other emerging nations may foretell a slowdown of the economic bull market for export commodities in agriculture. Of course, ethanol production has been a major driver of grain markets and the economic bottom line throughout the agricultural sector. One must be mindful of the status of the subsidization of

Economics: The Talk of the Town

Dr. David Kohl energizes agricultural lenders, producers and business persons with his keen insight into the agricultural industry through extensive travel, research, and exposure during his career. He is Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship at Virginia Tech, Blacksburg, VA. Dr. Kohl has traveled over 8 million miles in his professional career and conducted over 6,000 workshops and seminars for a variety of agricultural audiences. Dr. Kohl’s personal involvement with agriculture and interaction with key industry players provide a unique perspective into the future trends of the agricultural industry and economy.

By: Dr. David M. Kohl

“...one could contend that

this is an asset bubble...”



The 30-day vs. 15-Year Farm Credit Bond chart below illustrates that 30day issues have remained at historically low levels for the last two years and 15-year issues continue to stabilize. The gap between short-term rates and long-term fixed rates remains wide and actually grew slightly over the last six months.

Rates Remain Stable

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this industry which is housed in the Energy Department of the U.S. government. Any changes in policy due to budget shortfalls can have a large impact on agriculture, both on the grain and livestock side. Factors such as the weak dollar and historically low interest rates, along with weather issues in major production centers in the U.S. and abroad can impact supply and demand balances and continue to support a bullish, but very volatile, market for agriculture. These game changers have been capitalized into land values and cash rents particularly in the Midwest and upper Midwest. Will the land value rush continue? Appreciated land values and cash rents are presently creating a false sense of security in many producers’ financial statements. Quite a few producers are cash purchasers of land and long term contracts on farm rent with little borrowed capital, which is indicative that this is not a credit bubble like the 1980s or the recent financial crisis that hit commercial and residential real estate. However, one could contend that this is an asset bubble, driven by the aforementioned domestic and global economic fundamental game changers. For producers who are in a growth mode, prudent debt, cash, and liquidity management strategies are imperative in agricultural marketplace that appears to be at the top of the cycle.

Concerning the general and global economic outlook, moderation of growth with extreme volatility created by economic “black swans” or unusual events will be ever- present on the economic radar screen into the future. Managing for opportunity created by these events will be a top priority for agricultural producers. This will require prudent business strategies such as knowing the cost of production by enterprise and testing “but what if ” scenarios in revenue and cost.

A sound economic risk management program that is executed on the revenue side, the cost side, and the interest rate side of the business will not be an option, but it will be a requirement in a global economic environment with a surprise around every corner. The economy has everybody talking about a lot of things, but few are doing anything about it. Successful producers use the HUT Principle: hear, understand, and take action!



We are pleased to offer Jerry Crownover’s “Life is Simple” column. Jerry is a graduate of the University of Missouri. He and his wife, Judy, own and operate a ranch west of Springfield and are FCS Financial members. We hope you enjoy Jerry’s Ozark humor and wisdom.

“Life is Simple” Copyright 2010, Jerry Crownover

I tried to make cowboys out of both my sons. Honestly, I really did. As soon as my first son, Seth, was out of diapers, he would ride along with me every afternoon to the farm. I was still teaching school and we lived on five acres on the west side of town, but owned a farm about fifteen miles from there. As soon as I arrived home each afternoon, Seth would be ready to “go check the cows,” and we would load up in the pickup truck and head to the farm. Every cow seen with her tail sticking out (even if she was just relieving herself ) would be evaluated by Seth as, “Dad, I think she’s gonna calve tonight.” He would supervise, from the cab of the truck, concerning how many bales of hay I should put out or whether they needed the mineral feeder filled. I concluded that he would surely become a farmer.

Each Tuesday night, I’d dress him up in his hat, boots, and duster and we’d head to the only nightly livestock sale in the country. He would take in all the sights, sounds, and smells of the auction barn. The trip home would always find me serenaded by his chants and bid-taking as if he were the real auctioneer. Oh well, if he couldn’t make an honest living farming, maybe he could become an auctioneer. Then Zach, the second son, came along and he showed even more interest in the cattle than Seth had. He was raising bottle calves by the time he was three and showing heifers at the county fairs by the time he was seven. Zach was calmer and quieter with the show calves than Seth, and the animals responded appropriately with intense bonding and affection between calf and boy. Both boys were active in 4-H with both of them serving stints as President of the local club. They both showed their heifers at every county fair in south Missouri, the Ozark Empire Fair, and the State Fair numerous times and they both were fortunate enough to have shown Grand Champions at each of the above. Seth won state public speaking in 4-H while Zach was the state winner in FFA Creed speaking. Zach also was President of his FFA Chapter and received the State Degree. Needless to say, because of their heavy involvement in these groups, I always assumed they would either farm or find careers in some field of agriculture—just like their dad. Was I ever wrong!

Seth is in Ireland, finishing up his PhD in philosophy and beginning to apply for openings at universities across the country to become a professor. Zach just graduated with his BA degree and has been accepted into graduate school at the University of Mississippi to study—you guessed it—philosophy. He, too, wants to go on and get his doctorate and become a professor of philosophy. I took one course in philosophy during my college career and thought it had to be the biggest waste of time and money in my entire educational experience. Nothing in philosophy made any sense to me and I often wondered what kind of person would want to devote their entire life to the study of such nonsense. But, both my sons love it. I’ve often said that I am lucky enough to never have to ‘work’ a day in my life because I love what I do so much, it never feels like work. Seth and Zach both feel this way about the field of philosophy, so I support them and wish them well in their chosen field. I do, however, take great pride in knowing one thing; In a few short years when they are both professors of philosophy at some prestigious university, I feel fairly certain that they will be the only two professors of philosophy in the entire United States that are also adept at the skills of artificial insemination and rectal palpation.

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Wheat Sales Closing is September 30Insure your new wheat crop with an MPCI policy

Please contact your agent for any of the following actions regarding wheat sales:

• New Application

• Coverage level/price election changes to existing policy

• Add a County

• Transfer/Cancellation

• Entity/Marital Status changes

• Request for Actuarial Change

To ensure accurate premium quoting, please report 2011 wheat production as soon as possible.

Important Dates to Remember

July 1Premiums/fees due for fall planted crops

July 15Acreage reports due for all spring planted cropsReports must be completed, signed and received by your agent by this date.

September 30Sales Closing date for fall wheat

Sales Closing for PRF

October 31Premiums due on spring crops

October 31Final plant date for wheat (15-day late plant through Nov. 15)

need coverage on

your forages?

Pasture, Rangeland, Forage (PRF)

insurance must be purchased by

September 30, 2011.

DiscoverdamagetoyourcropinsuredbyanMPCIpolicy?Youmustnotifyyouragenttoturninaclaimwithin72hours(3days).

urgent: Do you have an MPCI claim pending or anticipate turning one in due to flooding or other crop damages?Claims cannot be worked or adjusted by your insurance companies until MPCI acreage reports have been turned in and processed by your agent and insurance company. It is of the utmost importance that you report to your local FSA office as soon as possible if you have completed crop planting. Your crop insurance agent needs your 578’s and maps to check and support the processing of your MPCI acreage reports due July 15th for your crop insurance policy.

Damage throughout the state. Blame the hail. In a matter of minutes your crops can be severely damaged by hail and many have been in 2011. Hail is one of the most common weather conditions that can threaten your crops and your livelihood. It can wipe out part of a field, damage a few acres here and there or totally devastate an entire crop.

Crop hail insurance is a great option to help supplement your Multi-Peril Crop Insurance (MPCI) policy and overall risk management plan. It’s not too late to purchase a policy. Contact FCS Financial today and let one of our agents help you with your coverage needs. With potential crop insurance income per acre at all time highs, a few extra dollars for hail insurance may be your cheapest crop cost per acre.



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WHY LIFE INSURANCE?If someone depends on you financially, chances are you need life insurance.

Existing resources including survivors’ earnings, savings, investments

and life insurance already owned.

Current & futurefinancial obligations

—(minus)

=(equals)

Life insurance needed

Life stages or events that may trigger the need to review your current life insurance plan include:

• Marital Status

• Becoming a new homeowner

• Purchasing a farm or other real estate

• Planning retirement or recently retired

Find out how much life insurance you need by contacting FCS Financial for a free Life Insurance Needs Assessment. Call 1-800-444-3276 or visit www.myfcsfinancial.com for the agent nearest you.

• Having children

• Changing jobs

• Becoming involved in a family partnership or corporation

• Taking on additional debt

attention: online banking usersChanges coming soonOnline banking is an important feature for customers especially those who work off the farm, need to transact business after hours or just want to manage their accounts electronically. For the past year, FCS Financial has been updating and enhancing our online banking program as a way to provide Focused. Customized. Solutions.™ Recent enhancements include a fraud analyst tool and a new authentication process. Watch for a fresh look and easier navigation next year. After the most recent enhancements are complete, it will be important for all existing online banking users to visit our website at www.myfcsfinancial.com to login in to their account. New security features forced a change in our web address for online banking. To activate and use the new online banking address, visit www.myfcsfinancial.com and click on the Login button. If you have the site bookmarked on your computer, please delete the bookmark and login through www.myfcsfinancial.com. Those who have not used online banking in the past can click on the Enroll button at www.myfcsfinancial.com to use the system. If you have questions, please email [email protected]. Additional information will be sent by mail to online banking users when the enhancements are effective.

Protect your online identityWhen conducting any transactions online, you should be aware of identity theft. To help protect yourself, make sure your computer has current antivirus software enabled, look for https in the browser of transaction sites (“s” indicates a secure site), and type in web addresses rather than clicking on links. This is especially true when the link is sent to you through an email. FCS Financial will not use email to request personal information. If you receive any emails from FCS Financial that appear suspicious, call your local office at 1-800-444-3276 to verify the content of the message.



A big thanks to all who updated or verified their email address during FCS Financial’s iPad giveaway promotion. The winners of the three iPads were (clockwise from top left) Bonnie “Boot” Bohon, Windsor, Mo., with Brian Zimmerschied, FCS Financial; Sam (left) and Jean Thomason, Holden, Mo., with Doug Meyer, FCS Financial; and Steve Goslee, Mtn. Grove, Mo., with Michelle Luebbering, FCS Financial Express.™ Congratulations!

Our iPad Winners!

As a cooperative, FCS Financial is dedicated to serving rural communities in Missouri. Throughout the year, we receive many requests to support various causes. While we can’t donate to every cause, we have recently donated $1,000 to the relief efforts in Joplin; paper goods to all 4-H

clubs in our service area; plaques, dinner and paper goods to the FFA state convention activities; cash

to local food banks; and are sponsors of the 4-H Legislative Academy and several Missouri State Fair activities. Additionally, we provide scholarships and support most ag events in

the state through monetary donations and human resources. Our past is rooted in rural Missouri and our future is committed to seeing it grow.

Supporting Missouri’s communities



Sponsors:

Missouri agriculture is working to educate consumers about modern farming through a dynamic campaign with the St. Louis Cardinals. “SAFE at the Plate” reminds consumers of the delicious, nutritious and affordable food provided everyday by Missouri farmers and ranchers.

For many Missouri farmers, farming is more than a chosen profession—it is a commitment to caring for their animals, preserving the land and giving back to their communities.

Meet more Missouri farmers and register to win $500 in free groceries at MoFarmersCare.com.For offi cial rules and to enter, visit MoFarmersCare.com. Must be a Missouri resident and 18 years old at time of entry. Contest ends 8/31/2011. Void where prohibited.

Pictured: Kneeling: Gage and Galt Porter. Second Row (left to right) Mary Bonacker, Rachelle Chinn, Chris Chinn, Connor Chinn, Grey Porter, Cindy Heins, Sarah Heins. Back row: Stanley Bonacker, Paul Heins, Kevin Chinn, Matt Holliday, Gary Porter, Lori Porter, Chris Heins, and Benjy Heins.

8x10ad.indd 1 6/14/11 11:26 AM



FCS Financial hosted a groundbreaking ceremony on Friday, May 27, 2011, to celebrate the construction of their new retail facility in Macon. More than 50 people attended the event including local dignitaries, Macon Chamber of Commerce members, FCS Financial directors, customers and employees. “As Missouri agriculture adopts new technologies and techniques, FCS Financial strives to provide our customers the best products and service,” said Daryl Oldvader, CEO of FCS Financial. “Our first priority has always been our customers and this new Macon facility will allow us to provide Focused. Customized. Solutions.™ to producers across Northeast Missouri.” The new Macon retail facility located at the corner of HBC Road and US Hwy. 63 will serve as a home for Kirksville, Shelbina and Memphis customers and employees. Weather permitting, construction will be completed by December 2011. Customers will be notified in advance of the actual move date.

planning of future sites continues

FCS Financial continues moving forward with additional office construction and consolidations that were announced last year. A lot in Columbia has been purchased and construction is expected to begin in September. The search for a site in Springfield is just beginning while lot acquisition activities have temporarily been placed on hold in Joplin. Discussions will be re-engaged with the Realtor once we get a little further beyond recovery from the tragic tornado that devastated the area recently.

Artist’s rendering of future office.



Through a mail ballot, the stockholders of FCS Financial elected Michael L. Bruce, Nevada, Mo.; James Davis, West Plains, Mo.; Brian Peterson, Trenton, Mo.; and Rick Rehmeier, Augusta, Mo., to serve on the Board of Directors for three-year terms. They were installed at the Board meeting on Wednesday, June 22, 2011. FCS Financial provides credit and financial services to agricultural producers, agricultural-related businesses and rural residents. The FCS Financial board consists of 15 members and has 12 areas of representation.

Incumbents, New Directors Elected

james davismichael l. bruce brian peterson rick rehmeier

bruce is an incumbent whose area of representation includes Bates, Camden, Cass, Cedar, Henry, Hickory, Johnson, St. Clair, and Vernon counties. He and his wife, Connie, have three children and six grandchildren. His farming operation consists of wheat, soybeans, corn, and lespedeza. Bruce also has a cow-calf operation. He has been a customer for 39 years and a board member since 2002. davis is a new director whose area of representation includes Crawford, Dent, Howell, Oregon, Ozark, Phelps, Pulaski, Reynolds,

Shannon, and Texas counties. He and his wife, Leslie, have three children. He raises alfalfa and has a beef-cattle/cow-calf operation. Davis replaced Gene McClellan who retired from the board after serving as a director for 15 years. peterson is an incumbent director whose area of representation includes Carroll, Chariton, Grundy, Linn, Livingston, Mercer, and Sullivan counties. He and his wife, Barb, have three children and two grandchildren. Peterson operates a dairy and raises hay. He has been

a member of the board since 2002. rehmeier is a new director whose area of representation includes Iron, Jefferson, Lincoln, Madison, Perry, St. Charles, St. Francois, St. Louis, Ste. Genevieve, and Washington counties, and the City of St. Louis. He and his wife, Benita, have two children. Rehmeier is a fifth generation farmer raising corn, soybeans and wheat as well as 20,000 head of hogs marketed annually. Rehmeier replaced James Schulze who retired from the board after serving 13 years.



Greetings from the Board Room:

I hope that you had an opportunity to take advantage of some of the

educational opportunities FCSF offered earlier this year. From the attendees

that I visited with, the response was quite positive. At first glance, these

presentations can be expensive, but I’ve got to think that a better educated

and more aware member will be a better borrower and a more capable user

of the financial services offered by FCS Financial. If you didn’t make one

of the seminars, or you are like me and can always benefit from a little re-

enforcement, visit the web site and read what each of speakers had to offer.

All of the FCSF membership has been provided an educational

opportunity with the current election of directors. In an effort to put all

associations of the Farm Credit System on a similar election format, the

regulator required that the elections be held using a cumulative vote. As there were four positions to be filled, each

eligible voter had four votes that could be cast in any combination for any of the candidates. Hopefully, this will

help satisfy one of the often heard comments about our elections – some voters just weren’t comfortable voting for

someone they didn’t know. With this method you could cast all four votes for one individual. I’m curious to see

if this increases member participation in the election and how the votes are distributed. In my tenure as an elected

director, the only prediction I’m willing to make is similar to predicting the weather or markets – what appeared to

be clear pattern last year, will have absolutely no bearing this year.

One definite outcome of this election will be the loss of two long time board members. Both Jim Schulze and

Gene McClellan have chosen not to run for re-election. Jim at one time has been a vo-ag teacher and served as our

un-official parliamentarian. With his help and guidance, the meetings had less the appearance of trying to herd cats.

Gene stepped up the past two years and served as our PAC chair. In this day a necessity but not a task that everyone

has a desire to handle and he did it willingly. Thank you gentlemen very much for your service and dedication

After the director election, there is always something of a change with the formation of a new board. There

will be at least two new members to welcome, new committee assignments, and can always be a change in board

leadership. There will only be two remaining elected members with board experience in the prior associations and

at least half of the elected members with two years experience or less. Tenure is certainly not an issue for a couple of

reasons. The new board members have some exceptional abilities and the training process is much more extensive

and in depth than what Jim, Gene, and I experienced several years ago.

A new board, new organizational changes, and new building projects. One thing that remains the same is FCS

Financial’s goal to be the lender of choice to Missouri agriculture.

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James Nivens, Chairman of the Board


PRESORT STANDARDU.S. POSTAGE

PAIDJEFFERSON CITY, MO

Permit No. 210

Focused. Customized. Solutions.™For who you are. For what you do.FCS Financial is introducing Focused. Customized. Solutions.™, a new approach to service that brings the right resources to you.

It’s the loans, financial services and local expertise you trust, all designed with your specific needs in mind.

Your financial needs and your neighbor’s needs aren’t the same. So why should your service be? We match you with a team of

experts and financial options that fit your type of operation. We don’t think you should have to bend over backwards to get the

financial support you deserve. That’s our job.

We are Focused on your success in order to provide service, loans and financing Customized to your needs. And, in the end, to

deliver Solutions that help you grow for years to come. Visit us at myfcsfinancial.com, call 1-800-444-3276 or stop by any FCS

Financial office for Focused. Customized. Solutions.™

Focused. Customized. Solutions is a trademark of FCS Financial, ACA. FCS Financial is an Equal Opportunity Provider. Current life insurance carriers available at myfcsfinancial.com.


heartbeat summer 2011

Documents

fcs financial ceo

vision of fcs financial

fcs financial management

summer heartbeat

pm2 heartbeat summer

pmheartbeat summer

r daryl oldvader

site selection committee