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April 18
Next Generation Transformation

This article originally appeared in the Spring 2018 edition of Partners:


Bringing a new generation on to a dairy farm often times requires bringing in new innovation, new ideas or new technology to support the next generation. Today’s economy, coupled with the wide range of technology options on the market, require thorough evaluation and research before implementing new ideas.

For Tyler Wagner, it was automated milking systems that piqued his interest and proved to be a viable solution.

“When I told Dad I wanted to bring in robots, he thought I was crazy,” Tyler says. “But we did a lot of research and crunched the numbers and saw it could work.”

Today, the Wagners use four Lely robots to milk their herd of 240 cows in Manitowoc, Wisconsin. The transition to robots was the next progression for Tyler and his dad, Dale. Dale started the farm in the mid-1980s with 30 cows in a tie-stall barn. In 1997, they moved out of the tie stalls into freestall housing with a four-stall flat barn parlor.  They had steady growth of the herd for several years including the purchase of a neighboring farm in 2010 and the addition of two more stalls in the parlor. By 2014, they were facing tough decisions – continue to invest in dairy or sell the cows.

“The parlor was old and tired,” Tyler said. “We needed to do something – either sell the cows and just do the crops or invest in the dairy. We couldn’t see letting the barn sit empty, so we started looking into our options. Robots seem to make the most sense because I would rather manage cows than people.”

Before bringing in the robots, the Wagners met with other producers who were using robots and visited farms around the Midwest to put together the system that would work best for them. They also did a great deal of cost analysis to make sure the investment would cash flow.

“We projected a $1.30/CWT labor savings using the robots, giving us a 5-year return on our investment. We are half way through the first five years and are on track to meet our goal,” Tyler says.

While the Wagners could pencil out the costs and retrofit their barn to accommodate the robots, the one uncertainty they had was the potential effect on milk production and overall cow health. Having worked to achieve production levels of 85-pounds of milk per cow, they were concerned production might dip when they transitioned to the robots.

The herd is currently at pre-robot levels with higher fat and protein components and lower somatic cell counts. The consistent production endured eliminating the use of Posilac® and moving from a total mixed ration to a partial mixed ration, with pellets fed at milking. Maintaining and even improving production levels was the important part of the cost equation allowing the Wagners to see their projected ROI.

“The biggest unexpected benefit of the robots is the increase in pregnancy rate,” Tyler adds. “Because they are not standing in a holding area or at a feed bunk they are resting more. Before the robots the cows were waiting up to an hour and a half at each milking. We are also seeing a big improvement in the cow’s feet and legs.”

The cows are not the only ones enjoying an easier lifestyle. The Wagners are too.

“Using robots is a lifestyle change for a dairy farm,” Tyler says. “When we were growing up my parents never missed one of our games or school activities. I want to be able to do the same with my kids. Last Christmas, Dad and I were able to work around Christmas dinner, rather than having to plan around milking time. It makes a big difference.”

While the robots do not eliminate the daily work on the farm – animals still need to be fed and monitored, barns cleaned, calves cared for – it does allow for more flexibility. The Wagners have reduced the number employees from six to two with some part-time help.

The addition of the robots has become a pivotal point in the legacy of the Wagner’s family farm. Both Dale and Tyler took the opportunity during the transition to begin the overall succession planning of the dairy and their custom harvesting business.

“Dad brought me into the harvesting business as a partner in 2007, two years after I graduated high school. I became a partner in the dairy in 2015 and in 2017 the dairy bought the harvesting company,” Tyler explains.

The Wagners work closely with Laurie Schetter, senior financial services officer at GreenStone’s Manitowoc branch. Having a good relationship with Laurie has helped make the business and farm transitions easier. 

“When we visit with Laurie, we generally present her with three ideas and plans on how they will work,” Dale says. “She will take the plans back to the office, meet with her team and then give us an idea of what each would look like. We like to plan conservatively and be surprised when things turn out better than we expected, rather than the other way around. Laurie helps us make those kinds of decisions.”

Transitioning to the robots has created other opportunities on the farm and instilled a sense of optimism for the Wagners.

“We are always thinking about where the next robot can go,” Tyler says.


To read more articles like this, check out the online version of this year’s spring edition of Partners!



April 16
How Farms and Ranches Position for Success – Part 2


Previously, we focused on how producers are positioning for success in this elongated, grinder of a cycle. We examined shifting enterprises, cutting cost, building working capital, and talent management of the workforce as popular areas for adjustments. Again, at a recent conference, individualized keypads engaged producers as they provided anonymous responses regarding the adjustments in their own operations. From an audience of over 400 producers, this insight is especially valuable as farmers and ranchers look for ways to weather the current economic cycle. Now, let’s review more of the producer responses.

One in 10 participants indicated they had recently declined a potential growth opportunity. Instead, they chose to focus on the efficiency of their current opportunities. There is a wise, old saying, “Every time you say yes to one opportunity, you say no to another in your business or personal life.”

The commodity supercycle delivered record profits for over half a decade, which left many focused on growth. Actually, some businesses were in growth overdrive. In several instances, this rate of growth exceeded the capabilities of business management, which is resulting in today's multimillion-dollar losses. Of course, growth is the number one reason why businesses fail. However, it is not only due to a lack of management capabilities, but also because working capital was used for growth. Encumbering the business with too much debt was another issue as today’s prices are inadequate to service debt incurred during the supercycle. 

Recently, some producers have scaled back the scopes of their operations, and are attempting to squeeze more income out of the more efficient assets. As a result, many have found a better balance in their business, family and personal lives.

Financially, the one strategy adjustment that is the most personal, controversial and perhaps the most difficult is cutting family living cost. This option was mentioned by about one in 15 respondents. Yet, several cited the challenges of rising medical costs, schooling and everyday living, which have minimized the impact of any cuts made.

Sometimes, the actual costs of living are not the problem. Instead, there are too many dependent on the business for income. One example is a senior generation that is retired, but without other sources of income. Another is a minimally productive family member who is being overcompensated for his or her level of work. Of course, there is also the matter of commingling expenses. For business profitability, this misuse of resources can resemble an iceberg with family living costs above the surface, and a massive problem underwater. While it may require crucial conversations, a good family living budget can be very helpful in long-term sustainability and profitability. It is worth noting that some producers insist that family living costs have no impact on the farm business. I tend to believe that whether it is investments or healthcare, whatever spends income from the farm bears an impact.

The responses from this crowd of over 400 are particularly pertinent as each farm and ranch represented face the same economic realities. Their adjustments provide a great opportunity for benchmarking, and clearly demonstrate the fortitude and passion of many of today’s farms and ranches.

April 09
Tax Incentives for Homeowners

By Chad Zagar, GreenStone Vice President, Managing Director Tax and Accounting

Tax Calendar_4_18.jpg

The recent passage of the Tax Cuts and Jobs Act (TCJA) is influencing some of the advantages homeowners historically received at tax time. The following addresses some of the most important changes you will see in 2018 from a tax perspective. ​

Limits on deductions for state and local taxes including real property taxes

Previously, individuals could claim an itemized deduction for an unlimited amount of personal (non-business) state and local income and property taxes on their Schedule A of Form 1040. Individuals also had the option of deducting personal state and local general sales taxes on Schedule A instead of state and local income taxes, if that option was more beneficial. 

The TCJA, effective 2018-2025, limits the itemized deductions for personal state and local income taxes and property taxes to a combined total of $10,000 ($5,000 if you use married filing separate status). Additionally, personal foreign real property taxes can no longer be deducted at all. 

Itemized versus standard deduction

Claiming state and local property taxes can only be done if you have enough 2018 itemized deductions to exceed your standard deduction. The TCJA almost doubled the standard deductions for 2018 compared to 2017, so fewer individuals will likely be using itemized deductions. The 2018 standard deduction for married joint-filing couples is $24,000 (compared to $12,700 for 2017). The 2018 standard deduction for heads of households is $18,000 (versus $9,350 for 2017). The 2018 standard deduction for singles and those who use married filing separate status is $12,000 (versus $6,350 for 2017).

The TCJA also eliminated the potential to deduct more than $10,000 (or $5,000 if you use married filing separately) for real property taxes unless you own a home that is used partially for business or partially rented out. In these situations, you could deduct property taxes allowable to those business or rental uses on top of the $10,000 limit. 

TCJA Tax Saver

The TCJA does save a valuable break allowing individuals to potentially exclude from federal income tax up to $250,000 of gain from a qualified home sale or $500,000 if you are a married joint-filler. 

The TCJA will affect individuals differently depending on their unique situations. These are just a few items that will impact new homeowners.  In order to make sure that you minimize your tax liabilities, we recommend you visit with your tax preparer or contact one of GreenStone’s tax accountants to see how the new rules may be affecting your filings.

April 09
How Farms and Ranches Position for Success – Part 1

The Ag Globe Trotter  by Dr. Dave Kohl​


In a recent meeting sponsored by agricultural lenders, producers were asked about adjustments they were making in their businesses. Individualized keypads engaged producers and allowed them to provide anonymous responses. This exercise was particularly pertinent as agriculture moves into its fifth year of the economic reset. Today’s elongated grinder of a cycle is in bold contrast to the quick and abrupt downturn of the 1980s. The current economic environment is taking a toll both financially and emotionally on those connected with agriculture, which made all participants eager to hear the adjustments of others.​

From the producer responses, one of the most popular adjustments was changing enterprises in favor of more profitable outcomes. In fact, 60 percent of the 400 responses indicated an enterprise change. Yet, with this strategy, one must first analyze the market and available resources. Then, consistency in the market and management of resources must align with the strategy. An enterprise budget with various scenarios can be a good start for this strategy.

Other producers listed refinancing as a strategy. For those who lack working capital and have equity in land, this is a viable financial strategy to create liquidity on the balance sheet. However, one must simultaneously commit to a plan of improvement to prevent this same strategy from being used two to three years from now.

Another strategy listed by one in five producers, or 20 percent of the group, was to cut both fixed and variable costs. Of course, the key in cutting costs is to choose the right areas for reduction. For example, eliminating crop insurance and experiencing an adverse weather event compounds losses. And eliminating health insurance leaves one overly exposed to everyday accidents that can also be a drain on cash flow.

Lastly, one in six producers is using the downside of the economic cycle to shift talents in the business. In one situation, the son in a father-son operation lacked the skillset, passion and desire for the farm business. He handed his job over to his sister (with encouragement) who transformed the farm’s financial management. As evidenced, the underperforming human asset can be equally as taxing on cash flow as an underperforming capital asset.

The lively and active discussion was very interesting, and full of creativity and sound decisions. Next time, we will look at more practices today’s farms and ranches are using to position for success.

April 04
GreenStone in the Community: Building 21

​Engaging in local activities is one way GreenStone gives back to places where we work and live. Our employees carry out our passion for community engagement through a variety of activities both as GreenStone representatives and as volunteers – we are pleased to tell their stories here. Watch for upcoming stories of how our employees give back in our Open Fields blog!


It takes just 21 days to form a habit, and most influential habits form before the age of 21. This philosophy is the driving force behind the directors and volunteers at Building Twentyone, a youth-centered organization in Mason, Michigan. Building Twentyone embraces the concept of youth as the future of our communities by organizing meaningful activities and workshops in an effort to reach 7th to 12th grade students at their most impressionable ages.

After hearing about Building Twentyone, team members at GreenStone’s Mason branch contributed to the organizations efforts by making a generous donation. With donations like these from various sponsors, Building Twentyone can provide kids and young adults with a safe, fun and structured after-school hangout spot.

So what does Building Twentyone offer? Kids and young adults can enroll in a variety of organized activities such as culinary classes, CrossFit, video game design and applied digital arts classes. These are ways for students to engage in activities particularly interesting to them while building and broadening their skills including after-school jobs at the organizations’ skate park snack counter or front desk. The workshops Building Twentyone offer have especially beneficial components, with life-skills and good habits being essential teaching points.

Keep an eye this page for more stories about how GreenStone team members are helping grow their communities!







March 28
GreenStone in the Community: Youth Haven Ranch
Engaging in local activities is one way GreenStone gives back to places where we work and live. Our employees carry out our passion for community engagement through a variety of activities both as GreenStone representatives and as volunteers – we are pleased to tell their stories here. Watch for upcoming stories of how our employees give back in our Open Fields blog!

Youth Haven Donation.jpg

An organization very dear to the hearts of GreenStone employees at the Concord Branch is Youth Haven Ranch, a camp where underprivileged children from all over the Jackson, Michigan area come to experience a fun, safe and educational environment.

Youth Haven's mission is “providing life-changing, Christ-centered experiences for underprivileged children."  An important aspect of this organization is making sure the children have access to healthy meals, clothes and shoes, and personal hygiene items while surrounded by reliable positive influences. Many of the children may have never had access to these things. Children have access to these helpful services throughout the year, as Youth Haven is more than a summer camp; it also provides weekend camp opportunities, day camps, and after-school programs.
GreenStone team members at the Concord Branch chose to support the Ranch by donating gifts at Christmastime for the children. Pamela Jacobson, a customer service representative at the Concord Branch shared how the branch got involved with sharing the Christmas spirit at Youth Haven.
"We heard about the Ranch and their Christmastime events on the radio," Pamela shared. "We have been collecting and donating gifts for the children at Christmastime for about six years."

We realize the youth of today are leaders of tomorrow, and involvement in Youth Haven Ranch is one way GreenStone team members invest in the youth of our rural communities.

March 26
GreenStone Member Elected to Serve on AgriBank Board

Christine Crumbaugh.jpg
Christine Crumbaugh, of St. Louis, Michigan will serve on the AgriBank board of directors following her election at their annual meeting earlier this month. Crumbaugh and her family operate a 3,500-acre cash crop in Mid-Michigan raising sugar beets, corn, soybeans and wheat. Prior to her election to the Agribank board, she served on the GreenStone Farm Credit Services board of directors from 2012 to 2018.

While serving on the GreenStone board, Crumbaugh focused on the importance of preserving the Farm Credit System’s Federal Charter in order to continue providing dependable and consistent credit for rural communities and agriculture. She will continue to convey this message to legislators and other influencers in her new leadership role.
“It’s vitally important AgriBank is run as an efficient organization providing reliable funding and financial solutions so our member associations can service the needs of farmers, ranchers, and rural America.  My goals as an AgriBank director will be guided toward not only the success of AgriBank, but making sure we partner with our member associations in a way that ensures their success as well,” Crumbaugh says.
As a member of the 18-member board for AgriBank, Crumbaugh will help lead one of the largest banks within the national Farm Credit System. Under the Farm Credit System’s cooperative structure, AgriBank is primarily owned by 14 Farm Credit associations, covering a 15-state area stretching from Wyoming to Ohio and Minnesota to Arkansas, including GreenStone Farm Credit Services in Michigan and northeast Wisconsin.  


March 23
Transition Dilemma

The Ag Globe Trotter  by Dr. Dave Kohl​DrKohl_color.jpg

Recently, I was in the upper Midwest conducting lender-sponsored producer seminars. After one of the meetings, a farm family stayed to discuss farm transition with some of the lenders. They kindly invited me to join, and their first question was to ask for ways to remain a family cow-and-calf operation, instead of a large corporate family business. They asked, “Should we diversify, add value products or grow the business?” By the way, the family was in its fifth generation of management, with a sixth generation preparing to take over the reins.

One good approach to this situation is to reverse the order of examining opportunities. In other words, take an inside-out approach instead of one that is outside-in. First, this family needs to examine family goals and values. Specifically, I instructed each member to write down the top three business, family and personal goals for both the short and long terms (one year, and three to five years separately). This exercise was particularly helpful with this family as one member was very vocal, which seemed to be observed by the non-verbal communication of the other family members present.

Next, keeping with the inside-out approach, the family needed to examine and analyze the financial direction of the business over the past three to five years. We laid out major questions for them to answer including profitability direction, balance sheet values, and the amount of overall debt. The answers to these questions are critical to moving forward.

This approach also includes a talent assessment. That is, who does what? What are the passions and interests of each individual and do they fit the needs of the family business? The interest, availability and training of future generations must also be considered. Another important question is spousal involvement. Will spouses contribute, and if so, in what ways? Actually, the whole idea of job descriptions, regardless of business size, can be valuable in determining everyone’s roles and responsibilities. This also helps minimize overlap in the systems for increased efficiency. Developing a management system with specified roles is a good idea even for a smaller business where one or two individuals do it all.

Next, this family needed to think through its transition plans (exit and entrance). What will the senior generation require for healthcare and other living costs? And what will be needed to establish the younger generation as viable?

With this insight, the family can explore opportunities and scenarios that align with aspects identified in the internal analysis. When families neglect the inside-out process, individual members are often left fretting about the direction of the business, while others remain in the Ball of Confusion, like the 1970’s song by the Temptations.

Finally, this very nice farm and ranch family is, like many, experiencing the growing pains of family business transition. The members were loving and wanted the best for the family as well as the business legacy, which certainly aided the process. I commend them and all family businesses for tackling their future in such a practical, professional and open way.

Dr. Kohl is Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship in the Department of Agricultural and Applied Economics at Virginia Polytechnic Institute and State University. Dr. Kohl has traveled over 8 million miles throughout his professional career and has conducted more than 6,000 workshops and seminars for agricultural groups such as bankers, Farm Credit, FSA, and regulators, as well as producer and agribusiness groups. He has published four books and over 1,300 articles on financial and business-related topics in journals, extension, and other popular publications.

March 22
The Value of Financial Benchmarks

Steve Kluemper, Vice President of Credit, and Ian McGonigal, Senior Vice President of Regional Sales, GreenStone Farm Credit Services


Financial benchmarks provide farmers key insights into how their operation is performing financially and help identify areas for improvement. Benchmarks apply to every business operation. In order to run a successful operation, farmers need to understand their own financial position, and how their metrics relate to other, similar businesses.

While there are many financial ratios that deliver important information, there are three primary metrics every farmer should analyze: the Owner’s Equity Ratio, the Current Ratio, and the Debt Service Coverage Ratio, which measure solvency, liquidity, and debt repayment capacity, respectively.

The Owner’s Equity Ratio shows your net worth as a percentage of total assets, measuring your ability to withstand periods of financial stress. Net worth is calculated by subtracting the value of everything that is owed (total liabilities) from the value of everything that is owned (total assets). The higher the ratio, the greater the solvency and the more total capital supplied by the owner and less by the creditors. The target is 50-65 percent or higher.

The Current Ratio is a liquidity measure similar to Working Capital that shows the value of assets to be liquidated in the following 12 months (current assets) in relation to liabilities due in the following 12 months (current liabilities). Working Capital is calculated as current assets less current liabilities and expressed as a dollar amount, where Current Ratio is a ratio of current assets divided by current liabilities. They both indicate your ability to pay current liabilities from the normal liquidation of current assets rather than liquidating long-term assets or incurring more long-term debt. The higher the Working Capital and Current Ratio, the greater the liquidity. The target for the Current Ratio is 1.25-1.75 or higher.

The Debt Coverage Ratio determines your debt repayment capacity. It is calculated as a ratio of your annual earnings after all expenses, including owner withdrawals and family living expenses, except for interest and depreciation expenses, divided by your annual principal and interest payments. The greater your earnings are to cover debt payments, the easier you can handle planned and unplanned capital spending as well as changes in revenues and expenses. A debt coverage ratio less than 1.00 means there were insufficient earnings to repay all debt payments and working capital was used to make the payments. The Debt Coverage Ratio target is 1.15-1.50 or higher.

These benchmark target ratios are based on general financial management best-practices, as well as on GreenStone’s extensive analysis of the financial performance of our customer-owners. Whenever you compare your operation to a benchmark number, you should always ask how the benchmark was derived, how many operations and how many data points were included in the analysis, and how similar they are to your operation.  

In addition to letting a farmer understand how his operation is performing financially, financial metrics and ratios are also used to make lending decisions, though they are just one tool, not the only factor in these important decisions. For example, GreenStone Farm Credit Services loan professionals review our customers’ business plans carefully, assess their management strengths and weaknesses, and have in-depth conversations to explore their business opportunities and challenges, rather than relying solely on a few financial measurements. 

The financial position of any operation evolves over time and the financial ratios will also ebb and flow. An operation that is expanding to take advantage of an opportunity may leverage a significant portion of its resources, which will weaken some financial ratios. An experienced lender understands this as a temporary situation where, as the expansion plays out, the financial ratios should improve. They also understand that if one financial ratio is outside the target range, other ratios and credit factors may be strong enough to approve a sound, constructive loan.

Farmers should develop the discipline to calculate their financial ratios and compare them to industry benchmarks in line with their production schedule: annually for crops and at least quarterly for livestock. While industry groups and accountancy firms often offer their own benchmarks, GreenStone has developed an extensive database of financial ratios representing a diverse customer base, and can tell individual producers how they are doing compared to the rest of the portfolio. 

To provide meaningful information, GreenStone common-sizes the data to compare the balance sheet, earnings, and cost of production information per unit of resource such as acres, cows, etc. and per unit of production such as bushels, pounds, etc. The common-sized metrics will have variability based on the solvency, liquidity, earnings and debt repayment rates of each operation in addition to differences in business practices such as the amount of assets rented and owned, the amount of inputs produced and purchased, etc. Financial services officers can assist producers in comparing financial metrics to similar operations. 

Benchmarks are a valuable tool farmers can use to help improve their operation and make informed, strategic decisions. When a farmer’s financial ratio is below the industry benchmark, it may be time to consider how to improve the situation, perhaps by improving efficiency, profitability, cash flow, liquidity or solvency. As with any tool, the value is in how the information is put to use, recognizing that benchmarks are only a target to aim for. If a ratio is outside the optimal benchmark range, there is no need to panic, especially for young and beginning farmers. Rebalancing your debt obligations with your lender is often a solution to improve ratios outside of the optimal range. 

Understanding the financial implications of operational decisions takes time. Applying a consistent approach to analyzing your financial ratios and making decisions accordingly can work over time to improve your financial position.

March 21
Gubernatorial Forum Addresses Ag Issues

Five Michigan gubernatorial candidates took the stage Monday, March 19 in East Lansing at the Kellogg Conference Center to share their agriculture positions and to answer questions based on state agriculture policy.  ​​


The forum included Republican candidates (pictured top) Patrick Colbeck, Brian Calley and Jim Hines as well as Democratic candidates (pictured bottom) Abdul El-Sayed and Shri Thanedar. Each of the candidates comes from a unique and different background, but all of them recognize the importance of the agriculture industry in Michigan.   

Over the course of the educational conversation the candidates answered questions on animal agriculture, generational farm transition, ethanol, Right-to-Farm, water rights, and bovine TB. While the candidates shared their perspectives, they did indicate that expertise from the industry was necessary as the folks in the industry are most intimately impacted and involved in the day-to-day application of agriculture policy.   

As a sponsor of the forum, GreenStone thanks the candidates for their willingness to engage in a discussion on some of the issues of importance to the Michigan agriculture industry and economy. The industry appreciated the opportunity to meet the candidates vying to lead the state as the next governor.

The event was sponsored by 17 organizations: Michigan Corn Growers Association, GreenStone Farm Credit Services, Michigan Bean Commission, Michigan Pork Producers Association, Michigan Cattleman’s Association, Michigan Apples, Michigan Soybean Association, Montmorency U.S. Tart Cherries, Michigan Blueberry Advisory Committee, MBG Marketing, Michigan Greenhouse Growers Council, Michigan Milk Producers Association, Michigan Nursery and Landscape Association, Michigan Allied Poultry Industries, Potato Growers of Michigan, Michigan Farm Bureau, and Michigan Sugar.  ​




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