MFA’s H.C. Russell wins Gordon Warren award

Long-time advocate for Extension rewarded for service

The Gordon Warren University of Missouri Extension Land-Grant award honors a Missouri citizen who uses the resources of the land-grant university to benefit the state. The first winner of the award was the late Gordon Warren of Richland. Past winners include such notables as the late Missouri Governor Mel Carnahan, University of Missouri Chancellor Brady Deaton and former members of the University of Missouri Board of Curators.

This year, the award went to H.C. Russell, chair of the University of Missouri Extension Council. Russell is an area credit manager for MFA retail credit.

At the presentation, Russell was described as “one of those rare individuals who is able to use his intellect, his passion for the University and particularly MU Extension, his integrity and yes, his wry sense of humor to influence decisions for the betterment of the people of the state.”

Russell has served on the University of Missouri Extension State Council since 2005 and as its chair since 2009.

Under his leadership, members from across the state have become a cohesive advocacy group, which has been successful in communicating the value of MU Extension for Missouri citizens with legislators, county commissioners and the Governor’s Office.

Concurrent with service on the State Extension Council, Russell represented Extension on the University of Missouri Alumni Alliance—a group that advocates for the entire University under the direction of the system’s president.

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Risk management

We all measure risk—one way or another. Strategically is best

Effective risk management is key to surviving the boom and bust cycles of agriculture. With modern marketing strategies, farmers and ranchers have managed risk for decades. Many lock in inputs while simultaneously selling future crops. That’s one piece of the process of managing current price volatility.

Risk management is essential for our customers and for us.

Risk is inherent in agriculture. Risk, by itself, is not a bad thing. Without risk, of course, there’s no reward. Keep in mind that you will manage risk one way or the other. It’s far better to consciously manage risk. The qualifier is to plan for risk and to keep your exposure at an acceptable level.

To manage risk at MFA Incorporated, we have a specifically designated leadership group representing appropriate areas of the business. MFA faces a variety of risks from interest rates to weather to inventories, just to name a few.

We know that leveraging risk should be a fundamental part of every business plan. If you’ve watched companies rise or fall in recent years, you understand effective risk management is a competitive advantage whether in the boardroom or on the farm.

Those with well-thought-out risk management plans weathered the drought of 2012 better than those without. Crop insurance (another risk-management tool) went a long way toward offsetting the risk of weather.

But it doesn’t end there. The Kansas City Federal Reserve said it best: managing risk means sacrificing a portion of upside potential to protect against downside risk.

One traditional risk-management strategy in agriculture has been to maintain large reserves of working capital. That’s effective in dealing with market downturns and in lessening the risks associated with interest rates.

But that practice has a downside of its own—opportunity costs. If not done properly, it can limit future growth and necessary investment in land, facilities and equipment.

The depth and complexity of the risk-management process should reflect the magnitude of your risk profile and your personal preference in the level of risk with which you’re comfortable.

At MFA whether we’re looking at inventories, expansion opportunities, interest rates or pension-fund totals, we use a variety of metrics for different situations.

Take interest rates for example. We use a variety of sources of debt capital, some with fixed rates and staggered maturities and some with variable rates. We also monitor the yield curve, paying particular attention to intermediate and long-term rates. All of these help us manage interest rates.

The key for us at MFA is to have a plan in place and constantly evaluate that plan against changes in the marketplace. The plan is not static. It’s a continuous plan with a constant monitoring of risk.

Wild fluctuations in plant foods prices bit us several years ago. We now have appropriate risk-management strategies in place just for that situation. But inputs, as I’ve mentioned above, are just one part of the process.

Many people have mentioned that today’s agriculture shares a similarity to the 1970s. With that observation foremost in mind, we’re keeping a close eye on debt accumulation, cash flow and interest rates.

While those rates are low today, they won’t always be.

I’m reminded of what former MFA President Bud Frew observed in reflecting on economic swings in the 1970s and 1980s. He noted that what looked to be a very good investment at 4 percent interest looked awfully bad at 15 percent. There were very few years in between those rates.

If this country’s financial house is not put back in order soon, we face multiple risks outside of our individual control. That underscores the importance of risk management and financial triggers now.

I’m assuming our producers are putting a pencil, too, on land and equipment purchases to make certain of cash flow ability. On our end at MFA, we’re devoted to keeping a strong balance sheet.

Debt-to-asset ratio ranks near the top of the list.

I am a great believer of President Eisenhower’s approach to planning. “Plans are nothing. Planning is everything,” he said. And that’s the bottom line.

Economically, agriculture seems to be in new territory. Prices are high, farm income is good, interest rates are low. All of those are two-edged swords.

Planning is everything.

Bill Streeter is president and CEO of MFA Incorporated.

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Missouri 4-H dairy judging team first in placings at North American

Missouri 4-H was the high team in placings at the 2012 North American International Livestock Exposition Youth Dairy Judging Contest held Nov. 4 in Louisville, Kentucky, according to Karla Deaver, 4-H youth development specialist.
The team finished fifth overall in the 22 team field. The team of Steven Nelson, Tucker Peterson and Bailee Whitehead averaged 47.4 out of 50 possible points over 10 classes.
“The team was very consistent both in their placings and with each other,” said Deaver. “Only 4 points separated the three in placings. The lowest score any team member had on a class was 42 points. When oral reasons were added to their scores, only 14 points separated them. Our focus will now be on adding some polish to oral reasons the next 10 months in preparation for the National 4-H Contest next October.”
Nelson, son of Mike Nelson of Grovespring, was 8th high individual overall in the contest. He was 9th in Holsteins, 19th in Ayrshires, 20th in Brown Swiss, 16th in Jerseys and 18th in Oral Reasons. Peterson, son of Janet Peterson of Mountain Grove, finished 17th overall and was 9th in Ayrshires and 20th in Guernseys. Whitehead, daugther of Tony and Nikki Whitehead of Conway, was 7th in Brown Swiss and 21st in Guernseys, finishing 24th overall.
The team was 3rd in Ayrshires, 6th in Brown Swiss and Holsteins, 8th in Guernseys and Jerseys, and 10th in Oral Reasons.
Contestants placed ten classes and gave three sets of reasons. The team is coached by Ted Probert, University of Missouri dairy specialist, and Karla Deaver, University of Missouri Extension 4-H youth development specialist headquartered in Wright and Lawrence counties respectively.

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