Feature

Looking at 2019 with 'realism'

"Unique" was the best way to describe the 2019 fiscal year for both MFA and its members, said MFA’s Chief Financial Officer Karen White during the cooperative’s annual meeting Dec. 3 in Columbia. More than 550 delegates, em­ployees and special guests attended the meeting, which featured exhibits by MFA’s operating divisions, Missouri Department of Agriculture and MFA Oil.

From weather extremes to trade disruptions, agriculture has faced a long list of challenges over the past 18 months, White said. In particular, severe swings from drought to flooding are to blame for reduced yields, prevented planting and delayed harvests—all of which negatively impacted sales for MFA in the fiscal year that ended Aug. 31, 2019.

Consolidated sales reached $1.1 billion, but the overall result was a pre-tax loss of $10.1 million for 2019. Despite the loss, White pointed out, MFA’s balance sheet remains strong, and the cooperative has a favorable budget for the 2020 fiscal year.

“Yes, this was a unique year, but as a company, we weathered the storm,” White said. “It dinged us up a little bit, but we are prepared and excited about fiscal 2020. Our plan reflects earnings returning to 2018 levels, a goal we believe we can achieve, if Mother Nature gives us the opportunity.”

Reviewing financial performance by category, White reported that 63 million bushels of grain were sold in 2019, a 23% decrease from the previous fiscal year and a direct result of below-normal harvest in the fall of 2018. She pointed out that grain volume was similar to 2016 when the region also experienced drought.

“Harvest reports for this fall have been encouraging, with yields in most areas better than expected,” White said. “Unfortunately, the number of prevented plant­ing acres this past spring means we will likely not see grain bushels returning to 2018 levels.”

Field crop sales—which include plant foods, seed and crop protection—were $565 million, an 8% decrease from fiscal 2018. White said each of these product areas had reduced sales in 2019, with fertiliz­er tonnage especially impacted by wet conditions. MFA locations that service river bottom areas where much of the prevented planting acres occurred expe­rienced the largest drop in field crop sales, she added.

Livestock supply sales also decreased by 13%, totaling $151 million in fiscal 2019. This category includes feed, animal health and farm supply sales.

“The negative effects of the 2018 drought on livestock sales included a reduction in the beef herd in parts of MFA’s trade territory and a shortage of hay, which pushed producers to sell calves off the cow,” White explained. “In addition, many producers trended toward lower-priced alternatives with com­modity blends and away from our branded feeds.”

Total margins and operating revenues were $203 million, a decrease of 9% directly correlated to lower sales volumes, White said. Joint venture earnings were $1.1 million compared to $2.3 million last year. Working capital was $67 million at fiscal year end, down $16 million from 2018.

Total assets at the end of August were up slightly to $510 million, due mainly to an increase in inventory levels driven by lower sales volume. White also reported that MFA Incorporated has long-term debt of $77 million, including a term loan with CoBank and the MFA Bond Program. Total net worth decreased by approximately $10 million to $155 million, which is still a healthy number, White said.

“Over the last several years we have worked hard to build a strong balance sheet so that when we have unfortunate circumstances like this year, we can weather the losses,” she said.

White concluded her report by announcing that MFA will return 100% of its Domestic Production Activities Deduction (DPAD) this year, estimated at $7.5 million for fiscal 2019. This deduction is available for farmers who sold grain to MFA. In prior years, MFA has retained part of the DPAD dollars to reduce taxes.

RISING TO THE CHALLENGE

In his address to the membership, MFA Board Chairman Wayne Nichols also acknowledged the challenges farmers and the agricultural industry continue to face but expressed optimism that MFA is positioned for a more positive financial year ahead.

“Management presented the board with a very detailed business plan for this coming year. The plan reflects positive earnings for MFA,” Nichols said. “The board believes it is essential that MFA Incorporated remains profitable for today’s farmers and those of tomorrow.”

The Pomona, Mo., cattleman who represents District 13 on the MFA board also commended the company’s employees for their efforts to serve customers during trying times.

“The excessive rains and floods compressed delivery of products and services into a tight window,” Nichols said. “It was wait, wait, wait and then run for long hours to try to catch up. It took some creativity at times, but MFA employees put in the hours and team­work to get things done.”

MFA Chief Executive Officer Ernie Verslues reinforced the importance of serving members, even under such extreme circumstances. He pointed out that the biggest challenges farmers face—trade and weather—are outside their control, and said he expected the audience’s attitudes during the annual meeting presentations to range from pessimism to optimism and perhaps settle on “realism.”

“Throughout our long history, MFA has enjoyed the peaks and endured the valleys associated with agriculture and its cycles,” Verslues said. “That experience has trained us to strengthen the organization in good times and be prepared for diffi­cult times. I don’t have to remind you that we are currently in the valley, but our goal of building the balance sheet has paid off during the last down cycle. Our balance sheet is solid despite this year’s loss.”

Verslues said the adversity of the past year shouldn’t overshadow MFA’s positive accomplishments in 2019. He praised employees for getting product applied when conditions allowed, keeping business go­ing even when weather tried to derail sales, finding alternative options for unloading and transporting plant food and helping with sandbagging efforts during flooding in many parts of the trade area.

MFA’s organizational restructuring also was a key high­light of 2019, Verslues said, with initiatives to intensify the company’s sales focus, improve operational efficiencies and strengthen relationships with members and customers. In 2020 and beyond, he said, MFA will continue providing innovative products and services, making investments in rolling stock and facilities and giving employees opportunities for training and education.

“I don’t question our efforts during fiscal 2019. Unfortunately, the opportunities just weren’t there,” Verslues said. “Our trade area was hit by more challenges than most anywhere in the United States. It would have been easy to sit back and feel sorry for ourselves. But we didn’t. We looked for opportunities, because of our customer focus and because we care about more than just selling you products and services. Isn’t that what a cooperative is all about?”

TACKLING TRADE

Uncertainty in global markets was the topic tackled by guest speaker Seth Meyer, associate director of the Food and Agriculture Policy Institute at the University of Missouri, who delved deeper into the trade dispute between the U.S. and China. Soybean sales are most affected, he said, with total U.S. soy­bean exports to China falling by 22.8 million tons from 2017 to 2019. During that time, the average farm price also decreased nearly $1 per bushel.

Even if a trade deal is reached, uncertainty about exports will continue into 2020, he predicted. A drastic reduction in China’s hog production due to African swine fever has reduced overall demand for soybeans but could open up the market for the U.S. to increase pork exports.

“A trade agreement doesn’t instantly mean we go back to large volumes of Chinese trade in soybeans,” Meyer said. “It isn’t clear that there’s a quick way out of this. Maybe a deal will bring some pork sales back, but the bottom line is that we have a lot of demand uncertainty.”

While estimated national 2019 yields for corn and soybeans are the lowest since 2013, FAPRI’s projected 2020 acreage is similar to March 2019 inten­tions. A return to “normal” production also brings its challenges, Meyer said. CLICK TO VIEW MEYER'S SPEECH AT MFA

“If we have normal planting progress and normal yields, we’re going to have big supplies,” he said. “Sure, there’s an opportunity to provide inputs for that additional production. But bigger grain stocks can push down pric­es. We have to figure out what to do with it. And under current situations, it’s hard to envision not building stocks without a trade deal.”

Trade was among the challenges addressed by the Missouri Department of Agriculture during 2019, according to Director of Agriculture Chris Chinn, who also spoke at the annual meeting. She was personally involved with trade missions to England and Mexico this past year, while other department personnel traveled to China and Taiwan to discuss export opportunities.

“There’s a lot of good news on the forefront,” Chinn said. “The relationship we have with Mexico is strong, and I’m excited to have Missouri products continue going across the border. The Taiwan market is also strong, and they have a lot of faith in the products you’re providing.”

REACHING OUT

Chinn updated MFA members on the department’s “MORE” campaign’s initiatives to provide food for families in need, share agriculture’s story through social media, connect rural areas with high-speed internet and trim the state’s rules and restrictions on farmers. She reinforced that farmers can reach out to the department with questions or for assistance, such as crisis counseling. Free, confidential help is available by texting TalkWithUs to 66746 or calling 1-800-985-5990. More resources are available online at agriculture.mo.gov/more/resources.php.

“While you may have heard a lot of depressing news today, there’s also a lot of hope and optimism,” Chinn said. “When we have bad years, there are always good years ahead. I realize the amount of stress has been tremendous, but I want you to know that you’re not alone. We’re all in this together.” CLICK TO VIEW CHINN'S SPEECH FROM MFA'S ANNUAL MEETING

The afternoon’s guest speaker was Damian Mason, described as “a talk show host mixed with an agricultural economist and a healthy dose of comedian.” His entertaining presenta­tion focused on the future of U.S. agriculture, hitting the audience with humor as well as realism.

In his view, Mason said, the farmer of the future will need to adopt autonomous equip­ment, use less tillage, plant more cover crops and place inputs judiciously.

“We must do better by the land. It’s one of our most valuable assets,” Mason said. “Being better about placing our fertilizer and herbi­cides gets the job done and is good for the environment.”

While mid-sized farming operations are dwindling, Mason pointed out, very large and very small operations are growing. He said that trend opens opportunities for more value-add­ed products, alternative crops and niche farm­ing to meet the desires of today’s consumers.

“Only 1% of Americans farm, which means our customers outnumber us 99 to 1,” Mason said. “They are in the driver’s seat, but they don’t understand what we do. Moving forward, food production will be more about feelings, food production will be more about feelings, stories that make consumers feel good about their purchases—not how cheap it is. That’s our challenge. Reinvent or become extinct.” CLICK HERE TO VIEW MASON'S SPEECH.

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Precision partners

With all the precipitation last summer, Justin Stahl, farm manager for Sachs Farms, LLC, in Wheaton, Mo., thought his two new pivot irrigation systems would go unused. But Stahl had signed up for MFA’s soil moisture probe trial.

The data surprised him.

“It was wet down here,” Stahl said. “With­out knowing what was going on in the soil, you would have thought we had enough wa­ter, but it was amazing how much we actually had to put on toward the end of the season.”

The unpredictable weather of the previous two years has many farmers like Stahl won­dering how to manage their water, whether there’s too much or too little available to crops. That’s why MFA and Sydenstricker Nobbe Partners, a John Deere dealership group in Missouri and Illinois, have teamed up to offer moisture probes as a tool to irrigate more precisely.

“Irrigation isn’t a huge player in our trade area,” Precision Data Manager Thad Becker said. “But there are pockets here and there. This partnership gives us the opportunity to provide growers who irrigate another option through our Crop-Trak Complete program.”

Moisture probes aren’t new, Becker added. The technology has been available for close to 10 years, and MFA Crop-Trak agron­omists do consult with growers about irrigated acres. Teaming up with Sydenstricker Nobbe Partners allows both companies to leverage their strengths. MFA has the agronomic expertise, and John Deere has the equipment.

“MFA serves growers who are precision-minded,” said Neal Raymer, integrated solutions consultant for Sydenstricker Nobbe Partners in Macon, Mo., who worked with Becker on this partnership. “It was a good fit for us because we can provide the equipment expertise if a grower has questions on how to use it, but MFA can provide growers with the agronomic knowledge and help interpret the data.”

Last year, MFA placed 15 probes as part of the trial. While the probes can measure soil moisture and rainfall, Raymer said there are add-ons such as temperature gauges, insect traps and leaf-wetness sensors for disease modeling.

“It’s almost like a small weather station,” Becker said. “It ba­sically works like a cell phone with an antenna that sends data back to a computer.”

Each probe is placed either a meter or half-meter down in the soil and has a sensor at specific increments to indicate moisture levels in the field at varied depths. To install the probes, a slurry of soil and water is mixed, setting the probe in the dirt for the season. Each winter the probe is pulled and housed inside a temperature-con­trolled environment.

On Sachs Farm in southwest Missouri, the MFA precision team installed one probe in a corn field and another in double-crop soybeans.

Shannon McClintock, Region 5 Crop-Trak consulting area sales manager, worked with Stahl to analyze the data. McClintock scouts the 100% no-till farm where Stahl grows corn, wheat, soybeans and some cover crops. Describing the soil as “well-draining, even thin and rocky in places,” McClintock said they opted to use the half-meter probes.

Though the farm experienced ample amounts of rainfall in spring and even into June and July, in late August the probe told a different story.

“With the soil profile and drainage down here, we probably would have ran short of moisture if we weren’t using the probes,” McClintock said. “Near the end of the season when the corn was in reproductive stages, we could see it was using a lot of water. At that point, we turned on the pivot and were able to finish off the corn and keep up the test weights.”

It took the guesswork out of the irrigation schedule, and that’s big, according to Stahl.

“We installed those two pivots to be able to help combat drought years,” Stahl said. “But one of the biggest benefits of the probe is you can see what the crop is using. Then you can look at the forecast and make a decision to put water on or not. It isn’t cheap to pump water.”

From January 2019 to January 2020, 73 inches of precipitation fell where Stahl lives. In a year of flooding, without the data from the moisture probe, neither McClintock or Stahl said they would have thought to turn on the pivot.

“Having access to this data helped us opti­mize yields even in a wet year,” McClintock said. “It’s definitely a good tool to have in our toolbox.”

MFA’s Precision Agriculture Department and Sydenstricker Nobbe Partners plan to continue the soil moisture probe program in 2020. For more information, contact your MFA precision specialist or your local MFA or AGChoice facility.

To view this story as printed via a flipbook, CLICK HERE.

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In This Dec/JanToday's Farmer Magazine

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Farming without him

In 2010, Marilyn Calvin lost her best friend and business partner when her husband, Kenneth, died suddenly of an aneurism. After his death, Marilyn continued to operate their Mt. Vernon, Mo., dairy farm, which she and Kenneth had established in 1972.

There’s not much time for grieving when the cows have to be milked.

“When we got married, Kenneth had a shotgun and a car payment,” she said. “We started with nothing and bought this farm a piece at a time. I didn’t want to lose that.”

Today, Marilyn partners with their son, Kenlee, to milk 200 cows, mostly Holsteins, and care for 170 replacement heifers. They also raise corn silage, grain and hay and maintain an intensive grazing system on 550 acres.

“I’m just as much a farmer as anyone,” Marilyn said. “I milk in the morning, feed calves every day and help at night when needed.”

According to the USDA 2017 Census of Agriculture, 36% of all U.S. producers are female, and 56% of all farms have at least one female decision-maker. However, Karen Funkenbusch, specialist in human develop­ment at the University of Missouri Extension, believes women farmers are undercounted.

“Many say ‘I only handle the books,’ ‘I only order seed,’ ‘I only handle the marketing,’ or ‘I only handle the health of the cattle,’” Funkenbusch said. “These women don’t realize they make important business decisions.”

USDA doesn’t track the percentage of women carrying on farming operations after their husbands die, but there are plenty of women who do. Susan Jahn is one of them. She was widowed at age 40 when her husband, Kirk, was killed in an accident on their Jackson, Mo., farm in March 1999—just a month shy of his 40th birthday.

Susan was left with two young children, a large farrow-to-finish swine operation, an excavating business and 2,200 acres of row crops. It was Easter time, just before planting season. They’d already bought their seed for the year. She didn’t know what else to do but jump in the tractor and put that seed in the ground.

“I’d be out there in the field and plant some of my rows crooked, and I’d sit there and cry. I knew Kirk was looking down on me, and I couldn’t even plant straight for him,” Susan recalled, still misty-eyed when she talks of her late hus­band. “I had my faith to get me through, but I would still get so mad and wonder, ‘Why?’ He was supposed to be here farming with me.”

Susan and Kirk were high school sweethearts who married at age 19 and worked together for 20 years to build their farming operation. Their son, Scott, and daughter, Kelly, were 9 and 7, respectively, at the time of their father’s death.

After planting and harvesting that first season following the accident, Susan decided to cut back and focus more on her young family. She sold some of their larger farming and excavating equip­ment at auction. She gave up their rent­ed ground but kept her hog operation and the family’s own 400 acres, which she rented to other farmers.

In 2009, when Scott was a senior in high school, he told his mother he wanted to farm rather than go to col­lege. Susan put the tuition money she’d saved toward some land for him, and he picked up other rental acreage here and there to go along with the family farm.

“He’s Kirk made over,” Susan said. “Scotty always knew he was going to farm, he was going to excavate, he was going to do everything his dad did. He wanted to build it all back up again.”

Today, Susan and Scott together raise corn, soybeans and wheat on 1,200 acres. Susan helps with planting, harvesting and hauling dirt for the excavating business. She also manages 200 head of Duroc, Hampshire and crossbred hogs, mainly on her own.

“I’m doing everything I did when Kirk was here,” Susan said. “It’s hard, but it’s what I’ve always done. That’s why I picked it up so easily. I have friends who will ask why I’m still out there in the tractor or the combine all day long, and it’s simple. Farm­ing’s all I know how to do. And I love it.”

The same can be said of Frankie Knapp of Gideon, Mo., who, at 85, is still actively involved in the farm that she began oper­ating with her late husband, Rayvon, in 1952. Married at age 18, they farmed together 44 years before Rayvon died in 1996 from a series of health complications, including a heart valve replacement, kidney failure and lymphoma.

At the time, the Knapps were farming 2,000 acres of their own land and rented ground. Their sons, Ricky and Craig, had taken over much of the day-to-day farming responsibilities as Rayvon’s health failed. The brothers farmed for 10 more years until they lost contracts on their rental properties. The 700 acres they owned weren’t enough to support three families. So Frankie rented the ground to other farmers until 2018 when she offered her grandson, Jacob Knapp, a chance to take over the family farm.

Jacob, Craig’s son, grew up farming with his dad and uncle and started his own operation in 2006. But in 2008, the land he was renting was sold, and he had to quit. He worked as a farm­hand for other producers in the area until he began farming with his grandmother last year.

“I’m 85 years old. How much longer do I have?” Frankie said. “I’d rather have family farming it, and I think that’s what Rayvon would have wanted, too. Jacob’s the fifth generation to farm here.”

Taking active roles

Having intimate knowledge of their farming business made it easier for Marilyn, Susan and Frankie to take over management after their husbands died. Like many farm wives, they handled the bookkeeping and finances from the beginning of their mar­riages. They also participated in farm labor and decision-making.

“I always ran everything, even when Rayvon was alive,” Frankie said. “I did the books and the marketing. I was on call 24 hours a day.”

Taking active roles in the industry can also help position farm women—widowed, married or single—to be taken seriously in the male-dominated world of agriculture, Marilyn said. She worked her way up as a leader in the dairy industry for four decades. Every month, she attends a meeting of the Dairy Farm­ers of America Southeast Council, where she is the only elected female member. She’s also vice chair of the Midwest Dairy Asso­ciation Ozark Division. In 2013, she was named to the Missouri Institute of Cooperatives Hall of Fame—the only woman farmer to receive the honor.

“There’s still a stigma among farmers about female farmers until they get to know you—that you really farm and you know what’s going on,” Marilyn said. “I’ve worked hard and earned the respect of other dairy farmers.”

Susan has been active in Farm Bureau and is currently serving on the Cape County Soil Conservation and Farm Service Agen­cy boards. She said she’s made lifelong friends in these groups. Frankie kept books for a cotton gin in Gideon for 36 years, retiring from that job at age 69. The job gave her connections throughout the farming community and helped her gain first­hand knowledge of the marketing side of the business. It also helped keep grief from overwhelming her after Rayvon died.

“For a while, it seemed like having a job was the only thing that kept me alive,” Frankie said.

No matter how difficult the journey, carrying on their farming operations ultimately gives these women hope to preserve them for future generations. Scott and his wife, Laura, a schoolteach­er, now have a young son named Kirk, after his grandpa. The toddler likes to tag along with Susan as she farms—just like her own children did when they were little.

“Little Kirk is there, too, just taking it all in. He can identi­fy all our tractors, and he likes to see the pigs and ride in the combine with me,” Susan said. “I hope Scott continues on. I’m here to help his farm grow, and maybe he can do the same for his son someday.”

Frankie intends for grandson Jacob to continue the farming legacy she and Rayvon started more than 67 years ago. The 34-year-old now grows corn, cotton and soybeans, and his sons, Gavin and Brayden, are learning to farm with him.

“Farming is what I love, and I wanted my kids to be part of it, like I was raised,” Jacob said. “It works out great. I get along with Grandma, and she still helps me with all the marketing. She loves farming as much as me. It’s her passion.”

Sharing advice for farm wives

Susan said one of the hardest lessons she learned after Kirk’s death was that life as she knew it would never be the same. One minute, she, her husband and their kids were all working to­gether in their farm shops and hog buildings. The next minute, he was gone. She advises other farm wives to be aware of that harsh reality.

“If you’re not prepared,” she added, “people can take advan­tage of you.”

Knowing that the unthinkable can happen, Susan, Marilyn and Frankie also offer these considerations for carrying on a farming operation after a spouse’s death.

You have to love it. “Learn now what farm life is really like,” Frankie said, pointing out that many wives work off the farm or aren’t involved in day-to-day operations. “You don’t farm for the money. It’s hard work, and you don’t make that much. But you’ll have a good life.”

Take an active role in farm finances, including keeping re­cords and balancing the checkbook, Susan said.

Establish credit in your own name, Marilyn added. You can’t count on joint credit with your husband to suffice when you deal with vendors who don’t know you.

Build up savings and/or life insurance to assure you have the means to keep going. Also invest in crop, livestock and health insurance.

Get help. Frankie, Marilyn and Susan work with family members and hired help. If financing isn’t your forte, hire an accountant and make sure you understand lender expectations. MFA and other organizations can help with agronomic issues such as soil sampling and fertilizer application. USDA and the Extension Service also offer information, and USDA’s Women in Agriculture program provides mentors.

Protect your legacy for future generations. Consider setting up an estate plan to ensure the farm passes on according to your wishes. “It doesn’t matter whether you have red or green tractors, or beef or dairy cows, the land is your legacy,” Marilyn said. “Farmland is expensive, and if you sell it, there’s no way your kids can borrow the money to buy it back.”

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