The Pennsylvania Vegetable Industry Credit Scoring a one-of-a-Kind Business - Knowing you makes the difference.
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AgChoice Farm Credit • www.agchoice.com • autumn 2008
The Pennsylvania
Vegetable Industry
Credit Scoring
A One-of-a-Kind Business
Knowing you makes the difference.
Outstanding in Our Field.
Leader
is published quarterly for stockholders,
customer-owners, directors and friends of
AgChoice Farm Credit.
President
Allyn L. Lamb
BOARD OF DIRECTORS
Jeffrey L. Raney, Chairman
William K. Jackson, Vice Chairman
Clarence W. Beck
Lisa M. Boytim
Donald G. Cotner Jr.
Donald A. Koontz
Paul W. McPherson
Dennis B. Spangler
Brian Strathmeyer
Charles F. Ulmer Jr.
R. Mac Reeves, Appointed Director
Jack Webster, Appointed Director
EDITOR
Alexa Stoner
PUblisher
AgFirst Farm Credit Bank
PUBLISHING DIRECtor
Donna Camacho
designers
Athina Eargle
Darren Hill
Amanda Simpson
Your farm enterprise is successful because of the AgChoice Loan Officers: Travis Taylor
expertise that you bring to it. However, your success (From the left)
Jim George PRINTER
can be enhanced further when you can bring Shawn Frantz Spectra True Colour
outside knowledge to the table and apply it to your Barry Sands
Circulation
operation. Kathi DeFlorio
At AgChoice Farm Credit, our team of experts will Address changes, questions, or comments related to
the Leader may be directed to:
take the time to learn about your individual needs, Alexa Stoner | AgChoice Leader Editor
crafting specialized solutions to best serve you. AgChoice Farm Credit
900 Bent Creek Blvd. | Mechanicsburg, PA 17050
phone: 800-349-3568 x6025
Call us. We’re committed to making a difference. email: astoner@agchoice.com
Requests for copies of our financial reports and
inquiries related to internal control, auditing and
accounting should be directed to:
Ann Metzler | Audit Committee Recording Secretary
AgChoice Farm Credit
3301 West Market St. | York, PA 17404-5806
phone: 800-822-1218
email: ametzler@agchoice.com
Knowing you makes the difference. Cover Photo
Meadowbrooke Gourds giant Jack-Shack, Carlisle, Pa.
1.800.998.5557 | www.agchoice.com
Contents
Message From the
President
Who is at the Wheel of AgChoice? 4
board of Director
profiles
Donald G. Cotner 5
William K. Jackson 5
Association News 6
Cooperative Leadership
Choosing Your Next Leaders 8
Credit College
Credit Scoring 9
Developing Our Youth
Our Internship Experience 10
with AgChoice
feature story
The Pennsylvania 12
Vegetable Industry
Value-Added Services
Planning Tips for 14
Natural Gas Lessors
Simplify Your Life— 15
Use the AgChoice Purchase Card
Employee resources
Employees— 16
The Foundation of Any Business
Community Outreach
Telling Their Story 18
Business INnovation
A One-of-a-Kind Business 19
Bringing on the next
Generation
Sharing the 20
Soergel Family Heritage
Financial Report
2008 2nd Quarter Results 22
Autumn 2008, AgChoice Farm Credit | 3
Message from the president
Who is at the Wheel
Allyn Lamb
of AgChoice?
Ownership has its privileges as well as its responsibilities. It puts you in a
unique position.
Most of the quick responses to this question Since January, we have held 10 direction that AgChoice takes for the future
would likely be “Allyn Lamb, the CEO.” If Leadership Advisory Council meetings and by taking a few minutes when the election
you are considering day-to-day operations eight Focus Group meetings. More than 300 packet comes in November to read and get
and activities, that’s probably a pretty good customer-owners shared their thoughts, ideas to know the candidates, and cast your ballot.
response. If you are considering AgChoice’s and experiences on key issues during these You also have the opportunity to personally
longer range direction and focus, the answer interactive meetings. It is inspiring to me meet candidates at events such as the various
might surprise you. to see the openness of the participants and Customer Appreciation Events sponsored
The long-term success of AgChoice is the great input they provide. This kind of by the local offices. For a schedule of the
the result of a number of factors. The main information will influence the direction the upcoming 2008 events, visit our Web site
one, however, is to satisfy our customer- organization takes, and position us to meet (www.agchoice.com) periodically for updates
owners, provide compelling customer the future needs of our customer-owners at a under the “News and Events” link.
experiences, and meet your wants and needs. better level. I am proud of the focus our staff has on
Now we’re getting closer to the real answer Customer-owners like you “grab providing the Ultimate Customer Experience.
to “who is at the wheel.” You are not only the wheel” and provide direction to our We really want to make a bigger difference
a customer at AgChoice, you also are an Association when you elect the members of for our customers and the communities
owner of the organization. Ownership has its the Board of Directors. Ten of the 12 Board they live in. It is critical that the “AgChoice
privileges as well as its responsibilities. It puts members are real, live customer-owners just Ship” is headed in the right direction if we
you in a unique position. like you (our two appointed directors are are to accomplish that. Exercise your right
“Knowing you makes the difference” is “real” and “live,” but cannot be stockholders). and responsibility as a customer-owner to
not just a slogan to describe the relationship The Board plays a key role in determining the provide input to the organization and to elect
you have with the people who serve you long-term direction of the organization, so the Board of Directors. In doing so, you will
from AgChoice. Knowing you, knowing your role as a voter is an important one. be at the wheel of AgChoice and have an
your operation and knowing what you want The Nominating Committee has organization that will meet the ever-changing
influences what products, programs and just completed the task of identifying, needs that you and future generations will
services we develop and offer. I encourage you interviewing and selecting the candidates have. It will make a difference.
to provide candid feedback, ideas and insights for open Director seats. Soon you will We truly are customer-driven.
to your loan officer, service staff, Board have the opportunity, and responsibility,
members and management staff. Your ideas will of voting to select those Board members. I
help establish our future plans and direction. encourage you to provide influence on the
4 | Autumn 2008, AgChoice Farm Credit
Board of director profiles
Donald G. Cotner
Region #2 Director
Business Name: Don Cotner Farms,
Cotner Farms, Inc. and Boyd Station, LLC
Board member Donald Cotner surely doesn’t lead a boring life. Among
the many facets of his business are a 1,250-acre crop farm which
manufactures feed, a 500,000 hen egg-laying operation, and their
newest enterprise, Boyd Station, LLC. Add Don’s role as an AgChoice
soybeans and extrudes a high-quality express meal and soy oil. The
Director and his involvement in many other activities, and you can see
Cotner’s chickens have performed well on their soybean meal which has
that Don thrives on being active.
opened up a market to sell feed to the local broiler industry. Currently,
Originally a 30-cow dairy, the Cotner family farm decided to
the Cotner’s have the capacity for one million bushels each year, but they
expand into the poultry business when Don was in high school, and it
will increase that capacity to three million bushels by the end of 2008.
has been a core component of their business ever since. In addition to
Don’s willingness to adapt to change has been a tremendous asset
producing eggs, the Cotner’s also grade, package and market their eggs
on AgChoice’s Board of Directors. He is a long-time Farm Credit Board
throughout the foodservice industry in Pennsylvania, New Jersey and
member, with this year being his 27th year on the Board. However,
New York. Today, Cotner Farms, Inc. produces about 1,000 cases (or
in spite of all of the changes Don has seen over the years, one thing
30,000 dozen) of eggs every day.
has definitely remained the same. “We never make a decision without
Another major part of Don’s business is Boyd Station, LLC, a
thinking about the customer-owner first,” shared Don. “Being a good
partnership with his son, Bryan. Boyd Station transloads soybean meal
Farm Credit director is definitely a top priority for me.” n
from rail to truck to supply local mills. Their business also uses local
William K. Jackson
Region #4 Director
Business Name: Jackson Farms
For Board member Bill Jackson, carrying on the family tradition is an
important part of his life. Bill is co-owner and operator of Jackson Farms,
a Fayette County dairy farm which also has an on-site processing plant
and convenience store. Since 1958, the Jackson’s have been bottling
milk produced on their farm and selling it in the local area. However, the
Jackson’s have not been afraid to adapt to change over the years.
In 1985, the Jackson’s added a twist to their business and started to
make their own ice cream. The Jackson’s premium level ice cream has
become well-known across western Pennsylvania, creating many loyal
customers. Their on-farm store has also slowly expanded to adjust to a Jackson with his five-year old grandson, Cole.
growing market. Customers can now buy gas or groceries or even dine
for lunch when they stop by for some delicious ice cream. Directors. “We want to help all of our customer-owners succeed,”
The Jackson’s milk about 190 registered Holstein cows on their shared Bill about his role on the Board. “We continue to look at new
900-acre farm. Besides Bill, many other members of the Jackson family market opportunities, all for the benefit of our customers.”
are involved in the operation including his sister and brother-in-law and In addition to Bill’s responsibility as an AgChoice director, he is
also a few members of the next generation. Bill primarily oversees the very active in many community organizations, serving as president of
farming operation as well as the financials for the business. the Fayette County Fair Board and a member of the Penn State Fayette
Bill’s first-hand experience in managing his family business has Campus Advisory Board, Fayette Chamber of Commerce, Community
been very helpful in his nine years serving on AgChoice’s Board of Foundation of Fayette County and Brownsville Tri-County Hospital. n
Autumn 2008, AgChoice Farm Credit | 5
Association News
Bolt Goodman Fogal Jones
AgChoice Employees Honored
T
he following staff members were recognized for their hard work and providing guidance to other staff members. Bridget consistently
and dedication to AgChoice. The Distinguished Service Awards performs her job duties with outstanding effort and approaches her
are presented on a quarterly basis. Following are a few highlights responsibilities with a positive attitude.
showcasing each winner’s achievements: Brian Fogal–Susquehanna Valley Branch—Brian is a dedicated
Steve Bolt–Endless Mountains Branch—Steve is a true team and hardworking AgChoice employee. He is willing to put in many long
player. He provides strong leadership and mentoring to other appraisers hours, all for the benefit of AgChoice’s customers. Additionally, Brian
and carries out his duties in a manner that positively contributes towards shows tremendous attention to detail, which makes him an outstanding
AgChoice objectives. He continually goes beyond what is expected analyst, and he is always willing to share his expertise with others.
and is always willing to assist with other projects, which makes him a 29 Years of Service Recognized—Congratulations and best wishes
valuable asset to AgChoice. to Bobby Jones, AgChoice regional manager on his recent retirement.
Bridget Goodman–Cumberland Valley Branch—Bridget shows Bobby has served as a strong leader for 29 years employing his
great initiative and passion for the service she provides to AgChoice exceptional technical skills in credit and leading people with an energetic,
and our customers. Recently assigned to AgChoice’s Digital Imaging caring attitude. We wish him the best in this new phase of his life! n
Project, Bridget spent a significant amount of time learning the system
AgChoice Leaders meet Cumberland Valley Branch
with Senator Bob Casey holds YBS Business Seminar
AgChoice Board members and management spent a day in Twelve Young, Beginning or Small customer-owners participated in
Washington D.C. meeting with Pennsylvania’s legislators. n a one-day, hands-on workshop on basic business planning held in our
Chambersburg office. Participants developed a mini-business plan
for their farm operation, learned some key business management
approaches and mingled with other young and beginning farmers. n
From the left: Scott Owens, Allyn Lamb, Senator Bob Casey and YBS attendees develop their mini-business plan.
Director Paul McPherson.
6 | Autumn 2008, AgChoice Farm Credit
Customer
Appreciation
Events
Branches across AgChoice’s territory hosted customer appreciation events
to express their gratitude for their continued patronage and support. n Cumberland Valley Branch (Chambersburg) customers at Britton Park.
Seven Mountains Branch (Lewistown) customers enjoy the day at Curryville Branch customers take a lunch break at DelGrosso’s
DelGrosso’s Amusement Park. Amusement Park.
Endless Mountains Branch (Towanda) customers enjoy an old-fashioned Meadville Branch customers at Family First Sports Park.
pig roast at Hills Creek State Park.
AgChoice Supports
PA Farm Bureau’s
Mobile Ag Ed Science Lab
AgChoice provided financial support for the new Mobile Ag Ed
Science Lab hitting the roads in western Pennsylvania. Schools have
the opportunity to schedule lab visits where students have hands-on
exposure to agriculture. n
Autumn 2008, AgChoice Farm Credit | 7
Cooperative Leadership
Choosing Your Next Leaders
By Alexa Stoner, AgChoice Farm Credit Marketing Manager
Are you ready for the next election? By now you have heard the campaign promises, watched the
debates and made a list of all the pros and cons each candidate offers. The AgChoice Board of Directors
election doesn’t have the distractions of a presidential campaign, but the choice can still be difficult.
As a customer-owner, you have the power to make a difference and your vote is definitely heard!
T
ime, dedication, face-to-face meetings,
interviewing candidates, brainstorming
sessions. These are not merely words
but actions taken by dedicated AgChoice
Nominating Committee members in pursuit of
finding the best-qualified candidates to serve as
board members for your cooperative.
The Nominating Committee is often
overlooked in most organizations. How hard
can it be to throw out a few names of potential
candidates? Ask any member of the AgChoice
Nominating Committee and the response would
be the same—a lot harder than you think. Nominating Committee Members discuss potential board candidates.
The Nominating Committee serves an
In order for a Director candidate to be are searching for candidates who have our best
important role in the governance of AgChoice
eligible, the Nominating Committee must make interest at heart.”
by choosing candidates for open Board of
sure the following guidelines are met. The For the 2008 election, candidates were
Director seats. As elected members, the term
candidate must: chosen for Regions 1 and 3, along with all
for the Nominating Committee is one year,
• Be an AgChoice customer-owner region members agreeing on the At-Large
with an association policy allowing three
• Have good credit quality and be in good candidates. In addition, 2009 Nominating
consecutive one-year terms, a one-year break
standing Committee members for election were
and then the option to run again.
• Own voting stock discussed. This committee is comprised of a
• Meet the age requirement minimum of six candidates per region, four
The Nominating Committee members delegates and two alternates.
begin the process in March, discussing possible Customer-owners should rest-assured
candidate selections within their regions. Each knowing the process of finding qualified
region team reviews lists of potential board candidates is rigorous and taken very seriously.
candidates and makes choices of members to Time spent on the process is well worth it in
contact. The Nominating Committee considers the end when high quality candidates are on
the qualities and qualifications that are needed the ballot.
on the board. After the potential candidates are Taking the time to vote is how you
selected, they are contacted and interviews and can help! The Annual Meeting Information
on-site visits are conducted. Statement will be mailed in October. Take the
Of course this process is not easy, but with time to read the publication, learn about the
the help of the 2008 Nominating Committee candidates and become informed on who you
Chair, Lynn Eberly of Chambersburg, the want to represent you on the AgChoice Board
process ran smoothly. “This process takes of Directors. Ballots will be mailed November 6;
time, patience and dedication from customer- please make sure you exercise your right to
From the left: Governance Chairman Don Koontz owners who want to be sure the best-qualified vote! If you are interested in running for the
congratulates Nominating Committee Secretary candidates are presented to the membership. Nominating Committee, please contact your
Lori Hartle and Chairman Lynn Eberly.
After all, as customer-owners ourselves, we loan officer! n
8 | Autumn 2008, AgChoice Farm Credit
Credit Scoring
By Tim Eshelman, AgChoice Farm Credit Chief Credit Officer
What is credit scoring? Why do we credit score loans?
Credit scoring is a mathematical model that is used to assign a numeric Lenders have migrated to credit scoring as a means to improve:
score that represents the creditworthiness of the borrower, or the • Operational efficiency,
likelihood that the borrower will pay his/her debts in a timely manner. • Timeliness in making credit decisions, and
It is based on a statistical analysis of the borrower’s credit files, certain • Quality of those decisions.
financial data, and demographic information.
The credit scoring model used by AgChoice is the Small Business In other words, loans that are credit scored typically require
Scoring Service (SBSS) model developed by Fair Isaac Corporation. minimal information from the applicant, need less analysis by the credit
This model ranks risk by assigning odds, which is defined as the officer, and result in better credit decisions because of less dependence
number of good accounts divided by the number of “bad” accounts in on subjective data and the removal of any biases.
a given population of loans. A “bad” account is defined as one that was AgChoice has been credit scoring loans since 1999 and has
more than 60 days past due. had very good success with Fair Isaac’s models. For smaller loans
For example, in a pool of 30 loans to borrowers with a score of of $250,000 or less, we primarily rely on credit scoring to make our
200, the odds are that one of those loans will be bad; whereas, in a pool decisions; and, as the size of the loans increase beyond $250,000, we
of loans with a score of 180, the odds double, so you would expect two supplement the credit score by obtaining and analyzing more financial
loans to be bad. The models are scaled so that for every 20-point drop in and operational information from the applicant. Credit scoring is one
the score, the odds double that the loan will be bad. of the ways that AgChoice is able to increase the loan volume serviced
by each loan officer and lower its cost per $100 of loan volume, which
How does it work? ultimately benefits our stockholders.
Fair Isaac Corporation developed the current SBSS model by analyzing
data on more than a million loan transactions provided by 32 leading Heads up!
small business credit grantors. Based on this analysis, Fair Isaac When a loan is credit scored, a consumer credit report is usually
Corporation is able to determine what data or characteristics are most obtained as part of this process. Occasionally, the credit repositories
predictive of a person’s performance on future loans and develop a (i.e., Equifax, TransUnion and Experian) will sell leads to other lenders,
proprietary credit scoring model. in essence notifying them that you are seeking a loan. As a result, you
Some of the characteristics used by the model include, but are not may end up being barraged with phone calls from mortgage brokers or
limited to, the following: lenders trying to seek your business. If you do not want to be contacted
in this manner, you can prevent this by registering your name and phone
• Demand deposit account balance (e.g., checking and saving
number with a Do Not Call List (e.g., call 1-888-777-3406) or register
accounts)
online at www.attorneygeneral.gov/dnc.aspx. n
• Time as current business owner
• Months since most recent delinquency
• Percent of loans never delinquent
• Cash to assets ratio
• Debt to net worth ratio
Autumn 2008, AgChoice Farm Credit | 9
Developing OUr Youth
Our Internship Experience
with AgChoice
By Jamie Crawford and Robyn Bechtel, Members of the 2008 Intern Team
T
he 2008 intern team consisted of The experience in Washington was one of the
seven college students that brought highlights of our internship.
fresh perspective and new ideas to the Another part of our internship included
AgChoice Farm Credit Association. We came our group projects. The goal of the group
from a variety of backgrounds across the project was not only to help us gain the valuable
state of Pennsylvania. Our 11-week summer experience of working in a team-oriented
experience involved an in-depth introduction environment, but also to give AgChoice a new
Janelle, Kristina and Grant present recommen- to agricultural lending and the Farm Credit perspective on improving the Association.
dations on their risk management project. System. We were able to develop ourselves One group, consisting of Janelle Hartzell,
professionally while working with the Kristina McAllister and Grant Meyer, completed
knowledgeable and skilled staff at AgChoice. a project on risk management. They surveyed
Our internship was filled with a variety many customer-owners and worked closely
of events and experiences. Each of us had the with some of the senior leaders at AgChoice to
opportunity to plan customer appreciation develop ideas for a risk management education
events and promotions, work closely with the program. The other group, consisting of Robyn
staff through the loan and appraisal processes Bechtel, Kelsey Bova, Jamie Crawford and
and attend events such as open houses and a Amanda Mabold, completed a project which
Professional Dairy Managers of Pennsylvania involved assessing the current Web site and
(PDMP) meeting. We were able to go out on recommending ideas for enhancing it to
the road and meet with many of the customer- improve traffic and add interactive components.
owners of AgChoice. For some of us, this The group was able to work closely with the
part of the internship was one of the most marketing department to gain insight into
rewarding experiences. “I really enjoyed effective marketing ideas. Each group presented
getting to travel with the loan officers, talking their findings in an oral presentation, along with
Jamie, Grant, Amanda and Kelsey tour Mason- to the producers and seeing all of the different a written report, to the AgChoice Leadership
Dixon Farms in Gettysburg. types of operations and management styles,” Team and other staff members.
said Janelle Hartzell. This internship experience has been
While there was a lot of hard work and extremely rewarding and has allowed us to
learning for us to do over the course of our grow and develop professionally. We have each
internship, we were also able to take two trips, learned a great deal about agricultural financing,
one to Gettysburg, Pennsylvania and the other to but more importantly, we have learned how to
Washington, D.C. At Gettysburg, we attended a work in a professional team environment. It has
PDMP meeting and toured Mason-Dixon Farms. helped us to shape our future and discover what
The opportunity to tour Mason-Dixon Farms types of careers we would best fit in. Kristina
was a wonderful experience because we were McAllister shared, “I feel the tools I have gained
able to see the innovation and technology they while working with AgChoice will benefit me
use to make their operation successful. in whichever career field I choose. Experiences
Our trip to Washington involved meeting such as working with others and learning to
many influential people who work closely with prioritize and balance your responsibilities will
agricultural legislation. We toured the Farm help you in any career.”
Credit Council and had the opportunity to meet Thank you AgChoice, for this wonderful
with representatives from the House and Senate opportunity! n
Agriculture Committees. We were able to meet
and speak with Deputy Secretary of Agriculture, We encourage other students to apply for
Chuck Connor. We visited the Farm Credit a 2009 AgChoice internship. Applications are
Administration and met with their Board of due October 15. For more information visit
Directors and staff. They took time out of their www.agchoice.com/careers/internships or
Kristina and Robyn pose with Secretary Wolff at busy schedules to talk with us about their duties e-mail interninfo@agchoice.com.
Murmac Farms open house.
and how the Farm Credit System operates.
10 | Autumn 2008, AgChoice Farm CreditMeet our
2008
Intern
Team
Robyn Bechtel
Curryville, Pa.
Intern Office: Curryville Branch
School: The Pennsylvania State University
Major: Animal Sciences
Expected Graduation Year: 2010
Career Goals: To work within the dairy 2008 AgChoice Intern Team
industry Front row from the left: Janelle Hartzell, Jamie Crawford, Kelsey Bova
Back row from the left: Kristina McAllister, Grant Meyer, Robyn Bechtel, Amanda Mabold
Kelsey Bova Janelle Hartzell Grant Meyer
Spartansburg, Pa.
Slippery Rock, Pa. Palmyra, Pa.
Intern Office: Meadville Branch
Intern Office: Susquehanna Valley Branch Intern Office: York Branch
School: The Pennsylvania State University
School: The Pennsylvania State University School: The Pennsylvania State University
Major: Animal Sciences
Major: Animal Sciences Major: Accounting
Expected Graduation Year: 2009
Expected Graduation Year: December 2009 Expected Graduation Year: December 2009
Career Goals: I would like to work for
Career Goals: I would like to work in the Career Goals: I would like to find a job in
AgChoice Farm Credit or at least in the
dairy industry upon graduation. the accounting or finance field.
agricultural industry.
Jamie Crawford Kristina McAllister Amanda Mabold
Petersburg, Pa. West Sunbury, Pa.
Rome, Pa.
Intern Office: Seven Mountains Branch Intern Office: Butler Branch
Intern Office: Endless Mountains Branch
School: The Pennsylvania State University School: Kansas State University
School: Binghamton University
Major: Animal Sciences Major: Agricultural Economics
Major: Business Management with an
Expected Graduation Year: 2010 Expected Graduation Year: May 2009
emphasis in Finance
Career Goals: I would like to pursue a career Career Goals: Work in the agricultural
Expected Graduation Year: December 2008
in the agricultural industry. lending industry, preferably with a Farm
Career Goals: I would like to find a career in
Credit Association as a loan officer n
the management and/or financial field.
Autumn 2008, AgChoice Farm Credit | 11BoldNotStory
Feature bold
The Pennsylvania Vegetable Industry
By William Troxell, Pennsylvania Vegetable Growers Association Executive Secretary
Over 3,500 Pennsylvania farm families plant nearly 59,000 acres of vegetables that produce more than
340,000 tons of vegetables for fresh and processing use that are worth over $170 million. That is a lot
of “Simply Delicious, Simply Nutritious” Pennsylvania produce that is grown here in the Keystone State.
P
ennsylvania vegetable farms come in Roadside farm markets are a favorite are making a comeback as the public shows
all shapes and sizes. More than 3,000 place to pick up fresh, locally grown increasing interest in buying local produce.
vegetable farms have less than 25 acres vegetables—or even pick-your-own. Long established year-round, indoor farmer’s
of vegetables, 1,900 have less than five acres, Pennsylvania farm markets may be a simple markets feature many local growers selling
and only about 25 have 250 acres or more of picnic table under a shade tree in front of the their fresh produce during the season as well
vegetables. Despite all the small acreage farms, farmer’s house or a large modern retail store as shipped produce the rest the year. But most
the state ranks nationally in several crops. with a full line of local produce along with a of the newer farmer’s markets springing up
bakery, deli, and garden center. Many of these around the state tend to be “producer-only”
Crop Acres U.S. Rank large on-farm retail markets have incorporated markets where vendors can only sell what they
Sweet Corn 21,400 7th fresh mkt. special events such as strawberry and corn grow themselves. Many of these markets set up
Potatoes 10,500 18th festivals, wagon rides to the field for pick- one, two or three days a week in urban parking
Snap Beans 10,900 6th processing your-own, or haunted hayrides in the fall to lots, parks, small town streets, or, in some
encourage customers to come out to the farm cases, special facilities built just for markets.
Pumpkins 8,500 4th fresh mkt.
to buy produce. Pennsylvania has more than 1,000 farm
Tomatoes 5,000 11th fresh mkt.
Community farmer’s markets, probably markets and community farmer’s markets
Cabbage 1,500 13th fresh mkt. the primary sales outlet for Pennsylvania listed in the Department of Agriculture’s, “A
Cantaloupes 1,100 7th fresh mkt. vegetable growers a hundred years ago, Consumer’s Guide to Pennsylvania Farm
12 | Autumn 2008, Agchoice Farm CreditNot boldbold
Markets 2007,” available online at
www.agriculture.state.pa.us.
The newest retail outlets for
Pennsylvania vegetables are Community
Supported Agriculture (CSA) farms—or what
is sometimes called subscription farming.
Here customers buy a “share” in the farm’s
expected harvest. They pay a set fee at the
beginning of the season and in return receive
a specified amount of produce each week.
One of the unique aspects of
Pennsylvania’s vegetable industry is the
network of 10 wholesale produce auctions audits will be a real challenge for many small Agriculture. This program has provided an
across the state where hundreds of growers Pennsylvania growers to comply with. additional $400,000 for vegetable research
sell millions of dollars worth of produce each An adequate supply of labor is another at Penn State and other universities and
year. These auctions allow growers to sell challenge facing growers. Many small companies. It addition, it is charged with
wholesale quantities of their produce to the growers rely on family members and local promoting Pennsylvania vegetables. It provides
highest bidder, who is usually a fellow farm workers for their labor supply, but many point-of-purchase materials for retail farm
marketer, a restaurant, retail store, produce medium and most larger growers depend on markets, conducts a yearly press relations
wholesaler or institution. During August, immigrants for their labor. campaign, and sponsors a vegetable recipe
some of the auctions move truckload after The Pennsylvania vegetable industry is contest. Consumer information and recipes are
truckload of fresh produce six days a week. supported by two grower organizations. The posted on its Web site at www.paveggies.org.
Pennsylvania Vegetable Growers Association, Like all farmers, vegetable growers face
the voluntary, non-profit trade association numerous challenges to farming profitably.
serving the vegetable, potato and berry Pennsylvania’s relatively short growing
industries in the state, was founded in 1926. season, in comparsion to southern growing
The Association has more than 900 members. areas, remains one of the biggest barriers
It publishes it own monthly newsletter, to growers expanding their operations to
co-sponsors the Mid-Atlantic Fruit and hundreds and thousands of acres. It simply is
Vegetable Convention each winter in Hershey, hard to recover the infrastructure costs needed
and maintains a Web site at www.pvga.org. to produce vegetables profitably on a large
The Association’s food booth profits from scale when they are utilized only one or two
the annual Pennsylvania Farm Show and Ag months a year. But, Pennsylvania’s large rural
Progress Days has enabled the Association to population as well as the proximity to the
contribute more than $460,000 to research at nation’s northeast population centers, provides
Penn State University in the past 20 years. growers with unparallelled direct marketing
As more people are recognizing the freshness The growers of Pennsylvania have also and small wholesale opportunities. That,
and quality of local produce, supermarkets voted every five years since 1988 to maintain undoubtedly, will continue to be the strength of
and restaurants are also making a special the Pennsylvania Vegetable Marketing and Pennsylvania’s vibrant vegetable industry. n
effort to purchase more of their fruit and Research Program—a state marketing and
vegetables from Pennsylvania growers research check-off program established
in-season. Many growers deliver in-season under the state Department of
produce to local supermarkets as well to the
several supermarket distribution centers here
in the state.
With the recent focus on food safety
following the spinach and tomato/jalapeño
pepper incidents, many large wholesale
buyers are now requiring growers to have a
third party audit them for Good Agricultural
Practices (GAPs). Naturally, reputable
growers have always strived to produce a safe
product, but the record-keeping and other
technical aspects required for third-party GAP
Autumn 2008, Agchoice Farm Credit | 13Value-Added Services
Business Management
Services
Wealth Management Services
Includes a broad range of The Financial Power of Natural Gas:
consulting, business planning
and risk management services Planning Tips for Natural Gas Lessors
that match your needs. By Tim Sutherland CFP ®, CPA, AgChoice Farm Credit Director of Wealth Management Services
For many AgChoice customers situated in the lease. Each form is negotiable and balancing
Wealth Management Marcellus Shale region, an exciting energy the lease bonus/royalty/rent composition is an
Services boom has descended. If handled properly, a important part during your lease negotiation.
Financial and Wealthcare natural gas lease may represent a once-in-a-
planning considers the many lifetime opportunity to secure your financial #6 Avoid the Lottery Mindset
future. This article is a condensed version Many landowners in the Marcellus Shale
challenges and uncertainties
of a white paper we wrote offering planning liken their good fortune to “winning the
that life can throw at you, your
guidance regarding natural gas leases. Call us lottery.” Recognize that you will need help
workers and your business. at 800-246-6893 if you would like a copy of outside of your family to keep the emotion
the full version of the paper. out of the process and increase the odds that
you make the right business decisions.
Appraisals #1 Be Patient
Expert rural farm or Time is actually on your side. If horizontal #7 Don’t Obsess About Taxes
agribusiness appraisals, drilling is indeed the right technology to tap A big drawback is that all the cash received
including real estate, into the Marcellus Shale gas deposits, the under the lease is taxed as ordinary income.
energy companies stand to earn remarkable There are a number of tax-advantaged
equipment, buildings, livestock
returns on their investment. Take your time, investments to offset the tax impact, but seek
or any type of personal
select the right energy company and negotiate tax counsel before initiating any tax planning
property. your fair share of the wealth. moves. The bottom line is that some tax will
be owed on the lease income, so focus on
#2 Do Your Homework lowering the tax bill—not eliminating it.
Crop Growers, LLP Do your own research (on gas leases and
Effective risk management the energy company), ask questions and get #8 Balance Your Wealth
tools to help protect your references. Research your title, identify any Take a balanced approach to investing your
net worth, subsidized by the deed restrictions and get approval from your windfall cash. Start by investing a meaningful
mortgage lender to subordinate their legal amount in a diversified portfolio of financial
USDA Risk Management
interest in your gas reserves. assets. Invest in your business and receive
Agency (RMA) to make
tax benefits along the way. Pay off credit card
premiums affordable. # 3 Negotiate Like a Pro and other consumer debt and give some to a
You should never sign a standard gas lease favorite charity or family member in need.
because the terms and conditions are often
Farm Credit Leasing slanted in favor of the energy company. You #9 Conservatism Is Risky
Full-range of lease options to need to hire the right legal and business Many people who choose to invest their
help you save cost, improve expertise to directly negotiate with the money too conservatively will run out of
cash flow, avoid equipment energy company or their representatives on money within their lifetimes. This is a serious
your behalf. planning issue because inflation is back and
obsolescence, free up capital
you must invest so that your returns keep
and gain tax advantages.
#4 Think Green pace with your living costs. Remember, the
The most important lease provision is key factor in long-term investment success is
to protect your land and water from the not performance but investor behavior!
Credit Life and environmental risks of well drilling. Walk
Disability Insurance away from a lease negotiation if the lessee #10 The State of Your Estate?
Affordable insurance that is unwilling to meet your reasonable Your real estate will likely increase in value
delivers financial support to environmental protection expectations. at a faster rate in the future, so estate tax
your family and farm if you planning must also be addressed. The federal
should become disabled or die. #5 Royalty Is King estate tax law is very uncertain right now,
Lessor compensation can take a number of so stay aware of future tax law changes and
forms. A large lease signing bonus is the make the appropriate modifications to your
big carrot now being offered to landowners. estate plan. n
www.agchoice.com Royalty payments are also part of every gas
14 | Autumn 2008, AgChoice Farm CreditConvenience and Cost Savings AccountAccess
24-hour, online access to
Simplify Your Life—Use the your AgChoice Farm Credit
accounts, make payments
AgChoice Purchase Card online—just point and click.
At AgChoice Farm Credit, we know that the that it is linked directly to a customer’s line
day-to-day operation of your business can be of credit. Gone are the days of forgetting LoanLine
hectic, and we want to help. The AgChoice a check book or running out of cash. The
Toll-free, 24-hour telephone
Purchase Card is a handy service that offers AgChoice Purchase Card is a simple
access to your loan
the convenience and flexibility you need on a solution to many of the everyday purchases
regular basis. for a farming operation. Expenses accrue information.
The Corle family (K&D Farm) of over a set billing period, and customers
Bedford County is one customer-owner who receive an information statement listing the
has seen the benefits of AgChoice’s Purchase billing period activity. Any balance due is
Card. When their loan officer, Dan Brogdon, automatically transferred to the customer’s AgriLine®
recommended this service to the Corle’s, AgChoice AgriLine® account. Instant loan advances at the tip
they decided to give it a try. Over a year later, of your pen.
Ken Corle says that they could not be happier Separates Business Expenses
with the convenience of the card. Another major advantage of the AgChoice
Purchase Card is the ability to keep business
Use it almost anywhere expenses separated from personal expenses.
“We use it to buy all sorts of supplies for Ken Corle was quick to mention this benefit FastCash
the farm,” shared Ken who is part of their saying that their purchase card is used as Quick and easy fund transfers
family’s partnership, milking 170 cows and “the farm card.” K&D Farm is a partnership by phone.
farming 145 tillable acres. Both Ken and his between Ken and his wife, Donna, and their
son, Eric, are equipped with an AgChoice son, Eric, and daughter-in-law, Anita. With
Purchase Card. No matter where they go, four people involved in the management of
the Corle’s have their card in hand. From the operation, there is no doubt that keeping AutoDraft
the local farm supply store to the equipment expenses straight can be a difficult task.
Hassle-free, automatic drafting
dealership, the AgChoice Purchase Card can Besides making the Corle’s life a little bit
of your loan payments saves
be used almost anywhere. easier, this separation of farm expenses is
The purchase card is a partnership also helpful to their accountant. you time and money.
between AgChoice Farm Credit, the VISA How can the AgChoice Purchase Card
network and First Tennessee Bank. To meet fit into your business? The Corle’s are very
the needs of customers’ demanding lifestyles, pleased with the purchase card and feel that
the card can be used 24 hours a day, seven others could benefit as well. Call your loan AutoBorrow or
days a week. officer or local AgChoice branch office today AgSweep
to discuss how the AgChoice Purchase Card A seamless connection
Linked to an AgriLine® Account can help you better manage your business between your AgChoice Farm
What makes the AgChoice Purchase Card and simplify your life. n
Credit, Bank of America and
different than a conventional credit card is
Wachovia accounts.
AgChoice Purchase Card
Directly linked to your
rd
Commercial Ca AgChoice revolving line of
0000 0000 credit, providing you with
0000 0000 24-hour/7-day-a-week access
to your established account.
www.agchoice.com
Autumn 2008, AgChoice Farm Credit | 15Employee Resources
Employees
The Foundation of Any Business
By Raechel Kilgore, AgChoice Farm Credit Marketing Specialist
F
ew businesses would dispute the
importance of employees to any
operation. From smaller family-
owned businesses to large corporations,
employees can have a dramatic impact on an
organization’s success or failure. At AgChoice
Farm Credit, cultivating inspired associates
is one of our main objectives, and we take
pride in customer-owners who have a similar
philosophy in their businesses.
Metzler Forest Products, LLC of
Mifflin County is one AgChoice customer
who agrees. “We’re blessed with very good
employees,” shared Alan Metzler who
understands the value of attracting and
retaining quality employees.
Alan and Jill Metzler started Metzler
Forest Products in 1986 as a small custom
logging operation and transitioned gradually
into the large, multifaceted business which
exists today. Harvesting timber, clearing
land for highways, installing erosion control
systems and operating a retail business, are
just a few areas which comprise the Metzler’s
operation. Recently, they have introduced a
new product to their business—cut and split
firewood and wood pellets available to local Loan officer Thad Taylor joins AgChoice customer-owners, Alan and Jill Metzler of Metzler Forest
Products, LLC.
retail customers.
The growth of Metzler Forest Products, time, talent and abilities,” said Alan. Several and Jill’s oldest son, Lucas, currently works
LLC has also resulted in an expansion of their employees have stayed with the Metzler’s for full-time operating one of the Metzler’s wood
work force. Currently they have about 45 many years and have moved into management chippers. Younger sons, Logan and Nathan,
employees whom Alan and Jill consider the positions within the business. Alan relies are still in school, and they mostly help over
heart of their operation. “We couldn’t run this heavily on input from his managers to assist summer break.
business without them,” explained Jill. “Our him in making any sort of business decision. The wide scope of the Metzler’s business
employees make it possible.” While Jill serves as the primary office offers an added challenge in employing
manager who also oversees financials of the people. No matter what the employee’s job
Employing the business, Alan takes on a more supervisory is, the Metzler’s strive to see all of their team
“Right” People role for department managers, develops members succeed. Office staff, mechanics
Over the years, the Metzler’s have focused new projects, analyzes equipment and job and equipment operators are all a critical part
on employing good people as part of their costs and builds customer relationships. Metzler Forest Products, LLC. Additionally,
business. “Each person has unique qualities, The next generation of Metzler’s have also the well-being and safety of all employees is
and we try to be a good steward of their started to work at the family business. Alan of foremost importance.
16 | Autumn 2008, AgChoice Farm Credit“Each person has unique qualities, and we try to be a
good steward of their time, talent and abilities.”
involved in many organizations within
Developing a their industry and local community. Jill is a
Unified Business member of the Belleville Mennonite School
With so many different areas of expertise, the Board and is also very active in volunteering
Metzler’s have taken several positive steps in church and school activities. Alan is a
to bring their business together. One way long-time active member of Pennsylvania
that they are able to accomplish this task is Forest Products Association (PFPA) and a
by conveying many of their core business past board member of the Northern Loggers At Metzler Forest Products, employees are the
principles with all employees. The Metzler’s Association. Additionally, he serves on the foundation of their business. They have a team of
about 45 staff members who provide the day-to-
take pride in providing quality services and area airport authority and local bank’s Board day support needed to service their customers.
products to their customers, and all of their of Directors. Photo courtesy of The Lewistown Sentinel.
employees recognize this principle. Alan went The Metzler’s also recognize the role
on to explain, “We know the importance of AgChoice Farm Credit has had in growing Below: The Metzler’s provide a wide range of
gaining the respect of our customers. We tell their business. “We enjoy working with Farm products and services to the forest products
all employees to respect the land as if it is Credit and in particular, our loan officer, Thad industry including timber harvesting and land
clearing. Jerry Himes, forester with Metzler
their own.” Taylor, who has a background in the timber Forest Products, is just one dedicated employee
The Metzler’s also host a company picnic industry,” said Alan Metzler. “AgChoice has who understands the importance of offering
each year to help show their appreciation for been very flexible during our business’s rapid quality service.
all employees and to give them a chance to growth, and they understand the way our
personally get to know each other. Employees business works.”
and their families look forward to this annual AgChoice’s Thad Taylor responded,
event, and it has truly become a tradition for “The Metzler’s operate an outstanding
Metzler Forest Products, LLC. business, and we are proud to have them as
Without a doubt, Alan and Jill’s customer-owners. They truly care about their
management approach has been key to the employees, customers and the community.”
success of the business and their relationships So what exactly is the lesson that we
with employees. Alan identifies “continuing can learn from the Metzler’s? Building strong
to refine their business” as their main relationships with employees is an important
strategy for the future, and this will only foundation for any business, big or small. Both
be accomplished through the continued Alan and Jill Metzler are quick to credit their
excellence of their management and staff. employees for the success of their operation.
That is a true testament to positive employee
Relationships Beyond relations at Metzler Forest Products, LLC. n
Their Business
For the Metzler’s, maintaining strong Many of Metzler Forest Product’s employees are skilled to operate the heavy machinery such as the
chipper shown below. The addition of chipping equipment to the Metzler’s business has allowed
relationships even goes beyond their them to expand their operation, providing a service that few others can provide.
employees. Both Jill and Alan are actively
Autumn 2008, AgChoice Farm Credit | 17Community Outreach
Telling Their Story
By Alexa Stoner, AgChoice Farm Credit Marketing Manager
M
urmac Farms is home to the Craig Today the Craig’s are milking 1,000 cows
family and 1,000 dairy cows. and farming 1,700 acres. Heifers are custom
Located in Bellefonte, Centre raised off-site and return to Murmac Farms
County, Murmac has a unique history and a before freshening. Twenty-two employees work
great story to tell. on the farm including two of their children,
Tom and Sherry Craig have led a very Brian Craig and Pamela Whitehill. “We credit a
regimented life. Both served in the United lot of our success to our family’s ability to work
States Marine Corps, Tom as a Major and together,” shares Tom. “It definitely is a ‘group
Sherry as a Pay Officer. In the early 80s, Tom effort’ and we recognize the different aspects Sherry and Tom Craig appreciate Murry McJunkin
and Sherry left the military and decided to start that everyone brings to the table.” who gave them their start in the dairy business.
dairy farming. Moving to central Pennsylvania, The Craig’s also recognize the need
they met and built a relationship with Murry for strong community relations. As housing of Agriculture, Dennis Wolff, members of the
McJunkin who was selling his milking herd. developments push nearer to farms, keeping Pa. Dairy Task Force and fellow dairymen
The Craig’s bought McJunkin’s cattle, rented neighbors informed became a major goal for visited during the day to see their new facilities.
his facilities and bought feed from him. Murmac Farms. Working with their loan officer, As the first crowd dispersed, members of the
During the 90s they slowly began to Keith Walker, Triple H Construction and farm had little reprieve as they prepared for the
expand their cow numbers and facilities. Lancaster Dairy Automation, they decided to community open house that evening.
In 2007, they formed a LLC and built new have a two-part open house in June. Secretary During early June, local 4-Hers distributed
facilities including a 620-cow freestall barn and door-hanger invitations to approximately 1,000
BouMatic double-16 parallel parlor. neighbors inviting them to the open house and
In order to make the transition to the ice cream social. Murmac Farms highlighted
new facility, a great deal of planning was their farm, their cows, their new facilities, the
involved. The Craig’s received input from Mike dairy industry and their way of life to more
Hosterman, AgChoice’s Agricultural Business than 300 visitors. Self-guided tours of the
Consultant, and Gary Snider of Farm Credit of dairy farm provided an opportunity for fun,
Western New York. Tom credits AgChoice’s fellowship and most importantly, information.
ability to “think outside of the box” in helping Family members, employees and farm advisors
them throughout the expansion. In addition, answered questions from inquisitive neighbors.
AgChoice and the Craig’s worked closely with The Craig’s want to be good neighbors and
SEDA-COG to receive help through SBA and are always looking for ways to show the farm is
the First Industries Fund. not something to fear but instead embrace. “By
opening our farm up to our neighbors, they can
Below: Visitors check out Murmac’s new 620- Above: The new double-16 parallel milking parlor get an idea of what we are doing,” says Sherry.
cow freestall barn. was a huge hit at the Murmac Farms open house. “People are always afraid of the unknown. We
have the ability to tell our story and they in turn
can get a feel for our business and our way of
life.” Keith Walker adds, “The community open
house really showed that Murmac Farms takes
care of their animals, produces high quality
milk and returns a significant investment to the
local economy.” The event was so successful
that many of the attendees are asking the
Craig’s to make it an annual event.
By taking the time to tell their story now,
the Craig’s are making sure their farm is still
around for future generations. In addition, they
now have advocates in their community to
speak up for the farm if any issue arises. n
18 | Autumn 2008, AgChoice Farm CreditBusiness Innovation
A One-of-a-Kind Business
By Alexa Stoner, AgChoice Farm Credit Marketing Manager
M
eet Benjamin Bear—a produce rough winter skin and a high-pressure water jet
farmer with a dream, a few dried completes the cleaning process.
gourds and a whole lot of initiative. Once washed, the gourds sit overnight
Located in Cumberland County, Ben, an to remove additional moisture and continue Finished gourds are available at
AgChoice customer-owner, started as a contract their journey to either the Finishing or Crafting Meadowbrooke’s retail store and at retail outlets
vegetable producer supplying berries, tomatoes rooms. In the Crafting room, the “prepper” across the country.
and a few ornamental gourds to a local farm draws the pattern on the gourd, drills any holes
market. One winter, Ben noticed an opportunity needed and gets it ready for the “crafter.”
as the gourds in the field became hard and In the Finishing room, crafters are found
hollow. He crafted a few primitive “art” pieces dying the gourds their appropriate colors and
and sold them in local markets. In 1994, putting any finishing pieces on the project. This
Meadowbrooke Gourds was formed and has includes corn cob pipes for the snowmen, wings
been delighting gourd enthusiasts nationwide. for the angels or even straw for the scarecrows.
Gourds at Meadowbrooke are started by The finished gourds are moved to a “Curing”
seed in a greenhouse and transplanted into room, where the gourds are allowed to dry
the fields. All gourds are grown in plastic before being shipped to their final destination.
covered rows with drip-line irrigation. Moths In the early years, Meadowbrooke Gourds
are the king pollinators of gourds, however at was strictly a wholesaler, supplying retail stores
Meadowbrooke, hand pollination is used on with completed gourds. As the gourds gained
some varieties to produce thicker shells and a in popularity, more folks found themselves in
larger crop. The gourds are cut after the first Carlisle asking for a tour or wanting to buy them
frost and transferred to the plastic rows to dry on-site. A decision was made to open a retail
during the winter months. Gourds will lose 90% store in 2004 and has been a great success.
of their weight while drying and a hard winter Meadowbrooke ships nationwide and even Finished works of art are available at
is actually beneficial in loosening the outside has two international customers. Recently, a www.mbgourds.com.
layer of skin. new market strategy was created with the QVC
design and sales that keeps everyone happy.
After collecting dry gourds the following network where 2,250 gourd creations sold out
“Our gourds are home-grown and hand-crafted.
March, the fun begins. Gourds are sorted by size within five minutes. Meadowbrooke is hoping to
As a small team of crafters, our employees share
and stored in pole buildings around the farm until receive additional TV exposure as they are being
ideas, discuss design elements and have a fun
they enter the production phase. According to considered for the new season of “Dirty Jobs.”
time doing it,” states Darren.
Darren Hartsock, wholesale sales manager, more Meadowbrooke has a unique relationship
Ben retired from daily operations at
than 3,000 pieces are hand-crafted each week. with its 20 employees. Employees have a say in
Meadowbrooke but has confidence in the
The gourds are pulled from the storage bins and how the business is run, take company vacations
new management team of Darren, Dori and
go to the wash tank. Metal bars help remove the together and have an incentive policy based on
Shawn to keep operations moving in the right
direction. “It really doesn’t matter what type
More than 200 varieties of raw gourds can be found at Meadowbrooke.
of operation you have—always look to the
future—don’t be in the same place tomorrow
that you are in today,” shares Ben. “We
continue to change and adapt ourselves to the
wants and needs of our customers.”
The process is fascinating and the end
product definitely one-of-a-kind. Crafters at
Meadowbrooke take great pride in their gourd
creations and it shows. For more information
about Meadowbrooke Gourds or to check out
their open house schedules please visit their
Web site, www.mbgourds.com. n
Autumn 2008, AgChoice Farm Credit | 19You can also read
