Financing Farms

finfarmAs the second largest industry in Michigan, agriculture is big business. From berries and cherries to dairy and corn, agriculture is one of the fastest growing segments of Michigan’s economy.

Standing side by side with many producers is GreenStone Farm Credit Services, Michigan’s largest agricultural lender. 

Though it’s now the sixth largest association in the Farm Credit System, GreenStone started out small, approving its first farm mortgage loan in 1917. This was the first time farmers had easy access to amortized loans.  

In the century that followed, GreenStone grew to now serve more than 23,000 members at 37 branches throughout Michigan and northeast Wisconsin. It currently manages a portfolio valued at $6.4 billion. 

Although the organization has grown, its purpose has remained the same.

“GreenStone is dedicated to helping farmers make their business a success,” said President and CEO Dave Armstrong. He wants GreenStone to be the farmer’s “first choice for financial services.”

The organization is as versatile as the industry. It provides loans for farm equipment, livestock and facilities; for short-term needs; for farmland purchases and buildings; and programs to lease buildings and equipment. GreenStone has other related programs like life and crop insurance, accounting, tax and appraisal services. 

Having the right products is only part of GreenStone’s story. Like a credit union, it is a cooperative owned by its member stockholders and governed by a 16-person board. 
Like GreenStone, Armstrong is a knowledgeable partner to farmers. His father ran a farm supply and poultry business in Ionia. He interned at a Credit Association in Southeastern Michigan. When he graduated in 1981, Armstrong became a loan officer at the branch in Monroe. For the next 14 years, he worked for the Farm Credit Services office in Michigan’s thumb area and eventually became its CEO. 

In 2000, four regional Farm Credit Associations in the Lower Peninsula merged to form GreenStone. Two years later, the Upper Peninsula and northeast Wisconsin credit offices joined, too. Armstrong was named Executive Vice President for Customer Delivery, and eventually succeeded the retiring CEO in January 2009.

The newly formed organization was headquartered in East Lansing, but broke ground on a new facility in 2009, the same year Armstrong became President and CEO.

Throughout his lifetime, he has seen agriculture go through many ups and downs. “The ag industry went through a difficult period beginning in the mid-1970s,” said Armstrong. “From the late 80s to present day, the industry has faced adversity, but it has overcome it and survived.”

So has GreenStone. In fact, it’s thrived. Its history of strong financial performance is due largely to its competitively priced products and services and sound risk management. In 2005, the company became so successful that it started a patronage program that pays dividends to eligible members.

Armstrong attributes the success to understanding its members. The typical customer is an independently-owned business on a farm averaging between 1,000-3,000 acres. Michigan farmers produce several commodities including fruit, vegetables, ornamental flowers, dairy products, eggs and a vast array of field crops. 

The equine industry is a part of their business, too. “Equine operations are usually only part of a farmer’s business,” Armstrong said. “They’re considered more hobbies or side businesses and don’t require a large amount of financing.” 

Equine sector customers are served exclusively by GreenStone’s Ann Arbor branch. “There are only a dozen true horse farms among our members,” according to Andrew Kudwa, the branch’s Financial Service Officer, but many others board horses on their land. This segment of the industry does better when the economy is good, he explained, because people spend discretionary money on recreational activities involving horses. 

But he’s seeing a renewed interest. “The economy is coming back, and we’re beginning to see more participation from local schools, camps and others who enjoy horses.
“Thankfully, we’ve weathered the economic storm,” he said, and predicts that GreenStone will see more requests from customers for financial help for breeding, boarding and training horses. 

Besides providing finances, Kudwa and other financial officers offer expert assistance in planning. “We’re like an old fashioned bank,” he said. They ask questions designed to get to know their customers and help them build a successful business. 

Questions they’ll ask include: — What type of business will it be? What background does the owner have?  What’s their business plan? Is the plan realistic? Does the owner have any experience? Has the owner failed or succeeded at this business before?

Kudwa is well qualified to ask these questions. He grew up on a farm in St. Johns, and has worked for GreenStone for 10 years. Although the economy’s been down, like Armstrong, he’s optimistic about the future. “We’re starting to see growth in the economy, boding well for customers in all sectors of agriculture.”

Despite the sluggish economy, drought conditions and an untimely cold snap, agriculture and GreenStone did well last year. According to Armstrong, 2012 “was a record year with strong crop yields and record farm income. It’s hard to say conclusively what the future will hold because our business is driven by the weather,” he said. “But we think 2013 will be similar to 2012 in terms of positive returns.” 

GreenStone does not take its success lightly. In 2012, GreenStone donated more than $450,000 to groups that represent its members’ interests, and some of its 475 staff members donated more than 2,500 hours of volunteer time. 

It takes seriously its role in supporting an industry that plays such a prominent role in Michigan’s economy and performs a vital global service. “GreenStone Farm Credit Services is proud to help Michigan’s farmers feed millions of people around the world,” it writes on its website.

GreenStone Farm Credit Services
3515 West Road
East Lansing, MI 48823
(800) 968-0061

Article by Ann Cool | Photos by Dave Trumpie


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