north central
North Central Farmers Elevator Solutions for Your Success
Thriving Through Challenges By KEITH HAINY, General Manager
We’ve just completed an incredibly challenging year, surviving and even thriving through some of the highest market volatility ever experienced and the most daunting world economic times. As a company, we can be proud of the accomplishments we achieved. Our total sales for the year were $454 million. The grain division performed extremely well, especially in the last quarter, handling 55 million bushels of grain. Drying income was large this year because of weather conditions and overall margins were good all the way across the board. One of our challenges this past year was fertilizer. With fertilizer prices coming down in tandem with grain prices, we sustained a large write-down. This multi-million dollar devaluation is reflected in our year end statement. Reporting income on a tax basis, as we have done in the past, our earnings would be at $5.9 million dollars, before a $2.7 million bonus depreciation deduction. However, our auditors at Eide Bailey informed us, in January, of a recent IRS ruling regarding the domestic production activity deduction. It has become apparent that a cooperative can take full advantage of this deduction on behalf of all
of its members. The board has not yet determined whether to pass it through to members or use it corporately. If NCFE would use the deduction, it would make it difficult to show our records on a tax basis. For that reason, the board has made the decision to switch to a GAAP (generally accepted accounting principles) basis to provide the maximum usage of tax deductions while still showing the actual financial performance methology used by most companies in our industry. The transition to GAAP will, among other things, change our depreciation schedule to reflect the useful life of an asset and will possibly add over $6 million to owners’ equity. As we change to GAAP, the board has also recommended changing our fiscal year end to July 31. This recommendation will be voted upon by our members at the annual meeting. This by-law change would assist us in more accurate taking of inventories when they are all at their lowest levels with no grain ground piles. In December, Lebanon Equity Exchange approached us about the possibility of unifying their cooperative with NCFE. At a Feb. 6 meeting, their membership voted 92.5% in favor of unification. We appreciate the confidence that the Lebanon membership has in this cooperative. The approved proposal will meld their financial strength with ours. We are
Continued on Page 2
See us on the web at www.ncfe.coop
MARCH 2009
VOLUME 15 • NUMBER 2
Make Plans to Attend Your NCFE Annual Meeting on Tuesday, March 17th. Join us at the Father Borman Hall in Ipswich for supper at 6:30 p.m. and the business meeting to follow at 7:30.
Thriving Through Challenges Continued from Page 1
excited about serving customers in the Lebanon area with a full line of products and NCFE solutions. We recently hired a logistics manager to help us develop more efficiencies in every aspect of our transportation business. From the large number of trucks we use to supply ethanol plants, the moving of products and equipment across multiple facilities, to the heavy demands that spring places on our services each season, we see a great need for this position. State of the art software is being installed which will
allow us to track equipment, using technology for more effective and efficient scheduling. It’s been an incredible year in so many ways. The remarkable talents and dedication of our employees became so apparent again this fall. All of our departments and locations are eager for spring to get underway and the start of a new growing season. If you’ve never been to an annual meeting before, make this one your first and come participate in the business of your cooperative. From Hague to Lebanon, from Warner to Herreid, we are grateful to each one of our customers. s
Our new employees from Lebanon include Mike Schwingler, Bob Dahlquist, Kent Wolforth and Kellee Persoon.
Achieving Fuel Delivery Efficiency By KEITH HAINY, General Manager
2
Over the last few years, we have spent a lot of time examining fuel delivery and how to make the system more cost effective. We’ve mentioned it in this space many times. In 2008 we conducted a study using 2007 data. The study looked at how efficient we were in delivering fuel to customers including volumes going through tanks, how many trips per customer, and distances from bulk plants, and many other factors. The data was closely analyzed. What emerged was the tremendous need to effectively monitor customer fuel tanks. That’s because delivery efficiencies are best achieved when at least 80% of a customer’s tank is filled when we pull into the yard. Instead, we are currently averaging only 48% of tank capacity per delivery. The solution to this challenge is the use of a fuel delivery system or Refined Fuel Delivery (RFD). Using electronic monitoring of fuel tanks, fuel can be sourced more directly from the pipeline. The devices and
installation will be completely free to customers. But customers will still have flexibility over their fuel management. There will be several billing options to best fit your needs. Consumption billing will entail paying only for the fuel used during the specific month, using average monthly pricing. This is similar to how your monthly electrical bill is figured. This has been the most popular choice in other locations that have used electronic monitoring. Other options include: • Priced the day of delivery or call in order at that day’s price. • Tank buy-outs (buy out your tank contents at the average monthto-date price). • Contracting (your fuel costs can be locked in for a predetermined time frame). These purchasing options provide competitive pricing options, yet still allow you control over your fuel management. But what you won’t have any more are worries about
©2009 North Central Farmers Elevator. All Rights Reserved.
fuel shortages or forgetting to call in your order ahead of time. The real efficiency with electronic tank monitoring also comes down to tank size. There’s a 9¢ per gallon discount for delivery to a 1,000-gallon tank versus a 500-gallon tank. An additional 2¢ more a gallon savings can be achieved with a 2000 gallon tank. As Troy references in his article, we have a very good program now available to upgrade tanks. The transition to electronic monitoring is underway, as staff members begin contacting customers to profile tank sizes, products, and most importantly, answering your questions. Our intent is to have delivery implementation under way later this summer or by early fall. We appreciate your support and look forward to bringing you the full benefits that can be achieved through a more efficient petroleum delivery system. s
Published in partnership with VistaComm® (www.VistaComm.com).
At Last: More Efficient Fuel Delivery to call us ahead of time to schedule a delivery—with this new system, it’s all done for you. It also helps us finally achieve a more manageable and efficient way of delivering fuel. We will have several billing options that will be available. We anticipate the most popular method will be consumption billing. That means you’re billed for only the fuel that you actually used, no matter how much was delivered to your tank. To complement the new system, we have very attractive pricing and options on fuel tanks. We are encouraging trade-ins on old tanks if you would like to upgrade to a larger tank for more efficient management of your fuel supply. Steel has come down a bit recently, so now is an extremely good How Monitoring Works time to update and go larger. NCFE will pay for and install the necessary monitors and controllers. A moniPlease don’t hesitate to call us tor is installed in the fuel tank, recording tank volumes daily. A signal is sent about any of this, whether it’s to a controller located in a sheltered location like your house or shop, where a a question on the new delivphone line and power are available. When your tank’s level falls below a predeery system or your interest in termined amount, an order is automatically generated for fuel delivery, through a new tank. s an automated toll-free phone number. The system then dispatches a truck to make a delivery.
We are excited about transitioning to a new electronic fuel monitoring delivery system. The upgrade and installation to electronic monitoring is completely free of charge to you. By Troy weig Staff members are now conPetroleum Manager tacting petroleum customers to answer questions and to assess your needs, so we can fine-tune the system so it best fits your operation. The first group of customers that will be going on-line with the new system will be those in the Warner area. Electronic monitoring results in worry-free fuel management. No more running out of product or forgetting
Taking Energy Seriously As we’ve analyzed our department, one point that has emerged is our need for an expert in Cenex® products and in all things fuel-related, including automated fuel delivery. So in the next few months we will be hiring a certified Cenex energy specialist. The need for energy specialization has become vital in today’s marketplace. Just like an agronomist providing advice, we can help customers be more successful by helping choose the right petroleum products. We’re looking forward to building better relationships with our existing customers, and even gaining new customers with all of the exciting services now occurring in this department.
Spill Prevention Control and Countermeasures (SPCC) Update
Because of the new executive branch transition, EPA is delaying by 60 days the effective date of the final rule that amends the SPCC regulations. They are now set to become effective April 4, 2009. This amendment extends the dates by which the owner/operator of an SPCC-regulated facility must prepare, amend, or implement its SPCC plan. But the amendments do not remove any of the regulatory requirements. Farm facilities will still be required to comply, with specific compliance requirements dependent on total fuel volume classification.
Tier I: less than 10,000 total gallons and not having one tank over 5,000 gallons capacity Required to have: • Template on tank
• SPCC plan • Self-certification
Tier II: less than 10,000 total gallons and having one tank of 5,000 gallons capacity Required to have: • Template on tank • SPCC plan • Engineer required: tank testing
Bulk facility Required to have: • Certified engineer write SPCC plan For more information, visit: www.epa.gov/oem/ content/spcc/index.htm s
3
From Bull to Bear By Mike Nickolas, Grain Manager
February’s USDA supply and demand report initially reflected a bullish market, the type of report everyone was hoping we would receive. However, it rapidly turned bearish as sudden negative influences on the report included South American weather and the ongoing debates in Congress on how best to fix our economy. That leaves us dealing with a marketplace we have become
very familiar with over the last few years. Very volatile, as we trade on the whole gamut of weather, economic, and geopolitical issues. Expect some pretty sharp swings in the market as we move through the coming months. We continue to pick up our grain piles across NCFE country. Our goal is to have the uncovered piles pretty much gone by the end of February, leaving the covered piles to pick up later this spring. Overall, we have had minimal loss to the company on all our piled corn. Considering the huge amount of piled corn we had, the damage losses have been manageable and negligible.
We continue to deliver corn to the ethanol plants as rapidly as we can, by both truck and rail. Obviously our hope is that the ethanol industry continues to turn itself around and become more profitable again. It would be extremely hard on this part of the country to no longer have those markets for the corn crop. On a final note, we wish Nathan Davis good luck as he joins his dad and brother on the family farm. We want to thank him for his 6+ years of commitment and service to NCFE and its patrons. Good luck, Nathan! s
Cabela’s Mineral Promotion
• Receive a $40 Cabela’s gift certificate with your purchase of a ton of ProPhos™ or RangeLand™ mineral. • Receive a $20 Cabela’s gift certificate with the purchase of a ton of RangeLand Mineral Tubs. Minerals must be booked by March 20 and picked up by September 1.
Line Up Truck Servicing Now By Steve Benning, Benning, Shop Manager
4
We’ve had an incredibly busy winter and spring is getting nearer all the time. Please give us a call now to line up your DOT and service jobs. We want to get your truck in and out of here so you don’t miss a beat as planting season arrives. Look your tire situation over, too. If you need tires for your vehicles give us a call so we have them ready to put on. We continue to use Shur-Co® as our tarp supplier and Fleetguard® as our preferred choice for filters. We also have a few dropdeck van trailers left for sale. Call for more details. Have a great spring and remember to call us as soon as possible for service and parts for your trucks and trailers. s
Come for Lunch. Book Feed. We are hosting a series of booking days, at the main office of all our branch locations. We’ll be serving lunch from 11 to 2 as a small way of showing our appreciation for your support of our feed products. You’ll be able to book your minerals, tubs, and creep feed, while having a quick lunch on us. March 2: Java March 3: Pollock March 4: Bowdle (Legion Hall) March 5: Northville March 6: Wecota March 9: Hague March 10: Leola March 11: Warner March 12: Onaka March 13: Herreid March 18: Ipswich (4-H building) We will have company representatives on hand to talk about all of your farm and ranch needs. s
Minerals for All the Right Reasons By Jarvis Haugeberg, General Manager, Dakotaland Feeds, LLC
Our annual Cabela’s mineral promotion is going on, but frankly, I don’t think it should be the only reason folks are buying minerals. The most important reason is so your cows get the minerals, trace minerals, and vitamins that they need, as Scott says in his article. The simple fact is that minerals fed at small amounts can make a big difference in herd performance. The difference in cattle with a good mineral program and a poor mineral program are not differences you will see from the road. The table below shows that as a cow’s trace mineral status declines there is a loss of immunity and reproductive function. This happens long before you will see any clinical signs of deficiency.
I know there can be certain points about cattle nutrition that are confusing. On certain topics, you can go to a meeting with our team and hear one point of view. Then you attend a meeting held by a competitor and you’ll hear something quite different. But on this one point I think you’ll find we all agree: virtually every expert agrees that for a minimal cost,
we can take care of our cows’ mineral and vitamin needs by feeding a good mineral program. We offer a number of options to supplement your herd’s mineral needs. Our most popular line of minerals is the ProPhos™ line. These minerals have been around a while and are very well-fortified for everyday mineral supplementation. During this time of year when most cows are in their third trimester of gestation and/or early lactation, many customers select our Techni-Breeder mineral line. They are higher in fortification and carry a very high level of ZinPro organic minerals. We recommend this ‘premium’ line of minerals to ensure your cows are prepared for calving and early lactation. We generally don’t recommend this product for year-round feeding. We also offer RangeLand™ Mineral tubs. They are very popular because of consistent mineral consumptions by cattle. They are formulated with all-weather technology. We also offer RangeLand All Weather minerals. The mineral particle size is larger and designed to resist rain and wind. They are not always readily available and need to be booked ahead of time. Some of these products have ingredient options like containing Aureomycin® (AU), which has been shown to be effective for anaplasmosis. While no official claims other than that have been approved by FDA, herds that have used AU have realized several benefits. Altosid® is also an ingredient option. This choice is gaining in popularity because it just plain works as a fly control. Limited newsletter space only allows me to hit the high points of this very important topic. Check with your NCFE location for more information, contact Scott, or a Dakotaland Feeds Livestock Production Specialist (LPS) for help in selecting the best product for your herd. s
Why Feed Mineral? By Scott Kilber, Feed Specialist
Minerals are vital for nearly every body function of a cow. They are very important for calf development, the immune system, breed-back, and overall animal performance. A cow’s mineral needs are at her peak just prior to and after calving. The growing calf is taking in a large amount of mineral to build its own body, so it is ready to enter the world. After calving, the cow needs a large amount of mineral to replenish her reproductive tract, so she can promptly rebreed for next year. Keep your cows productive by feeding a quality ProPhos™ mineral or a RangeLand™ Mineral Tub. s
Altosid® Specials
Buy 16 Altosid tubs and get one free. The tubs must be booked by May 20. They can be picked up all summer long.
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Noteworthy Topics
By Matt Christopherson, Agronomy Marketing Manager and Lane Mielke, Sales Manager
Profitability Emerges With Pre-Emerge
Be thinking about pre-emerge chemical solutions for both corn and soybeans this spring because, as we all know, glyphosate products are higher in price than a year ago. We carry multiple products in both package and bulk. They include: Harness® Xtra, G-max Lite,™ Extreme,® and Halex® GT. Valor® has also received a label for corn in 2009. If it’s used in soybeans, it also keeps you in Roundup Rewards.® There’s value to including pre-emerge products in your farming system. Certainly increased yields will help profit margins, but their usage also adds value by better use of application equipment, and also ability to spread out your work load in a more manageable way. Talk to your agronomist about adding value with pre-emerge chemicals this year. s
Sitting Pretty for Seed Treatments
The products of choice we will be using for seed treatments this season are Trilex® 6000 and Warden® CZ. The chemistries and biological activities of these products will enhance seedling and plant growth. Talk to your location now about scheduling your seed treatment. New equipment and treaters have been added to the following locations: Hague, Pollock, Herreid, Lebanon, and Leola. Additionally, the high capacity drum treater will be operational at the new agronomy facility in Warner. s
Earning Trips and Loyalty Cash Rebates
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Emerald Extra is an input incentive program offered by NCFE through Winfield Solutions which can earn producers several award options including vacation packages. Several couples were able to enjoy trips with their use of selected product brands. We have a couple producers who have already earned the agricultural field trip of a lifetime to Brazil through Winfield and Croplan. Ask your sales agronomist about how you can earn future awards with your purchase of selected products. A program that is a great fit for everyone is the use of Loyalty Cash Rewards. It’s easy to use and there’s no enrollment necessary. Use your spring purchasing power to help you earn rebate checks this fall. Talk to your agronomist about this program, too. s
Liquid Fertilizer Storage Lease
Leases are still available for our new liquid fertilizer storage program. The 10-year lease agreements provide a management system that allows you to have storage without meeting all of the regulations that will eventually also apply to farmers with bulk fertilizer storage tanks. It eliminates your on-farm tank, pump, and equipment maintenance concerns. Other great benefits besides elimination of any land and water contamination include: • No more unsightly tanks in yard. • No storage fees. • Rapid loading capabilities. • More flexible fertilizer purchasing power. • Guaranteed supply when you need it. s
Act Now For Application Rebates
Rebates on application spreading are available if your field maps are provided to NCFE before March 15. We are transitioning into complete GPS technology for our applicators to make better use of our equipment and provide you with more accurate and better application service. We want your maps ahead of time to get them into our system, and can also more efficiently plan out our spreading routes and workloads. Additionally, an extra rebate will be tacked onto our pricing for customers that sign up for My Farm Records. Don’t wait any longer. Get your maps in to your agronomist or branch location, and sign up for My Farm Records. With your protected password, you can manage and see all your NCFE purchases and grain activity. s
The Sooner the Better—On All Products
In nearly every product area, the input marketplace is in a ‘better sooner than later’ position. Very little prepay occurred on chemicals so a logistics backup is a very real possibility, causing possible supply issues this spring. Don’t wait any longer to make your chemical-buying decisions. Call us if we can help and let’s get product in the pipeline for you. The fertilizer situation has been in the news a lot. Manufacturing has shut down, and the lack of a fall fertilizer season is going to further influence the market. We are anticipating supplies to be tight, so line up your product needs now. Then you’ll have the nutrients you need, when you need them. Can you take your corn seed yet? We’d really like to start deliveries. So please call if you have the time and storage to take seed now. The availability of the more popular hybrids and varieties could be a challenge to get much later in the season. Like chemicals and nutrients, now is the time to finalize your seed plans—the sooner the better. s
Logistics Position Added Corey Reiffenberger was recently hired as the new logistics manager for NCFE. The newly created position will help coordinate equipment, transportation, and route scheduling, thus ensuring greater efficiencies and customer satisfaction. One of the first orders of business for Corey has been visiting all the locations to engage branch managers on plan development and logistics ideas. “With Hague and Lebanon coming on board, this has really widened the footprint of NCFE,” says Corey. “We want to cover as many acres as possible, in the shortest time possible, keeping our units busy, while all the time providing top-notch service.” One of the solutions will be implementing new technology and software that will track all NCFE equipment. GPS tracking devices will be placed on all equipment, which will help coordinate routes and transportation flows of all rolling stock. Corey grew up in the elevator business, with his dad as a cooperative general manager. He most recently comes from the ethanol industry, where he coordinated various aspects of plant management. “Our goal is to not just make NCFE operations more efficient but to ultimately provide greater customer satisfaction with our services.” Corey and his wife, Kayla, live in Aberdeen. s
Wild Fluctuations at it Again
By JEREMY VANDER VORST, Benson-Quinn Branch Manager
Over the last few weeks we have experienced a see-saw market due to concerns over the world economy. Most of you have been paying close attention to each new day’s economic news. This information has been causing wild fluctuations in the grain and livestock markets. I would expect that the health of the economy will continue to be on traders’ minds over the next few months. As the growing season approaches, more focus will be shifting to U.S. growing conditions. Also over the next few weeks, the market may experience a push for acres in various markets. I believe that spring wheat may need to fight for a few acres due to a decrease in winter wheat acres. As new crop spring wheat prices approach $7, this area should be rewarded with new crop sales. The world supply of wheat was replenished last year with an increase in acres and record production. One quick tidbit to watch is weather in the southern plains, as the winter wheat crop comes out of dormancy. This region has been experiencing extremely dry conditions this winter. By the time most of you receive this, the RMA will have set spring prices for crop insurance. These prices may play a large role in many of your planting decisions. Currently, new crop corn futures are around $4.20 and new crop soybean futures are $9.25. Traders often look at the price ratio of soybeans to corn. This will often give an indication of which crop farmers are going to plant. The current ratio is this: 925/420, which equals 2.2. The figure of 2.2 has traders believing this will
Corey Reiffenberger
Interest Rate Changes • 2.5% on demand notes and deferred contracts with a due date before May 1, 2010. • 3.5% on deferred contracts with a due date after May 1, 2010.
provide incentive for farmers to switch more acres to soybeans. But as the ratio reaches 2.0, acres often get moved back to corn. New crop cash corn prices have been around $3.70 in recent weeks. With a small rally, prices could near $4—this is an area where new crop corn sales should be executed. For those concerned about further rallies, purchase calls or call spreads. Another strategy that often works well is a fence. This is executed by purchasing an out-of-the-money put and selling an out-of-the money call option. This will give you a price floor and leave upside potential for further rallies. Example: • Buy a $4.10 December put option for 52¢. • Sell a $5.20 call for 29¢. This strategy would cost you 23¢ per bushel. It also can work very well for price protection of soybeans at a higher cost-per-bushel. The economy has wreaked havoc on the livestock sector this winter. Prices have rebounded in recent weeks and many analysts expect livestock markets to rebound sharply in the last quarter of this year and in 2010. This is because cattle numbers are declining, according to recent reports. On-feed numbers are down significantly and our cow herd is approaching levels we have not seen in over 50 years. If the economy experiences a rebound, the cattle industry could also see a nice bump in prices. Please don’t hesitate to call or stop by the West Bowdle terminal with questions. My number is 877893-0800. s
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DIRE C TOR Y Ipswich . . . . . . . . . . . . . . . 605-426-6021 Toll-Free . . . . . . . . . . . . . . 800-658-3353 Auto Center . . . . . . . . . . . 605-426-6782 Farm Store . . . . . . . . . . . . 605-426-6163 Farm Store Toll-Free . . . . . 877-232-4692
PO Box 366 Ipswich, SD 57451
Bowdle . . . . . . . . . . . . . . . 605-285-6533 Toll-Free . . . . . . . . . . . . . . 800-584-9286 Petroleum . . . . . . . . . . . . 605-285-6570 Craven . . . . . . . . . . . . . . . . 605-426-6591 Fertilizer . . . . . . . . . . . . . . 605-426-6535 Hague, ND . . . . . . . . . . . . . 701-336-4673 Herreid . . . . . . . . . . . . . . . 605-437-2744 Toll-Free . . . . . . . . . . . . . . 888-437-2744 Petroleum . . . . . . . . . . . . 605-437-2415 Java . . . . . . . . . . . . . . . . . . 605-649-6291 Petroleum . . . . . . . . . . . . 605-649-6241 Lebanon . . . . . . . . . . . . . . . 605-768-9465 Leola . . . . . . . . . . . . . . . . . 605-439-3137 Petroleum . . . . . . . . . . . . 605-439-3147 Sun Terminal . . . . . . . . . . . 605-426-6843 Northville . . . . . . . . . . . . . 605-887-3441 Onaka . . . . . . . . . . . . . . . . 605-447-5803 Pollock . . . . . . . . . . . . . . . . 605-889-2321 Warner Elevator . . . . . . . . 605-225-8247 Petroleum . . . . . . . . . . . . 605-225-9608 Wecota . . . . . . . . . . . . . . . 605-324-3200
BOARD of DIRECTORS Richard Osterday – Java, President Larry Vetch – Onaka, Vice-President Quentin Larson – Pollock, Secretary Ken Olson, Jr. – Turton Lynn Deibert – Herreid Bryan Bauer – Mina Dale Gill – Java Dave Heidenreich – Wecota Gerald Lacher – Lebanon Derek Merkel – Leola Phillip Shanley – Warner
Our Mission: To be an agricultural leader in serving our customers’ needs with integrity, innovation, and profitability.
South Dakota Author Featured at Annual Meeting
V.J. Smith, the author of the captivating best seller, The Richest Man in Town, will be the speaker at the NCFE annual meeting. The event will be held March 17 at Father Borman Hall, in Ipswich. Supper will be at 6:30, followed by the annual meeting at 7:30. Business at the meeting will include a vote to change a bylaw. The suggested bylaw change would establish a new fiscal year-end of July 31, instead of the current Dec. 31. The details behind the suggested bylaw change are on page 1 of the newsletter. Three directors are up for re-election but all are running unopposed so no ballots were necessary. This year’s speaker is a 1976 South Dakota State University graduate. Smith went on to be assistant SDSU athletic director and executive director of the SDSU alumni association. Then a chance meeting with a local Wal-Mart employee changed the course of his life. Today he has become one of the most sought after motivational speakers across the countryside. Come to this year’s annual meeting to participate in the business of your cooperative and to rev up your spirit a little, as we near spring. s
Thriving Through Challenges By KEITH HAINY, General Manager
We’ve just completed an incredibly challenging year, surviving and even thriving through some of the highest market volatility ever experienced and the most daunting world economic times. As a company, we can be proud of the accomplishments we achieved. Our total sales for the year were $454 million. The grain division performed extremely well, especially in the last quarter, handling 55 million bushels of grain. Drying income was large this year because of weather conditions and overall margins were good all the way across the board. One of our challenges this past year was fertilizer. With fertilizer prices coming down in tandem with grain prices, we sustained a large write-down. This multi-million dollar devaluation is reflected in our year end statement. Reporting income on a tax basis, as we have done in the past, our earnings would be at $5.9 million dollars, before a $2.7 million bonus depreciation deduction. However, our auditors at Eide Bailey informed us, in January, of a recent IRS ruling regarding the domestic production activity deduction. It has become apparent that a cooperative can take full advantage of this deduction on behalf of all
of its members. The board has not yet determined whether to pass it through to members or use it corporately. If NCFE would use the deduction, it would make it difficult to show our records on a tax basis. For that reason, the board has made the decision to switch to a GAAP (generally accepted accounting principles) basis to provide the maximum usage of tax deductions while still showing the actual financial performance methology used by most companies in our industry. The transition to GAAP will, among other things, change our depreciation schedule to reflect the useful life of an asset and will possibly add over $6 million to owners’ equity. As we change to GAAP, the board has also recommended changing our fiscal year end to July 31. This recommendation will be voted upon by our members at the annual meeting. This by-law change would assist us in more accurate taking of inventories when they are all at their lowest levels with no grain ground piles. In December, Lebanon Equity Exchange approached us about the possibility of unifying their cooperative with NCFE. At a Feb. 6 meeting, their membership voted 92.5% in favor of unification. We appreciate the confidence that the Lebanon membership has in this cooperative. The approved proposal will meld their financial strength with ours. We are
Continued on Page 2
See us on the web at www.ncfe.coop
MARCH 2009
VOLUME 15 • NUMBER 2
Make Plans to Attend Your NCFE Annual Meeting on Tuesday, March 17th. Join us at the Father Borman Hall in Ipswich for supper at 6:30 p.m. and the business meeting to follow at 7:30.
Thriving Through Challenges Continued from Page 1
excited about serving customers in the Lebanon area with a full line of products and NCFE solutions. We recently hired a logistics manager to help us develop more efficiencies in every aspect of our transportation business. From the large number of trucks we use to supply ethanol plants, the moving of products and equipment across multiple facilities, to the heavy demands that spring places on our services each season, we see a great need for this position. State of the art software is being installed which will
allow us to track equipment, using technology for more effective and efficient scheduling. It’s been an incredible year in so many ways. The remarkable talents and dedication of our employees became so apparent again this fall. All of our departments and locations are eager for spring to get underway and the start of a new growing season. If you’ve never been to an annual meeting before, make this one your first and come participate in the business of your cooperative. From Hague to Lebanon, from Warner to Herreid, we are grateful to each one of our customers. s
Our new employees from Lebanon include Mike Schwingler, Bob Dahlquist, Kent Wolforth and Kellee Persoon.
Achieving Fuel Delivery Efficiency By KEITH HAINY, General Manager
2
Over the last few years, we have spent a lot of time examining fuel delivery and how to make the system more cost effective. We’ve mentioned it in this space many times. In 2008 we conducted a study using 2007 data. The study looked at how efficient we were in delivering fuel to customers including volumes going through tanks, how many trips per customer, and distances from bulk plants, and many other factors. The data was closely analyzed. What emerged was the tremendous need to effectively monitor customer fuel tanks. That’s because delivery efficiencies are best achieved when at least 80% of a customer’s tank is filled when we pull into the yard. Instead, we are currently averaging only 48% of tank capacity per delivery. The solution to this challenge is the use of a fuel delivery system or Refined Fuel Delivery (RFD). Using electronic monitoring of fuel tanks, fuel can be sourced more directly from the pipeline. The devices and
installation will be completely free to customers. But customers will still have flexibility over their fuel management. There will be several billing options to best fit your needs. Consumption billing will entail paying only for the fuel used during the specific month, using average monthly pricing. This is similar to how your monthly electrical bill is figured. This has been the most popular choice in other locations that have used electronic monitoring. Other options include: • Priced the day of delivery or call in order at that day’s price. • Tank buy-outs (buy out your tank contents at the average monthto-date price). • Contracting (your fuel costs can be locked in for a predetermined time frame). These purchasing options provide competitive pricing options, yet still allow you control over your fuel management. But what you won’t have any more are worries about
©2009 North Central Farmers Elevator. All Rights Reserved.
fuel shortages or forgetting to call in your order ahead of time. The real efficiency with electronic tank monitoring also comes down to tank size. There’s a 9¢ per gallon discount for delivery to a 1,000-gallon tank versus a 500-gallon tank. An additional 2¢ more a gallon savings can be achieved with a 2000 gallon tank. As Troy references in his article, we have a very good program now available to upgrade tanks. The transition to electronic monitoring is underway, as staff members begin contacting customers to profile tank sizes, products, and most importantly, answering your questions. Our intent is to have delivery implementation under way later this summer or by early fall. We appreciate your support and look forward to bringing you the full benefits that can be achieved through a more efficient petroleum delivery system. s
Published in partnership with VistaComm® (www.VistaComm.com).
At Last: More Efficient Fuel Delivery to call us ahead of time to schedule a delivery—with this new system, it’s all done for you. It also helps us finally achieve a more manageable and efficient way of delivering fuel. We will have several billing options that will be available. We anticipate the most popular method will be consumption billing. That means you’re billed for only the fuel that you actually used, no matter how much was delivered to your tank. To complement the new system, we have very attractive pricing and options on fuel tanks. We are encouraging trade-ins on old tanks if you would like to upgrade to a larger tank for more efficient management of your fuel supply. Steel has come down a bit recently, so now is an extremely good How Monitoring Works time to update and go larger. NCFE will pay for and install the necessary monitors and controllers. A moniPlease don’t hesitate to call us tor is installed in the fuel tank, recording tank volumes daily. A signal is sent about any of this, whether it’s to a controller located in a sheltered location like your house or shop, where a a question on the new delivphone line and power are available. When your tank’s level falls below a predeery system or your interest in termined amount, an order is automatically generated for fuel delivery, through a new tank. s an automated toll-free phone number. The system then dispatches a truck to make a delivery.
We are excited about transitioning to a new electronic fuel monitoring delivery system. The upgrade and installation to electronic monitoring is completely free of charge to you. By Troy weig Staff members are now conPetroleum Manager tacting petroleum customers to answer questions and to assess your needs, so we can fine-tune the system so it best fits your operation. The first group of customers that will be going on-line with the new system will be those in the Warner area. Electronic monitoring results in worry-free fuel management. No more running out of product or forgetting
Taking Energy Seriously As we’ve analyzed our department, one point that has emerged is our need for an expert in Cenex® products and in all things fuel-related, including automated fuel delivery. So in the next few months we will be hiring a certified Cenex energy specialist. The need for energy specialization has become vital in today’s marketplace. Just like an agronomist providing advice, we can help customers be more successful by helping choose the right petroleum products. We’re looking forward to building better relationships with our existing customers, and even gaining new customers with all of the exciting services now occurring in this department.
Spill Prevention Control and Countermeasures (SPCC) Update
Because of the new executive branch transition, EPA is delaying by 60 days the effective date of the final rule that amends the SPCC regulations. They are now set to become effective April 4, 2009. This amendment extends the dates by which the owner/operator of an SPCC-regulated facility must prepare, amend, or implement its SPCC plan. But the amendments do not remove any of the regulatory requirements. Farm facilities will still be required to comply, with specific compliance requirements dependent on total fuel volume classification.
Tier I: less than 10,000 total gallons and not having one tank over 5,000 gallons capacity Required to have: • Template on tank
• SPCC plan • Self-certification
Tier II: less than 10,000 total gallons and having one tank of 5,000 gallons capacity Required to have: • Template on tank • SPCC plan • Engineer required: tank testing
Bulk facility Required to have: • Certified engineer write SPCC plan For more information, visit: www.epa.gov/oem/ content/spcc/index.htm s
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From Bull to Bear By Mike Nickolas, Grain Manager
February’s USDA supply and demand report initially reflected a bullish market, the type of report everyone was hoping we would receive. However, it rapidly turned bearish as sudden negative influences on the report included South American weather and the ongoing debates in Congress on how best to fix our economy. That leaves us dealing with a marketplace we have become
very familiar with over the last few years. Very volatile, as we trade on the whole gamut of weather, economic, and geopolitical issues. Expect some pretty sharp swings in the market as we move through the coming months. We continue to pick up our grain piles across NCFE country. Our goal is to have the uncovered piles pretty much gone by the end of February, leaving the covered piles to pick up later this spring. Overall, we have had minimal loss to the company on all our piled corn. Considering the huge amount of piled corn we had, the damage losses have been manageable and negligible.
We continue to deliver corn to the ethanol plants as rapidly as we can, by both truck and rail. Obviously our hope is that the ethanol industry continues to turn itself around and become more profitable again. It would be extremely hard on this part of the country to no longer have those markets for the corn crop. On a final note, we wish Nathan Davis good luck as he joins his dad and brother on the family farm. We want to thank him for his 6+ years of commitment and service to NCFE and its patrons. Good luck, Nathan! s
Cabela’s Mineral Promotion
• Receive a $40 Cabela’s gift certificate with your purchase of a ton of ProPhos™ or RangeLand™ mineral. • Receive a $20 Cabela’s gift certificate with the purchase of a ton of RangeLand Mineral Tubs. Minerals must be booked by March 20 and picked up by September 1.
Line Up Truck Servicing Now By Steve Benning, Benning, Shop Manager
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We’ve had an incredibly busy winter and spring is getting nearer all the time. Please give us a call now to line up your DOT and service jobs. We want to get your truck in and out of here so you don’t miss a beat as planting season arrives. Look your tire situation over, too. If you need tires for your vehicles give us a call so we have them ready to put on. We continue to use Shur-Co® as our tarp supplier and Fleetguard® as our preferred choice for filters. We also have a few dropdeck van trailers left for sale. Call for more details. Have a great spring and remember to call us as soon as possible for service and parts for your trucks and trailers. s
Come for Lunch. Book Feed. We are hosting a series of booking days, at the main office of all our branch locations. We’ll be serving lunch from 11 to 2 as a small way of showing our appreciation for your support of our feed products. You’ll be able to book your minerals, tubs, and creep feed, while having a quick lunch on us. March 2: Java March 3: Pollock March 4: Bowdle (Legion Hall) March 5: Northville March 6: Wecota March 9: Hague March 10: Leola March 11: Warner March 12: Onaka March 13: Herreid March 18: Ipswich (4-H building) We will have company representatives on hand to talk about all of your farm and ranch needs. s
Minerals for All the Right Reasons By Jarvis Haugeberg, General Manager, Dakotaland Feeds, LLC
Our annual Cabela’s mineral promotion is going on, but frankly, I don’t think it should be the only reason folks are buying minerals. The most important reason is so your cows get the minerals, trace minerals, and vitamins that they need, as Scott says in his article. The simple fact is that minerals fed at small amounts can make a big difference in herd performance. The difference in cattle with a good mineral program and a poor mineral program are not differences you will see from the road. The table below shows that as a cow’s trace mineral status declines there is a loss of immunity and reproductive function. This happens long before you will see any clinical signs of deficiency.
I know there can be certain points about cattle nutrition that are confusing. On certain topics, you can go to a meeting with our team and hear one point of view. Then you attend a meeting held by a competitor and you’ll hear something quite different. But on this one point I think you’ll find we all agree: virtually every expert agrees that for a minimal cost,
we can take care of our cows’ mineral and vitamin needs by feeding a good mineral program. We offer a number of options to supplement your herd’s mineral needs. Our most popular line of minerals is the ProPhos™ line. These minerals have been around a while and are very well-fortified for everyday mineral supplementation. During this time of year when most cows are in their third trimester of gestation and/or early lactation, many customers select our Techni-Breeder mineral line. They are higher in fortification and carry a very high level of ZinPro organic minerals. We recommend this ‘premium’ line of minerals to ensure your cows are prepared for calving and early lactation. We generally don’t recommend this product for year-round feeding. We also offer RangeLand™ Mineral tubs. They are very popular because of consistent mineral consumptions by cattle. They are formulated with all-weather technology. We also offer RangeLand All Weather minerals. The mineral particle size is larger and designed to resist rain and wind. They are not always readily available and need to be booked ahead of time. Some of these products have ingredient options like containing Aureomycin® (AU), which has been shown to be effective for anaplasmosis. While no official claims other than that have been approved by FDA, herds that have used AU have realized several benefits. Altosid® is also an ingredient option. This choice is gaining in popularity because it just plain works as a fly control. Limited newsletter space only allows me to hit the high points of this very important topic. Check with your NCFE location for more information, contact Scott, or a Dakotaland Feeds Livestock Production Specialist (LPS) for help in selecting the best product for your herd. s
Why Feed Mineral? By Scott Kilber, Feed Specialist
Minerals are vital for nearly every body function of a cow. They are very important for calf development, the immune system, breed-back, and overall animal performance. A cow’s mineral needs are at her peak just prior to and after calving. The growing calf is taking in a large amount of mineral to build its own body, so it is ready to enter the world. After calving, the cow needs a large amount of mineral to replenish her reproductive tract, so she can promptly rebreed for next year. Keep your cows productive by feeding a quality ProPhos™ mineral or a RangeLand™ Mineral Tub. s
Altosid® Specials
Buy 16 Altosid tubs and get one free. The tubs must be booked by May 20. They can be picked up all summer long.
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Noteworthy Topics
By Matt Christopherson, Agronomy Marketing Manager and Lane Mielke, Sales Manager
Profitability Emerges With Pre-Emerge
Be thinking about pre-emerge chemical solutions for both corn and soybeans this spring because, as we all know, glyphosate products are higher in price than a year ago. We carry multiple products in both package and bulk. They include: Harness® Xtra, G-max Lite,™ Extreme,® and Halex® GT. Valor® has also received a label for corn in 2009. If it’s used in soybeans, it also keeps you in Roundup Rewards.® There’s value to including pre-emerge products in your farming system. Certainly increased yields will help profit margins, but their usage also adds value by better use of application equipment, and also ability to spread out your work load in a more manageable way. Talk to your agronomist about adding value with pre-emerge chemicals this year. s
Sitting Pretty for Seed Treatments
The products of choice we will be using for seed treatments this season are Trilex® 6000 and Warden® CZ. The chemistries and biological activities of these products will enhance seedling and plant growth. Talk to your location now about scheduling your seed treatment. New equipment and treaters have been added to the following locations: Hague, Pollock, Herreid, Lebanon, and Leola. Additionally, the high capacity drum treater will be operational at the new agronomy facility in Warner. s
Earning Trips and Loyalty Cash Rebates
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Emerald Extra is an input incentive program offered by NCFE through Winfield Solutions which can earn producers several award options including vacation packages. Several couples were able to enjoy trips with their use of selected product brands. We have a couple producers who have already earned the agricultural field trip of a lifetime to Brazil through Winfield and Croplan. Ask your sales agronomist about how you can earn future awards with your purchase of selected products. A program that is a great fit for everyone is the use of Loyalty Cash Rewards. It’s easy to use and there’s no enrollment necessary. Use your spring purchasing power to help you earn rebate checks this fall. Talk to your agronomist about this program, too. s
Liquid Fertilizer Storage Lease
Leases are still available for our new liquid fertilizer storage program. The 10-year lease agreements provide a management system that allows you to have storage without meeting all of the regulations that will eventually also apply to farmers with bulk fertilizer storage tanks. It eliminates your on-farm tank, pump, and equipment maintenance concerns. Other great benefits besides elimination of any land and water contamination include: • No more unsightly tanks in yard. • No storage fees. • Rapid loading capabilities. • More flexible fertilizer purchasing power. • Guaranteed supply when you need it. s
Act Now For Application Rebates
Rebates on application spreading are available if your field maps are provided to NCFE before March 15. We are transitioning into complete GPS technology for our applicators to make better use of our equipment and provide you with more accurate and better application service. We want your maps ahead of time to get them into our system, and can also more efficiently plan out our spreading routes and workloads. Additionally, an extra rebate will be tacked onto our pricing for customers that sign up for My Farm Records. Don’t wait any longer. Get your maps in to your agronomist or branch location, and sign up for My Farm Records. With your protected password, you can manage and see all your NCFE purchases and grain activity. s
The Sooner the Better—On All Products
In nearly every product area, the input marketplace is in a ‘better sooner than later’ position. Very little prepay occurred on chemicals so a logistics backup is a very real possibility, causing possible supply issues this spring. Don’t wait any longer to make your chemical-buying decisions. Call us if we can help and let’s get product in the pipeline for you. The fertilizer situation has been in the news a lot. Manufacturing has shut down, and the lack of a fall fertilizer season is going to further influence the market. We are anticipating supplies to be tight, so line up your product needs now. Then you’ll have the nutrients you need, when you need them. Can you take your corn seed yet? We’d really like to start deliveries. So please call if you have the time and storage to take seed now. The availability of the more popular hybrids and varieties could be a challenge to get much later in the season. Like chemicals and nutrients, now is the time to finalize your seed plans—the sooner the better. s
Logistics Position Added Corey Reiffenberger was recently hired as the new logistics manager for NCFE. The newly created position will help coordinate equipment, transportation, and route scheduling, thus ensuring greater efficiencies and customer satisfaction. One of the first orders of business for Corey has been visiting all the locations to engage branch managers on plan development and logistics ideas. “With Hague and Lebanon coming on board, this has really widened the footprint of NCFE,” says Corey. “We want to cover as many acres as possible, in the shortest time possible, keeping our units busy, while all the time providing top-notch service.” One of the solutions will be implementing new technology and software that will track all NCFE equipment. GPS tracking devices will be placed on all equipment, which will help coordinate routes and transportation flows of all rolling stock. Corey grew up in the elevator business, with his dad as a cooperative general manager. He most recently comes from the ethanol industry, where he coordinated various aspects of plant management. “Our goal is to not just make NCFE operations more efficient but to ultimately provide greater customer satisfaction with our services.” Corey and his wife, Kayla, live in Aberdeen. s
Wild Fluctuations at it Again
By JEREMY VANDER VORST, Benson-Quinn Branch Manager
Over the last few weeks we have experienced a see-saw market due to concerns over the world economy. Most of you have been paying close attention to each new day’s economic news. This information has been causing wild fluctuations in the grain and livestock markets. I would expect that the health of the economy will continue to be on traders’ minds over the next few months. As the growing season approaches, more focus will be shifting to U.S. growing conditions. Also over the next few weeks, the market may experience a push for acres in various markets. I believe that spring wheat may need to fight for a few acres due to a decrease in winter wheat acres. As new crop spring wheat prices approach $7, this area should be rewarded with new crop sales. The world supply of wheat was replenished last year with an increase in acres and record production. One quick tidbit to watch is weather in the southern plains, as the winter wheat crop comes out of dormancy. This region has been experiencing extremely dry conditions this winter. By the time most of you receive this, the RMA will have set spring prices for crop insurance. These prices may play a large role in many of your planting decisions. Currently, new crop corn futures are around $4.20 and new crop soybean futures are $9.25. Traders often look at the price ratio of soybeans to corn. This will often give an indication of which crop farmers are going to plant. The current ratio is this: 925/420, which equals 2.2. The figure of 2.2 has traders believing this will
Corey Reiffenberger
Interest Rate Changes • 2.5% on demand notes and deferred contracts with a due date before May 1, 2010. • 3.5% on deferred contracts with a due date after May 1, 2010.
provide incentive for farmers to switch more acres to soybeans. But as the ratio reaches 2.0, acres often get moved back to corn. New crop cash corn prices have been around $3.70 in recent weeks. With a small rally, prices could near $4—this is an area where new crop corn sales should be executed. For those concerned about further rallies, purchase calls or call spreads. Another strategy that often works well is a fence. This is executed by purchasing an out-of-the-money put and selling an out-of-the money call option. This will give you a price floor and leave upside potential for further rallies. Example: • Buy a $4.10 December put option for 52¢. • Sell a $5.20 call for 29¢. This strategy would cost you 23¢ per bushel. It also can work very well for price protection of soybeans at a higher cost-per-bushel. The economy has wreaked havoc on the livestock sector this winter. Prices have rebounded in recent weeks and many analysts expect livestock markets to rebound sharply in the last quarter of this year and in 2010. This is because cattle numbers are declining, according to recent reports. On-feed numbers are down significantly and our cow herd is approaching levels we have not seen in over 50 years. If the economy experiences a rebound, the cattle industry could also see a nice bump in prices. Please don’t hesitate to call or stop by the West Bowdle terminal with questions. My number is 877893-0800. s
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DIRE C TOR Y Ipswich . . . . . . . . . . . . . . . 605-426-6021 Toll-Free . . . . . . . . . . . . . . 800-658-3353 Auto Center . . . . . . . . . . . 605-426-6782 Farm Store . . . . . . . . . . . . 605-426-6163 Farm Store Toll-Free . . . . . 877-232-4692
PO Box 366 Ipswich, SD 57451
Bowdle . . . . . . . . . . . . . . . 605-285-6533 Toll-Free . . . . . . . . . . . . . . 800-584-9286 Petroleum . . . . . . . . . . . . 605-285-6570 Craven . . . . . . . . . . . . . . . . 605-426-6591 Fertilizer . . . . . . . . . . . . . . 605-426-6535 Hague, ND . . . . . . . . . . . . . 701-336-4673 Herreid . . . . . . . . . . . . . . . 605-437-2744 Toll-Free . . . . . . . . . . . . . . 888-437-2744 Petroleum . . . . . . . . . . . . 605-437-2415 Java . . . . . . . . . . . . . . . . . . 605-649-6291 Petroleum . . . . . . . . . . . . 605-649-6241 Lebanon . . . . . . . . . . . . . . . 605-768-9465 Leola . . . . . . . . . . . . . . . . . 605-439-3137 Petroleum . . . . . . . . . . . . 605-439-3147 Sun Terminal . . . . . . . . . . . 605-426-6843 Northville . . . . . . . . . . . . . 605-887-3441 Onaka . . . . . . . . . . . . . . . . 605-447-5803 Pollock . . . . . . . . . . . . . . . . 605-889-2321 Warner Elevator . . . . . . . . 605-225-8247 Petroleum . . . . . . . . . . . . 605-225-9608 Wecota . . . . . . . . . . . . . . . 605-324-3200
BOARD of DIRECTORS Richard Osterday – Java, President Larry Vetch – Onaka, Vice-President Quentin Larson – Pollock, Secretary Ken Olson, Jr. – Turton Lynn Deibert – Herreid Bryan Bauer – Mina Dale Gill – Java Dave Heidenreich – Wecota Gerald Lacher – Lebanon Derek Merkel – Leola Phillip Shanley – Warner
Our Mission: To be an agricultural leader in serving our customers’ needs with integrity, innovation, and profitability.
South Dakota Author Featured at Annual Meeting
V.J. Smith, the author of the captivating best seller, The Richest Man in Town, will be the speaker at the NCFE annual meeting. The event will be held March 17 at Father Borman Hall, in Ipswich. Supper will be at 6:30, followed by the annual meeting at 7:30. Business at the meeting will include a vote to change a bylaw. The suggested bylaw change would establish a new fiscal year-end of July 31, instead of the current Dec. 31. The details behind the suggested bylaw change are on page 1 of the newsletter. Three directors are up for re-election but all are running unopposed so no ballots were necessary. This year’s speaker is a 1976 South Dakota State University graduate. Smith went on to be assistant SDSU athletic director and executive director of the SDSU alumni association. Then a chance meeting with a local Wal-Mart employee changed the course of his life. Today he has become one of the most sought after motivational speakers across the countryside. Come to this year’s annual meeting to participate in the business of your cooperative and to rev up your spirit a little, as we near spring. s
