Scoop March The. Planning for the Future. By Tom Kennell, President

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1 The COOPERATIVE EUREKA SECOR EL PASO Scoop March 2009 Planning for the Future By Tom Kennell, President As we reported in the last annual business meeting in August of 2008, we needed to make some changes at GRAINLAND to position us for the future. The changes included increases to working capital and retained earnings. This prepares us for a volatile environment that continues in our nation as well as globally. Our working capital is presently three to four times of that we carried in a normal environment. We also talked about the need to generate more revenue to position us for the future, both to cover increased facility costs and to prepare for future capital improvements. We did that through increasing drying and storage rates last fall. At that time we had some concerns about the size of our rate increases, but as we look now, we are glad we made that decision. As of today, our facility costs are roughly a half million more than they were one year ago. This is due mostly to increases in gas and electricity cost, both as higher utility fees as well as increased usage because of the wetter corn this last fall. As of today, Jeff s merchandising of grain is off to a good start, with a nice increase over last year. Hopefully we will be able to hold these gains over the next six months. All of these things that were mentioned above have contributed to put GRAINLAND in a strong position both for the current fiscal year, and for the years to come. This also helps position GRAINLAND as we look to future capital needs to serve you as a patron. In addition to the new office planned at the Eureka location, our future capital plans for the next 3-5 years include rail improvements as well as possible rail expansion. With yield trend lines on the increase, faster harvest equipment, and larger operations, we know that we need to gear GRAINLAND facilities to meet those challenges. While we have no definite timetable for increasing storage, we know that we need to plan for additional space in the next 3-5 years. Even with the volatility of prices and economies, we feel that we are well positioned to carry GRAINLAND into the future and to fulfill our motto of serving our patrons needs by being a strong and progressive company.

2 Harvest 2008 By Jeff Kaeb Harvest is always one of the most rewarding times of the year. I think this past harvest was no different. In the spring of 2008, it rained and rained leaving many us of wondering if we would even get the crop planted. Like always, everyone found a way to get the crop in. After much concern about planting conditions, farmers ended up with picket line stands and tremendous population numbers. Then came the rally in corn and bean prices! We saw corn break through 7 dollars and beans go through 16 dollars. As we all know, what goes up must come down and that s exactly what commodity prices started doing after the 4 th of July weekend. In August, I started hearing yield checks on corn coming back around 174 bushels per acre. But, once the farmers got the combines rolling everyone was pleasantly surprised! Harvest started September 22 nd and with a few rain delays here and there we finished up November 28th. We had our harvest plans made early as we carried over 850,000 bushel of corn and no soybeans, with no plans of a ground pile. Harvest went very well for us, as we were able to maintain our long hours of operation in order to keep our patrons running in the field. We didn t have to close any facilities this year due to the lack of space even after we found out the corn was yielding much better than expected. Due to better than expected yields; we did have to make a small ground pile of about 150,000 bushels of corn. Making a ground pile, instead of shipping the corn allows us to pick up better carry and basis gains in the market. The pile was completely picked up by December 20 th right before the ice storm hit. Drying expenses were much higher last year for a couple reasons. One was the higher price of gas to run the dryer. And the other reason was the corn just didn t dry down much in the field. The average moisture of corn delivered last year was 22% and in 2007 it was 19.4%. Last harvest was a successful one for both Grainland and our patrons. We thank you for all the business that you give us. We are hoping that everyone has a great spring and we look forward to seeing what this fall will bring! Eureka Facility Update By Lori Miller As some of you may or may not know we moved out of our Eureka office location on February 6 th. We are currently working out of our Secor office location. The old office building is down and the contractors are busy forming walls and pouring concrete at this time. The walls are in the process of being built, so things are moving along at a great pace. The weather has been favorable for us to get things done and we are grateful for that. You may still contact us using the same Eureka phone numbers that you have used in the past. The market line will continue to give you our daily bids after 4:30 p.m. We are very excited about our new office building and will be happy to update you on the progress as it gets done. Our hope is to be in the new building sometime this summer. We would like to be back in Eureka in time for wheat harvest this coming July. Of course this will depend on how well Mother Nature treat s us in the upcoming months! We wish you well with your spring planting, give us a call if you have any questions, or stop in and see us! We look forward to hearing from you. -2-

3 Making the Best Better By Dale Zimmerman, Secretary A number of years ago I was introduced to the 4-H motto To make the best Better. There have been many times since that this motto has come to mind. One of these occasions was on January 20 th at the GRAINLAND board and manager retreat in Bloomington. I have the opportunity to serve on the GRAINLAND board with excellent businessmen that make their living farming. In the last 12 years that I have been on the board, the names have changed but the quality remains the same. This will be our 106 th year as a cooperative and there have been many minds that have contributed to the success that we enjoy today as one of the state s best cooperatives. There have been many changes that have taken place since Secor Elevator Company and Farmers Grain Cooperative of Eureka were first started. Our founding fathers could never have imagined the size and scope of the business that we have today. This reminds me that GRAINLAND Cooperative is larger and stronger than any one of the people involved. When we have moved on there will continue to be a GRAINLAND Cooperative. Through the years we have found it beneficial to spend time as a board, with outside guidance, considering the future of GRAINLAND. This type of retreat, along with GROWMARK board member training sessions, has helped us become better board members. There are many instances during board meetings a decision will be made as a direct result of our training sessions. Through the years we have used a number of different organizations to lead the retreat. The last two years we have used the services of GROWMARK for our retreat with great results. This year Joe Kapraun, Greg DeGraaf and Jim Charlesworth led the discussions. The topics included the grain industry in 2018, in depth study of our financial statement, comparative analysis, board and manager responsibilities. Our manager, Jeff Brooks, and board president, Tom Kennell, were instrumental in -3- getting GROWMARK to take a customer satisfaction survey. Some of you randomly selected patrons received this survey and we would like to thank you for your response. We were told that the percent of surveys returned was very high. There were three main sections to the survey, customer satisfaction with grain services, the importance of individual services (unloading, bids, patronage, etc) and GRAINLAND s viability. Jim Charlesworth presented the tabulated results to the board during the retreat. The overall grain service satisfaction results were 4.3 on a scale of 1-5, which is very good. The seven services that were listed on the survey were all rated high, which means that they are important to our patrons. The last question on the survey was; do you feel that GRAINLAND is positioned for the future as a viable, financially strong company? The results of that question were 100% yes; Jim stated that he has never seen a question answered 100% favorably. There was also a space for comments and we intend to contact every one that wanted to be. This brings me to the reason that I was reminded of the motto. The board and management thought we might find some weak spots to concentrate our efforts towards. You know, fix our problems. We had to really stretch the results to find a significantly lower area. This also means the employees and prior boards have had an open ear and mind to the needs of our patrons. So the main thing we can do as your board of directors and employees is Make the Best Better. In the coming year there will be decisions to make, results to evaluate, issues to address and whatever else may come before the board. You can rest assured that your board will use our training to enhance the profitability of our patron owners by providing a financially sound and progressive company. The board would like to thank you for your past support of GRAINLAND and look forward to working with each one of you in the coming years.

4 The Big V In the Market Place By John Aeschliman We have witnessed a very wild ride in the commodity markets over the last year and a half. When patrons would ask me about market direction, the only answer that I could accurately give them was that we would see a lot of volatility ( The Big V ). Money funds, commodity index funds, and investors all seemed to want to buy corn and soybean futures last spring and summer. When corn and bean prices reached $7.00 and $15.00, many asked, who could use the products we raise. It was obvious that the hog producer couldn t with the liquidation of hog numbers that we witnessed locally. The manufacturing of ethanol also became costly as we heard reports of proposed plants being put on hold and other ethanol plants in financial trouble. Grain exports worked because of the U.S. dollar fell in value versus foreign currencies. Rallying grain markets are similar to throwing a ball into the air. Once the upward momentum quits, gravity rapidly pulls the ball back down to earth. I have witness several market rallies during my career. It seems that when we are having a rally there are marketing analyst predicting higher prices are yet to come. They tell us that we are in a new era of higher prices but only too soon do we realize that we are back to the same old era of lower prices. Market volatility made it challenging for farmers to market grain. Last summer when we had the on going rally, every time a grain sale was made it looked like the sale was made too early and too cheap as grain markets continued to climb. Once grain markets topped out at the end of June and the price decline began, we held on to the notion that prices would recover. The current economic situation in the United States and globally has put a damper on fund money reentering the market. The technical indicator that we see in today s market tells us that the market should be bought. Lack of confidence in the economy by investors is keeping them out of the market place. Every time we get a little rally in the market it is soon sold off. The current market climate cannot seem to sustain an on going rally. The volatility in the market can work for a grain producer. It is important that a producer know what his cost of production is. Once he has a firm handle on this cost, he needs to be willing to sell when the volatility of the market offers a price where a profit can be locked in. An early summer morning sunrise over the El Paso facility (picture taken by Dave Dressler) -4-

5 Riemond H. Rippel Sr R i e m o n d Rippel, a past director of the Secor Elevator Company passed away on December 28, He farmed northeast of Secor for 62 years and retired in R i e m o n d served on the Secor Elevator Board of Directors during the sixties, seventies, and eighties holding the office of board Secretary for many years. He was on the Board when the wood elevator burned down in 1967 and was involved in the decision to build the concrete elevator that stands today. Riemond was dedicated to promoting the cooperative system. Many patrons who knew him, considered him the grandfather of the grain cooperative in Secor. Riemond will certainly be missed by many of his friends and neighbors in Woodford County. Judy Jording Retired October 30th, 2008 A retirement party was held on October 30 th in honor of J u d y Jording s 44 years of service at the Eureka office. M a n y GRAINLAND patrons and f r i e n d s stopped by to wish her well. All her customers and coworkers will miss Judy. Harold R. Neumann Harold (Harry) Neumann passed away February 12, 2009 in Sarasota Florida. Harold served on the Board of Directors of Farmers Grain Cooperative of Eureka and G R A I N L A N D Cooperative for 14 years. He was a member of the board in 1999 when GRAINLAND Cooperative was formed. He also served on the Maple Lawn Homes Board for 12 years, having served as president. Harold farmed in the Metamora area for 50 years. Upon his retirement in 2004 he and his wife, Joanne moved to Goshen, Indiana to be closer to their daughters. Harold s warm and friendly smile will be greatly missed by all of us, especially at harvest when he would come back to help Mark and Kurt haul in those bountiful crops. Judy and her husband, Denny are planning on doing more traveling and spending time with their grandchildren. We wish her the best and hope she is enjoying her retirement. Sandwiches and cake were served for Judy s retirement party. -5-

6 Nick Hostetler EMPLOYEE SPOTLITE My name is Nick Hostetler. I have worked for GRAINLAND Cooperative at the Eureka location for a little over a year before I was hired on as a full time employee. I became the o u t s i d e o p e r a t ions worker for GRAINLAND s El Paso location just before harvest of last year. I grew up in the country near the town of Washburn. I was home schooled since the fifth grade and graduated High School in March of I decided to take a year off of school to get a job and save money for college. I took a summer night class at ICC last year, and I am currently starting the spring semester at ICC with a full time class load. Both of my parents have been working for the company Choice Books for the past five years. Their job is to service Christian book racks at stores and businesses in parts of Wisconsin and Missouri. I am the youngest of two sisters and three brothers. They have all gotten married in the same order of age (oldest to youngest). Since I am the youngest, I have plenty of time to get married. In my free time I enjoy snowboarding, wakeboarding, playing street hockey, shooting trap, and skydiving. I have been skydiving seven times, but I haven t been back for over a year. I have really enjoyed working at this company, and look forward to going to college and working for GRAINLAND Cooperative. COOPERATIVE 927 County Highway 3 Eureka, IL EUREKA SECOR EL PASO