Nebraska Cooperative Council

2014-15

Annual Report Inside this Report: Chairman & President’s Message 3 Leadership 4 State Legislation 5 State & Federal Regulations 8 NCC Political Action Committee 10 Director Education 11 Youth Education 12 New Cooperatives Faculty Position at UNL 13 Cooperative Economic Impact Study 13 Annual Meeting 14 Cooperative Hall of Fame 15 Upcoming Leadership Change 15 Financials 16 NCC Member Cooperatives Membership 17 by the Numbers (estimated as of 8-31-15)

32 Nebraska supply/marketing co-ops operating: 347 additional branch locations in Nebraska 55 additional branch locations out of state NCC Mission Statement: 3 Rural electric co-ops To defend, protect, and enhance 1 Transport co-op the agricultural cooperative movement through pro-active programs in educa- 1 Telephone co-op tion, legislation, government affairs, 1 Out-of-state co-op with a branch in Nebraska communication, and regulatory issues. 1 Out-of-state rural electric co-op 1 Livestock Marketing Agency 7 Participating Members 37 Supporting Members Cooperative Principles: NCC Member Supply/Marketing Co-op Stats: • Voluntary and Open Membership 54,300+ total voting members • Democratic Member Control 5,600+ employees (full and part-time) • Member Economic Participation $7.2 billion total sales • Autonomy and Independence $2.9 billion total assets • Education, Training & Information $154 million net savings • Cooperation among Cooperatives $212.7 million investment in new equipment and facilities in past year • Concern for Community $67.2 million total patronage refunds in past year $26.4 million equity/estate redemption in past year $13 million property taxes paid in past year $7.7 million federal/state income taxes paid in past year

Nebraska Cooperative Council 134 South 13th Street, Suite 503 Lincoln NE 68508 Ph: 402/475-6555 Fax: 402/475-4538 Email: [email protected] Website: www.nebr.coop

August 31, 2015 2014/15 Annual Report - Nebraska Cooperative Council Chairman & President’s Message

Seventy years ago, a group of 20 Ne- educational outreach to community col- braska cooperative leaders met in Lincoln lege students. For the 2014/15 academic to discuss establishing/organizing a trade year, we conducted 18 classroom sessions association for local cooperatives. As a re- encompassing 359 students. Since the pro- sult, the Nebraska Cooperative Council was gram was established, we have provided 58 formally organized in 1945. Incorporated presentations attended by 1,045 students. into the Council’s Articles of Incorporation In addition, in August 2014, the Uni- as one of the organizational purposes is versity of Nebraska implemented a “Role the charge that the Council is “to do any of Cooperatives in Agriculture” class which NCC President Robert Andersen and and all things necessary to defend, protect was taught by Attorney Rocky Weber. This Board Chairman David Briggs and enhance the agricultural cooperative was the culmination of several years of movement for the mutual benefit of the working with the University to create coop- members of the Council.” erative offerings within the Department of of Revenue. This includes the decision this Those early cooperative leaders were vi- Agricultural Economics. It should be noted year to challenge the Department concern- sionary as they understood the importance that this class will be offered again in the ing its position on the Sales & Use Tax of continuing education for cooperative di- fall 2015 semester. The importance of this on Parts & Machinery and NH3 Trailers/ rectors and managers alike and, secondly, cannot be overstated as it has been many, Tanks Classification. In addition, we also they understood the importance of having many years since the University offered continue our energy source exemption a voice in the formulation of public policy students a class on cooperatives. challenge which was initiated several years concerning cooperatives. In July 2015, we executed an Agree- ago. Both of these challenges are being The Council remains committed to ment with the University of Nebraska funded by voluntary contributions from developing and providing quality coop- Extension Division and the Ag Economics several of the membership (see page 9). erative training programs for cooperative Department to partially fund a new faculty The Council’s legislative program directors. Indicative of this, three years position in Agriculture and Rural Coopera- continues to be a priority area. The ago the Council’s Board of Directors and tives. The candidate interview process will Council’s management team recognizes Education Committee made the strategic be commencing shortly, and the Search the importance of providing leadership in programming decision to elevate the qual- Committee includes three Council repre- the development and support of legislative ity of the Council’s director education pro- sentatives. It has been since 1999 that we initiatives favorable to cooperatives. grams. Accordingly, we have incorporated had a recognized faculty position within This past legislative session, your asso- nationally recognized experts from various the Institute of Agriculture and Natural ciation was involved in or closely moni- land grant universities and industry and Resources with a cooperative discipline. tored 71 legislative bills and resolutions. financial leaders into our programs. We We believe our financial commitment to This consumes an inordinate amount believe our educational opportunities create the faculty position will enhance of time and a day-to-day presence at the compliment cooperative management cooperative extension, research, and Capitol. See the legislative section on page teams’ abilities to meet the challenges of a undergraduate teaching. 5 which provides a summary of those is- competitive agribusiness environment and This past July, the Board of Directors sues we were following. potential alternatives in an ever-changing approved engaging the UNL Business Your Council is recognized as an and complex business climate. College to undertake an economic impact important and respected legislative leader This past year, 398 board members study on supply/marketing cooperatives in for agricultural cooperatives by our elected and employees attended our director/ Nebraska. This information should prove state/federal legislators as well as the state/ manager training programs. The positive helpful in our education and legislative federal governmental departments and responses from the members, both in programs as well as to our educational other stakeholders. This is the result of meeting evaluations and verbal discus- outreach with other stakeholders. the efforts and dedication of many within sions, reaffirms the strategic decision to As we look at the regulatory challenges the cooperative system. elevate and enhance our programming. before our membership, the Council has As you review this year’s Annual Our youth education programming has provided leadership to challenge recent in- Report, we believe it illustrates the Council been expanded. In 2011, we initiated an terpretations by the Nebraska Department (Continued on page 7)

August 31, 2015 2014/15 Annual Report - Nebraska Cooperative Council Pg 3 2014/15 Council Leadership

Board of Directors

David Briggs, Chair Dean Thernes, Vice Chair Bruce Favinger, Secretary Dave Beckman Mike Hechtner WESTCO Farmers Pride Cooperative Producers Inc Central Valley Ag Co-op CoBank Alliance Battle Creek Hastings York Omaha

John Oehlerking Doug Ohlson Randy Robeson Tim Rowe Midwest Farmers Co-op Frenchman Valley Farmers Co-op Frontier Co-op Co. All Points Co-op Elmwood Imperial Brainard Gothenburg

Committees Legislative Advisory Committee Excellence in Cooperative Robert Andersen..... Nebraska Cooperative Council (Co-chair) Education Committee Dean Thernes...... Farmers Pride, Battle Creek (Co-chair) Bruce Favinger...... Cooperative Producers Inc, Hastings (Chair) Dave Beckman...... Central Valley Ag Co-op, York Don Anthony...... CHS Inc, Lexington Evan Brandes...... Aurora Co-op Elevator Co. Deb Brauer...... Crossroads Co-op Assn, Sidney Matt Caswell...... AGP, Omaha Carl Dickinson...... Central Valley Ag Co-op, York Jamey Nygren...... Farm Credit Services of America, Omaha Jay Geu...... Frenchman Valley Farmers Co-op, Imperial John Oehlerking...... Midwest Farmers Co-op, Elmwood Tom Houser...... CoBank, Omaha Randy Robeson...... Frontier Co-op Co., Brainard Mike Nohavec...... Farmers Cooperative, Dorchester Ron Rutten...... Country Partners Co-op, Spalding Dale Piper...... Midwest Farmers Co-op, Elmwood David Briggs...... WESTCO, Alliance (ex-officio) Tim Rowe...... All Points Co-op, Gothenburg David Briggs...... WESTCO, Alliance (ex-officio) NCC-Political Action Committee Dr. Larry Van Tassell....University of Nebraska-Lincoln (ex-officio) Dean Thernes...... Farmers Pride, Battle Creek (Chair) Ed Woeppel...... Nebraska Cooperative Council Britt Anderson...... All Points Co-op, Gothenburg Ron Hunter...... Ag Valley Co-op, Edison Hall of Fame Committee Mary Kay Lyon...... CHS Agri Service Center, Holdrege Daryl Erickson...... Greenwood (Chair) John Moore...... Central Valley Ag Co-op, York Don Wiseman...... Fairbury (Vice Chair) Doug Ohlson...... Frenchman Valley Farmers Co-op, Imperial Jerrell Dolesh...... Tilden Bill Schuster...... Aurora Co-op Elevator Co. Ed Foster...... Gothenburg Ron Velder...... Farmers Cooperative, Dorchester Doug Nuttelman...... Stromsburg David Briggs...... WESTCO, Alliance (ex-officio) David Briggs...... WESTCO, Alliance (ex-officio) Robert Andersen...... Nebraska Cooperative Council (ex-officio) Staff Robert Andersen..... President Glenda Gaston...... Office Manager/Admin Assistant Ed Woeppel...... Education & Program Director Deb Mazour...... Program Coordinator/Admin Assistant

August 31, 2015 Pg 4 2014/15 Annual Report - Nebraska Cooperative Council State Legislation 2015 Session

The 2015 legislative session adjourned 2016, both are now due semi-annually. sine die on May 29. The Council tracked “Grade” is also defined to mean “the 71 bills and resolutions with potential percentage of total nitrogen, available to impact cooperatives. This year may phosphate and soluble potash.” The grade have been one of the most unpredictable must be stated in the same terms, order sessions in recent memory. With 18 new and percentages as in the guaranteed senators, the Legislature took action on analysis, except for specialty products that While the Council monitors all legisla- some very controversial issues. The repeal may be guaranteed in fractional units. tive activity in order to keep its coopera- of the death penalty, granting a drivers’ In addition, the penalty provision for tive members abreast of any legislative license to “dreamers,” increase in fuel filing late reports will result in an admin- changes that may affect how cooperatives taxes, and prison reform were issues that istration fee of 25% of the delinquent conduct business, the primary responsi- dominated the session. Twenty-four Legis- amount being added for every month that bility of the Council in the legislative arena lative Updates were forwarded throughout the fee remains unpaid. is to monitor and effect legislation that the session to keep the membership up to pertains to “cooperative specific issues.” date on key issues. LB 106 - Livestock Zoning (S) This legislative priority includes, but is not During the 2015 session, 247 bills LB 106 was signed into law on May 27, limited to, legislative action affecting: became law (either with or without the and provisions became effective Septem- • Cooperatives as business entities Governor’s approval) and over 400 bills/ ber 5, 2015. It requires the Director of unique from corporations and limited resolutions will be carried over to the 2016 Agriculture to appoint a 10-person com- liability companies session. mittee of experts to advise the Department • Cooperative corporate governance Listed below are some of the more of Agriculture in the development of an and the rights and obligations of coopera- significant bills we followed. The Coun- assessment matrix which could be used tive board members, stockholders and cil’s position is indicated in parentheses by individuals as a reference tool when patrons (S=support, O=oppose, M=monitor, completing the permit application and by • Laws, including tax codes, that may NP=no position). county officials when scoring conditional affect how cooperatives allocate patronage use permit or special exception applica- to their patrons SIGNED INTO LAW tions. The committee of experts would • Equity management and equity include representation from county board redemption restrictions LB 23 - Engineers & Architects Regu- members, county zoning administrators, • Securities and other “safe harbor” lation Act (N) livestock production agriculture, the Uni- exemptions that provide cooperatives the LB 23 modernizes and updates the versity of Nebraska, and other experts as ability to raise and manage equity laws governing the licensure and practices may be determined by the director. These legislative priorities involve of engineers and architects. Provisions issues that affect the very nature of the of the bill became effective September 5, LB 175 - Livestock Growth Act (N cooperative business model, whether it 2015. with AM492) be a local or regional cooperative, a utility LB 175 was signed into law with the cooperative, a transportation cooperative, LB 92 - Ag Liming Materials Act and emergency clause, and provisions became or the Farm Credit System, CoBank or re- LB 93 - NE Commercial Fertilizer & effective May 28, 2015. It creates a grant lated cooperative entities uniquely formed Soil Conditioner Act (S both) program to assist livestock friendly coun- to serve the needs of cooperative business LBs 92 and 93 were both signed into ties in expanding livestock production. organizations. law on February 27. The bills synchro- Fund uses could include zoning, siting, nize the timeline for submitting ag liming and infrastructure improvements (ie, reports and the fertilizer and soil condi- roads, bridges, sewers, or water systems). tioners report so that effective February 1, The bill creates the Livestock Growth Act (Continued on page 6)

August 31, 2015 2014/15 Annual Report - Nebraska Cooperative Council Pg 5 State Legislation with the dealer, or notify the Public Service tions bill), senators successfully overrode (continued from page 5) Commission (PSC) of an apparent loss. the vetos on both bills on May 14. • Removes a requirement that all The bills provide funding to address Cash Fund, and grants of up to $15,000 grain transportation vehicles be registered budget shortfalls for maintaining roads would be available for the aforementioned and issued grain dealer plates. and bridges by raising the excise tax on purposes. • Clarifies that accountants or ac- motor fuels by 1.5¢/gallon each year for counting firms preparing statements for four years beginning January 1, 2016. The LB 177 - Public Power Districts / grain dealership license applicants may be 1.5¢ increase each year would be allocated Membership (O) located in any state. to the Highway Trust Fund (.5¢), cities Provisions of LB 177 become effective (.5¢), and counties (.5¢). September 6, 2015. As passed, no full- or LB 242 - Dry Bean Resources Act (M) According to the Fiscal Note attached to part-time employee could serve on the With the incorporation of the emergen- LB 610, the increase to cities and coun- Public Power District (PPD) board that cy clause, LB 242 became law on April 14, ties totals $4.2 million for fiscal year (FY) they are employed by, and no high-level 2015 following the Governor’s signature. 2015-16, $16.9 million for FY2016-17, manager employed by a district may serve As passed, it raises the checkoff fee for dry $29.6 million for FY2017-18 and $42.3 as a member of a PPD board of any dis- beans from 10¢/cwt to 15¢/cwt on August million for FY2018-19. The increase to the trict. High-level manager is defined in the 1, 2015, and then in 2017, the maximum Department of Roads totals $2.1 million bill as “chief executive officer, president, checkoff fee is increased to 24¢/cwt. for FY2015-16, $8.5 million for FY2016- vice president, chief financial officer, chief Under both current law and LB 242, the 17, $14.8 million for FY2017-18 and $21.2 operations officer, general manager, or Dry Bean Commission has the authority to million for FY2018-19. assistant general manager.” set the checkoff within the specified range each year. LB 480 - Workers’ Compensation LB 181 - Flashing Lights (S) The bill also reduced the amount A number of bills were introduced this Effective September 6, 2015, LB 181 of funds that can be spent to influence session dealing with various changes to allows public utility districts to have blue federal legislation from 25% to 15% of the workers’ compensation (WC). The Council and amber rotating or flashing lights on Dry Bean Commission’s annual budget. worked through the Nebraskans for Work- any public utility vehicle doing construc- In addition, it clarified that “the purpose of ers’ Compensation Equity and Fairness tion, maintenance or repair of utility such expenditures for federal lobbying ac- (NWCEF) coalition of which the Council infrastructure on or near any highway tivity shall be limited to activity supporting is a member. NWCEF is a coalition of similar to what snow removal equipment the underlying objectives of the dry bean Nebraska employers and business leaders is allowed. program relating to market development, who collaborate to promote balance to WC education, and research.” in Nebraska. They analyze WC laws and LB 183 - Grain Dealer Act (S) issues and seek equitable means of provid- LB 183 becomes effective September LB 464 - Effective Financing State- ing WC coverage to Nebraska workers. 5, 2015. The bill amends the Grain Dealer ments (S) Ultimately, LB 480 became the vehicle to Act as follows: LB 464 was signed into law on May 26, address WC changes, and a number of • Decreases grain dealer obligations and provisions become effective Septem- bills were amended into it. Provisions of covered by the dealer’s security, which is ber 5, 2015. It amends statutes regarding LB 480 were passed and become effective money set aside to pay growers who are the filing system for farm product security September 5, 2015. It makes the following not paid immediately upon delivery of interests to eliminate requirements that changes (the original bill number and the their product. social security numbers and IRS taxpayer Council’s position on each is indicated): • Limits the dealer security to cover identification numbers be included on • Denies WC benefits if an employee payment only to growers who sell directly Effective Financing Statements (EFS) and knowingly and willfully made false state- to dealers. The bill would not prevent compiled by the Secretary of State in the ments regarding his/her physical or medi- owners who are not growers from claiming EFS master list. cal condition by acknowledging that he/she past due payments or grain purchased is able to perform the essential functions from filing claims stemming from the LB 610 - Motor Fuel Taxes (S) of the job based on the employer’s job dealer’s failure to deliver. Although the Governor vetoed LB 610 description. (LB 158 - support) • Shortens from 30 to 15 days the and LB 610A (its accompanying appropria- • Clarifies that employees are not re- time a grower may demand payment from sponsible for any finance charges or late the dealer, attempt payment negotiations penalty payments as a result of medical

August 31, 2015 Pg 6 2014/15 Annual Report - Nebraska Cooperative Council services rendered by a provider. (LB 363 - such as natural disasters or terrorist equal to annual increases resulting from oppose) attacks. The bill would be beneficial to the determination of the state’s average • Revises the interest rate applicable to an cooperatives in the event of same. weekly wage. award of WC benefits in which an attor- LB 429 - Utilization and Treatment ney’s fee is permitted. It changes the rate LB 73 - Modern Tax Act (O) Guideline (S)... Would presume any provided in section 45-104.01 (14%) to Held by the Revenue Committee, LB medical, surgical, and hospital services a rate calculation of 6 percentage points 73 would tax interest on eligible loans at a provided on or after January 1, 2016, in above the bond investment yield, as pub- rate of 5.5% of the amount of interest paid accordance with the Official Disability lished by the U.S. Secretary of Treasury. by a qualified debtor annually. The defini- Guidelines (ODG) as published by the Effective April 16, 2015, the judgment tion of a “qualified debtor” and “eligible Work Loss Data Institute, to be reason- interest rate is 2.137%. (LB 133 - support) loan” are very broad. This tax would apply able and necessary. The measure would • Expands the authority to invest trust to all loans, secured or unsecured, made remove responsibility of an insurer, assets held in irrevocable WC trusts to to Nebraska residents or entities. risk-management pool, or self-insured allow for investments in the same man- employer for charges for medical, surgi- ner as corporate trustees holding retire- LB 74 - Sales Tax Fees (S) cal, or hospital services not provided in ment or pension funds for governmental LB 74 is being held by the Revenue accordance with the ODG, unless the employees. It provides that if the assets Committee. It would change sales and use medical, surgical, or hospital services were fall below the acceptable amount required tax collection fees. The bill would allow pre-authorized or resolved pursuant to the by the compensation court, the trustor those that collect the taxes to retain an independent medical examiner process or must deposit additional assets to continue extra half of 1% (0.5%) for amounts ex- by the WC Court. to satisfy the minimum security amounts ceeding $3,000 being remitted to the state. required. It also provides that the trustee This would provide additional revenue for cannot invest assets into stocks, bonds or those collecting and remitting the sales other obligations of the trustor. (LB 600 - and use taxes, including cooperatives. support) Chair & President’s Workers’ Compensation Message CARRIED OVER TO The bills below will be carried over to (continued from page 3) THE 2016 SESSION the 2016 session: is committed to its mission of doing all LB 134 - Confidentiality of First In- things necessary “to defend, protect, and LB 22 - Engineers & Architects Regu- jury Reports (S)... Would make first injury enhance the agricultural cooperative lation Act (S) reports relating to workplace injuries movement through pro-active programs LB 22 is being held by the Judiciary confidential unless the employee waives in education, legislation, and regula- Committee. Its intent is to provide im- confidentiality to allow the report to be tions.” We believe that the Council’s munity for architects and professional made available for public inspection. founding fathers would be pleased that engineers that voluntarily provide services LB 388 - Total Disability Benefits 70 years later, the Council’s mission requested by national, state, or local public (O)... Would provide annual adjustments parallels their original vision. officials in the event of catastrophic events for total disability benefits in a proportion In closing, we want to extend our sincere appreciation for the members’ participation, input, and financial sup- port this past year to position the Council to properly address the challenges before us both now and in the future. “It is difficult to make our material Your continued support is both val- condition better by the best law, but it is ued and appreciated. easy enough to ruin it by bad laws.” In the cooperative spirit, we remain... - Theodore Roosevelt

David Briggs Robert Andersen

August 31, 2015 2014/15 Annual Report - Nebraska Cooperative Council Pg 7 State & Federal Regulations

utilizing the energy consumption Sales Tax Exemption Challenge of and payments from a member NE Department of Revenue cooperative’s grain handling sites in • Interpretation of Sales/Use Tax eastern Nebraska. Legal counsel and an Exemption for Depreciation energy auditor compiled and filed refund • NH3 Trailer/Tanks Classification Energy Source Exemption claims relating to both gas and electricity There has been a significant develop- Update used for drying grain. ment in connection with the concerted As Council members are aware, the The Department quickly determined effort that members have undertaken to interpretation and application of the that there was no legitimate basis to deny challenge the Department of Revenue’s energy use exemption to grain drying has the refund claims relating to natural gas. application and interpretation of the sales been in limbo since 2008. The Council has Each of the gas refund claims arose from and use tax exemption for agricultural collected voluntary contributions from its sites where the gas was used solely in a machinery and equipment. members for the purpose of challenging grain dryer. As such, NCC members who For many years now, the Department the Department of Revenue with respect utilize gas dryers should ensure they are has refused to characterize NH3 trailers/ to application and interpretation of the filing exemption certificates (form 13) tanks as agricultural machinery or equip- energy exemption. The purpose of the joint with their natural gas providers, and those ment for purposes of the sales and use tax funds is to bring cases before the Depart- who have been paying tax on gas utilized exemption for agricultural machinery and ment and challenge its positions on the for drying grain should be able to seek and equipment “because they are licensable energy exemption, through litigation and receive refunds of sales taxes paid without trailers”. Consequently, we recently chal- appeals if necessary. much, if any, resistance from the Depart- lenged this interpretation appeals to the In late fall 2010, numerous sales tax ment. Refund claims can be sought for District Court of Lancaster County. refund claims, or test cases, were filed taxes paid as far back as three years ago. After submitting legal briefs to the The refund claims for taxes paid in Attorney General’s office, the State of connection with electricity are still pending Nebraska has concluded that the Depart- The Council continues to work and being litigated before the Department. ment’s interpretation is not supported by closely with the National Council of Unfortunately, the Department did not set current law. The Department therefore Farmer Cooperatives (NCFC) regard- forth a progression schedule or schedule has communicated to the Court that ing federal legislation and regulations. a hearing, despite repeated requests, until we are correct in that such trailers do NCFC has a continuous presence with earlier this year. qualify for the exemption, and the Attorney federal legislative staffs and policy mak- We are now engaged in the discovery General’s office has notified us that the ers which allows the views of farmer process and are working to respond to Department will no longer be denying owned cooperatives to be held in the numerous requests from the Department refunds on the basis that such equipment forefront of any discussions. regarding the grain drying process. The is not qualified for the exemption because NCFC, along with strong support hearing officer has set October 9, 2015 it is licensable. To be clear, this develop- from state councils such as Nebraska, as the discovery deadline. We also have ment applies only to purchases of trailers monitors any efforts that would threat- a hearing on the merits scheduled for or tanks, as opposed to expenses associ- en the cooperative business model. November 17, 2015, which may very well ated with repairs or parts for such trailers. Issues such as mandatory equity last 2-3 days. Repairs to and parts for such trailers, and redemption, interest on members’ eq- We encourage all our members to con- how they are treated by the Department uity, securities, patronage redemption, tinue to claim the energy use exemption under the exemption, is still at issue in the Capper Volstead repeal, and many more relating to grain drying. ongoing appeals that are described below. are continually monitered to ensure In light of this concession to the Court, that the cooperative business model is all members should review their records not compromised. to determine if they paid any sales or use

August 31, 2015 Pg 8 2014/15 Annual Report - Nebraska Cooperative Council repairs that have recently been denied is ...to the following who provided voluntary contributions quite long, and in most cases there can be to cover expenses related to resolving the energy source no doubt they have a determinable life of and sales tax exemption issues: longer than one year. A hearing is scheduled before the ENERGY SOURCE FUND CONTRIBUTORS Lancaster District Court on September 2, Aurora Co-op Elevator Co Hemingford - Farmers Co-op Elevator Co Battle Ceek - Farmers Pride Holdrege - CHS Agri Service Center 2015. We anticipate the district court will Brainard - Frontier Co-op Co Imperial - Frenchman Valley Farmers Co-op render decisions on the appeals yet this Brule - Farmers Co-op Assn Lindsay - Farmers Co-op Assn year. Once the decisions are issued, we will Cedar Bluffs - Farmers Union Co-op Assn Spalding - Country Partners Co-op then need to determine whether further Dodge - Cooperative Supply Inc York - Central Valley Ag Co-op Dorchester - Farmers Cooperative Holyoke CO - CHS/Grainland Co-op appeals to the Nebraska Court of Appeals Edison - Ag Valley Co-op N/S Ag Processing Inc or Supreme Court will be necessary. Elmwood - Midwest Farmers Co-op CHS Inc Note that the Legislature modified the Friend - Farmers Union Co-op Co Eastern NE Grain Gothenburg - All Points Co-op Land O’Lakes exemption for repair and replacement Hastings - Cooperative Producers Inc parts during the 2014 session. Effective October 1, 2014, taxpayers no longer SALES TAX EXEMPTION FUND CONTRIBUTORS are required to establish that repair and Aurora Co-op Elevator Co Friend - Farmers Union Co-op Co replacement parts are depreciable. Also, Battle Ceek - Farmers Pride Gothenburg - All Points Co-op Brainard - Frontier Co-op Co Hastings - Cooperative Producers Inc from and after this date the exemption no Dodge - Cooperative Supply Inc Hemingford - Faremrs Co-op Elevator Co longer requires that sales tax be paid and Dorchester - Farmers Cooperative Imperial - Frenchman Valley Farmers Co-op then refunded at the taxpayer’s request. Edison - Ag Valley Co-op N/S Lindsay - Farmers Co-op Assn The exemption is a direct exemption, and Elmwood - Midwest Farmers Co-op Spalding - Country Partners Co-op Elsie - Hi-Line Co-op Inc Wausa - CHS Inc for this reason there should not be too Fairfield N/S Co-op Fertilizer many issues with the Department allowing the exemption going forward. tax in connection with purchases of NH3 applies to depreciable repairs and parts. trailers/tanks in the last three years. To Even though the Legislature has statutorily Effective Financing Statement - the extent they have, they should imme- defined the term “depreciable tangible Unique Identifier Number diately file refund claims. We can assist personal property” to mean property In March, the Council held a Credit any member who might have questions which has a determinable life of longer Workshop for the purposes of presenting regarding how to submit refund claims. than one year, the Department refuses to tips for successfully managing credit risks As members will recall, the NH3 trailer apply this definition. and updating the membership regarding issue was only one of the issues we raised The Department is refusing to accept pertinent credit issues. A portion of the in the pending litigation. The Depart- that certain replacement parts purchased workshop also addressed the recent transi- ment of Revenue has been applying a very prior to October 1, 2014, such as alterna- tion by the Nebraska Secretary of State restrictive interpretation of the sales and tors and spray bars, are depreciable tan- (SOS) to the personal Unique Identifier use tax exemption for depreciable repairs gible personal property. The Department Number (UIN) system as it applies to Ef- or parts for agricultural machinery and denied refund claims submitted by several fective Financing Statement (EFS) filings. equipment under Neb. Rev. Stat. §77- cooperatives. The actual list of parts/ (Continued on page 10) 2708.01, including repairs and parts for NH3 trailers. Several members have had refund claims denied on the basis that certain repairs and parts are not depre- ciable. As part of the concerted effort, we have filed appeals to the District Court of Lancaster County to challenge these determinations. By way of background, the exemption for agricultural machinery and equipment Forty-two cooperative representatives attended a Council-hosted workshop in March 2015 repairs and parts, which is applicable to all to learn about credit issues including a recent change by the Secretary of State to use a purchases made prior to October 1, 2014, Unique Identifier Number system with Effective Financing Statement filings.

August 31, 2015 2014/15 Annual Report - Nebraska Cooperative Council Pg 9 State & Federal Regulations (continued from page 9) We learned that the implementation social security numbers. This spreadsheet to cooperatives). We are most hopeful this of the UIN system was creating substantial would be made available on a limited basis will become a reality. issues for cooperatives due to the inabil- (to those entities that are registered quar- ity to cross-reference individuals’ social terly recipients of the master lien lists) PSC Schedule A and E Rates security numbers with their respective in order for cooperatives to update their On June 2, the Nebraska Public Service UINs in a prompt and efficient manner. systems so that new UINs can be matched Commission (PSC) voted to raise the Thus, the new system creates a strain on to the existing information (i.e., name, current Schedule A and E rates. These cooperative personnel. To clearly define address, social security number) that is rate schedules govern the maximum rates the problems that cooperatives face and contained within such systems. for state-licensed grain warehouses for to create a transitional phase to ease into In addition, we requested that the SOS Receiving and Handling (R&H) grain as the new system, an ad-hoc committee was modify their current practice concerning well as Storage and Insuring (S&I). Prior established by the Council and included the distribution of periodic updates to the to the May 19 PSC hearing on the rates, assistance from Attorney Bill Kutilek. master lien lists. Presently, the SOS issues the Council’s Grain Ad-Hoc Committee Throughout this process, the SOS office a list of filing changes to that master lien recommended increasing the maximum maintained a willingness to work with us list that were made since the last quarterly charges due to the increases over the in terms of making the UIN system a more distribution. However, these updates years to building and personnel costs. The user-friendly system. are only available on microfiche. Due to Council’s Board of Directors agreed with Accordingly, the SOS Business Services the declining use of microfiche systems, that recommendation, and Council Presi- Division has agreed to produce a spread- we have been engaged in a continuing dent Bob Andersen testified at the hearing sheet (in Excel format on encrypted discs) dialogue to encourage the SOS to provide in favor of increasing the rates. Informa- of active debtors along with their cor- the updates in other forms of media tion regarding the new rules was sent to responding UINs and last 4 digits of their (including electronic transmission directly members on June 2.

NCC Political Action Committee The NCC Political Action Committee continues to be a significant part of the Council’s overall legislative program. The ...to the following members who provided voluntary contri- NCC-PAC was established in 1999 to help butions to the NCC-PAC for the 2014-15 fiscal year: gain access to legislators from urban and rural areas of the state through voluntary Ainsworth - Farmers/Ranchers Co-op Assn Hastings - Cooperative Producers Inc contributions from members. Alliance - Panhandle Rural Electric Member- Hemingford - Farmers Co-op Elevator Co As the urban areas of the state con- ship Holdrege - CHS Agri Service Center Alliance - WESTCO Imperial - Frenchman Valley Farmers Co-op tinue to grow in population, it is important Aurora Co-op Elevator Co Lindsay - Farmers Co-op Assn that the Council has access to the state Battle Ceek - Farmers Pride Scottsbluff - Panhandle Co-op Assn senators serving those areas. Through the Blue Hill - Glenwood Telephone Membership Sidney - Crossroads Co-op Assn PAC, the Council has the opportunity to Corp Spalding - Country Partners Co-op Brainard - Frontier Co-op Co Wausa - CHS Inc communicate with and educate state sena- Cedar Bluffs - Farmers Union Co-op Assn York - Central Valley Ag Co-op tors regarding issues that are important to Clarkson - Farmers Union Co-op Supply Co Ag Processing Inc cooperatives and rural Nebraska. Dodge - Cooperative Supply Inc N/S Austin Mutual Insurance Co As we have transitioned into the era Dorchester - Farmers Cooperative Capital Recovery, Inc Edison - Ag Valley Co-op N/S CHS Inc of term limits, the ability to update and Elmwood - Midwest Farmers Co-op CHS Insurance educate senators has become even more Elsie - Hi-Line Co-op Inc Gardiner Thomsen crucial. As senators move in and out of Fairfield N/S Co-op Fertilizer Land O’Lakes Inc Friend - Farmers Union Co-op Co Milliman, Inc. leadership positions much more rapidly, Gothenburg - All Points Co-op Nebraska Rural Radio Assn maintaining open communication has Grant - Midwest Electric Co-op Corp become much more critical.

August 31, 2015 Pg 10 2014/15 Annual Report - Nebraska Cooperative Council Director Education

The Council concluded its 2014/15 retired cooperative man- education programs with a full compli- ager, and Ed Woeppel, ment of programs designed to meet the NCC Education & Program needs of cooperative directors. Once Director. A total of 69 again, attendance was strong with 398 phases were completed directors, managers, and staff or 74% of by directors from 18 the Council’s member supply/marketing cooperatives. cooperatives attending at least one of the programs. Cooperatives For Participants from the Director/Manager Workshop, along with facilitator Dr. Mike This attendance level is remarkable Tomorrow Seminar Boehlje from Purdue University, explored what considering the merger activity that has The CFT seminar was held on February farmers might expect from agribusiness in 2020. taken place in the past few years. In fact, 4 in Lincoln with 74 individuals attending. we would have to go back to the early CFT continued with its “big picture” theme Board Officer Seminar 2000s to see this level of attendance. by featuring a variety of speakers that BOS was held on February 26 in LaVis- Programs offered this year were the Nebraska directors may not normally have ta prior to the start of CoBank’s Customer Director/Manager Workshop, Director a chance to hear from. Meeting. The program was once again an Certification Program, Cooperative Issues Dr. David Kohl, retired professor from open-ended discussion that hit on a variety Symposium, Cooperatives For Tomorrow Virginia Tech, began the day by addressing of cooperatvie topics. It was once again Seminar, Board Officers Seminar, Credit the “end of the commodity super cycle.” highly rated by the 32 participants. Workshop, and StrengthsFinder. A sum- Ray Wyse, founder of SWAT, LLC, then mary of each program follows: talked about long-term trends in food and Credit Workshop fuel consumption. On March 5, the Council hosted a Director/Manager Workshop After lunch, Joe Hudson, founder of Credit Workshop in Kearney with 42 The Council’s Director/Manager Work- One Earth Capital, addressed sustainable individuals representing 19 co-ops and 2 shop was held in Kearney on November agriculture and the changing consumption Supporting Members attending . 20, 2014. Eighty-seven (87) members habits of consumers. Dr. Eric Thompson Bill Kutilek and Andrew Pease, at- heard from Dr. Mike Boehlje of Purdue from the University of Nebraska finished torneys with the Crosby Guenzel LLP law University and Steve Dawson, founder of the day by addressing how Nebraska’s firm, and Ann Hinkle, Deputy Secretary of Dawson Forensic Group. This was the first economy is being impacted by the shift in State, were facilitators for the program. time the Council held its Annual Meet- the ag economy. Because of the importance of credit ing and Director/Manager Workshop on issues, particularly in this changing consecutive days. After review of the evalu- Cooperative Issues Symposium economic environment, the program was ations, it appears like the membership The CIS was held in Lincoln on Febru- highly rated. The evaluations show that approved of this change. ary 5 with 76 participants. participants found value in the workshop Dr. Mike Boland from the University and would be able to utilize the materials Director Certification Program of Minnesota addressed a number of and discussion to improve their practices All four phases of DCP were conducted cooperative topics including qualified vs. regarding credit. on January 6 and 7, 2015 in Kearney. DCP non-qualified allocations, equity revolve- is designed to accelerate the process by ment, and how contemporary mergers are StrengthsFinder which directors become active, effective impacting cooperatives. Council staff provided StrengthsFinder board members. Jim Magnuson, CEO, and Bob Finch, training for 18 management level employ- Conducting the four phases were Dr. Board President of Key Cooperative in Ro- ees of Frenchman Valley Farmers Co-op in Roger Ginder, Professor-Emeritus, Iowa land, IA, discussed their strategy for equity Imperial. The program provided partici- State University; Tom Houser, Vice Presi- retention and revolvement. pants with a better understanding of how dent of the Regional Agribusiness Banking Bob Bell from Lancaster, WI, finished individuals process things differently and Group of CoBank; Rocky Weber, Attorney the program with a presentation on driving how teams can become more effective by with Crosby Guenzel LLP; Don Wiseman, culture through an organization. understanding different processing styles.

August 31, 2015 2014/15 Annual Report - Nebraska Cooperative Council Pg 11 Youth Education

College Offerings cooperative internships and participate in Cooperative Speaking Contest This year has been an historic time for a cooperative study/tour. The Council, along with the CHS Foun- a “cooperative presence” with college ag Ag Career Fair at Northeast Com- dation, sponsored the State FFA Coopera- students in Nebraska. In total, we have munity College (NCC)... The Council tive Speaking Contest on April 9-10 in Lin- reached over 250 college ag students and many local cooperatives partnered coln. Fifty-seven (57) through three different offerings. with NCC-Norfolk which hosted their first students participated at New Cooperatives Class at UNL... Ag Career Fair. Over 70 students had the district contests with On August 26, 2014, the University of the opportunity to learn about Nebraska 23 qualifying for state. Nebraska-Lincoln held the first session of cooperatives and the career opportunities This year’s winner the “Role of Cooperatives in Agriculture” in cooperatives. was Jessie Rudolph (at class. This one-credit-hour class, taught Co-ops 101 at Community Colleg- right) of the Gothenburg by Attorney Rocky Weber, has proven to es... In addition to the above “first time” FFA Chapter. Second be very successful and will become an events, the Council is in its third year of place was awarded to ongoing offering within the Ag Economics our Co-ops 101 program with community Karissa Dicke of the Elgin FFA Chapter, Department. A total of 13 students were colleges. This continues to be a successful and third place went to Emma Good of the enrolled in the initial class that allowed way to reach two-year ag students in every Ainsworth FFA Chapter. Other results (in students to gain an in-depth understand- area of the state. This academic year we alphabetical order) and the FFA chapters ing of the cooperative business model. provided 17 presentations to 289 stu- they represented were: The Council was pleased to work with dents and instructors at the two-year post Gold - Tiandrah Barnes, Cody-Kilgore; Heidi UNL in the development of this class. In secondary schools. Since the inception of Borg, Allen; Jada Jensen, Hyannis; Emily Ludwig, addition to the class, students will have the Co-ops 101 program, we have reached Wisner-Pilger; and Kaitlyn Taylor, Holdrege the opportunity to earn credit through over 1,025 students. Silver - Dalton Anderson, Lewiston; Spencer Bierfreund, Medicine Valley; Megan Coan, Lakeview; Brody Davis, Cody-Kilgore; Brody Gamer, York; Mon- tana Hill, Seward; Lauren Jacobsen, Wisner-Pilger; and Kaitlyn Lennemann, Southern Valley At left: On Sept 2, Bronze - Erika Eckhardt, Sterling; Cody 2014, NCC Education Hambleton, Fullerton; Mercedes Hemmingsen, & Program Director Ed Woeppel presented Riverside; Hanna Hulse, Leigh-Clarkson; Jackie a Co-ops 101 at Lewis, Loup County; Devyn Rother, St. Paul; and Kali Southeast Community College-Beatrice to Uhrich, Red Cloud inform students about co-ops and the many job opportunities Summer Ag Teachers Conference available at them. The Council and the CHS Foundation joined together to sponsor a break during the Nebraska Ag Teachers Summer Con- vention held June 1-4 in Kearney. During the break, Ed Woeppel provided remarks on behalf of the Council. He thanked teachers for their role in preparing the next generation of agricultural leaders and discussed the value that Nebraska coopera- tives provide. At the meeting, Woeppel also provided copies of cooperative videos and curriculum to new teachers and programs

Above: Attorney Rocky Weber holds a panel discussion with two cooperative managers during the that had joined the ranks in the past year. Cooperatives Class at UNL in the fall of 2014.

August 31, 2015 Pg 12 2014/15 Annual Report - Nebraska Cooperative Council New Cooperatives Faculty Position at the University of Nebraska On July 1, 2015, the Council’s Board of Directors approved entering into an agree- ment with the University of Nebraska to establish a faculty position in agricultural and rural cooperatives. On July 20, Coun- cil President Bob Andersen, Ag Economics Department Head Dr. Larry Van Tassell, and UNL Extension Dean Chuck Hibberd Signing the agreement to create a UNL faculty position in signed the documents for this position. agricultural and rural cooperatives are (L-R) UNL Ag Economics This tenure-track position will be Department Head Dr. Larry Van Tassell, NCC President Robert Andersen, and UNL Extension Dean and Director Chuck Hibberd. jointly funded by the Council and the Insti- tute of Agriculture and Natural Resources in order for our educational programs braska. We will still seek out the best pos- for the first six years of the position. to meet the needs of our members, we sible presenter for each topic that is identi- This agreement between the Council need to seek out the most highly qualified fied. Once the new UNL faculty member and the University of Nebraska is a result facilitators to address issues in their area establishes areas of research expertise, we of a significant amount of research, of expertise. will utilize them within programs focusing discussion, and negotiation between both This model will not change due to the on those area of expertises. groups. For a number of years the Council new agreement with the University of Ne- led efforts to establish a stronger “coop- erative” presence in the Ag Economics Department. Last year, we were able to Cooperative Economic establish a one-credit hour cooperatives class for undergraduate students; however, Impact Study neither research or extension was ad- Since the 2006/07 FY, the Council has ible report of the economic impact that dressed by this addition. been collecting data from local coopera- cooperatives have on Nebraska’s econo- In the fall of 2014, Dr. Van Tassell tives via the membership application. This my, the Council has contracted with the submitted a proposal to the Council that data has been used in a cumulative form University of Nebraska-Lincoln Bureau would create a cooperatives staff position. to develop items such as the Fact Sheet of Business Research (BBR) to conduct After much study/discussion, the Council’s about cooperatives that we utilize in the an economic impact study of Nebraska’s Board determined this partnership would Co-ops 101 presentations for college supply/marketing cooperatives. provide value to Nebraska cooperatives. students and provide to state senator The principal investigator on the The search for a qualified individual candidates during the PAC interviews. The study will be Dr. Eric Thompson, Direc- began immediately with plans of conduct- NCC Fact Sheet provides cumulative totals tor of the BBR at UNL. Dr. Thompson ing interviews this fall. As part of the of locations, members, employees, and will be assisted by Dr. David Rosen- agreement, the Council will have three investments made by supply/marketing baum, also with the BBR. members on the search committee provid- cooperatives. As mentioned previously, the infor- ing adequate industry input. Our internal data doesn’t take into mation derived from this study will be Through this agreement we envision account “multiplier” effects and other valuable for our contacts with students this person will enhance the undergradu- economically important analysis of a true and legislative candidates; however, it ate offering for the cooperatives class, impact study. So while our collection has will also be beneficial for our general internship, and study/tour programs; been very cost effective and constitutes membership, farm organizations, com- conduct applied cooperative research; and an informative and positive first step, it is modity groups, the general public, and be involved in outreach programming. safe to say that the numbers we report are current state senators. In 2011 the Council adopted a different understated by a substantial amount. The study is slated to be completed this approach to director education program- To provide a more accurate and cred- winter. ming. At that time we determined that

August 31, 2015 2014/15 Annual Report - Nebraska Cooperative Council Pg 13 Annual Meeting

The Council’s 69th Annual Meeting featured a significantly Following the business session, the group heard from Sergeant revised format that resulted in a shortened meeting and an op- Keni Thomas. Sgt. Thomas provided an inspiring presentation portunity for attendees to participate in two Council activities in based on his service as an Army Ranger in Somolia, which inspired one trip away from home. The Annual Meeting was held at the the book and movie “Blackhawk Down.” Kearney Holiday Inn on the afternoon of November 19, 2014 with The Hall of Fame induction ceremonies provided the capstone 184 members and guests in attendance. for the 2014 Annual Meeting. Virgil Harms of Blue Springs and During the business session, the financial report, President’s Roland From of Lincoln were the 2014 inductees into the Hall of report, Chairman’s report, PAC report, and Excellence in Coopera- Fame. tive Education Committee report as well as an update on the UNL On the following day (Nov. 20th) the Council hosted its Direc- Cooperatives Class, Internship and Study/Tour, and the Nebraska tor/Manager Workshop in Kearney. Model Business Act were provided.

Keynote speaker and entertainer Sergeant Keni Thomas

Prior to presenting the President’s Report, President Bob Andersen (at podium) shares a joke with the membership. Also pictured (L-R): NCC Board Vice Chair Randy Robeson, Board Secretary Bruce Favinger, and Board Chair David Briggs.

Neil Stedman (left) from Midwest Farmers NCC Board Chair David Briggs (left) Co-op in Elmwood was one of the prize thanks outgoing NCC board members winners during the day’s drawings. Ron Heerten (center) and Carl Dickinson (right) for their service.

Following the Annual Meeting, the membership enjoyed time for fellowship over hors d’oeuvres and beverages.

August 31, 2015 Pg 14 2014/15 Annual Report - Nebraska Cooperative Council Cooperative Hall of Fame Upcoming Roland From of Lincoln and Virgil the NCC board from 1999-2002. While on Harms of Blue Springs became the 60th the board, he served on its Educational Change in and 61st members to be inducted into the Advisory Committee for three years with Nebraska Cooperative Council Hall of Fame two years as chair and on the Fund for Council on November 19, 2014. The induction Excellence Committee for three years with ceremony was held in conjunction with two years as chair. Leadership the Council’s Annual Meeting in Kearney. As part of a distinguished group of Virgil Harms cooperative leaders, Roland and Virgil each After graduating received a framed certificate commemo- college, Virgil taught rating their induction into the Hall of business at Deshler Fame. In addition, they will be recognized High School. In with a plaque detailing their contributions 1971 he began a to cooperatives which will be permanently 35-year career with the Omaha Bank for Long-time Council President Bob displayed at the Council office. Cooperatives and its successor CoBank. Andersen (top left) announced his He began as a business analyst, and impending retirement this spring. Roland From at retirement he was responsible for After 42 years of dedicated service to Roland became a CoBank’s largest regional office in Omaha. Nebraska cooperatives, Andersen will cooperative member At various points in his career, Virgil also be retiring on February 29, 2016. in 1973. In 1988, had responsibility for CoBank’s Wichita KS, Through his four decades of leader- he was elected to the Sacramento CA, Spokane WA, and Austin ship, the Council has grown to become Farmers Cooperative TX offices. the reliable voice for cooperatives while Business Association board and served on Virgil served on the board of the Ne- being viewed as one of the premier it for 13 years through 2001. The last nine braska Cooperative Council for two 2-year trade associations in the state. David of those years, he served as board chair. terms. He also served on its Legislative Briggs, NCC Board Chair and President Roland served as a members repre- Advisory Committee for two 2-year terms of Westco in Alliance, indicated that sentative for the Nebraska Cooperative and on the Hall of Fame Committee for six “The leadership Bob has provided the Council for two years and then served on years. cooperatives in Nebraska during his career is outstanding. Over his four decades of service, Bob has worked hard to bring a unified voice regarding cooperative issues to the Legislature. In addition Bob has built strong rela- tionships with institutions and agencies all across the nation.” On May 1, the Council’s Board of Directors announced the selection of Rocky Weber (top right) to serve as President and General Counsel of the Nebraska Cooperative Council . Weber

Above (L-R) Hall of Fame Inductee will join the Council on January 4, Roland From, his wife Bev From, 2016. Most recently, Weber has served and Nominator Jerry Johnson. as managing partner of the Crosby Guenzel law firm.

Hall of Fame Inductee Virgil Harms (center) thanks the membership. Also pictured are NCC President Bob Andersen (left) and Virgil’s wife Pat Harms (right). August 31, 2015 2014/15 Annual Report - Nebraska Cooperative Council Pg 15 2014/15 Financial Statements

STATEMENTS OF STATEMENTS OF FINANCIAL POSITION ACTIVITIES August 31, 2015 and 2014 August 31, 2015 and 2014

ASSETS GENERAL FUND 2015 2014 2015 2014 Current Assets: Revenue and Support: Cash and Cash Equivalents: Members’ Dues $594,489 $576,130 Cash - Unrestricted $978,929 $882,906 Participating Members’ Dues 95,264 109,334 Cash - Restricted - FFE 69,169 131,636 Meetings 36,004 32,603 Cash - Restricted - NCC-PAC 112,049 76,531 Workshops 125,913 126,075 Cash - Restricted - NACA 60,034 59,914 Interest Income 3,738 3,890 Cash - Restricted - UNL Tickets 1,464 1,528 Total Revenue and Support 855,408 848,032 Cash - Restricted - Energy Source 26,032 12,402 Cash - Restricted - Anhydrous Sales & Use Tax 18,009 - Expenses: Total Cash and Cash Equivalents 1,265,686 1,164,917 Salaries 369,588 356,202 Social Security Tax 24,287 23,606 Mutual Fund Investments - Restricted - FFE 609,597 436,011 Unemployment Tax 351 406 KRVN Golden Notes - Unrestricted 5,000 2,500 Employee Insurance 3,431 3,400 KRVN Golden Notes - Restricted - FFE 5,000 - Retirement 40,763 38,846 Certif of Dep - Unrestricted 93,589 148,606 Total Personnel Expenses 438,420 422,460 Certif of Dep - Restricted - FFE 19,636 133,373 Certif of Dep - Restricted - NACA 13,050 12,978 Accounting Fees 6,750 6,750 Interest Receivable - Unrestricted 1,038 1,032 Auto 12,702 13,717 Interest Receivable - Restricted - FFE 291 496 Books and Magazines 3,485 4,674 Interest Receivable - Restricted - NACA 6 6 Consulting Services/Contract Labor 27,087 21,699 Prepaid Expenses 14,303 8,852 Depreciation 18,126 19,148 Total Current Assets 2,027,196 1,908,771 Directors’ Fees 12,797 8,018 Investments: Dues/Contributions 6,470 24,824 KRVN Golden Notes - Unrestricted 15,750 19,500 Impact Study 12,320 - KRVN Golden Notes - Restricted - FFE 4,000 9,000 Insurance 4,857 4,824 Certif of Dep - Unrestricted 98,090 41,242 Legal Fees 37,563 37,474 Certif of Dep - Restricted - FFE - 19,529 Loss on Disposal of Fixed Assets 309 - Deferred Annuity - Restricted - FFE 36,615 35,463 Meetings 45,547 62,898 Cash Value of Deferred Comp. Assets 39,721 40,077 Total Investments 194,176 164,811 Office Supplies 13,251 9,874 Postage 1,922 1,853 Property & Equipment: Property Taxes 1,570 1,241 Furniture & Office Equipment 125,409 123,388 Rent 32,322 32,311 Accumulated Depreciation (89,302) (73,101) Repairs and Maintenance 8,089 9,118 Net Property & Equipment 36,107 50,287 Telephone 7,666 8,627 TOTAL ASSETS $2,257,479 $2,123,869 Travel 6,715 7,769 Workshops 69,388 57,136 LIABILITIES & NET ASSETS Youth Education 3,550 760 Current Liabilities: Miscellaneous 72 100 Prepaid Dues $536,512 $540,888 Total Expenses 770,978 755,275 Prepaid Deposits 4,050 1,000 Prepaid NCC-PAC Contributions 26,719 22,669 Increase in Net Assets 84,430 92,757 Accrued Expenses 36,376 32,288 Net Assets - Beginning of Year 572,267 479,510 Total Current Liabilities 603,657 596,845 Net Assets - End of Year $656,697 $572,267

Long-Term Liabilities: Deferred Rent 9,170 8,482 ENERGY SOURCE FUND Deferred Compensation Payable 39,721 40,077 2015 2014 Total Long-Term Liabilities 48,891 48,559 Revenue and Support: Contributions Received $41,402 $ - Net Assets: Interest Income 11 8 Unrestricted 656,697 572,267 Total Revenue and Support 41,413 8 FFE - Restricted 744,309 765,507 NCC-PAC - Restricted 85,330 53,862 Expenses: NACA - Restricted 73,090 72,899 Legal Fees 27,783 5,473 NCC-UNL Tickets - Restricted 1,464 1,528 Total Expenses 27,783 5,473 Energy Source - Restricted 26,032 12,402 Anhydrous Sales & Use Tax - Restricted 18,009 - Increase (Decrease) in Net Assets 13,630 (5,465) Total Net Assets 1,604,931 1,478465 Net Assets - Beginning of Year 12,402 17,867 Net Assets - End of Year $26,032 $12,402 TOTAL LIABILITIES & NET ASSETS $2,257,479 $2,123,869

August 31, 2015 Pg 16 2014/15 Annual Report - Nebraska Cooperative Council *ANHYDROUS SALES & USE TAX FUND 2015 Revenue and Support: 2014/15 Contributions Received $27,850 Interest Income 3 Total Revenue and Support 27,853 Expenses: Membership Legal Fees 9,844 SUPPLY/MARKETING OUT-OF-STATE RURAL Total Expenses 9,844 COOPERATIVES ELECTRIC COOPERATIVE Increase in Net Assets 18,009 Ainsworth - Farmers/Ranchers Co-op Assn Torrington WY - Wyrulec Company Net Assets - Beginning of Year - Alliance - WESTCO Net Assets - End of Year $18,009 Aurora Co-op Elevator Co LIVESTOCK MARKETING AGENCY *This fund was established in 2015. Battle Creek - Farmers Pride Producers Livestock Marketing Brainard - Frontier Co-op Co FUND FOR EXCELLENCE (FFE) FUND Brule - Farmers Co-op Assn PARTICIPATING MEMBERS 2015 2014 Revenue and Support: Cedar Bluffs - Farmers Union Co-op Assn Ag Processing Inc Interest Income $931 $5,930 Clarkson - Farmers Union Co-op Supply Co CHS Inc Investment Income (Loss) from Marketable Securities 11,152 (5) Dodge - Cooperative Supply Inc N/S CoBank Unrealized Gain (Loss) on Marketable Dorchester - Farmers Co-op Dairy Farmers of America, Inc Securities (34,433) 12,246 Edison - Ag Valley Co-op, N/S Farm Credit Services of America Increase in Annuity Cash Surrender Value 1,152 1,120 Total Revenue and Support (21,198) 19,291 Elmwood - Midwest Farmers Co-op Growmark, Inc Elsie - Hi-Line Co-op Inc Land O’Lakes Inc Expenses: Fairfield N/S Co-op Fertilizer Assn Total Expenses 0 0 Fordyce Farmers N/S Co-op SUPPORTING MEMBERS Increase (Decrease) in Net Assets (21,198) 19,291 Friend - Farmers Union Co-op Co ACE Agribusiness/Pennmillers Net Assets - Beginning of Year 765,507 746,216 Gering - Stateline Producers Co-op ADM (Archer-Daniels-Midland) Net Assets - End of Year $744,309 $765,507 Gothenburg - All Points Co-op Aon Risk Solutions NATIONAL AFFAIRS COOPERATIVE Hastings - Cooperative Producers Inc Arthur J. Gallagher Risk Management ACTION (NACA) FUND Hayes Center - Hayes County Farmers Services, Inc 2015 2014 N/S Co-op Associated Benefits Corp Revenue and Support: Hemingford - Farmers Co-op Elevator Co Associated Milk Producers, Inc Contributions Received $ - $15,000 Henderson Community Co-op Assn Austin Mutual Insurance Co Interest Income 191 191 Total Revenue and Support 191 15,191 Holdrege - CHS Agri Service Center Berkley Agribusiness Risk Specialists Imperial - Frenchman Valley Farmers Co-op BNSF Railway Expenses: Lindsay - Farmers Co-op Assn Capital Recovery, Inc Total Expenses 0 0 Pilger - Farmers Co-op CHS Insurance Services, LLC Increase in Net Assets 191 15,191 Ravenna - Farmers Co-op Assn CliftonLarsonAllen CPAs Net Assets - Beginning of Year 72,899 57,708 Scottsbluff - Panhandle Co-op Assn EBM Construction, Inc Net Assets - End of Year $73,090 $72,899 Sidney - Crossroads Co-op Assn Farm Credit Council Services NCC-PAC FUND Spalding - Country Partners Co-op FarmLink 2015 2014 Talmage - Farmers Co-op Co Four Points Federal Credit Union Revenue and Support: Wauneta Co-op Oil Co Frisbie Construction Co, Inc Contributions Received $35,052 $35,841 Interest Income 171 206 Wausa - CHS Inc. Gardiner Thomsen CPAs Total Revenue and Support 35,223 36,047 York - Central Valley Ag Co-op Howalt+McDowell Insurance Inspro Inc Expenses: Donations 3,750 45,450 RURAL ELECTRIC COOPERATIVES INTLFCStone, LLC Miscellaneous 5 - Alliance - Panhandle Rural Electric KFSA Total Expenses 3,755 45,450 Membership Assn Lincoln Inspection Service

Increase (Decrease) in Net Assets 31,468 (9,403) Grant - Midwest Electric Co-op Corp McPherson Concrete Storage Systems, Inc Net Assets - Beginning of Year 53,862 63,265 O’Neill - Niobrara Valley Electric Membership Milliman, Inc Net Assets - End of Year $85,330 $53,862 Corp Monsanto UNL TICKETS FUND Nationwide Agribusiness Insurance Co 2015 2014 TRANSPORT COOPERATIVE Nebraska Corn Board Revenue and Support: Grand Island - Central Co-op N/S Nebraska Ethanol Board Contributions Received $46,204 $46,847 Transport Co Nebraska Rural Radio Assn Interest Income 2 1 Total Revenue and Support 46,206 46,848 Olsson Associates TELEPHONE COOPERATIVE Pawling, Finn & Torell, CPAs LLC Expenses: Blue Hill - Glenwood Telephone The Cooperative Finance Assn UNL Tickets 21,555 22,323 UNL Contribution 24,300 24,000 Membership Corp Triangle Insurance Postage 415 492 Union Pacific Railroad Total Expenses 46,270 46,815 United Suppliers, Inc OUT-OF-STATE SUPPLY/ Increase (Decrease) in Net Assets (64) 33 MARKETING COOPERATIVE VistaComm Net Assets - Beginning of Year 1,528 1,495 Hiawatha KS - Ag Partners Co-op, Inc Net Assets - End of Year $1,464 $1,528

August 31, 2015 2014/15 Annual Report - Nebraska Cooperative Council Pg 17