This month we spotlight Mankato-based AgStar Financial Services, which has provided financial services to the agriculture sector for over 90 years. Read our interview with Mark Schmidt, vice president of industry specialties at AgStar, below.
Q. Please tell us a little bit about AgStar?
A. AgStar Financial Services, ACA, headquartered in Mankato, Minn., employs more than 600 full-time team members. As part of the national Farm Credit System, AgStar has a public mission to serve 69 counties in Minnesota and northwest Wisconsin. AgStar’s industry specialization, client segments and market delivery systems result in diversification nationwide. With expertise in the corn, soybean, swine, dairy and bio-energy industries, AgStar has developed successful programs in loans, leases, crop insurance, tax services, accounting, consulting and rural home mortgages. As a value-added financial services cooperative, AgStar allocates patronage dividends to its 14,000 stockholders. AgStar is also committed to giving back to rural residents, organizations and communities through AgStar’s Fund for Rural America. Visit www.AgStar.com for more information.
Q. Please tell us about your company’s role within the ethanol industry and why the company is committed to supporting the ethanol industry now and into the future.
A. AgStar became involved in the ethanol industry by providing finance to its existing producer clients who were looking for opportunities to invest in ethanol as a means to increase their returns, per acre of corn. Our future commitment to ethanol is aligned with this same strategy; our goal is to offer financing opportunities that keep our clients and rural America vital and healthy.AgStar’s diverse portfolio includes renewable fuels, grain, swine, dairy and cattle industries and we remain committed to each of these industries.
Q. From your perspective, what would you like fuel consumers to know about the ethanol industry and the fuel it produces?
A. The ethanol industry was created for multiple reasons including:
- clean the air
- reduce the U.S. demand on foreign oil imports and the need for the U.S. military to protect those interests as part of our national defense
- add value to America’s agriculture output, which will restore economic vitality to rural areas.
Moreover, locally, ethanol production does help consumers save money. Ethanol is the cheapest domestic and global source of octane for finished gasoline, cheap octane lowers the price of gas plus it adds volume to our gasoline supply. By adding volume to our nation’s transportation fuel supply; again, ethanol is helping put downward pressure on gas prices. The average American household is saving approximately $200-400 per year on gasoline because of ethanol's inclusion in the U.S. fuel supply.
Q. What do you see as the ethanol industry’s biggest challenge?
A. AgStar recognizes that agriculture is cyclical and global in nature. Each commodity sector encounters ups and downs as global economics change; ethanol economics are no different. It does not appear that ethanol producers in the U.S. will have a problem supplying the domestic needs of ethanol and octane. Rather it will be the economics of providing the supply that harbor the risk. Being able to survive economic downturns is the risk of all commodity production and building a strong balance sheet through effective cost management and profitability are the keys to surviving volatility in all commodities, including ethanol.
Q. What does your company see for the future of ethanol and advanced biofuels?
A. AgStar believes in the future of ethanol as a valuable source of octane (biofuel) and feed stuffs. In addition, AgStar believes in the ability of the ethanol business to bring economic value to all producers and rural communities. Globally, ethanol has a bright future in regards to demand for ethanol and ethanol-related products as it’s a very productive and competitive source of supply.