It's become a standing joke in agriculture. 2000 is the wettest drought on record. To be fair, I know that not everyone in MFA's trade territory has had adequate amounts of moisture. It's one of the mysteries and frustrations of weather. Areas suffering from dry conditions are right beside areas with too much rain. But on average, the summer of 2000 (which followed an awfully dry spring) dumped large amounts of rainfall all across Midwest and Midsouth cropland. We have an excellent crop out there. It will cause storage problems. But in the grand scheme of things, it's far better to have too much grain than not enough.

Farmers should know. Just last year, dry weather resulted in lower yields. On top of that, crop prices fell precipitously. Farmers were stuck with substandard yields and low prices. At least this year, loan deficiency payments will give farmers some form of a safety net. And high yields will partially make up for dismal grain prices.

Despite those grain prices, this past fiscal year has been MFA's best year ever in terms of results on our own operations. Better still, this year has further strengthened our balance sheet and underscored the financial health of your cooperative. In reference to our own operations, I mean our profitability does not stem from large patronage checks resulting from our supply purchases from interregional cooperatives. Our profitability was earned by our own activities. I expect us to end the fiscal year with a profit in the neighborhood of $9 million.

That stands in stark contrast to our loss of nearly $2 million last year. Last year's loss (the first in 14 years for MFA) came about largely because of factors beyond our control, as most of you well know. Look no further for an explanation than $8 hogs, $1.80 corn, $4 beans and a $6.5 million drop in our interregional patronage resulting from last year's declining nitrogen prices.

To break out of that pattern, we had to take aggressive steps. We placed a lot of emphasis on cutting overhead. We made the decision early on to expand our market via joint ventures and limited liability companies. Each and every one of those entities performed at or above our expectations. In terms of these ventures, we were able to expand and grow our market without having to expend enormous sums of capital. Access to capital, as you know, is a weak point in the financial structure of cooperatives. Investor-owned businesses have access to capital through the stock market in ways unavailable to cooperatives. Cooperatives have only two ways of raising capital--through earnings or through taking on additional debt.

But I do not want to overlook an even more important reason underlying MFA's successful efforts to put your cooperative back on its path of strong balance sheets. Our employees deserve the credit. We are fortunate, as you member/owners well know, to have an incredibly talented pool of employees. MFA's people take pride in who we are and in what we stand for. We are a cooperative formed to benefit you, our member/owner. Our job is to help our customers who are our owners. And our employees understand that and go above and beyond to that end. You can track our success in the programs we've implemented, in the products we've developed and in the services we've provided.

The theme of our upcoming annual meeting explains it all: "Building on MFA Tradition: Experience, Knowledge, Solutions." We at MFA have a long, proud tradition of using our experience and knowledge to provide solutions. We've placed a lot of emphasis on service, and our employees follow through on that service. Customers choose us because of our reputation, because of our service, because of our history of providing solutions. Innovation sets MFA apart from the competition. We're in business to help our customers enhance their production.

That uniqueness is reflected in our balance sheet, which is the strongest in memory. For proof of that, you need look no further than our member ownership, which is also referred to as debt-to-equity or solvency ratio. Member ownership percentage was close to 40 percent by the end of August. Member ownership percentage is the product of net worth divided by assets. It's the piece of the assets that MFA's member/owners own versus the part owned by banks and creditors.

Forty percent has been our target for years. And we have achieved that mark. It's a significant financial accomplishment and underscores the fact that your cooperative is well capitalized. The more we increase our net worth, the less we have to rely on borrowing. The less we rely on borrowing, the less we are at the mercy of the Fed's interest rate hikes and the resulting interest expense.

Again, it's safe to say your cooperative's financial condition is the strongest in our history. Of course, these and all of the numbers I quote here are preliminary because at the time I write this, we have not yet closed the books on our Aug. 31 year end, so the figures are not yet officially verified by an accounting firm. But I do not expect much variance.

Thanks to you, our member/owners, we at MFA are indeed poised for success in this new century.