N E W S L I N E
Tree Top sets sales record;
$10.8 million earnings paid
Apple and pear grower-members of
Tree Top Inc., based at Selah, Wash.,
were paid $10.8 million in cash to close
out the 2000 crop season. Payments to
members are made throughout the year
in the form of cash advances as fruit
deliveries are received. The cooperative
reported record sales of $297.5 million
for fiscal 2001, which ended July 31.
Tree Top processed a record 533,000
tons of fruit from the 2000 harvest and
completed its ninth consecutive year of
profitability. Also, for the ninth consecutive
year, the board voted to distribute
all grower earnings in cash.
Earnings from non-member business
were sufficient to cover the cooperative’s
operating costs. However, the
market value of fruit dropped significantly
due to an oversupply of low-cost
concentrate on the world market. The
value of juice apples, for instance,
dropped from $121.18 per ton a year
ago to $42.93 per ton. Similarly, peel
apple values dropped from $128.90 per
ton to $72.28 per ton. Tree Top has
2,000 members in Washington, Oregon
and Idaho. The cooperative’s
annual payroll for 1,300 employees
exceeds $43 million.
LOL completes purchase
of Purina Mills feed business
In a brief annual meeting in St.
Louis on Sept. 10, shareholders – by a
2- to-1 margin approved the $230
million cash sale of the Purina Mills’
livestock-feed manufacturing business
to Minnesota-based Land O’Lakes
(LOL) Inc. The transaction, which
includes LOL assuming Purina’s $130
million of debt, was completed in early
October. Purina Mills will become part
of the consolidated business operated
by Land O’Lakes Farmland
Feed LLC, a subsidiary
of the two regional
cooperatives and the
largest feed company in
North America.
The combined organization’s
feed sales are
expected to reach $2.5
billion. The company
will be headed by Bob
De Gregorio. Purina Mills, founded in
1894, declared bankruptcy last year. It
has 48 feed plants, 2,300 employees
nationwide and is known for its
“Chow” brand livestock feeds.
“Through the acquisition, we are
building the economies of scale and critical
mass necessary to compete in the
consolidating feed industry,” said Jack
Gherty, LOL president and chief executive
officer. “By bringing in Purina Mills
into our system, we are creating a
national feed organization that is
extremely well positioned to succeed
long term and deliver increasing value
to customers and others,” he added.
DeGregorio said the transaction “brings
together complementary geography and
product lines and unites two organizations
and product lines that share a high
level of customer recognition and a
proven record of quality and service.”
Volume of Canada’s Top 10
ag co-ops tops $15 billion
Canada’s 42 agricultural cooperatives
which represent 654,000 producers
had a combined business volume
of $19 billion (in Canadian dollars)
and assets valued at $17.4 billion in
1999, according to a recent report from
the Cooperatives Secretariat at Ottawa.
While the number of
Canada’s agricultural
cooperatives declined 3.3
percent, memberships
increased 2 percent from
1998 to 1999. Business
volume was down 4 percent,
but asset value of
cooperatives climbed 9
percent. The number of
employees was up 0.5
percent, to more than 22,400.
Some of Canada’s agricultural cooperatives
are leaders in particular industries.
The combined business volume
of the top 10 agricultural cooperatives
was more than $15.4 billion, and they
reported assets of $5.2 billion, up 11
percent from 1998.
Marketing of agricultural products in
Canada and abroad reached $12.5 billion.
On the farm supply side, combined
business volume of these cooperatives
was $3.2 billion, up 3.2 percent
from 1998. The nation’s 53 fishery
cooperatives reported $179.5 million in
revenue for 1999, up 30 percent from
1998. The 4,064 service cooperatives,
the largest sector in Canada, reported a
combined business volume of $1.5 billion,
up 4 percent from 1998.
CHS buys Farmland’s interest
in petroleum joint venture
CHS Cooperatives is purchasing
Farmland Industries’ share of Country
Energy, their fuel joint venture, which
will result in a major boost in petroleum
volume and service territory for
CHS. Country Energy sells about 3
billion gallons of fuel annually. The
move makes CHS a petroleum marketer
from Lake Superior to Texas and
throughout the Plains and West.
Meanwhile, Farmland is exploring the
sale of its holdings in oil refineries
which were not part of the Country
Energy buyout.
In other CHS news, federal regulators
are reviewing a proposal to combine
flour-milling operations of CHS
and Cargill, both of which are headquartered
in Minnesota, into a joint
venture that would create the second
largest miller (by capacity) in the
nation. If approved, the new joint venture
would become effective early in
2002. If combined, the Harvest States
division of CHS Cooperative would
contribute five mills and Cargill would
add another 15 to the venture, for a
combined 293 million pounds of flourmilling
capacity per day. Both firms
have suffered from low profit margins
and periodic operating losses in
milling. Cargill would contribute 75
percent of the new venture’s capacity
and ownership.
Sunkist expansion reflects
rising interest in fresh juice
A $15.5 million expansion project
underway at Sunkist Growers’
processed products plant in Tipton,
Calif., reflects shifting consumer
demand toward fresh orange juice and
away from frozen concentrate. “This
six-million-gallon bulk-storage system
is an investment in the future of our
West Coast citrus industry,” says Jeff
Gargulio, president of world’s leading
citrus marketing cooperative. Construction
is expected to be completed
next August. “The expansion positions
us to take advantage of increased sales
opportunities and will improve
returns to our growers,” he said.
Labor savings and reduced handling
costs will increase the juice value.
Sunkist sells its juice in bulk to customers
who package the final consumer
product. The Tipton plant was
built in 1982.
Oemichen new VP
with Wisconsin Federation
Bill Oemichen, an attorney who led
Wisconsin efforts in federal milk marketing
reform, has been appointed
senior vice president of the Wisconsin
Federation of Cooperatives (WFC) at
Madison. WFC serves as the legislative
arm of the state’s 600 cooperatives,
principally agricultural and rural electric
co-ops. Before joining the cooperative
sector, Oemichen was administrator
of the consumer protection division
for the Wisconsin Department of
Agriculture.
Rod Nilsestuen, president of the
Wisconsin federation and Minnesota
Association of Cooperatives, saluted
Oemichen’s “extensive government
experience in both states, his deep
knowledge of cooperatives, and his
outstanding reputation for getting
results. His extensive work with dairy,
agriculture and consumer issues and
strong administrative and legal experience
will be great assets.” Oemichen
had earlier been deputy commissioner
and chief legal officer for the Minnesota
Department of Agriculture.
Flood of Asian imports hurts
Plains Cotton Cooperative
The winds of change fueled by a
flood of low-cost imported textiles
and apparel from Asia, coupled with
the strong U.S. dollar cut into fiscal
2001 performance of Plains Cotton
Cooperative Association (PCCA) at
Lubbock, Texas. The co-op reported
its first net loss $627,861 since
1985. Despite the loss, PCCA paid
$1.9 million in cash dividends to
warehouse and marketing pool
patrons, $1.5 million in stock retirements
and $7.9 million in retirement
of per-unit capital retains.
The most dramatic change was in
the textile division, which lost $7.9
million, the largest in PCCA’s history.
“Since 1997, devalued Asian currencies
have given those countries’ textile and
apparel products a significant advantage
compared with U.S. made goods,
“ said Van May, PCCA president and
chief executive officer.
Due to cheaper Asian market
imports and limited opportunities in
the Caribbean basin, PCCA exited
the yarn-dyed business and converted
its Mission Valley plant to a
spinning/denim weaving operation.
The plant spent $6.2 million to cut its
production, administrative and sales
force 60 percent and increased denim
manufacturing capacity 30 percent.
May said it was the least expensive and
most attractive alternative available to
the cooperative. The marketing division
also registered
a net
loss of
$347,000, its
first in 12
years. Adverse
weather
impacted pool
marketing
efforts.
On the
positive side,
gains have
been made in
electronic marketing. “We completed
negotiations and formation of our new
Internet trading company, The Seam,
and began operating it last December,”
May said. “We believe these new electronic
ventures will ultimately generate
improved financial results for PCCA
and all of our members by providing
better control of overhead costs related
to cotton marketing.”
Changing guard at Foremost:
Fuhrman succeeds Storhoff
After nearly a quarter century at the
helm of Foremost Farms USA at Baraboo,
Wis., Don Storhoff is retiring,
and will be succeeded by David
Fuhrman, current vice president of the
co-op’s cheese division. Fuhrman has
been with the cooperative since 1981.
He currently serves as co-chairman of
the Dairy 2020 Council, a Wisconsin
initiative that works to help the state’s
$17 billion dairy industry better position
itself for long-term viability. With
its 13 plants and 700 employees, the
cheese division represents about half of
Foremost’s annual sales, which reached
$1.1 billion in fiscal
2000. The cheese
division is the largest
of the cooperative’s
operating divisions.
Storhoff will stay on
until the end of the
year to assist in the
transition.
Chairman Ed
Brooks said
Storhoff’s “leadership
and vision have
been the key to
Foremost Farms’
growth and success.
This growth has taken
place on a step by
step basis and has
resulted in a financially stable, diversified
cooperative that is a major manufacturer
and marketer of cheese,
whey ingredients, butter, packaged
fluid milk and juice and bulk raw
milk. He leaves the cooperative on
solid footing with a well-defined
direction for the future.
“Since our formation in 1995, we
have focused on generating returns for
our member-owners through marketdriven
returns,” Brooks said. “We’ve
streamlined business procedures and
reinvested in our manufacturing plants
to produce products in demand by
today’s marketplace.”
Doug Wilke has been named the
new vice president of the cheese division.
Wilke has been with the cooperative
since 1987. Most recently, he
helped with the changeover of Foremost’s
Appleton plant into a cheese
shredding facility.
In a move to bolster the state’s
dairy industry, the Foremost board of
directors has donated $150,000 to the
integrated dairy management program
at the University of Wisconsin-
Madison. “The dairy industry is very
important to us and this is a way to
enable land-grant colleges to do the
research necessary for all of our producers,”
said Brooks. The program
involves construction of dairy heifer
research facilities at the Marshfield
Agricultural Research Station and
upgrading dairy facilities at the
Arlington research center and at the
Madison campus.
Storhoff and his wife, Lois, have
created two annual $1,000 college
scholarships one for the child of a
member and the other for the child of
an employee. The scholarships will be
administered by Foremost Farms’
Charitable Foundation.
Agway restructuring
triggers $8.9 million loss
Expanded energy business volume
and higher product prices helped boost
2001 sales for Agway Inc., Syracuse
N.Y., to $1.55 billion, up 14 percent
from 2000. But the Northeast regional
cooperative lost $8.9 million for fiscal
2001. The co-op also had a loss of $9.4
million in 2000, and is expected to suffer
one more year of losses in 2002 due
to the restructuring efforts. But the
cooperative should return to profitability
by 2003, according to Donald Cardarelli,
Agway’s president and chief
executive officer.
Part of the current losses are due
to closing an underperforming Texas
produce operation and converting
several Agway-owned operations to
dealer stores and selling or closing
some facilities. Strong 2001 earnings
were reported for its energy and
insurance divisions and its lease
financing subsidiary.
Producers Rice buys
Greenville mill complex
Producers Rice Mill Inc., a
Stuttgart, Ark. based cooperative, has
completed the purchase of a one-million-
bushel capacity rice mill complex
in Greenville, Miss., from ACH Food
Companies Inc. The facility includes a
white rice mill, a parboil mill and a
rice flour mill. The mill can load
barges directly on the Mississippi
River. Producers Rice has also signed a
supply agreement to provide rice products
to ACH, which is focusing on the
manufacture of specialty, high-value
products. The sale does not impact
ACH’s other operations in Brinkley,
Ark., and Mobile, Ala..
Producers began expanding into
northwestern Mississippi in 1996,
with the opening of a green rice handling
facility at Boyle. The cooperative
of 2,400 members now handles
about 25 percent of Mississippi’s rice
crop. It operates 10 other green rice
receiving stations in eastern
Arkansas.
