NEWSLINE

CountryMark expanding refinery; rebranding Midwest fuel stations CountryMark Cooperative is investing $20 million to upgrade and expand its refinery in Mt. Vernon, Ind. The project, announced at the co-op’s most recent annual meeting, is expected to be completed in 2008 and will boost refining capacity by 45 million gallons per year, or roughly 12 percent of current production.

The additional production at its Indiana refinery comes at a time when a national gas shortage, combined with a 2-percent increase in U.S. fuel demand, has forced energy prices upward, says CountryMark CEO Charlie Smith. In addition to increasing refinery yields, CountryMark also has announced plans to invest in the reliability of the refinery and fuel distribution facilities.

The co-op has also announced that its EnergyPlus 24 retail fuel stations are being rebranded with the CountryMark name and image. The look has been updated to reflect the stations’ identity as CountryMark fuel stations. The 90 fuel stations across Indiana, Ohio and Michigan will continue to have fuel available 24 hours, and many also offer convenience store products and services. The stations are operated by 21 independent local cooperatives, all of which are based in Indiana.

Nearly half of the profits made by CountryMark in 2006 were returned to member cooperatives through patronage refunds. In the past two years, CountryMark has sent $43.3 million back to its member cooperatives.

Some 5 million gallons of soy biodiesel and 6 million gallons of cornbased ethanol were purchased by the co-op in 2006 and blended into CountryMark's premium diesel and gasoline products. Nearly 80 percent of the diesel CountryMark distributes through local cooperatives is a blend of soy biodiesel.

In 2006, the co-op completed work on a $44 million advanced diesel fuel processing unit, which enables it to produce premium, ultra-low sulfur diesel fuel that is more environmentally friendly and meets new EPA clean air mandates. Known throughout the years as an agricultural co-op, CountryMark is now focused exclusively on energy.

NW pear shippers to combine marketing
Two familiar premium Northwest pear shippers have combined operational and marketing relations to become one of the largest premium pear shippers in North America. Stemilt Growers Inc. will market 100 percent of Peshastin Hi-Up Growers pears starting in August. Under a previous agreement, Stemilt marketed a large percentage of Peshastin’s crop.

"Stemilt’s marketing channels for premium fruit are a perfect fit with our operations,” says Peshastin Hi-Up general manager Ken Hemberry. The collaboration makes the two organizations the largest Washington supplier of Concorde, Taylor's Gold and organic pears.

Peshastin Hi-Up is a grower-owned cooperative that has a long history of growing premium pears in the upper Wenatchee River Valley. The co-op, which only ships pears, grew and packed about 750,000 cases of pears in 2006. The majority are d'Anjou and Bartlett pears, while other pear varieties round out the program.

“Stemilt and Hi-Up will gain efficiencies through collaboration in not only marketing but also in packing, storage, packaging, ripening programs, transportation and logistics. This will be a complete go-to-market strategy," says Stemilt vice president of sales and marketing Mike Taylor. Stemilt is privately owned by the Mathison family, which has farmed in Central Washington since the early 1900s. Stemilt shipped approximately 1 million boxes of pears in 2006.

GROWMARK to acquire energy
firm; teams with FB on risk management GROWMARK Inc. is seeking to acquire 100 percent of STAR Energy LLC (STAR), Manson, Iowa. STAR is a retail energy company serving northwest Iowa with $60 million in sales last year.

STAR, currently owned by GROWMARK, West Central Cooperative and NEW Cooperative Inc., primarily serves rural markets. It delivers gasoline, distillates, propane, and lubricants and operates unattended fueling locations.

West Central Cooperative CEO Jeff Stroburg says the transaction will allow West Central to focus more on its strategic businesses. STAR Energy and West Central have many common customers and plan to continue to support each other in the marketplace, he notes.

In other GROWMARK news, the co-op is forming a joint venture with Illinois Farm Bureau called AgriVisor LLC. The venture brings together the organizations’ grain and livestock marketing analysis and contract execution functions in an effort to offer farmers the best marketing tools available.

“Uniting our efforts to provide farmers with risk management alternatives that maximize their profitability is a logical step for two organizations committed to serving the best interests of our farmer-members and owners,” says Larry Keene, GROWMARK director of grain risk management and value-enhanced products.

Co-op development class
Applications are being accepted for Session II of The Art & Science of Cooperative Development, a training program for new and established co-op development practitioners. The program is produced by CooperationWorks!, a nationwide service co-op for cooperative development centers and individual practitioners. This five-day, intensive training takes place in Madison, Wis., Sept. 10-14. Session I is not a prerequisite for Session II. For more information, contact Audrey Malan, (307) 655-9162 or cw@vcn.com.

AMPI acquires Cass-Clay
Associated Milk Producers Inc. (AMPI), New Ulm, Minn., has completed the acquisition of Cass-Clay Creamery Inc. The North Dakotabased cooperative is now operating as a division of AMPI.

The Cass-Clay division includes a fluid milk bottling plant in Fargo, N.D., and a specialty cheese plant in Hoven, S.D. Products manufactured at the Fargo facility will continue to be marketed under the Cass-Clay® brand, recognized in the upper Midwest for quality fluid milk, ice cream and cultured products such as yogurt and sour cream.

“The dairy farmers of Cass-Clay are proud to be the newest AMPI owners,” says David Glawe, chairman of the Cass-Clay and a Detroit Lakes, Minn., dairy farmer. He is one of nearly 200 cooperative owners who unanimously voted to authorize the transfer of Cass- Clay Creamery assets to AMPI.

The Cass-Clay brand and product line complements products manufactured at AMPI plants across the Midwest. AMPI is a private-label manufacturer of consumer-packaged cheese, butter, instant milk and shelfstable dairy products. With the acquisition, the 4,000 dairy farmerowners of AMPI now operate 15 plants and annually market more than $1 billion of dairy products regionally and nationally.

“This acquisition reflects the cooperative’s long-term commitment to Midwest dairy farmers,” says Paul Toft, AMPI board chairman and a dairy farmer from Rice Lake, Wis. “It allows us to optimize our farmer-owned milk manufacturing facilities.”

Study: ethanol not main factor in higher food costs
A new study by agricultural economist John Urbanchuk of LECG throws a bucket of cold water on the popular argument that the rising cost of corn – prompted by the increasing production of ethanol – is the cause of increased food prices and other consumer-related inflation. Instead, Urbanchuk's new statistical research shows that escalating energy costs are the real culprit behind the recent runup in retail food and beverage prices.

The study arrives amidst a growing debate over the expansion of the U.S. ethanol industry. Many critics blame ethanol and corn producers for everything from shortages of Mexican tortillas to higher prices for corn flakes and soft drinks.

Urbanchuk's study – The Relative Impact of Corn and Energy Prices in the Grocery Aisle – was commissioned by the Renewable Fuels Association. The full report and corresponding tables can be found at: http://www.rippmedia.com/ LECG-JU-Ethanol.doc.

According to the Urbanchuk report, rising energy prices have had twice the impact on the Consumer Price Index for food as has the price of corn. He examines CPI data from 2002 through May of this year to make his point.

"While it may be more sensational to lay the blame for rising food costs on corn prices, the facts don’t support that conclusion,” says Urbanchuk. “By a factor of two-to-one, energy prices are the chief factor determining what American families pay at the grocery store.”

Moreover, he notes, "Retail food prices are not likely to accelerate significantly in 2008 and beyond, even as ethanol production continues to expand. In fact, consumers will be more severely affected by rising gasoline and energy prices than by increases in corn prices."

A&N Electric Co-op to acquire Delmarva Power
A&N Electric Cooperative’s (ANEC) board has voted to acquire the electric distribution service territory of Delmarva Power in Accomack and Northampton counties on Virginia’s Eastern Shore. The purchase agreement, which is subject to approval by the Virginia State Corporation Commission (SCC), will mean that ANEC will become the electricity provider for the approximately 22,000 customers of Delmarva Power located in Virginia.

ANEC currently serves more than 11,000 consumers in portions of Accomack and Northampton Counties in Virginia and Somerset County, Md. With the addition of consumers now served by Delmarva Power, ANEC will be the distributor of electric service for all residents of Virginia’s Eastern Shore.

Terms of the purchase agreement will be released to the public once a formal application has been filed with the SCC.

A&N Electric Cooperative’s wholesale power supplier, Old Dominion Electric Cooperative, will purchase and operate the majority of Delmarva Power’s 69 kV transmission facilities in Virginia, a transaction that will complement the distribution system purchased by A&N. Old Dominion Electric Cooperative, based in Glen Allen, Va., is a wholesale power supply cooperative that provides electricity to 12 member distribution cooperatives across Virginia, Maryland and Delaware.

CHS building three pipeline terminals
CHS Inc. is constructing two new Montana petroleum terminals and planning a third for eastern Washington to maximize supply efficiency for customers of its Cenex® brand refined fuels products. The terminals under construction are located at Logan and Missoula, Mont., along the Yellowstone Pipeline. A location is being sought for a planned terminal in the Moses Lake, Wash., area.

The three terminals will supply CHS customers with a wide range of products for bulk distribution from the company's refinery at Laurel, Mont., including gasolines, diesel fuels and ethanol-blended gasolines. The terminals are designed to accommodate biodiesel blends in the future.

Conference to gauge true value of co-op businesses
Cooperatives are facing many strategic dilemmas as they continue to adapt to a changing business landscape. Understanding the true value of the cooperative business is critical to meeting these challenges.

“Valuing the Cooperative Business in the 21st Century” is the theme of this year’s annual farmer Cooperative Conference, which will help address these issues.

The conference, now in its 10th year, will be held Nov. 5-6 in St. Paul, Minn., at the Crowne Plaza Hotel. The event is sponsored by the University of Wisconsin Center for Cooperatives. Topics will include: Updates on the conference and registration information will be posted on the University of Wisconsin Center for Cooperatives Web site:

www.uwcc.wisc.edu. Or contact: Lynn Pitman at (608) 261-1355, or pitman@wisc.edu.

South Dakota co-ops merging
Two South Dakota co-ops — Fremar Farmers Cooperative, based in Marion, and Central Farmers Cooperative, based in Salem — have voted to merge, effective Aug. 1. The new cooperative will be called Central Farmers Cooperative and will be based in Marion. About 78 percent of Central Farmers’ patrons and 89 percent of Fremar patrons approved the merger, according to the Associated Press.

Central Farmers has operations in Montrose, Canova and Rumpus Ridge. Its services include fuel, propane, tires, oil, feed, lumber, agronomy and grain services to customers in a 35-mile radius of Salem. Fremar is based in Marion and has additional facilities in Freeman and Dimock. Its services include agronomy, grain and feed.

Fremar has developed one of the largest producer-owned ethanol projects in South Dakota. Construction on Millennium Ethanol, a 100-milliongallon ethanol plant, is expected to be completed by the end of 2007. US BioEnergy has announced a plan to acquire the plant.



FCS boosts lending to young, beginning and small producers

The Farm Credit System (FCS, or System) is increasing its financing of young, beginning and small (YBS) farmers and ranchers, according to a recent report. The overall trend for lending to each of the three YBS borrower categories continues to be positive, with solid gains in 2006 loan volume from 2005 levels, according to the report prepared for the Farm Credit Administration, which oversees the nation’s producerowned FCS.

The number of new loans was up for beginning and young farmers and was flat for small farmers in 2006. However, the growth rate in the YBS categories as a percentage of the System’s total new-loan dollars was down slightly for 2006. Small farmers continued to receive the largest share — 54 percent — of the System’s new loans during the year.

The report, prepared by Office of Regulatory Policy, is part of the FCA’s continuing effort to ensure that the FCS responds to the credit needs of these farmers and ranchers. In March 2004, the FCA board approved a regulation strengthening YBS programs and policies at System banks and associations. Congress established the YBS mission in the 1980 amendments to the Farm Credit Act.

In 2006, the System held 140,209 loans worth $15.4 billion made to young farmers, age 35 or younger, up 11 percent from 2005. During 2006, 46,459 new loans worth $5.5 billion were made to young farmers, or 17 percent of all new loans made during the year and 10.5 percent of the new-loan dollar volume.

FCS holds 189,223 loans, worth $25.4 billion, made to beginning farmers — those with 10 or fewer years of farming experience. During 2006, 57,838 new loans worth $9.3 billion were made to beginning farmers, representing 21.2 percent of all new loans and 17.8 percent of new-loan dollar volume.

FCS institutions had 465,951 loans outstanding worth $36.3 billion to small farmers — those with gross annual sales of less than $250,000 — at the end of 2006. During 2006, 148,025 new loans worth $11.6 billion were made to small farmers. New loans to small farmers represented 54.3 percent of all new loans and 22.2 percent of new loan volume. Although the number of new loans made during 2006 was essentially unchanged from 2005, the volume of new loans increased 6 percent.

Economic and demographic factors have led to a decline in the number of small and young farmers in the farming population. As a result, the System’s potential YBS lending market has declined. To encourage lending to these farmers, many associations are using special underwriting standards, lower interest rates or other programs aimed at YBS borrowers.


Small farmers learn ways at conference to add value

The 20th annual California Farm Conference in Monterey, Calif., in March, was attended by 375 farmers, ranchers, ag students, educators, farmers’ market managers and other professionals. They learned marketing practices that will help them increase their profits and grow their businesses.

The conference theme was “The Time Is Ripe,” and workshops were designed to meet the mission of the conference: to address timely topics relevant to family farming, direct marketing and agricultural sustainability.

Conference topic tracks included: “Growing Your Business,” “Making Your Market Successful,” New Frontiers in Specialty Crops,” “After the Harvest: Value-Added Strategies,” “Hot Topics in California,” “Marketing: If I Grow it; Will They Come?” and “New Ideas in Production.”

At a session titled “Financing Value-Added Projects,” speaker Rhonda Motil of the Monterey County Vintners and Growers Assoc., spoke about the success the organization has had using Value-Added Producer Grants (VAPG) from USDA Rural Development. Karen Firestein, cooperative specialist for USDA Rural Development in California, provided detailed information about applying for a VAPG.

In attendance were scholarship recipients as part of a program funded by USDA. They included small-scale farm operators with limited means as well as agriculture students and farmers’ market managers. In the past five conferences, the California Farm Conference has targeted its outreach and successfully increased the diversity of attendees.

In 2007, with the assistance of USDA, scholarships went to 90 smallscale farmers, of whom 38 percent were Hispanic, 6 percent African- American and 28 percent Asian or Pacific Islanders. About 38 percent were women, 4 percent Native American and 4 percent were persons with disabilities. In addition, 15 farmers’ market managers and 15 students were awarded scholarships.

USDA Rural Development provided a $72,000 Rural Business Enterprise Grant to help cover the costs. For more information about the conference, visit: http://www.californiafarmconference. The 2008 California Farm Conference will be held Feb. 24-26 in Visalia, Calif.





July/August Table of Contents