Rural Cooperatives Magazine - March/April 2001
N e w s l i n e
Farmland to expand branded-bread distribution
To expand distribution of its branded breads, Farmland Industries of Kansas City, Mo., has formed United Bakeries International. The new business is a joint venture with Mountain View Harvest Cooperative, and gives Farmland a stake in the Mountain View-owned Gerard's Bakeries at Longmont, Colo. For members, Gerard's represents another market outlet for their wheat.
Mountain View was formed in 1997 by 225 grain producers who purchased Gerard's and who grow grains that meet particular specifications for the bakery's breads. Gerard's sells rolls and breads to restaurants and hotels in 40 states. Last year, Farmland test-marketed its own brand of breads (baked by Gerard's) under the Farmland and Carando brands. Five bread products were first test-marketed last fall: a multigrain loaf, sourdough loaf, sourdough dinner rolls, deli sandwich rolls and potato rolls - all carry the Farmland brand. The Carando brand is featured on focaccia bread and an Italian loaf.
"We are interested in helping consumers link Farmland bread to Farmland beef and pork products," says Ken Thomas, director of Farmland Grain processing. "When consumers put Farmland's beef or pork products on their plates, they can now add our quality bread products too."
Sunkist revenues down
Revenues for Sunkist, the California citrus marketing cooperative, dropped about 2 percent, to about $847 million last year. Payments to growers were down 3 percent, to $682 million. Acting President James Mast said factors in the decline included poor fruit quality, retail consolidation and foreign competition. The cooperative also decided to quit marketing Argentine lemons out of concern that it could introduce harmful pests or diseases.
Ag stress prompts cutbacks at Southern States
Reflecting the current stress in agriculture, Southern States Cooperative (SSC) based at Richmond, Va., has begun reviewing its operations and trimming its staff. The cooperative has about 5,000 employees in 25 states, including 750 employees at its headquarters. The cooperative's 300,000-plus farmer members have been hard hit by low commodity prices and cuts in tobacco quotas.
In line with that reduction, SSC has forged a marketing link with United Producers, Inc. (UPI), at Columbus, Ohio, to provide livestock marketing and credit services to livestock producers in the Midwest and Southeast. UPI will lease and operate with the option to buy selected SSC livestock marketing facilities. Producers Credit Corporation, a UPI subsidiary, will provide livestock credit services to the membership. UPI serves 40,000 livestock-producing members.
Calcot to end almond sales
The two-year-old almond marketing cot, California's cotton cooperative at Bakersfield, is being disbanded due to low grower returns and soft prices. The almond business never generated the kind of revenue the co-op had hoped when launching the almond division in 1998,according to Calcot president Tom Smith. Of its 1,800 cotton members, 500 also grow almonds. Calcot handled about 11 million pounds of almonds last year and is expecting 10 million pounds this year. Grower-members will have to find a new home for their almonds next season. California's largest almond processor and marketer is Sacramento-based Blue Diamond Growers, also a grower-owned cooperative.
USDA to award $25 million to boost value-added ag
USDA Rural Development is making $25 million in grants available for the development of agricultural producer-owned processing businesses. The new Value-Added Agricultural Product Market Development grants program is designed to encourage producers of agricultural commodities to process their raw products into marketable goods, thereby increasing farm income.
Of the total amount, $20 million will go to help associations of independent producers establish value-added business ventures. The remaining $5 million will be awarded to establish a pilot project known as the Agricultural Marketing Resource Center. Ventures in which agricultural producers add value to their products by processing, packaging, or other means are eligible to apply for grants. Grants can be awarded for such activities as conducting feasibility analysis, developing business and marketing plans, or as working capital while the venture develops cash flow.
Grant funds cannot be used for the development or acquisition of buildings or other facilities, or to purchase, rent, or install fixed equipment. The maximum allowable grant amount is $500,000, and grant recipients must provide 1-to-1 matching funds.
Grant applications for this purpose will be accepted in two rounds. Applications for the first round must be received by 4 p.m. Eastern Time, April 23, 2001. The deadline for the second round is 4 p.m. Eastern Time, June 27, 2001.
Nonprofit corporations and institutions of higher learning are eligible to apply to establish the Agricultural Marketing Resource Center. The center will collect and make available information on value-added processing to independent producers and processors. It will also develop a strategy to establish a nationwide market information and coordination system.
The recipient of the $5 million grant must supply an additional $5 million in matching funds. All applications for this grant must be received by 4 p.m. Eastern Time, April 30, 2001. This program is administered by USDA's Rural Business Cooperative Service. Further information is available at USDA Rural Development state offices, or at the following Web address: http://www.rurdev.usda.gov/rbs/coops/vadg.htm.
ACDI/VOCA seeking farm credit specialist for overseas missions
Loan officers, credit association managers, and farm credit bank employees who would be willing to work for several weeks with financial institutions in developing nations are sorely needed for ACDI/VOCA missions. ACDI/VOCA is a nonprofit international development organization that helps farmers, rural finance institutions, agribusinesses, cooperatives and private and government agencies abroad. Its members consist of leading U.S. agribusiness cooperatives and farm credit banks.
ACDI/VOCA volunteers donate their time and talent to work side by side with farmers and entrepreneurs who are pushing for economic progress and democratic reforms around the world. Some continue with long-term assignments after that. There is growing demand for expertise in four categories:
- Bank Management;
- Financial Planning and Management
- Rural and Micro-Credit
- Agricultural Lending
Volunteer assignments are for a period of two to four weeks, depending on project needs and volunteer availability. Requests for specialists arrive regularly, with approximately six weeks' lead time before a volunteer is needed in the field. Paid assignments as international advisors can last from two weeks to three years.
For more information, visit the website: www.acdivoca.org, or (800) 929-8622, fax: (202) 626-8726 or e-mail:volunteer@acdivoca.org
LOL earnings best since '96
Land O'Lakes Inc. (LOL) reported earnings in four years thanks to strategic moves in its dairy division, stabilized cheese and butter prices and a rebounding swine market this past year. Net earnings for fiscal 2000 reached $102.9 million while net sales topped $5.8 billion. L0L's dairy division posted earnings of $87.9 million on sales of $3.2 billion, but that reflected $44 million gained from selling its fluid dairy business to Dean Foods.
In other news, LOL and Dairy Farmers of America (DFA) have formed a joint venture to own and operate a cheese plant at Melrose, Minn., that LOL purchased from Kraft Foods. Built in 1970, the plant processes about 1 billion pounds of milk annually into bulk cheese which is then shipped to other plants for further processing and packaging. The 150 employees were invited to continue in their jobs. LOL members have long been a suppliers to the factory. Kraft will continue purchasing cheese from the plant. This will be the first partnership between the two dairy cooperatives. DFA has 19,500 members in 45 states and processes nearly 37 billion pounds of milk a year. LOL produces 600 dairy products and processes 12 billion pounds of milk annually.
LOL is also developing a large cheese plant in South Dakota in a joint venture with Davisco Foods International and is considering construction of a cheese plant in Wisconsin with Alto Dairy Co-op at Waupun.
Jack Gherty, chief executive officer of Land O'Lakes has been elected chairperson of the National Council of Farmer Cooperatives during its annual meeting. Gherty succeeds Don Schriver, executive vice president of Dairy Farmers of America. The council's first Director of the Year Award was presented to Jack Hardesty, president of Maryland-Virginia Milk Producers Association at Reston, Va.
CENEX Harvest States buys Rodriguez Food
CENEX Harvest States (CHS) has acquired Rodriguez Festive Food Inc. of Fort Worth, Texas, a manufacturer of wheat and corn tortillas, tortilla chips and a full-line of Mexican foods. The purchase price was not announced. Rodriguez Food represented a "strategic fit [for CHS] as we continue to expand our tortilla, chip and Mexican food business," said Joel Bachul, CHS vice president and general manager. "The facilities at Fort Worth will help us better serve our national and regional customers." CHS' tortilla and Mexican food sales now top $65 million annually. Its Mexican food brands include: La Canasta and Arizona Brand tortilla chips, Paradisio tortillas and El Gran Deli, among others. It operates additional Mexican food processing plants in Minneapolis, Minn., and Phoenix, Ariz.
In other CHS news, the St. Paul-Minn.-based co-op has joined a new, on-line agricultural commodity marketplace - Pradium - headquartered at Annapolis, Md. Pradium will bean on-line, business-to-business marketplace.
Tri-Valley sells S&W brand; Sale of canneries imminent
Bankrupt Tri-Valley Growers has agreed to sell its S&W food brand to Del Monte for $39 million. Del Monte says it plans to contract with Tri-Valley's successor to produce S&W fruit and vegetable products for this season, but will then move production to its own facilities in California. The S&W brand was the "jewel" in Tri-Valley's product line.
At press deadline for this issue in mid-March, a final sales agreement was expected any day that will likely transfer ownership of the co-op's huge fruit packing canneries in Central California to Signature Fruit LLC, a new company formed by John Hancock Life Insurance, Tri-Valley's largest creditor. Separate sales are being pursued for the co-op's tomato processing business.
Some $20 million in federal disaster payments from USDA will also be made to the cooperative's 500 members - mostly tomato, peach, pear and apricot growers - who lost money on Tri-Valley contracts when the co-op cut back production of canned fruits and tomato products due to its deteriorated financial condition. Members may be able to collect up to half their losses.
DFA reopens Dakota plant
After lying dormant for six months, during refitting for new technology and product lines, a cheesemaking plant at Pollock, S.D., has been reopened by Dairy Farmers of America (DFA) and has begun manufacturing cheese and dairy-based ingredients for sophisticated food applications. The joint venture between DFA and the New Zealand Dairy Board is called DairiConcepts and is based at Springfield, Mo. The limited partnership features equal ownership. The firm has production facilities at Hummelstown, Pa., Bruce, Wis., Zumbrota, Minn., and Eldorado Springs, Mo.
New Minn-Dak CEO
David Roche is the new chief executive officer of Minn-Dak Farmers Cooperative at Wahpeton, N.D. He has extensive experience in the sugar industry, according to cooperative chairman Victor Krabbenhoft. Roche replaces Larry Steward who retired last September.
Cabot offers organic cheddar
Cabot (Vt) Creamery Cooperative, owned by Agri-Mark, has introduced a line of organic cheddar cheeses. Cabot's facility is now a certified organic plant. The new line is sold throughout the natural foods community and was developed out of concerns over food safety and animal welfare. Cabot has dramatically pushed up sales of hormone-free milk and organic milk in Maine.
Swiss Valley pays dividend
A $6 million profit earned this past year by Swiss Valley Farms, Davenport, Iowa, will result in cooperative members receiving a 22-cent-per-hundred weight dividend in cash and stock. Farmers will receive a 12-cent-per-hundredweight cash payment (54.5 percent of the declared dividend) for every 100 pounds of milk marketed with Swiss Valley. The cooperative's milk production increased 37 percent during the year due to unifications. The extra supply helped the cooperative achieve an increased market share.
Two expansion projects will come on stream this year: a major expansion and renovation at Mindoro to meet an increased demand for blue cheese and a renovation at the Cedar Rapids cultured products plant to increase production and storage for cottage cheese, yogurt, sour cream and dips.
Mullen heads food processors
Dennis Mullen, president and chief executive officer at Agrilink, a fruit and vegetable processing cooperative at Rochester, N.Y., was named chairman of the National Food Processors Association (NFPA) board of directors at its 93rd annual meeting in Chicago. The scientific trade association represents the $460 billion food processing industry. With three laboratory centers, NFPA is the leading authority on food science and safety.
In marketing news, Agrilink is looking at growth opportunities in Canada via a reintroduction of its Birds Eye brand products after a long absence from store shelves.
A team developed distribution plans and redesigned packaging to meet Canadian requirements. Agrilink also exhibited at the Toronto Royal Winter Fair.
Beef co-op opens marketing
The new Consolidated Beef Producers co-op, Amarillo, Texas, completed its first cattle sale in February, reports Gary Kaplan, the co-op's chief executive officer. Members pay an initial $3,000 fee, commit cattle on a weekly basis for sale to packers, and agree to sell at least 5,000 head of cattle through the consortium. The co-op will negotiate with the packers.
ProGold resumes operations; Growers ponder crop options
Production of corn sweeteners resumed March 11 at the co-op-owned ProGold corn- milling plant in Wahpeton, N.D. The plant had been idle for two months due to high energy costs and sluggish demand for corn fructose sweeteners. The $260-million facility processes 85,000 bushels of corn daily and pays farmers about 10 cents per bushel more than most local elevators. Despite the closure, Cargill met an obligation to buy corn for the plant - including 500 million bushels in January. Plant workers remained on the job during the shutdown, performing maintenance and servicing customers from existing inventory.
The plant has been leased and operated since 1997 by Cargill Inc. of Minneapolis, Minn. The company has not ruled out further shutdowns if economic conditions worsen. Uncertainty over the plant's status has left many corn growers pondering a switch from corn to soybeans or some other crop. Sharp rises in natural gas costs could prompt the plant to switch to fuel oil or another energy source. ProGold is owned by Golden Growers Cooperative (49 percent), Minn-Dak Farmers Cooperative (5 percent) and American Crystal Sugar Co. (46 percent).
Farmland sets sales record but still records loss for 2000
In his first annual meeting as chief executive officer, Farmland Industries' Robert Honse reported record sales of $12.2 billion for fiscal 2000, but the depressed farm economy continued to drag on the cooperative's profitability. Farmland's net-after-tax losses continued at $29.2 million, with the nitrogen fertilizer business causing a special drain on earnings. After a decade of growing and diversifying to compete with large multinational companies, Honse said Farmland would refocus on profitability: attaining investment grade status among financial analysts to lower interest costs.
"We must find ways to rely less on others' money to run our business," he said. A key to that is building the Farmland brand, in which the cooperative has heavily invested, Honse stressed, by building the brand's value and expanding its reach so in time it reaches national recognition. Continued reliance is planned on joint food ventures: Farmland National Beef, Farmland Springwater Farms Catfish (the second largest catfish processor in the nation), and Farmland Pork, plus wholly owned divisions to provide farm production supplies.
It has also been announced that the co-op's Farmland National Beef subsidiary will expand its operations to Moultrie, Ga., by investing $8 million to rehabilitate an old plant there.
Court rejects initial AGP bid for FCA
Ag Processing (AGP) Inc.'s proposed purchase of the bankrupt Farmers Cooperative Association (FCA) - a large, local grain marketing co-op in Lawrence, Kan. - for $11.7 million was rejected March 13 by U.S. Bankruptcy Judge John Flannagan. He ruled that FCA will have to devise a plan for accepting and reviewing competing bids, including offers from Archer Daniels Midland Co. and Bunge Corp., among others. Omaha, Neb.-based AGP - the only cooperative seeking to buy FCA -may still have the best offer, but the judge says he wants more time to make sure. FCA had hoped to complete the sale to AGP, a grower-owned soybean processing co-op, by April 1, in time for growers to prepare for spring planting. AGP's offer was for most of FCA's inventories and all but three of its facilities.
In other AGP news, the co-op has just completed another successful year. Fiscal 2000 results showed the cooperative had pre-tax earnings of $20.9 million on sales of nearly $2 billion. The slight decline from 1999 reflected lower commodity prices. It was the first annual meeting with Marty Reagan at the helm, having succeeded Jim Lindsay. [end]
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