NEWSLINE



Agri-Mark has record earnings
Agri-Mark dairy cooperative in 2007 had a record, after-tax profit of $17.6 million, easily surpassing the previous record of $11.4 million set in 2003. Coop leaders say the earnings were welcome news for dairy farmers who have been struggling the past few years with low market prices and huge increases in production costs—especially for energy.

Agri-Mark’s profit allocation will be 50 cents per hundredweight. This represents allocated earnings of roughly $9,000 for the average Agri-Mark member milking 100 cows and producing 1.8 million pounds of milk per year.

The Methuen, Mass.-based co-op, owned by 1,300 dairy farmers, had sales of about $836 million and marketed more than 300 million gallons of milk. Co-op officials say the continued strength of the cooperative's Cabot and McCadam branded businesses, strong demand for the whey proteins and powder produced by the co-op and cost reductions due to changes Agri-Mark made in its business during the past year, all worked to boost profits. In addition, Agri-Mark members also received several million dollars in monthly premiums for overall milk quality and other incentives that the coop was able to return to its dairy farm families.

“Last year was finally a good one for farm prices, but milk production costs also climbed to record levels,” says Board Chairman Neal Rea, a dairy farmer from Cambridge, N.Y. “That is why I am so pleased that Agri-Mark is able to generate these year-end profits and also earn money for the farm in the form of monthly premiums.”

The co-op’s whey protein plant in Middlebury, Vt., continues to generate strong revenues from processing whey into more value-added products. The co-op’s whey proteins and powders are marketed both nationally and internationally and are used as ingredients in hundreds of products, including sports nutrition drinks and baby formulas.

“Our brands continued to grow and the commercial side of our business was strong as well,” says Paul Percy, who milks 350 cows near Stowe, Vt., and has served on the Agri-Mark board since the co-op was formed in 1980. “I see the potential for many good years ahead.”

Paul P. Johnston, Agri-Mark president and CEO, says he recognizes the challenges of sustaining such highprofit levels year to year, especially given the volatility of both national and international dairy markets and farm milk prices. Still, Johnston says Agri- Mark is stronger financially and better prepared today to face the future.

“Northeast dairy farmers need to market a larger percentage of their own high-quality dairy products directly to the consumer so they can capture a larger portion of the dollars they spend on those products,” says Johnston. “We will continue to work to expand our branded sales in 2008 and explore every opportunity to stabilize farm milk prices at levels above the cost of production for our farmer-members.”

Snokist expanding processing;
will exit fresh-produce sector
Snokist, Yakima, Wash., will exit the fresh-fruit packing business in early 2008 to fully concentrate efforts and direct its resources to the processed-, canned- and aseptic-fruit product lines. Snokist says it has a fruit-bowl line which produces fruit blends, high- and low-acid products and gelatins. Co-op officials say all of these products have tremendous growth opportunities for single-serve packaging and as valueadded ingredients for the food industry.

Snokist has made a significant research and development investment and has set a goal to add four new products each year and distribute to customers.

Snokist President Jim Davis said the co-op is committed to continuously taking steps to improve efficiencies and ensure that it remains competitive for the next 100 years. “The new direction and vision is very clear: to be a profitable, grower-owned, packagedfruit company,” he says. “Snokist will strengthen the ongoing commitment to the private-label programs of our customers with unique products, partnerships and personalized customer service.”

Exiting the fresh division requires changes to both the co-op’s business infrastructure and its properties. The latter includes selling the Mead Avenue location and the Grandview Port property. Both Grandview plant No. 1 and No. 2 will be leased, with an option to purchase. The Sawyer facility will be retained for future needs.

Snokist has been a prominent leader in the fruit industry since 1903 and a major worldwide producer and shipper of fresh cherries, pears and apples as well as one of the largest canners in the world.

Sioux Center ethanol plant
to double fuel production
Siouxland Energy and Livestock Cooperative in Sioux Center, Iowa, has completed a major expansion of its ethanol plant, more than doubling annual production capacity from 25 million gallons to 60 million gallons. The plant can now process more than 20 million bushels of corn annually and will market about 400,000 tons of wet distillers grains and 140,000 tons of condensed distillers soluables syrup.

The plant opened in 2001, making it Iowa’s oldest operating farmer-owned ethanol plant. Co-op Manager Bernie Punt said the plant “has a new perspective today in the extremely fastchanging ethanol industry. Our expansion project helps keep our plant competitive so that we can continue adding value to the farming operations in Northwest Iowa.”

New biodiesel facility
opens in Colorado
A new biodiesel blending and storage facility has opened in Aurora, Colo., increasing the availability of the cleaner-burning fuel for the area. Pipeline company Magellan Midstream Partners L.P. owns the facility, which is located at an existing petroleum terminal. CHS Inc., a Minnesota-based energy and grain-based foods cooperative, will market and distribute the fuel.

“By combining a biodiesel blending and storage facility with Magellan’s existing infrastructure, we can get blended fuel to our customers faster and more efficiently,” says Drew Combs of CHS. “Rack blending as opposed to splash blending provides more accuracy and higher quality as well as one-stop loading with a single bill-of-lading.”

Company officials say the move demonstrates biodiesel’s increased integration into the nation’s petroleum infrastructure. The recently passed federal Energy Bill includes an expanded Renewable Fuels Standard, which for the first time will require more renewable fuel to be incorporated into the U.S. diesel market. Biodiesel and other renewable fuels depend on petroleum infrastructure, such as the Magellan terminal, for easy distribution, they noted.

The new biodiesel-blending facility has an 84,000-gallon tank and will make biodiesel blends available to petroleum distributors. Those customers will likely include area truck and car fleets and could lead to more public pumps. Current Colorado biodiesel users include Jefferson County Public Schools, the City of Lakewood, New Belgium Brewery in Ft. Collins, Safeway and Aspen Ski Resort.

Oemichen tells Senate panel
about rural healthcare co-ops
Testifying before the U.S. Senate Small Business and Entrepreneurship Committee, Bill Oemichen, president and CEO of the Minnesota Association of Cooperatives (MAC) and Wisconsin Federation of Cooperatives (WFC), described ways for small businesses to address healthcare needs. Specifically, Oemichen addressed support for federal reforms that would help small employers, including farmers, gain access to affordable, quality health insurance coverage.

“We believe the member-owned cooperative model that puts consumers in charge of their own health decisions is the perfect fit for health care,” said Oemichen.

With the support of its member cooperatives, MAC and WFC created a project called “Co-op Care” to allow small employers, including farmers, to join together to purchase health insurance as a large group. They successfully sought passage of enabling legislation in both Minnesota and Wisconsin to provide a Co-op Care model, and have since worked to establish healthcare purchasing cooperatives in both states aimed at farmers and small businesses.

“When compared to the large group market, small employers — especially farmers — buying health insurance face greater challenges: stricter underwriting, fewer choices, lower quality benefits and little or no data upon which to base informed decisions,” he testified. “Bringing small employers together under the cooperative umbrella allows the coop… to negotiate directly with insurers or providers similar to a large employer. This, in turn, allows the cooperative to negotiate higher quality coverage, improve benefit choices, relax underwriting criteria — if it so chooses — and utilize cost and quality data to educate members about cost drivers and ensure that rate increases are in line with claims experience.”

MAC and WFC serve more than 800 member-cooperatives owned by more than 6.3 million Minnesota and Wisconsin residents.

ACE unveils new Web site
The Association of Cooperative Educators (ACE) has unveiled a new, improved Web site to help improve communication and connections among ACE members and the cooperative education community (www.ace.coop). ACE says it is striving to use its Web site and newsletter to “make links between ideas, people, programs and geographical regions.” The ACE newsletter, “Update,” is also posted to the Web site.

The importance of cooperative communications is stressed in “Communications — A Movable Feast,” an article in a recent ACE newsletter by Ian MacPherson of the British Columbia Institute for Cooperative Studies at the University of Victoria, Canada.

ACE is a membership organization that brings together educators, researchers, cooperative members, and cooperative developers from across cooperative sectors and national borders. The resulting cross-pollination of ideas enhances cooperative development, strengthens cooperatives, promotes professionalism and improves public understanding of cooperatives.

ACE benefits cooperative education and the cooperative movement by: ACE holds an annual institute where members and guests gather to share cooperative education studies, ideas, endeavors and thought. The 2008 Institute will be held in Ottawa, Ontario, July 29-Aug. 1, where the theme will be: “The Sustainable Cooperative: Vision, Leadership, Education.” For more details, visit the ACE website: www.ace.coop.

Tennessee Farmers Co-op
sets new sales record
Consolidated sales for Tennessee Farmers Cooperative (TFC) and its subsidiaries reached an all-time high of $584 million in 2007, an increase of $63 million from 2006. In a year full of challenges — including a late-spring freeze, summer drought, short hay supplies and higher input costs — the sales record was welcome news for Tennessee farmers.

TFC’s subsidiaries include ADI, ADI Agronomy, Fort Loudoun Terminal, Co-op Vet Health, Risk Management and Stockdale’s.

Net income (before taxes and member programs) was $15.8 million, compared to $10.4 million in 2006. TFC alone had income of $11 million, up from $9 million in 2006. All operations departments were profitable in 2007, and both ADI and ADI Agronomy had their best year since TFC purchased them in 1992.

The cooperative returned $8 million to member co-ops in patronage and allocated reserves in October. That money will eventually flow back as patronage payments to the farmers who own the local co-ops. CEO Bart Krisle said TFC has paid $204 million in patronage and reserves to member coops during the past 25 years. In turn, local co-ops have distributed $185 million of that amount in cash to their farmer-owners.

“These figures represent the cooperative system at its finest — a system that is a very relevant and effective form of business today,” said Krisle, who is completing his second year as CEO. “The co-op system keeps money in our state, in our agricultural community, in our local economies and in our farmers’ hands.”

While higher prices of inputs, such as fertilizer and fuel, played a major role in the sales figures, Krisle said sales volume was up in these areas as well. Systemwide fertilizer tonnage increased 22 percent from last year.

Manufacturing records were broken at TFC’s metal fabrication plant in LaVergne, Tenn., where co-op products such as feeders, hay rings and gates are made. TFC’s Jackson Feed Mill had its best production year, at 85,000 tons.

“Whether it was making fertilizer available when farmers needed it most, or providing livestock feeds formulated to help stretch low hay supplies, our system pulls together best when the chips are down,” said Board Chairman Ross Via, a Crockett County row-crop farmer. “It is the difficult times — not the ideal ones — that show us the true value of our cooperative system.”

Via’s seven-year service on the TFC board ended with the 2007 annual meeting, and Stephen Philpott of Shelbyville, Tenn., was elected by fellow board members as the new chairman. Bill Mayo of Tennessee Ridge was selected as vice chairman.

TFC, established in 1945 as a regional farm supply cooperative, provides products and services to 60 member co-ops, which serve some 70,000 farmer-owners and more than 500,000 other customers across Tennessee and in several neighboring states.

Co-ops to expand oilseed-
crushing capability
Producers Cooperative Oil Mill (PCOM), a 63-year veteran in processing cottonseed in the Southern Great Plains, is expanding its operation to include the processing of canola, sunflowers and other oil seeds for food and biofuels. PCOM has signed an agreement with the recently formed Plains Oilseed Products Cooperative (POP) to jointly promote and crush canola, sunflowers, cotton seed and other oilseeds.

“We want our cotton-growing clients in the Southern Plains and Mid-South to know we will continue to provide them with the same quality service we have given for more than a half century,” said Gary Conkling, oil mill president and CEO.

The unusual alliance of agricultural producers — including an oilseed crusher, state universities, a national seed supplier and American Farmers and Ranchers Mutual Insurance Co. (Oklahoma Farmers Union) — will provide agriculture producers in the Southern Great Plains with a new market for current and future oilseed crops.

PCOM will retrofit current cottonseed-crushing capacity to allow additional capacity and infrastructure for crushing winter canola and sunflowers for oil to be used in the food industry and for biofuel production. POP will continue to work with grain handlers across the Southern Great Plains to establish additional local delivery points for growers’ oilseed.

Oklahoma Farmers and Ranchers Energy Enterprise (OKFREE), formed by Oklahoma Farmers Union, was supported through a Value-Added Producer Grant from USDA Rural Development to study the feasibility of processing oilseed and to understand the market opportunities for oilseed in the food and biofuels industry.

Fonterra delays
farmers’ sale vote
Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, has said it needs more time to persuade the New Zealand farmers who own the cooperative that they should support a stock sale. It has delayed a vote on the proposal, according to a report carried by Bloomberg News Service. “We've got a lot more work to do to win members’ support,” Fonterra Chairman Henry van der Heyden said. The postponement of the vote, initially set for May, was announced Feb. 15 in a letter to members.

The farmer-shareholders were to vote on a new structure for the company as the first stage of a sale of shares in 2010 that could have raised about $2 billion, Bloomberg reported. Fonterra, based in Auckland, announced the plan in November, citing the need to access outside capital to fund expansion. “Farmers are conservative people and they’ve built up the company to what it is,” said Alan Moore of Milford Asset Management in Wellington, N.Z. “Maybe they think: ‘Why should we give that up?’”

NCBA’s Paul Hazen addresses
U.N. on co-ops and job growth
Paul Hazen, president and CEO of the National Cooperative Business Association (NCBA), told a United Nations panel in New York City in February about the role of cooperatives in reducing poverty through employment generation. Hazen addressed the 46th Session for the Commission on Social Development.

In East Timor, for example, NCBA has helped create employment for more than 150,000 farmers selling coffee through assisted entities. Cooperativa Café, which sells its coffee to Starbucks, has grown to be the largest private employer in the country since this project began in 1995. Hazen cited this as one of several examples for the Commission. “At NCBA, we have a consistent track record of showcasing why cooperatives are a better business model. One obvious benefit is the amount of jobs they create in local communities to allow people to improve the quality of their lives,” said Hazen.

Hazen spoke on behalf of the International Cooperative Alliance (ICA), an independent, nongovernmental association which represents socially responsible cooperatives worldwide. Hazen is a member of the organization’s board. “By bringing the cooperative enterprise to more communities both in the United States and around the rest of the globe, we give some of the world’s poorest people the keys to a better life,” Hazen said.

USDA renewable energy
studies on Web
Four studies commissioned by USDA Rural Development to help focus attention on crucial strategic issues facing the nation’s renewable energy industry have been posted to the Internet. The four studies, which were summarized in the January- February issue of this magazine, can be accessed by selecting “Spotlights” at: www.rurdev.usda.gov/rbs/coops/csdir.htm.

The studies focus on: The issue of USDA’s Rural Cooperatives magazine with the study summaries can also be viewed online (as can the past 10 years of the magazine) at: www.rurdev.usda.gov/rbs/pub/ openmag.htm.

Bill Davisson named
chairman of NCFC
Bill Davisson, chief executive officer of GROWMARK Inc., a farmer cooperative headquartered in Bloomington, Ill., was elected chairman of the National Council of Farmer Cooperatives (NCFC) during the organization’s recent annual meeting in Lake Buena Vista, Fla. Davisson takes over leadership of the association from John Johnson, CEO of CHS Inc., who completed his second one-year term as chairman in 2007.

Davisson has served as CEO of GROWMARK since 1998, having worked his way up through the GROWMARK system over the course of his career.

NCFC also elected a new vice chairman at the meeting, Douglas Youngdahl, president and CEO of Blue Diamond Growers of Sacramento, Calif.

“I know that both Bill and Doug will work tirelessly to ensure that NCFC continues to represent the interests of farmer cooperatives and their members in a dynamic business and policy environment,” says NCFC President Jean-Mari Peltier. “I, along with the entire staff at NCFC, look forward to working with them over the coming year.”

Tobacco lawsuit ends
with $100 million payment
Nearly 200,000 burley tobacco growers in four states will share an estimated $100 million under a final judgment entered in December 2007 in their lawsuit against the Burley Tobacco Growers Cooperative Association, Lexington, Ky. Each farmer will likely get about $430, according to a report in the Lexington Herald-Leader.

The plaintiffs asked the court to order the co-op to pay members from what they deemed to be excessive reserves, held since at least 1992. The co-op contended that it was required by the federal government to keep a large reserve to protect the federal Commodity Credit Corp. from losses on loans made by the co-op.

The co-op issued a statement saying it was pleased with the judgment because it would restore growers’ confidence in its future, and because it avoided being dissolved, as requested by the plaintiffs.

With the end of the federal tobacco support program, a smaller volume of burley tobacco is being sold at co-op auctions and the number of growers has declined sharply. Many of those who are left grow under contract with cigarette makers, the Herald-Leader. reported. “We have been working hard to attract foreign buyers for burley tobacco,” says co-op President Roger Quarles.





March/April Table of Contents