Newsline

Co-op developments, coast to coast

Clinton presents PCCA
subsidiary with ACE Award
Plains Cotton Cooperative Association's (PCCA) Denimatrix subsidiary has received the U.S. State Department’s prestigious 2010 Award for Corporate Excellence (ACE) in the small-to-medium enterprise category. The award was presented by U.S. Secretary of State Hillary Rodham Clinton to PCCA President and CEO Wally Darneille at a ceremony in Washington, D.C.

Denimatrix, located in Guatemala City, Guatemala, is PCCA’s denim apparel production company. Founded in 2009, it has the capacity to produce about 150,000 pairs of high-fashion denim jeans per week. It is part of PCCA’s vertically integrated “from field to fashion” business model, which also includes the American Cotton Growers denim mill in Littlefield, Texas.

The award recognizes Denimatrix for contributing to the development of the local economy, for reaching out to the community to help disadvantaged youth and the homeless in Guatemala City and for environmental stewardship.

The ACE award was established in 1999 to recognize the important role U.S. companies play abroad as good corporate citizens. The award also is a signal of the State Department's commitment to further corporate social responsibility, innovation, exemplary practices and democratic values worldwide. Past recipients of the ACE award include Cargill, General Motors, Motorola, Chevron/Texaco and Ford Motor Co.

Denimatrix was nominated by U.S. Ambassador to Guatemala Stephen McFarland. A record 78 American companies doing business in other countries were nominated by U.S. Ambassadors around the world.

Denimatrix was one of 12 finalists. “By providing a stable and desirable workplace, we can attract employees whose productivity will make them competitive in a global economy,” Darneille said. “This award means a great deal to us about the future as well as the past. It is a recognition of the dedication of several generations of PCCA stockholders to doing the right thing for present and future generations.”

Headquartered in Lubbock, Texas, PCCA is the largest originator of U.S. cotton for textile mills around the world.

CHS returns $231 million to
owners; Building shuttle-train
loading elevators
CHS Inc. owners in all 50 states will share in an estimated $231 million disbursement during 2011 as a result of the energy- and grain-based food company’s strong fiscal 2010 earnings. The distribution maintains a period of five consecutive years of significant cash returns to owners. Since its creation in 1998, CHS has returned more than $2 billion in cash to its agricultural producer and member cooperative owners.

The $141 million distribution to member-owners consisted of cash patronage paid on fiscal 2010 business and retirement of previously earned CHS equity. Additional retirements of equity and dividends paid on preferred stock made throughout the year are expected to bring fiscal 2011 cash return total to about $231 million.

“In making this distribution, CHS has demonstrated one of the most important ways we can deliver on our mission of adding value for all of our stakeholders,” says Michael Toelle, CHS board chairman and a Browns Valley, Minn., farmer. “Strong financial performance also allows CHS to meet our member-owners’ needs on a daily basis and to fulfill a long-term strategic direction as a successful energy- and grain-based foods company.”

CHS net income for its fiscal year ending Aug. 31, 2010, was $502.2 million.

During 2011, distributions are being made to nearly 1,100 member companies and more than 45,000 individuals and other businesses. Patronage is based on business done with CHS by member cooperatives and individual farmers and ranchers during fiscal 2010, while equity redemptions and preferred stock distributions represent retirement of ownership in CHS earned in past years.

In other CHS news, the has co-op announced its intent to join with some local grain partners to build state-ofthe- art shuttle train loading elevators in Montana, Nebraska and North Dakota. Work is to be completed during the next 12 to 18 months.

“The CHS commitment to growers includes endeavors like this, where we reinvest back into our communities,” says John McEnroe, senior vice president for the Country Operations division of CHS. “It’s a very tangible way CHS returns value to its memberowners,” he adds.

CHS Country Operations has a preliminary agreement for construction in place with Farmers Union Elevator Co., New Salem, N.D. There is also an agreement between All Points Cooperative, Gothenburg, Neb.; Farmers Cooperative Grain Co., Merna, Neb.; and the CHS Agri- Service Center, Holdrege, Neb., for a facility in the Custer County area. In addition, CHS has expansion plans to accommodate 110-car trains at its Kershaw, Mont., location as well as its facility in Lakota, N.D., operating under Lake Region Grain.

All facilities will be located on a BNSF rail line. Construction could start as early as May 2011, CHS reports.

Wickham to lead NCFC
Gregory Wickham, CEO of Dairylea Cooperative Inc., was recently selected chairman of the National Council of Farmer Cooperatives at its 82nd annual meeting in San Antonio, Texas. He had been NCFC vice chairman and was a board member for five years. Succeeding Wickham as vice chairman is Bob Engel, president and CEO of CoBank.

Wickham and Engel will lead a board comprised of 22 presidents and CEOs from cooperatives across the country as they strive to “to tell the story of farmer cooperatives and ensure that the interests of all co-op memberowners are protected.”

“I learned at a young age the value of farmers working together, and I am excited to have a role doing so through NCFC,” Wickham says.

Wickham has worked for agricultural cooperatives his entire career. Prior to joining Dairylea in 1997, Wickham worked for the Farm Credit Bank of Springfield (CoBank's predecessor) from 1978 to 1987. He then joined the agricultural division of Agway Inc. from 1988 to 1995, moving to CoBank in the fall of 1995.

Wickham acknowledges the importance of agricultural cooperatives, both to their farmers and to their respective industries. Dairylea has worked closely with NCFC over the years, “to grow success and support of cooperatives across the country,” he notes. In 1929, when Dairylea was still called the Dairymen’s League, several cooperative employees were instrumental in helping to from NCFC.

“Greg brings experience, knowledge and leadership to NCFC, all of which will be valuable as we seek to continue to tell the co-op story to policymakers, opinion leaders and the American public,” NCFC President and CEO Chuck Conner says.

Wickham received a degree in ag economics from Cornell University and earned his MBA in ag economics from the University of Hartford.

CoBank earnings
climb 8.6 percent
CoBank, a leading cooperative bank serving agribusinesses and rural infrastructure providers throughout the United States, has reported record high earnings and net interest income. Its loan quality also continued to improve throughout the year, the bank reported.
“Despite an economic environment that remains challenging and highly volatile, the bank continued to serve as a dependable source of credit for vital industries across rural America,” says Robert B. Engel, president and chief executive officer.

Net income was a record $613.8 million, up 8.6 percent from $565.4 million in 2009. Net income reflected the benefit of refunds of Farm Credit insurance premiums paid in prior years, a lower premium in the current year, a lower provision for loan losses and greater fee income. Those positive earnings drivers were partially offset by impairment losses in the bank’s investment portfolio and some other factors.

Average loan volume during 2010 was $45.5 billion, up 2.3 percent from the prior year. A key driver was higher seasonal financing requirements from agribusiness customers due to the sharp increase in prices for grains and other agricultural commodities that occurred in the latter part of 2010. The bank also increased its lending to rural electric distribution cooperatives around the country. Those increases were partially offset by lower levels of borrowing from customers in the rural communications industry, where overall demand for debt capital remained weak.

Average loans to other banks and associations in the Farm Credit System were essentially unchanged, reflecting relatively flat loan demand at the producer level of the U.S. farm economy. Total loan volume for the bank at Dec. 31, 2010, was $50 billion, compared with $44.2 billion at the end of 2009.

Net interest income for CoBank rose 0.5 percent, to $950.8 million, up from $946 million in 2009. Engel noted that CoBank has returned more than $1.3 billion in patronage to customer-owners around the country during the past five years.

New Zealand co-ops
aiding earthquake victims
Co-ops have been rallying to offer support following the Feb. 22 earthquake that devastated Christchurch, New Zealand. As of early March, the death toll stood at 166, but many people were still missing and feared dead. Ramsey Margolis, executive director of the New Zealand Cooperatives Association, says some coops were also directly impacted by the earthquake.

To help concerned co-ops at home and around the world follow the situation, he has created a blog at: www.s.coop/nzquake. A couple of recent postings (as of early March) included:

March 4 — “Silver Fern Farms announced that it will be making donations based on all sheep, beef and deer processed during the week of March 14 to the New Zealand Red Cross 2011 Earthquake Appeal. The cooperative had already put in place a number of initiatives to support the relief effort in the wake of the tragedy, including providing access to fresh water and equipment from its processing sites, as well as donating meat supplies to the Farmy Army and the Salvation Army.

Chief Executive Keith Cooper said that the cooperative had been overwhelmed by messages of concern from its members and wanted to step up the company’s response on their behalf. In addition, Silver Fern Farms has received commitment from offshore customers to match the company’s contributions.

March 3 — “No one was hurt at either the CRT Cooperative Farm Centre on Waterloo Road, Christchurch, or in its offices in Sir William Pickering Drive. But the offices had a good shake,” General Manager/Marketing Nigel Riley reports. “Ceiling panels fell down, everything was all over the place upstairs at Sir William Pickering Drive. It looked like someone had thrown a hand grenade and shut the door.”

LO’L sales second best
in its 90 years
Land O’ Lakes Inc. (LO’L) reported the second-highest net sales and earnings in its 90-year history, despite challenging economic conditions. More than 1,000 cooperative members and visitors who gathered in Minneapolis for the co-op’s annual meeting were told that the co-op:

Returned a record $125 million in cash to members;
Had net sales of $11.1 billion (up 7 percent from 2010) and net earnings of $178 million (down from 2009’s record $209 million);
Saw a reduction of 11 percent in its debt;
Strengthened the LO’L market presence in nearly all of its key business segments.

Co-op president and CEO Chris Policinski pointed to several factors that drove performance in 2010: the strength of Land O’Lakes brands; solid performance by new, innovative products; a continued focus on operating efficiency and risk management; and the “disciplined pursuit of strategic growth initiatives.” The co-op improved its market position in branded butter, deli cheese, seeds, crop protection products, young animal milk replacers, premium lifestyle feed and value-added livestock feed.

LO’L’s dairy foods business generated pretax earnings of $50.3 million, compared to $61 million in 2009. Dairy foods sales were $3.7 billion, up from $3.2 billion in 2009, helped by higher sales volume for the co-op’s flagship branded butter.

LO’L’s feed business reported $22.1 million in 2010 pretax earnings, compared to $29.8 million in 2009. Feed sales were $3.3 billion, down only slightly. Volume was down significantly in the livestock segment, while relatively flat in the co-op’s Lifestyle, Milk Replacers and Feed Ingredients segments.

The company’s crop inputs business — Winfield Solutions LLC — reported $144.8 million in pretax earnings, up from $136.8 million in 2009. Crop input sales hit $3.7 billion, well up from $3.3 billion in 2009. Sales volume was strong across-the-board, especially for crop protection products and nearly all seed categories.

Gray to lead SRSA
Thomas W. Gray, Ph.D., a rural sociologist with the Cooperative Programs office of USDA Rural Development, was installed as president of the Southern Rural Sociology Association (SRSA) in February at the association’s annual meeting in Corpus Christi, Texas.

SRSA is a professional social science association oriented to enhancing the viability and quality of rural life, communities and the environment in the South and to encourage similar work nationally. In addition to work of its own academic discipline, the organization’s approach to rural sociology also encompasses other social sciences and includes practitioners at the university, community and government levels.

“Social justice, as seen through various disciplinary lenses, is an essential focus of the organization,” Gray says. The organization has a national membership and is responsible for publishing the Journal of Rural Social Sciences.

Co-chairs picked
for Co-op Caucus
U.S. Senators John Thune of South Dakota and Amy Klobuchar of Minnesota will be co-chairs of the Congressional Farmer Cooperative Caucus. In the House, U.S. Representatives Sam Graves of Missouri and Tim Holden of Pennsylvania will also co-chair the caucus. The caucus has 18 Senate members and 44 House members.

Thune was also co-chair of the Congressional Farmer Cooperative Caucus during the last session of Congress and has served on the U.S. Senate Agriculture Committee since 2007. He played a critical role in the passage of the 2008 Farm Bill in the U.S. Senate and served on the U.S. House Agriculture Committee during the drafting of the 2002 Farm Bill.

Klobuchar serves on the U.S. Senate Agriculture Committee and worked closely with House Agriculture Committee Ranking Member Collin Peterson to pass the 2008 Farm Bill. With more than 200 cooperatives, Minnesota leads the country in number of cooperatives.

Foremost distributes
$31 million to members
Foremost Farms USA, Baraboo, Wis., issued cash payments of $31.8 million during 2009 and 2010 to dairy producer-members of the cooperative. Of that total, $6 million was paid in 2009 in cash patronage and equity revolvements. The remaining $25.8 million was issued in 2010, including $6.7 million of cash patronage; the balance represented revolvement of equities held by dairy producers who marketed milk through Foremost Farms and its predecessor cooperatives.

“We have repositioned our business and have been profitable despite marketplace volatility and a challenging national and global economy,” says Dave Fuhrmann, co-op president. “The board of directors is looking to the future as the global demand for dairy increases. We will grow with that demand and maximize returns for our present, past and future memberowners.”

Foremost Farms USA is owned by 2,200 dairy farmers from Wisconsin, Minnesota, Illinois, Indiana, Iowa, Michigan and Ohio who market 5 billion pounds of milk annually. In 2009, Foremost Farms revenue was $1.14 billion.

Changes to VAPG
program announced
Deputy Agriculture Secretary Kathleen Merrigan has announced changes to USDA Rural Development’s Value Added Producer Grant (VAPG) program that will provide additional opportunities to beginning and socially disadvantaged farmers. The changes, outlined in an interim rule published in the Federal Register, will also assist independent producers, farmer and rancher cooperatives, agricultural and producer groups, as well as support local and regional supply networks with their value-added projects.

“Improvements to this popular program will create additional economic and job opportunities by helping owners of small- and mediumsized family farms sell their products in local and regional markets, part of our drive to ‘win the future,’” Merrigan said. “USDA investments such as these are part of the Obama administration’s work to support farmers, ranchers and rural businesses.” The regulations address program changes included in the 2008 Farm Bill.

The revisions include:

Providing up to 10 percent of funding to beginner farmers and socially disadvantaged farmers and ranchers;
Providing up to 10 percent of funding to local and/or regional supply networks that link producers with companies marketing their products;
Giving priority for grants to beginner farmers, socially disadvantaged farmers and ranchers, and operators of small- and medium-sized family farms;
Extending grant eligibility to producers who market their products within their state or within a 400-mile radius.

These changes take effect March 25, 2011. In addition to the rule changes, USDA Rural Development is soliciting comments on the interim rule and the best way to facilitate the participation of tribal entities and tribal governments in the VAPG program. For information on how to submit comments, see page 10,090 of the Feb. 23, 2011, Federal Register.

VAPGs may be used for feasibility studies or business plans, working capital for marketing value-added agricultural products and for farmbased renewable energy projects. Eligible applicants include independent producers, farmer and rancher cooperatives and agricultural producer groups.

Value-added products are created when a producer increases the consumer value of an agricultural commodity in the production or processing stage. For more information on VAPG and other USDA Rura Development programs, visit: www.rurdev.usda.gov.

Sunkist sales top $1 billion;
Gillette picked as new
chairman
Sales for Sunkist topped $1 billion in 2010, the 10th time in the past two decades it has surpassed that mark, President and CEO Russell Hanlin told the more than 800 grower-members who met at California’s Ventura County Fairgrounds in February for the citrus marketing cooperative’s 117th annual meeting.

“In 2010 we were faced with, and successfully overcame, many difficulties imposed by the weak global economy,” Hanlin said. “We ended the year strong and financially stable, increasingly more efficient and well positioned for continued success. The coordination between our sales and marketing team and our packinghouses was the best I’ve seen.”

Following the annual meeting, the newly elected board of directors met to elect their officers for the current year. Mark D. Gillette of Dinuba, Calif., was elected to his first term as board chairman, succeeding Nicholas F. Bozick of Mecca, Calif. Bozick had served as chairman for five consecutive terms, the maximum allowed under Sunkist bylaws.

Gillette is a fourth-generation citrus grower who started the Gillette Citrus Co. in 1983 with his father and brother. He is the managing partner of Gillette Citrus, a Sunkist-affiliated grower, packer and shipper of fresh citrus. He grows oranges in Fresno and Tulare counties. Gillette has served on the Sunkist board since 1999.

CCA cooking up ‘hotM
communications’
“Hot Ideas for Cooperative Communicators” is the theme for the 2011 Cooperative Communicators Association’s (CCA) annual institute June 19-22 in San Antonio, Texas. Among the scheduled sessions are:

Spice up your newsletter design;
Writing a smokin’ social media policy;
Fun with Photoshop, and other creative solutions;
Crisis communications: getting out of the hot seat, and
There’s an App for that.

Other sessions will focus on project budgeting, website design and effective writing, among others.
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The conference is usually attended by more than 100 cooperative communications specialists from all types of cooperatives who say they find the chance to network and discuss common issues with their peers to be just as valuable as the conference sessions.

Early discount registration deadline is May 6. To register online, visit: wwww.communicators.coop. For more information, call Sarah Dorman, conference co-chair, at (712) 667-3200, or e-mail her at: sarahd@westcentral.net.

MMPA wins Dairy Plant of the Year

Michigan Milk Producers Association (MMPA) recently took home top honors from the International Dairy Foods Association (IDFA) annual meeting, winning the 2010 Plant of the Year award from Dairy Foods magazine. The co-op recently completed a two-year, $62 million renovation project at the plant.

The investment made by the dairy farmer-owners of MMPA increased daily processing capacity to nearly 5 million pounds and expanded the production capabilities at the Ovid facility. The expansion included construction of a $27 million tower dryer, $7 million in mechanical vapor recompression (MVR) equipment and $28 million in receiving, processing, utility and warehousing improvements and additions.

MMPA General Manager Clay Galarneau accepted the award at the IDFA meeting. “It is a real honor to be recognized by this group of processors,” Galarneau said. “Our members have made a significant investment in our processing facilities and we are proud of the improvements made at Ovid. We believe this investment will benefit our dairy farmer owners for many years.”

The changes made at the plant were spurred by increasing milk production in Michigan and the Great Lakes region. Faced with additional volumes of milk, MMPA members had to choose between investing in their own facility or sending the milk to neighboring states. “Our members saw the need for the plant expansion and backed it with a 10-cent per hundredweight equity retain,” says MMPA President Ken Nobis. “Our members see a strong future in Michigan’s dairy industry, and our facilities need to be able to keep pace with our members’ production and customer needs.”

Products made at the Ovid facility include cream, condensed milk, butter and powdered milk, which are sold as dairy ingredients to a wide variety of food manufacturers. “You don’t see the MMPA label in the store, but when you eat pudding, yogurt, cookies, ice cream and many other foods, chances are you are enjoying ingredients made at the MMPA manufacturing facility,” Galarneau says.

MMPA is owned by about 2,100 dairy farmer-members throughout Michigan, Indiana, Ohio and Wisconsin. In 2010, MMPA marketed more than 3.9 billion pounds of milk.

March/April Table of Contents