'Best of the best' inducted into Co-op Hall of Fame
John B. Gauci, David A. Hamil, and Otis and Mary Lee Molz have received the highest honor bestowed by the cooperative community: induction into the Cooperative Hall of Fame. Hundreds gathered at a ceremony April 25 at the National Press Club in Washington, D.C., to honor them and their outstanding contributions to cooperatives.
To mark the 25th anniversary of the Cooperative Hall of Fame, a number of past Hall of Fame inductees attended the event. The anniversary was also marked by the launching of a new Cooperative Hall of Fame Web site, www.coopheroes.org.
Master of Ceremonies Harvey Sigelbaum, co-CEO of MultiPlan Inc., explained that the 2001 inductees were selected by two committees of national co-op leaders based on their 44 "genuinely heroic" contributions to cooperatives. "They truly are the best of the best," said Sigelbaum.
John B. Gauci was recognized for his life-long devotion to developing co-ops throughout the world to help people improve their lives. In his acceptance speech, Gauci emphasized the need for all cooperatives and co-op leaders to commit themselves to ongoing and new co-op development initiatives.
David A. Hamil served as administrator of the Rural Electrification Administration for 14 years under four presidents and was a driving force behind the creation of the National Rural Utilities Cooperative Finance Corporation. He was visibly touched by the honor bestowed upon him. At age 92, he thanked the group for remembering the "old timers" and their efforts.
Otis and Mary Lee Molz were honored for their years of volunteerism in cooperatives in the United States and overseas. Otis acknowledged the support of others in their efforts while Mary Lee urged the young cooperators in the room to devote themselves to co-ops.
The Cooperative Development Foundation, a national foundation promoting self-help and mutual aid in community, economic and social development through cooperative enterprise, administers the Cooperative Hall of Fame.
DFA sells interest in Suiza for cash, six dairy plants
On the heels of a merger between Suiza Foods of Dallas and Dean Foods of suburban Chicago, Dairy Farmers of America (DFA) has sold its nearly 34 percent interest in Suiza. In return, DFA gained more than $165 million plus ownership in six dairy plants located in: Miami and Winter Haven, Fla.; Birmingham, Ala.; Cincinnati, Ohio; Charleston, S.C.; and Salt Lake City, Utah. The plants represent areas where Suiza and Dean, the nation's two largest dairy processors, had overlapping operations.
Suiza paid $1.5 billion in cash and stock to buy Dean Foods and absorbed its $1 billion debt. The Associated Press and The Wall Street Journal report that the new company, which will carry the Dean name, will have an estimated $10 billion in dairy and specialty food sales. It will control a 30- to 35-percent share of the fluid milk market, depending upon the outcome of some antitrust issues. The deal is expected to be closed later this year. Suiza has completed 43 acquisitions in its eight-year history.
Meanwhile, DFA has placed its new plants in a new company called National Dairy Holdings, LP. It will share ownership with three dairy entrepreneurs. The firm will also operate the Valley Rich plant at Roanoke, Va., which had been jointly owned by DFA and Allen Meyer, one of the three entrepreneurs.
According to newspaper reports, U.S. Sen. Patrick Leahy of Vermont expressed reservations about the Suiza-Dean merger. "The acquisition would create a company with vast market power not only over consumers, but also over farmers who can expect to be offered even lower prices for their labor and products," he said. Last year, Leahy had asked the Justice Department to look into potential anti competitive activities of Suiza. "It already controls or handles 70 percent of the fluid milk in New England, and regional retail milk prices already have risen because of the concentration."
In other DFA news, its corporate board of directors has been reduced from 116 to 48, marking the end of the cooperative's initial restructuring period following its formation. The new board was seated at the April 3 annual meeting in Kansas City, Mo. The directors had been chosen earlier for a one-year term to represent a local district within DFA's seven geographic marketing areas in its 45-state territory. In the officer election, Herman Brubaker of West Alexandria, Ohio, was renamed chairman of the board, the post he has held since DFA was formed in 1998. Other officers are: Tom Camerlo, Florence, Colo., first vice chairman,; Charles Beckendorf, Tomball, Texas, vice chairman; Bill Siebenborn, Trenton, Mo., vice chairman; and Randy Mooney, Rogersville, Mo., secretary-treasurer.
DFA, the nation's largest dairy-cooperative, last year processed and marketed 45 million pounds of milk for its 27,000 members.
Swiss Valley sets dividend The board of directors for Swiss Valley Farms, Davenport, Iowa, has declared a 22-cent per hundredweight dividend to members who delivered milk to the cooperative in fiscal 2000. Swiss Valley earned a $6 million profit, from which it paid 12 cents per hundredweight in cash (54.5 percent) and the balance in stock.
The year was marked by tremendous growth in market share, membership and growth in equity for the cooperative, said Gene Quast, the cooperative's chief executive officer. The cooperative's milk supply increased 37 percent. Plant expansion this summer at Mindoro, Wis., will increase blue cheese production. Production and storage capacity has been expanded at the plant in Cedar Rapids, Iowa, which will increase the supply of cultured products, such as cottage cheese and yogurt.
In other news, the cooperative has totally revamped its website, www.swiss-valley.com, to offer members a myriad of information about the dairy cooperative. Each division has a site with informative pages linked from the main page. Members can also access, extensive producer information, including check history and test results. Swiss Valley has 1,700 members farming in Iowa, Illinois, Wisconsin and Minnesota.
When Bob Honse assumed the reins as CEO of Farmland Industries last September, he faced an immediate challenge to reduce the regional cooperative's level of borrowing. Several years of declining earnings and substantial-losses from a depressed fertilizer market in 2000 sparked a top-to-bottom review of all the cooperative's operations. Proactive measures to improve the balance sheet were identified as part of this review. Staff reductions, sale of assets and possible joint ventures for some of its operations were all considered.
One of the first results from there view is a new, grain-marketing joint venture with Archer Daniels Midland (ADM), a major investor-owned agricultural processor. This joint venture could generate potential savings of about $10 million annually, the cooperative projects. Farmland's internal review showed that its grain business borrowed the most but returned the least among its operating units. The new ADM/Farmland company will lease and operate the cooperative's 24 elevators and share the profits.
The Kansas City Star reports that Farmland will receive $3 million annually in lease fees. All of the 400 elevator employees will retain their jobs while another 100 employees at the co-op's headquarters will join the venture or be reassigned at Farmland. In addition to reducing the co-op's debt, the pact will enhance patronage-based earnings for the grain business, Honse said.
The grain business is characterized by low margins and high capital demands. Honse said the cooperative's only export facilities are on the Texas Gulf Coast. With the new venture, Farmland gains access to markets served through the Mississippi River, the Great Lakes region and the Pacific Northwest while ADM expands to the Great Plains wheat market.
In early May, Farmland announced that it was closing its canned-ham plant in Carroll, Iowa, which will cost the community 150 jobs. The 51-year-old plant was aging, and the popularity of canned hams has also declined, the co-op noted. The cooperative has also idled nitrogen fertilizer plants in Lawrence, Kan., Pollock, La., and Enid, Okla.
Diamond sales top $244 Million
Sales revenue from walnuts and other nuts increased 13 percent, to more than $244 million, for Diamond of California in fiscal 2000. Diamond generated net earnings of $18 million,17 percent higher than in 1999. Gross sales from Diamond Nut Co., which markets nuts other than walnuts, grew from $39 million to $53 million while earnings before interest and taxes increased 33 percent, from $ 3 million to $4 million. Diamond's equity resources now total $54.
Diamond completed its transition from the former Sun-Diamond Growers partnership and established separate resources for managing sales and distribution, sales administration and information system functions. International retail sales volume climbed 300 percent in the past five years. Food service and ingredient business grew 29 percent last year in the domestic market and 45 percent in the international market. Diamond is not only America's top walnut marketer, but also the leading brand in a variety of other nuts. Cooperative President Michael Mendes noted, "This extraordinary level of awareness derives from the company's investment in the brand."
AMPI leader urges more member participation in co-opOne of the basic tenets of cooperatives is member participation, although it's not always emphasized the way it should be. Mark Furth, general manager of Associated Milk Producers Inc.(AMPI), at New Ulm, Minn., feels so strongly about the issue that he made increased member participation one of his five-year goals for the cooperative. Last on his list was "growing new roots." Writing in the cooperative's "Dairymen's Digest" magazine, Furth explained, "Although AMPI has experienced near-record growth in membership and milk volume, member involvement has to keep pace. In a cooperative, involvement should not be optional. You have an investment in this farm-to-market business. It's your company. Is it working for you?" The magazine included a listing of the cooperative's elected leaders. "This listing is a useful tool when wanting to propose a resolution, discuss an issue or learn more about your cooperative," Furth continued. "Becoming involved may be as simple as calling a fellow AMPI member about a concern or as rewarding as aspiring to be on the corporate board of directors. You decide. It's your business. Accept the challenge!
"As an AMPI owner, 4,800 Midwest neighbors are your business partners. Together, you own a farm-to-market business that processes, packages and markets your milk. In an age when producers everywhere are striving to move their products up the food chain, you are well on your way," Furth reminded the membership.
During fiscal 2000, AMPI achieved $1 billion in sales, had increased earnings of $9.8 million and revolved $8.9 million back to members. Amidst an environment of rising producer exits and retirements, more than 300 new producers joined AMPI last year. The cooperative's record-breaking sales and volume of packaged cheeses were the catalyst for a $3 million facility expansion at Portage, Wis. The building project will be completed later this year and increase the plant's sales cooler capacity. "Our consumer-packaging facilities are a long-term investment form our business," Furth said. "New customer orders of aseptically packaged products made in Dawson, Minn., and cheese packaged in Portage resulted in double digit sales growth."
In the officer election following the annual meeting, Paul Toft, Rice Lake, Wis., former vice president of the board and a director for 14 years, was elected president. He succeeds Wayne Bok, Geddes, S.D., who is retiring from the dairy industry. The board has been downsized from 34 to 33 members. Toft has been marketing milk through AMPI to its plant at Jim Fall, Wis., since 1973.His youngest son, Mark, returned to the dairy farm this spring.
Texas rice co-op formed
A group of about 30 rice growers near the Wharton County community of Louise, Texas, have formed a new marketing cooperative to earn more from the long-grain rice market. Producers are not only suffering from historic low prices, but also from the high cost of farm production supplies, particularly fuel and fertilizer. The cooperative hopes to handle members' rice from the dryer to the grocery shelf. The interim board will canvass other rice growers with an eye to increasing membership. Simultaneously, it will work on developing the legal and business framework of the cooperative.
The new rice co-op has set a minimum commitment of 1.2 million hundredweights of rice and a maximum of 2.5 million hundredweights-about one-fourth of the rice grown in the Texas area west of Houston. The concept is similar to Riceland Foods, an Arkansas rice marketing cooperative. A key to the plan will be to buy or lease a mill with established brands which earn more than bulk rice in domestic and export markets. The cooperative already has a small mill in mind to purchase. Rice acres hit a 30-year low last year, but the yield was up due to improved varieties and ideal growing conditions.
Pork co-op faces obstacles
Despite opposition from a local group, Family Quality Pork Processors Cooperative of northeastern Nebraska is taking steps to operate a $2.4 million packing plant that can slaughter 250,000 hogs per year. In the first step, the Boone County Planing Commission has approved a site east of Petersburg. The next step will be to obtain a conditional-use permit to operate the planned $2.4-million facility, which would employ about 40 workers. The cooperative seeks to expand its current membership of 125 to 150.
Proponents say the facility will look more like a farm than a factory and have less odor and runoff than traditional slaughter plants. Investors see the cooperative as a way of helping small producers stay in business. Members are being asked to pay a fee of $12 for every hog they want slaughtered at the plant each year. Membership investment was open to the first 149 producers who wanted to invest up to $250 per person to fund the business plan.
Wisconsin co-op initiates semen research trial
Results are expected this summer from a sexed-semen research trial being conducted in collaboration with Accelerated Genetics of Baraboo, Wis., XY Inc. and Colorado State University. The goal is to introduce sexed semen to the North American artificial insemination industry. It's the first time an AI organization in the United States has conducted such a research trial. It will inseminate 1,200 virgin heifers in a concentrated number of dairy herds. The semen was collected from three Accelerated Genetics' sires housed at XY Inc., in Ft. Collins. The ultimate goal is to predetermine the sex of calves from specific matings with the result to have faster gain within herds.
MMPA returns $1.9 million in cash
For the sixth consecutive year, Michigan Milk Producers Association (MMPA) has paid $1.9 million in cash patronage refunds to its members. The funds represent 30 percent of the $65.7 million allocated earnings generated by the cooperative in fiscal 2000. The patronage includes all of the farm supply earnings and 25 percent of the milk marketing profits. Cash payments set a record because the $4.1 million returned in 1988 and1989 was paid in equities.
"The ability to make these cash payments and maintain a competitive pay price is the essence of a strong cooperative," said MMPA President Eldwood Kirkpatrick. "We have consistently generated premiums and net savings (since 1987) while requiring no capital equity retains from our members," he said. "We have operated without any equity capital retain and relied on plant operations, milk marketings and member dues to fund the cooperative."
Foremost converts to mozzarella
A $91,000 grant from the Wisconsin Development Fund to Foremost Farms is being used to retrain the 50 employees at its cheese production plant at Richland Center, Wis., which will switch from manufacturing cheddar to mozzarella cheese. The major conversion comes on the heels of a tough year for the cooperative based at Baraboo. Earnings for fiscal 2000 reached only $10 million, down from $19 million a year earlier. Similarly, revenues dropped to $1.1 billion from $1.3 billion in 1999 due to lower cheese prices and higher energy costs.
Patronage refunds for fiscal 2000 reached $12.6 million, or an average 23 cents per hundredweight for milk marketed through the cooperative. Duaine Kamenick, Foremost's finance vice president, said it had been a trying year for dairy farmers. "Milk prices were lower than they had been in decades and were followed by record prices in 1998," he said. The average milk price for Foremost members in 2000 was $11.62 per hundredweight, vs. $13.93 per hundredweight in 1999. Members received patronage refunds totaling $12.6 million, down $2.31 from the 1999 price of $13.93 per hundredweight. Members marketed 5.3 million pounds of milk. As in past years, Foremost will pay 25 percent of its patronage in cash and add the rest to members' equity accounts.
Record loan level for Texas FCBs
The Farm Credit Bank of Texas and 23 local credit cooperatives in the five-state Tenth Farm Credit District ended fiscal 2000 with record loan volume and strong earnings despite difficult weather and market conditions faced by many agricultural customers. Gross loan volume reached $5.2 billion, a new record for the 84-year-old district and 9.1 percent higher than 1999. Improvements in the livestock industry contributed substantially to the strong demand for agricultural and equipment loans. Expansion in the integrated processing and marketing sector also were factors. [end]
Beet Grower co-ops on brink of processing most U.S. sugar
"Once Imperial sells Michigan Sugar and Western Sugar sells its factories, 90 percent of the sugar beets planted (nationwide this year) will be processed at cooperative factories," said Dick McKamey, president of the Washakie Beet Growers Association at Worland, Wyo. "The growers needed to take this risk not only for themselves, but also for the community and the (factory) employees," McKamey said.
The Washakie association has signed a one-year lease for the Holly Sugar factory. The company, which had planned to close the plant unless growers leased it, will continue operating it and market the sugar.
Growers have been plagued with the lowest prices in 20 years, a glut of sugar, high energy costs and cheap imports from Canada and Mexico. Plans have been postponed until June 30 by the Rocky Mountain Sugar Growers Cooperative to purchase Western Sugar Company at Scotts Bluff, Neb. The cooperative was formed last July when the Western plants were offered for sale.
The delay is expected to help the cooperative to solidify its financing. Also sidelined was a proposal by the Scotts Bluff city council to commit $500,000 to a 10-year loan from the city's sales tax proceeds to help the cooperative with operating expenses. During the interim, the cooperative will seek to increase its committed acres from 150,000 to 170,000, especially in Colorado and Nebraska. The plants operate more efficiently at the 170,000-acre mark, although Western Sugar's six factories can process up to 185,000 acres of sugar beets.
Growers in Wyoming, Montana, Colorado and Nebraska are subscribing to the new cooperative at a rate of $185 per acre. The $78 million agreement will give sugar beet growers their first processing plant ownership stake in the 90-year history of the North Platte River Valley's sugar industry. Hod Kosman, a Scottsbluff bankerer, volunteered to assist the cooperative. If farmers don't preserve the region's sugar industry and buy Western Sugar, Kosman says land values could drop up to 20 percent. "It's [investing] an excellent way for farmers to participate upstream, and they don't have that opportunity often," he said.
[Photo courtesy American Crystal Sugar]
Rick Dorn, a third-generation Montana beet grower and president of the cooperative, said "This is not the growers' burden alone." Although prices have bottomed, cooperative backers believe that's why the deal is within reach of the growers. The cooperative is offering to lease shares to non-members at $70 per acre for two years; after that, producers can buy shares for an extra $140 per acre.
The lease will keep the plant open to handle this year's beet crop. The agreement was reached just as farmers were about to sow the 2001 crop. The cooperative will have title to all the sugar produced. In an Associated Press report, Washakie President Rick McCamey said, 'The growers needed to take the risk not only for themselves, but also to support both the community and employees."
Meanwhile, Imperial has signed a letter of intent to sell the capital stock of Michigan Sugar Co.'s four factories to Michigan Sugar Beet Growers Inc., a new cooperative of 1,400 growers based at Saginaw. However, the cooperative recently learned it did not qualify for tax-exempt bonds to finance and purchase the facilities. It is seeking low-interest financing elsewhere. The group needs to secure about $40 million plus an undetermined line of credit to operate the processing plants.
The cooperative expects to secure 125,000 acres, or the amount of sugar beets processed annually in the Michigan plants. Richard Leach, its executive vice president, said the only way growers will be paid for last year's crop is for members to contract with the cooperative.
The transaction is subject to the negotiation of a definitive agreement and approval of the company's board of directors and resolution of Imperial's Jan. 16 petition for relief to the U.S. Bankruptcy Court for the District of Delaware.
Purchase terms include a cash payment of $55 million at closing, deferred payments of $10 million and the cooperative's assumption of $18.3 million in industrial development bonds. The cooperative faces an Oct. 1 financing deadline. If the deal is closed later, the company will manage the four Michigan factories and market the processed refined sugar under a lease and management agreement so the 2001 crop can be processed. Further, the cooperative will sign a sales and marketing agreement so the company will continue marketing the refined sugar processed by Michigan Sugar Co. after the sale. The cooperative has members in Michigan and Ontario, Canada. A membership drive will follow to sell about 24-million shares at $200 each plus delivery of one acre of production.
