Spreading Seeds of Success
Alabama Farmers Co-op and its Bonnie Plant Farm play
big role in strengthening
the rural South
Editor’s note: This article is an expanded version of one that
originally appeared in CoBank’s 2006 annual report. Learn
more about Alabama Farmers Co-op at www.alafarm.com,
and Bonnie Plant Farm at www.bonnieplants.com.
f you’re a resident of rural Alabama or
even parts of Florida, Georgia and
Mississippi, you’re likely to benefit—perhaps more than you know — from
an agricultural cooperative that was
born during the 1930s to help farmers get a tax break on
nitrogen fertilizer.
These days, you’ll find much more than fertilizer at
Alabama Farmers Cooperative (AFC), one of the largest
farmer-owned businesses in the Southeast. Since it
began 71 years ago, the federated supply and marketing
cooperative has served the region with nearly every
imaginable agricultural supply and service.
Based in Decatur, Ala., the multifaceted company is
owned by 46 local, farmer-owned cooperatives that
represent more than 30,000 members. Originally known
as Tennessee Valley Fertilizer Cooperative, AFC
typically sees annual revenues reach more than $300
million.
Grain marketing, cotton ginning and catfish
processing are major divisions of AFC. Member co-ops
also operate 80 farm-supply retail stores that sell
everything from feed, seed, and fence supplies to garden
materials, animal health products and sporting goods for
a rising number of non-farm residents.
Powered by its diversity, AFC is channeling income
to farmers, jobs to 2,300 people, support to related
businesses and millions of dollars into rural
communities.
“AFC and its member co-ops provide a lot of retail
outlets in the community and much-needed products
and services for farmers,” says Jimmy Newby, an Athens, Ala.,
farmer whose family — through its membership in
Limestone Farmers Cooperative — has done business with
AFC since 1960. “Those benefits and services would be
sorely missed if AFC wasn’t here to provide them.”
This Southern agricultural leader has built its success in
large part by anticipating customers’ needs and developing
innovations to meet them. Perhaps no AFC division typifies
that approach more than its Bonnie Plant Farm division.
Winning over Wal-Mart
Based in Union Springs, Ala., Bonnie Plant Farm is one of
the nation’s largest sellers of tomatoes, vegetable plants, herbs
and flowers. As a wholesale company, Bonnie Plant Farm
doesn’t sell directly to the public. Instead, the division ships
to 49 states, supplying major home and garden retailers like
Wal-Mart, Home Depot and Lowe’s.
In Union Springs alone, Bonnie Plant Farm employs 200
workers, mostly in greenhouse and delivery operations, and
generates a yearly payroll of $40 million.
“We’re one of two major employers in this area [the other
is a chicken-processing plant] with a huge economic impact,”
says Bonnie Plant Farm manager, Dennis Thomas. “A lot of
people are counting on us to succeed.”
Bonnie Plant Farm has achieved its success in part with an
innovative inventory and delivery system for its retail buyers.
Using a process now copied by competitors, Bonnie Plant
Farm trucks its high-quality plants directly to customers’
stores, where it also stocks the products on the shelves. Only
when plant sales are recorded at the cash register by
scanning each container’s Universal Product Code is Bonnie
Plant Farm credited.
The paperless system streamlines inventories and increases
efficiency for retailers. Most important, it creates customer
satisfaction. It’s a major reason why Wal-Mart named Bonnie
Plant Farm its Vendor of the Year in 2005 — and why the
plant wholesaler has seen its revenue soar.
Partnering for success
Today, AFC relies on a handful of lenders to finance the
operations of Bonnie Plant Farm and the co-op’s numerous
other divisions. As a long-time financial partner, CoBank
helps fund AFC’s seasonal operating needs. CoBank
specializes in financing U.S. agribusinesses, particularly
cooperatives, as well as rural communications, energy and
water systems and agricultural exports.
A CoBank subsidiary, Farm Credit Leasing supplies
delivery trucks and greenhouse equipment for Bonnie Plant
Farm. Bank of America and Deere Credit serve as additional
AFC financial partners.
“Having multiple lenders was once unthinkable,” says
AFC’s chief financial officer, Dan Groscost. But, he adds, the
diverse banks work well together to help manage risk for
AFC’s multimillion-dollar operations.
Grandparents’ legacy
“There’s no question that our people, products and
partnerships are key to our success,” says Tommy Paulk, AFC’s CEO since 1996.
Paulk, the fourth CEO in the co-op’s history, might also
credit his grandparents, Bonnie and Livingston Paulk. The
two established Bonnie Plant Farm in 1918 near Union
Springs, Livingston’s hometown.
Expanding beyond a bare living of raising cotton, corn,
peanuts and hogs, the couple began producing cabbage plants
to sell to merchants during the winter months. The venture
proved successful, with the Paulks boosting their efforts by
advertising in the local newspaper.
The business grew steadily as the couple added more fieldgrown
vegetables to their sales inventory. They soon
christened their budding business, naming it after Bonnie
Paulk. The Paulks began advertising their vegetables in every
weekly paper in Alabama and in the South’s leading farm
papers.
By 1940, Bonnie Plant Farm counted about 2,000 regular
customers. It shipped to 10 Southern states besides Alabama.
In 1975, Alabama Farmers Co-op bought Bonnie Plant Farm.
Business grew rapidly through the 1980s as Bonnie Plant
Farm added more greenhouses and plant-delivering trucks.
The next generation steps up
“As mass market retailers began to expand into the home
garden trade by opening garden centers, we suddenly saw an
opportunity to increase sales at an even greater pace,” Stan
Cope, another grandson of Livingston and Bonnie Paulk,
remembered a few years later.
To prepare for what was to be tremendous growth in the
1990s, Bonnie Plant Farm increased its distribution stations
in other states, hired more salesmen and constructed more
greenhouses. By 2005, the company counted 35 stations in 25
states. Its 293 route salespeople delivered its vegetable and
flower plants to more than 8,000 accounts nationwide.
Agriculture’s cyclical nature, however, soon took a turn for
the worse. In 2006, AFC and its members faced a year-long
drought, low yields, rising interest rates, high input prices
and increasing pessimism about the prospects for a farmerfriendly
Farm Bill in the next Congress.
A disappointed Paulk would report to members that AFC
had experienced its “worst financial performance in several
years.” Even thriving Bonnie Plant Farm felt the hardships of
2006. Despite record sales that year, the division ended up
earning less than in 2005, hit hard by growing expenses for
supplies, raw material costs, propane and fuel.
Paulk vowed that “a financial turnaround must be job one
for us in 2007.” By spring, the recovery was taking place.
Hope for the future
“Our members are incredibly loyal to this system, and
their unwavering support has enabled us to have the best start
we’ve seen for a long time,” Paulk reported this spring. “All
divisions have exceeded expectations through five months of
operations and are on a pace to produce record earnings once
again for [fiscal year] 2007.”
The downturn of 2006 would not have surprised Paulk’s
grandmother, Bonnie, nor would it have discouraged her. In
her 1940 history of Bonnie Plant Farms, she recalled the
troubles that Southern farmers as well as her family’s business
had seen, and explained her outlook.
“Although we have not made any money, we have made a
good living,” she noted. “Our expenses are heavy, increasing
as business grows... We started out just as everyone does, with
the idea of making some money. We are still living and
working in hopes.”
It’s not likely that Bonnie Paulk foresaw the heights that
Bonnie Plant Farm would reach. But 67 years later, her
determination to survive still rings true, not just for her
grandson and the Alabama company he manages, but for
rural cooperatives the nation over.
