NEWS LINE

 Compiled by Patrick Duffey

Pacific Coast Producers
moves tomato operation
 Tomato growers around Woodland, Calif., are getting a boost this year with the opening of a newly refurbished processing plant, purchased earlier by Pacific Coast Producers (PCP) from Del Monte. The 40-acre operation had been closed during the 2001 season. In moving its entire tomato processing operation from Lodi to Woodland, PCP significantly will cut its transportation costs. “All of our growers are now within a 20-mile radius of Woodland,” said President Larry Clay. He called the move “a great opportunity for the cooperative.”

Tonnage is expected to climb from 350,000 tons a year to 510,000 tons. PCP is the third largest processor and marketer of canned peaches, pears, apricot and fruit cocktail mix nationwide and the leading supplier of canned tomato products.

WestFarm Foods expands
A major dairy plant expansion came on line this summer at WestFarm Foods’ plant at Jerome, Idaho. The addition to the original condensing plant will allow it to process 3.3 million pounds of milk into powder every day. The expansion of the original condensing plant was an outgrowth of the 1998 corporate strategy to become a lowcost processor of selected finished dairy products.

The $40.2 million project will open capacity at existing plants to process milk from the Treasure Valley and eastern Washington state, where the supply is expected to grow an additional 1.5 million pounds per day in coming years. The company’s aim was to increase its presence in Idaho, a state where milk production has been climbing from 6 to 12 percent annually.

USDA co-op statistician
Charles Kraenzle dies
Charles A. Kraenzle, who was responsible for compiling USDA’s annual cooperative statistics report and a number of articles each year for this publication, died Aug.14 at his home in Annandale, Va. Kraenzle, 61, was awarded USDA’s prestigious “Superior Service” award in 2000 for his contributions to America’s cooperative sector.

“The number of co-ops and members in the nation, their share of various commodity markets and every thing else one could wish to know about America’s farmer cooperatives were compiled and reported by Charlie and his staff,” said Randall Torgerson, deputy administrator of USDA’s Rural-Business Cooperative Service. “He will be sorely missed not only here at USDA, but by the nation’s cooperative community.”

Kraenzle had directed USDA’s cooperative statistics and technical services staff since 1988. As director of USDA Agricultural Cooperative Service’s cooperative management division earlier in the 1980s, Kraenzle was responsible for supervising research and other work related to farmer cooperative finance strategies, management and operations, policy, statistics and automated data processing.

He began his career as an agricultural economist with USDA’s Farmer Cooperative Service the forerunner of today’s USDA/RBS Cooperative Services program in 1973. Kraenzle earned his masters degree in agricultural economics at the University of Missouri and a doctorate at the University of Connecticut.

Earlier, in partnership with his brother, he had a 700-acre grain and livestock farm in Ste. Genevieve, Mo. Kraenzle served on the board of local cooperatives associated with Missouri Farmers Association and MFA Oil Co.

Kraenzle authored or co-authored numerous publications and articles related to agricultural cooperatives, including reports on grain marketing, problems and issues facing farmer cooperatives and cooperative use of subsidiaries. In 1980, he coauthored the book, “Survival Strategies for Agri cultural Cooperatives,” published by Iowa State University.

Eldon Eversull is serving as acting director of the Cooperative Services statistics staff until a permanent replacement is named.

Iowans form beef co-op
Iowa cattle producers, with the help of low-interest loans from the state to finance equity stock purchases, have formed Iowa Quality Beef Supply Network, a new cooperative. The Iowa Cattleman’s Association promoted the effort. The co-op plans to raise $7.5 million to renovate and operate a beef slaughtering plant at Tama, in eastern Iowa. The state has set aside $10 million for producers to use up to $250,000 per investor for 5 years. Plans call for American Foods of Green Bay, Wis., the nation’s ninth largest meat packer, to manage the plant and maintain a 25 percent ownership interest.

The plant, scheduled to open this winter, is expected to employ 400 people and slaughter 300,000 cattle annually. Organizers plan to slaughter fed cattle, Holstein steers and cows at the plant and produce specialty beef for Jewish and Muslim markets. The cooperative of 980 producers won the right in bankruptcy court to lease the plant from the city.

Pro Fac sells majority
interest in AgriLink
Nearly 90 percent of the 500 grower- members of Pro Fac Cooperative, Rochester, N.Y., have voted to sell their controlling interest in AgriLink Foods, a frozen-vegetable processing and marketing subsidiary, in exchange for a $175 million equity investment by Vestar Capital Partners. Members will still have a minority interest reportedly about 42 percent in AgriLink. The company will be known as Vestar/ Agrilink Holdings LLC, an affiliate of the Vestar financing company of New York.

In September, Pro-Fac paid a 43 cent dividend for its fourth quarter to shareholders of its class-A preferred stock. Payment had been delayed pending the Vestar deal. AgriLink also secured $470 million in new syndication financing from more than 40 institutions for use in reducing existing bank indebtedness.









LOL expands marketings
in Mitsui, Dean ventures
In a pair of joint ventures this summer, Minnesota based Land O’ Lakes (LOL) significantly expanded its potential dairy product marketings on both the national and international scenes. The most recent move was to expand an alliance and licensing arrangement with Dean Foods, Dallas, Texas. Dean, through its Morningstar Foods subsidiary, will use the LOL brand name nationally on a broad range of value-added milk and cultured dairy products.

The first product launched under the new venture is LOL’s Dairy Ease, a lactose-free milk.

The venture supercedes an earlier dairy marketing alliance between the two firms. Jack Gherty, LOL president, said the cooperative would benefit from Dean’s national brand-based product development and expertise. The arrangement grants perpetual, royalty-bearing national licensing rights of the LOL brand directly to Dean Foods and includes additional value-added products, such as milks, aseptic products, infant formulas and soy products.

On the western front, LOL and Mitsui & Co. Ltd., one of Japan’s top trading companies, have opened Cheese & Protein International, a $150 million cheese and dairy plant joint venture at Tulare, Calif. The business can process 3 million pounds of milk a day. Tulare County’s milk was valued at $1.1 billion last year, the first Golden State county with a billion-dollar commodity.

The 450,000-square-foot plant, with its staff of 120 employees, had been operating for a couple months before the July grand opening. The plant will initially produce 120 million pounds of mozzarella cheese and 75 million pounds of whey solids used as thickening and foaming additives in food products, including infant formula, nutritional drinks and ice cream. In the second phase, to be completed in 2004, production will double to 240 million pounds of cheese and 150 million pounds of whey. LOL’s mozzarella operation at Gustine, Calif., acquired in 2000 from the Beatrice Group, has seen staff scaled back from 143 to about 100. The operation may be shut down later this fall, and the building sold or leased because of the new Tulare operation.

Deegan, Solberg, other co-op leaders win honors
Michael Deegan, chief executive officer for ACDI/VOCA, the development arm of the National Council of Farmer Cooperatives in Washington, D.C., is recipient of the distinguished service award from the Association for International Agriculture and Rural Development. He was cited for building “a strong, more efficient organization that is highly respected in the international agricultural development community.” Deegan has been credited with engendering appreciation between developers and policy makers for the important role of agriculture in economic development. He says agriculture is a key engine of growth in most developing countries.

In ACDI/VOCA’s most recent annual report, Deegan says the organization “broke new ground with endeavors that are shaping the way economies and societies are advancing.” Among the 60 projects in more than 40 developing countries last year were community development efforts in Bolivia and Serbia, rehabilitating a former war zone near Eritrea, reaching out to people with HIV/AIDS in Africa, conducting a feed subsidiary program to help farmers and herders cope with endemic water shortages in the West Bank and Gaza and launching a supplemental feeding program for Indonesian school children.

Other co-op leaders winning awards include: Riceland buys Missouri mill
To serve members’ increased acreage in Missouri, Riceland Foods of Stuttgart, Ark., plans to buy a rice storage and milling facility in New Madrid, Ark., from Louis Dreyfus Corp. Riceland President Richard Bell said the mill has access to major highway, river and rail transportation. “I expect Missouri, in time, will be the third largest rice growing state in the South,” Bell says. Rice acreage in southeast Missouri has doubled in the past 5 years and the added supply has severely strained Riceland’s other marketing facilities in the region, he said.

The New Madrid facility, built in 1988 and updated with state-of-the-art milling equipment, would ease the situation at the cooperative facilities, particularly at harvest time. The facility is located within the New Madrid Port Authority, and Bell said Riceland plans to bring more value-added business and employment to the port. Of the cooperative’s 9,000 members, 700 farm in southeast Missouri.

Farmland suit nets $17 million;
reorganization plan shaping up
Although it’s a far cry from the $42 million in damages the cooperative sought from multiple sources, it appears chemical giant BASF Corp. will pay Farmland Industries more than $17 million in damages, before legal fees and expenses, to settle a vitamin price fixing lawsuit. The cooperative had purchased $123.5 million in vitamins for use in animal feed products. Farmland’s price fixing suits against other vitamin makers and distributors continue.

Meanwhile, Farmland President and CEO Robert Terry said the cooperative is preparing a strategic reorganization plan for a September presentation to the bankruptcy court and creditors. The coop hopes the reorganization plan will be approved in November. “It is designed to ensure Farmland emerges as a financially strong company for the benefit of all stakeholders,” he said. The businesses involved in the bankruptcy have assets of about $2 billion and liabilities of about $1.5 billion. A third quarter deficit of $189.5 million was driven by $55.1 million in petroleum losses, due partly to refinery maintenance.

Terry, however, has been optimistic about improved earnings later this year in the Refrigerated Foods unit, which includes Farmland’s beef and pork products. Similarly, he is anticipating profits from the nitrogen fertilizer business this fall after multi-year losses, caused by high natural gas prices and adverse weather.

Since filing for Chapter 11 bankruptcy protection May 31, Farmland has closed 16 convenience stores in Arkansas, stopped production at several fertilizer plants due to the weak market, laid off more than 100 employees, terminated another 180 part-time and fulltime employees, and is negotiating to sell a phosphate fertilizer operation.

The bankruptcy court allowed Farmland to borrow $306 million to sustain its operations.

The cooperative owes about $570 million to 20,000 individual bond holders, about $340 million to secured creditors, such as banks, and another $590 million to other unsecured creditors, such as vendors.

West Central opens Iowa’s
largest soydiesel plant
With an eye toward helping the nation wean its dependence on foreign oil, West Central Cooperative of Ralston, Iowa, has opened the nation’ largest soydiesel processing plant. The $6 million facility, located next to the cooperative’s soybean processing plant, will turn 10 million bushels of locally grow soybeans into 12 million gallons of soydiesel fuel for diesel markets across North America.

“People are recognizing that a soydiesel blend will extend the life of vehicle and machinery diesel engines and improve air quality at the same time,” says Chief Executive Officer Jeff Stroburg.

More companies with fleet vehicles are being pushed by mandated environmental standards to use a diesel blend because it can reduce or eliminate the diesel odor. Initially, the West Central plant will use oil from its own processing plant, but as production expands it will buy soy oil from other processors in Iowa, which will help relieve the glut in the state, Stroburg said. West Central’s 18 grain elevators receive soybeans from up to 12 counties in western Iowa.

Adami heads
livestock co-op
Wisconsin’s Equity Cooperative Livestock Association has chosen its chief financial officer to be its new president and chief executive officer. The board earlier had turned to Charles Adami, its vice president of finance, to serve as interim CEO this spring when former President Gregory Beck resigned. Although Adami’s tenure with the cooperative only started in 2000, he had 25 years prior experience in business, mostly in financial management, team building and business forecasting. He said the 80-yearold cooperative’s financial stress was caused by reduced livestock volume amidst an ever diminishing milk herd in its trade territory, packer concentration, increased operating costs and personnel changes. The cooperative’s operating revenue dropped almost $240,000, to $11.9 million, while operating expenses climbed by $500,000, to $12.1 million. A sharp increase in patronage refunds of almost $170,000 rescued cooperative members, but final net proceeds were down almost $800,000, to $42,559.

North Carolina craft
cooperative thriving
After only six months in operation, the new Appalachian Heritage Crafters store in Murphy, N.C., may be setting a pattern for other rural areas in economic transition. When the community’s primary manufacturer exited for Mexico, the all-volunteer cooperative was formed. Murphy is nestled in the Appalachian Mountains in the southwestern corner of the state near Georgia and Tennessee. Crafters have been making everything from patchwork quilts and bark baskets to carved walking sticks and homemade jam. The store generated $50,000 in profits in its first six months.

Bison co-op buys
Denver food firm
With an eye toward boosting its meat sales in a glutted industry, the North American Bison Cooperative, New Rockford, N.D., has purchased Denver-based New West Foods, which sells bison meat in retail grocery stores. The bison cooperative, formed in 1993 by 350 producers in 19 states and four Canadian provinces, has focused primarily on the restaurant and food service business, so merging the sales and marketing organizations with the Denver firm makes sense, says Dennis Sexhus, the cooperative’s chief executive officer.

The co-op was the major supplier to New West Foods, formerly the Denver Buffalo Co. Retail labels from both firms will be used on bison meat products. While production still outpaces market development, Sexhus sees the industry returning to health in another year or so. The cooperative’s sales this year are expected to reach $25 million, or double the 2001 level.

Buffalo numbers have been climbing despite a glutted market for buffalo meat. The national buffalo herd numbers about 400,000, compared with only 50,000 a decade ago. While the cooperative provides half the nation’s supply of buffalo meat, it has nearly 4 million pounds the equivalent of a year’s production in its freezers. The U.S. Department of Agriculture recently agreed to buy $10 million in buffalo meat for hospitals and prisons.

Agway selling insurance
unit to Indiana Farm Bureau
Agway Inc., Syracuse, N.Y., has signed an agreement to sell Agway Insurance, its property and casualty insurance company, for $21 million to the Indiana Farm Bureau Insurance Co. Agway’s wholly owned insurance subsidiary wrote more than $30 million in premiums to more than 300 independent agencies in 10 New England and eastern states. Indiana Farm Bureau has 465 independent agents, nearly $400 million premiums in force and serves more than 275,000 members. The deal requires approval by the New York Insurance Department.

Tillamook marketing effort
targets Latino population
This spring, Tillamook County Creamery Association introduced cheese recipes using Monterey Jack and Cheddar cheese aimed at Latino families. The idea stemmed from a cheese recipe contest last year sponsored by the Oregon-based dairy cooperative. Tillamook used a registered dietician to guide development of the recipes for the Latino community and to show how to incorporate cheese into their diets to counter calcium deficiencies. Recipes were distributed to independent retail locations and to Catholic parishes in the Los Angeles area.

The 92-year-old cooperative is owned by about 150 dairy farmer families in Oregon’s Tillamook County.

Farmland preservation
honor comes with $10,000
A Nov. 1 deadline has been set for farmer or rancher nominations for American Farmland Trust’s annual $10,000 Steward of the Land award. The award honors farmers who demonstrate exceptional on-farm stewardship and actively promote farmland protection policies across community lines. To obtain a nomination kit, call 202-331- 7300, ext. 3044; e-mail gchen@farmland. org with your name and complete address or access the trust’s website at: http://www.farmland.org/steward. Grace Chen is award coordinator.

Bushel pasta co-op
tries retail brand
Bushel 42 Pasta Co., a young pastamaking cooperative at Crosby, N.D., is experimenting with its own retail pasta brand. The cooperative, which opened earlier this year, plans to sell a small amount of lasagna under its own brand and logo in some West Coast retail stores, with a Bushel 42 macaroni and cheese product to follow soon. The cooperative, owned by 250 farmers in North Dakota and eastern Montana, drew interest from discount retail stores and drug stores after being featured in a trade magazine article. The firm makes specialty pasta items for food companies and food service providers.

The cooperative got a boost from USDA Rural Development in the form of an 80 percent guarantee of a $2.8 million-loan to help the new cooperative buy machinery and equipment. The loan will help create another 35 jobs.

The company has become a local source of pride for the Divide County community of 1,000 residents. However, the cooperative has no plans for immediate widespread distribution of its products to grocery stores. Shelf space cost, or slotting fees, are an expensive part of developing a market brand, said Mark Gunter, sales and marketing manager. “It’s the cost of doing business that has to be built into your program.”

Forty-two pounds of pasta can be derived from a single bushel of wheat, hence the cooperative’s trade name.

DFA, Dairylea solidify pact;
Black Hills Milk to merge
Dairy Farmers of America (DFA), Kansas City, Mo., has expanded the scope of its joint venture relationship with Dairylea Inc., a dairy bargaining/service cooperative at Syracuse, N.Y. Dairylea has become DFA’s first cooperative member by making an initial $3 million investment in DFA and agreeing to future retain contributions. Two Dairylea members Clyde Rutherford and Sandy Staufer have been placed on the DFA board, giving Dairylea a voice in DFA’s policy and marketing decisions.

For the past several years, Dairylea has been operating Dairy Marketing Services, a marketing venture within DFA’s Northeast Council. DFA markets Dairylea’s 5.5 billion pounds of annual milk production. The latest action leaves the door open to a future merger.

Dairylea, which also offers nine other businesses services including insurance and financial services to its 2,000 dairy farmer members, has combined annual sales of close to $1 billion.

In another action, the 43 members of Black Hills Milk Producers at Rapid City, S.D., agreed to merge with DFA. Black Hills Milk members produce 70 million pounds of milk annually. Manager Mike Paulsen will continue to provide marketing and member services. Bob Verhuizen, Black Hills chairman, was elected to a 2-year term on the DFA Central Area Council.

Gail Kring new cotton co-op CEO
Gail Kring, currently vice president of operations, will become the new chief executive officer this fall for PYCO Industries Inc., a cotton processing cooperative based at Lubbock, Texas. Kring will succeed Wayne Martin, the current CEO, who will be retiring after almost a decade at the helm. Next year, Martin will complete 13 years on the CoBank board. PYCO is owned by cooperative cotton gins in Texas, Arkansas and Mississippi and has processing facilities at Lubbock and Greenwood, Miss.

Co-op increases security
for anhydrous tanks
To thwart theft and increase community safety, Westland Co-op at Crawfordsville, Ind., has spent $25,000 to install locks on its 500 anhydrous ammonia tanks. Phil Pirtle, risk coordinator for the cooperative, said it wanted to prevent any tampering or theft of anhydrous ammonia, which can be used to manufacture methamphetamines. The locks can only be opened with a key and can not be cut off.

CHS adds Fairmont crusher,
expands grain businesses
A $60 million soybean crushing plant, slated to open for the 2003 fall harvest, is under construction near Fairmont, Minn., by the Harvest States Division of CHS Cooperatives. When completed, it will double the crushing capacity of 110,000 bushels at CHS’ plant in Mankato, Minn. The Fairmont plant will employ 38 people full-time.

Steve Burnet, CHS chairman, likened the expansion to planting seeds for a crop that will be harvested for multiple seasons. “The soybeans producers deliver to the plant will begin a value-added journey through the cooperative,” he said.

Meanwhile, CHS has purchased six local grain elevators in North Dakota from Cargill. They have been attached to area local cooperatives affiliated with CHS. Similarly, grain elevators at Denton and Geraldine, Mont., have been purchased by CHS from General Mills and will be managed by Central Montana Coop, a CHS member local. It plans to negotiate with a nonprofit, shortline railroad at Denton to haul harvested grain this fall from the locals to the high-speed shuttle loader at Moccasin, Mont., which was built 2 years ago by CHS and United Grain Corp.

Harvest States Foods, part of CHS’ Harvest States division, has broken ground for a new tortilla processing plant at Newton, N.C. The 10,000- square-foot facility will produce corn and flour tortillas and tortilla chips for eastern retail and food service customers. When completed next summer, the plant will employ 70 people and operate two shifts.

Co-op seminar set for Spokane
The 31st cooperative leadership seminar is slated for Spokane, Wash., Jan. 8-10, and sponsored by the Executive Institute for Northwest Cooperatives. The program features seminars for new directors, valuable tools for established cooperative directors and managers and networking with cooperative leaders from Idaho, Oregon, Washington, Montana, Utah and Alaska. For further information, call 208-888-0988.

Calcot makes cotton payment
Members of Calcot, Bakersfield, Calif., received a 4-cent-per-pound progressive payment this summer, signaling a slight recovery in the cotton futures market. The market recently reached a historic-low price of 28 cents per pound. The installment was for 2001-02 San Joaquin Valley acala cotton. Chairman Tom Smith said the payment was tied to improved export sales due to lower value of the dollar and favorable timing.

Bothast heads ethanol center
A new, $20 million corn-to-ethanol research center being built on the campus of the University of Southern Illinois at Edwardsville will be directed by Rodney Bothast. He had been research leader of USDA’s fermentation biochemistry research uni at the National Center for Agricultural Utilization Research at Peoria, Ill. The new center is being financed by federal and state funds.

Bothast will supervise a staff of about 12. He hopes to attract and train graduate students to work in the ethanol center, the first in the public domain to explore ways to convert starch in corn into fuel for internal combustion engines.

Kansas gets first cotton gin
Southwest Kansas farmers looking for an alternative crop will have access to a new cotton gin this fall, thanks to the formation of Northwest Cotton Growers Inc. It is building a new $3.5 million gin on a 46-acre site near the community of Moscow.

Five years ago, cotton as a cash crop was virtually unknown in the state. But about 45,000 acres of cotton were harvested last year. The cooperative’s location will eliminate a transportation cost hurdle. The closest gin was hundreds of miles away.

The new gin will have the capacity to handle 60,000 bales of cotton. The ginned cotton will be hauled to Altus, Okla., where it will be warehoused and marketed by Plains Cotton Cooperative Association.

Debts force closure of
Heritage Tomato Co-op
Touted in 1999 as an economic model for other rural communities to emulate by former President Bill Clinton, the Hermitage (Ark.) Tomato Cooperative Association folded this summer under a $9.5 million debt. Its tomato processing center, never put to use, along with other cooperative property and equipment, will be sold at auction Oct. 11 by Farmer’s Bank of Hamburg, Ark.

NMPF monitors dairy imports
The National Milk Producers Federation is producing “Import Watch,” a new quarterly on-line newsletter which will analyze the flow of imported dairy products into the United States and how they affect the domestic market. President Jerry Kozak noted that dairy imports have risen from 3.21 percent in 1995 to 5 percent in 2000. He said the newsletter was designed to help dairy farmers, processors and policymakers gain a better understanding of the relationship between dairy imports and the domestic marketplace. It can be view at www.nmpf.org.

Changing Faces, focus of Mid-
Atlantic Cooperators Event
“Cooperatives: Changing Faces” will be the theme of keynote remarks by Chuck Cruickshank, director of procurement, member services and transportation for Land O‚ Lakes at a conference Oct. 22-23 at Carlisle, Pa. The conference is sponsored by the Mid-Atlantic Alliance of Cooperatives. Also featured will be William Beckham, vice president and director of internal audit at AgFirst Farm Credit Bank, who will discuss business ethics for co-ops, leadership development and director liability. Wayne Figurelle of PennTAP will discuss technology and e-commerce opportunities for co-ops, while Leta Mach, education director for National Cooperative Business Association, will discuss the future of cooperatives and national trends. For more information, call (814) 238-2401, or e-mail info@maacooperatives.org




September/October Table of Contents