Type of business: Farmers Pride Cooperative is a 100 percent, producer- owned soybean meal production and marketing cooperative. On Sept. 1, Farmers Co-op Oil Co. in Newman Grove merged with Farmers Pride, Battle Creek Co-op.
Business objective: To operate as a producer-owned, value-added enterprise that processes locally grown soybeans into soybean meal for local livestock producers and soybean oil for feed or fuel.
Annual sales: Farmers Co-op Oil had $18.8 million in total co-op sales for 2004, up 29.6 percent from $14.5 million in 2003. NewMaSoy™ soybean meal and oil sales were $1.4 million for 2004, up 353 percent from 2003. Total NewMaSoy™ sales for 2003 were $415,000, which was the start-up year, with meal being processed for less than six months. Sales have increased exponentially since then, and will surpass $2 million this year for processed soybean meal and oil.
Number of members & employees: Membership comprised of 310 Newman Grove-area farmers; the Newman Grove co-op location has 18 full-time employees overall, and several more in the soybean-processing division.
Description of business activity: The conversion of soybeans into meal and oil begins by mechanically extruding the soybeans to release the oil from the meal. These products are then separated; the meal is ground to a uniform consistency for additional protein and energy in livestock feed for swine, poultry and dairy operations. The oil is sold as feed or fuel-grade oil to processors. While these processes have been in existence for years, many farmers in rural areas have been unable to reap the benefits because the value-added activity takes place after the commodities are sold at low market prices.
How co-op was developed/financed:
Farmers Co-op Oil Co. was first organized
in 1924 as a fuel purchasing and
distributing co-op. In succeeding years,
grain merchandising, agronomy/fertilizer,
feed sales and ready-mix concrete
departments were added. In early
2002, an informal feasibility study on
adding a soybean processing facility
was done through the local board of
directors with advisory assistance from
CoBank. There was no stock sale to
finance the soybean processing plant.
The plant costs (in excess of $400,000)
were amortized over seven years at 5
percent interest.How USDA helped: In addition to technical assistance, USDA Rural Development provided Farmers Co-op Oil Co. with a $22,300 Value-Added Producer Grant (VAPG) for product market development in 2003. The money was used to complete a feasibility study that would verify the existence of an emerging market for natural processed soybean meal and oil products. The project received the green light and later that year the co-op received a second VAPG of $120,000 from USDA Rural Development to assist in the first full year of operations. Farmers Co-op Oil provided matching funds of $142,300.
Leader’s comment: “This soybean- processing facility allows rural Nebraskans who are members of Farmers Co-op Oil Co. to actively participate in, and own, a value-added enterprise, which diversifies their incomes and ultimately improves the long-term sustainability of their farming operations.” — Randy Benson, General Manager, Farmers Co-op Oil Co.
The results: Today, NewMaSoy™* Extruded/Expelled Soybean Meal, Extruded Full Fat Soybean Meal and Natural Process Soybean Oil are being produced from the 1,200-1,500 bushels of soybeans processed daily. (NewMaSoy is a state of Nebraska registered trademark.) Three full-time positions and several part time positions have been added to the plant’s workforce. Through the hiring of a full-time marketing representative, made possible by the VAPG from USDA, sales increased dramatically in 2004. The soybean valueadded activity is anticipated to provide a 20-cents-per-bushel increase above the raw product value.
Market outlook: The demand for soybean oil is excellent, with the product being sold as quickly as it is processed. Soybean meal requires more marketing effort, but sales continue to climb each month and the trend is strong for repeat-customer business. More than 480 tons of meal were sold in October and approximately 1,000 tons were contracted for in late 2004 and the first half of 2005. Protein is being provided to dairy and swine farms, and several feed mills. The sales area has expanded to cover 13 counties in Nebraska with contracts in Kansas, Colorado, South Dakota, New Mexico and Idaho. Soybean meal has not been sold out of state yet, but this is the next marketing step for the co-op, with sales in both Kansas and South Dakota on the horizon.
Major challenge/opportunity facing co-op: Margin percentage, production efficiency and equipment maintenance continue as our greatest profit challenge.
Contacts: Phone: (402) 447-6292: e-mail: grwisse@ megavision.com.
