Mega Cooperative

[formeragcofan]

Whaddaya think of this?

West Central Coop based in Ralston, IA and Farmers Coop based in Farnhamville, IA members voted to merge. I just can't see how this is going to be good for agribusiness, but I guess it doesn't matter what I think. Just another Wal Mart type of situation.

http://www.west-central.com/about/news/detail.aspx?id=158

http://www.fccoop.com/media/cms/2015_Dec_YES_Release_E8970256CC988.pdf

I think it was better when they had to compete with each other. Now they have just joined forces in order to wipe out all of the smaller cooperatives that might try to compete with them.

[elcheapo]

This was talked of at a local coop meeting yesterday.
It was pointed out they have storage for 165 million
Bu..,.we did 30 million bu bushel business last
Year

You are right...no competition.., not only on
Input but where to haul it.

Just because it's a coop doesn't automatically make
It good..
Alot of new pickups with logos on them, employees
Have nice homes and nice vehicles

Better than many of the "farmer owners"

[roarintiger1]

Most Co-ops were founded to save farmer-owners money, for convience to farmer-owners, and to offer unparalleled service to farmer-owners...........Not any more.  

[Red Steele]

my take is that a generation ago, some of the better farmers would be the board leaders and they would try to make decisions to help the local community, and ensure good service, competititve prices, etc.

Fast forward, and now the boards are made up almost entirely of "yes men"...guys handpicked by the real executives to rubberstamp decisions that enhance the return to management. Mergers are usually designed to create a bigger paycheck to the head honcho, and a golden parachute to the second honcho.

The guys that rely on one local cooperative should keep an ample supply of vaseline on hand from what I have seen.

[sw363535]

 a local coop that provides grain storage, marketing, and group buying power....  All a board needs to do is protect "fairness".  Profits are not necessarily the motive.  If it breaks even and enhances members individual success, it has filled it's purpose...

And a large congolomerate...

The large modern versions of coops are a much different cat... Thinking in terms of power and profit and mass accomplishment.  Serving the needs of agriculture as a hole  🙂   and the needs of the world.  Few board members are qualified to compete and administer at those levels.  It is just a different ballgame when that kind of debt and cash flow is involved..

Not to say it is good or bad,  but very different..

[elcheapo]

well the local big boy bunch here,  own part interest in 2 110 unit train loaders, and own 1 outright.......you would think we

would be rolling in dough, due to our "advantage", well we have the worst basis around.  they keep growing and growing

and soon, i'm going to have to haul grain over 60 miles one way to get away from them. 

my grandpa years ago was in on starting one of the area ones......the goal was to be able to buy in bulk, and save money,

they also had a grocery store, so there would be a local store, and several elevators where they paid up a little more,

since the farmers "funded" part of the building and the like.....they used to have nice dinners, were cheaper, and had

"service", every year they would charter a couple buses to farmland industries hq, and the like........

today.........the grocery store is the office, the head man gets well over $100,000, we've "spun off", the marketing division, and

don't even get a check with the coop logo anymore.....at the meetings its almost 50/50 flannel shirts, and "logo shirsts"

and the only thing they can say is "look to the future".....my question is, who's future ?

granted some gov stuff has not helped......we have to have a full time saftey person, and at all the elevators if you load out

to the rail, about a $90,000 thing that the workers hook themselves onto.....and now they had mineral oil to all grain

comming in to cut down on dust.

the deal is, the coops must get bigger, their labor and "fixed costs", go up each year....and grains are kind of are at a

"given level", so you have to divide the expenses by x number of bushels........the odds of bigger crops are low.....so you

must have more bushels......ie, either buy more elevators, or merge.

the trend i really don't like is where the coops compete with the farmer owners.....they are using my money to beat me with.

we have a situation where we have a couple of area stills.....which farmers can haul to, but the local big boys outift

"swamps", them at times......using the coops semi's and etc......example on milo......they are 60 cents under, and

the still is about 20 cents under...and about 20 miles to the still....well coop is hauling my grain to the still, and

"swamp" it, so they don't need farmer loads all the time.......i don't think that is right.

the coop used to have a small hog operation, they stuff that was low grade, that they docked to almost zero, or had

problems, and the cleanings from the seed cleaner, they run it thru the hogs......made money actually......

but the new crop of managers got it, said it cost too much, and got rid of everything......even the feed mill.

"we are loosing money".......so much for farmer service.

but the new fellow we have.......all of them are the "go go people", members of boards, even national ones, etc,

big operators, that have "generational" money behind them......who are easly presuaded....their biggest worry is

how fast they can unload the semi.....oh you ask about why the basis is so bad........oh, there is nothing that

can be done about it, you just have to cope........they are "proud" of their coop......so much so, the chairman

a couple of years ago started to tear up saying how lucky we were to have the general manager we have".

ok, i'll shut up now..............

ohhhhhhhhhhhhhhhh  i hear the words peanut clusters comming from the kitchen..........i'm gone

[sw363535]

It sounds very "Farmland" doesn't it ?

but if the purpose of the farmer members was to own a small minority share in a large agriculture business.

Then a steady stock purchase program of an already established winner would have been easy over time.  It could have been done by mail and saved a lot of truck miles.  Who would you bet on ADM or a group of coops..

but there is reality in some of those issues......... In places you can't get a train to stop if you can't fill em with a 100 loader in very few hours.

They are sort of caught up in the same financial growth squeeze/survival issues most of the economy is forced into..

[OKdon]

Today the tail is wagging the dog. Don't blame the employees though. It's the elected board that are supposed support the member self interest. Employees are hired to do the job and the board and it's member are to provide a mission statement  and make sure that employees comply.

The objective should be to offer a positive return to members and many directors are persuaded to dance to a different tune. Too palsy wellsy with management and employees. Mostly, favoring employee interest above their own. 

Evidently employee interests trump the interest of 50 years of membership.

[sw363535]

Good points Don,

But some issues are always tied to the definition of "a positive return to members".  Many coops are formed to serve the farming community through grain storage and access to inputs.  Many board members fall on one of two sides on those issues.  Many expect cheap or at least competitive prices, and the other side expects high stock value and dividends...

Employees do get caught in the middle.

[OKdon]

What you get into is a differing position. Management always tend to use cash income to promote convenience for their own self interest. thus the new pickup trucks instead of retiring debt.of course they always pledge that the new investment will improve productivity or improve profits. Whether it be a new chemical facility, feed mill, or grain storage. Generally they are focused on the future rather than the guys that have waited  40 years for the retained earnings.

What I am saying is that if such investments are worthy of consideration, then they shouled have to finance through bankers not retained savings. Debt is debt whether it is owed to the bank or to patrons. One has to wonder how successful an operation is if it won't finance itself. I know that retained saving are used interest free but are member obligated to loan their retained saving interest free.

Most of us at one time or the other had to go to the bank to finance  our operations or equipment purchases. We didn't expect to use free money to finance our business. Why isn't the the business and management required to play by the same rules we are? If retained savings are the members money that doesn't mean it should be interest free. If your manager cannot pay interest on borrowed money what makes you think he is a super dooper manager. I know guys that have multi millions of non interest bearing borrowed money and yet are unable to produce a profit for the business.

Fortunately our management at our local is well managed and they are retiring debt owed to elderly members. the question is why must we wait so long. When I was on the board we had estates that had not been settled. We got a financial windfall from a regional and there was still folks that didn't want to satisfy the estates. Why woory about them ws the reply. "they are dead."

That is why i didn't belong on the board of directors. As usual, I look at things from a different perspective. The advantages or profits from patronising a company belongs to the owner members. If they are going to retain profits they need to pay interest on it like any other business. Of course the interest paid would be subtracted off the next years earnngs and the profit statement would reflect the true financial skills of the management.