Farm Supply & Grain Handling Cooperatives and the role they play in Iowa and the United States

Transcription

1 Farm Supply & Grain Handling Cooperatives and the role they play in Iowa and the United States Phil Sundblad, IFBF District Director John Pruss, UFM Co-op General Manager David Miller, IFBF Director of Research

2 What do we mean when we say Cooperative Corporation Capitalized By Users Controlled By Users Cooperative? Typical Examples Farm Supply Cooperative Grain Handling/Processing Cooperative Feeder Pig Production Cooperative Produce Marketing Cooperative Financial/Farm Credit Cooperative Rural Electric Utility Cooperative Cooperatives in the US are not collective farms

3 These are all Co-ops!

4 The Cooperative Evolution Ag Co-ops Formed From because: Farmers had No: Power Legal Organization Representation Organizational Structure Railroads Built in 1840s to 1890s Farmers were dependent on the Railroads to ship their products to cities & urban markets In 1922, the Capper-Volstead Act allowed farmers to organize collectively to buy inputs & sell commodities

5 Cooperative Principles Cooperative Principles Anyone can join Member Control Member Benefit Distribute Savings By Patronage Equity Capital Has Limited Return Continuing Education Capper Volstead Requirements: Each Member Gets One Vote Dividends Must Be Less Than 8% Member Business Must Be Greater Than Nonmember Business Voting Members Must Be Ag Producers Operate For Benefit of Members

6 Five Basic Board Functions Decision Making Hiring the manager and/or management team Setting operating policy Setting financial authorities (lending, borrowing, etc.) Advisory provide advice to management Trustee Fiduciary responsibility to members Perpetuating making decisions to assure continuity of the business Symbolic

7 Iowa Cooperatives in 1950

8 Number of Independent Iowa Grain and Farm Supply Cooperatives Year Number Contributing Issues to reduction in co-op numbers Inadequate Equity & Capital 26% Deteriorating Cash Flows 56% To Improve Operational Cash Flows 18%

9 Iowa Grain and Farm Supply Coops 2010

10 What is driving co-op mergers today? Access to new markets & rail loading capability Economies of Scale Access to technology Better utilization or access to fixed assets and personnel Ability to hire and retain quality personnel New competitors Changing membership demographics

11 United Farmers Mercantile Cooperative Corning Essex Farragut Red Oak Shenandoah Stanton Villisca

12 UFMC s MISSION Statement To be a profitable, competitive, service-oriented grain and supply business for the economic benefit for the members. This will be done through conservative short-term guidance balanced with aggressive long-term goals and future planning

13 Organizational Data Date of Incorporation Date of Reorganization Under Chapter 499 of Iowa Law Stock Capitalization $150,000 (Class A) Class A Stock $ Members with Voting rights Stock Capitalization $68,250 (Class B) Class B Stock $ Members No voting rights

14 Regional Investments Creates Patronage Income Land O Lakes Minneapolis,M N $777,237 Co Bank Denver CO $701,063 UFMC Regional Stock $9,732,510 CHS (Cenex) St. Paul MN $5,333,623 Green Valley NH3 Plant Creston IA $137,500 AGP Omaha NE $411,225

15 UFMC Sales $179,351,875 Create Local Savings

16 Payroll Changes in 10 Years Number of Employees 12/04 49 Full-time 12/06 52 Full-time 12/08 55 Full-time 12/09 75 Full-time 12/11 85 Full-time 12/12 85 Full-time 12/13 87 Full-time $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000, Payroll

17 Members Equity is Increasing

18 Total Cash Paid to Members in Past 10 Years: $6,350,760

19 19 Our Balance Sheet

20 Capital Expenditures (Additions to Property, Plant, & Equipment) Total: $24,940,983 Avg. $2,494,098 20

21 Local Savings vs. Net Savings 21

22 Property Tax Paid Largest Property Tax payer in Montgomery County 2004 $168, $143, $173, $159, $199, $282, $275, $309, $372,867 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50, Property Tax UFMC s property tax is twice the amount of the Number 2 property tax payer in Montgomery County

23 Loading Grain Trains

24 Corn Destinations.

25 2012 Projects and Challenges 25

26 2012 Projects and Challenges 26

27 Projects & Assets for Improved Service Improved the feed mill s capacity and efficiency 27

28 Why are we doing this? Our Board said that our job is to provide the farmer with the best grain bid possible for Montgomery County and surrounding Communities To do that, we have to continue to access the 110 railcar market To keep up with the speed of Harvest To help Feed the World

29 Source: International Database World Population Growth

30 Montgomery County Corn acres 72, ,000 87,300 87,300 96,500 Yield 97 bpa Production 6,984,000 bu. 13,300,000 10,565,000 10,882,000 18,530,000 Soybean acres 39,000 69,800 74,600 87,600 86,100 Yield Production 1,413,000 2,620,000 2,716,000 3,522,000 4,822,000 Row Crop acres 111, , , , ,600 % of County 41% 64% 60% 64% 66% 30

31 Montgomery County Corn ha 28,800 42,000 34,920 34,920 38,600 Yield ton/ha Production Tons 179, , , , ,128 Soybean ha 15,600 27,920 29,840 35,040 34,440 Yield ton/ha Production Tons Row Crop hectares 39,250 72,778 75,444 97, ,945 44,400 69,920 64,760 69,960 73,040 % of County 41% 64% 60% 64% 66% 31

32 How many Producers will there be, and how many acres will they farm? Farmers Acres

33 UFMC #1 Concern PEOPLE! Finding and keeping GREAT employees Maintaining high service levels Preparing for the future Assets, equity service and financial position 33

34 Why Farmers Like Cooperatives locally owned, local leadership usually close by kilometers or less reliable place to buy inputs, good, trusted agronomic advice regarding products that are available

35

36 Why Farmers Like Cooperatives Reliable place to sell my products. I know I am going to get paid and paid on terms that work for me Dividends are used to keep facilities modern and up to date Coops have animal feed and animal health product experts to help me make good decisions Coops are good community citizens

37 Do Cooperatives Matter in the Iowa Economy? Grain & Supply Co-ops generated sales of over $11.5 billion in their last fiscal year These 77 cooperatives had over 128,000 members Operate facilities in 618 Iowa communities Paid over $26.7 million in property taxes Provide 6,488 jobs in these communities The average payroll and benefits is $54,323 per worker

38 What Does All This Mean Cooperatives are vital to the success of their members and help the private farmers of Iowa prosper Cooperatives are good businesses in the local communities Cooperatives reduce costs for their farmer members. They also pay taxes, a lot of taxes, most of it in rural Iowa Cooperatives provide good jobs with good benefits for people who live in small communities throughout Iowa

39 Thank you for your attention Questions?