Harvest, facility expansions, equity payouts -- all reasons to feel good this fall

    By Dave Christiansen, President and CEO

    I may have said this before, but I just love this time of year. Our senses are rejuvenated with the scent of fall harvest, the sound of dryers running, the sight of leaves beginning to turn, the excitement of fall football and actually receiving some rain again. I think many of you would agree that this is a wonderful time to see the results of all your efforts this past spring and summer. As we begin fall harvest, it appears as though the yields will be all across the board, as many areas were just one rain short of having excellent yields this year.

    The Groveland expansion did fall slightly behind schedule but should be back on track as you read this. There were many things that contributed to the delays, but we should now be in full stride and meeting the needs in that area. To have a facility that can unload at a rate of 30,000-plus bushel-per-hour capacity is really going to be nice. We look forward to continuing with this type of upgrade at strategically selected locations. We continue to hear from many of you that our decision to make some locations seasonal or to not operate for all commodities is not a problem -- as long as you receive competitive pricing and can unload quickly. We are doing everything we can to meet these requirements.

    The HFT project (more commonly known as the fertilizer plant at Hutchinson) is also progressing, albeit slowly. Things don"t always go as fast as we think they will when dealing with railroads. It will change how we planned to utilize the facility this fall. We are currently making additional investments in larger tendering equipment to best utilize the facility when it does come on stream. Our intent is to continue to seek ways to drive cost out of our system to save you money. Handling fertilizer multiple times is just one cost we can improve on. We often ask ourselves, "If we didn"t have any facilities, where would we decide to place them and what would they look like." This project is representative of that question. Is Hutchinson the perfect spot? Maybe not perfect, but it does have the rail access we need. Does it cost as much to transport 60 miles as it does to have and maintain a facility located there and hold it there? Not even close. As we begin to utilize this facility more and more, will it cause us to change how we do things? Absolutely. Regardless of this plant, we will experience change as time goes by. We still have some questions that we don"t have the answers to, but they will be answered as we push forward.

    The big key remains that we need to work together to drive unnecessary expenses from the equation. Countryside Feed is an example of doing just that. We continue to be very pleased with the performance of that entity since the consolidation of our feed manufacturing and sales. The financial performance is exceeding our initial plan. The operational performance continues to show improvement and we gain new customers monthly. Countryside Feeds easily will exceed last year"s performance of the combined operations by more than $300,000. This should be our "bell cow" for what we can accomplish by working together. It is unfortunate that pride, fear of change and a desire to be independent many times keeps us from achieving, or even attempting to provide, a system that would be beneficial to all of our member owners.

    Thanks to the State of Kansas, we are currently making many changes to our fueling sites we hadn"t planned to make. I understand the need for safety and compliance, but sometimes rules that have good intentions also have results that are very expensive and inconvenient. Decisions must be made whether to shut down a fueling site or spend (in some cases) an irresponsible amount of money to upgrade the location for the amount of volume. That being said, it doesn"t make the decision to shut down a fuel site any easier. In all cases, we are attempting to visit with each patron using that facility to determine the feasibility of an RFD tank at their place based on volume. In many cases, it will work nicely. But in some instances, it just won"t. As we have indicated in the past, RFD won"t be the answer for everyone. But, as I understand, we are currently the fastest growing RFD distributor in the entire system. Many producers are discovering that this is one of the easiest ways to always have fuel and manage the risks that exist in the fuel business. With fuel jumping around as much as 25 cents a day and easily 60 cents in a month, no one can outguess the market. When applicable, the RFD system can help eliminate the peaks and valleys, and we can prove that it is the best way to save you money and increase convenience.

    You may have already heard that Fred Seiler was recognized as CCA of the Year in Kansas and immediately made the decision to take the responsibility of heading up our seed division. As you may surmise, we were sorry to have him move from his current position, but we were delighted to have him accept the challenge of developing our seed division into the best in the Midwest. Fred brings not only practical knowledge but a very good sense of the challenges producers face in making hybrid decisions that are right for their operation. I am very confident that Fred"s skills, leadership and ability to develop a team around him will prove to be just what you need to realize your farm objectives. We just enjoyed another pleasant experience of distributing approximately $300,000 in deferred equity checks representing a payout of 1981 equity to about 400 members. It"s always such a joy to see the cooperative system work. Our intention is to repeat this payment around the first of the year.

    The common denominator in most (if not all) of the projects I"ve referenced in my article is that each one requires a substantial amount of capital. It makes no difference whether you are replacing or improving existing assets, building new facilities or equipment, paying out deferred equity or making other investments that you plan to capitalize on later. There is only one acceptable way to generate the money that is required to do these types of projects and that is to earn it through operations. Yes, there remain some people who believe that coops are supposed to just break even or, at best, generate minimal income. For those of you in that camp, rest easy, we do operate in the truest sense of the words "at cost." Any money generated in excess of that necessary to effectively run the business is paid back to the members based on the volume they do. I would admit a "break even at best" strategy would eliminate considerable pressure for the short term. The long term . . . well, we wouldn"t have to worry about that now, would we? If we adopted a "break even at best" strategy, we would absolutely eliminate any opportunity to tackle any of the projects about which I have just written. No new facilities, no new equipment, no facility upkeep and absolutely no equity redemptions or patronage. It is comforting to know that the vast majority of coop members would find that completely unacceptable.

    Thanks for keeping your coop strong. Remember the old adage, if it is to be, it"s up to me. Thanks again and have a safe harvest.


    Click here to go back.