Iowa Public Television

 

Value-added COOP makes the most of commodities

posted on February 4, 2000


DESPITE ITS WOES, AGRICULTURE REMAINS THE ECONOMIC ENGINE FOR MUCH OF RURAL AMERICA. TO BE SURE ITS COMPOSITION IS CHANGING. FOR ALL THE CONTROVERSY BIOTECHNOLOGY STILL OFFERS THE PROMISE OF GENERATING MORE VALUE ON THE FARM.

IT IS NOT UNLIKELY COMPANIES WILL SOMEDAY SEEK OUT FARMERS TO PRODUCE A LEGION OF NEW CROPS. THEIR SKILL COULD CONCEIVABLY PLACE FARMERS IN GREAT DEMAND, NEAR THE TOP OF THE EMERGING INFORMATION-BASED AGRI-ECONOMY.

IN THE INTERIM, AS NANCY CROWFOOT EXPLAINS IN THIS UP-DATE, MANY OF THE NATION'S MORE INNOVATIVE FARMERS ARE ENHANCING THEIR BOTTOM LINE AND THE LOCAL ECONOMIES OF THEIR COMMUNITIES BY DEVISING VENTURES TO TAKE ADVANTAGE OF WHAT THEY PRODUCE.

THEY MEET ...

THEY GREET ...

AND THEY BUILD. THEY BUILD ENTERPRISES ... SUCH AS A $10 MILLION DOLLAR ETHANOL PLANT ... AND A $ 2 MILLION DOLLAR SOYBEAN PROCESSING PLANT.

THE ENTERPRISES FULFILL THEIR FIRST AND FOREMOST LOVE ...FARMING.

Bill Thorman, sunrise energy president: "everything that we did until about 1980, 81, we couldn't make a mistake. Farming was fun.

Now farming has got to the place where you have to be a marketing manager, you have to watch all your costs. You have to be as efficient as you can be in order to survive.

And this is basically our survival, this plant."

THORMAN'S VIEW OF "SURVIVAL" IS SIMILAR TO A FEW HUNDRED OTHER FARMERS IN EAST CENTRAL IOWA.

THEY'VE CREATED THEIR OWN FIELD OF OPPORTUNITY, WITH THE ESTABLISHMENT OF TWO VALUE-ADDED VENTURES THAT OFFER LOCAL GRAIN MARKETING OPTIONS, BOOST LOCAL EMPLOYMENT, AND ADD TO THE LOCAL PROPERTY TAX BASE.

THE GLITZ OF BRICKS AND MORTAR ARE IMPRESSIVE IN TOWNS WITH JUST 700 TO 5,000 RESIDENTS. BUT CONSTRUCTION WOULD NOT HAVE EVEN BEGUN WITHOUT THE YEARS OF RESEARCH AND FINANCIAL PLANNING BY TWO GRASSROOTS, FARMER COOPERATIVES ... COOPS WHICH STARTED OUT WITH BASIC GOALS TO INCREASE THE BOTTOM LINE.

ONE, AROUND SINCE 1987, IS FOR CATTLE FEEDERS:

Wayne Newton: "I always felt that if we could provide a technical support to family farmers that we could in fact compete with the huge yards of the southwest."

THE OTHER COOP, ESTABLISHED IN 1992, IS FOR GRAIN FARMERS.

Keith Bader: "we hope we can find good contracts. They could come to one place and contact 135 farmers."

BOTH COOPS HAVE INDIVIDUAL GOALS AND SOUGHT OUT NICHE MARKETS.

FOR EXAMPLE, THE CATTLE FEEDERS COOP GREW OUT OF A TIME WHEN CATTLE NUMBERS IN IOWA HIT AN ALL TIME LOW. ONE CATTLEMAN WANTED TO SEE THE NUMBERS GO BACK UP ... BUT WITHOUT AS MUCH FINANCIAL RISK FOR FAMILY FARMERS.

Wayne: "it's an opportunity that's out their and rather than expand their cash flow needs, custom feeding operation just kind of fits into the program.

TODAY, 180 IOWA FARMERS MAKE UP THE "BENTON EASTERN IOWA FARM FEEDERS COOPERATIVE" ... OR "BEIFF."

FOR A ONE TIME $500 JOINING FEE, THE BEIFF COOP STAFF WILL BROKER THE DEAL BETWEEN INVESTOR AND FARMER. THE COOP SELLS THE CATTLE AT MARKET TIME ... DISPERSING THE SALE MONEY TO ALL INVOLVED, KEEPING A COMMISSION FOR THE COOP ITSELF.

WHILE BOTH BEIFF AND THE IOWA PRODUCERS COOP HAVE SUCCESS STORIES ... THEY HAVE NOT COME WITHOUT LESSONS LEARNED.

FOR EXAMPLE IN 1995, ONE OF IPC'S MAIN CONTRACT BUYERS OF FOOD GRADE SOYBEANS WENT BELLY UP, AND SOME FARMERS DIDN'T GET PAID.

Keith Bader, IPC president: "well it didn't help their enthusiasm for contract farming that's for sure. Because the bankruptcy drug on for about a year and a half. And I think the lawyers got more money out of it than any of the farmers ever did."

THIS SPRING ANOTHER SEED COMPANY BACKED OUT OF A CONTRACT ... BUT IPC WAS ABLE TO NEGOTIATE A SETTLEMENT.

WHILE STILL SEEKING THE ELUSIVE SPECIALTY CROP MARKET, SOME IPC MEMBERS TOOK A STEP THEY HOPE GIVES THEM BETTER CONTROL OVER THEIR DESTINY.

Marlyn Jorgensen: "we had several discussions and lots of different ideas came up and one of those was the soybean processing facility.

MARLYN JORGENSEN WAS ONE OF THREE IOWA PRODUCER COOP MEMBERS WHO FORMED A LIMITED PARTNERSHIP TO CREATE "IOWA SOY SPECIALTIES." AS THEY SOUGHT INVESTORS IN THEIR COMPANY ... WHICH MANUFACTURES SOY FLOUR AND TEXTURED SOY PROTEIN ... THEY TURNED FIRST TO THEIR FELLOW IPC MEMBERS. 28 OF THEM JOINED AND GROW FOOD-GRADE SOYBEANS FOR THE PROCESSING PLANT.

Marlyn Jorgensen: "one of the benefits that we have is that a lot of our producers are also investors. So if indeed that you know, they make a little bit on their growing of the beans and a little bit on their investment, then they then they get that bigger reward than, than somebody who's just doing it and not being an investor."

THE BENEFITS OF BECOMING AN INVESTOR ARE BEING STRESSED AGAIN.

AS TOURS ARE BEING GIVEN OF THEIR LATEST ENDEAVOR ... AN ETHANOL PLANT ... BOTH THE BEIFF AND IPC COOPS ARE URGING THEIR MEMBERS TO MAKE INDIVIDUAL INVESTMENTS IN THE PLANT.

Bill Thorman, sunrise energy president: "here was another way that we could enhance our income. It could mean up to $150 with a premium, 150 bushel, a dollar dividend plus the wet corn savings. Even though its, it was a considerable investment and still is, we didn't have any trouble selling it."

FOR AN INITIAL $5,000 A SHARE, EACH INVESTOR CAN DELIVER UP TO 5,000 BUSHELS OF WET CORN TO A BURMED AREA OUTSIDE THE PLANT. AFTER THE CORN IS PROCESSED INTO FUEL, THE BYPRODUCT, OR STILLAGE, WILL BE FED TO LIVESTOCK.

Wayne: "the ethanol about pays the expenses and the co-product is the frosting on the cake.You take the grain out of the fields from the bountiful harvest, take a little bit of the starch out and make better feed than what it was going in. and take it back out and feed it to the cattle and turn it into a delicious steak."

IT MAY BE "STEAK" IN THE END, BUT IT TOOK FIVE YEARS TO COOK. HOWEVER, THE COOPS AREN'T DWELLING ON THE TIME IT TOOK TO GET HERE. THEY ARE ALREADY LOOKING TO THE FUTURE.

MEMBERS VIEW THE ETHANOL PLANT AS JUST THE BEGINNING OF VALUE-ADDED INDUSTRY FOR THEIR COMMUNITY. SINCE ETHANOL PRODUCTION BEGAN ON THANKSGIVING DAY, THEY'VE ALREADY ADDED A FEEDLOT JUST OUTSIDE THE PLANT. AND IN THEIR FIELD OF DREAMS, THEY ENVISION A DAIRY OPERATION, AQUACULTURE, AND A GREENHOUSE. (WHICH WOULD USE ANOTHER ETHANOL BYPRODUCT -- CO2).

FOR MARKET TO MARKET, I'M NANCY CROWFOOT.


Tags: agriculture commodity prices co-op economy news rural