By Todd Neeley
DTN Staff Reporter
OMAHA (DTN) -- The boards of directors for two Iowa farmer cooperatives have voted to let their members decide on a proposed merger that would make the new company one of the largest in the country, according to a news release from the companies Thursday.
Farmers Cooperative Co. and West Central Cooperative this week announced a unanimous vote by their boards to proceed with a merger vote by members of both cooperatives.
In the past full fiscal year, Ames, Iowa-based Farmers Cooperative Co.’s agronomy, grain and feed businesses grossed $675 million in sales and reported $292 million in total assets. FC has 414 full-time employees at 49 locations, according to the company.
Ralston, Iowa-based West Central’s agronomy, grain, feed and dairy nutrition product line grossed $633 million and had $300 million in assets during its last full fiscal year. The cooperative has 275 full-time employees in 24 communities.
According to 2014 USDA data, such a merger would create a cooperative with about $1.5 billion in business volume. The resulting cooperative would rank in the top 20 nationally among the top 100 cooperatives, according to USDA, http://tinyurl.com/….
Farmers Cooperative has more than 5,000 members across a trade territory of more than 3 million acres. West Central Cooperative’s agronomy, animal nutrition and grain businesses include 24 locations in 12 Iowa counties.
INFORMATION SHARING
Since August, both companies have been weighing the potential risks and benefits associated with a merger.
Farmers Cooperative Board President and Odebolt, Iowa-area farmer John Scott said in a statement Thursday it would be important for all farmer members to carefully consider the information presented in the next few weeks before casting a ballot.
“Our members own these cooperatives,” he said. “We encourage each owner to read the plan of merger and proposed articles of incorporation, ask questions, and return their ballot. Every member matters.”
West Central board chair and Paton, Iowa-area farmer Sue Tronchetti said the boards support the merger because they believe farmer members will see the benefits.
“This is a landmark decision for our member-owners,” she said in a news release. “Our boards, management and employee teams believe we can diversify our businesses, improve member services and protect and enhance member patronage by utilizing our scale to procure more efficiently.”
The cooperatives are scheduled to host 20 member meetings to present information about the proposal, between Nov. 30 and Dec. 11. A list of meeting locations and other resources are available on the cooperatives’ websites.
“By merging FC and West Central, members would truly have an ownership stake in every step of the value-added supply chain,” West Central President and Chief Executive Officer Milan Kucerak said in a news release. “Whether it’s branded seed, faster grain assets, or value-added corn and soybean processing, a combined cooperative is better positioned to weather market volatility, directly access global markets, and offer more to its owners.”
Jim Chism, chief executive officer of Farmers Cooperative Co., said in a news release the merger would allow both companies to improve services for their members for the long-term.
“We want to improve member service with better, faster assets sooner, and by retaining and hiring the best people,” he said. “Most importantly, a merger allows us to maintain our commitment to serving our communities and keep profits local.”
For a merger to be valid, Iowa law requires 50% of each cooperative’s membership to vote, with two-thirds approval. According to a news release from the companies, ballots and additional details about voting are expected to be mailed by Nov. 20. Votes are expected to be counted at a special meeting scheduled for Dec. 18.
If a merger is approved, according to the news release, each cooperative would be represented by nine farmer owners and member equity will roll into the new cooperative on a one-for-one basis. The combined cooperative would be headquartered in Ames, Iowa, and Kucerak would be the chief executive officer, according to the companies.
In June, the members of two large South Dakota farmer cooperatives voted against unification of the South Dakota Wheat Growers Association and North Central Farmers Elevator, in a proposed merger that would have placed the new company among the top 10 largest cooperatives in the country.
Todd Neeley can be reached at todd.neeley@dtn.com
Follow him on Twitter @ToddNeeleyDTN
(CZ/AG)
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