The proposed unification of North Central Farmers Elevator and Wheat Growers offers many potential benefits to member-owners, employees and communities. It is the goal of both cooperative Boards to provide timely and helpful information during the consideration process. To view the Unification Agreement, click here.
Q: When will the unification happen?
A: The members approved the unification and it will become effective February 1, 2018.
Q: What is unification?
A: Cooperatives are unique. Unification of agriculture cooperatives refers to the forming of one new entity, focused on serving its members rather than the needs of its corporate owners.
Q: Why was unification considered again?
A: This was a proactive, forward-thinking step. The goal of this unification is to create a stronger cooperative that can continue to provide the service, technology and access to markets and employee talent needed to remain competitive, relevant and valued by our member-owners.
As a member-owned cooperative, everything we do is based on how we best deliver value to our members. In this case, our member-owners are being challenged by changes in the ag economy and have encouraged us to revisit the potential for unification as a means to strengthen our ability to support their success.
Q: Two years ago there were comments that unification would not be pursued again unless something changed. What has changed?
A: The most visible changes are lower commodity prices, general downturn in the ag economy and the drought we’re experiencing. In addition, a series of mega-mergers is sweeping across the agriculture community. Consolidations of Monsanto & Bayer, ChemChina and Syngenta, Agrium/CPS and Potash Corp., and Dow and Dupont are limiting the ability of small cooperatives to bring value to their members. We’ve got a new AGP soybean processing plant coming into the market in two years that will change our market dynamics. We’re also experiencing increased competition from large global organizations, as well as from several national and regional firms.
Q: Are either North Central or Wheat Growers in trouble financially?
A: We realize there are questions regarding the perceived financial strength of one or both of our cooperatives. It’s important to understand, first of all, that both cooperatives have weathered decades of financial ups and downs. North Central is 103 years old, and Wheat Growers is 94. Like many of you, we have made adjustments during the tough times and always emerged stronger.
Today, despite what you may have heard, we both have strong balance sheets and financials. Yes, the most recent two years have been challenging ones for both of us. But, our balance sheets are stronger than they’ve ever been. And our financial performance is in line with our five-year averages. It takes more than just a year or two of earnings performance to change that.
Q: Will there be a reduction in competition as a result of the unification?
A: As a result of new competitors entering the market and mega-mergers happening in the agribusiness world, a new unified cooperative would be 60 times smaller than the next largest competitor in our marketplace. While some might think this unification will limit their opportunities, we need to unify in order to compete more effectively with new grain facilities, shuttle loaders and agronomy investments that are taking place across our region. From a larger economic perspective, this is being recommended so that we can continue to compete effectively on behalf of our members.
Q: What do you plan to do with the aging wood houses you each have?
A: Wood house grain storage was top notch -- once upon a time. The largest ones typically topped out at about 100,000 bushels. By today’s standards, that’s not much storage. We can put that much grain in three bags today or one small steel bin.
What’s important to know about the wood houses is this. Where there are aging wood houses, we will study what needs to be done and make decisions that benefit our members. We want our grain storage facilities to be safe and efficient, for employees, members and the surrounding community. As a unified cooperative, we are confident in our ability to make improvements where they are most needed and to invest where there is the greatest benefit.
Also, if and when a wood house comes down, that does not mean we’re getting out of a community, it simply means we’re going to be doing things in a different way.
Q: Will we lose the locally-owned feel?
A: The location employees of both our cooperatives have always been the key to providing superior customer service for your unique production needs. Remember, we still have the same locations, location management and staff that you have confidence in today. Your Board of Directors will continue to be made up of producers that will govern your locally-owned cooperative. Members will continue to elect directors to represent your interest.
Q: What will be the potential benefits to members of unification?
A: Member-owned cooperatives are in the best position for supporting member success. Cooperatives can better adjust to market fluctuations, competition, crop conditions and adverse weather conditions than can commercial enterprises. By unifying our two organizations, we can achieve better buying power from our supplier networks and better strength with the markets we supply. We also can grow our financial position to allow us to continue to invest in facilities and equipment essential to serving our members. And we’re better able to take advantage of new technologies, and recruit and retain top talent to better serve members’ needs.
Q: What impact will unification have on our communities?
A: Unification would preserve our ability to compete. Our cooperatives devote considerable resources – financial and otherwise – to the health and well-being of our local communities. At the end of the day, cooperatives were formed to serve farmers and ranchers, and the families and communities that stand behind them. Large global organizations do not share that same commitment. They may sell products to our members, but they channel their financial resources and dividends to their shareholders and their short-term financial interests.
Q: How will unification benefit employees?
A: Our quality employees are essential to the success of a unified organization. A unification of our two cooperatives will allow us to enhance career advancement opportunities for our employees, continue to offer competitive benefit programs, and improve our ability to attract and retain talent. There is no plan to eliminate jobs as a direct result of unification. All employees will remain employees of the new company. With the many open positions in our two organizations, any future adjustments to employment will be handled through attrition, retirements and job performance.
Q: Will locations be closed or consolidated?
A: Questions about facilities and operations will be worked out by the new combined Boards during the year following the merger. Where there is any overlap in services or facilities, the Boards will take a careful look at what is best for our members. The reality is that these are decisions that will need to be made no matter how the membership votes.
Q: Where will the home office be located?
A: Aberdeen will become the new cooperative’s main headquarters with the Ipswich office to serve a vital role in our ongoing operations.
Q: Who will become the CEO of the new organization?
A: Chris Pearson will become the CEO of the new unified organization.
Q: What role will Mike Nickolas play?
A: Mike Nickolas will become the new Executive Vice President and Chief Operating Officer of our Grain Division. He will also play a key leadership role in the transition period unifying the two cooperatives.
Q: Will the new cooperative have a new name?
A: Yes. The leadership of the new combined organization would work with the Boards and members to develop a new name.
Q: How can I get more information?
A: As there is new information to pass along, we will update you, by holding location meetings and by sending updates. We plan to post updates on our respective websites (www.ncfe.coop and www.wheatgrowers.com). We also will use social media (Facebook and Twitter) to post additional information.