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Iowa | IMHO, a number of factors are leading the charge for cooperatives wanting to merge:
1. CoBank is pushing hard, very hard to coops to merge. If you come to Central Iowa, organizations like FC, NEW, Heartland, and West Central are being pushed hard to continue merging with others. http://www.cobank.com/
2. The fertilizer losses that many had on their books from the fall 2008-spring 2009 price crash has hurt.
3. Many coops, such as Prairie Land, have had tremendous losses from ethanol plants going belly up. I believe that Prairie Land wrote off $10 million from Pine Lake ethanol in Steamboat Rock going bankrupt.
4. Qualified coop general managers are in short supply. Managing a coop today is not like it was 25 years ago. For example, if you look at the now gone Howard County Equity, I believe 2 disasterous managers took their coop to where they did not have a choice but to merge with Innovative Ag Services.
5. Commodities have become a rail-based business. If you can ship out unit trains of grain and receive unit trains of fertilizer, you have a tremendous competitive advantage over the smaller retailers.
The question is can the smaller coops still be competitive against the "big boys?" Absolutely. However, they cannot do business the same way they have for the last 50 years. If you do that, just like in farming, you will be swallowed up by the "big boys." I believe there are opportunities out there for the smaller coops to surpass the "big boys." However, you must be willing to think outside the norm. Unfortunately, many of the smaller coops seem unwilling to do that and just "throw in the towel." | |
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North Iowa Coop Merger
