University of Wisconsin Center for Wisconsin
Rural Cooperatives, July/August 1999, pp. 6.
Published by the Rural Business and Cooperative Development Service
Big steps in the Plains: Kansas grain producers create new venture
By Kent Miller
Four Kansas cooperatives took a giant step this spring when they formed a joint venture which will benefit grain producers throughout the north-central region of the state.
Farmway Co-op of Beloit, Delphos Coop, Cloud County Co-op of Concordia and Randall Farmers Cooperative Union merged their grain marketing departments into AgMark LLC. It will be located in Beloit. At the same time, the joint venture between the cooperatives began construction on a 110-car load-out facility in Concordia. The site was formerly owned by Cloud County Co-op, which sold it to the limited liability corporation.
When completed in early 2000, the new facility will be capable of handling about 1.6 million bushels. Its five employees will be able to load out 110 rail cars at one stop in 10 hours.
AgMark LLC wil1 generate efficiencies for producers by combining warehouse licenses and marketing efforts, standardizing grain accounting systems and by having a cooperatively owned train loader/terminal facility. These translate into profits distributed back to local co-ops to pay patronage dividends, cooperative leaders note.
According to Byron Ulery, chief executive officer of Farmway Co-op, the most worthwhile projects are not simple. "These four cooperatives have stayed together and formed AgMark LLC for the common good of the members of the cooperatives," Ulery says.
The cornerstone of this project, notes Pat Breeding, chief executive officer at Delphos, is to do together what the four cooperatives could not accomplish alone. "The four local cooperatives will continue to operate their own facilities," he says. "Checks will be written on AgMark LLC checks and will continue to be written at each location, as they are now."
Jeff Bechard manages grain marketing for the LLC. He says the venture will
improve the grain prices relative to historical values. "The difference in freight and/or handling fees could result in a different bid at each elevator location of the cooperatives," he says. "We will become more aggressive in picking up on-farm stored grain, price improvement and we will have the ability to load big trains plus stil1 be able to utilize the short-line railroads at the different elevator locations."
Mark Paul, who joined AgMark in fall 1998 as manager of the Concordia terminal, says the facility is being built for the future. Everything is computer-controlled —from unloading farm trucks to loading grain onto rail cars. '] see this as one of the best grain facilities around. It has the ability to get the grain shipped out, which has been a glut to them in the past. The new facility also allows the four cooperatives involved to be in a new market and to get the grain to a market where it is going to make them even more productive. It also helps the four cooperatives because they are working together as a group instead of as competitors."
The State Grain Inspection Service wil1 have a grain inspection lab at the Concordia facility. Paul says the increased rail traffic makes the lab a sensible addition. Inspectors also can service surrounding area elevators. "There will be a lot of samples brought here from other elevators that can be graded here just like they do at Salina or Topeka. With (inspectors) on site, it gets them a lot closer to where the grain is being loaded
and where the main volume of grain is being shipped," Paul says.
The economic impact on the north-central Kansas area due to the AgMark terminal will be significant, according to a feasibility study conducted by the four founding cooperatives prior to entering into the joint venture. Up to 14 counties could feel its impact.
"The trickle effect will amount to approximately $7.5 million a year coming back to the local economy," says Paul.
'You will see a grain price increase in some areas due to the freight difference. A producer wil1 stil1 need to get the grain to the terminal. It doesn't matter if you are a member of Farmway, Randall, Delphos or Cloud County—any profit AgMark makes goes back to the local cooperative and they can utilize the profit to their advantage to help their producers."
Adds Paul, 'You don't get an opportunity like this very often to come in and set up an elevator to do what it's supposed to do, and that is to move grain in a hurry. This facility is designed to run fast and easily I believe the producers will be very happy."
In 1996, Farmland, Midland Cooperative of Hays, Kan., and Midwest Cooperative of Quinter, Kan., completed construction on a 100-car grain load facility at Ogallah, Kan., called Westland Terminal.