Cooperative Business Update
February 2016
GRAIN MARKETING MEETINGS
Cooperative Business Update Your Tama-Benton Cooperative has witnessed several personnel changes over the past year. Mel Campbell retired as your General Manager, Veryl Sievers as your Controller and Jennie Anderson as your Merchandiser / Grain Accounting Clerk. Our board of directors faced the challenge of hiring a new General Manager last Spring and that’s when I accepted the position. It was then my responsibility as the General Manager to find and place the most qualified people in the other key staff positions to serve our patrons.
CLUTIER-LEGION WED. FEB. 17TH 9:30-11:00 A.M.
DYSART–LIBRARY THURS. FEB.18TH 9:30-11:00 AM
VINTON–U.S. BANK 414 A AVE. THURS. FEB. 18TH 1:30-3:00 PM
Doug Elliott from Ames, Iowa was hired in late July as our Controller. Doug brings a wealth of accounting and management experience from working in the cooperative system and other industries. Doug has been a great asset to our management staff, employees and to our board of directors. Amy Fisher who was promoted to our Dysart Office Manager position in July has also accepted responsibilities as our Grain Accounting Supervisor. Amy has worked in the grain department in Dysart and will do an excellent job in serving our customers at all three locations. Bonnie Wagaman from Dysart was hired in early July as our Grain/Accounts Payable Clerk in the Dysart office. Bonnie worked in the insurance business in Waterloo before accepting the position. Bonnie’s office skills have also been a great addition to our office staff.
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Another new hire, Kary Moore is currently working at the Vinton office, weighing trucks and answering the phone. Kary was new to the cooperative industry before coming to work parttime at our Clutier location during the 2015 Fall harvest. We appreciate your patience as we get Kary properly trained to assist customers regarding the grain and agronomy business in the Vinton area. I believe we have put together a fine group of qualified staff and group of employees able to take care of our customers’ needs as we move into the future. We welcome you to stop in and introduce yourself to our new employees when you have the opportunity. General Manager Charles Gabehart
Year-to-Date Financial Report Our gross annual sales volume through 7 months of operations is nearly 25 million dollars compared to 22 million a year ago. Despite this year’s drying income being down nearly $300,000 dollars due to the warm weather during harvest, our net local savings is $300,000 ahead of last year. This is in line with a normal margin for cooperatives but will be difficult to maintain given the high amount of yearly depreciation we have on our balance sheet. Due to the addition of the new grain facilities from the windstorm in 2011, our company annual depreciation went from $381,000 in 2011 to nearly $1.1 million in 2015. Our insurance premiums and property taxes have also increased due to the value of the new assets. The 2011 windstorm was a blessing, but also a curse. Without good insurance coverage, we wouldn’t have been able to afford to purchase all of the new assets we needed to handle grain the way we did at harvest. It improved our ability to handle grain quickly and get our patrons back into their fields. On the negative side, it will make it difficult for your cooperative to generate a local savings comparable to industry standards as in past years. This year’s local savings will depend on the amount of grain we purchase and market during the next 5 months at a reasonable profit margin, plus how the weather conditions affect our agronomy operations this Spring.
Partners Program (We Care) One of our goals this year is to find out what we can do to help improve service to our customers. In order to accomplish this, we will be setting up meetings and making calls to our customers to see how we can improve our business to serve you. Our “Partners Program” will involve active participation from our board of directors, management staff, employee group and customers. Many cooperative businesses fail to make direct personal contact with their members, which in today’s competitive environment will lead to lower sales volumes and profits. There are many agricultural companies in our trade area that are aggressively pursuing our customer base. We just want you to know that we really do appreciate your business and look forward to serving you. After all, we are an extension of your farming operation and owned by you, our members. If you get a call to participate in a meeting, please be open in allowing us the opportunity to listen and learn from you on what we can do to earn more of your business.
Comments From Doug As I reflect on the last several months since joining the employee team on July 23rd as the Controller, it has been a very rewarding experience. I enjoy working with a great group of employees and appreciate their help. I have met a number of our members & customers and look forward to its continuance in the months ahead. Based on my past experience of working for other cooperatives and my association with their board of directors, I feel that we have an excellent board of directors providing the leadership to furthering the goal of being a strong and independent cooperative. Some general information about me is that I was born and raised on a small family farm outside of Iowa Falls, IA. I’m an Iowa State University graduate and live in Ames with my wife, Jan. I have one son & daughter-in-law with five children. I thoroughly enjoy my grandchildren and being an active church member. Prior to joining Tama-Benton Cooperative, I have 30 years of strong financial background with over 20 years serving as CFO & Controller for various cooperatives in Iowa, Kansas and Oklahoma. These cooperatives have ranged in sales of $20 million to over $250 million and from a single location to over 25 locations.
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I’m excited to be on board with Tama-Benton Cooperative and ready to build working relationships with fellow employees to do our best to serve you, the members and customers. We are here to listen to your needs and to follow through with the deliverables doing it with integrity.
Agronomy Department Hello from the Agronomy Department. First of all, I would like to thank all the Tama-Benton Cooperative customers and members for their business and making this prepay season a success. In the past, I have talked about volatility in the fertilizer industry and this year is no exception. The good thing is this year’s prices have been on a steady decline since last fall. If you have not made a decision on your spring needs yet, please stop in and talk with Jake, Bob or myself. We would be happy to help you make a plan. With the mild winter and considerable moisture received thus far, we have the likelihood of disease in corn and soybeans to continue this year and could be very high. Last year, there was a tremendous amount of northern corn leaf blight and I believe this disease will survive over the winter months. Fungicide treatments in this environment showed excellent return on investment last year with increased yield and crop standability. Currently, there is a $75/ gallon rebate on fungicides if purchased by March 15th. I believe this is a very good tool to use to help offset lower commodity prices by increasing yield and producing more bushels to sell. As we approach the spring season, I would like to thank everyone for your support of TamaBenton Cooperative. I know that for most producers, farming is not just your job, but your livelihood. We truly appreciate the opportunity to serve you and to help you be more successful. As we get busy with the many tasks at hand, remember to think and work safely in the approaching spring season. Thank you. Barney Hopper
Projects June 2015/ May 2016 Over the past year, your board of directors approved nearly $725,000 of projects critical to your Tama-Benton Cooperative. In order to serve our customers in the Clutier area, we added an additional 3400 bushel per hour grain dryer, new bin sweep in the large steel grain bin, new grain probe and a new moisture tester. At Vinton, we just completed the installation of a new 14’x80’ Cardinal truck scale along with $60,000 worth of work on the concrete elevator grain legs and distributor. In Dysart, we relined one of the concrete silos, patched and repaired the outside of the 2 north concrete bins, replaced several grain augers and conveyors, plus added a Timpte grain trailer to transfer grain between locations. We will also be able to utilize existing employee personnel to haul grain into the Cedar Rapids market during the off season. We plan to continue to invest and upgrade our anhydrous ammonia plants each year at all three locations as tonnage sales allows and to meet OSHA regulations.
NEW GRAIN TRAILER PURCHASED TO HELP TRANSFER GRAIN BETWEEN LOCATIONS
INSTALLATION OF THE NEW TRUCK SCALE AT THE VINTON LOCATION
BELOW: PATCH WORK DONE ON CEMENT SILOS AT DYSART LOCATION ABOVE:
ABOVE:
NEW DRYER AT CLUTIER LOCATION
NEW PROBE AT CLUTIER LOCATION
Projects June 2016/ May 2017 Moving into our next fiscal year, we will need to continue updating agronomy equipment, elevator repairs and liquid fertilizer storage. We plan to add some additional 1500 gallon anhydrous nurse tanks and purchase running gears to double up several of our 1000 gallon nurse tanks. In order to stay competitive in the fertilizer market, we may need to replace some of the aging liquid fertilizer storage tanks in Vinton and add some addition bulk storage in Dysart. Our spray rigs are getting some age on them, thus we’ll need to look at upgrading one in the very near future. Since the flow of grain takes its toll on elevator equipment, both receiving pits in Dysart and Vinton will need to be relined. Additional repairs will be completed on grain spouting & elbows, plus making repairs to the grain distributor. We continue to add paddle sweeps to our grain bins for employee safety and to meet OSHA regulations. It would be nice to add some addition steel grain bin storage in Dysart, but the labor intensive flat storage may have to be utilized a little while longer.
Grain Markets
Knowing when to price grain this year has been extremely difficult for many farmers. Historically grain prices are lowest at harvest and increase as the year moves forward. Unfortunately the market has traded in a very narrow range since harvest with limited price rallies. This Spring is offering virtually no market premium giving little reason to store grain long term. With the abundant supply of grain produced in the U.S., you would have expected the CBOT futures market to give those with farm storage the opportunity to capture some addition premium from the market. The March/May corn spread is only at a 5- cent carry when it should be closer to a 12-13 cent carry in a typical year like the one we’re having today. Basis values have remained relatively strong as processers need corn to grind but farmers have been slow to sell. The strong El Nino pattern has been a big factor in providing rains over many crop producing areas in the United States and South America the past year. We know from the low production crop in 2012 that prices can change rather quickly. It will be interesting if the weather pattern changes from a strong El Nino to strong a La Nina (dry and hot pattern) as many climatologists are anticipating. The question is, will if affect production in the United States or South America, plus when and how severe? Grain marketing opportunities for an elevator will change from year to year. There are years of volatile basis swings and volatile CBOT futures swings and this has not been one of those years. We will offer price later contracts when the markets indicate they will work. We will offer marketing information, alternative contracts and grain offer programs you can take advantage of when marketing your grain. Remember the best programs are the ones that work best for both you and your cooperative. Railroad rates at Vinton have continued to increase the past year and fuel prices are substantially lower, thus making the truck market nearly equal to rail rates. Several years ago, we were able to quote the same price at Vinton as the processors in Cedar Rapids, but unfortunately, that is not possible today as the marketing environment has changed significantly. CONTINUED ON PAGE 8
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Marketing grain has certainly been a challenge this year with all the outside market factors influencing commodity price direction. Do you remember the last time crude oil prices were under $30 a barrel, corn prices were $2.50 and soybeans at $6.00? This year we were fortunate to have a great crop in the Unites States with corn production of 13.601 billion bushels and soybean production of 3.996 billion bushels. Unfortunately, most other exporting countries around the world also experienced excellent crop production. Strong export competition against both US corn and soybeans will continue throughout the year and likely increase our carryover supplies into 2016. The February USDA report is estimating our September 1st corn stocks at 1.837 billion bushels and soybeans at burdensome 450 million bushels. Without a production problem somewhere in the world, grain prices will have a difficult time moving higher. In addition to the adequate grain supplies, major countries around the world are facing difficult economic times. China’s economic growth has slowed to 6.8%, the lowest in nearly 25 years. China’s stock market recently declined from over 5,000 points to 2,800. The DOW was able to hold together as foreign currency flowed into the US as a safe haven but has since declined nearly 2,000 points to 16,000. China holds nearly 54% of the world’s ending grain stocks compared to just 22% in the United States. U.S. ethanol plants continue to process approximately 5.2 billion bushels of corn annually, but at a very low to negative profit margin. Several large companies have already or are considering selling off some of their ethanol assets. News released this week reported ChemChina was very close to purchasing Syngenta for 43.8 billion dollars. The transaction could be concluded by the end of the year subject to shareholder acceptance and regulatory approvals. Other news this week reported dicamba-tolerant soybeans have received approval in China. This is a big step in having Engenia Herbicide commercially available which will control the toughest broadleaf weeds, including glyphosateresistant varieties, in dicamba-tolerant soybeans. General Manager Charles Gabehart
Wrap-Up In summary, Tama-Benton Cooperative has a strong balance sheet with thanks to our members and customers for their business. We look forward to this to continue in the future with full support from our team of Directors, Staff and Employees. CLUTIER, IOWA 52217
DYSART, IOWA 52224
VINTON, IOWA 52349
GRAIN MARKETING MEETINGS
Cooperative Business Update Your Tama-Benton Cooperative has witnessed several personnel changes over the past year. Mel Campbell retired as your General Manager, Veryl Sievers as your Controller and Jennie Anderson as your Merchandiser / Grain Accounting Clerk. Our board of directors faced the challenge of hiring a new General Manager last Spring and that’s when I accepted the position. It was then my responsibility as the General Manager to find and place the most qualified people in the other key staff positions to serve our patrons.
CLUTIER-LEGION WED. FEB. 17TH 9:30-11:00 A.M.
DYSART–LIBRARY THURS. FEB.18TH 9:30-11:00 AM
VINTON–U.S. BANK 414 A AVE. THURS. FEB. 18TH 1:30-3:00 PM
Doug Elliott from Ames, Iowa was hired in late July as our Controller. Doug brings a wealth of accounting and management experience from working in the cooperative system and other industries. Doug has been a great asset to our management staff, employees and to our board of directors. Amy Fisher who was promoted to our Dysart Office Manager position in July has also accepted responsibilities as our Grain Accounting Supervisor. Amy has worked in the grain department in Dysart and will do an excellent job in serving our customers at all three locations. Bonnie Wagaman from Dysart was hired in early July as our Grain/Accounts Payable Clerk in the Dysart office. Bonnie worked in the insurance business in Waterloo before accepting the position. Bonnie’s office skills have also been a great addition to our office staff.
Continue from page 1
Another new hire, Kary Moore is currently working at the Vinton office, weighing trucks and answering the phone. Kary was new to the cooperative industry before coming to work parttime at our Clutier location during the 2015 Fall harvest. We appreciate your patience as we get Kary properly trained to assist customers regarding the grain and agronomy business in the Vinton area. I believe we have put together a fine group of qualified staff and group of employees able to take care of our customers’ needs as we move into the future. We welcome you to stop in and introduce yourself to our new employees when you have the opportunity. General Manager Charles Gabehart
Year-to-Date Financial Report Our gross annual sales volume through 7 months of operations is nearly 25 million dollars compared to 22 million a year ago. Despite this year’s drying income being down nearly $300,000 dollars due to the warm weather during harvest, our net local savings is $300,000 ahead of last year. This is in line with a normal margin for cooperatives but will be difficult to maintain given the high amount of yearly depreciation we have on our balance sheet. Due to the addition of the new grain facilities from the windstorm in 2011, our company annual depreciation went from $381,000 in 2011 to nearly $1.1 million in 2015. Our insurance premiums and property taxes have also increased due to the value of the new assets. The 2011 windstorm was a blessing, but also a curse. Without good insurance coverage, we wouldn’t have been able to afford to purchase all of the new assets we needed to handle grain the way we did at harvest. It improved our ability to handle grain quickly and get our patrons back into their fields. On the negative side, it will make it difficult for your cooperative to generate a local savings comparable to industry standards as in past years. This year’s local savings will depend on the amount of grain we purchase and market during the next 5 months at a reasonable profit margin, plus how the weather conditions affect our agronomy operations this Spring.
Partners Program (We Care) One of our goals this year is to find out what we can do to help improve service to our customers. In order to accomplish this, we will be setting up meetings and making calls to our customers to see how we can improve our business to serve you. Our “Partners Program” will involve active participation from our board of directors, management staff, employee group and customers. Many cooperative businesses fail to make direct personal contact with their members, which in today’s competitive environment will lead to lower sales volumes and profits. There are many agricultural companies in our trade area that are aggressively pursuing our customer base. We just want you to know that we really do appreciate your business and look forward to serving you. After all, we are an extension of your farming operation and owned by you, our members. If you get a call to participate in a meeting, please be open in allowing us the opportunity to listen and learn from you on what we can do to earn more of your business.
Comments From Doug As I reflect on the last several months since joining the employee team on July 23rd as the Controller, it has been a very rewarding experience. I enjoy working with a great group of employees and appreciate their help. I have met a number of our members & customers and look forward to its continuance in the months ahead. Based on my past experience of working for other cooperatives and my association with their board of directors, I feel that we have an excellent board of directors providing the leadership to furthering the goal of being a strong and independent cooperative. Some general information about me is that I was born and raised on a small family farm outside of Iowa Falls, IA. I’m an Iowa State University graduate and live in Ames with my wife, Jan. I have one son & daughter-in-law with five children. I thoroughly enjoy my grandchildren and being an active church member. Prior to joining Tama-Benton Cooperative, I have 30 years of strong financial background with over 20 years serving as CFO & Controller for various cooperatives in Iowa, Kansas and Oklahoma. These cooperatives have ranged in sales of $20 million to over $250 million and from a single location to over 25 locations.
CONTINUE FROM PAGE 3
I’m excited to be on board with Tama-Benton Cooperative and ready to build working relationships with fellow employees to do our best to serve you, the members and customers. We are here to listen to your needs and to follow through with the deliverables doing it with integrity.
Agronomy Department Hello from the Agronomy Department. First of all, I would like to thank all the Tama-Benton Cooperative customers and members for their business and making this prepay season a success. In the past, I have talked about volatility in the fertilizer industry and this year is no exception. The good thing is this year’s prices have been on a steady decline since last fall. If you have not made a decision on your spring needs yet, please stop in and talk with Jake, Bob or myself. We would be happy to help you make a plan. With the mild winter and considerable moisture received thus far, we have the likelihood of disease in corn and soybeans to continue this year and could be very high. Last year, there was a tremendous amount of northern corn leaf blight and I believe this disease will survive over the winter months. Fungicide treatments in this environment showed excellent return on investment last year with increased yield and crop standability. Currently, there is a $75/ gallon rebate on fungicides if purchased by March 15th. I believe this is a very good tool to use to help offset lower commodity prices by increasing yield and producing more bushels to sell. As we approach the spring season, I would like to thank everyone for your support of TamaBenton Cooperative. I know that for most producers, farming is not just your job, but your livelihood. We truly appreciate the opportunity to serve you and to help you be more successful. As we get busy with the many tasks at hand, remember to think and work safely in the approaching spring season. Thank you. Barney Hopper
Projects June 2015/ May 2016 Over the past year, your board of directors approved nearly $725,000 of projects critical to your Tama-Benton Cooperative. In order to serve our customers in the Clutier area, we added an additional 3400 bushel per hour grain dryer, new bin sweep in the large steel grain bin, new grain probe and a new moisture tester. At Vinton, we just completed the installation of a new 14’x80’ Cardinal truck scale along with $60,000 worth of work on the concrete elevator grain legs and distributor. In Dysart, we relined one of the concrete silos, patched and repaired the outside of the 2 north concrete bins, replaced several grain augers and conveyors, plus added a Timpte grain trailer to transfer grain between locations. We will also be able to utilize existing employee personnel to haul grain into the Cedar Rapids market during the off season. We plan to continue to invest and upgrade our anhydrous ammonia plants each year at all three locations as tonnage sales allows and to meet OSHA regulations.
NEW GRAIN TRAILER PURCHASED TO HELP TRANSFER GRAIN BETWEEN LOCATIONS
INSTALLATION OF THE NEW TRUCK SCALE AT THE VINTON LOCATION
BELOW: PATCH WORK DONE ON CEMENT SILOS AT DYSART LOCATION ABOVE:
ABOVE:
NEW DRYER AT CLUTIER LOCATION
NEW PROBE AT CLUTIER LOCATION
Projects June 2016/ May 2017 Moving into our next fiscal year, we will need to continue updating agronomy equipment, elevator repairs and liquid fertilizer storage. We plan to add some additional 1500 gallon anhydrous nurse tanks and purchase running gears to double up several of our 1000 gallon nurse tanks. In order to stay competitive in the fertilizer market, we may need to replace some of the aging liquid fertilizer storage tanks in Vinton and add some addition bulk storage in Dysart. Our spray rigs are getting some age on them, thus we’ll need to look at upgrading one in the very near future. Since the flow of grain takes its toll on elevator equipment, both receiving pits in Dysart and Vinton will need to be relined. Additional repairs will be completed on grain spouting & elbows, plus making repairs to the grain distributor. We continue to add paddle sweeps to our grain bins for employee safety and to meet OSHA regulations. It would be nice to add some addition steel grain bin storage in Dysart, but the labor intensive flat storage may have to be utilized a little while longer.
Grain Markets
Knowing when to price grain this year has been extremely difficult for many farmers. Historically grain prices are lowest at harvest and increase as the year moves forward. Unfortunately the market has traded in a very narrow range since harvest with limited price rallies. This Spring is offering virtually no market premium giving little reason to store grain long term. With the abundant supply of grain produced in the U.S., you would have expected the CBOT futures market to give those with farm storage the opportunity to capture some addition premium from the market. The March/May corn spread is only at a 5- cent carry when it should be closer to a 12-13 cent carry in a typical year like the one we’re having today. Basis values have remained relatively strong as processers need corn to grind but farmers have been slow to sell. The strong El Nino pattern has been a big factor in providing rains over many crop producing areas in the United States and South America the past year. We know from the low production crop in 2012 that prices can change rather quickly. It will be interesting if the weather pattern changes from a strong El Nino to strong a La Nina (dry and hot pattern) as many climatologists are anticipating. The question is, will if affect production in the United States or South America, plus when and how severe? Grain marketing opportunities for an elevator will change from year to year. There are years of volatile basis swings and volatile CBOT futures swings and this has not been one of those years. We will offer price later contracts when the markets indicate they will work. We will offer marketing information, alternative contracts and grain offer programs you can take advantage of when marketing your grain. Remember the best programs are the ones that work best for both you and your cooperative. Railroad rates at Vinton have continued to increase the past year and fuel prices are substantially lower, thus making the truck market nearly equal to rail rates. Several years ago, we were able to quote the same price at Vinton as the processors in Cedar Rapids, but unfortunately, that is not possible today as the marketing environment has changed significantly. CONTINUED ON PAGE 8
CONTINUED FROM PAGE 7
Marketing grain has certainly been a challenge this year with all the outside market factors influencing commodity price direction. Do you remember the last time crude oil prices were under $30 a barrel, corn prices were $2.50 and soybeans at $6.00? This year we were fortunate to have a great crop in the Unites States with corn production of 13.601 billion bushels and soybean production of 3.996 billion bushels. Unfortunately, most other exporting countries around the world also experienced excellent crop production. Strong export competition against both US corn and soybeans will continue throughout the year and likely increase our carryover supplies into 2016. The February USDA report is estimating our September 1st corn stocks at 1.837 billion bushels and soybeans at burdensome 450 million bushels. Without a production problem somewhere in the world, grain prices will have a difficult time moving higher. In addition to the adequate grain supplies, major countries around the world are facing difficult economic times. China’s economic growth has slowed to 6.8%, the lowest in nearly 25 years. China’s stock market recently declined from over 5,000 points to 2,800. The DOW was able to hold together as foreign currency flowed into the US as a safe haven but has since declined nearly 2,000 points to 16,000. China holds nearly 54% of the world’s ending grain stocks compared to just 22% in the United States. U.S. ethanol plants continue to process approximately 5.2 billion bushels of corn annually, but at a very low to negative profit margin. Several large companies have already or are considering selling off some of their ethanol assets. News released this week reported ChemChina was very close to purchasing Syngenta for 43.8 billion dollars. The transaction could be concluded by the end of the year subject to shareholder acceptance and regulatory approvals. Other news this week reported dicamba-tolerant soybeans have received approval in China. This is a big step in having Engenia Herbicide commercially available which will control the toughest broadleaf weeds, including glyphosateresistant varieties, in dicamba-tolerant soybeans. General Manager Charles Gabehart
Wrap-Up In summary, Tama-Benton Cooperative has a strong balance sheet with thanks to our members and customers for their business. We look forward to this to continue in the future with full support from our team of Directors, Staff and Employees. CLUTIER, IOWA 52217
DYSART, IOWA 52224
VINTON, IOWA 52349
