Local co-ops help bolster grain export picture

Thursday, October 25, 2012
Ken Gard, active with the Farm Bureau, Pork Producers and Woodbury County soil and water conservation efforts, in addition to his responsibilities as Farmers Cooperative board chairman, says local ethanol production is a plus in a successful co-op program.(Sentinel photo by Jolene Stevens)

Ken Gard said it was simply a matter "of wanting to learn" how co-ops worked when he decided to become involved with the board of the Farmers Cooperative Company, in Hinton, where he'd been marketing a portion of his grain.

"I was concerned about how they operated and how they could be successfully competitive with private companies," Gard said of the co-op, which has operations in Le Mars, Akron and Oyens as well as Hinton.

A grain producer farming at the northeastern edge of Sioux City, Gard is now in his fifth year as chairman of the co-op board.

Union Vikings 4-H club members visit Pumpkin Hollow, near Le Mars, for a club fundraiser. Club members pictured here during their Saturday visit to the pumpkin patch are (from left) Brandon Kass, Camden Schroeder and Adam Harms.(Sentinel photo by Jolene Stevens)

This month the co-op's producer members join others across the nation in the observance of National Cooperative Month.

"Co-ops fill a special niche in our agriculture of today," Gard said. "They keep private industry honest as well as providing services and products that can help our members to become more profitable in today's market place."

Producer-owned co-ops posted record sales and income nationwide in 2011, according to data provided by Dallas Tonsager, undersecretary for rural development, U.S. Department of Agriculture.

The figures show co-ops surpassing previous 2008 record sales by $10 billion.

The 2011 revenue passed up the 2008 income figure by $500 million.

Tonsager's data also shows that 14 of the leading co-ops nationwide are in Iowa, the most of any state.

Gard said a major benefit provided by a cooperative for its grain producer-members is it gives local producers access to the worldwide market.

"Yes, it's true we have a domestic market for our products," he said. "However, if you're tied just to the domestic marketing of your agricultural products this may or may not be the best place to sell your grain."

Currently the domestic market has been good for producers, Gard said.

The same was not true 10 years ago, he said.

"We had to reach out further with access to world markets with exports now an important part of our economic picture," he said.

He added he's optimistic that this export market can be sustained with continuing benefits to local area producers.

Gard cautioned that it is difficult to know what's ahead

"I'm remembering the last time we had corn take a spike up," Gard said. "Russia said they needed corn, supposedly they were going to need corn forever. Do they buy much from us or anybody else now? Not a whole lot."

Agriculture export markets are likely to continue to shift, he said.

"It's my take in 50 years of farming that if a commodity becomes high priced, somebody someplace is going to grow it," he said. "We need to enjoy the demand for our corn and soybeans as it is today while it's here."

Gard suggested local cooperative members "have an advantage" in reaching out to export markets not only in China and other Asian countries but elsewhere as result of the Farmers Cooperative ffiliation with Ag Processing Inc. (AGP).

The larger co-op, representing 175 Midwestern cooperatives, is seen as the world's largest soybean processing company and a leading U.S. supplier of refined vegetable oil.

Expressing his belief of the importance of export markets, Gard said there is a concern that remains in his mind.

"One of our advantages we've had for years in pursing our export markets has been that we've had the best transportation in the world to get our products to market," he said. "We haven't in recent years, however, been reinvesting in it. If you don't reinvest the system eventually wears out."

He talked about transportation beyond roads and rails.

"We see this now in our barge traffic, a cheap way to get products to the Gulf area, if that's where you want it," he said. "You can't do it if the ports are shot, and you can't get through," he said.

Likewise, if ocean shorelines become inadequate for the harboring of larger shipping vessels, trade will be hampered, he said.

He pointed to "big business, political will and environmentalists efforts" each in their respective ways disrupting potential transportation improvements and additional export market growth.

"Our future transportation must be addressed and addressed properly if we expect continued growth in our export markets for manufactured as well as raw products," Gard said.

Addressing additional advantages he sees of today's co-ops, Gard cited the system's checks and balances and its desired ability to stabilize the prices of its products.

This, he said, can be especially important for fertilizer and other crop products offered by co-ops.

He said he feels the success of local co-ops, including the one at Hinton, has been dependent on a determination to have sufficient operating capital to allow for facilities needed by producers.

This includes facilities for "competitive" grain handling, storage and products.

In addition, he said a co-op must be willing to ensure this necessary capital is available and, when necessary, forego member dividends if additional monies are necessary in order to meet operational needs.

Gard said successful ethanol plants in the area have been a factor in the success of the local area co-ops.

"Right now ethanol drives the market up here," he said. "We fortunately have several plants that are doing well. They're doing this because they're operating efficiency."

Those doing otherwise "will probably be taking time off next summer," he added.

Gard said it's difficult to understand recent "complaining" about ethanol.

"Producers apparently don't understand or don't remember what the industry has done for them," he said, citing the lowering of feed costs for both hog and cattle producers through the feeding of ethanol co-products.

This allowed for a return of the cattle industry to the Midwest after it had earlier gone to the southwestern United States, he said.

"This means additional jobs in the Midwest and locally, in addition to increased tax revenue for the area," he said. "Our ethanol plants do serve a purpose."

Gard said agriculture and agribusiness is "important to the nation" and one of the few areas where raw product is taken from the land and made into a finished product.

"This is why the United States is the economic engine it is today, an economic driver particularly here in the upper Midwest," he said.

Gard said, however, that he feels America's consumers have yet to gain full understanding of agriculture's role in feeding the nation and the world.

"I'm afraid they don't understand -- and won't until the grocery shelves are empty, and they don't have things to buy," he said.