For most ag retailers, the bringing together of two companies into a single business entity would be cause for some kind of high-profile recognition — issuing a press release or inviting the trade media to an open house, for instance. However, when Mt. Angel, OR-based Wilco Farmers formally combined the ag portions of its business operations with St. Paul, MN-based Agriliance earlier this year, most industry observers probably were unaware of the change. The newly combined cooperative’s grower-customers probably didn’t notice, either. And according to Bill Hubbell, general manager for Wilco-Agriliance LLC, that’s exactly the way it should be.
“One of our major goals for 2006 was to have a smooth transition with the joint venture, with little or no impact on our grower-customers, and so far, we’ve done that based upon everything we’ve heard from the field,” says Hubbell. “Wilco was already the sum total of one major consolidation almost 40 years ago and several smaller ones in the interim. The teaming with Agriliance just represents another chapter in our efforts to grow the cooperative and have it evolve for the future. From history’s perspective, we’ve already gone down this path before.”
Indeed, Wilco’s modern history starts with a similar coming together of cooperatives back in 1967.
According to Larry Ferguson, ag supply manager for the company, that’s the year that five separate cooperatives servicing the growers in Oregon’s Willamette Valley region — Valley Farmers, Donald Farmers, Stayton Farmers, Canby Farmers, and Mt. Union Warehouse — realized they could provide better service by combining their personnel and outlets. “All these companies had operated separately to that point, some for close to 30 years, constantly competing with each other for grower-customers,” says Ferguson. “But everyone realized that bringing everything together would enable the cooperative to grow faster while providing it with expanded resources and materials to get the job done.”
History Repeats Itself
In reality, he adds, the decision to join forces with Agriliance came about in a similar fashion. Wilco had already worked with Agriliance for several years, with Agriliance operating a service center out of Wilco’s headquarters facility in Mt. Angel and regularly supplying inputs for the cooperative to sell through its outlets.
On its own, Wilco had managed to rack up some very impressive numbers, seeing record revenue of $35 million for its ag business in 2005, serving a steady grower-customer base of 1,500. As Ferguson points out, “Wilco was doing just fine” without the need for a new business partner.
“But our company’s president/CEO, Doug Hoffman, was looking down the road and the future he saw wasn’t so bright,” he says. “One of our major competitors in the area, Woodburn Fertilizer, was acquired by Wilbur-Ellis about 18 months ago, so we now had a national competitor throughout the valley. To keep pace, Wilco needed to grow and continue to have a key supplier working with us to make that happen. That’s when the idea to formally bring our business operations together with Agriliance’s was born.”
Over a period of time, a deal was reached between the two ag retailers. Agriliance and Wilco formed a 50/50 joint venture with the agronomy business and Agriliance officially had its Chehalis, WA, outlet join the cooperative’s family of facilities.
In January 2006, the company was formally renamed Wilco-Agriliance to reflect the strength of both companies to their customers and suppliers. Now, Wilco-Agriliance personnel are working cooperatively with Wilco’s and Agriliance’s Coastal Division office in Memphis, TN, to establish the direction the new cooperative will take.
Obviously, we are thrilled to be able to add Wilco to our group,” says Jim Blome, vice president, Coastal Division for Agriliance. “In essence, it’s a similar arrangement to the one we made a few years ago with Alabama Farmers Cooperative. Wilco Farmers does a great job in the area with their members and we are very happy to be in a position to help them get to the next level when it comes to providing services and inputs to their grower-customers.”
Customers Come First
And as Hubbell points out, customer considerations are key to how Wilco-Agriliance has maintained its business throughout the decades. “We are very, very customer focused,” he says. “There are 241 different crops grown in our area — everything from corn and onions to grass seed and sod — and I won’t tell you we are expert in all of them. But there are a heck of a lot of them that our agronomists do know well, and that is what’s important to our customers so we can help them be more profitable.”
According to Hubbell, this highly diversified customer base is one of the main reasons Wilco decided to seek a partnership with Agriliance. “Besides needing agronomists that are expert in as many different crops as possible, you also need very specialized ag equipment to perform the varied custom application work that’s needed,” he says.
In addition, Hubbell says that annually an average of 14,000 acres has been coming out of the traditional ag production in its service territory. “To survive in this kind of market environment, we will have to adjust to these kinds of changes, and the alliance with Agriliance provides us with some of the opportunities to do this.”
Take crop protection products, for example. For several years, Wilco has marketed its own line of brands along with offerings from basic manufacturers, post-patent producers, and suppliers such as Agriliance’s AgriSolutions line. The reason for this vast product mix was simple: grower-customers growing 241 different crops regularly use hundreds of crop protection products to manage them effectively.
“Although we were a member of Agriliance’s customer base and the company ran a service center out of our headquarters, there was still no guarantee we could always get the products we needed to supply our grower-customers every time,” says Ferguson. “That’s pretty much a given now that we are 50% owned by them.” In addition to a more guaranteed supply situation, he adds, Wilco will also benefit from having access to Agriliance’s inventory management capabilities with AgriSolutions products.
Down the line, Hubbell thinks that Wilco-Agriliance will also begin using some kind of computerized information system for traceability purposes. “Canneries and some of the other food producers that our growers work with have been demanding recordkeeping for the crop protection products for several years,” he says. “But now, they are starting to ask for information on what crop nutrients were applied to the crops as well. So we are looking at ways we can help growers have instant access to this kind of information electronically, with real-time delivery perhaps.”
More Crop Protection Options
Besides working more closely within the Agriliance family of brands and services, Hubbell believes another key to Wilco-Agrilance’s future is cultivating its relationship with the basic crop protection product manufacturers. The reason for this ties back to the crop diversity inherent to the Willamette Valley. “For our area, there’s all this special labeling required on crop protection products, but most of these products tend to be targeted at growers in the Midwest, so the labels don’t work for our customers,” he says. “We often need our chemical suppliers to add a supplemental label to these products so they can be used in our region.”
The situation has become more precarious in recent years, he adds, as EPA has stepped up its product reviews, sometimes removing chemistries from the market that had been used by local growers for years to stay competitive. “Last year, a product called Ronilan (vinclozolin) used to control white mold in beans was removed from our market by EPA,” says Hubbell. “That increased the cost of control by two to three times per acre. We need the basics working with our growers and our crops to continue to be able to give us more options.”
Moving forward, Hubbell expects 2007 to be a pivotal year for Wilco-Agriliance as a company. “Now that we’ve lined up our business with Agriliance, Wilco-Agriliance will spend much of the coming season evolving and testing new market opportunities that are different than those we’ve focused on traditionally,” he says. “We are looking to work more with some of the specialty crops that are grown in the valley and the landscape business. We will continue to grow our core business with our grower-customers. With the alliance with Agriliance on our side, I believe will be in a much better position to expand and defend our market turf.”