The Cooperative Consolidation Crunch
July 11, 2016 One month ago on June 14, I had the opportunity to attend the official opening of a new ag retail facility in Marysville, OH. The plant was part of an expansion effort being undertaken by Heritage Cooperative, Inc., a 30 location ag retailer based in central Ohio. At the event, Heritage President/CEO Eric Parthemore talked about how the opening of the Marysville outlet “provides a cost-effective way for the farming community to do business, saving time, money, and resources.”
Just over one week later, word broke that the board of directors for Heritage Cooperative had entered into negotiations to possibly merge with Agland Co-op, Inc., based in nearby New Philadelphia, OH. If combined, the new cooperative would have more than 50 locations throughout the Midwest and service almost 6,000 grower-customers.
And so the cooperative consolidation crunch continues. Already in 2016, there have been numerous high-profile cooperative mergers, including Iowa’s West Central Cooperative joining forces with Farmers Cooperative and Minnesota’s Central Valley Coop merging with Watonwan Farm Service.
Loading ...As for why this is happening, some market watchers say that agriculture’s current economic uncertainty is to blame. “The best way to manage expenses is through merging,” they say. But others believe it is more a case of cooperatives “trying to keep up with the Joneses.” In Ohio, for example, Heritage/Agland competitors TruPointe Cooperative and Sunrise Cooperative recently consolidated their operations “in an effort to maximize our efficiencies” said a company press release.
Given the current state of agriculture, and the fact that cooperatives are under enormous pressure to better manage their costs in this kind of environment, we can probably expect more such cooperative consolidation announcements throughout the rest of 2016 and beyond.
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