CHS: Weathering Market Shifts

While dealers have enjoyed two years of strong bottom lines, the cyclical nature of the ag economy demands companies prepare for challenging times ahead. Co-op powerhouse CHS Inc., headquartered in Inver Grove Heights, MN, has been doing just that, and CropLife editors wanted to learn from its efforts. We talked with Lynn Foth, vice president of Aligned Solutions there. He joined CHS in March 2011 but has spent 36 years in agriculture, many of them at the local cooperative level and many as the CEO/general manager of retail sites in Iowa and Illinois. He describes what CHS is doing internally to be ready for market changes.

Q: You head up CHS’ Aligned Solutions group, formerly known as Business Solutions. What does this segment of the company do?

A: We used to be the business consulting connection between CHS corporate and its locations across the country. With my arrival this year, we went to a different format to identify all the potential offerings that our company has to help local cooperatives through our 14 different divisions. We’re focusing on assisting local cooperatives with market development and market growth, particularly with some of the threats that are in the marketplace today — the multinationals and some of the things that are happening in grain and nutrients today.

A major emphasis now in our group is on external education, what is happening in the macro world, if you might, that the co-ops live in. We are also emphasizing planning to a much higher level — after you understand the world that you live in, you spend time planning.

This group has had a strong history of providing valuable training services and talent development and placement. While we’re not leaving that arena, our number one objective now is to help companies grow their markets and where appropriate, help connect them with some of the resources in our building.

Q: Do retailers have as good a handle as they could on the big picture, what’s happening externally?

A: I think the awareness of retailers has gone up dramatically. They have really made a committed effort to get their boards to understand and become educated on the global aspects of retail agriculture. That’s been a very, very key accomplishment of a successful retailer in the last two years.

Q: How did CHS identify areas within the company that needed attention?

A: We got started about three years ago when our former CEO John Johnson began an initiative known as 2020. The goal was to focus on what may be coming down the trail by the year 2020 and how prepared CHS might be to meet those needs, as well as thinking about what our highly valued customers in the local cooperative community might look like then.

Our new CEO Carl Casale came on board early last year, took those efforts, and did an excellent job of rallying the management team, looking at how we might execute what was learned and build a platform around what our CHS aspirations might be moving forward. We came up with five key aspirations: 1) global commodities expansion, particularly in grain and nutrients; 2) energy platform growth; 3) food ingredients growth — the last two were specific retail aspirations; 4) how to become more producer-focused; and 5) how to leverage our own enterprise for more customer value.

Carl spent a lot of time early in 2011 in meetings around the country to get feedback from our local coops, as well as to introduce the aspirations.

Q: We understand here at presstime that Carl is going to announce some specific steps CHS will be taking at your year-end annual meeting — and you can’t talk about them yet. But can you share some general retail projects?

A: From the Aligned Solutions group, I can say we’re stressing that members really spend a lot more diligence on what we call the ABC’s of good retail.

“A” would be alignment. I think in these times it’s critical that producers align with their board, the board align with the CEO, CEO with senior leadership team, senior leadership team with employees, then basically the employees back to the producers — so that everyone understands the vision and mission — and the aspirations of the local cooperative as well as connecting links in terms of alignment to vendors. This would allow deeper partnerships in this climate.

We have been in good times, so there are a lot of different views on how to use some of  the returns that the folks have been fortunate enough to generate. There’s also some generational transformation going on with new, younger directors coming in. That alignment issue is very critical here.

“B” would be balance. A company’s balance centers a lot around its equity programs. These need to be reflective of your past heritage, your current patrons, and your future customers.

“C” is capital situation. In particular, look at the relationships that you have with your banker — and all relationships down through producer financing.

Q: How are you starting to execute some of the changes?

A: From Carl’s discussions across the country and from work within the company, we’ve developed a list of mutually beneficial projects that we hope to explore moving forward.

We’re much more team-driven now, and people are engaging and becoming involved with each other to look at problems and promote solutions collectively — which I think is very much appreciated by the staff. Staff are working with people in the company that perhaps they didn’t have the opportunity to work with before. It’s kind of broadened everyone’s horizons on who CHS is, our connection out into the country, and the focus that’s needed between our business units and our valued customers.

Q: Where do you think you’ve seen some companies falter when they’ve hit some tougher times?

A: I think a lot of it is really understanding the external world they live in as well as their internal capabilities, capacities, and gaps. This all comes back to the planning process. I think those companies that really do well have a history of putting a lot of emphasis on planning and are much better equipped to weather the downturns.

Look at the world in three-year windows. I don’t like to see companies take the five-, 10-year approach. Companies should put a lot of time in assessing the three-year windows that lie ahead and in learning from the three-year windows that they just exited. If they’ve been disciplined enough to go through that and really make it more than just a one-day  business planning event — make it perpetual ongoing business plan — I think those are the ones better equipped to make the changes.

Q: Any advice for ag retailers coming off these good years?

A: I can’t emphasize planning enough, that’s the greatest advice I could suggest. But even more so than planning, have the discipline to execute those plans.

We need to really understand that we are in exciting times but also very challenging times. Our two greatest assets are changing. One is our people — we are going through a generational transformation. But we’re also seeing a necessity to shift some of our long-standing asset base.

We have some tired assets, I think, as a cooperative community, some of our assets have got some age on them. These factors again reinforce planning from both a people standpoint and a facilities standpoint as we make this next generation transformation.

So that would be my advice: Put a lot of effort into your planning process, but make sure you execute it with the next generation.

Leave a Reply

State of the Industry Stories

Liquid Fertilizer Storage tanks
State of the IndustryComplex Fertilizer Market Brings Mixed Feelings
January 5, 2016
Declining fertilizer prices and plentiful supplies should be good news for growers facing low crop prices. But they and their Read More
Asmus Farm Supply crop protection products in storage
State of the Industry2016 Crop Protection Outlook: The Guessing Game
January 4, 2016
One would naturally assume that retail sales of crop protection products in a contracted market would themselves be contracted, but Read More
Seed corn bags in storage
Special ReportsThe Outlook For Seed In 2016
January 3, 2016
Among all crop input categories going into 2016, the seed category has as many questions regarding which direction it will Read More
Wilbur-Ellis’ new fertilizer blending facility, located in Mott, ND, was designed by A.J. Sackett & Sons.
State of the IndustryBuying Intentions Survey: Retailers Taking A Prudent Approach In 2016
January 2, 2016
The CropLife® magazine Buying Intentions Survey made its debut last year to gauge current industry trends against the retailer’s plans Read More
Trending Articles
Matt Hopkins15 Twitter Accounts Every Ag Professional Must Follow
October 13, 2016
What do singer Katy Perry and the President of the United States have in common? They are two of the Read More
AGCO RG700 cab
OpinionRoadblocks To Precision Ag Innovation
October 5, 2016
On August 29, I got to preside over the PrecisionAg Innovation Series event, “Game-Changing Advances in Precision Farming Technology,” developed Read More
J.C. Ramsdell containment system
EquipmentClear Opportunity In The Tank Market
October 4, 2016
Crop prices may be down, but steel prices are too — and that’s good news for retailers looking to add some Read More
WinField booth Farm Progress
Special ReportsTalking Weed Management Strategies At Farm Progress 2016
October 2, 2016
The annual Farm Progress Show — this year staged in Boone, IA — is always a great place to catch Read More
Corn Field
Eric SfiligojFacing Ag Industry Challenges
September 26, 2016
At the 2016 annual Mid America CropLife Association (MACA) meeting in September, a pair of crop protection company representatives discussed Read More
Bayer Monsanto
Crop InputsBayer-Monsanto Mega-Merger: 6 Things You Need To Know
September 14, 2016
Mega mergers have become almost routine in the agricultural industry. Right on the heels of Monday’s news that fertilizer giants Potash Read More
Latest News
Eric SfiligojThe 2016 CropLife 100 Preview
October 28, 2016
Fall is in full swing and we at CropLife magazine are busy putting the finishing touches on our end-of-the-year stories and Read More
ManagementHighlights from the PrecisionAg Vision Conference
October 28, 2016
Editors Eric Sfiligoj and Matthew Grassi discuss what was talked about at the 1st annual PrecisionAg Vision Conference and provide Read More
Crop InputsOhio State Researchers Announce Progress on ‘Phos…
October 27, 2016
Researchers at The Ohio State University are investigating new techniques to detect organic phosphorus compounds in water samples from the Read More
Stewardship4R Nutrient Stewardship Certification Program To Launch…
October 26, 2016
The 4R Nutrient Stewardship Certification Program will expand the voluntary retailer program to the full state of Ohio, allowing nutrient Read More
AGCO RG700 at the 2015 National Farm Machinery Show
EquipmentAGCO Parts Rolls Out No-Interest, No-Payments Offer Via…
October 26, 2016
AGCO Corp. is now offering an innovative financing solution on qualifying Parts and Service transactions. Now through December 31, 2016, Read More
Soybean field
Crop InputsIncotec Invests In North America
October 25, 2016
Leading seed enhancement company Incotec, part of Croda, has announced an investment in their North America business. The total investment of Read More
Patriot 25th anniversary
SprayersCase IH Celebrates 25 Years Of Patriot Sprayers At Bens…
October 24, 2016
Case IH executives, employees and special guests celebrated 25 years of production of Case IH Patriot sprayers in a special Read More
4r Nutrient stewardship
StewardshipNominations For The 4R Advocate Program Due October 31
October 24, 2016
Nominations for the 4R Advocate program are due to The Fertilizer Institute by October 31, 2016. The program recognizes agricultural Read More
Corn close up
Eric SfiligojProtecting Agriculture’s Ability To Feed The World
October 24, 2016
The rate of change coming to agriculture is growing, and will continue to do so for the foreseeable future. This Read More
Student Young Worker CHS
CropLife 100CHS Supports #FirstJob Compact
October 24, 2016
CHS joins the White House and many of the country’s largest employers in signing a new initiative centered on helping Read More
Kennebec Grain terminal
CropLife 100Wheat Growers Kennebec Facility Loads First Rail Cars
October 21, 2016
In a season of firsts for Wheat Growers’ Kennebec Grain Terminal, the first 115-car unit train was loaded with soybeans Read More
ManagementThe Latest Dow-DuPont Rumor, Product of the Year Voting…
October 20, 2016
CropLife Editor Eric Sfiligoj shares a new rumor about the Dow-DuPont merger and updates on two CropLife-driven programs, the CropLife Read More
Soybean Closeup
FungicidesFMC Begins Registration Process For New Fungicide Activ…
October 19, 2016
FMC Agricultural Solutions has begun the joint U.S. EPA and Canadian Pest Management Regulatory Agency registration process for bixafen, a new Read More
Soil Young Corn
Industry NewsAgribusiness Search Firm Appoints New Managing Partner
October 18, 2016
Morris Bixby Group, a leading agribusiness search firm providing the highest quality professional recruiting and career advancement services since 2000, Read More
Wheat Field North Dakota
FertilizerUnited Suppliers Acquires Kansas Fertilizer Business
October 17, 2016
United Suppliers, Inc. has purchased the assets of Evans Enterprises, LLC, an ammonium chloride fertilizer business based in Olathe, KS. Read More
Corn Field
Industry NewsFMC Launches New Operations In Argentina, Exits Joint V…
October 17, 2016
FMC Corp. has exited its joint venture with Ruralco Soluciones S.A. FMC has launched new commercial operations, FMC Quimica S.A., Read More
Dow AgroSciences
InsecticidesRenewed Registration Issued For Products Containing Sul…
October 17, 2016
On October 14, 2016, the U.S. EPA re-established the registration of products containing sulfoxaflor (Isoclast Active), including Transform WG, Closer Read More
Eric SfiligojThe Whys Of Agriculture
October 17, 2016
During 2016, there have been myriad challenges facing the whole agricultural industry. Such wide ranging issues as water protection, sustainable Read More