Ag Cooperatives Feeling the ‘Urge to Merge’
October 7, 2020 As the calendar turns to October, I am knee-deep in compiling our magazine’s CropLife 100. In fact, soon I will give everyone an early look at some of this year’s survey findings, with the complete report appearing in December.
However, one thing is abundantly clear — many of the nation’s largest cooperatives have whole-heartedly embraced the urge to merge. One of the biggest took place approximately one month ago, when the retail outlets of CropLife 100 members Greenpoint AG (No. 12 on the 2019 CropLife 100) and Agri-AFC (No. 22) merged under the Greenpoint AG name. This merger also included the wholesale division of Tennessee Farmers Cooperative (No. 9). The new Greenpoint AG will be a $1 billion ag retailer co-owned by Tennessee Farmers Cooperative, WinField United, and Alabama Farmers Cooperative.
But why did these individually successful cooperatives decide to come together at this time? According to Alabama Farmers Cooperative’s Rivers Myres, it’s what the future demanded. “Even though we are all individually strong, it takes vision and strategic leadership to both remain competitive and to provide exceptional service to our ultimate customer, the American farmer,” said Myres. “Greenpoint AG will allow for us to do both.”
And Greenpoint AG/Agri-AFC is just the first of many more such cooperative mergers. Elsewhere among CropLife 100 cooperatives, merger plans are already being made. This includes No. 18 Co-Alliance planning to merge its operations with No. 48 Harvest Land Co-op in Indiana and No. 39 Landmark Services Cooperative merging with Countryside Cooperative in Wisconsin. Both of these mergers are aiming to take place in March 2021.
So getting back to the larger question, why are all these co-ops merging in 2020? As might be expected, the decision comes down to money.
“Many farmers are under financial distress,” wrote CoBank in a report. “Depressed incomes and tight margins can affect cooperative viability and make a merger look more attractive. Many recent consolidations represent mergers of equally strong organizations.”
And in this sense, the current cooperative merger trend is hardly new. Back in 2017, I had the chance to visit with George Secor, President/CEO of Sunrise Cooperative in Ohio. At the time, Sunrise had just merged with another successful cooperative, Trupointe, and I wanted to know why.
“We were both coming off really strong financial years,” said Secor. “At this same time, I kept telling our board that with what was going on across the agricultural space, the decks could easily get re-shuffled and we could suffer as a company.”
So it looks like many more successful cooperatives will explore merging as market uncertainty continues to drive the agricultural market, into 2021 and beyond.
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