New Generation Co-operative Profiles
Reproduced from The Practical Approach to New Generation Cooperatives, Minnesota Association of Cooperatives.
The following are a selection of the NGCs that have been formed in Minnesota.
ValAdCo
Curt Watson, Chairman
Box 392
Renville, MN 56284
Phone: (320) 329-3225
Fax: (320) 329-3254
ValAdCo is a farmer-owned cooperative that was organized and incorporated in 1991. The cooperative operates four hog breeding farms in Renville County. Genetically superior breeding stock is produced on the farms for resale to hog producers. The primary purpose of ValAdCo is to add value to shareholders corn. Profits of the cooperative are distributed as"value added" payments in proportion to the bushels of corn delivered by the member to the pool.
Renville county is in the heart of the corn, soybean and sugarbeet production area of southern Minnesota. The cost of transportation has influenced the competitive standing of farmers who raise crops on some of the most productive land in the country. The Mississippi River barge terminals and Twin Cities mills are 100 miles away. Rails is an expensive and often unreliable alternative. These farmers pay close attention when there is talk of increasing the value of their corn and reducing the costs of transportation.
The members of the cooperative are producers who view the cooperative as an investment that adds value to their corn in two ways. The farms of the cooperative use some of their corn as livestock feed but the main impact is in increasing the availability of breeding stock for area hog producers. By helping to keep hog production in Renville County more viable, a much higher percentage of the corn raised there is used locally.
ValAdCo has approximately 100 members and there are 22 full-time employees.
Midwest Investors, Inc.
Dana Persson, CEO
Box 615
Renville, MN 56284
Phone: (320) 329-8377
Fax: (320) 329-3246
Midwest Investors is a marketing cooperative incorporated in March, 1994. Membership is limited to agricultural producers. Midwest Investors was first organized to invest in the production of eggs and egg products as an opportunity to diversify a producer's investment portfolio in"value added" agricultural production. The cooperative anticipates it will explore investments in other value added opportunities. Midwest Investors is governed by a Board of Directors consisting of seven producers.
Golden Oval is the egg production and processing division of Midwest Investors. Construction of an in-line production and processing complex began in Renville in June, 1994. The egg production facility design plans for 16 two story barns, each with a capacity for 127,000 birds. The 16 barns require approximately 60 acres of land. The first flock was placed in the layer barns in November 1994. In October, 1996 the 16th barn will be completed and filled, bringing the total number of layer hens to two million. The processing building houses the equipment to break and separate the eggs. Processing began in September, 1995. At full production approximately 55 to 60 million pounds of egg products will be produced annually. The production from the operation is shipped to meet the terms of marketing agreements with two companies who further process liquid eggs into products for the retail and food service industries. Projected sales for Golden Oval are approximately $200,000.00.
Two equity offerings have been held which resulted in a total of 383 producer members investing over $8,000,000 to help finance the project which will cost a total of nearly $22,000,000.
United Mills
Bill Gass, General Manager
Box 610
Renville, MN 56284
Phone: (320) 329-3141
Fax: (320) 329-3265
United Mills is a feed milling cooperative, incorporated in November, 1993. Production of feed for members began in June, 1994. The present members of the cooperative are Midwest Investors, a marketing cooperative involved in egg production and processing; ValAdCo, a swine production cooperative; and Co-op Country Farmers Cooperative, a grain marketing and farm supply cooperative. Each member holds stock representing one-third interest in the company. The Board of Directors consists of 9 members, 3 representing each of the members.
The plant has a milling capacity of fifty tons per hour or more than 300,000 tons of feed per year and storage capacity of 750 tons of bulk material. The feed mill is computerized and fully automated. All functions of receiving, manufacturing and grain processing are controlled by a computer automated graphic panel. The panel allows the operator to simultaneously receive grain and feed ingredients, process corn, mix and batch feed and load outbound trucks. A loadout panel also controls the loadout bin selection, bin opening and closing and direction of the conveyor. Semi-trailers can be loaded in 15 minutes.
There are presently 10 employees of United Mills including those in the mill and delivery truck operators.
Southern Minnesota Beet Sugar Cooperative
Al Ritacco, CEO
East Highway 212
Renville, MN 56284
Phone: (320) 329-8305
Fax: (320) 329-3252
Following an announcement in March, 1971 that there would no longer be a market for their sugarbeets, members of the Southern Minnesota Beet Growers Association formed the Southern Minnesota Beet Sugar Cooperative with the goal of building their own factory. Groundbreaking for the factory took place in March, 1973, the dedication was in July, 1975 and they started processing the first crop that fall.
In 1978, new grower contracts were signed, a permanent financing arrangement was reached and a new management team was hired. That was when the growers really reached the goal of operating their own factory.
The 1994 crop was the largest in the cooperative's history. 465 grower/owners harvested 2.4 million tons of sugarbeets from nearly 110,800. Pre-harvest began August 30th and full harvest went from October 3rd through November 5th. Processing began on September 3rd, running for 223 days and averaging 9,408 tons of sugarbeets sliced per day.
There are 250 full-time employees with about 100 more added during the peak season. The annual payroll (without including producer payments) exceeds $10 million.
In addition to processing pure beet sugar, SMSC also produces beet pulp pellets and beet molasses. Beet pulp pellets are used as a feed for dairy cattle, beef cattle and sheep. Much of the production is exported. Beet molasses is further separated to produce additional sugar and the by-products betaine and separator molasses solubles. Beet molasses is used in the production of yeast, chemicals and pharmaceuticals. It is also used as livestock feed.
Minnesota Corn Processors
Richard Jurgenson, CEO
400 West Main Street, Suite 201
Marshall, MN 56258
Phone: (507) 537-2676
Fax: (507) 532-2906
Minnesota Corn Processors was established as a cooperative in 1980. The corn wet milling plant began operations in 1983. This cooperative was established by farmers who were disillusioned by corn prices. They banded together, investigated the possibilities of owning their own corn processing plant and then began convincing their friends and neighbors that it was advantageous to build their own corn processing plant. By selling their corn to themselves, they could increase the value of the corn processed, thereby controlling their own destiny while improving the net return on their investment.
The members have agreed to limit membership based on the capacity of the plant. Additional membership and capital stock has been sold in recent years to finance growth. In 1991, after several years of profitable operations at near the 15,000,000 bushel capacity, the Board of Directors announced plans to build a second plant at Columbus, Nebraska. Two years later the capacity of that plant was doubled and in 1995 $285 million was spent to upgrade the plant at Marshall to produce high fructose corn syrup. Last year the two plants milled 131 million bushels of corn produced by over 2,400 members. The plants also refine ethanol and MCP is the second largest ethanol producer in the United States.
Each of the Minnesota Corn Processors' plants has more than 100 full time employees and a payroll of about $3.5 million.
MinAqua Fisheries Cooperative
Dave Bakker, Chairman
Box 659
Renville, MN 56284
Phone: (320) 329-3380
Farmers are investing in this cooperative to build yet another alternative market for their crops. MinAqua Fisheries Cooperative is constructing barns to raise Tilapia, an African perch. The $4.1 million project is starting with construction of two barns that will each produce a million pounds of fish each year. The first barn should be in operation by the end of 1996. Plans are to expand to four barns and a processing facility.
Aquatic Bio-Enhancement Systems of Beulah, North Dakota has been hired for designing and engineering of the operation. They will also manage construction and initial operations. When production starts the live fish will be marketed through another cooperative, North American Fish Farmers Cooperative of Binford, North Dakota.
MinAqua Fisheries Cooperative will purchase fingerlings that weigh about two grams. Tilapia require water temperatures between 82 &endash; 86 degrees F to survive. The cooperative will heat water for the barns using heated waste water generated by the Southern Minnesota Beet Sugar Cooperative. The fish will be fed a ration of soybean meal, corn, wheat and fish meal. Tilapia take seven to eight months to reach a market weight of 1.25 pounds. The fingerlings have a feed conversion ratio of 1 pound of feed for each pound of gain. As they mature the ratio will reach 1.8 pounds of feed per pound of gain.
Farmers who join the cooperative pay a $750 membership fee and pledge to purchase at least two capital shares at a cost of $2,500 each. Each of those shares gives producers delivery rights to market 75 bushels of soybeans per year. Area farmers purchased 940 shares during the initial offerings of stock.
Phenix Manufacturing
Lanny Jass, CEO
Box 609
Mankato, MN 56002
Phone: (507) 931-0315
Fax: (507) 931-5573
Phenix Manufacturing is a soybean marketing cooperative that has invested in a plant that manufactures a building material using soybean flour and recycled newspapers. The manufacturing plant is a joint venture between the cooperative and Phenix Biocomposites, a St. Peter company that developed a soybean based building material. The product, called Environ, looks like polished granite and has the consistency and durability of wood. It is marketed to builders and furniture manufacturers, who use it to create an ornamental finish on everything from tables and countertops to walls and window moldings.
A coalition of ten local cooperative elevators had invested in Phenix Biocomposites to help the small manufacturing company get started. After years of product development and market research the company returned to the cooperatives and offered farmers the first chance to invest in the expansion to full production. The cooperative was organized in December, 1994 and started offering shares of delivery rights stock shortly afterward. By April 14, 1995 over one thousand Minnesota farmers had invested $10 million in the cooperative.
The first plant was located in St. Peter and much of the technology was fine-tuned there. The plant will continue operating while the larger plant is built in Le Center. The new plant will use 1 million bushels of soybeans a year to produce about 22 million board feet of Environ. The process also requires 55 million pounds of waste newspaper. That is about three times the amount of waste newspaper generated in a city the size of Mankato. Production will start in the fall of 1996 with just under 100 employees and the plant will eventually have 150 to 200 persons on the payroll.
Minnesota Valley Alfalfa Producers Cooperative
Dennis Goehring, Chairman
Box 64 Granite Falls, MN 56241
Phone: (320) 564-2400
Fax: (320) 564-2451
A group of 500 farmers in west central Minnesota are convinced they can turn a popular forage crop into a higher-value energy crop to feed electricity to consumers. Minnesota Valley Alfalfa Producers Cooperative or MnVap, is proposing to build the world's first commercial sized biomass electric power generating plant at Granite Falls. It would use alfalfa to produce 50 to 75 megawatts of electricity each year, enough to keep the lights on in a city the size of St. Cloud.
The cooperative is negotiating with Northern States Power Company as the most likely partner in the $260 million project. The Minnesota Legislature has mandated that NSP utilize alternative sources for 125 megawatts of electricity as part of a compromise permitting storage of spent nuclear fuels. The plant would separate alfalfa stems from the leaves and direct the stems into the biomass generating plant. The leaves would be processed into a variety of high protein alfalfa feed products.
Generating 50 megawatts of electricity would require 150,000 tons of alfalfa from the members of the cooperative. A membership share in the cooperative is $200 and members then purchase capital shares which are selling at $47.50. Each capital share gives the member delivery rights for one ton of alfalfa.