Spring 2023 Newsletter
May 01, 2023
Fiscal year 21/22 proved to be one for the record books for your company. Record volumes of grain were handled as a result of the largest harvest handle to date during the fall of 2021. Along with extreme volatility for all commodities, this provided many opportunities for your company. Record prices for both grain and inputs were also experienced in 2022 as the Russia/Ukraine war shifted demand around the world for grains and fertilizers. As the war progressed and sanctions were put on by both sides, Euro Gas jumped to nearly $100/MMBtu, forcing nitrogen manufacturing facilities in Europe to shut down, allowing U.S. nitrogen producers to export to Europe keeping domestic prices in the U.S. firm. Thankfully Europe has had a mild winter this year with only five days having recorded temperatures below freezing so far, bringing gas prices back down, thus causing fertilizer prices to soften as most European nitrogen manufacturers are again producing products.
At our annual meeting held January 10th in DeWitt, we reported the fiscal 21/22 year-end results. Total sales of $1.46 billion generated local savings of $26.2 million and net savings after tax of $30.8 million. These are all records for Farmers Cooperative. At the direction of your Board of Directors, patronage of $13.1 million; $6.55 million cash and $6.55 million of qualified equity were allocated to our member owners. Along with the patronage distribution, the last half of equity earned in 2011 and the first 50% of your 2012 equity has been revolved, as well as age 65 equity, totaling $5.3 million. All total, $11.8 million in cash was sent to our member owners December through February. These results are only possible with an employee group that comes to work every day and works hard for our owners, living our company mission: Investing in our Owners’ Success; delivering service and solutions to exceed customer expectations. So, when you see them, please thank them and recognize them for a job well done!
I spoke about the headwinds we are facing as we come into 2023 at our annual meeting. We see substantial challenges in three main areas: inflation, interest rates, and labor. At this time, it does feel like the supply
chain issues we faced the last 24 months are getting better. From tires to chemicals, timing delays are easing, so that is a good thing. However, the wide path of destruction the last 18 months of inflation has caused is of great concern. From repairs to new assets, we are paying from 30 to 50 to 70% more than two short years ago. This will increase our expenses some $3.0 to $6.0 million this year. Also, in one years’ time, we have seen interest rates increase nearly 5.0%. With our normal average borrowings, this will add $5.0 million plus to our overall expenses. Now we tackle labor issues; Farmers Cooperative is blessed to have a great employee base that is hard working and committed to serving you, our member owners. We just wish that we could find more of them. We are again utilizing the H-2a program, bringing 26 workers on a 10-month work visa from South Africa, with plans to bring another 10 workers in September on a 4-month contract. This program is by no means a permanent solution, but it does give us access to a seasonal workforce that work hard and do a very good job for us.
Farmers Cooperative is continuing to reinvest in the business this year. The greenfield site located near Barnes, Kansas, consisting of
2 – 820,000 bushel concrete tanks and 20K bu./hr. receiving legs will be completed late spring. A 15K bu./hr. leg will upgrade the receiving capacity at Beatrice as well as conveying equipment. In Lushton, a new leg will be added as well. We will also add eleven overhead loadout systems at various locations. The agronomy group is adding on to the chemical buildings in Wilber and DeWitt, as well as adding three flex dry machines and three row crop machines to our fleet of application equipment. The energy, feed, and transport divisions are also upgrading and adding to their fleet of service trucks and semis to better serve our customers again this year. In addition, the energy group is working to build a new tire store near Plymouth. At this time, we are working to find the best site with plans to start construction mid-year.
In closing, I want to thank you for your business and support. Farmers Cooperative is here for you, and we look forward to serving you again during 2023.
Read Much More >>