After a busy and short spring fertilizer season we are in a stretch of great weather and spraying, keeping pretty well caught up compared to the earlier NH3 and dry applications. We thank you for your business this spring and your patience when product was running tight. Our ability to get fertilizer on the ground is much greater than the ability of suppliers to get it to us. STATEMENTS: We try to make every effort to get the agronomy accounts billed correctly but mistakes and misunderstandings with splits, fields, prepays and product changes are certainly possible and we hope you will examine your statement carefully and check with your location if something is not correct. Farm Service Company is having an excellent year to this point and we hope to finish strong during our last quarter. Our fiscal year ends in August 31.
STATE OF THE INDUSTRY AND FARM SERVICE COMPANY:
Our industry continues to change and evolve as usual and perhaps especially as a result of the past market collapse and volatility in commodity pricing. Many companies at all levels, from smaller privates and local cooperatives to international players and everyone in between are seeking realignment agreements, new relationships, partnerships and unifications that will limit risk, provide better access to capital and product volumes, better relationships with suppliers and vendors all working to improve supply chain management and limit or share risk.
In our region alone of SW Iowa, we have seen at least four private retailers sell out, one of the nations largest agronomy retailers acquire one of those, discussions of various fertilizer plants being built, the Midwest’s largest cooperatives forming their own buying group in a realignment, and more. The nations largest regional cooperatives are expanding into direct retail business called “country ops” and in cases competing directly with local cooperatives.
What does this mean to Farm Service Company? We need to continue to seek efficiencies ourselves. This can take several forms. Through past Board and staff planning sessions, we endorsed plans to restructure our efforts to a north, middle and south emphasis. The fertilizer building, office and shop at Neola was step one. While we continue to “get legs under” this building, great progress is being made. The building and staff led by Doug Welsh “turned” the building one and a half times this year, our first target. Our next goal is 1.8 turns, 2.0 would be better. We have also found that with the help of managers Terry Totten at Logan and Mark Knop at Henderson, half of the tons through the building went 20-40 miles to serve local floaters. Direct loads to producers were also done. With recent supply challenges and when storage becomes king, we always had dry and NH3 at Neola. We are also exploring plans to off-load rail NH3 at this site which will be of great benefit to our member owners and area producers in both reliability of supply and in pricing. The work of all our employees and application equipment across all the Cooperative geography was excellent this spring and we are thankful for their hard work, long hours, and the support of their families in getting the work done.
Another change includes the closing of the feed mill at Treynor and working with UFMC at Red Oak on feed deliveries. While changing the feed business at Treynor is difficult in many ways, the direction of the livestock industry in our area with shrinking numbers makes consolidation of milling and trucking equipment necessary. Rod Greiner will be sharing time between Farm Service and UFMC customers to continue to provide service and livestock knowledge to producers. Our warehouses remain open for bag and block purchases.
We are also taking steps to consolidate the Treynor agronomy business to the east location and maintain other company functions at the west site. Plans will begin this summer.
We have also changed our buying group relationships We believe these efforts will enhance our procurement and delivery of agronomy commodities. As this year unfolds, we will continue to keep updates coming on developments in our area.
