Fieldviews FA L L 2 02 1 ED I TI O N
H IGH LI GHTED A RTI CLE S THE TIME IS NOW MITCH ALTERMATT
RESULTS DRIVEN JONATHAN OLMSCHEID
TIMES ARE TOUGH. WE ARE TOUGHER. JIM CARLSON
THE TIME IS NOW. MITCH ALTERMATT CEO & GENERAL MANAGER Those of you who know me well can attest to my intense passion for agriculture and the cooperative system. With that passion comes a continuous desire to strengthen and improve the business model. But that’s not always the easiest task to complete, especially in a member owned business. We’ve all heard the saying “the more things change, the more they stay the same.“ Unfortunately, this could not be more true for the cooperative system. Throughout the last thirty years, agriculture has evolved into an industry that is driven by technology, innovation and efficiencies and yet, the cooperative system as a whole has lagged in progression compared to the competition with the change and the demands of our member-owners. Traditionally, cooperatives have been reluctant to adopt new processes, implement new technology and explore partnerships because “that’s the way things have always been done.“ Emotional attachment, self-preservation and good, old fashion complacency also play a strong role in this. Consequently, the financial health and long-term sustainability of the business have suffered, having an even greater impact on our biggest priority – our patrons. As the business environment continues to change, I sincerely believe my top priority is to search for strategic opportunities to better position UFC for future success. Throughout the last two years, we have worked swiftly and effectively to refocus our people, products and processes on the core units of the business. Together, we have improved the coop financially, restructured processes and roles for better organization, focused on risk management to protect our employees and those we serve. We’re experiencing the positive results of improving our business from the inside out, making us more prepared for the future than ever before. Yet, we are not content. We need to remain aggressive, take action and continue to capitalize on the
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opportunities that are in front of us today to ensure the business remains viable and successful for the next thirty years and beyond. As we all know, the COVID-19 pandemic has created a ripple effect of new headwinds that are impacting all divisions of our business and will continue to do so for years to come. We’re experiencing global logistics and supply chain disruptions, increased demand from growing countries like China, Brazil and Japan, trade and tariff disruptions, and skyrocketing prices to name a few. These new headwinds, coupled with an already challenged economy and labor shortages, further encourage the need for change. While the current situation may sound a bit gloomy, I can assure you that I, along with the UFC leadership team and board of directors, view these challenges as a great opportunity to further strengthen the coop. As we progress through fiscal year 2022, we must explore new strategies and partnerships with neighboring coops and industry players. New partnerships will allow us to pool labor resources, capitalize on operational efficiencies and leverage technology and automation at the local level. It is evident while networking with my peers and professionals across the industry that our neighboring coops are facing the same challenges. They are in critical need of strategic partnerships and/or consolidation. We have worked our tails off in the last two years to improve our market position; we now are high on the strategic partner list they are looking for. There are seventeen cooperatives located in south central Minnesota that we directly compete with along with multinational competitors such as Hefty, Nutrien, etc. UFC is geographically located in the center of them all. Rather than going toe to toe with them, it is time we work together to become more efficient, more competitive and more sustainable for our patrons. I firmly believe Minnesota, specifically our geographic territory, is primed and ready for
consolidations. UFC is well positioned to help lead the effort in order to better serve our patrons of tomorrow.
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I will leave you with a quote from Cael Sanderson, one of the greatest wrestlers and coaches to step on the mat and one of my top inspirations. “Unless you continually work, evolve, and innovate, you’ll learn a quick and painful lesson from someone who has.” Let’s do our part to ensure the cooperative industry is at the forefront of innovation and evolution. Thank you for your trust throughout the last 24 months. We ask that you continue trusting us going forward as we continue to be a resource and partner for you.
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There are seventeen cooperatives located in south central Minnesota that we directly compete with along with multinational competitors such as Hefty, Nutrien, etc. UFC is geographically located in the center of them all. FIELDV I EWS FALL 2021
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RESULTS DRIVEN JONATHAN OLMSCHEID CHIEF FINANCIAL OFFICER The first Fieldviews article I had the privilege of writing was in the Spring 2020 Edition when I was very new to the UFC team. I spoke of learning the diverse business operations of UFC and its impact on local communities by asking employees, board members and owner members the question “What does UFC mean to you?” In asking that same question today, the answers are significantly different for many reasons, including both internal and external factors. Prior communications from UFC have used words like adaptability, efficiency, effectiveness, and opportunity; they all still apply to businesses of UFC. However, they have also provided positive financial results when acted upon in the last few years. Still working through the annual audit process currently, UFC’s 2021 fiscal
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year local savings is expected to be the best since 2016. Overall Savings the best since 2014. Although there is no direct correlation to overall revenue dollars to profitability, 2021 will also be the highest overall revenues for any UFC fiscal year in history. This was possible as a result of each department being able to help one another to capitalize on profitable opportunities. Examples of this would include: if barns are being filled in the winter months, the agronomy team members could help with delivering the additional feed. The grain team aligns the shipment of trains to help bring in cash when it is needed for purchasing propane at the best cost. The profitability of UFC has a great ripple effect as available cash generated can be utilized where it will have the greatest impact. Reducing interest on borrowed cash had a great impact with paying $1.59 million in interest expense in 2021 versus $2.58 million in 2020 versus $3.66 million in 2019. Aligning inventories and business activities with the current environment, in addition to reduced interest rates, all contributed to this one expense reduction to further improve profitability.
efficient equipment, to allow timely service to members, and provide cash back to the countryside via equity redemptions ($2.5 million in 2021) and patronage ($1 million in cash from 2020 fiscal year). UFC is looking forward to the anticipated 2021 patronage after another strong fiscal year from local savings. There are many ways in which members can aid in cash management and the profitably of UFC. One I want to keep reminding the membership is the utilization of electronic payments. Paying invoices online, as well as receiving ACH payments for grain sales, both increases the speed of processing and reduces the steps of processing. In closing, I and the whole UFC team want to thank you -the members- for doing business with UFC. We will all continue to improve your experiences with every interaction with UFC and its team. UFC’s financial health and future outlook has continued to improve over the last year, and the focus of the UFC team is to continue on the path going into the 2022 year.
As a cooperative, the profitability is used to support the member owners in many ways such as purchasing more
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SEASONS OF CHANGE JEFF MANDERSCHEID CHAIRMAN OF THE BOARD By the time this hits your mailbox, harvest will be wrapping up and fall tillage will be nearing completion. It seems as though most producers throughout our area are pleasantly surprised by average yields despite the dry season. I hope the season has been enjoyable and prosperous for you! While you’ve been busy in the field, your UFC board of directors has been hard at work discussing, strategizing and planning for 2022 and beyond. Thanks to loosening COVID restrictions, the board has been able to get back into the “normal” swing of things and attend routine industry update meetings. In August, the board also attended the annual, two day strategy retreat. This two day retreat served as a great opportunity for your board to strictly focus on the plans and priorities for the future of UFC. Our time at the industry update meetings was well spent. We are able to speak with other cooperative directors, learn the latest challenges and updates within the industry and what projections are being made for the industry’s future. Specifically supply chain constraints, crop nutrient shortages and price increases were all key topics of discussion. The cooperative system as a whole was another key topic of discussion. While attending one of these meetings, a speaker shared an interesting statistic. In 1990 there were 3,100 cooperatives. Today, there are only 1,100 which goes to show the number of mergers and consolidations that are happening. Given the existing supply chain constraints and challenges within the market place this trend will continue. At the annual strategy retreat, a large focal point of our conversations surrounded the current challenges within the marketplace and how they will impact the business and patrons beyond 2022. With these considerations in mind, the board identified a list of ten priorities for 2022, 2023 and 2024 as well as a list of five directives for the UFC management team to work towards implementing
throughout the next four years. In the end, our goal is to put your cooperative in a successful and sustainable position now and for the future. The cooperative’s future success is dependent upon the actions and decisions we make today. We must revisit our existing systems and processes with a critical eye, and rethink how we are currently doing things. The agriculture industry itself has significantly changed with the evolution of science and technology, yet the cooperative system has been slow to keep up with the change. UFC must continue to advance systems, increase efficiencies and employ long term strategies in order to support needs of our growing member-owners. Statistics show the number of cooperatives is declining; however, I firmly believe the influence of the cooperative system is not. The opportunities for our future success are endless, but we must be willing to have an open mind and make changes. In the last three years, we’ve had to make many decisions that were difficult and unpopular. Yet, these decisions have served us well and proven to be the best course of action for the longevity and financial health of the business. We are on the right path, now we must keep going. Together, your board of directors fully recognizes the exciting opportunities that are within reach for UFC. We also recognize the significant influence of the cooperative system as it relates to our member-owners, and we do not take this lightly. Throughout the next fiscal year, your board of directors, leadership team and UFC employees will continue to work hard and make strategic decisions that will allow us to capitalize on new opportunities. Given our strong performance record UFC is in an attractive position to ignite change and collaboration within the cooperative system in our region. I won’t say much more than this, other than it is an exciting time to be in agriculture! I look forward to the revolutionary and formative months ahead for UFC! FIELDV I EWS FALL 2021
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REAL WORLD EXPERIENCE COMPLIMENTS CLASSROOM LEARNING JENNY KROHN Training and Development Manager 507-232-1013 jenny.krohn@ufcmn.com
START HERE. GROW HERE. NOW ACCEPTING 2022 INTERNSHIP APPLICATIONS
UFC is proud to offer a number of internship opportunities for students who are pursuing an education in agriculture! Our paid internship program is designed to give students an opportunity to complement their education with hands-on experiences and learning.
This is also an opportunity for UFC to develop potential future employees. If you are interested in an internship with UFC head to our website www. ufcmn.com/Careers, and complete the internship application. Remember to apply early! Our recruiting process begins in the fall and ends mid-winter.
2021 INTERNSHIP OPPORTUNITIES Agronomy Crop Scout Internship Agronomy Operations Internship Service Technician Internship Please reach out to Jenny Krohn at jenny.krohn@ufcmn.com or apply online. W W W. U F C M N . C O M / C A R E E R S
United Farmers Cooperative’s internships are designed to give students an opportunity to complement their formal education with career-related experiences. Gaining real world experiences also helps the participants to make more informed career choices, which will result in higher job satisfaction and higher productivity.
Our internships are paid programs that coordinate with the students’ schooling. Summer internships are available along with shorter seasonal internships. Interns will be assigned a mentor to assist them. Recruitment for summer interns is done in the fall with the goal of hiring decisions to be made by late winter.
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UFC SCHOLARSHIPS
APPLICATION OPENS JANUARY 1, 2022 United Farmers Cooperative (UFC) has established this scholarship program to recognize and reward the academic achievement, co-curricular participation, and community involvement of the children of its patrons and employees. Agriculture and the world are rapidly becoming more complex and sophisticated. With this in mind, an educational base and technical training become important tools to cope and flourish in such an environment. We encourage each student to remember their heritage as they pursue their studies. It is our hope that these awards assist in developing careers that enhance the future of rural Minnesota. APPLICANTS OF THE UNITED FARMERS COOPERATIVE SCHOLARSHIP PROGRAM AWARD MUST BE: Dependent children of either UFC voting patrons or of full-time employees. Students who are seniors in high school or recent high school graduates.
AWARD INFORMATION If selected as a recipient, the student will receive a $750 award. Up to ten (10) total awards will be granted given qualified candidate(s) and disbursed as follows: Up to seven (7) awards of $750 may be granted to children of United Farmers Cooperative voting patrons. Up to two (2) awards will be granted to dependent children of United Farmers Cooperative employees. One award of $750 will be designated as the Arnie Berdan Memorial Scholarship award, for a student majoring in agriculture. Preference will be given to a child of a full-time employee, assuming there is a qualified applicant. Awards are not renewable. Awards are for undergraduate study only.
Planning to enroll for the first time in a full-time undergraduate course of study at an accredited two or four-year college, university, or vocational technical school.
TO LEARN MORE AND TO APPLY, VISIT L E A R N M O R E . S C H O L A R S A P P LY. O R G / U F C S C H O L A R S H I P FIELDV I EWS FALL 2021
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ENERGY UPDATE DARV TURBES VICE PRESIDENT OF ENERGY As producers, we are by nature accustomed to volatile markets, unknown situations and playing the hand we’re dealt. But, the recent surge in energy prices is causing even the most seasoned, thick-skinned producers to be uncomfortable. The current energy crisis Europe is experiencing is creating a ripple effect of turmoil that is resulting in price spikes in the cost of electricity, putting pressure on energy suppliers and causing significant disruption across many industries. There are also many domestic factors that are further amplifying the effects of this energy crisis which are being felt right here in UFC territory. The higher prices are being driven by rising demand and tight supplies. As the pandemic slows and consumers begin spending again, factories and service providers are ramping up production, which requires energy. Oil supplies are tight because oil-exporting countries have decided to increase production in measured steps instead of opening more widely. Natural-gas supplies are running low after a freeze in Texas earlier this year drove up
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demand. In addition, Hurricane Ida forced nearly all of the Gulf of Mexico’s gas output offline. In Europe, inventory levels have dropped due to hot weather, less than ideal wind-power generation and lower imports from Russia. Combined, these factors have created the perfect storm which we anticipate will be our new normal for the foreseeable future. As your partner in energy, we take our responsibility for providing our patrons with relevant and timely marketing information, competitive pricing as well as tools to help you navigate these challenges seriously. Whether you are purchasing bulk propane to dry grain, or you’re simply looking to heat your home with natural gas, we are happy to help you manage your risk and control your costs by providing programs such as prepay, budget, booking, tanking monitoring, contracts and more. If you are in need of new energy equipment, we also offer a payment plan which allows you to have the equipment you need without tying up capital. If you have any questions, please contact the energy team at 888-832-5734.
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THINK FOR THE FUTURE CHAD WILSON DIRECTOR OF CONSTRUCTION AND FARM EQUIPMENT The buzz phrase right now is “plan ahead.” You’ve heard us say it, along with nearly every other industry that has fallen vulnerable to global shortages. Retailers are encouraging consumers to purchase their holiday gifts early, energy companies are telling customers to contract their winter home heat, and the agronomy division of UFC is encouraging customers to purchase spring chemical and fertilizer products - all as soon as possible. The UFC Equipment division is no different. Farming has evolved into a high tech industry throughout the years with digital technology playing a large role in aiding producers in the field. The computer chip shortage that we first began talking about nearly one year ago is still in full effect. The chip shortage has led to a decrease in equipment manufacturing, making it difficult for producers to upgrade their equipment. If you’re operating older machinery, you are not immune to the negative effects of this shortage. Equipment manufacturers are not operating at full capacity, making it more difficult than ever before to order in basic parts for routine maintenance. Unfortunately this shortage is expected to continue well
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into 2023, and will significantly change the way producers plan and prepare their operation for the future. The computer chip shortage is just one of many shortages that is significantly changing the way patrons in UFC territory manage their operations. We are feeling the impact of supply chain disruptions, logistic challenges and increased demand throughout our equipment, parts and service and grain systems departments. Setting you up for success is our priority. To do that, we are asking that you think ahead to your operational needs for Spring 2022 and beyond. We cannot stress this enough! If you know you will be needing new equipment, tires, a grain bin, grain legs or air system in the future, we highly recommend you put your order in right away. Shortages and other delays in the supply chain will affect how quickly you will receive your order. Taking a proactive approach and planning ahead will help ensure you have what you need, when you need it. To place an order, schedule maintenance or for questions call the Ag Service Center in Lafayette at 507-228-8224.
UFC AG SERVICE CENTER - LAFAYETTE
YOUR PREMIER DESTINATION FOR EQUIPMENT SALES, PARTS & SERVICE!
BUY WITH US. SERVICE WITH US. GROW WITH US. 507-228-8224 | 840 PIONEER AVENUE | LAFAYETTE, MN 56054
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GRAIN UPDATE MATT RETTMANN & BRETT ANNEXSTAD GRAIN ORIGINATORS/MERCHANDISERS The old adage of “rain makes grain” was certainly put to the test this growing season. After a smooth and dry spring planting season, the soil that was already void of excess moisture, never received plentiful rains throughout the growing season. This caused much worry as to what yields we would see coming into harvest. It’s safe to say that our expectations, along with those of growers were fairly low. Now, one can never be 100 percent sure what is out there ahead of time, but once the combines started rolling, the early reports were better than expected in most areas. Location played a huge roll in just how good, or tough things were, but all in all the final verdict was as positive of an outcome notwithstanding the weather we had. Large inverses in both the cash and futures market sent a clear signal to clean out as many bins of both corn and beans as we could. Both the farmer and the elevator industry seemed to do just that as inventories leading into fall were some of the lowest that we have ever seen. Although the premium faded to some extent, basis never really faded back to “normal” harvest levels as new crop was used to supply an empty feed, ethanol, and export program. This leads us to where we are at today. With basis at historically strong levels for this time of year, the demand remains for your grain. Corn has had a
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unique draw this year, coming from north of the US border because of a deficit in Canada. This adds to the aforementioned local demand coming from strong ethanol margins and added grind at Heartland Corn Products. There is more of a carry in futures, which is rewarding storing beans more so than corn; the processors also need to keep crushing beans. Soybeans have seen PNW demand out west, via shuttles, to fill the void of a shorter than normal Dakota crop. So overall, things could remain very interesting in the basis game on both commodities as we have produced a larger than expected crop and there is strong demand for it coming from all angles. With markets that move so quickly, plan ahead as the calendar flips over and into spring, remembering to keep an eye out for what looks to be attractive 2022 pricing opportunities as well. Keep sell orders working as you never know when they will get hit with all the volatility. If you have any questions on these topics, want to make a sale, or put in target prices that can hit if the market rallies, the UFC Grain Department is here to help you with all of your grain marketing needs. Contact our grain office at our new number of 507-232-1049.
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TIMES ARE TOUGH. WE ARE TOUGHER. JIM CARLSON VICE PRESIDENT OF AGRONOMY took one of the world’s largest fertilizer and chemical plants offline, creating a major kink within the already struggling logistics and the supply chain. Specifically, glyphosate supply is extremely tight. As a result, all retailers have been put on allocation and pricing has increased. The agronomy team is continuing to look for alternative sources.
Times are tough. Together, we are tougher. The Covid-19 pandemic along with a bullish global energy market have triggered an entirely new crisis that is being felt by the agriculture industry. Throughout the past year, all facets of UFC have felt the effects of this, and the agronomy division is no exception. As your partner in agriculture, it is our job to provide you with the best products and services for your operation at a competitive price. It is also our responsibility to educate our patrons on the volatile markets and be forthcoming with our anticipations for future markets and trends. By equipping you with information, tools and resources we will help you navigate the unknowns and best prepare your operation for the future.
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Ida also disrupted grain and soybean shipments from the Gulf Coast, which accounts for about 60% of U.S. exports, at a time global crop supplies are tight and demand from other countries is strong (reference first bullet point).
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Trade and logistic delays caused by the Covid-19 pandemic are battering an already struggling agriculture supply chain. Glysphosate and Glufosinate supply remains tight, along with many other CPP products and we will continue to see these issues through spring of 2022. Because of the limited supply, multiple products will be on allocation.
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Urea prices are skyrocketing largely due to the plant Hurricane Ida knocked offline this past August. In addition, the price of natural gas, which is a significant cost component of nitrogen production, is skyrocketing globally which is driving the overall cost increase. The whole nitrogen complex has followed.
Fall harvest is still underway, however, it is never too soon to begin planning and preparing for spring 2022. There are many factors that are fueling the new crisis. Here is what you need to know: •
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First, the spread of prosperity is growing globally which has increased demand for commodities from countries such as Brazil, India, Japan and China. Hurricane Ida made landfall at 11:55 AM on Sunday, August 30, 2021. Nearly two months later, the negative ripple effects of the hurricane are still being felt. In fact, Hurricane Ida caused more damage to infrastructure along the lower Mississippi River region than the superstorm Hurricane Katrina. Ida
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Earlier in the year, China banned the export of all phosphate products until, at minimum, June of next year. While the U.S. doesn’t buy a lot of phosphate from China, the country does represent 30% of world trade. Meaning, China’s regular buyers will be looking elsewhere. All phosphate products will continue to be priced at levels none of us are comfortable with.
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Last, we expect potash supply will start to improve sometime in the first quarter for 2022. Unfortunately, these improvements will take some time to make their way to UFC territory and therefore won’t be realized by spring.
This isn’t the first crisis we have been through, and it won’t be the last. In the end, we will look back on these challenging times having gained new experiences and learned new information. Please stay in close contact with your UFC salesperson and support staff. Being proactive on needs for the next crop is important. The more time we have to work together, the better the chance is UFC can supply those needs as timely and as cost effectively as possible. Together, UFC and our patrons will come out more resilient and better off having access to new, additional resources and industry partners. Times are tough. Together, we are tougher.
NEW HIRE SPOTLIGHT CODY BAER | AGRONOMY SALES AND MARKETING MANAGER I am originally from western Minnesota. I grew up in Canby and currently reside outside of Lake Crystal. I moved to the Mankato area to pursue a Bachelor of Science degree from Minnesota State University Mankato. For the last 12 years I have worked for CHS Inc in various roles of increasing responsibility. These roles have allowed me the ability to build my skills in customer service, sales, team leadership, process management, and all-around business acumen. I am excited to bring these skills to the UFC agronomy team. I am eager to work for all of our agronomy customers. In this role, I will work closely with our patrons, and find ways for UFC to increase communications as well as value for our member-owners. I look forward to getting to know you in the months ahead! FIELDV I EWS FALL 2021
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FEED UPDATE KELLY POWELL FEED SALES MANAGER Many of you may be asking, “What is the deal on feed cost fluctuations or increases?” Just like you are hearing on TV and radio, supply chains are backed up and transportation is at a premium. We are getting told to purchase Christmas gifts early, and don’t wait until the week before, or the shelves may be empty. Your feed department is running into similar issues. The U.S. livestock industry buys many feed ingredients like vitamins, trace minerals and amino acids from overseas because they are not manufactured domestically. As many of you have heard, cargo ships have slowed, and ground transportation has had difficulty keeping up. All of this has created some issues with not only getting ingredients, but especially getting them in a timely manner. Suppliers are allocating our ingredient purchases based on previous purchases from them. In some cases, suppliers have broken purchasing agreements because they simply were unable to get their supplies. UFC has been very fortunate,
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to date, and we have been able to maintain an inventory of these ingredients because of relationships we have developed over the years with our suppliers. This is all a global issue that was in part created by Covid-19. The perfect storm of companies shutting down (both domestically and internationally), inventories being depleted, lack of trucking, along with labor shortages and ports being backed up, all at the same time, has created issues along the entire supply chain. We believe this scenario will last well into 2022. We will continue to be proactive on securing these ingredients for our patrons. If we anticipate shortages, we will be communicating with you ahead of time so we can adjust rations accordingly. If you have specific questions or concerns please give us a call. Thank you for your business and trust in the UFC Feed Department!!
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United Farmers Cooperative 705 East 4th Street PO Box 461 Winthrop, MN 55396 Main Office: 507-232-1000 Toll-Free Number: 866-998-3266 W W W.U F C M N . C O M
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