Two mergers continue a recent trend of mergers and acquisitions in the fertilizer distribution/retailer market. In part, the trend result is the decreased number of companies controlling the flow of liquid fertilizer from the producers to above ground storage tanks to the end consumer, the grower.
Farmers Cooperative Co and West Central Cooperative
The first merger, between Farmers Cooperative Co., Ames, Iowa, and West Central Cooperative, Ralston, Iowa, has been approved by board members of both cooperatives and will take effect April 1, 2016. Both are leading cooperatives in Iowa, with Farmers Cooperative Co. being 18th on the CropLife 100 list, and West Central being 44th.
In a December 2015 article for CropLife discussing the potential merger, Farmers Cooperative chief executive officer, Jim Chism said, “Our early discussions highlight opportunities to improve productivity by sharing resources to better deploy assets like application equipment, rail access, and truck logistics. Being more effective in our execution would reduce costs and allow us to better serve customers.”
In talking with CropLife in December 2015, West Central Cooperative president and chief executive officer, Milan Kucerak said of the merger, “Each organization brings unique strengths to the table, which we believe would further diversify our businesses. For example, FC has access to every major rail line in Iowa and West Central has built-in soybean demand for 20 million bushels annually at our SoyPlus manufacturing plant.”
CHS and Elburn Cooperative
The second notable consolidation is an acquisition. CHS, a Fortune 100 company, is bringing on Elburn Cooperative, a diversified agricultural retailer based out of Sycamore, Illinois, as its newest Country Operations business unit. The merger will become effective in March 2016.
The new company that is formed will be based out of the existing CHS crop nutrients operation in Crescent City, Illinois. Meanwhile, CHS will continue to operate its wholesale fertilizer business there, where it has many above ground storage tanks storing liquid fertilizer.
CHS supplies energy, crop nutrients, grain marketing services, animal feed, food, and food ingredients, along with business solutions including insurance, financial and risk management services. CHS is owned by farmers, ranchers, and cooperatives across the US.
“We have always had an open dialogue with CHS about the many great opportunities they could offer us,” says Tracy Jones, board chairman, Elburn Cooperative in speaking with CropLife. “Merging with CHS offers us a more competitive size and scale than we’ve had in the past on our own. This merger positions us to return the greatest value to our patrons and for future generations.
Speaking to CropLife for CHS, John McEnroe, executive vice president, CHS Country Operations said, “We are excited to work with a partner like Elburn Cooperative that shares our focus on providing local expertise and exceptional customer service. Working together is one more way we stay true to helping our owners grow.”
While both of these mergers indicate positive outcomes for both the organizations and their patrons, it remains to be seen if the merger trend will continue. The only way to know for sure is to continue monitoring the industry.