BACK 40 TO AISLE 40: CENEX HARVEST STATES REACHES PRODUCERS AND CONSUMERS VIA JOINT VENTURES
Editor’s Note: John D. Johnson became president and chief executive officer of Cenex Harvest States Cooperatives on June 1, after 24 years with Harvest States and Cenex Harvest States Cooperatives.
Cenex Harvest States (www.cenexharveststates.com) is a producer-to-consumer cooperative system owned by farmers, ranchers and their local co-ops. It operates petroleum oil refineries/pipelines and provides products and services ranging from grain marketing to food processing. It also markets and distributes energy products, agronomic inputs and feed to rural America, as well as grain and processed food products to customers worldwide.
AM: How does the postponed membership vote on the merger with Farmland Industries affect marketing?
JJ: When we determined that moving ahead with full unification with Farmland wasn’t right at this time, we knew we’d already taken tremendous steps forward together on behalf of our producer-owners. During the course of our unification discussions, Cenex Harvest States and Farmland were able to establish a number of joint ventures, some of them in conjunction with Land O’Lakes Inc. and other co-ops. These already are allowing us to pursue operational efficiencies and economic savings on the inputs side for local co-ops and their producers.
AM: Can the marketing joint venture Agriliance, LLC - between Cenex Harvest States, Land O’Lakes, and Farmland - accomplish the same goals, as a merger between Farmland and Cenex Harvest States?
JJ: Establishment of Agriliance would have been essential even with a Cenex Harvest States and Farmland unification because it offers opportunity to build on the successes achieved by the 12-year-old Cenex/Land O’Lakes Agronomy Company. The formation of Agriliance allows us to maximize agronomy production and distribution efficiencies, which further strengthens the position of our regional and local cooperatives.
In operation since late winter, producer-owned Agriliance is a leading North American crop input provider; marketing approximately 15 million tons of crop nutrients, $1.7 billion of crop protection products, and $300 million of Croplan Genetics seed. Agriliance markets crop nutrients, crop protection products, seed, information management and crop technical services to farmers and ranchers through the cooperative system and independent retail dealers in the U.S., Canada and Mexico.
AM: What marketing challenges does low commodity prices place upon local affiliated co-ops?
JJ: We recognize that this continues to be a time of tremendous stress and change for local cooperatives and the producers they serve. So, when we look at the big picture of both current economic conditions and ongoing market change, we’re more convinced than ever that our vision as Cenex Harvest States is the right one - to grow value for producers from the "Back 40 to Aisle 40."
Growing value takes many forms. Clearly, we must operate an efficient, financially successful cooperative that returns cash to its members. We must create new opportunities in the marketplace by connecting producers - through their cooperative system - to the end customer. In the two years since Cenex Harvest States was formed, I think we’ve made great strides in this area. At the moment, we’re finalizing the acquisition of a Minneapolis-based tortilla and chip manufacturer and have increased our ownership in Ventura Foods, a vegetable oil retail and food service packaging and distribution firm. We also have several pilot projects underway with producers raising special identity-preserved crops.
AM: How will your new e-commerce venture with Cargill and DuPont - Rooster.com - enhance your marketing?
JJ: Rooster.com provides a great opportunity to enhance our traditional local cooperative dealer network and to help it grow in the electronic marketplace. As we developed our e-commerce strategy, we realized that the key was building upon our strong, existing producer/local co-op relationships. Rooster is producer-centric and allows access to both inputs and outputs. Through Rooster, producers will be able to do business 24 hours a day, seven days a week, with the local dealers they know and trust. And, the local cooperatives will have the added visibility and traffic of being part of a web-based "shopping mall." AM