MaxYield Cooperative® Sees ‘Positives’ in Agricultural Change, Growth
Growth and developing opportunities also bring challenges to Iowa grain cooperatives like MaxYield Cooperative®, with 16 locations across northwest Iowa. Sometimes, however, there is an upbeat approach to meeting the challenges.
“We’ve grown.” said Larry Arndt, Director of Sales and Marketing at MaxYield, which has its corporate offices in West Bend. The cooperative has doubled sales in the last five years and added facilities, mostly by merging with existing cooperatives. Arndt said annual sales are at $205 million, double the mark of five years earlier.
MaxYield is a 93-year-old, 100 percent farmer-owned cooperative that handles grains (soy, corn), agronomy products, seed and energy (LP, gas). It originates corn for large grain companies, feeders and energy companies, according to Arndt. Energy has become an increasingly big market, with corn sales into large energy groups like Poet, VeraSun and Global.
The growth has required focus on the part of management.
“In the last fiscal year, we have become a very ‘seed first’ company. That’s what we call it, because seed trait technology today demands that we focus on seed solutions for our clients” Arndt explained. The company also has separated customers into three segments to address their specific needs.
Cooperative goals are twofold: Capture 17-20 percent return on local equity; and enter the top 1/3 tier of cooperatives in Iowa.
“With the kind of growth we’ve had, those are difficult goals. We’ve grown fast and probably have some growing pains.”
Still, the enthusiasm of the MaxYield manager is evident. “Agriculture is probably the most exciting thing going on around us in terms of economics and the world perspectives,” said Arndt.
- More people to feed in the world
- More desire for protein by consumers.
- A lot of bright young people interested in agriculture.
Those interested people, he noted, realize that every time a product is produced using oil, it will be a toxic product. When it is produced with grain, it will be a healthy product. “There is large-scale change in the works, a more corporate look at farming. The horizon is changing very quickly. The new-horizon corporations are going to look a lot different than today’s (companies),” Arndt predicted.
He described the direction of agriculture as investment groups look at world populations and world economics, where there are “a lot more people making $2,000 a year than the $1,000 they made years ago.” They are going to buy food.
One of the biggest challenges for MaxYield is in hiring and retaining good employees of all types, according to Arndt. The cooperative business is demanding and those coming out of the universities don’t want to be general laborers or specialist labor.
“Most of our employee needs are for general laborers. There is competition from the Monsanto, Syngenta and Dow types of industries,” he explained. Other large manufacturers in the area also draw from the employee pool. The cooperative pays the same wages, but the working conditions – number of hours worked in a week and required weekend work – may seem more favorable in manufacturing. MaxYield employs 165 people.
One of the high points – successes – that Arndt described was the development of SciMax Solutions®, a stand-alone profit center at the cooperative. SciMax Solutions technology was developed with a Wisconsin agronomist, who is contracted by MaxYield. The system pulls ½-acre grids, using the SciMax Solutions mapping tool to show yields. The project now involves 25 growers and nearly 40,000 acres. MaxYield assists growers in learning and using the technology, which helps them determine how to get more crops with fewer inputs.
Another new, related effort is the SciMax Nitrogen program, which Arndt described as the first scientific approach to nitrogen application. This program is just out of R&D and is being piloted on about 7,000 acres.
In 2003, MaxYield (which then carried the name of West Bend Elevator) received a $30,500 Value Added Producer Grant (VAPG) to study feasibility for a methane digester. In 2004, it received a $50,000 grant to study the feasibility of building a biodiesel production facility.
In each case, the cooperative determined it was not in its best interest to carry on with those projects.
The methane project was to be a “community digester” using manure to create methane gas, Arndt said. “It was a great concept, but it was about 10 years ahead of its time.” He predicted that as the livestock/manure application issues continue to come forward, there will be dramatic change. With the soy biodiesel plant, the study showed a lack of profitability in the long term, which has been born out in the industry, he said.
About USDA VAPG
VAPG funding has been offered by the USDA periodically since the early 2000s. A new round of funding is anticipated to be announced in the coming months. To be considered value added, projects must show how products are differentiated in specific ways from commodity crops. Typically, projects must also show how they may deliver greater returns to producers.
Independent producers, farmer or rancher cooperatives, agricultural producer groups, and producer-owned business ventures, including non-profit organizations, may apply. In previous cycles, applicants were required to be producers of the raw commodity who will maintain ownership of that commodity through the process of creating a value-added product. Grants have been available for planning projects (such as marketing and business plans and feasibility studies) and working capital projects (which might include wages or packaging supplies). (http://www.rd.usda.gov/)