Andale, Halstead farm co-ops hope to merge
02/26/2014 5:43 PM
08/08/2014 10:22 AM
Two area farm co-ops are set to merge if members approve in a vote set for Monday.
Andale Farmers Cooperative and Farmers Cooperative Elevator of Halstead together have about 1,300 voting members with annual sales of $100 million to $150 million, and profits of $2.5 million to $4 million, said Jack Queen, president and general manager of the Halstead-based co-op.
If the merger gets the required two-thirds support from the members of each co-op, the deal will close Aug. 1. The new entity would be called Grainway Farmers Co-operative.
Queen said the two co-ops are roughly equal in size. The combined territory stretches roughly from about 10 miles north of Halstead on the north to Kellogg on the south, and from Furley on the east to the Reno County line on the west.
Grainway Farmers Co-op would be headquartered in Andale, with Queen as president. All 60 or so existing full-time employees would be retained, Queen said.
The two boards have been discussing a merger for more than year and unanimously recommend the measure, he said.
The members would receive equity in the new entity based on what they owned in the current two co-ops.
The two are considered small operations, and even with a merger, the resulting facility would be small- to medium-sized in Kansas, Queen said.
The two are seeking to consolidate to reduce costs and gain leverage in purchasing, he said.
There is some overlap in territories between the two. And some buildings or assets could be built larger if there was only one, instead of two.
“For example, our spray rigs cross paths all the time,” he said. “We’ll do this guy and they’ll do that guy, and we may have to drive 30 miles for a guy who is 10 miles away from their facility. We’ve sprayed across the road from each other at the same time. We’ll take that out.”
However, he said, there is still plenty of competition. There are four private agricultural chemical companies in the area. And grain prices are largely driven by Wichita and Hutchinson terminal markets, rather than the elevators.
It’s also part of a long-running trend. Kansas had 256 co-ops in 1975, 93 in 2009, and the U.S. Department of Agriculture is projecting that to fall to 52 by 2020, he said.
Queen acknowledged some members are unhappy with the proposed merger, but he thinks they comprise a minority. The majority support the deal, he said, or the boards wouldn’t have pursued it.
“Some are upset and don’t want it to happen, and they’ll vote,” he said. “Some say, ‘Hey, what took so long?’ and they’ll vote. It’s the ones who say, ‘Yeah, that sounds OK’ that you have get out to vote.”