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Only the beginning

TFC leaders announce the start of new strategies, staffing structure
By Allison Morgan, photos by Sarah Geyer and Chris Villines 12/30/2014

While the “end” of fiscal year 2014 was the official purpose of Tennessee Farmers Cooperative’s annual meeting on Nov. 30 and Dec. 1, leaders of the organization focused on “beginnings” during their presentations to nearly 800 member Co-op directors, managers, and special guests at Gaylord Opryland Resort and Convention Center in Nashville.

The meeting’s “Where It Begins” theme proved appropriate as both Board Chairman Kenneth Nixon of Carthage and Chief Executive Officer Bart Krisle discussed the launch of new strategies to “better position our cooperative system to serve the changing needs of farmers.”

“Simply put, it begins with you,” Krisle said. “This is your business. Our Co-op system would have no reason to exist without our farmers, members, and customers. From the products we sell to the services we provide to the expertise we offer, Co-op is a trusted partner for your farm, home, family, and community.”

Nixon’s message to the membership centered around the recommendations of the 12-member System Study Team that worked together from January through October 2014 to explore ways to “enhance the value to the farmer-owner by focusing on efficiencies that will maximize the effectiveness of our cooperative system,” as directed by the TFC board’s strategic plan.

The result was a comprehensive report outlining five strategies that address the system’s current structure while increasing financial strength, promoting continued growth, improving service to members, and preserving farmer input. The TFC board approved these strategies at its October meeting:

1. TFC will develop and support the concept of allowing local cooperatives to become an operational division of TFC. This additional organizational structure option will enhance the system’s financial strength, promote continued growth, and still preserve farmer input.

2. TFC, working with local cooperatives, will rationalize facilities and equipment to minimize duplication costs and maximize service effectiveness within the system.

3. TFC, working with local cooperatives, will enhance inventory management across the system. Included within this is a plan to reduce the number of like items as well as other options.

4. TFC, working with local cooperatives, will implement programs to more effectively market and price strategically identified inventories across the system.

5. Improve recruiting, training, placement, and retention of employees, managers, and directors.

“I truly believe that in the history of this great organization, the formation of this team is the most important thing we’ve ever done,” said Nixon, who led the team along with two other TFC directors, three member Co-op directors, and three member Co-op managers — one from each zone — and three of TFC’s senior management staff. “Throughout all of our discussions, we always focused on what we thought was in the best interests of our farmer-owners. These are just recommendations. None of these will go into effect without the support of local Co-op boards and their membership and TFC’s board. It begins there.”

In his annual meeting address, Krisle emphasized that the study team’s report is only the beginning of the process. TFC is now tasked with implementing those recommendations. He said the first strategy — giving local cooperatives the option of becoming an operational division of TFC — is perhaps the most difficult but also has the most potential to enhance the system’s financial strength and promote continued growth.

“This has generated the most discussion and feedback, and there are two important points that I want to make,” said Krisle. “First, it is an option for a member cooperative to consider. This strategy leaves the decision about each Co-op’s future in the hands of the farmers, where it belongs, and gives them another choice to protect and grow their business. Second, each opportunity will involve a business evaluation to determine if the member becoming a division of TFC has the potential for a return on the investment made.”

Krisle also announced that TFC has made adjustments to its management team, including the hiring of a new customer relations officer and director of training. (See related story on page 5). Along with other responsibilities, these new positions will help define the process and establish guidelines to carry out this strategy and the rest of the study team recommendations.

“As the market and agricultural environment change, if we are not willing to seek ways to be more effective and efficient, then we will become irrelevant and won’t survive,” said Krisle. “Average goes out of business.”

There was nothing average about TFC’s financial performance in 2014, as reported by Chief Financial Officer Shannon Huff during the business breakfast, which was added to the agenda this year as part of a new streamlined format for the annual meeting. These changes allowed the meeting to end on Monday afternoon instead of concluding with a banquet that night.

TFC reached consolidated gross sales of $763 million for fiscal year 2014, which ended July 31. That’s a decrease of $12 million from 2013, due primarily to the effects of Universal Cooperatives’ bankruptcy earlier this year, explained Huff, but still the third-highest sales number on record in TFC’s nearly 70-year history. Margin before income taxes was $26.9 million, and TFC returned $17 million in patronage refunds to its member Co-ops — $8.5 million in cash.

With a record 668,000 tons sold, fertilizer accounted for more than $268 million of TFC’s sales, said Chief Operations Officer Jim McWherter in his report during the breakfast. He also covered other highlights of the 2014 fiscal year, including unprecedented seed sales at $70 million and the third-highest fuel sales volume in TFC’s recent history at 37.7 million gallons.

In the livestock area, McWherter pointed out highlights such as the launch of the new Pinnacle horse feed lineup and the formation of Alliance Animal Care, a joint venture between TFC and MFA that has already “vastly improved” the service level and timely delivery of animal health products to members. He also mentioned that sales of garden seed-packaged at TFC’s Halls Seed Plant showed another year of growth due to continued interest in home gardening.

“At TFC, our task is to work with our member Co-ops to help position them to benefit their members and owners,” said McWherter. “Where it begins for our cooperative system today is determining the needs that our farmers have and then providing products and services that will generate success for you.”

TFC’s operational departments were in the spotlight at the TFC Business Showcase, which kicked off the meeting on Sunday afternoon with informative and eye-catching displays and interaction with TFC employees from all areas of the business. The showcase also featured the debut of the new “Where It Begins” video that follows many of Co-op’s products and services from TFC to the member Co-op to the customer. That video can be seen on TFC’s YouTube channel at this link:

On Monday, the annual business luncheon focused on Co-op’s commitment to youth in Tennessee, with the donation of $25,000 to 4-H and FFA from the sales of Co-op’s 2014 commemorative Case knife and the presentation of the original Ralph McDonald painting created for the Tennessee FFA Alumni Association print series that raises funds for scholarships and ag education. Co-op is sponsoring the 2015 edition of the print, which was unveiled during the annual meeting. Attendees had a chance to purchase the prints on site and have them personalized by the artist. The original will now hang in TFC’s LaVergne offices.

Also during lunch, retired TFC Metal Fabrication Plant manager David Lancaster of Gordonsville was announced as the 2014 recipient of Co-op’s highest honor — the James B. Walker Cooperative Spirit Award. (See related story on page 26).

While Co-op leaders were involved in the business sessions, their spouses and guests were treated to the annual ladies’ brunch with entertainment by The Plain Jane Wisdom Girls — veteran broadcaster Devon O’Day and songwriter/speaker Kim McLean. Both proud Co-op customers, the duo blended humor, heart, and music through their “Farm to Table: How America Says I Love You” program. After the brunch, many of the ladies visited adjacent Opry Mills mall to do some Christmas shopping.

All attendees were invited to hear the afternoon’s keynote address by Michael Durant, retired U.S. Army chief warrant officer and inspiration for the best-selling book and acclaimed movie, “Black Hawk Down.” Durant was the pilot of a Black Hawk helicopter that was fired upon and brought down Oct. 3, 1993, during a fierce combat operation in Mogadishu, Somalia. He was overrun by a crazed mob, captured, and held prisoner for 11 days, suffering from gunshot wounds and a broken back, leg, and face in the process.

Durant, now president and chief executive officer of Huntsville, Ala.-based Pinnacle Solutions, has turned his harrowing experiences into a powerful story of survival and motivation.

In relating his military experience to other areas of life, Durant shared this list as “keys to mission success:” people, leadership, resources, tactics, training, and planning.

“The theme for this conference, ‘Where It Begins,’ wasn’t the phrase I used to come up with this list, but still it ties to it very well,” said Durant. “What does it take for organizations to be successful? These are the building blocks for a powerful organization, whether it’s what you do or a military unit, football team, family.”

After Durant’s serious message, the meeting ended on a much lighter note with the grand prize drawing for a John Deere Gator, which went to Stanley Yates of Grainger County. His name was drawn from all the member Co-op directors who turned in completed entry forms at the TFC Business Showcase. Other major door prizes went to Dusty Matlock of Franklin County, Mike Lynn of White County, Richard Choate of Fentress County, Larry Cadle of Claiborne County, and William Butch Campbell of Fentress County.

“I was in disbelief when they called my name,” said Yates, a Rutledge dairyman, as he sat in his new Gator for the first time. “I never win anything, so I sure didn’t think I’d be the one taking this home. But I’m thrilled, and I sure can put it to good use.”

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