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Looking ‘Beyond the Horizon’

Co-op’s future success will require adjusting to agricultural industry changes
By Glen Liford, Photos by Sarah Geyer and Chris Villines 1/1/2018

With the forward-looking theme “Beyond the Horizon,” Tennessee Farmers Cooperative’s annual meeting provided plenty of opportunities for Co-op stakeholders to contemplate future possibilities for the farmer-owned business that has been a vital part of Tennessee agriculture since it was established in 1945, The two-day event held on Sunday, Nov. 26 and Monday, Nov. 27 allowed member Co-op directors to hear firsthand the operating results of the year and get a glimpse of the challenges and opportunities posed by a rapidly changing business climate.

During the Sunday afternoon get acquainted session, the TFC Showcase was once again a popular attraction as attendees had the opportunity to visit with one another and TFC product personnel, asking questions and receiving information about the latest Co-op products and services.

In the middle of the display area, the “Co-op Auction Barn” took center stage as shoppers placed bids in a silent auction format  on a wide selection of Co-op products and some unique items made by Tennessee craftspeople, many of whom were featured in past issues of The Cooperator. This was a new feature designed to raise additional funds for FFA and 4H.

A special group of items was reserved for a live auction segment at the end of the day. Presided over by auctioneer John Houston, TFC and Feed Animal Health sales manager, the live auction successfully kicked off the first-ever Co-op Auction Barn event by generating more than $2,000 in sales alone. The silent auction concluded early Monday morning, and when the final tally was complete, more than $9,000 was raised for the benefit of the state 4-H and FFA youth groups.

In his remarks to the crowd of more than 650 attendees during Monday’s business session, Kenneth Nixon, TFC board chairman, related the meeting’s theme to the visionary direction of creative entrepreneur Walt Disney, who had the imagination and insight to transform 30,000 acres of Central Florida swampland, fields, and orange groves — purchased for $185 an acre — into the sprawling entertainment complex that today attracts some 19 million visitors each year. Disney died before his creation opened in 1971.

Soon after the complex opened, one Disney World employee remarked to another, “Isn’t it too bad Mr. Disney didn’t live to see this?” The other employee responded, “He did see it — that’s why it’s here!”

“For the long-term health of our Co-op system, we too must look Beyond the Horizon at the ever-changing dynamics of the agriculture industry while not straying from the three factors that have made our cooperative system successful for more than 70 years,” said Nixon. “Those three factors are sound business practices, hard work, and cooperation.”

To stay relevant, he said, TFC and member co-ops must continue to make a profit in spite of a rapidly changing operating environment.

“We must make sure that when change comes to our cooperative system — and I think it will become necessary — it is in the best interest of our federated system and also the farmers who are the owners of this system,” he said.

Acknowledging that each Co-op is member owned, Nixon stressed to the membership that “only by working together can we meet the needs of our farmer members.”

“With the predicted agricultural reset looming, we all must stay laser-focused — as farmers, as local Co-op farmer members, and at TFC — on helping each other navigate these potentially choppy waters and emerging unscathed,” he said. “I want our system to be here for my children, my grandchildren, and ultimately their children, too. I’m sure all of you have that same wish. Working as one, we can make that happen.”

Similar sentiments were shared by Bart Krisle, TFC chief executive officer, in his address. Krisle used the analogy of sailing to drive his point home with a quote by entertainer Jimmy Dean:

“I can’t change the direction of the wind, but I can adjust my sails to always reach my destination,” he said.

“Adjustments are a necessity when things occur around us that are not within our control if we want to arrive at our desired destination.”

Krisle cited a number of factors in the agriculture industry as “winds” that are beyond the control of Co-ops, including the trend of mergers and acquisitions at all levels of the agriculture supply chain. Business models that provide  “direct to producer” sales efforts are increasing. Farm income is declining, and there are fewer and larger farms. Technology and politics add further uncertainty to the industry, he said.

“These are a few of the things that are occurring within our industry that will likely impact our business, and as a result, offer us the opportunity to make adjustments to our sails so that we stay on course,” said Krisle.

That intended destination is “to enhance the value to the farmer owner by focusing on efficiencies that maximize the effectiveness of our cooperative system,” he added.

“The reality is that we will never arrive at a place and stop,” he said. “But it is a place that we always want to be moving toward.”

To continue on this course, Krisle outlined a strategy that TFC will follow to meet the changes impacting the business. That strategy focuses on four areas:

• Deliver value to members and customers.

• Look for business growth.

• Focus on leadership development.

• Lead the federated cooperative system development.

“The fact remains that as long as we stay focused on the destination and make the necessary adjustments to our business, we will stay on course and remain successful,” Krisle concluded.

TFC Chief Financial Officer Shannon Huff shared operating results from the year at the business breakfast on Monday morning. Highlights included consolidated gross sales of $611 million for 2017, a decrease of $3 million over the previous year. Net margins for the year amounted to $25.5 million. TFC returned $22 million in patronage to its member Co-ops, which included $17.6 million in cash and $6.5 million to retire

allocated reserves.

Fertilizer sales declined by $19 million primarily due to a price decrease of more than $25 per ton in spite of a slight increase in tons. However, Seed and Crop Protection sales offset that reduction with significant increases. Some 266,000 tons of feed were sold, a decrease of 2,000 tons over 2016. Fuel gallons remained “fairly constant” with 36

million gallons sold.

“TFC had a very successful year financially,” said Huff. “You played a major role in that success, and we thank you very much.”

Continuing with the Beyond the Horizon theme, Chief Operations Officer Jim McWherter began his departmental reports by challenging the farmers present to consider the production levels of their operations in 2000 versus 2017.

“I bet many of you have gone beyond production numbers, which were once unimaginable,” he said. “What was beyond your horizon in 2000 is now achievable, allowing many of you to accomplish more than you could ever dream.”

Plans for 2018 include updates for the Halls Seed Plant and a continued emphasis on Croplan corn, soybeans, and cotton, in addition to popular Monsanto products.

“We continue to be the leading supplier of forages in Tennessee,” said McWherter, who said that position is strengthened by Co-op’s shared ownership in Allied Seed.

In the challenging fertilizer market, he stressed that the experienced Crop Nutrients Department’s employees would continue to play key roles in keeping the member Co-ops and TFC in a competitive position.

Technology will continue to gain momentum, too, said McWherter.

“Yield data, soil nutrient analysis, satellite imagery, and other data collected on the farm is now being turned into knowledge to help guide decisions, so that precise amounts of seeds, fertilizers, and pesticides can be applied across crop fields,” he said. “The use of ag technology allows growers to be more efficient with crop inputs, increase productivity, reduce the environmental footprint, and transform crop production.”

Co-op will continue to meet the technology needs of growers with its Incompass Ag Technology Program, and through partnerships to offer important products and services such as the R7 suite of agronomic tools with WinField United and Climate Corporation Field View products with Monsanto, he said.

“The use of these new tools will help us serve our growers in new and exciting ways,” said McWherter. “When you combine this technology with the products we have available, farmers will continue to make new records and in the most cost-effective way possible.”

In the livestock area, the emphasis will remain on the manufacture of products to allow members to succeed, he said. TFC will also continue to capture private label and toll milling tons to better utilize capacity at its mills to increase efficiency and profitability.

The Hardware and Ag Equipment departments continue to help the state’s farmers benefit from the Tennessee Ag Enhancement Program by providing products that qualify for the program, he said.

In the Tires, Batteries, and Accessories Department, an agreement with a new supplier, S&S Tires, has enabled Co-op to offer a broader selection of tire sizes and more efficiently distribute these products, utilizing next-day delivery with no minimum orders, he said.

Finally, McWherter said the Home, Lawn, Specialty Department will continue to provide a wide variety of products for turf and lawn customers, as well as providing essential items, such as clothing, hunting supplies, and small hardware items for the changing customer base faced by many member Co-ops.

Keynote speaker Jim Morris concluded the business session of the meeting on Monday morning. Originally drafted as a first-round pick in 1984, it was Morris’ dream to become a major league baseball player. Those plans, however, were derailed when he suffered a series of debilitating injuries before he got out of the minors in 1988. He left baseball, got married, raised a family, and got his college degree before becoming a high school science teacher and baseball coach in West Texas.

Eleven years after leaving minor league baseball, Morris was looking for a way to motivate his high school baseball team. Stressing the importance of dreams and hard work, he challenged the team: if they would win the district championship, then he would try out for the major leagues.

They won the championship, and Morris kept his end of the bargain. At his tryout, he threw 12 consecutive pitches at 98 miles per hour and was awarded a professional baseball contract. He played for the Tampa Bay Devil Rays in 2000, then the Los Angeles Dodgers, and retired from baseball in 2001.

His incredible story was recounted in the hit movie, “The Rookie” starring Dennis Quaid.

“Dream killers come in all shapes and forms,” Morris told the Co-op audience. “Even people who are set up in positions to help you. These are the people who want to see you fail. What you want on your team are dream makers — they want to see you succeed. Surround yourself with these people, and you’ll become the best ‘you’ and be a part of a winning team.”

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