A merger proposal between North Central Farmers Elevator (NCFE) in Ipswich, S.D., and Wheat Growers in Aberdeen, S.D., is back on the table after members rejected an earlier merger plan in 2015.
In separate letters sent to members on July 31, the boards of both co-ops said they had “each approved revisiting the unification opportunity that was considered by the cooperatives two years ago.” The boards said the decision was based on input they had received from member-producers, adding that the “potential advantages of a unification that we identified previously still exist, even more so today given all of the market changes and pressures.”
Those pressure include a downturn in the agriculture economy that has affected the profitability of both co-ops and the farmers they serve. “At the same time, several competitors have entered or grown in the market, and we’re in the midst of a drought year that likely will have a negative impact on yields at harvest,” said Rick Osterday, NCFE board president.
Wheat Growers is a grain and agronomy co-op with more than 5,100 active member-owners and some 40 locations in eastern North and South Dakota. NCFE offers grain, agronomy, feed, and energy products and services from approximately 22 locations in north-central South Dakota and south-central North Dakota, and has more than 2,500 producer-members.
When NCFE and Wheat Growers floated their first merger proposal in 2015 (GM March 9, 2015), NCFE’s voting members responded by rejecting the unification with a 51 percent majority, while Wheat Growers members voted 61 percent in favor of the merger (GM June 22, 2015). Had that merger proceeded, the new co-op would have started operations in August 2015 under the CentraGro Cooperative name, with projected annual sales of $2.23 billion and approximately 7,000 members.
Leaders of both co-ops pushed hard for the 2015 merger, touting benefits that included increased patronage, a stronger balance sheet, greater investments in products, services, and facilities, and a projected $44 million in savings achieved through synergies during the first four years of operation. NCFE and Wheat Growers also stressed in 2015 that the merger would result in no facility closures or employee layoffs.
Opponents of the 2015 merger, however, expressed concerns that the unification would result in less competition, both for the sale of grain and the purchase of fertilizer and other crop inputs. The merger proposal was followed by a steady – and at times contentious – exchange of letters on the op-ed pages of regional newspapers by local farmers both for and against the proposed merger (GM May 25, 2015).
Wheat Growers and NCFE said they are now in a two-week comment period during which they are soliciting input from members on the new merger proposal. “We will compile all comments received and carefully consider them as we proceed with the next steps to refresh the data, benefits, and opportunities of a potential unification,” said Hal Clemenson, Wheat Growers board president. “Following the reexamination process, both boards will determine whether to proceed to a vote of the membership.”