Farm service co-ops look to merge

Published 10:24 am Monday, October 19, 2015

By Sam Wilmes

Two local farm service cooperatives announced Wednesday they unanimously approved a plan to merge.

The board of directors of Watonwan Farm Service Co., headquartered in Truman, and Central Valley Cooperative, headquartered in Owatonna, are seeking support from their members after both boards approved the merger.

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Informational meetings have been scheduled for Nov. 12, 19, 20 and 24 to share more details about the unification with members, and to address questions and concerns.

Ballots will be mailed to voting members Dec. 2. The voting process will close on Dec. 21, and the votes will be tallied Dec. 22.

Watonwan Farm Service has locations near Albert Lea, including Freeborn, Bricelyn, New Richland and a joint venture with Central Valley in Clarks Grove.

Central Valley has locations near Albert Lea, in Austin, Ellendale, Hayfield and Blooming Prairie.

According to a press release detailing the plan, the cooperatives identified $5-7 million in expected savings if the merger were to pass, and said the combined sales would be in the $600 million range at current commodity prices.

If approved, the new cooperative will be named Central Farm Service. Both headquarters would remain open to serve customer’s needs, according to Jo Ann Gumto, marketing communications director at Watonwan Farm Service.

For the merger to proceed, a quorum is required and a two-thirds majority of each cooperative’s membership who cast a ballot must vote in favor of the plan.

There are no immediate plans to close locations if the merger is approved, according to a press release detailing the proposed merger.

If the members support the merger, the effective date of the unified cooperative will be March 1, 2016.

The cooperatives currently work together in several partnerships, and reportedly have been exploring the possibility of consolidation for more than a year.

Equal representation on the new co-op board from the two cooperatives is planned if it’s approved.

Watonwan Farm Service Board Chairman Charlie Johnson and Central Valley Board Chairman Eric Schrader said in the press release that a merger would enhance member value and preserve control by member-owners for a long-term, viable local cooperative.

“So often mergers occur due to financial instability or to overcome weakness,” Johnson said. “This is not the situation with Watonwan Farm Service and Central Valley; both cooperatives are financially stable. As the dynamics in agriculture continue to change, we want to bring the strengths of our cooperatives into a unified company that will thrive in the decades ahead.”

“The efficiencies and savings that were identified in the study could not be overlooked,” Schrader said. “Together, we would operate more effectively, creating greater value to our members than if we were on our own.”

Watonwan Farm Service and Central Valley also identified employee opportunity and retention, access to capital, risk management, geographic diversity and arbitrage and maintaining member control as other positive benefits of the merger, according to the press release.