Co-ops Face Pressure to Merge

Co-ops Face Pressure to Merge

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Global competition, falling farm incomes, industry consolidation and a growing need for specialized talent are causing co-ops to make big changes to protect their share of the grain marketing system.

Ag Web reports that as farm operations have increased in size, co-ops have had to do the same in order to compete against the big multi-national companies.  Over the past four decades. the number of co-ops has fallen from more than 6,400 to just 2,100 in 2013 - that's a 66% decline.   Yet they remain an economic force.

The USDA says co-ops reported a record $2 billion of business in 2013 and while some co-ops aim to get bigger, the board of the  Pendelton Grain Growers co-op in Oregon voted to dissolve and sell its' assets. 

Founded during the Great Depression, the eastern Oregon co-op's fortunes have fallen in recent years. It overstated its earnings in 2010 and 2011 landing it in hot water with regulators.  PGG tried to restructure its business model by selling off its retail and agronomy businesses, but it continued to hemorrhage money and lost almost $4.5 million in 2013 and almost $8 million in 2014.   Meanwhile, nearby co-ops turned profits.

The board will oversee the sale of its' remaining assets, but the co-op won't give its 1,800 members dividends for another three to six years.

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