New alliance could boost marketing options

ORIGINALLY WRITTEN BY DON RATZLAFF
Greater efficiency in marketing grain has prompted five area cooperatives to coordinate their efforts through a new company called Team Marketing Alliance LLC.

The new company is expected to be in operation by this summer?s wheat harvest.

The partners in the new company are Cooperative Grain & Supply, based in Hillsboro; Farmers Co-operative Elevator Co., Nickerson; Farmers Co-operative Elevator Co., Halstead; Farmers Grain Cooperative, Walton; and Mid Kansas Coop Association, Moundridge.

?This is significant in the fact that it ties us with other coops without having to merge,? said Lyman Adams, general manager of CG&S. ?In the ?80s and early ?90s, the word was that you had to merge to gain this. Now, through this alliance, we can still keep our independence for our producers and gain some of the efficiencies that are on the table.?

The alliance has its roots in some cooperative marketing ventures undertaken by the cooperatives in Moundridge and Walton, Adams said.

?We?ve talked about it for some time,? Adams said. ?Moundridge and Walton showed that joint marketing worked. But that was limited as to what you can do. The value of putting everything under one license just takes it to the next level.?

A similar alliance was first forged by four cooperatives in northern Kansas.

?They kind of gave us a framework to use and then we sort of made it fit our way,? Adams said.

The new company will be based in Moundridge, but will not own any real estate at present. Ted Schultz, currently of Mid Kansas Coop, will become general manager of TMA. The company will employ about 10 people.

Except for the function of marketing and transporting grain, all five partners will continue to operate their 38 storage facilities independently.

The economic value of the organization is two-fold. First, by combining their marketing efforts under one license, the cooperatives should improve efficiency and thus squeeze more dollars out of their grain enterprises by reducing shipping costs for grain following a sale.

For instance, when grain is sold to Topeka, it?s more efficient to transport it from a northern site in Marion or Hillsboro than from a southern site like Nickerson. The reverse would be true when a sale is made to the south of the TMA region.

Another way efficiency is gained is by having a greater volume of grain to sell. For instance, CG&S markets about four million bushels of grain each year; TMA would market about 30 million bushels.

The primary economic advantage will be easiest to trace at the level of the individual cooperatives. Adams says it has not been decided whether the cooperatives will pass on any of the savings directly to individual producers in terms of grain prices.

Generally, producers will notice little difference in their business affairs. The scale ticket will say ?Team Marketing Alliance? and the checks will come from TMA. But producers should be able to work with the same people they have before.

One advantage for producers is that those who haul grain to more than one of the five cooperatives can take care of all their business at the office of their choosing.

TMA will also be offering a new marketing program called Grain Price Protection Services, in which a marketing specialist will help a producer create a marketing program tailored to the producer?s needs.

TMA will employ three marketing specialists who will work with individual farmers in the area.

?We?ve been doing (GPPS) for a year for individual producers to have a marketing plan,? Adams said. ?That?s really where the potential is (for producers).?

One other area TMA is exploring is finding ways to ship grain via the railroad instead of only by trucks.

?That?s not something we had to have to gain benefits,? he said. ?But we do have a committee working on how can we be involved in shipping grain by rail. That will come down the road. We hope we don?t have to build a facility, but if we need to improve some of our facilities or go into an alliance with a terminal, we?ve got to have that ability.?

Adams said informational meetings about TMA will be offered in the coming weeks so area producers can become more informed about the alliance and what impact it could have on their operation.

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