Open HouseDate: October 27, 2017
Join us as we celebrate the new partnership between Key Cooperative and LRI.
With 1,200 acres to farm and 5,000 feeder pigs to finish, Melvin Dunsbergen and his son Dustin have their hands full. The last thing they want to worry about is checking fuel prices and tanks. That’s why they like Cenex® Automated Fuel Delivery (AFD).
“We’re busy farming. We take care of our business, and they take care of the fuel business,” says Melvin Dunsbergen, Lynnville, Iowa. “We’ve been happy with how simple it is. They keep our tank full and we get billed the average monthly price for what we use.”
With AFD, your local cooperative installs an electronic monitoring system in your bulk fuel tank, so you no longer need to order fuel. When the fuel level dips to a predetermined amount, the monitor sends a GPS signal to a fuel distribution center and the nearest delivery truck is routed to fill your tank.
“Before we had Cenex Automated Fuel Delivery, we had an excellent fuel driver who went out of his way to keep us full and watch prices for us. When he retired, I thought things would go downhill, but we’re really happy with how this works,” says Dunsbergen. “In the past, I’ve come close to running out of fuel. This means one less thing to worry about.”
With AFD, the Dunsbergens always have plenty of high-performance fuel on site for combining, chisel plowing and other work. “We have a lot of bottom ground and we’ve got a disk ripper going down 17 inches. That takes a lot of fuel and power,” he says. “We’ve had no trouble at all in the field. Cenex Ruby Fieldmaster® premium diesel fuel keeps the injectors clean, and Cenex lubricants do a good job.” For added security, they enroll their equipment in the Cenex Total Protection Plan®.
Attractive Billing Options
The Dunsbergens buy fuel through Key Cooperative in Sully, Iowa, which provides automatic delivery to about 900 customers.
“This program basically turns fuel into a utility — it’s always there when you need it,and you only have to pay for what you use,” says Lynn Sheets, petroleum manager for Key Cooperative. “Just like with a utility, it’s ‘sign me up, hook me up and leave me alone.’”
Customers have payment options — deferred billing with average monthly pricing is the most popular. Customers are billed each month for the estimated number of gallons used, but rather than pay the price of fuel on the day the fuel was delivered (or used), they are charged that month’s average price.
“Supplies can be tight in the fall, but typically farmers want to wait for prices to go down to order fuel,” says Sheets. “With AFD and average monthly pricing, farmers can forget about checking fuel tanks or trying to second-guess the market. They can focus on more important things.”
Cody Kalous, refined fuels operations manager for Agfinity in Eaton, Colo., agrees. “Average monthly pricing is a great marketing tool,” he says. “It takes some of the peaks and valleys out of the market for our customers. Otherwise, they might spend a lot of time chasing the low end of the market and trying to avoid the high end.”
In addition to serving farmers and ranchers, Agfinity provides automated fuel delivery to construction companies, landscaping firms, transportation fleets and snow removal businesses. “Our customers appreciate not having to rely on themselves or their employees to check tanks,” says Kalous. “Deferred billing is also a huge benefit. Not having to pay for fuel that’s sitting in a tank helps all those operations maintain good cash flow.”
Good for All Parties
Cooperatives gain benefits with AFD, too, including not having to replace expensive trucks, upgrade bulk plants or carry high priced inventory. In the integrated AFD system, the local co-op maintains customer relationships, services tank monitors and sends invoices, while CHS delivers fuel directly to the customer from a nearby terminal.
“This eliminates a lot of operational risk for a co-op,” says Kalous. “With AFD, you don’t have trucks and drivers on the road, so you don’t have to worry about accidents or spills. There are also fewer staffing and regulation headaches.”
CHS Dakota Plains in Valley City, N.D., began offering AFD this year after careful study of its petroleum operation financials. “I’m excited about the efficiencies we’ve gained and the added level of security we’re providing for growers,” says Ken Astrup, general manager.
“The beauty of the AFD program is it doesn’t take any options away from the grower. They can still contract or put a tank on hold, and now they can wait to pay until they use the fuel, which is a big help when commodity prices are lower.”
Filling tanks before harvest season is a huge advantage, says Astrup. “We started harvest with over 700,000 gallons of fuel in our customers’ tanks. In the past our employees — and any other drivers we could find to haul fuel for us — sometimes had to wait in line at the Fargo or Jamestown terminals for up to 10 hours to fill up. This year, we haven’t had to worry about spot outages at terminals because the fuel is already in growers’ tanks.”
CHS Dakota Plains is so pleased with the system that it’s looking at installing monitors on customers’ home heating tanks.
Refining the Program
CHS recently restructured the AFD team to address rapid growth, says Beau Gorres, AFD operations manager. AFD volume has more than doubled over the past five years. “We’re focused on providing exceptional service to our customers, meeting increased end-user demand and being even more proactive.”
CHS continues to leverage its logistical strength to efficiently and economically meet fuel needs across the country. The AFD team takes advantage of supplies and pricing from multiple terminals to reduce costs for customers and has the flexibility to reassign delivery trucks if one region is experiencing mechanical issues.
Recently, the team proactively filled tanks in one region to avoid supply disruptions due to scheduled maintenance at a refinery.
Right-sizing of on-farm fuel tanks is another priority for CHS.
“As technology has changed, it’s more important than ever to make sure fuel tanks are the right size for an operation,” says Gorres. Many farmers are upsizing to capture price advantages and match equipment capacity. “If you don’t have the right size fuel tank and you’re lifting fuel faster than your supplier can respond, you could run out of fuel.”
Because AFD is a web-based program, customers can check their fuel inventories whenever they like. For more information about the program, contact your local authorized Cenex fuel distributor.
“AFD is a great tool that anticipates our customers’ needs and takes emergency fuel orders out of the equation.” — Cody Kalous, Agfinity, Eaton, Colo.
“This is one of those unique programs that only a cooperative system can provide. It proves good things can happen when we work together,” says Lynn Sheets of Key Cooperative, who has seen a lot of changes during his 40 years in the fuel business. “AFD is good for the local co-op, good for our customers and good for CHS. Planning ahead helps everyone, and savings that are generated go back to our farmer-owners.”
5 Ways AFD Benefits Farms
Tired of checking your bulk fuel tank gauge? As agriculture has changed over the years, the Cenex brand has changed the way it delivers fuel to accommodate farmers’ changing needs. The Cenex® Automated Fuel Delivery system offers many benefits, including:
• Increased productivity
• Reduced price volatility
• More flexible cash flow
• Online tank and use info
• Peace of mind
Look for this article in the upcoming November/December issue of Your CHS Connection.
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