Newsletter Archive

Challenges and opportunity in agriculture by Jim Magnuson, General Manager

Heart to Heart, February 2010 Connections

The Annual Meetings for your cooperative were held on January 19 and 20. Attendance at both meetings was very good in spite of challenging weather. Presentations from Monsanto and Advance Trading provided a high level overview of the world’s growing food needs and analysis of more recent market activity. Projected world population growth presents a great challenge and opportunity for US agriculture. Most the world’s best land is already in production. Further growth will come from South America and Africa. 

African growth will depend on development of new technologies to adapt food crops to much more challenging growing conditions. Producing food in new areas is one thing, but processing and transporting it is another. Unfortunately, advancement in crop yields in remote areas may exceed the ability of underdeveloped countries to move grain to areas of need. Development of roads, waterways and rail will take years and billions of dollars to develop. The economies of the nations with the greatest food needs may be unable to finance and operate an adequate transportation system.

China continues to represent a significant market opportunity for US agriculture. The middle class continues to grow, demanding higher quality food including meat protein. They are investing aggressively in transportation infrastructure. They are also investing in domestic grain and livestock production to achieve an acceptable level of food security.

US agriculture is irrevocably linked to world markets through our need for continuing exports of ag products and requirement for imports of energy and crop inputs. Conventional wisdom seems to be challenged daily. We will all need to be very open minded to new possibilities to keep up. A lot of work lies ahead but I remain optimistic about the future. I hope you do too.

Terry Leonard, Colfax was re-elected and Kevin Peterson, Gilbert was elected to a three year term on the Board of Directors. The Board has been reduced to ten members with five from the area north of Highway 330 and five from the area south of 330. Two Associate Directors bring the total number of directors to twelve. We sincerely thank Kevin Baldus, Roland for his past service on the Board. We also thank Nick Bunse, Newton  and Dave Hill, McCallsburg for their past service as Associate Board members. Kevin, Nick and Dave each played important roles in the merger process and the months following.

Operating results for your cooperative during the first quarter of the fiscal year ending December 31 are ahead of expectations. Sales and revenues are higher than expected and expenses are moderately lower. The Oct-Nov-Dec quarter has a significant impact on the full year’s performance. We are pleased to be off to a good start.

In late January or early February, members will receive checks representing equity earned in past years. Equity totaling $875,000 will be returned to members. The total distribution is nearly double the total annual equity retired by either HOIC or SCE. Please note this distribution is not taxable. Taxes were paid in the years when the equity was originally distributed to members. Cash distributed to members in January and February from 2009 Cash Patronage allocations and retirement of Members’ Equity will total $1.4 million. We are very pleased to be able to return value to our members through these programs. Thank you for your continued support of your cooperative.