Merging with local cooperatives and acquiring non-cooperative businesses are ways to grow business in a mature market. But MFA carefully considers each move, its profitability and effect on local community before making decisions. Here's a look at MFA's most recent enterprises.

Recent additions to MFA's portfolio of assets reflect a careful expansion--a conservative mix of prudence and opportunity. Two additions have come via agreements in which local cooperatives gain efficiencies in today's low margin environment by joining forces with MFA. Members of the Glasgow Cooperative Association, with sites at Armstrong, Fayette and Glasgow, voted to join MFA last summer. This past fall, members of Mid-Missouri Cooperative, with locations at Alma, Concordia, Emma, Sweet Springs and Waverly, also joined.

"Having these cooperatives as part of MFA is an opportunity to gain efficiencies of scale and economic benefits for everyone," said David Jobe, MFA senior vice president, corporate operations. "While we've long advocated strong local cooperatives, there are instances in which obvious mutual benefits exist."

Craig Poppinga, general manager for Mid-Missouri group, said that the consolidation means local cooperatives will gain some benefits of scale from the merger.

"Members won't see a lot of visible changes here right away. Some of the signs still say Farmland and probably will until the busy spring season slows. Our basic service lines won't change, but will be improving. We will be offering more services. We have been working with Dave [Hughes] in ASIL (MFA's Agricultural Systems Information Lab). We were already offering variable rate, but ASIL has software two versions newer than we did. We just weren't big enough to afford the latest."

Both of the central Missouri cooperatives, with their proximity to the Missouri River and the Union Pacific and Gateway rail lines, provide efficiencies in grain handling. Strong farming communities at each site bring active members into the cooperative.

Former chairman of the board for Mid-Missouri Cooperative, Stan Oetting, said that the tightening conditions in agriculture made for tough choices at the cooperative.

He said it is tough to compete on price and financing in the face of tight margins is difficult.

"Now, the cooperative has the time and the backing to figure it out. I feel fortunate that we still have a cooperative in our community. The farmers here are happy to still have a cooperative here in the community, happy to have a place to dump grain and buy feed and fertilizer," he said.

The transition to MFA exists on several levels for the cooperatives.

Joe Abbott is manager at the Concordia location and in charge of the feed mill for the Mid-Missouri group. He says the mill, which was selling Farmland and Land O' Lakes feeds, is already producing MFA brands.

Abbott says the mill has done a robust business in the past and is geared to make a quick transition. "We've sold everything from grind and mix to complete feeds. We are in the process of converting to all MFA feeds. We've already made both TrendSetter and Cattle Charge here," he said.

In yet another move to boost efficiency, MFA negotiated an agreement with Land O' Lakes and Farmland Industries to acquire a feed mill in Centralia, Mo. "The Centralia mill complements our existing feed business in central Missouri," said Jobe. "It gives us increased capacity to continue serving our members."

In January 2002, MFA's board of directors approved purchase of two retail facilities--Davis Agriservice in Olpe, Kan. and LeGrand Fertilizer at Poplar Bluff, Mo. These facilities will become part of MFA Enterprises, a wholly owned subsidiary of MFA Incorporated. Davis Agriservice will be part of the Emporia AGChoice location, an existing part of MFA Enterprises.

LeGrand Fertilizer will be part of Morris Farm Center, headquartered in Piggott, Ark. Morris Farm Center, another division of MFA Enterprises, has locations in seven northeastern Arkansas communities. LeGrand's Poplar Bluff location, in Butler County, Mo., serves an area where MFA did not have an existing presence.

Neither location will be structured as a cooperative. Several facts highlight the benefit of non-cooperative business to MFA and MFA's customer/owners, said Jobe. "First," he said, "the structure allows us to create profits, which can be retained as permanent capital, thereby strengthening the cooperative. Second, the practice allows us to spread overhead costs over expanded volume and reduce interest the cooperative must pay. Plus, expanded volume allows greater efficiencies of scale."

Jobe says that the enterprises are ways to bolster MFA's main goal of being a strong cooperative.

Agriculture, he said, from the consumer-level food processors to commodity companies and the farms that supply them, right down to the ag service industry that delivers inputs to those farmers, is a mature market.

"But there is room for careful expansion," said Jobe. "The point is you cannot stay the same. Change is constant. We have two choices: grow or decline. Growth, however, must be in accordance with our mission: To improve the economic condition of our owner/members."