Despite the drought over much of our trade territory, MFA is positioned to end its fiscal year

Aug. 31 with excellent profitability on our own operations. In fact, measured simply on our own operations, this year should be the best in the last 20. At the time I write this, final numbers are not yet available. When they are I will share them as I do every year. Much of our profitability reflects the record yields of last fall.

Because this new fiscal year's books will reflect this grain season, it will be difficult if not impossible to duplicate those results for this fiscal year. After the first week in June, rain was almost non-existent in a large portion of our market area until early August. Not having the bushels to handle this coming year will hurt our bottom line significantly. Fortunately, we do have areas that received rains and will have decent yields.

Our corporate theme this fiscal year is "MFA: Vision, Growth, Success." The theme grew from a past effort in which we charged a cross section of our workforce to think about what MFA should look like in the years ahead, considering the changing dynamics of agriculture. From that exercise, we developed a corporate vision statement: "MFA embraces ethical business practices, provides value to its farmer/owners and operates at targeted levels of returns." It corresponds with our mission statement of: "MFA Incorporated will operate in both a cost and sales effective manner in providing a select number of quality products and services on a timely basis to ensure the continued existence of the cooperative for the economic benefit of its farmer/owners."

We identified a list of objectives that we felt were necessary to achieve our goals. Individual committees were assigned with the charge of coming up with appropriate recommendations. Again, these committees were composed of individuals representing the different business units within the company with representation from both the country and corporate office.

If we are to accomplish specific targeted levels of return, we must continue to improve profitability and improve the return on assets, resulting in strengthening our balance sheet to ensure the long-term viability of the company.

In today's environment, no matter what type of business you are in, you must continually rationalize everything you do. MFA is similar to your farm or ranch in that each business unit must generate adequate returns. And if a unit isn't returning targeted numbers, you must decide how to fix it. If it is not fixable, you need to reposition those assets to something that will generate returns.

I believe it is a true test of our leadership ability to recognize when a business unit or a particular location is not delivering value and then have the courage and the initiative to reposition those assets, no matter how long a particular business unit or location has been a part of the system. The point is that each of us at MFA is charged with making sure MFA remains a viable entity for many years to come. As a result, it is important we analyze everything we do. We have to if we are to live out the vision we have for MFA.

Growth is the second part of our theme. We are committed to growing the company and expanding into new, select markets. Obviously, being a cooperative, we must be very selective in how we spend money for expansion. We do not have deep pockets. But we will continue to look for growth opportunities that we feel have a high degree of certainty of generating our return criteria.

Over the last few years we have grown the company by acquiring new facilities and forming joint ventures. If you look at the financial results of those efforts, they have certainly more than paid for themselves. The profitability of those efforts has allowed us to use our share of the revenue to make improvements to facilities that have been a part of the system for a very long time. A good example would be our recent commitment to improve specific grain facilities within the MFA system. We have made a commitment to spend several million dollars on those facilities. The timing may not be perfect, as the drought illustrates, but those improvements will be in place for the future to allow us to take advantage of the changing grain industry dynamics.

Success is the third component of our theme. The fact that MFA Incorporated has been around for 91 years says a lot about our success. For the most part, we at MFA have never forgotten why MFA was formed nearly 91 years ago. That in itself has a lot to do with our continued success. Look what happened to many agribusinesses and cooperatives. But most importantly, it is our people who have made us successfulÑespecially those in our retail stores who interact with our customers. Simply put, we have better people than our competition. The employees of MFA are our most important asset.

We may not in every instance be living up to the "targeted levels of return" mentioned in our vision statement. But we are getting closer. A company is successful when it can generate good returns on the assets employed, just like we did this year. And it is important for all of our customers to know that we generate those returns while embracing ethical business practices. We know we have to compete every day with many businesses that do not meet those standards. But we will always maintain a reputation in the marketplace of dealing with honesty and integrity.