VIEWPOINT

In the cyclical business of agriculture, MFA offers quality, service and stability.
By Don Copenhaver

What a difference a year makes! At this point last year, I was noting the fact MFA was completing the best year in terms of profitability in the past 20. To be sure, I also noted that it would be difficult if not impossible to duplicate that effort this year considering the extremely dry weather across MFA’s trade territory during last year’s growing season. What an understatement.

The dry weather did reduce the revenue on the grain side of the business during the fiscal year Sept. 1, 2005, to Aug. 31, 2006. From every angle, it was a difficult year in agriculture: a short crop with high prices, low volume in the fertilizer business, drought (with its exponential effects) and the year’s absurdly high energy prices. At this writing, I don’t have final numbers yet, but MFA will be profitable—just not at the level I’m satisfied with.

But enough of the negative. Those who participate in agriculture are optimists by nature. Today’s agriculture is full of opportunities. MFA will have a good corn crop to handle this fiscal year, despite the drought. The soybean crop will not be as good as hoped because of a lack of rain. But with all the ethanol demand, the situation translates to more corn acres this coming spring. That means good movement in the fertilizer business and more opportunities for MFA to sell MorCorn, the new line of seed corn. Keep that product in mind. MorCorn set records across MFA’s territory this past year, hitting more than 190 bushels in some test plots.

MorSoy, MFA’s outstanding line of soybeans, continues to gain market share. The seed division and sales force have built an outstanding reputation on the quality and performance of the MorSoy brand. MFA’s customers continue to put more units in the ground. It’s an excellent cycle from MFA’s perspective. The more we sell, the better the reputation for MorSoy. University tests continue to show the high yield of MorSoy beans. These varieties continue to exceed or equal any and all beans available on the market.

MFA’s precision agronomy program continues to bring in more and more producers and provide more and more cost-effective benefits. In addition, here at MFA, we’ve brought on board an agronomist specifically to help customers deal with new and developing NRCS programs. So whether you’re struggling with the environmental quality incentives program or comprehensive nutrient management plans, MFA can be your technical service provider to make sure you’re in compliance.

Our commitment to helping our customers succeed doesn’t end there. Here at MFA, we have committed and spent $6.5 million this past year on modernizing key grain locations that will allow us to procure more grain in those markets. MFA is also strategically placed to merchandise corn directly to the ethanol plants. Corporately, MFA has negotiated a five-year revolving credit plan with lenders for favorable interest rates and increased lines of credit. It’s a huge advantage for MFA and allows the company to move quickly and strategically on opportunities.

MFA’s partnerships in the fertilizer industry allow the cooperative to take advantage of non-traditional markets, provide market intelligence and cash in on opportunities to buy plant foods in more timely, cost-effective manners when any or all of the above opportunities arise.

In the feed area, MFA continues to grow the business. MFA has committed resources to southeastern Kansas where MFA-owned locations already serve the fertilizer, seed and crop protection business. MFA will soon begin manufacturing feed tubs that use dried distillers grains or DDGs from the ethanol industry as the primary source of protein. Those tubs will be marketed in multiple states. MFA’s feed division has also introduced a new branded product line to help customers take advantage of the supply of ethanol byproducts. DDGs can be an excellent feed ingredient when coupled with supplementation designed to provide a complete feed.

And, of course, MFA has a distinct advantage in the cattle business with our award-winning and nationally known Health Track program. With the number of cattle in MFA’s market area, the potential to expand Health Track substantially is tremendous. This program has proven time and time again that it will put additional money in the pockets of participating cattle producers. In fact this fall, MFA’s livestock operations division expects to issue the 250,000th Health Track tag. If you multiply that by the approximately $50 per head additional average net return to the producer, you’ll find an extra return of $12.5 million that has directly benefited participating Health Track producers. No one has a program that provides a comparable benefit for customers. No one.

All in all, at MFA our balance sheet remains strong. That allows us to take advantage of growth opportunities to better serve you—our customer/owner. So again, there are many positives in today’s agriculture. At MFA, we will continue to stress those positives and take advantage of opportunity. I feel good about MFA’s future. I have spent my entire working career with MFA and am very proud of the MFA emblem. I am especially proud of the high quality of people who represent this company, both our employees and our customers. We will soon celebrate 93 years of serving agriculture. Considering the type of business we are in, that is remarkable. Not very many companies can claim that longevity.