Annual Meeting Preview

Winter 2010
news
WHEAT GROWERS
The 2010 Harvest:
Connecting to Tomorrow Delivers
Annual Meeting Preview
Scott Hier: From Farm to
Market and Back Again
WHEAT GROWERS
news
Looking Ahead
Moving Forward
Dale Locken
Chief Executive Officer
This year we were again reminded that Mother Nature has her own
say in things. The wet weather of spring and summer meant that
more than two million acres didn’t get planted this year, and that
led to 160 million bushels less production in our trade area. That
affected our agronomy business in terms of fertilizer, seed, crop
protection and crop application services that were not needed on
those Prevent Plant acres.
It was a good year but not a great one for Wheat Growers. We’re
going to have about half of our expected income due to Prevent
Plant. But thanks to your loyalty and productivity and the hard work
and dedication of our employees, it was still a profitable year, with
$15 million in net income.
Returning Profits to Member-Owners
One of the many benefits of doing business as a cooperative is
being able to return profits back to our member-owners. Wheat
Growers Board of Directors has approved a $3.5 million patronage
dividend for business done with the company for this fiscal year. We
will again be paying 40 percent of the dividend in cash this year.
This year Wheat Growers embarked upon a major upgrade of our
grain handling facilities. The Connecting to Tomorrow initiative was
undertaken in order to keep up with the increased grain production
in our trade area and to better serve you, our patrons, with faster
unloading and increased drying and handling capabilities. Last year
we asked our board, delegates and patrons what they thought
about investing old-year equity payments for three years in order to
finance a portion of this initiative. All groups overwhelmingly agreed
2.
(97 percent) to invest old-year equity instead of borrowing this piece
from the bank. Even with this change, Wheat Growers still maintains
one of the most current equity retirement schedules in the industry.
The Age 70 Retirement Program and Estates are not affected by
this and will continue to be paid.
Each year the board and management of Wheat Growers reviews
the Section 199 Domestic Production Activities deduction in
order to determine how best to maximize the tax benefit for our
membership and the cooperative. This year Wheat Growers will be
passing through approximately $9 million of Section 199 deduction
to patrons. The deduction is allocated based on a customer’s
grain sales to the cooperative. Wheat Growers will be using the
remaining portion of the available Section 199 deduction to
minimize the cooperative’s tax liability.
“ One of the many benefits
of doing business as a
cooperative is being able
to return profits back to our
member-owners.
“
I
t’s been quite a year here in Wheat Growers country.
I thought this would be a good time to reflect on 2010 and look
forward, with optimism, to 2011.
This is just one of the reminders that our customers have ownership
in Wheat Growers, in governance and financial matters. Our board
and delegate elections are underway, and the Wheat Growers
annual meetings are set for next month. There are stories about
both in this issue.
This short production year means that Wheat Growers will be
even more fiscally responsible for investments and assets that
we’ll purchase in the coming year. We will delay spending on
replacement assets, because we have very new, modern
equipment and will not allow our services to you to be diminished.
Just like any responsible farmer in this situation, we’ll pull back
for a year until better times come.
WHEAT GROWERS
Accepting Applications Now
for Summer Internships
Optimism for 2011
I firmly believe that better times are around the corner. What is the
basis for my optimism? There is a growing worldwide demand for
grain, and grain pricing has a strong outlook. And, of course, we
have to give Mother Nature some credit here too, because excellent
fall weather has certainly helped with harvest. Farmers are able to
spend time this fall getting many of those wet, but now dry or drying,
acres back in shape for 2011 spring planting. Our Connecting
to Tomorrow investments at the eleven existing facilities really served
our customer’s needs quite well in taking and receiving grain during
this year’s harvest. Remember that these improvements are
long-term investments that will continue to serve us well into the
future, and for generations to come. One last thing: Our employees,
led by Director of Safety and Environmental Affairs Bill Spreeman,
have been putting a great emphasis on safety with very positive
results for our safety outcomes.
This is a great time to start
thinking about summer,
especially if you’re a student!
Each year Wheat Growers hires several summer interns,
who often return as full-time employees. For example,
12 current Wheat Growers agronomists worked as
summer interns.
Wheat Growers is currently accepting applications for
the summer of 2011. Students at any secondary school
(technical school, college or university) are eligible to
apply for a Wheat Growers summer intern position.
Students receive competitive pay during their summer
work, learn from experienced professionals and receive
a scholarship for their education. E-mail Wheat Growers
at jobs@sdwg.com for more information.
Scott Hier – One of the Best
Finally, there’s a great story about Scott Hier in this issue. Scott is
retiring from Wheat Growers after 36 years of dedicated service.
Scott is one of the best I’ve ever seen at understanding customer
needs and what is cost-efficient and of true value for the farmer.
He’s always kept that first and foremost in his decision-making
process and has produced tremendous gains for our producers.
We’ll miss Scott, but look forward to continuing business with him
as he moves back to full-time farming.
In addition to the internship opportunities, Wheat Growers
has a variety of seasonal and full-time positions currently
available. Check out Wheat Growers’ Employment
Opportunities page at www.sdwg.com.
3.
WHEAT GROWERS
news
Speeds Up Already Cooperative Harvest
A
s he and his brothers
park their combines for
the 2010 harvest season,
Terry Gilchrist echoes many farmers’
thoughts when he talks about how
relatively uncomplicated this year’s
harvest was compared to last year.
“Everyone knows what it’s been like
the last couple years. It didn’t matter
what kind of inputs you put down or the
technology you used — you could do
everything right — Mother Nature just
wouldn’t cooperate,” says the Columbia,
S.D., farmer. “This year the weather
cooperated at harvest and we were
out of the fields by the first week in
November. Last year we weren’t out
until December 22.”
Along with the cooperative weather,
Gilchrist says the updates made to
4.
the Grebner terminal as part of Wheat
Growers’ Connecting to Tomorrow facility
improvement project, made unloading a
breeze this year.
“Everything was a lot faster. The speed
of unloading and improved traffic flow
had us in and out of there in no time,”
Gilchrist says.
Gilchrist farms with his two older brothers,
Jan and Eldon, and his nephew, Grant.
He says cooperative membership is a
tradition for the men who have operated
Gilchrist Farms over the years.
“My grandfather and dad were members.
We buy most of our inputs from
Wheat Growers because of the local
convenience,” says Gilchrist, who was
happy to see the cooperative invest in
several facility upgrades as part of the
$94 million Connecting to Tomorrow
project. “I’m glad to see that they are
keeping up with the latest technology
and always improving the facilities. We’re
only here for a short time — the next
generation is following close behind us.”
Right on Schedule
Roger Hansen says that although harvest
2010 didn’t put the facility upgrades and
greenfield facilities to the test, it did provide Wheat Growers’ staff and members
with an opportunity to try out the efficient
upgrades which sped up unloading time,
increased dumping capacity, improved
traffic flow and increased overall receiving capacity by 25 percent; all the while
increasing member’s marketing access.
“We are meeting the project’s mission —
to provide faster dumping, improve
efficiencies and provide members with
better market access,” says Hansen,
adding that even the wet weather this
spring and summer didn’t stop progress.
witnessed the entire upgrade process
and the efficiencies that resulted from the
upgrades this harvest firsthand.
The Connecting to Tomorrow upgrades
also make it possible for the terminal to
accept two commodities at once.
Hansen expects construction of the
shuttle loaders to be complete at the
two greenfield facilities in Roscoe and
Andover in time for spring deliveries.
“We can dump a semi and have the grain
gone in less than two minutes,” Borg
says of the new 30,000 bushel per hour
conveyor. “It’s a grain eater.”
When Borg talks about the Connecting to
Tomorrow project, he reflects Gilchrist’s
enthusiasm for the future.
“Everyone worked so hard to have
the upgrades complete by harvest.
It was a big task. I’m impressed by the
efficiencies the Connecting to Tomorrow
project provided for member-owners this
harvest and will provide for many harvests
to come,” says the Vice President
of Business Development of the
future-focused project that began
November 2009.
Along with increasing receiving capacity
by 30,000 bushels, two 229,000 bushel
bins added 458,000 bushels to the
terminal’s storage capacity and a new
10,000 bushel per hour dryer increased
the terminal’s drying capacity to 17,000
bushels per hour.
Tim Borg agrees with Hansen. As the
Grebner Terminal Location Manager, Borg
“The upgrades not only increase
efficiencies for the terminal, but speed
up the service we offer to our members,”
Borg says.
“The project increases our terminal’s
overall efficiencies, getting the farmers
back in the fields quicker. This is a nice
convenience during a harvest when the
conditions are excellent, but it will prove
even more valuable during future harvests
when the conditions aren’t,” Borg says.
To learn more about Connecting
to Tomorrow contact Steve Briggs
at sbriggs@sdwg.com.
5.
WHEAT GROWERS
news
Tomorrow
is our reward for
working safely today
Hal Clemensen
Board President
I
hope your harvest experience this year was a lot like mine.
I’m not even referring to the bushels in the bin, although I’m
certainly grateful for a good harvest. Our farming operation
wound up a very busy, intense-as-usual, harvest safely, with no
accidents or injuries. And that prompted me to start thinking about
what we can all do to keep that record intact next year.
As farms get bigger, there are a lot of things that come into play
regarding safety. People are going over more acres; there has been
more push to get the crop out, especially over these last three
seasons. You’re often operating in the dark, working long hours with
machinery that has gotten bigger and more sophisticated. In a
normal, calmer time of year, you probably wouldn’t be pushing as
hard or putting as many hours in.
The roads leading to and from our farms and into town were another
challenge. There were a lot of semis moving grain all over Wheat
Growers country as well as farmers moving machinery from place
to place. The roads in many parts of our area are still pretty soft,
especially on the shoulders. It all adds up to higher risk factors
for us all.
take stock of our operation when it comes to safety and commit to
making things even better for the coming years.
The old attitude among many farmers was that just because
the elevator or cooperative has to follow these safety rules and
regulations, doesn’t mean I have to. But as our operations
continue to grow and bin sizes increase, they do become
commercial-size storage units. That will probably lead to more
regulations for our operation.
After I was done with harvest, I wrote down all the things that I can
see that need improvement while it was fresh in my mind. We need
more light at the grain bins, we need safety harnesses on our farm,
we should be using dust masks when we’re unloading, and not all
the ladders on our big bins have cages on them, so I’m checking
into putting cages around them.
Now that you’re done with harvest too, I hope you take the time
to sit down and write down the things you need to do to upgrade
the safety of your operation. We should be proactive and increase
our safety mindset. Remember, wishing won’t keep us safe —
safety will.
The growth of our farms and the need to cover more ground has
created higher pressure to get all the work done, and that can lead
to trouble. So in this calmer time after harvest, I hope all of us can
“ I hope all of us can take stock of our
operation when it comes to safety
and commit to making things even
better for the coming years.
“
6.
The Long View, Beyond the Combine Cab
F
rom the cab of the combine —
littered with empty pop cans, candy
wrappers and sandwich bags — one’s
view of strategic planning may simply be trying
to find a way to get one more truck unloaded
in the elevator or the bin before the end of the
day. It is so easy to focus on the tasks at hand
and overlook a long-range vision for a farm or
a company. The attention of Wheat Growers
has clearly been focused on building out our
Connecting to Tomorrow projects. But behind
the scenes, the board, the strategic planning
committee and leadership team continue to
look forward.
According to J.B. Penn, an economist with
John Deere, agricultural outputs this year will
total seven billion tons and will need to increase
by 50 percent by the year 2030, and double
by 2050. That is due to the rapidly expanding
populations of, and resulting exports to, the
Pacific Rim nations. Wheat Growers has taken
the first step by building out facilities that will
begin to meet this need for better handling of
increased corn and bean production from our
owners. We are uniquely poised to capture our
share of this growing market and continue to
explore and develop relationships with export
companies. Wheat Growers is making the
investment in planning and facilities for the
future success of our member-owners and
the company. What we are building today is
only a fraction of what will be needed for future
production growth and demand.
David Salmen
Wheat Growers Board Member
A Reminder About the Wheat Growers Deferred Payment Program
Producers who wish to take advantage of current high prices for
grain may want to defer cash payments into a later time frame.
or elect to defer for over one year and receive a very competitive
3.75 percent interest rate.
“One benefit of Wheat Growers’ financial strength is that our
deferred payment program allows you to be comfortable whether
you defer payment for a few months or for a longer-term period,”
Roger Krueger, Wheat Growers Vice President of Grain, said.
Krueger noted that, “These rates are approximately what our
borrowing costs are at the bank and we’d much rather pay our
patrons these competitive interest rates instead.”
Wheat Growers deferred payment program allows you to select
either short-term deferral at a current rate of 2.75 percent interest,
More information is available at any Wheat Growers location,
or www.sdwg.com.
7.
WHEAT GROWERS
news
“It’s been a
good run.”
Scott Hier Retires as
Vice President of Agronomy
P
eople and challenging work are what first captured
Scott Hier’s attention when he interned for Wheat Growers
as a college student. Thirty-six years later, he says it’s
still the people and what he does each day as Vice President of
Agronomy for Wheat Growers that motivate him.
“My first job was working for the local cooperative driving truck
and working in the grain elevator. I was 15,” he says, of the
job he attributes to sparking his interest in ag business and
working with customers. “Even back then I enjoyed interacting
with farmers.”
“No day is ever the same. Each season brings new challenges
and with those challenges, opportunities to anticipate producers
needs. Wheat Growers has always devoted the resources and
the right people to do what is necessary to meet our producers’
needs — that makes my work fun,” Hier says.
When a college internship in the Wheat Growers agronomy
department turned into a job offer, Hier never looked back.
He worked his way through the agronomy department beginning
as an Applicator, Truck Driver and Spray Operator; then serving
as an Agronomy Fieldman. Hier then managed the Bath Fertilizer
location for 14 years — overseeing a move and development
of a new facility. For the last 11 years, Hier has served as
the Vice President of Agronomy supervising a team of four
Product Managers.
When Hier retires this December to farm full-time, he says it’s the
people of Wheat Growers — the members and his team — that
he will miss the most.
A Lifetime of Cooperative Work
Growing up working on his family’s farm near McLaughlin, S.D.,
Hier says he always had a lot of respect for how cooperatives
work and benefit producers.
8.
No matter his role at Wheat Growers, Hier says each position
has been rewarding because of the people he worked with, the
customers and suppliers.
“I believe in getting the right people, letting them do their job and
providing guidance along the way.”
Welcome to Your
New Office Building!
Hier says, the right people, coupled with Wheat Growers’
dedication to making resources available to do what needs
to be done to best serve the members, makes for a
winning combination.
A Few Things Have Changed
In the mid 1980s, Hier took over his family’s farming operation,
which he managed with the help of this father and wife, driving
the long distance to do much of the work on an occasional day
off and on the weekends. As a Wheat Growers member himself,
he often relied on his experience in the fields and that of other
members, when he and his team decide whether or not to adopt
a new technology or sell a new product or service. He points to
Wheat Growers’ adaption of precision agriculture as an example.
On October 15, Wheat Growers got a new
address, as we moved into the new office building
“We began developing the program in the 90s, continually
devoting resources and capable staff to the focus. By the time
our producers were ready to embrace it, we could provide them
with everything they needed,” he says of the department that has
rapidly expanded since 2008.
at 908 Lamont Street South in Aberdeen. As
Richard notes in his column in this issue, Wheat
Growers staff is back together under one roof
for the first time in more than two years. We’re
enjoying the efficiencies and convenience that
Of all the technologies Hier has witnessed evolve over the
last 36 years, he says Roundup Ready technology and
no-till/minimum till practices have most impacted what
members plant and how they operate.
the move brings, as well as the state-of-the-art
“These technologies brought about a big change from small
grains to row crops for many of our growers. Production of corn
and soybeans has skyrocketed in what used to be big wheat
country,” Hier says. “Our name has been Wheat Growers for
87 years, and today the biggest crop we handle is corn.”
Now that we’re settled in, we would love to
connectivity that makes communicating with each
other, and you, even better.
have you stop by for a visit. Give us a call at
888-429-4902 if you’re planning on coming
to Aberdeen, or just drop by any time during
business hours.
As the countdown to his retirement begins, Hier
becomes sentimental.
Aberdeen
“It’s been a good run,” he says.
Then he laughs and adds,
“My former co-workers haven’t
seen the last of me. Now that
I’ll be a full-time farmer, I’ll be
calling to order inputs and
services — and I have everyone’s
cell number.”
6th Ave
Co Rd 14
390th Ave
previous
location
Lamont Street
VI C E P RE S I D ENT
OF AGRONOMY
8th Ave
Dakota St
Scott Hier
24th Ave
12
new
WHEAT GROWERS
9.
WHEAT GROWERS
news
The Road Ahead
I
n order to move forward, you have to make sure the
road you’re on is clear, and if need be, you build a new and
better road to take you farther. That’s been the philosophy
of Wheat Growers in several major areas this year including
Connecting to Tomorrow, the fertilizer storage expansion projects
at Oakes and McLaughlin, our safety initiatives and our new
office building.
Connecting to Tomorrow
One of the first posts on our Connecting to Tomorrow website
was in early April of this year, as work began at Hecla and
Highmore. Now work on those two projects and the other
existing sites have been completed as part of Phase 1. What
that means for this year’s harvest is that we handled a much
greater volume of grain in a shorter amount of time for our
customers. Equally important, it was a less stressful fall for our
employees. There has also been major progress on our two new
grain shuttle loading facilities at Andover and Roscoe.
A wet spring and early summer delayed work on the Andover
and Roscoe sites. Due to a lack of infrastructure as we began,
a road system had to be built before we could start building
the facilities. Those delays put the rest of the project behind as
well. But thanks to much drier weather in late summer and early
fall, I’m happy to tell you that the concrete construction at the
Andover site has been completed, and the Roscoe facility will be
completed the first half of December. We have been piling grain
at Andover and Roscoe until the flat storage spaces are finished
and with more cooperation from the weather, we hope to be fully
functional by mid-winter.
Fertilizer Storage Expansion
The Oakes and McLaughlin projects marked a significant
step forward in speed and efficiency for customers in these
markets. The Oakes expansion was finished in time for the
2010 spring season. The existing 15-hundred ton facility is now
a 19 -thousand ton plant, capable of bringing 12-hundred tons of
fertilizer per hour off rail. The two, new 16-ton blenders increased
blending capacity from 60 tons per hour to 350 tons per hour. It’s
a similar story in McLaughlin, where the expansion project began
in February of this year and is now completed. McLaughlin added
20-thousand tons of storage capacity, doubled its unloading
capacity and also doubled its blending capabilities to 200 tons
10.
per hour by adding a new 10-ton blender. Both facilities can now
meet growing customer demand as well as reduce the waiting
time to load out.
Safety Initiatives
Safety isn’t just a slogan; it’s a way of life. That has always been
the case with Wheat Growers, and it will continue to be into
the future. Our safety initiatives may make our jobs take a little
longer, but we’re willing to do things the right way, the safe way.
We’re not going to cut corners. We are going to continually
improve our performance in all key metrics regarding safety so
that we can provide the safest workplace possible for all of our
employees and our member-owners.
A New Office
For the first time in over two years, all our employees in
Aberdeen are working together under one roof. We have
moved from our four locations scattered around Aberdeen to
Wheat Growers’ new office building on October 15. This move
increases our functionality and enhances our productivity simply
by having everyone together. There are also some practical
savings that come into effect right away. For instance, the cost
of heat and rent for those four offices was far greater than the
cost of heating our new office. We hope you’re as proud of our
new office as we are, and we encourage you to stop in for a
tour any time you’re in Aberdeen.
Looking Forward
I want to echo Dale’s optimism for the coming year. Thanks to
the dry, mild fall weather, a lot of our farmers have been able
to till up their Prevent Plant acres in anticipation of putting them
back in production next spring. We’re looking forward to an
excellent spring and enhancing our Wheat Growers’ agronomy
performance, with the opportunity to deliver our full range of
services. If you haven’t already done so, please contact our
agronomy division and explore all options that are available.
Richard Bentley
C HIEF O P ERATIN G O FFI C ER
Today’s Focus
is Tomorrow’s Strength
Wheat Growers Annual Meetings – January 11 and 12, 2011
The Wheat Growers annual meetings: Today’s Focus is Tomorrow’s Strength, are just around the corner.
The January 11 meeting will be held in the Dakota Event Center in Aberdeen, and the January 12 meeting
will be held in the Huron Event Center. Here’s the schedule for both days:
8:30 a.m.
2:45 p.m.
Registration begins
Final round of breakout sessions:
9:30 a.m.
Washington Update — Chuck Connor, President and CEO of the
National Council of Farm Cooperatives
Welcome from Board of Directors Chairman Hal Clemensen
10:00 a.m.
First round of breakout sessions:
Washington Update — Chuck Connor, President and CEO of the
National Council of Farm Cooperatives
Market Outlook — Mike Kvistad, Director of Grain Marketing
Services, ADM Grain Group, Consultant for Marketing Partner
Advisory as well as the Owner/Operator of Prospect Farm
Farm Safety — Safety speakers will be Dr. Richard E. Nicolai,
Associate Professor of Agricultural and Biosystems Engineering,
at SDSU; Glenn Drees, Vice President of Schiff, Kreidler-Shell
and Chris Goulart, an RCI Consultant
12:30 p.m. Luncheon
Featuring award-winning speaker David Okerlund, who has
written three books. His fourth book, The 7 Traits of Dynamic
Leaders in Leadership Roles, is due to be published soon.
1:30 p.m.
Second round of breakout sessions:
Washington Update — Chuck Connor, President and CEO of the
National Council of Farm Cooperatives
Market Outlook — Mike Kvistad, Director of Grain Marketing
Services, ADM Grain Group, Consultant for Marketing Partner
Advisory as well as the Owner/Operator of Prospect Farm
Farm Safety — Safety speakers will be Dr. Richard E. Nicolai,
Associate Professor of Agricultural and Biosystems Engineering,
at SDSU; Glenn Drees, Vice President of Schiff, Kreidler-Shell
and Chris Goulart, an RCI Consultant
Market Outlook — Mike Kvistad, Director of Grain Marketing
Services, ADM Grain Group, Consultant for Marketing Partner
Advisory as well as the Owner/Operator of Prospect Farm
Farm Safety — Safety speakers will be Dr. Richard E. Nicolai,
Associate Professor of Agricultural and Biosystems Engineering,
at SDSU; Glenn Drees, Vice President of Schiff, Kreidler-Shell
and Chris Goulart, an RCI Consultant
4:00 p.m.
Business session begins
Financial report
Address from Board Chairman Hal Clemensen
Report from CEO Dale Locken
5:30 p.m.
Buffet dinner is served
Election Season Isn’t Over Yet!
Wheat Growers members have received their ballots for the
Delegate and Board of Directors election. All voting is done
by mail, with ballots due back to the Wheat Growers office in
Aberdeen by 5 p.m. on December 31.
Hal Clemensen, Chairman of the Wheat Growers Board of
Directors reminds all members that: “It’s your cooperative,
governed by Delegates and a Board of Directors that you
choose, so it’s important that you take part in these elections.”
The Delegates will meet to ratify the election and conduct current
business for the Wheat Growers cooperative and discuss the
company’s direction for the new year. The Delegate meeting is
January 5 in the boardroom of the new Wheat Growers office
building in Aberdeen.
11.
908 Lamont Street South
Aberdeen, SD 57401
FROM WHEAT GROWERS
We wish for you all a happy holiday season, with the greatest of blessings for you and your families,
and for a peace that surpasses all understanding.