Co-Alliance partners on pork, shares profits
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Indianapolis-based agriculture and energy cooperative Co-Alliance Cooperative Inc. and Signature Farms LP, a swine management company based in the Rush County town of Milroy, have announced a partnership that they say will support grain and pork producers in eastern Indiana. They created Legacy Feed LLC, an integrated company that will produce feed and manage swine farms. “This new business will allow Co-Alliance to provide a more diversified offering in our eastern geography. I anticipate this strong combination will provide synergies and help us create more value in the swine production space,” said Kevin Still, President and CEO of Co-Alliance Cooperative.
In an interview with Inside INdiana Business, Still said the partnership tops off a banner year for the ag co-op.
“The beauty about Co-Alliance, what we like to say our profits go back to Main Street, they don’t go back to Wall Street. And so, we’re able to capitalize on our profits,” said Still.
Legacy Feed intends to build a state-of-the-art feed mill in Henry County that will have 1.5 million bushels of grain storage and the capacity to produce 300,000 tons of pelleted hog feed annually. Plans call for the mill to be constructed next to an existing grain elevator that also stores 1.5 million bushels. Eventually, the two operations could account for 6 million bushels of grain, and a new opportunity for area farmers to sell their grain.
“It’s going to increase their basis. We’re currently probably pulling about a million and a half bushels out a year of corn out of the area. We start talking 6 million bushels, we become a major player there to buy their bushels. It’s a great opportunity for our farmers,” said Still.
Both Co-Alliance and Signature Farms currently raise pigs for Tyson Foods. Signature will manage of swine operations for both entities, under Co-Alliance supervision.
“Combining Signature Farms’ strong legacy of swine management services with Co-Alliance’s proven success record in swine feed manufacturing will allow our teams to provide a leading swine production company in which our customers and employees thrive and provide opportunity for growth,” said Eric Freeman, operations manager of Signature Farms.
Construction will take about 18 months with operations of the feed mill getting started in 2024.
Meanwhile, Co-Alliance is distributing patronage refund checks to its owner-members, totaling over $45 million. Still explains patronage payments are like a rebate on a credit card. The co-op says the amount paid back to each member is based on the volume of business they completed with the cooperative in the fiscal year, which ends on August 31. That business could include fuel, farm chemicals, and seed, among other inputs.
The organization calls this year’s refund program unprecedented.
“It was a great year. We had record earnings. Quite honestly, people that were in the ag industry this past year had good results, had good income, as did we,” said Still.
Co-Alliance says approximately 5.5% of the members’ business is being paid back this year. The organization says 51% of its net income will be paid back in patronage this month. The remaining profit will be reinvested into the business.
“We’re able to capitalize on our profits. We’re going to retain what we need in our business to continue our growth and maintain the kind of equipment facilities we need. Whatever we don’t need, we’re going to return to our farmer owners,” said Still.
The co-op has 8,000 farmer-members stretching from central Indiana into Michigan and western Ohio. Still says as the organization works through the operations of the new joint business and construction of the feed mill, he says Co-Alliance continues to look at other businesses for potential growth and to help spread the financial risk among an even more diverse portfolio.
“We’re a growth company. But we don’t grow just for the sake of growth. It has to be right for our company, right for our shareholders, right for our employees,” said Still. “But we need to grow because we’ve got to stay on the radar of our farmer owners as they get bigger. We need to stay on the radar for our vendors. And again, stay on the radar for our employees.”