Indiana ag co-ops begin due diligence effort
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A pair of Indiana-based agricultural cooperatives are furthering their existing relationship by engaging in a comprehensive due diligence process.
Indianapolis-based Co-Alliance Cooperative Inc. and Ceres Solutions Cooperative Inc. in Crawfordsville say the initiative will explore opportunities for strengthening their alliance “and most importantly enhance the benefits offered to their farmer members.”
The co-ops say the examination of each other’s financial, operational and organizational aspects is expected to take about three months to complete.
Amy Kinsler, vice president of sales marketing for Co-Alliance, said the effort could highlight potential opportunities for both organizations.
“This is a great chance for us to evaluate all of those and look if there are any potential synergies where we can perform at a higher level for those farmer owners,” Kinsler said. “So really, this due diligence announcement is us sharing our intent with our teams, with our stakeholders, with our farmer owners, so they know those conversations are ongoing, but not really knowing today where those might take us.”
Co-Alliance and Ceres have previously partnered on a joint venture, Endeavor Ag & Energy, that was formed to acquire an agricultural retail business in Michigan, focusing on agronomy, propane and feed.
“We’ve successfully been able to operate a business together,” Drew Garretson, chief marketing officer for Ceres, told IIB. “That, I think, has led to some, some good business partnership, and I think that makes us feel more comfortable about exploring what this due diligence process might look like.”
The due diligence team is comprised of six individuals representing both co-ops. Kinsler said it’s unclear what will follow once the three-month process is complete.
“We know the cost of doing business as a cooperative is continuing to increase; as our farmer owners continue to increase their size, as their business becomes more complex, so does the cooperatives’ business,” she said. “[The result] could be something really, really fairly small that we just haven’t had an open dialogue around, or it could be a larger opportunity. At this point, we really don’t have a defined direction yet.”
The co-ops said in a news release the strategic options that could come from the effort may include expanded services, improved operational efficiencies, and increased member benefits, though specifidcs were not provided.
“We believe that this collaborative effort will lead to mutual benefits for both cooperatives and their members,” Ceres Solutions Board Chairman Rick Brubaker said in written remarks. “We are excited about the potential for growth and innovation that can emerge from this process.”
Kinsler and Garretson said the due diligence process is one that was pushed for by the co-op’s respective farmer owners, and there has been mostly positive response.
“The cooperative business has been built and sustained with the mindset of servicing our farmers and making sure that we’re providing them a sustainable cooperative into the future,” Kinsler said. “So this due diligence is something that we owe to our members, we owe to to our internal teams to make sure that we’re looking at all ways that we can be the most efficient cooperative servicing our farmers.”
Both co-ops say members can expect regular updates on the due diligence effort.
Co-Alliance serves farmer members and customers in Indiana, Ohio and Michigan with a specialization in agronomy, propane, fuels, grain, seed, hog production and feed.
Ceres Solutions serves customers across 37 counties in Indiana and Michigan with a line of n. The business strives to build long-term relationships and add value through a comprehensive line of energy, agronomy, seed and feed products and services.