Post on 17-Jan-2016
In Business to Exceed Customer Expectations
About Us
West Central was incorporated in 1933 in Ralston, Iowa, which is still its headquarters
West Central is governed by 9 elected board members and 2 appointed associate board members
3,198 Class A Stockholders and 90 Class B Stockholders
Stockholders have invested $38 Million in the company
Ownership is determined by volume of business done
Stock is allocated yearly based on profitability
Annual Operations
West Central employs 228 people
Grain – markets 60 million bushels
Agronomy - Seed, fertilizer and chemicals sales: $18,089,718
Feed - processes over 128,000 tons
Soy Processing - processes 7.5 million bushels of soybeans and processes 65 million pounds of soy oil into methyl esters
Core Values
QUALITY
Providing superiorproducts and services
QUALITY
Providing superiorproducts and services
PROFESSIONALISM
Employees assisting customers
PROFESSIONALISM
Employees assisting customers
INNOVATIONResearch, new products,
new solutions
INNOVATIONResearch, new products,
new solutions
INTEGRITY
Honesty, trust, partnerships
INTEGRITY
Honesty, trust, partnerships
CUSTOMER CUSTOMER FOCUSFOCUS
CUSTOMER CUSTOMER FOCUSFOCUS
Sales History (millions)
$253.5
$219.0
$187.6
$169.9$163.7
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
2000 2001 2002 2003 2004
www.westcentral.coop
Sales
57%
7%
8%
28%
Grain
Soy Center
Feed
Agronomy
History of Cash Returned to Members
$914,128
$1,586,146
$1,237,668
$1,506,314
$1,810,101
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
2000 2001 2002 2003 2004
Board of Directors
Management Team
Most Traditional Cooperatives are built on a business model that evolved from 1890 to 1920
In that 30 year period 12,000 Farmer Owned Cooperatives were created
Karl Nolin
The Traditional Agriculture Cooperative is characterized by:
Growth Financed Growth Financed
by Earnings or Debtby Earnings or Debt
No Market No Market
for Equityfor Equity
Open MembershipOpen Membership
No Supply ControlNo Supply Control
The Essential Elements necessary for long-term viability:
Profitability is a Must
Membership Must Remain Interested
Investors Must Want to be Investors
Profitability
Liquidate “Legacy” Locations
Establish Return on Asset Benchmarks
Cooperative’s may be different from Investor Owned Firms
in having a lower ROA Requirement
Membership Must Remain Interested
The Owners are the Customers
Interest of Cooperative and
Customers Must Align
Function of Cooperative Must Be to Continually Re-align Goods & Services to
Match the Needs of Customers
Membership Must Remain Interested
Membership Must Remain Interested
Is this any different than any other Is this any different than any other form of business?form of business?
Farmer Cooperatives usually appeal to a smaller universe of customers
– its stockholders.
Membership Must Remain Interested
Investors want to be Investors
Cooperatives need a mechanism Cooperatives need a mechanism
to allow certain groups to allow certain groups
of investors to exit.of investors to exit.
Investors Exit Strategies
1.1. Aggressive Payout of EstatesAggressive Payout of Estates
2.2. Significant Classes of Equities have <10 Year PayoutSignificant Classes of Equities have <10 Year Payout
3.3. Base Capital PlansBase Capital Plans
4.4. Preferred Stock with Characteristics that Reflect Preferred Stock with Characteristics that Reflect LiquidityLiquidity
a)a) Payout by Age, i.e. 65Payout by Age, i.e. 65
b)b) Dividend – Voluntary OwnershipDividend – Voluntary Ownership
c)c) Non-qualified with Separate Payout ScheduleNon-qualified with Separate Payout Schedule
Public Policy
FASB 150
Dividend Allocation Rule
Limit of Return to Capital 8%
If Traditional Cooperatives are able to:
Remain Profitable
Align the interest of cooperative and membership
Maintain an Investors Group that wants to be Investors
Then . . .
I believe there is an
opportunity
for traditional cooperatives
to serve a membership base
for years to come.
Are there any questions?
Thank you!