Economic strength:

With a committed board of directors and supportive membership, MFA moves forward

by Ernie Verslues for the May Today's Farmer magazine

First of all, thank you to all who attended MFA’s district meetings in March. District meetings are an important part of the governance of your cooperative. At the Sedalia meeting, your delegates elected a new board member. Davin Althoff of California, Mo., was elected to represent District 9.

He is replacing Harry Thompson of Lohman who has been a member of MFA’s corporate board since 2003. I want to sincerely thank Harry for all of his contributions to MFA’s successes over the years. He has been an important member of the board and an excellent advisor for MFA. His opinions have always been informed and important in service of MFA’s members and the cooperative’s direction.

Simultaneously, I want to welcome Davin to the board. I look forward to working closely with him as MFA moves forward. Davin farms with his family on a diversified row-crop and livestock operation. He’s also the chief financial officer and business director for the Missouri Beef Industry Council. He is a welcome addition to the board of your cooperative.

As reported at the district meetings, MFA is in good shape financially. Evidence of that is found in strong working capital ($85 million), record levels of net worth ($156 million) and strong earnings for the first five months of the fiscal year. MFA’s fiscal year begins Sept. 1.

The source of those earnings points to one of the strengths of MFA: its diversified operations. Wet and cold weather limited fall fieldwork, but the market showed very good cattle prices, which were further enhanced by lower feed costs. That, in turn, increased volumes at MFA and profit in feed, farm supply and animal health.

The trade territory saw the largest harvest on record last fall. MFA’s volumes and earnings were good. To prepare for the harvest, MFA made as much room for grain as possible. That meant, in some cases, temporary storage. At one point, the company had more than 10 million bushels of corn on the ground.

Additionally, MFA accelerated the pace of facility improvements at several locations last summer and fall. MFA loaded barges for the first time in 10 years—22 barges, in fact, and all beans. MFA will look for additional opportunities this spring, but water levels, of course, play a major role.

To move the tremendous harvest, MFA loaded every railcar to be found and fought for every truck. In all, approximately 150 loads per day were moving at the time of the district meetings. Last fall’s harvest exceeded that number.

I am optimistic about the rest of the fiscal year. MFA is sitting on record amounts of grain as are many of you. Still, there are areas of concern shared by all of us in agriculture. In terms of grain, lower values for the near term are caused by large U.S. and world supplies. The strengthening of the dollar may negatively impact exports.

In terms of interest rates, questions continue about when the move off record-low rates will occur and how quickly it will happen. No one can say for certain.

Another risk concerns regulation. EPA and OSHA continue to approach agriculture aggressively. MFA’s feed division has spent $1.5 million in the last year to upgrade facilities. MFA will be proactive in addressing many of the regulatory issues with the precision program, feed manufacturing changes and the new retail operating system. It is MFA’s intention to manage through regulations rather than letting regulations define the business.

You can expect MFA to continue to grow. The management team will look to increase market share in existing territory while simultaneously pursuing new markets through expansion. Growth is healthy. Growth is vital to the success of the company. MFA will look for opportunities that create value.

Acquisitions and expansion will be thoroughly evaluated and only pursued if they complement or supplement existing operations, meet targeted corporate financial returns and create value for the member/owner.

As evidence of that, MFA’s latest expansion is an increase in investment at Central Missouri AGRIService, LLC, in Marshall, Mo. The additional investment will finance a grain facility. It will consist of a 110-car rail loop loader and 1 million bushels of storage.

It is the first loop-loader facility in the MFA system. To be an effective part of the rail grain market, unit train levels are mandatory. The facility is expected to be operational for fall 2015.

Even though MFA has a plan to move forward and a track record that’s 100 years old and second to none, everyone at MFA knows we must continually earn your business. That can only be done with a first class workforce. We will continually strive to hire the best, train them and retain them. Thank you for your support and your business.


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