From corporations to ag service providers to farmers, there is a wave of mergers and acquisitions in the agricultural industry. Business is getting bigger. And for those who serve farmers, one trend remains constant through organizational changes—service to the customer.
Providing outstanding service was the main priority for MaxYield Cooperative this past May when it acquired seven locations from The Andersons, says Chad Meyer, client relations and communications leader for the co-op. Three of the new locations had a direct overlap with the cooperative’s existing footprint in northwest Iowa; the other four expanded the co-op’s footprint for its core services: grain, seed, agronomy, energy and farm retail.
With the location overlap, farmers recognized right away that access to seven new facilities improved their grain-delivery efficiencies. “Bushels could be shifted to minimize lines, minimize wait, and keep grain from having to be stored on the ground,” Meyer explains.
Where The Story Begins. Meyer says this acquisition came from unrelated conversations over the previous year.
“Ultimately, The Andersons determined that they wished to sell those properties. And we had asked to be strongly considered should they consider selling those.”
Today, the genesis for these business activities is wide ranging. But typically, mergers and acquisitions have occurred in waves.
“I can remember 25 years ago, when cooperatives started to merge, there were 77 county co-ops in Indiana’s 92 counties. Today, there are 14 co-ops,” explains Harold Cooper, CEO of Premier Companies.
As of Aug. 31, 2016, Premier Companies merged with Jackson Jennings to form a $250 million company that stretches from Indianapolis to Louisville to Cincinnati. Its business mix is 50% energy, 30% crops, 10% feed and 10% retail/gas stations. Before the merger, the two cooperatives were within $4,000 of each other’s net worth and had the same member equity status.
Cooper worked for Jackson Jennings as his first job out of college, and after working for other ag retailers, he joined Premier Companies 15 years ago.
“This was the fourth time we formally tried to merge. The catalyst was changes in senior management, and that opened the opportunity to engage and talk about coming together,” Cooper says.
Culture Counts. Meyer, with MaxYield Cooperative, says it’s imperative to do due diligence and understand the other entity’s culture to unite together for employees and customer-facing activities. For their recent acquisition, the seven facilities were transitioning from being part of a publicly traded company to a member-owned cooperative.
“Understand the culture of the organization that you are acquiring or merging with. And have a pretty good idea of what you want that culture to look like once it’s been completed,” Meyer says.
MaxYield had a communications plan including a joint news release and joint letters to both clients and membership all sent when the agreement was reached on March 31. Then when the transaction closed on May 1, the company sent another news release and letters to customers as well as updates on their website and outreach via social media.
“There was a big value to our communications being ‘joint’ to explain the changes and why they were happening. Farmers could hear from leaders of both organizations. It shows why the decision to sell was beneficial for The Andersons, MaxYield and the client base in that area,” Meyer says.
The day of the announcement, each member of the MaxYield senior management team went to a different location and spent time talking more about the announcement.
“We wanted to equip team members to do their job through the transition. And if something does need clarification, team members should have someone to go to and ask the question,” Meyer says.
Lessons Learned. In the transition, successes and shortcomings will be revealed.
“It took us some time to address all of the naming and signage considerations of the new locations. We did get feedback from clients, and we learned something there. If the complaints are about signs, it probably means everything else is going well,” says MaxYield’s Meyer.
With their expanding business, Premier Companies didn’t advocate with members to approve the merger solely because of efficiencies it could gain. They focused on providing better services. Cooper gives the example of the credit department which expanded from a single-person department at the two cooperatives to a three-person department today. It has allowed the credit team to be more responsive in replying to farmers and also more aggressive in offers they can extend to farmers.
At the retail locations, new tools and products are available to farmers.
“We have more resources with precision ag through our TRAX crop-management system. We’re helping farmers with nutrient placement and plant health through GPS sampling—both soil and tissue, irrigation management satellite imagery and more,” says Eric Hoene, crop manager at Premier Ag Division in Cortland, Ind.
After having gone through the recent integration, there is something specific Cooper would do differently if he could.
“Our two companies had the same computer and accounting systems,” he says. “But in our transition, we decided to change all product codes, all customer numbers, email and phone systems the official day we merged. And it took us two to three weeks to get it all sorted back out and be able to email, call and bill as we should be able to. I joked at the time that if I wasn’t such a close friend of the CEO I’d have called for his head.”
More To Come. The trend of businesses changing and getting bigger appears to continue onto the horizon. Because it’s impacting all types of ag businesses, including farmers themselves, change may be better received than assumed.
“Most customers understood that if a cooperative business is going to remain a choice in the market, it has to be able to gain efficiency in size and compete against national companies,” Cooper says. “We have to be competitive or we ultimately die in small markets. Premier Companies needed to get bigger to remain relevant for our farmers.”