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Agrimarketing : October 2008
SUCCESSFUL AGRI-MARKETING NEBRASKA’S AURORA CO-OP CELEBRATES 100 YEARS OF PROGRESS by Brett Faber, Director of Communications, Aurora Co-op Editor’s note:Anniversaries abound in the ag industry.Here is an in-depth look at the inner workings of one of the nation’s most successful co-ops. I t all began when 25 individuals wanted to change the price they were paid for grain. It didn’t seem right to them that prices at the termi- nal market were considerably better than the prices paid to local farmers. This group of 25 knew that if they wanted to change the price they received for grain, they would have to change how it was marketed. The best way to do that: form a cooperative. That is exactly what they did. On February 15, 1908, the Aurora Elevator Company, known today as the Aurora Cooperative Elevator Company, was incorporated in the east central Nebraska town of Aurora. “Cooperatives were following a new set of ideals in the early 1900s and were rising in popularity,” said George Hohwieler, Aurora Cooper- ative’s current President/CEO. “That by no means ensured success. The cooperative’s pioneers worked tirelessly and recognized that they would have to continuously adapt if they were to succeed into the future.” Within weeks of forming, the com- pany had raised $9,800 and in August 1908, a 31,000-bushel, wood-cribbed elevator had changed the Aurora sky- line. By the end of that first year, the company handled 128,721 bushels of grain — much of which was wheat. Accounts receivable stood at $3. It was a good first year. GROWTH SPURT “That early success brought farmers from a nearby community who wanted to join, giving the company two locations by 1910,” Hohwieler said. “The next growth outside these communities didn’t occur until 1969. Then in the 1980s, mergers and acquisitions came more frequently, 56 AgriMarketing ¦ October 2008 and as we celebrate our 100th anniversary this year, we serve members and patrons in 43 locations across Nebraska and into Kansas.” In its 100th annual report, the company reported record 2007 sales and income of $475.0 million and total net earnings of $23.5 million. It also approved $12.0 million in patronage refunds, with $5.6 million of that being in cash payments to members, the largest in the his- tory of the cooperative. Grain storage capacity stood at 38.2 million bushels and the com- pany employed 460 people. “We had a good year in 2007,” Hohwieler said, “but that was possible because of the hard questions the company’s management and board asked themselves over the past 100 years.” Are we making the right decisions in grain marketing? Should we expand our market- ing area? Can we better lever- age our purchasing power to give members an edge on fertilizer prices? Are we taking advantage of new knowledge to provide the best possible feed rations? Do we need to broaden our reach to continue our success in supporting the biofuels sector? Are we nimble enough? BEING NIMBLE That last question — on being nim- ble — is one Hohwieler views as crit- ical. Without the ability to move for- ward or quickly change direction, opportunities can be wasted. He explained that to be success- ful a cooperative must be able and willing to change as quickly as possi- ble, with an eye on helping members succeed. In return, members will be supportive and loyal. “Aurora Coop- erative continuously faces challenges — and we’ve been fortunate over time to see those as opportunities, Aurora Co-op President/CEO George Hohwieler (L) and Chairman of the Board of Directors Bill Schuster. respond with a solid plan and then have the courage to act and follow through,” he said. That was the cooperative’s approach through the turbulent 1930s, the expansion of grain storage during the ’50s, the decision to enter the petroleum business in the late ’60s and the mergers and acquisi- tions in the ’80s and ’90s. More recently, the Aurora Coop- erative saw the quickening pace of changes in agriculture and began to examine what it needed to do to ensure success in the future. For example, the expanding biofuels sec- tor was changing where the corn crop went and when. Larger corn crops were coming — and with them the need for more efficient methods of handling grain. Demand for com- petitively priced crop inputs was increasing. Storage space for grain was tight.
November December 2008