Dec 21, 2020

Year-End Thoughts from Federated’s CEO

Last year, for 2019, the one word that came to mind was “Wow.” That was the result of the crazy weather we all endured during the year. For 2020, even though WOW would work again – or "Covid" would work – the words I would use to describe 2020 are "Stay Safe and Healthy." I know it has been hard on all of us as we try to keep ourselves, family, and friends safe and healthy. My hope is you have been successful with this challenge and you and your family and friends have not been impacted. I am proud of our team at Federated for how we have embraced all the protocols so we can get through this crazy chapter in all our lives and continue to service our patrons while staying safe and healthy. It feels like I have spent more time learning about CDC guidelines than about anything else this year.

For 2020, even though it has been very challenging for many of us on a personal front, I have heard some very positive news on the business front from this year’s harvest. I heard statements like, “Best yield I have seen in 10 years!” and “Best yield ever!” It is great to hear and to see some positives coming out of 2020. The other bright spot is the increase in crop prices. I have heard from many growers that with the combination of very solid yield and the commodity prices, 2020 will be a good year from a business standpoint. Unfortunately, Federated had to cancel the three events during the year when we can spend time together: the annual meeting, Discovery Plot days, and customer appreciation days. We did still plant the plots and our results are posted on our website. We also saw some very positive yields in our plots. I hope you can find some time to review the results, and if you have any questions our agronomy team is available to discuss.

Overall, the co-op is positioned to also have a very solid year in 2020. Our agronomy business will be solid, our energy business is in a good shape, even though we will sell less gallons in propane and fuel versus 2019. One driver of the shortfall in propane was dryer gas; the dry corn required less propane, which we are happy to see when it benefits the grower. Our retail business, primarily convenience stores (C-Stores), saw a decline in fuel sales and inside sales because of the falloff in traffic due to Covid19. Our Country Stores saw an increase in sales in power equipment, in fact we are now the 16th largest dealer of Cub Cadet in the country. We also saw an increase in animal feed as more folks purchased animals and spent more time at home with them. Our lumber yard in Pine City will also have a good year as more folks worked on home improvement projects and supported the local retailer. Our continued focus on getting smarter and identifying waste in the system continues to help us support your business.

As I have discussed many times, we are laser focused on cost, service, and growing our business. We will continue working very hard to earn your trust across all the co-op’s service areas. The more business we have, the more leverage we have with our suppliers. So, if we haven’t yet earned all your business and you need a bid on any parts of your business – from agronomy, to energy, to your retail needs on items such as power equipment, feed, or parts – we are here to serve. Our goal is to have more Power of One patrons.

One key area that requires help from all sides is planning. To effectively move forward, we need to know what your plans are so we can schedule the work. We had some key agronomy team members retire in 2020, who for decades added great value to the team. With the transition, we lost local knowledge about you and your land. It will take time to rebuild this knowledge so working together will be critical. Also, if you know any one looking for a career in agronomy, we have some great positions available – just visit our website.

We are investing in a new IT system that we believe will help us be better at planning so the partnership between the co-op and you, the patrons, will bring more focus. Our goal is to improve our efficiencies with your plans by combining with the plans of all our patrons. Our Agronomy sales team is ready to work hard to help you with planning as together we make 2021 a great year.

On behalf of your Board of Directors and the 290 employees at Federated Co-ops, thank you for your patronage.

Stay safe and healthy. 

Merry Christmas and Happy New Year!

Mike McMahon, CEO, Federated Co-ops

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