A Surprisingly Successful Year for Corn
Chalk up 2020 as a surprisingly successful year for Central Valley Ag (CVA), Nebraska’s largest farmer-owned cooperative. “Surprising” because for an anxiety-filled, three-month span last spring following the COVID-19 outbreak, travel slowed, fuel consumption plummeted and the ethanol industry experienced an abrupt slow-down.
Back in March, these developments did not bode well for CVA, whose primary market for corn is ethanol. In a normal month, the co-op ships some 6-8 million bushels to ethanol plants. As the impact of the pandemic spread, however, the market for ethanol began to soften. CVA leaders had to wrestle with a multitude of important business questions. Chief among them: how to find a home for all that corn?
“That was the biggest operational adjustment we had to make— we were holding on to a lot of grain because ethanol simply wasn’t running at the capacity it was before,” said Carl Dickinson, CVA president and CEO. “Fortunately, our organization had other market alternatives because of our shuttle train loaders, including poultry, livestock and export markets.”
Recalling the onset of COVID-19, Dickinson vividly remembers the whirlwind happenings of Saturday, March 7. In the morning, he first learned about an employee who had been exposed to the virus and needed to be quarantined. By 7 p.m., Dickinson had gathered his team on Zoom to discuss steps to move forward, keeping top-of-mind the health of their 900 full-time employees and 150 seasonal workers.
CoBank does it better than anyone because they're in it every day.That makes a huge difference.
– Carl Dickinson, President & CEO, Central Valley Ag
CVA leaders quickly locked down offices and restricted unnecessary travel; measures that, in hindsight, contributed to excellent results for the business. By focusing on delivering value to its members across 83 locations in Nebraska, Iowa and Kansas, CVA performed well in spite of the pandemic. Sales topped $1 billion, and the bottom-line of all four CVA divisions— agronomy, feed, grain and energy—performed well.
Fortunately, the ethanol market also gradually recovered during the year. “It took a little while for ethanol to come back, but once it did at mid-year, we actually saw dramatic improvement in our bottom-line performance,” Dickinson said.
CoBank has acted as lead lender for CVA and its predecessor companies for decades, arranging financing first in the tens of millions and more recently in the hundreds of millions as the company has grown.
Over the years, even when markets proved volatile as in 2020, CoBank and Tom Houser, lead relationship manager, have been trusted partners who can always be counted on to help CVA and see the bigger picture, Dickinson said.
“Trying to predict the financing needs of a co-op like ours isn’t always so easy,” he said. “CoBank does it better than anyone because they’re in it every day. That makes a huge difference.”