Growth, Expansion, Diversification
America’s grain farmers consistently produce higher per-acre yields year after year, which is great news for feeding the world but presents an ongoing challenge to NEW Cooperative, whose job is to collect, process and sell all the grain its member-owners deliver.
“Our members, farming their current acreage, produce three million more bushels of grain every year, which means we have to continually expand our storage and processing capacity just to keep up,” said Dan Dix, NEW Cooperative’s general manager. “At the same time, we’re continually looking for opportunities to replace or enhance revenue that’s being lost through increased margin pressures across the industry.”
Now one of the largest local cooperatives in the country, NEW Cooperative started in Iowa’s Northeast Webster County, which provides the acronym for the cooperative’s name, in 1973. Since then, the grain, feed, agronomy and fuel cooperative has pursued an aggressive growth strategy that’s seen annual sales grow from $700 million to $1.5 billion over just the past ten years.
Growth has come both organically and through acquisitions. At times, NEW Cooperative has purchased and improved existing grain facilities; in three other instances, it’s built new processing plants in underserved locations, with financing provided by CoBank, its long-time financial partner. The co-op has also entered into joint ventures with private companies to expand its footprint and has undergone three significant mergers in recent years. In 2021, it acquired neighboring MaxYield Cooperative with a CoBank-led term loan syndicated to six Farm Credit organizations.
“CoBank understands the seasonality and volatility of our business, and has the capacity and willingness to step up when the market doubles our borrowing needs overnight, or when we undertake a significant project like this latest acquisition,” said Dix. “There’s a reason CoBank is the only lender NEW Cooperative has ever known.”
A relatively straightforward transaction was complicated by a ransomware attack that froze operations just as harvest season arrived. Working without access to typical reporting systems, the cooperative reverted to paper and pencil and never missed a beat.
“This kind of attack makes everything else look simple,” said Dix.
Not limiting itself to growth through expansion, NEW Cooperative has also diversified, over time adding feed, agronomy and fuel to the original grain storage and marketing functions. It’s designed and licensed an agronomic operation and record-keeping software used to manage 12 million acres of Midwest farms. In 2021, it brought online a new barge loading facility on the Missouri River that opens new markets for the cooperative’s grain and provides a new channel for delivery of crop nutrients. The port is of growing interest to regional commodity groups who are willing to pay for the privilege of such convenient access to the nation’s waterways, adding yet another new income stream to NEW Cooperative’s portfolio.