Locals gain by diversifying: from funeral homes to pizza parlors, Southwest co-ops find ways to boost earnings

Rural Cooperatives, Jan-Feb, 2002 by Lynette Cockerell

Editor's note: This article is reprinted from the Summer 2001 issue of Plains Cotton Cooperative Association's (PCCA) "Commentator" member magazine.

As the climate in the agribusiness world becomes exceedingly competitive, local cooperatives are discovering new and inventive ways to increase earnings, distribute larger dividends or provide additional services to their members.

In the Southwest, as elsewhere, the cooperative system and the thousands of dedicated people who work for it are driven by one central purpose: to help member-producers achieve long-term success. Part of this goal is achieved by providing not only greater profits and larger dividends, but offering quality products and services to cooperative members. As agriculture diversifies, the services and products offered by many local cooperatives will expand as well.

Following are some examples of Southwest cooperatives that have found ways to help their members succeed.

Convenience store yields profits for supply co-op

Crosby County Fuel Association (CCFA) has diversified from the farm business by opening two CENEX/AMPRIDE convenience stores. The stores, in Crosbyton and Ralls, Texas, are not only a convenience to local patrons, but they also allow CCFA to capitalize on the through-traffic of U.S. Highway 62/82.

The co-op's board of directors entered into the venture only after extensive research. The fuel association studied the feasibility of the project with the help of Country Energy LLC, a company formed by two of the United States' largest farmer-owned cooperatives: Cenex Harvest States (St. Paul, Minn.) and Farmland Industries Inc. (Kansas City, Mo.).

Country Energy offers a full-range of products and services to marketers considering a CENEX/AMPRIDE convenience store facility. The business provides assistance with site selection, building size and layout and helps define petroleum and in-store equipment needs. In addition, the company offers retail training that spans all facets of convenience-store operations. Country Energy also assisted CCFA in choosing an appropriate mix of products and services.

The stores opened in February and March of 2001, respectively, and carry a wide range of products. In addition to convenience items and fuel, the CENEX/AMPRIDE location in Crosbyton also contains a Noble Roman's Pizza Parlor and a Taco Bell. The Ralls location is home to a Pizza Hut and TCBY Yogurt.

"The fuel business is picking up as truckers and travelers hear about our stores, but the restaurants have been far more successful than the co-op had anticipated," says Monty Bevel, CCFA's general manager.

Despite extensive research by the co-op board and the advice of seasoned professionals, the stores were not ready for the influx of food orders they received in the first month of business.

"We made 350 pizzas a day at our Pizza Hut the first two weeks we were open, and lines extended out the door," David Henry, Ralls CENEX/AMPRIDE manager says. "In a town with few eating choices, we offer four fast food restaurants within eight miles of each other. However, we never anticipated that customers would come from as far as Spur, Dickens and Floydada," he adds. Bevel is pleased with the progress the stores have made in such a short time.

"We have a lot to learn about being in a non-ag business, but we are catching on fast," Bevel says. "We're really happy with our new operation, and we expect it to be profitable," he concludes.

Ten co-ops open fertilizer plant

In a joint venture with Farmland Industries, 10 High Plains cooperatives joined together to open a co-op fertilizer plant in 1997. Frontier Fertilizer and Chemical, with locations in Hurlwood, Texas and Seagraves, Texas, supplies liquid fertilizer blends and solutions to members as well as to independent dealers on the Texas High Plains and eastern New Mexico.

A management committee, comprised of representatives from the member cooperatives, operates Frontier Fertilizer. The members co-ops are quite diverse, including Lockney Co-op Gin, Crosby County Fuel Association, United Farm Industries in Plainview, and "Spade Co-op, among others.

The fertilizer plant specializes in custom fertilizer blends and management takes pride in prompt delivery and responsive customer service. Dry fertilizer, trace elements and potash also are available from the plant. According to Jay Garretson, Frontier's manager, product quality also is of the utmost importance to the co-op. Consequently, the business has never received a bad report from government fertilizer sample testing in its 5 years of operation.

"Our fertilizer blends are made to order and include the exact ingredients in the precise proportion the customer has requested," Garretson says. The plant has been a great asset to its member cooperatives and has saved them a considerable amount of money.

"We are able to buy ingredients in volume and pass the savings on to our customers," says Charlie McQuhae, Frontier chairman and manager of Lockney Co-op Gin. "Of course, we don't just service our members. Approximately 40 percent of our business is with independents," he explains.