Archive for Friday, April 6, 2001

Bankrupt co-op prepares for spring season

April 6, 2001

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April normally is a time for guarded optimism at the Kalb family farm near Baldwin.

It's time to start planting the fall crops starting with corn, then followed closely by soybeans and milo. Questions about soil moisture, warm temperatures and fertilizer levels abound as winter melts into spring.

The Farmers Cooperative Assn.'s Midland Elevator north of Lawrence
is included in a possible purchase deal. FCA, the state's largest
agricultural cooperative, has been mired in uncertainty since
September, when it filed for bankruptcy protection.

The Farmers Cooperative Assn.'s Midland Elevator north of Lawrence is included in a possible purchase deal. FCA, the state's largest agricultural cooperative, has been mired in uncertainty since September, when it filed for bankruptcy protection.

But these days another uncertainty has been added to Kermit Kalb's farming thoughts: The fate of Farmers Cooperative Assn.

FCA, the state's largest agricultural cooperative, has been mired in uncertainty since September, when it filed for bankruptcy protection under pressure from creditors.

Now the 3,700 farmers who own FCA are wondering what will become of their source for selling grain, buying farm supplies and contracting for agricultural services.

"We need a place to do business," said Kalb, who is chairman of the co-op's board of directors. "We need to get this whole situation resolved."

Last month, FCA leaders thought they had a solution.

AGP Grain Cooperative, a subsidiary of Omaha, Neb.-based Ag Processing Inc., had indicated that it was willing to pay FCA nearly $12 million for the bulk of its assets including grain elevators, fertilizer plants and piles of inventory, ranging from grain to petroleum.

The deal was intended to keep FCA's expansive network of locations spanning much of northeast Kansas and northwest Missouri intact, and be ready for service during the spring planting season for fall crops.

But the deal sat on the table. A bankruptcy judge postponed acting on the deal until he could be sure that a fair bidding procedure was in place for all of FCA's assets.


Last month four other agricultural operations were said to be interested in making possible bids for portions of FCA's assets: Archer-Daniels-Midland Co., Bunge Corp., DeBruce Grain and Midwest Fertilizer Co.

Another season

The delay of the sale convinced FCA officials to prepare for another season, only this time with a reduced staff. FCA's work force has dropped to about 50 employees, down from 140 before the bankruptcy filing.

Don Dumler, FCA's president and chief executive officer, said he was confident that the co-op could meet the needs of its owners for another season.

"They can't all abandon us and go to Ottawa or St. Mary's or Tarwater, because they've only got so much equipment," Dumler said. "We know we are going to have to operate this thing, and we think we have enough people left in the key areas to supply and furnish product. On a cash basis we have enough inventory or access to enough inventory to get the spring needs satisfied."

The collapse of the nearly 50-year-old co-op adds yet another wrinkle to a changing agricultural landscape.

Business continues at Farmers Cooperative Assn.'s south elevator in
Lawrence as the spring season looms.

Business continues at Farmers Cooperative Assn.'s south elevator in Lawrence as the spring season looms.

The elevator in Lancaster, for example, was acquired by FCA in 1995. That made FCA owners of Ron and Mary Lou Bowen, who own and operate Bittersweet Farms near Holton.

The Bowens have been doing business with the Lancaster elevator for 30 years. Now they are preparing to roll once again with a change in ownership.

"It's all kind of sad," said Mary Lou Bowen, who described the bankruptcy filing as an unwelcome "shock" that hit during the fall harvest. "I'm old enough that I've seen a lot of the rural services swallowed up by the urban. But most things don't remain the same. You just have to keep moving forward."

Preparing for payoff

FCA officials say they are confident that selling the co-op's assets will raise enough money to pay off the co-op's debts.

In its court filings, FCA listed debts of $19.7 million against assets of $25.3 million. CoBank says it is owed $10.6 million, making it the largest creditor.

Richard Postma, right, 1012 N. 600 Road in Baldwin, listens to
bankruptcy attorneys talk about the status of the Farmers
Cooperative Assn. at a January meeting.

Richard Postma, right, 1012 N. 600 Road in Baldwin, listens to bankruptcy attorneys talk about the status of the Farmers Cooperative Assn. at a January meeting.

The offer from AGP Grain Processing, which had been contingent upon approval from AGP's board of directors, would have included most of FCA's assets, but not all of them.

Expected to be sold for development purposes are two Lawrence properties: FCA's headquarters, known as the south elevator, at 2121 Moodie Road; and the Ampride convenience store, 1000 E. 23rd St.

A farm store in Gardner also is anticipated to be sold for future development.

None of the three properties, as a group, are likely to remain viable for agricultural uses, said John Cruciani, an FCA attorney.

The Ampride store, for example, sits at the busy corner of 23rd Street and Haskell Avenue, and no longer includes a tire shop available for fixing flats on farm equipment.

"It has a higher and best value as a development property," Cruciani said.

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