US: Two agriculture cooperatives, part of the CHS group, to merge

By Aerin Einstein-Curtis

- Last updated on GMT

Related tags Management

Two US agricultural and feed co-ops in Montana are merging to enhance operational efficiency and risk management.

The boards of CHS Kalispell and CHS Mountain West announced their consolidation plans last week. The plan still faces regulatory review.

CHS is a nationwide farmer-owned cooperative comprising about 1,100 cooperatives, 75,000 producers and 20,000 stockholders in the US. It works with animal feed, grains and foods; supplies energy, crop nutrients and grain marketing services; and offers insurance and financial and risk management. 

A Fortune 100 company, CHS had  a net income of $781m for the fiscal year ending August 31, 2015 and a net revenue for the same year of $34.6bn.

If approved, the goal is to function as one business by the start of September using the CHS Mountain West Co-op name, the companies said.  

The decision stemmed from long term planning considerations made by the producer boards of both entities, said Lisa Graham-Peterson, spokesperson for CHS.

“They’re both very close in trade territory in Montana,” ​she told us. “And it is not unusual for our businesses to look at the future and realize that by working together, they can either expand or enhance what they’re offering.”

Cattle in Montana outnumber the state's human residents, and there are about 27,500 farms and ranches in the state, said the US Department of Agriculture. The agricultural industry generated about $4.2bn, of which about $2bn was in livestock production in 2012.  

Consolidation details

Both co-ops are managed locally and initially their two producer boards will combine into one, said Graham-Peterson. “They’ll determine how to organize their board long term,” ​she added.

The new entity’s assistant general manager, Mark Lalum, has been drawn from Kalispell and the new general manager, Chuck Thompson, from Mountain West.

The decision is a recent one, and it is unclear at this time what changes it will bring to the types of animal feeds and commodity products that are offered, said Graham-Peterson.

“We’re in a commodity business,” ​she said. “They’ll continue to look at what they can offer to ranchers or farmers in the area.”

The benefits of the consolidation include improving efficiency and improving risk management of market positions, said Brien Weber, board chairman from CHS Mountain West Co-op.

Once combined, the new co-op will offer services and products for farmers, ranchers and customers in the area of Montana stretching from the Canadian border to Idaho.

The facilities covered in the move include feed and product stores in Drummond, Missoula, Alberton, and Kalispell along with a feed center and grain elevator.  

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