Co-Alliance Says Its Big Year Pays Back to Farmers, Its Business

In 2023, Co-Alliance paid $45 million in patronage via 8,000+ checks to its eligible farmer-members, which is 51% of the co-op’s net income. The remaining profit is being invested into Co-Alliance assets and the area it serves in Indiana, Michigan and Ohio to allow the cooperative to be prepared to service the needs of today’s and tomorrow’s farmer owners. 

CEO Kevin Still says this is an unprecedented cash return, and its shows two things: the business had a great year in 2022, and also he’s working to focus on the future of the co-op. 

“We remember our co-op roots, while we operate as a business first,” Still says. “We have to make a profit, do capital projects, and maintain our facilities. That’s why we’ve grown in the past 15 years—we’ve stayed on the radar of the farmers and served them with size and scale.”

Today, Co-Alliance has four business units: energy, agronomy, grain, swine/animal nutrition. 

“We’re passionate about the four core business and the future of those. Our vision is to redefine excellence using a trusted team. We think we’re pretty good now, but we are going to have to continue to evolve to be an industry leader,” Still says. 

Still is applying a focus on the next three years because of how quickly the industry is changing. This is both in terms of the farmers the co-op is made up of as well as the retail business itself. 

One example is the forthcoming digital platform, Co-Alliance Connect. 

“We have to change the way we show up to customers, and we have to do business different and better,” he says. “This is a way we can communicate with the customer in the way they want to be communicated with.” 

A second example is embracing changes to the historic business models. 

“We have to be able to provide more valuable services,” Still says. “This could mean better prescriptions for agronomic applications because we can’t just sell commodities. It’s about knowing their fields better and being a trusted business partner.” 

One business providing inspiration and opportunity for diversification is the swine/animal nutrition division. 

“We know we have to help our farmers manage risk,” Still says. “We’ve done this with our farmers as we contract raise pigs. We pay them to own the building and space per pig–this gives them an automatic cash flow. If there’s a way to help a farmer manage risk, it’s something we will look at.” [read more about Co-Alliance and its hog business in the sidebar below]

As announced, the co-op is strategically investing in its infrastructure. For its agronomy business, Co-Alliance is building its fourth agronomy hub in Mount Summit, Indiana. Additionally, the co-op is updating six sites a year to provide farmers with automated liquid and chemical loadout 24/7. 

Other key issues Co-Alliance is watching: 

• Technology: “We want to be a leader piloting technology–autonomy equipment, drone sprayers, etc.,” Still says. 
• Labor: “No doubt, the pool is smaller today with 400,000 less people entering the workforce, The Great Resignation, and a wave of early retirements,” Still says. He says immigration is a key topic to address and adds, “We are passionate about the H2A program. If we get approved, we’ll bring over several international employees to supplement our employee base.”
• Input markets: “It’s an interesting phenomenon,” Still says. “We had a great fall. A lot of people put on fertilizer. 2023 will be one year that the spring price could be less than fall price. Usually, in a normal year, there’s a little escalation between fall and spring price—this year it may be the opposite. We do know that traditionally a great fall leads to a strong year for our farmers and team.  We look for that trend to continue this year.”
• New Products: Still says his agronomy teams are focused on where biologicals, specialty fertilizers, and micronutrients optimize yields, give Co-Alliance a unique position, and provide a strong ROI for farmers.  

Why Co-Alliance Is Investing in Pig Farming

Co-Alliance CEO Kevin Still says its swine/animal nutrition division is an area for growth not only in their co-op business but also for farmer members. 

The co-op assists Indiana farmers in contract raising hogs for a large pork production company. With the recent creation of Legacy Feed, Co-Alliance will now manage over 2.1 million pigs each year. 

To support its pig farming in the past seven years, Co-Alliance has invested in two feed mills in northern Indiana.  One feed mill is wholly owned by Co-Alliance in Reynolds, IN and the other is a partnership with Alliance Feed in Columbia City. Each has been a 300,000 ton pelleted facility with 1.5 million bushels of grain storage. 

A third feed mill will be completed in the next 18 months via Legacy Feed, a newly launched partnership with Signature Farms. Located in Millville, Indiana, this will expand the Co-Alliance pig farming footprint eastward. Its feed mill will follow the template of the other two facilities: 300,000 ton pelleted capacity and 1.5 million bu. of grain storage. At its opening, the feed mill will run at half of capacity, but Still expects it to quickly be at full capacity and serve contract pig farming demand new to the area. 

“As the population grows, we are excited to be a major protein production company,” Still says. “It’s a vital role we need to play as a co-op to support our producers.”
He adds how the swine business provides new revenue streams, stronger basis and diversification for the family-owned farms that are the foundation of Co-Alliance. 
“Co-Alliance knows that the pork industry is a major industry in Indiana and we are passionate about continuing to help our farmers feed the world.”

“We have watched the pork industry consolidate and vertically integrate at a high rate over the past couple decades.  Co-Alliance is committed to providing our farmer-owners an aligned opportunity in that integrated channel.  The risk of not being aligned with a processor is becoming too great for many family farms.”