What happens when something grows? It changes, doesn’t it? A wheat seed looks different after being in the ground for a month and livestock will someday reach an age of weaning.
“If our co-op was going to survive in today’s world, it was going to have to grow,” said Tom Hauschel, Heartland Co-op CEO. “We realized change was necessary for us to compete in the increasingly challenging marketplace.”
Since the early days of the 1900's, Central Iowa farmers knew they needed a place to market their grain for a fair price. Now, over 100 years later, Heartland Co-op has evolved into the cooperative it is today with 63 locations with operations in grain handling and marketing, fertilizer and application, agriculture chemicals and application, livestock feed and processing, agriculture energy products and propane.
At each benchmark during the past 100 years, Heartland looked at the future needs of its members and chose growth over stagnation. The old, original elevators served the needs of those turn-of-the-century farmers who unified in order to put some clout in their grain marketing. “We're still doing everything we can to give Heartland-area farmers a voice in the future of agriculture amongst the growth that was attributed to our success,” Hauschel said.
Heartland believes in differentiating themselves from the competition by providing unique, value-added and innovative solutions to customers. Currently they serve more than 5,300 members and conduct business with them and others in one of the 63 communities across the state of Iowa.
The "original" Heartland Co-op was formed in 1987 with a merger of three cooperatives with facilities in Panora, Dallas Center, Minburn and Granger.
The Heartland Co-op that exists today was formed in 1993 with a merger of the "original" Heartland Co-op, Alleman Cooperative Company, Mitchellville Cooperative, and the facilities previously owned by Avon Grain Company at Carlisle and at East 18th Street in Des Moines. According to Hauschel, 17 mergers and acquisitions have occurred since 1993 creating the nationally recognized cooperative they are today.
A merger in 2007 truly changed the dynamics and earnings of the cooperative. “It gave us much better market arbitrage, asset utilization, access to capital, purchasing power, operating efficiency and much more,” Hauschel said. “All of those elements coming together improved cash flows and allowed Heartland Co-op to make meaningful improvements to serve the members.”
In addition to increased earnings, Hauschel said mergers have allowed their cooperative to attract and retain top-end talent. The ability to draw the attention of very talented people is a tremendous advantage. People will make a significant difference in returns to members while allowing the cooperative to be competitive in the market place, he said.
For Heartland members, growth has created a more viable, sustainable cooperative system. In addition, Hauschel believes it gives them better purchasing power and the ability to make meaningful improvements at their locations for better member services including speed, space and equipment. “We spend more money at an individual location than the prior cooperative had for a capital budget 10 years ago,” Hauschel added.
The geographic diversity has benefited Heartland as well. “You aren’t so reliant on one location,” Hauschel said. The western region of Heartland had record yields this past year while the northern footprint had one of the worst years in history. “Not having all the eggs in one geographic basket spreads out the cooperative’s risk,” he said.
Many of the earlier mergers were economically driven for Heartland Co-op. Hauschel added the board then witnessed and saw the difference in customer service, earnings and the difference in the talents they hired. “They continued to see all of the things we were missing before because we were too small or didn’t have the capital to be a competitive partner to our members”, Hauschel said.
According to Hauschel, a fear regarding growth of Heartland members has been there will be no competition. But in today’s market place, he said there is no lack of competition. “The bigger fear would be not having a viable cooperative system for the future,” he said.
While growth and change have been two constants for many other cooperatives across the country, mergers, consolidations and acquisitions have not been a strange occurrence for cooperatives throughout Nebraska and Iowa. In 1994, Iowa had 256 cooperatives. Today, they have 59 cooperatives. There are 55 agricultural cooperatives across Nebraska today.
Hauschel said there have been many changes as they reflect upon the past of Heartland Co-op. “We expect the trend of growth to continue, but growing with a purpose is more important than ever.”
Editors note: MKC was formed in 1965 through a merger with of three neighboring cooperatives in Moundridge, Buhler, and Groveland. Just like Heartland Co-op, MKC has grown in size and territory through mergers and acquisitions since it founding. Most recently in a special meeting on Thursday, March 6, the membership of Farmers Cooperative Association approved a merger with MKC in an overwhelming 91% vote of approval. The merger will take effect June 1, 2014.