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August 2010 e-Link

Message From the Manager

Director Election Process Underway

Hunters' Night Out Held at Truman Feed Mill

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Message From the Manager

August 17, 2010

Todd Ludwig, CEO

We continue to clean up and assess the damage to some of our facilities as a result of back-to-back storms that occurred on June 25 and 26. Although not as visible to the eye as some other locations, our Wells elevator received considerable damage from the wind twisting the frame of the wood structure on the west side. Engineers and our insurance company have been working hard to evaluate just how extensive the damage is and at this time it appears that the entire woodhouse on the west side is unusable.

We are currently in the process of making accommodation for harvest so that we will be able to receive and load out grain. A new leg has been put up and we have tapped into the reclaim conveyor on one of the new steel bins and plans are underway to tap into the reclaim conveyor on the other bin and flat. This will allow us to load semis.

A demolition crew takes down the wood structure at Hartland which sustained extensive damage from a storm on June 25.

We have already begun taking the headhouse down from the damaged structure and once that is complete we will begin fixing up the scale structure so that it can be used this fall. It will take some time to assess how we will replace this portion of the elevator long-term, but it is our hope to have a plan in place by the end of harvest.

The damage to our Hartland facility was also quite extensive with the storm taking off the entire headhouse on the wood structure. This damage, however, was easier to assess and we have already taken down that portion of the elevator and are now in the process of determining the integrity of the cement bins and legs. As in Wells, we are attempting to make some modifications so that the cement structure can be utilized this fall.

Although the loss of storage space in both Wells and Hartland appears to be troublesome, we feel we will have enough alternative space within WFS to be able to handle the grain that comes in this fall.

Waiting for year-end numbers
July 31 marked the end of fiscal year 2010 for WFS. Final inventories were taken on August 2 without any surprises and we are now in the process of finalizing our year-end numbers. All indications are that we will once again have a good year and we are eager to be able to communicate our financial results along with our patronage rates to our patrons. Although we will know our final numbers in just a few weeks, our auditing firm will not have the confirmed numbers until the end of September. At that time we will be able to announce our year-end results and anticipate announcing our patronage rates sometime later this fall.

Cooperative Council gets insight from board and management

Board chairman Ken Klug addresses members
of the Cooperative Council on July 28.

The WFS Cooperative Council met for the second time on July 28 at Hamilton Hall in Blue Earth. We began the meeting by giving an update on our progress with building a new grain facility. Questions that arose from this conversation included, where we planned on building, how much land was needed, would the cash bids be better, and has the storm damage changed our minds on how big to build a new facility? To answer these questions, we have not yet put an option on any land, but we do have a general idea of where the location will be. How much land is needed will really depend on what type of railroad track we put in, which has not been determined yet. Will the bid be better? We are in the process of finalizing a deal with the railroad that we feel will be beneficial to our farmers. Did the storm damage change our way of thinking? No, we feel our original plans can still accommodate both your needs and ours.

We then discussed upgrades that have taken place at St. James, Welcome, and what was planned for Wells before the storm damage. Most of the questions that occurred from this conversation centered on the storm damage and how we were going to accommodate harvest. As I stated earlier, we are making accommodations to both receive and load out grain at Wells. However, we will only be able to take corn up to 16% moisture due to our inability to utilize a dryer. Accommodations will also be made at Hartland.

We then reviewed the operations for the Clarks Grove LLC, the joint venture with Central Valley Cooperative. As I stated to the group, things continue to go very smooth.

We also discussed the 199 tax deduction, the RFD program, and our financial highlights with minimal questions before touching on the topic of future growth. This brought up the subject of rumors. Someone asked if it was true that WFS and Central Valley Cooperative were going to merge their feed divisions. It is true that WFS and CVC explored the possibility of merging our feed divisions, but after extensive discussions, we decided it wasn’t the right time to pursue that opportunity.

An open forum was then provided to the group with questions ranging from the volatile markets to the WFS website. Once again, those that were able to attend appreciated the opportunity to hear what was happening in their cooperative. They also appreciated the opportunity to have some input into the decisions that are being made. If you would like this opportunity as well, I would encourage you to take part when this group meets again in December.

Aphids are back
Those nasty little aphids are back again and our agronomy department has been busy helping you determine how and when you should take defense. Although we have been doing some ground spraying, we are very reluctant. With the height of the soybean plants, we have been recommending that you utilize aerial spraying so that the plants are not damaged from the sprayers. If you are questioning whether or not spraying is necessary, you may want to discuss this with your field marketer to determine your best option. However, in previous years we have seen more than enough yield response to justify spraying.

Volatility encourages pre-planning
Markets continue to be volatile with a rally in grain and a spike in nitrogen products. We obviously can’t predict where it’s going, but I’d like to encourage you to think about locking in at least a portion of your grain and your crop input costs if you can reach a margin you’re comfortable with. By locking in both, you’re able to know exactly what your profit potential will be. Our GPPS and field marketing staff can help analyze this with you. I encourage you to give them a call.