GROWMARK and CHS Announce – Cooperative Ventures

Aerial view of a tractor plowing a field with Ag Tech/Cooperative Ventures icons overlaid.

A New Capital Fund Aimed at Ag Tech Startups

GROWMARK and CHS today announced the formation of Cooperative Ventures, a new capital fund that will focus on creating advancements in breakthrough technologies for the agriculture industry. The fund will provide differentiated value to startups in the agricultural ecosystem by leveraging the expansive, connected networks, unparalleled access to the farmgate and proven success of the two agricultural cooperatives. Both companies will be equal partners in the $50 million fund, which will be established as its own separate legal entity.

The combined markets of the two companies cover millions of acres and thousands of farmers that will create an industry-leading test field for products and services within North America. The fund has identified three core investment areas, or “Fields of Play,” to maximize the impact of each investment:  crop production, supply chain, and sustainability.

“This is a terrific opportunity to act cooperatively by working together on a venture meaningful to agriculture and our corresponding supply chains,” said GROWMARK CEO Jim Spradlin. “Both GROWMARK and CHS have trusted relationships and expertise within our networks, which will provide tremendous value for technology startups and ultimately benefit our respective customers. This is a natural evolution of GROWMARK’s AgValidity trial and testing program.”

“This partnership will help accelerate technology solutions to existing and emerging challenges in agriculture and is yet another way CHS creates connections to empower agriculture,” said Jay Debertin, president and CEO of CHS Inc. “Our ongoing commitment to investment in growth and innovation for the benefit of CHS owners and the cooperative system further places CHS and GROWMARK at the forefront of cutting-edge technology solutions by leveraging our deep expertise and strong connections with farmer-owners.” 

GROWMARK and CHS will provide tech startups unprecedented access to robust distribution capabilities within multiple value chains, allowing for opportunities to test and refine at different scales. Having cooperative member-owners and customers within the same ecosystem will take these innovative ideas to a new level to create shareholder value and customer-focused solutions.

Special attention will be paid to the startup’s strategic fit with both GROWMARK and CHS. Other factors will be based on their drive to lead in the startup space, the ability to deliver value and quality, the experience of management, and ultimately the ability to take a product or service to market. Cooperative Ventures will be comprised of teams based out of Bloomington, Illinois, and St. Paul, Minnesota.

 About GROWMARK:

GROWMARK is an agricultural cooperative serving almost 400,000 customers across North America, providing agronomy, energy, facility engineering and construction, and logistics products and services, as well as grain marketing and risk management services. Headquartered in Bloomington, Illinois, GROWMARK owns the FS trademark, which is used by its member cooperatives. GROWMARK also owns and operates SEEDWAY, the largest full-line seed company in the United States. More information is available at growmark.com.

CHS reports fiscal year 2021 net income of $554.0 million

arvesting soybeans

31% increase in net income over prior fiscal year; Strong global demand for grains and oilseeds drive results

CHS Inc. reported net income of $554.0 million for the fiscal year ended Aug. 31, 2021, reflecting an increase of 31% or $131.5 million compared to fiscal year 2020.

Key financial drivers for fiscal year 2021 include:

  • Consolidated revenues of $38.4 billion for fiscal year 2021 compared to $28.4 billion for fiscal year 2020, a year-over-year increase of 35%. 
  • Significantly improved earnings across our Ag segment compared to the prior year driven by strong global demand for grains and oilseeds which drove commodity prices higher and a full year of improved trade relations between the United States and foreign trade partners. 
  • Equity earnings from investments, particularly from CF Nitrogen and Ventura Foods, were a significant source of earnings during fiscal year 2021.
  • While improved refining margins in our refined fuels business resulted in increased margins as demand shocks from the COVID-19 pandemic began to subside, the resulting margin improvements were more than offset by exceptionally high costs for renewable energy credits and less favorable pricing on heavy Canadian crude oil processed by our refineries, resulting in lower earnings.
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Co-op 101: What is a cooperative?

National Co-op Month graphic

October is National Co-op Month and a time to celebrate the cooperative model and the strength it brings to local communities.  

“CHS is proud to be part of the cooperative system and we’re driven by our purpose to create connections to empower agriculture,” says Jay Debertin, CHS president and CEO. “Our values of inclusion, integrity, cooperative spirit and safety guide us as we work together for shared success and to strengthen our communities.” 

Do you know what a co-op is? Here we break it down.  

  • What is a cooperative? A cooperative is defined by USDA as a user-owned and controlled business from which benefits are derived and distributed equitably on the basis of use or as a business owned and controlled by the people who use its services.  
  • Who determines policy? The CHS Board is made up of 17 member-owners, elected by the members.  
  • How are profits distributed? The business is operated for a profit; it’s how the profit is divided that makes a co-op unique. Unlike most corporations where the profits are distributed to stockholders, co-ops distribute profits to member-owners on a patronage basis. Patronage is a method of sharing profits among the members. It is based on how much they purchase and the profitability of the co-op.  
  • What kind of co-op system is CHS? CHS is a blended federated and centralized cooperative system. CHS is unique in that along with the federated system of member cooperatives, we also have Country Operations, made up of centralized retail locations dedicated to serve member-owners in their respective geographies. Along with member cooperatives, those member-owners of Country Operations locations vote for board members at the CHS annual meeting or are represented by delegates from their business unit at the annual meeting.  

Help us celebrate National Co-op Month by joining the conversation on social media using #CoopMonth. 

CHS Seeds for Stewardship funds support Dale & Clayton Fire & Rescue

Chris Tews, Dale Fire; Matt McHugh, CHS Safety Leader and Robert Wilkins, Deputy Assistant Chief, Dale Fire Department

CHS Seeds for Stewardship funds are going back into the communities where CHS does business to protect local fire fighters and community members, build stronger rural communities and support ag education.

Through CHS Country Operations Seeds for Stewardship, Dale Fire & Rescue is receiving $2,800 and Clayton Fire Rescue is receiving $2,176 from CHS Larsen Cooperative. Dale Fire & Rescue will be using these funds to purchase a grain bin rescue system and Clayton Fire Rescue will be purchasing rescue saws.   

“CHS Larsen Cooperative has a close working relationship with both of these fire departments. From time to time we have the departments come to our locations to practice rescues and doing walk throughs with our staff; so, they have a better understanding of our business,” says David Neal, General Manager, CHS Larsen Cooperative. “Having this equipment will definitely help these departments provide an increased level of service to our communities and facilities in the area.”

Making the purchase of a grain bin rescue system will provide a centrally located resource that can be quickly deployed to help save lives in the community. There are several large farming operations that grow, harvest, transport, and store crops on site in Readfield. These bulk materials present unique challenges to emergency services and this equipment can help them do their job safely and more efficient than they can today. Dale Fire & Rescue also borders other farming communities who would benefit having a portable coffer dam and grain evacuation system readily available.

“Dale Fire & Rescue is looking forward to purchasing their coffer dam which is designed to keep grain from flowing against the entrapped victim and to create a space around the victim from which grain can be removed. We will be buying a kit that contains the coffer dam, the grain ejector, grates, and case.  This is portable system and we can quickly transport it to the surrounding departments if needed,” says Robert Wilkins, Deputy Assistant Chief, Dale Fire Department.  

Clayton Fire Rescue’s purchase of a rescue saw that cuts steel and a rescue saw that cuts wood will provide a quicker and safer response to many rescue situations. Both saws would be utilized for rescue and fire situations including but not limited to; grain bin rescue, person(s) entrapped in farm machinery, vehicle accidents, accessing fires in machine sheds and barns, removal of brush during wildland fires, and removal of trees and limbs from a natural disaster. The added equipment would provide needed lifesaving equipment to Clayton Fire Rescue and surrounding stations.

“Thank you to the CHS Seeds of Stewardship program for the generous donation of two rescue saws,” says Scott Rieckmann, Director of Public Safety. “The saws will greatly enhance our response to many types of emergency calls in our response area and neighboring communities.”

The CHS Country Operations Seeds for Stewardship matching grant program supports our commitment to create connections that empower agriculture and our rural communities. Through this program, local CHS ag retail business units are identifying organizations in the communities where we live and work who need support for safety, ag leadership, farmer health and well-being, and community engagement.  

Since 2017, CHS has donated more than $1.8 million in funds through CHS Seeds for Stewardship.

Scott Rieckmann, Director of Public Safety; Ryan Jones, CHS YieldPoint Coordinator and Tony Seelow, CHS YieldPoint Equipment Specialist & Fire Dept Member

The CHS Larsen Cooperative- ag retail business delivers agronomy, energy, grain and feed products and services to Wisconsin ag producers and other customers from eight locations in 22 counties. It is part of CHS Inc., (www.chsinc.com) a leading global agribusiness owned by farmers, ranchers and cooperatives across the United States. Diversified in energy, agronomy, grains and foods, CHS is committed to creating connections to empower agriculture, helping its farmer-owners, customers and other stakeholders grow their businesses through its domestic and global operations. CHS supplies energy, crop nutrients, seed, crop protection products, grain marketing services, production and agricultural services, animal nutrition products, foods and food ingredients, and risk management services. The company operates petroleum refineries and pipelines and manufactures, markets and distributes Cenex® brand refined fuels, lubricants, propane and renewable energy products.

CHS Harvest for Hunger campaign raises $2,275 locally for food shelves

Over the past year, it has become even more clear that local food shelves and pantries play an important role in communities. The CHS Harvest for Hunger campaign has supported those local organizations in their fight against hunger since 2011. This year, local efforts helped raise more than $2,375 and 3,992 pounds of food to distribute to local food shelves and pantries.

“We have seen increased demand for our local food shelves and food pantries over the past year due to the pandemic,” says David Neal, general manager, CHS Larsen Cooperative. “Our employees, farmers, and communities put cooperative spirit into action to help support these essential organizations in their efforts to feed those in need in our communities through our CHS Harvest for Hunger campaign.”

CHS Harvest for Hunger is organized by CHS Country Operations, the ag retail division of CHS. During March, CHS employees from locations across the United States worked with farmers, ranchers, community organizations and schools to raise $509,184 and 114,746 pounds of food to be distributed to food shelves, pantries and community organizations.

Locally, funds were distributed to:

Freedom Food Pantry, $1,370

New London Community Cupboard, $1,370

Fundraising efforts included the sale of Little Caesars take-home pizza kits and food donations.

With this year’s total, CHS has now raised more than $6.8 million and nearly 3.9 million pounds of food since the campaign was first launched in 2011.

The Difference Between Oil and Grease

Often when people think about lubricants, they only think about oil. But oil isn’t the only lubricant equipment owners need to keep their operation moving.

Grease plays a critical part in the health of their equipment and is an essential part for any well-rounded equipment maintenance plan. Grease provides different benefits to keep crucial components protected. To keep your customers’ operations moving and decrease downtime, here’s what you should know about the special role of grease.

How grease is different

Despite their physical differences, common ingredients are found in both oils and greases. The type of base oil, either classified as conventional or synthetic, determines how thermally stable the product is when exposed to extreme conditions. Specific chemical ingredients, also known as additives, are then added to provide each product with a specific slate of benefits.

The biggest difference setting grease apart from oil is its thickener. Grease is a thickened oil, not a thicker oil. The thickener within a grease acts as a sponge, holding the base oil and the additives together. This creates a grease’s semi-fluid or solid structure, as opposed to the syrup-like consistency of oil. This added thickener is crucial when it comes to the applications where grease is needed.

How grease functions differently

At the most basic level, oil and grease both perform the same general function: to prevent metal-on-metal contact and protect equipment from wear. However, there are many ways components move and environments they endure inside equipment.

For intense friction and high-speed applications, an oil is typically the best choice. But other components that endure heavy loads or move vertically typically require a grease. Grease is engineered to stay in place and provide a longer lasting barrier between metal components, such as wheel-bearings.

Grease also acts as an excellent seal. Moving parts that are exposed to the elements are a welcome mat for dirt and debris waiting to contaminate equipment. Grease seals out harmful contaminants, keeping equipment protected for maximum performance and minimum downtime.

How grease maintenance works (not so) differently

Owner’s manuals almost always provide instruction on the oil maintenance routine recommended for a piece of equipment. However, few manuals offer guidance on grease maintenance, even though it’s a vital part of an overall maintenance routine.

Because of its significant role in keeping equipment protected, it is important to use a high-quality grease product. For guidance on the best grease for your customers’ equipment, visit the Cenex Equipment Look-up Tool.

CHS reports $273.6 million in fiscal 2021 third-quarter net income

Closeup of green soybean rows

Strongest third-quarter net earnings since 2014; $50 million of additional owner equity redemptions authorized in 2021

CHS Inc. released results for its fiscal third quarter ended May 31, 2021. The company reported net income of $273.6 million compared to $97.6 million in the third quarter of fiscal year 2020, an increase of 180.2%. Significant year-over-year earnings growth in all business segments — Energy, Ag and Nitrogen Production — and Corporate and Other businesses each contributed to the increase.

Reflecting strong company performance, the CHS Board of Directors has approved $50 million in additional equity redemptions to member cooperatives and individual owners since the December 2020 CHS Annual Meeting. The increase is incremental to $33 million in approved equity redemptions announced at the 2020 annual meeting, for a total of $83 million in planned owner equity redemptions in fiscal 2021. A distribution of $30 million in cash patronage was also made to owners in early calendar 2021, based on business transacted with CHS in fiscal 2020.

“Robust performance across CHS resulted in a very strong third quarter,” said Jay Debertin, president and CEO of CHS Inc. “Strong global demand in agricultural markets and the hard work we have been doing to gain efficiencies across our supply chain led to higher volumes in nearly every business area, significantly improving our Ag segment earnings compared to the prior year’s third quarter.

“We also are seeing increasing momentum in pandemic recovery as restrictions ease and vaccination efforts progress, which has had a favorable impact on our Energy segment results and overall performance.”

Fiscal 2021 third-quarter highlights

  • Revenues of $10.9 billion grew 50.9% from $7.2 billion in the third quarter of fiscal 2020.
  • Earnings were up by more than 40% across all business segments (and Corporate and Other businesses) compared to both the second quarter of fiscal 2021 and the third quarter of the previous fiscal year.

Energy segment results

  • Improved refined fuels margins resulted in fiscal 2021 third quarter margin gains, as did the absence of a $42.0 million noncash charge to reduce refined fuels inventories to their market value that impacted the prior year’s third quarter, but did not reoccur in the third quarter of fiscal 2021.
  • Improved margins in the company’s refined fuels business were partially offset by significantly higher prices of renewable energy credits that had a negative impact on margins of approximately $82.0 million, less favorable pricing on heavy Canadian crude oil and lower propane margins due to the reversal of hedging gains recognized during the prior year.
  • Overall, revenues increased by 24.2% and earnings increased by $59.6 million over the fiscal 2021 second quarter, reflecting volume and margin recovery from the effects of the pandemic.

Ag segment results

  • Strong global demand drove commodity prices higher, and improved trade relations between the United States and foreign trade partners led to continued higher volumes for grain and oilseed, which significantly improved Ag segment earnings compared to the prior year’s third quarter.
  • Higher overall margins were partially offset by mark-to-market losses for certain processing and food ingredients products, which the company expects to reverse over time.
  • Lower volumes of feed and farm supplies were partially offset by increased volumes for agronomy products, stemming from stronger demand due to favorable weather conditions, compared with the previous year’s third quarter.

Other focus areas

  • Nitrogen Production segment earnings increased in the quarter due to higher income attributed to increased sale prices of urea and urea ammonium nitrate.
  • Favorable market conditions for edible oils and a recovery in sales volumes compared to earlier in the pandemic drove significantly increased income through the company’s investment in Ventura Foods, LLC.
  • Focused cost-reduction initiatives, launched in fiscal 2021, continued to gain traction in reducing year-to-date marketing, general and administrative expenses.
  • The company began to bring employees back to its global offices in full or hybrid capacities as pandemic restrictions lifted. The costs of these activities are not expected to be material.

For the nine months ended May 31, 2021, CHS reported net income of $305.0 million versus $401.0 million for the same period in fiscal 2020.

“We are encouraged by overall improvements in the global economy and the positive traction we’re gaining at CHS with initiatives focused on working more efficiently and effectively throughout the enterprise,” said Debertin. “We are optimistic conditions will continue to improve over the next 12 months. The resilience of our employees and their commitment to our owners and customers has been inspiring and we look forward to the future and continued shared success.”

FY2021 Quarter 3 CHS Inc. earnings statement by segment
*Earnings is defined as income (loss) before income taxes

This document and other CHS Inc. publicly available documents contain, and CHS officers and representatives may from time to time make, “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on CHS current beliefs, expectations and assumptions regarding the future of its businesses, financial condition and results of operations, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of CHS control. CHS actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause CHS actual results and financial condition to differ materially from those indicated in the forward-looking statements are discussed or identified in CHS filings made with the U.S. Securities and Exchange Commission, including in the “Risk Factors” discussion in Item 1A of CHS Annual Report on Form 10-K for the fiscal year ended August 31, 2020, and Item 1A of Part II of CHS Quarterly Report on Form 10-Q for the quarterly period ended May 31, 2021. These factors may include: changes in commodity prices; the impact of government policies, mandates, regulations and trade agreements; global and regional political, economic, legal and other risks of doing business globally; the impact of the ongoing COVID-19 outbreak or other similar outbreaks; the impact of market acceptance of alternatives to refined petroleum products; consolidation among our suppliers and customers; nonperformance by contractual counterparties; changes in federal income tax laws or our tax status; the impact of compliance or noncompliance with applicable laws and regulations; the impact of any governmental investigations; the impact of environmental liabilities; actual or perceived quality, safety or health risks associated with our products; the impact of seasonality; the effectiveness of our risk management strategies; business interruptions and casualty losses; the impact of workforce factors; our funding needs and financing sources; changes in the method of determining, or the replacement of, LIBOR; technological improvements that decrease the demand for our agronomy and energy products; our ability to complete, integrate and benefit from acquisitions, strategic alliances, joint ventures, divestitures and other nonordinary course-of-business events; security breaches or other disruptions to our information technology systems or assets; the impact of our environmental, social and governance practices; the impairment of long-lived assets; and other factors affecting our businesses generally. Any forward-looking statements made by CHS in this document are based only on information currently available to CHS and speak only as of the date on which the statement is made. CHS undertakes no obligation to update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise except as required by applicable law.

Keep your rural road safe

June is National Safety Month. CHS and Nationwide are proud to share a partnership focused on safety. The following information is provided by Nationwide, the #1 farm and ranch writer in the U.S.*

Nationwide logo

Safely navigating large agricultural equipment over rural roads to and from the fields is a challenge for even the best drivers. Nationwide reminds farmers to consider the following rules on the safe operation of equipment to help reduce the risk of motor vehicle collisions.

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Bulk Fuel Storage Reminders

One important thing to remind all our customers to do during planting prep is to clean out dirt and other debris that has accumulated in your fuel tanks.  Debris can be pumped into equipment where it will cause build-up that leads to less-than-optimal performance and eventually can require expensive repairs. To reduce the risk, best practices call for fully cleaning out fuel tanks at least once per year and switching out filters each quarter.

Equally as important as getting rid of debris in tanks is keeping water out of the fuel supply. Fuel contaminated with water can cause decreased acceleration, loss of horsepower and, in some cases, engine damage that spells costly downtime. Water in the fuel also allows for microbial growth to form inside tanks that attack the fuel. Frosty springtime mornings add to risk with increased condensation.

Equipment today comes with water drain valves. As you prepare for a busy growing season, remember to use those valves to remove water from machinery, in addition to removing water from storage tanks regularly.

There is one extra-easy way to minimize water in equipment during the season, when you’re done working at the end of the day, take time to fill up the fuel tank. Condensation happens overnight — especially in spring weather — and reducing airspace by filling up tanks every day will reduce that risk.

For more information about bulk fuel storage or to learn more about the importance of Cenex premium diesel fuels, please contact your local sales representative. 

Nicolet Fire District Hosts Emergency Response Fire Training

The Nicolet Fire District, in partnership with the Wisconsin Propane Education & Research Council (WiPERC), is hosting an emergency response, live propane fire training on Wednesday, April 28, 2021 at 6:00 PM.   Approximately 50 fire fighters from the Nicolet Fire District, White Lake Fire Dept., Riverview Fire Dept. and the Doty Fire Dept. are expected to attend.  At times during the training, area residents may see flames shooting 20 feet or more into the air.  Local media and other observers are welcome to watch.

The training consists of classroom instruction on the physical properties of propane and a hands-on portion that includes five fire scenarios including a grill, forklift, bulk tank, and propane terminal piping props. All hands-on training is overseen by Wisconsin certified fire instructors, FIRE LLC and is conducted in accordance with NFPA 1403.The Doty Fire Dept. is providing local coordination and the location for the training.  WiPERC estimates the value of this training is $4,000 to $5,000 depending on the size of the group trained and the number of trainers required.  

Propane will be provided by CHS Larsen Cooperative, who is a WPGA member and participates in the propane industry check-off program, which provides the funding for this training.

The Wisconsin Propane Education & Research Council is the education foundation of the Wisconsin Propane Gas Association (WPGA). 

The training will be held at the Town of Doty Town Hall located at 14899 County Road T Mountain, WI  54149.

For more information on this program contact Emma Corning, WPGA/WiPERC Executive Director at emma@wipga.org or 608-210-3307.                

© 2021 CHS Inc.