Agtegra Moves Ahead After Merger

May 21, 2018

Article Credits: Mitchell Daily Republic

New Agtegra Cooperative signage is shown at the former Wheat Growers location in Woonsocket. Following the merger with North Central Farmers Elevator, the new co-op has 60 locations in both North Dakota and South Dakota. (Marcus Traxler / Republic)

ABERDEEN — So far, it's been a smooth start for Agtegra Cooperative.
The newly formed cooperative created by merging the former South Dakota Wheat Growers and North Central Farmers Elevator co-ops has been up and running for three months. And aside from the rebranding behind a new name and logo, building a viable business has been hard work but rewarding, Agtegra Executive Vice President for Grain Mike Nickolas said.

"We knew that the impact of merging and coming together was going to be big, and I don't think we realized just how big," Nickolas said. "We did see that in the first three months."

Nickolas said Agtegra purchased 85 million bushels of grain in the three-month span from February to April and shipped more than 60 million bushels.

"It was just tremendous," said Nickolas, noting the new company benefited from a small increase in prices in February and dry weather in Argentina. Agtegra benefited from good corn and soybean exports in the Pacific Northwest, as well.

"We've entered a new era, for sure," Nickolas said. "This could keep extending going forward."

The two former co-ops approached a plan to merge in 2015 but that was turned down by the member-owners of Wheat Growers and North Central. In September 2017, the member-owners voted in favor of the merger, with 58 percent of North Central members and 63 percent of Wheat Growers backing the plan. In the merger effort, advocates had argued that the possible co-op would save $12.7 million annually over the first four years of what would become Agtegra.

Nickolas, who was the former CEO for North Central, said that with a large footprint that includes 60 locations in northern and central South Dakota and southern North Dakota, there have been benefits to bringing the co-ops together. Agtegra has 6,770 member-owners and about 20,000 equity holders in the company.

"Some of the efficiencies that we felt could be possible have been there," he said. "When you're transferring grain to a rail line, there's going to be some savings by being able to go to the closest site ... and moving trains to the facility that is most advantageous. It's allowed us to be more price competitive."

Nickolas admitted the grain division has had an easier time making the adjustment to Agtegra, mainly because there are fewer administrative hurdles.

"In the long term, it will be a benefit for our member owners," he said. "Instead of duplicating efforts, we're able to focus more of our energy into items such as precision agriculture and more innovation."

Prior to the official merger on Feb. 1, Wheat Growers purchased a 40,000-ton dry fertilizer plant in Kimball previously owned by Gavilon. (Gavilon continues to own the nearby 2.2 million-bushel grain facility). The Kimball site became the largest of seven fertilizer hubs in the Agtegra system.

"The Kimball fertilizer plant has three times the storage capacity as our newest plant in Kennebec," Agtegra Chief Operating Officer John Husk said at the time of the announcement. "With this added storage volume and efficient loading capabilities, we can provide our customers seamless delivery of cost-effective product for their operations."

The Kimball plant includes access to a 110-car unit loop-track, plus high-speed automated fertilizer loadout and storage capabilities.

"It's one of the larger plants we have, and it's been very successful in allowing us to deliver to other locations," Nickolas said. "And at the same time, it's a good supply in that area and allows us to go from the plant to the farmers' fields. The supply was needed there."

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