The Belgrade Cooperative
The Belgrade Cooperative Association in Minnesota has grown tremendously since its founding in 1928 when the first members joined to use the buying power of a group to get better prices on oil and fuel purchases.
But it has not grown like other coops in the farming supply industry. In fact, it has made a decision to stay locally owned.
While the coop has vastly expanded the products it sells to farmers, it has not wavered from this decision. That’s a big contrast to other coops throughout America that are merging to form partnerships with more and more buying power—but also more challenges associated with distribution, organization and staying connected to farmers.
“Our coop is a little unique in that it is locally owned, a single location and operated by the producers that utilize the company for its services,” says Jeff Koehler, general manager of the Belgrade Cooperative Association. As a result of its local focus, the coop can tailor its services to its 3,000 members across a trade area of 2,400 square miles from its facility in Belgrade, Minnesota.
Local but diverse customers
Belgrade is a producer-cooperative, meaning its members are people who work in the agriculture industry, such as farmers. But Koehler says its membership structure is a little unique “in that we have fairly substantial propane and heating business and the propane customer [known as non-producers] are about 2500 customers,” or make up the bulk of coop members. Although these non-producers do not work in agriculture, they still benefit from of Belgrade’s low fuel prices.
Besides propane, the cooperative also sells gasoline and diesel fuel as well as fuel storage containers. But the majority of its sales are from agriculture products that include nitrogen stabilizers, crop nutrients, crop protection products and partner brand seeds such as Croplan, Dekalb, Asgrow, NK and Mycogen.
In addition to providing products, the coop also provides services. These include prescription seeding and applying crop nutrients and crop protection products. It also delivers the propane and diesel fuel that heats its members’ barns and homes and fuels their tractors and other equipment.
Guidance for new forms of agriculture
In the last few years, the coop has invested heavily in a precision agronomy program called Precision A.C.R.E. Through this service, the coop employs technology to help farmers make more informed decisions by gathering data about their specific sites, such as nitrogen levels in the soil, permeability of the soil and which crops will produce the greatest yields. This information helps farmers decide what crops to plant and how to care for them.
“There are certain populations of farm producers that really embrace the idea of having a [cooperative] that is very in-tune with what [the farmers] are doing on their farm,” he says.
Instead of other cooperatives that, in effect, tell farmers what they need, Belgrade works with its members so they may discover solutions together.
“We’re at their level every day,” says Koehler. “Our business is depending on their business. We don’t have any corporate desk space. Whatever they buy from us is directly related to how well we do.”
Belgrade’s smaller size allows it to react quickly to the needs of its members because it can get a fast response from its directors and staff. When changes in the market appear, “we can engage ourselves in competitive situations very quickly,” says Koehler.
Though nimble, the coop is also savvy
Staying nimble requires more than quick reflexes. In order to stay competitive, Belgrade has created purchasing alliances that allow it to fiercely compete for business in Belgrade and the surrounding area.
For instance, Belgrade is the owner and shareholder of a company called Midwest Fertilizer. This company negotiates crop nutrients purchased directly through the manufacturer and sets up accounting that has Belgrade pay the manufacturer directly. This leads to savings for Belgrade, says Koehler, because “we get treated price-wise like we’re a multi-national company.” The resulting low prices for coop members keep Belgrade competitive.
In addition to diversifying its model, the cooperative has also been expanding who it sells to.
In spring 2015, Belgrade opened its second location in Melrose, Minnesota. The cooperative chose the location because of young producers “in tune with the animal and livestock industries” in the area, says Koehler. “We’re excited to share our same philosophy and success we’ve had in Belgrade with patrons and customers in Melrose,” he says. Last year alone the new location saw a 20 percent increase in business.
Despite Belgrade’s success, Koehler is not without concerns. The most pressing concern is the consolidation of farms. As American farmers are growing older and nearing retirement, many of their farms are being consolidated into larger operations. Koehler says the next big challenge will be acquiring the business of these new, larger entities.
“That continuity to get to the next generation is going to be a very important challenge not only for this supply company,” says Koehler,
Still, he’s confident that Belgrade staff will be able to adapt. “I feel pretty good now about how we approach our market and you have to do that with a good staff, [with] people looking to the future,” says Kohler. “I think that makes a difference and I’m excited to see what that [future’s] going to be.”