Fessenden Coop Association
Fessenden Coop Association (Fessenden Coop) has been in business since 1943 when a group of farmers joined forces to boost buying power and create better marketing opportunities in central North Dakota. With a head office in Fessenden, North Dakota, and grain storage and marketing facilities in Carrington, Hamberg, New Rockford and Esmond, North Dakota, the organization provides integrated services for area growers. The business specializes in wheat, soybeans, edible beans, as well as corn and also deals in minor crops, such as flax and barley.
Mark Hovland serves as general manager of the cooperative. He works with a team of 61 people, dedicated to serving members. He has been involved with the agriculture industry since 1982 and has served as general manager of the business since 2002. “We like to think of ourselves as a progressive coop,” he notes. “We do our best to retain and attract good employees and keep up with our resources to better serve our growers.”
Like many comparable cooperatives in the region, Fessenden Coop operates as a grain and agronomy cooperative. The organization buys and markets a range of grain products and offers custom application of fertilizer and chemicals. The Fessenden team strives to serves as a resource for growers, helping members improve efficiencies and improve return on their crops. The business has three shuttle locations, allowing for faster and more efficient transport of materials once these products enter the market.
“What really helps us stand out in terms of membership is that we have kept up with capital expenditures,” Mark says. “We are constantly replacing old equipment, adding storage and installing faster grain handling equipment. Speed and space have been key the last few years and people are willing to haul for a more efficient service. We strive to be competitive with coops and privates in the area. There are plenty of private multinational grain facilities in the area, but we add value to our producers by returning the profits the co-op generates back to them. Each year the board of directors will decide how much of the patron allocation to pay out in cash and how much will be retained until retired in the future. The most recent years have been 40 percent in cash and the balance paid out at later date. Currently we have paid back everything up to year 2000, which places us at a 14-year rotation, which is pretty common.”
Reinvesting in the business
Hovland and the team continue to expand to meet the demands of member and the market, managing investments for profitability and efficiency in operations. The crew completed a third location in August 2014, a new grain facility in Hamberg, North Dakota.
“It has been working out really well,” Hovland elaborates. “We have loaded several trains out of there. We are just finishing up additional storage there as well. We added a million bushels of storage in 2014 that we hope to be able to use later in January 2015. This has been a great addition to the company. Being tied to one railroad would have been a major handicap for us. BNSF has offered different destinations for us and we have two locations on CP rail, as well, so having three different shuttle loading facilities has helped us keep our producers’ grain moving. Our new capabilities with BNSF opened up some new markets to us, as well.”
Fessenden Coop, along with partner CHS Inc., is in the process of building a 28,000-ton fertilizer plant. Because of winter weather, construction is on hold for the coming months. “We had probably 90 percent of concrete done before it got too cold,” Hovland says. “We will see the balance finished in the spring when it warms up. Right now we are more or less at a standstill. There will be a little work throughout the winter, but the main building won’t resume until spring. We are looking at a completion date in December 2015.”
While Fessenden Coop already produces some fertilizer on a much smaller scale, the new facility will improve efficiencies and allow the team to make fertilizer a larger component of the business. “We are currently operating out of older, small fertilizer plants at three of our locations. Once the new one is up and running, the three older ones will phase out. They will be used for storage and maybe a little production, but the new one will take over bulk of movement.”
While the team is bulking up fertilizer and shipping capabilities, Hovland says the fastest growing area of the business is grain storage. The team is in the process of completing an additional million bushels of storage at existing locations and in the next couple of years may add another million to that. A lot of this growth can be attributed to the explosion of the soybean and corn market in recent years
“Soybeans have replaced wheat as our leading commodity,” Hovland says. “Corn has also grown dramatically, as well, but the market took a step back in 2014 due to lower prices and other factors. We ship out 100-car trains of corn to export channels and a few ethanol customers. We sell a little for feed locally, and ship some smaller trains going to regional feed mills.”
Hovland and his team see a healthy market over the coming years. The cooperative continues to grow to accommodate this market. Despite the challenges common across the industry, the cooperative is well managed to maintain profitability and avoid undue risk. A strong set of facilities and services help to keep Fessenden Coop Association a top choice for growers in central North Dakota.