North Central Farmers Elevator: Expanding into a New Century of Business

North Central Farmers Elevator (NCFE), a full-service, farmer-owned cooperative headquartered in Ipswich, S.D., has come a long way throughout nearly a century of activity. The year 2013 marks NCFE’s 98th year in business and the beginning of new ventures.

Originally founded in 1915 as Farmers Equity Elevator Company, the co-op functioned as a collective grain hub. Settled in a rural, sparsely populated area, NCFE’s pioneering customers quickly realized the advantages of combining their efforts and purchasing supplies together.
“Our roots go back to the early 1900s,” shares Mike Nickolas, general manager of NCFE. “We are a blend of several co-ops that have merged together. What smaller groups couldn’t do alone, we could do collectively.”

Nearly 100 years later, this cooperative spirit is still thriving. NCFE provides grain storage, sales and marketing services, as well as feed, fuel, seed, fertilizer and other agronomic supplies and solutions to the co-op’s valued producer-members. Today, the co-op has 22 locations and serves over 2,500 patrons in north-central South Dakota and south-central North Dakota. NCFE employs approximately 250 full-time and seasonal employees dedicated to anticipating and exceeding customers’ needs.

NCFE has significantly expanded over the last decade, evolving through various mergers and acquisitions, including those in the fertilizer, energy and micronutrient sectors. In 2012 NCFE was ranked No. 58 on the USDA’s list of “Top 100 Largest Agricultural Cooperatives.” In 2013 NCFE was named one of the “13 to Watch in 2013” by the Aberdeen American News in South Dakota. The article highlights Nickolas, NCFE’s dedicated champion, and the expanding presence the co-op has in its region.

Constantly Positioning for Expansion

Nickolas took over as general manager in August 2012 after 15 years as the co-op’s grain division manager. He’s no stranger to the business, having been in the agriculture industry since 1984. As quoted in the Aberdeen American News article, Nickolas has made agriculture cooperatives his life-long career, and he explains how it takes a certain kind of individual to make it in the business as follows:

“The farmer is an optimistic person because every year, he is planting seeds and spreading fertilizer with the hope of a good crop. That’s what keeps you going. You can’t stop because of fear.”

Fear of failure certainly hasn’t stopped NCFE. The co-op recently purchased Custom Air Inc., an aerial application service company, increasing NCFE’s agronomy operations. The purchase became official Jan. 1, 2013, when the companies merged to make a new limited liability company: NCFE Custom Air LLC.

“We’ve formed this brand-new LLC with a total of five planes to complete aerial spraying for our members,” details Nickolas. “We’re ready to go now, but we will start spraying for the growing season this spring.” The planes will operate out of Miller, Highmore and Harrold, S.D., but will cover NCFE’s trade territory.

This is not NCFE’s only initiative. Construction on a 50,000-ton fertilizer plant that will go up next to the Archer Daniels Midland (ADM) grain elevator south of Tulare, S.D., is on the horizon for 2013. NCFE and ADM will split ownership of the plant, which will become a wholesale site for ADM and a retail site for NCFE. “We will be able to supply our southern agronomy centers by having this product on hand, when needed, will help,” explains Nickolas.

The Tulare plant will ease some of the burden on other NCFE fertilizer plants. “This [Tulare plant] will take the pressure off the Craven plant, which is running at about capacity, so we can work on expanding business,” shares Nickolas. Building will begin this spring on the Tulare plant and is expected to reach completion by mid 2014.

Along with new business partnerships and facilities, NCFE will install more grain storage structures and truck scales at several locations. It’s all in an effort to be more efficient. “We want to get the farm trucks in and out faster at harvest time,” explains Nickolas. NCFE has also taken advantage of various energy opportunities, which includes owning a third of North Star Energy LLC. NCFE’s continual growth and expansion is a result of many profitable years.

A Record Year and Many More to Come

NCFE saw record profitability in the 2012 fiscal year, allowing the cooperative’s board of directors to approve $9.4 million in capital expenditures. “Because of our size, we’ve had the luxury of many opportunities,” details Nickolas. “Our board will explore opportunities as they arise and move forward with options that benefit our producers and fit our business culture.”

The co-op’s successful fiscal year is thanks to a record crop. “We were really fortunate [that] this past year [2012] was one of the best crops on record; it was a homerun,” credits Nickolas. Although the majority of NCFE business relies heavily on Mother Nature, Nickolas believes success is a result of adaptation. NCFE has to anticipate and react quickly to these circumstances.

“When the farmer does well, we do well,” details Nickolas. “If we get some moisture, we could have another great year.”

Nickolas attributes NCFE’s growth to a strong, supportive customer and employee base along with strong relationships with owners. “We have a good customer base and we’re proud to be in the communities we’re in,” shares Nickolas. “As a locally owned business, we’re able to develop relationships, touching all points of producers’ business.”

Record growth doesn’t come without challenges. “This year’s harvest came off early and fast,” shares Nickolas. “This risks exposure to the elements; with a $160 million crop on piles, that was definitely the biggest challenge we faced this fall.” Nickolas adds that NCFE needs to keep adding permanent storage to avoid ground piles and crop exposure.

Nickolas is confident, however, that NCFE will continue on a path of growth and expansion into many more years to come, as the organization is grounded in a proactive, member-focused philosophy. “All decisions, at the end of the day, have to benefit the customer,” stresses Nickolas. “It has to be beneficial to the producers.” Dedicated to a mindful expansion and while operating with honesty and integrity, North Central Farmers Elevator will reinforce its cooperative legacy of service and value to thrive in a new century of successful business.