Template:Infobox Defunct Company Farmland Industries was the largest agricultural cooperative in North America when it declared bankruptcy in 2002.
The Farmland brand and its slogan "Good Food From the Heartland" is now owned by Smithfield Foods which continues to market meat products under the Farmland brand.
History[]
It was founded 1929 by Howard A. Cowden as the Union Oil Company (as a successor to Cowden Oil Company which he founded the year before). In 1935 it took the name Consumers Cooperative Association (CCA), and in 1966 Farmland Industries, Inc.
At its peak, the organization was the largest agricultural cooperative in North America, owned by 1,700 farm cooperatives in the United States, Canada and Mexico, which cooperatives were in turn owned by more than 600,000 farmer families. It had 16,000 employees in all 50 states and 90 countries. In 1977 it ranked #78 on the Fortune 100 company list.[1] In 2001, its annual revenues were in excess of $11.8 billion. It was listed as one of Fortune's "most admired" companies. It ranked #170 on the Fortune List when it dissolved.
The cooperative provided both agricultural supply and marketing services ranging from petroleum refining, fertilizer manufacture, feeds, shipping, crop production, livestock production, and refrigerated foods sales and marketing. The company was a joint venture partner with a number of other companies, including: Archer Daniels Midland in grain storage, distribution and marketing; Simplot in phosphate production; ConAgra in wheat marketing; Land O'Lakes in feed systems and crop nutrients; Cenex Harvest States in lubricants, propane and refined fuels; Mississippi Chemical in nitrogen production and shipping (Trinidad and Tobago); Norsk Hydro in phosphate fertilizer production and marketing; Wilbur Ellis Company in crop protection product marketing and distribution; U.S. Premium Beef in beef packing; and Kansas State University in agricultural research. Farmland also owned Tradigrain, a group of international grain trading companies headquartered in Geneva, Switzerland.
The company operated on a cooperative basis. The member/owners shared numerous commercial and financial benefits, including the sharing of costs for the processing and marketing of goods, competitive prices, and better supply and delivery capabilities.
Bankruptcy[]
The company loaded up on debt in the 1990s.
In June 1999 it broke ground for a Template:Convert headquarters on a Template:Convert campus[2] just east of Kansas City International Airport to consolidate the offices for 1,000 employees. The building was completed in 2001.[3]
The cooperative entered Chapter 11 bankruptcy in May 2002 after failing to secure a $500 million loan to meet lender demands on cash requirements (in its filing it listed $2.7 billion in assets and $1.9 billion in debt).
It was affected by a prolonged downturn in fertilizer prices, coupled with high energy prices and capital costs. The reorganization process resulted in the sale of virtually all of the company's assets, including the following subsidiaries: Farmland Foods, Inc., the pork processing division to Smithfield Foods for $367M; Farmland National Beef Packing Company to US Premium Beef for $232M; and the fertilizer production division to Koch Industries.
The Co-op Retirement Plan, which provides a final salary defined benefit retirement plan for member cooperatives' employees, was administered by Farmland. A non-profit, United Benefits Group, was incorporated to take over this service, from 2003.[4]
The reorganization process resulted in the sale of the cooperative's assets, with all creditors repaid by 2006. According to JPMorgan, the liquidating trustee, unsecured creditors received $891 million, which was 104 cents on the dollar, the maximum allowed by law, and allows for interest.[5]
Before the liquidation was completed, it was accepted that no assets remained to be distributed to the members, the local cooperatives, who had to write off the loss of their equity account balances. A 2004 study in Oklahoma suggested that the biggest impacts on cooperatives were on farmer relations and lost business relationships, and the direct financial impact of the write off was low.[6]
References[]
- ↑ Farmland Industries, Inc. - Company History
- ↑ Turner Construction Company
- ↑ Farmland Industries Continues Extraordinary Growth in KC - thinkkc.com
- ↑ Template:Cite web
- ↑ Template:Cite web
- ↑ Template:Cite web
- Dismantling of Farmland continues; Smithfield buying pork business (USDA Rural Cooperative Magazine)
- Beyond the Fence Rows: A History of Farmland Industries, Inc. 1929-1978, Gilbert C. Fite. Columbia: University of Missouri Press, 1978 ISBN 0826202586