Wheat Growers: Farmers pooled wheat to get better price

Farm Forum

Wheat Growers commemorated its 90th anniversary on June 28 by celebrating the resilient farmers that made it a success.

What started as an association of farmers pooling their wheat to get a better price in 1923 grew to become the 20th-largest cooperative in America with sales of $1.7 billion in 2012.

“We are very excited to celebrate these 90 years,” said Hal Clemensen of Conde, Wheat Growers president. “We made it through the Dirty Thirties and faced a lot of challenges. There are not many businesses that have stuck around 90 years.”

Not only is Wheat Growers one of the largest cooperatives in the nation, but it is the largest completely farmer-owned grain cooperative in the country, Clemensen said. The biggest cooperatives, such as Cenex Harvest States, also have corporate investment. Wheat Growers has no corporate ownership, he said.

Wheat Growers has a total of 38 facilities in South Dakota and North Dakota, most of which contain both grain elevators and agronomy centers.

“We have added elevators that wanted to join us over the years,” Clemensen said. “All along, we have been very cooperatively minded. We have wanted to make sure that farmers get a fair shake.”

The history of Wheat Growers starts with the need for farmers to band together to avoid going broke. During the early 1900s, commodity prices were mostly strong. By 1923, the price of wheat had dropped from a post-World War I price of $3 a bushel to 70 cents a bushel, according to “South Dakota Wheat Growers: The History of a Cooperative, 1923-2010” by Ruth Miller, a 40-year Wheat Growers employee.

“The pool operation was, to a great extent, an experiment based on the theory that orderly withholding of the grain from the market would stimulate a better price,” according to Miller’s book.

Wheat pools were established in 10 states. The pools succeeded in raising the price of grain until the U.S. stock market crashed in 1929. Prices plummeted, and Congress stepped in, creating the Federal Farm Board and, through its Grain Stabilization Corp., began buying farm commodities to strengthen prices.

Farmers still suffered with low prices, but pooling of wheat was no longer an economic necessity because of government intervention.

In 1930, the South Dakota Wheat Growers Association had a pivotal decision: Should it sell its assets and disband or become a farmer-owned cooperative with its own grain elevators?

A majority of the 125 delegates at the June 28, 1930, convention voted to become a cooperative.

The first four elevators in Wheat Growers were at Andover, Bristol, Columbia and Frankfort.

Jake Boosma of Wolsey, who served on the Wheat Growers board from 1984 to 2005, said that in the early 1930s, many grain elevators went bankrupt. It wasn’t until 1934, with a New Deal program to buy feed for livestock producers, that elevators got some relief.

“Wheat Growers got into the feed business, and that helped save it,” he said.

Much of the focus in the 1940s was on the cooperative’s fledgling feed business called Blue Diamond feed, according to Miller’s history. The Blue Diamond feed logo was first used in April 1940.

Much of the success of Wheat Growers is credited to the legendary C.W. Croes, who was the general manager of Wheat Growers from its founding to 1964. He is said to have campaigned vigorously and tirelessly for a better price for farm commodities locally, regionally and nationally.

He cut his own salary several times during the Depression to help keep the cooperative’s expenses down, according to Miller’s book.

Wheat Growers continued to grow throughout the 1950s, 1960s and 1970s.

Boosma said that in the 1980s, the elevator business began to rely more and more on rail transportation. Most elevators, in order to remain financially competitive, needed to have a railroad spur that could handle 27- to 54-car- unit trains.

Boosma describes the 1990s as a paradigm shift. He was board president in 1998, when Wheat Growers built two new grain shuttle-loading facilities in Wolsey and Mellette.

The board had researched the need to get bigger and more efficient. The trend in Minnesota and Iowa was for big facilities to be situated along rail lines, and the board decided that if it did not aggressively develop its territory, private companies likely would do so, Boomsa said.

“We took a lot of heat over that,” he said.

There were tough decisions to be made, such as closing small elevators in towns such as Conde and Frankfort. Farmers may have had to drive a little farther to one of the new elevators, but they were rewarded with quick unloading times and better prices for transporting grain.

“In hindsight, it was the best thing we ever did,” Boosma said.

During Clemensen’s tenure, Wheat Growers launched the Connecting to Tomorrow initiative, which involved a $100 million investment in facility upgrades. Two new state-of-the-art grain-shuttle facilities were completed at Andover and Roscoe in 2011. Ten Wheat Growers facilities received upgrades, such as new loading and unloading equipment and expanded grain storage.

The investment not only has strengthened the cooperative, but it was an investment in South Dakota, Clemensen said.

“We had a meeting with Governor (Mike) Rounds and he asked us, ‘Are you really spending $100 million in the state? And that money is not going to be spent in Sioux Falls or Rapid City, but in places like Alpena, Mellette, Willow Lake and Andover? And you are not asking for any money from the state? That is refreshing.’”

Wheat Growers members have been the beneficiaries of the cooperative’s growth, Clemensen said.

In the past 10 years, $65 million has been returned to cooperative members, he said.

Boosma said he firmly believes in the cooperative model. The members have input and oversight of the cooperative.

“The members are the investors, and the profits stay right here,” he said.

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