Agtegra becomes reality Thursday

The merger of the region’s two largest agriculture cooperatives becomes a reality Thursday.

That’s when Wheat Growers and North Central Farmers Elevator cease and start doing business jointly as Agtegra.

But even after the formal merger, there’s going to be some wait and see.

Producers must feel that way. Several contacted for their thoughts declined to comment for this story.

Although a majority of members of both co-ops voted for the merger as was required for the transaction to move ahead, a combined 1,611 members voted against it.

Rick Osterday, president of North Central Farmers Elevator’s board of directors, said a big part of moving forward is proving to those members that the transaction will be beneficial.

That’s something that likely hasn’t happened yet, said Wheat Growers CEO and future Agtegra CEO Chris Pearson.

“It’s going to have to be proven in how we act. How we take care of our employees, farmers and their needs. How we invest, how we take care of our assets we have and how we serve them with those,” he said. “It’s going to be in the actions that we’ll start to prove it after Thursday.”

The co-ops estimated the merger will come with a cost savings of $12.7 million a year.

Greg Smith, spokesman for Wheat Growers, broke down those numbers, roughly speaking:

• Agronomy: $4.6 million.

• Grain: $3.7 million.

• Operations: $2.9 million.

• Energy: $800,000.

• Administration: $700,000.

But when Agtegra members will notice those savings is hard to say.

“For producers, I don’t know that they will see any immediate impact in terms of prices changes or anything like that. Those are probably driven more by the whole macroeconomic environment right now,” said Jim Terwilliger, state economist with the South Dakota Bureau of Finance and Management. “But where you could potentially see something in the longer run is if (the merger) allows for more efficiencies in the organization in terms of lower costs.”

If the new cooperative has lower costs, the cost of services and products might also decrease for consumers, Terwilliger said. And that would help everyone because there’s been a big push to cut costs across the ag sector, from the producer level to cooperatives and by everybody else.

Other changes when the cooperatives begin conducting business as one will be more noticeable and immediate.

Some have already begun, including new branding and the cleaning up of some sites, Pearson said.

There are no projected closings for current North Central or Wheat Growers’ locations, he said. However, in areas where the cooperative has the same assets — a fertilizer shed, for instance‚ it might only use one, he said.

No employees are being eliminated and, after the merger, their work will be judged by their performance as has always been the case, Pearson said. If it’s eventually determined that fewer workers are needed, the decrease will happen via natural attrition.

“We won’t have a layoff or anything like that,” Pearson said.

Agtegra will have about 60 sites and roughly 900 employees.

There will be some movement of offices and organizational changes. Wheat Growers’ headquarters in eastern Aberdeen will become Agtegra’s main office.

But because those moves are mostly in administration, the go-to person for most, if not all members, will remain the same, Pearson said.

Even if an employee moves to a different site, members should still call who they are comfortable working with, Pearson said.

“We’ll work with them on that,” he said.

In 2015, an overall majority of the co-ops’ members voted in favor of the merger. But a majority of North Central members voted no, stopping the transaction at the time.

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Agtegra Cooperative

Employees: 900 (590 from Wheat Growers, 310 from North Central).

Locations: Approximately 60.

Members: 7,850.

During the first few days of the transition, Agtegra is planning to reduce its operational commitments. From Thursday through Sunday, some services will be unavailable and others will be limited. For a list, visit bit.ly/2BvL9Eh.

2017 vote totals

North Central Farmers Elevator: 911 yes, 657 no.

Wheat Growers: 1,598 yes, 954 no.

Combined: 2,509 yes, 1,611 no.

2015 vote totals

North Central Farmers Elevator: 809 no, 767 yes.

Wheat Growers: 1,534 yes, 995 no.

Combined: 2,301 yes, 1,804 no.