“No plant 19 says it all.” In a year of unprecedented weather events, nearly half of the acres in our trade area went unplanted. The impact of not having a crop planted will linger for our cooperative for not only 2019 but for the following years ahead. As we try and overcome last year’s challenges (as I’m writing this article) we are facing unprecedented times in dealing with the COVID-19 pandemic. The total impact of this virus is unknown but I’m sure it will change the way we conduct business in the future. Despite the aforementioned challenges, Luckey Farmers is positioned well to adapt to an ever changing environment.
Luckey Farmers experienced a loss of $1,195,439 on $77,491,378 sales. Agronomy sales were cut in half on liquid crop nutrients and 25% on dry fertilizers. Grain volumes were impacted worse with only 20% of the corn acres planted. Bushels handled this fall reflected the drop
in acres. Luckey Farmers handled less than 1 million bushels of corn when normal receipts are between 5 to 7 million bushels a year. Soybean yields were better than expected resulting in 2.8 million bushels handled but still a reduction of 40% from a normal year. An unusual amount of old crop was carried over knowing there would be plenty of space with reduced bushels. This allowed Luckey Farmers to take advantage of the carrying charges in the market and offset some of the volume reductions. Despite the poor results and conditions, Luckey Farmers was able to cut one million in expenses to offset the lost revenue and minimize the losses.
Having experienced such an unusual growing season, Luckey Farmers made some difficult and proactive decisions in order to reduce expenses and set your cooperative up for success for the future. By focusing on our core business structures, management and board decided it would be best to discontinue the manufacturing of feed. Production livestock and animal numbers continue to dwindle in our trade area. We felt we could better serve our feed customers by partnering with Kalmbach feeds to manufacture GroMor feeds and other quality products to deliver to the farm. Our feed mill was in dire need of repair and the cost to replace outweighed the benefits. This coupled with our closing of Perrysburg retail store (which was losing money annually) helped transition several employees to different roles without having to replace our employees that were retiring or close to retiring.
Some of the positives to point out as we move forward. Our balance sheet is strong. Despite the loss, we have enough working capital to support the line of credit we need in order to finance inventory and maintain operational functions. Depreciation is higher with all the capital improvements we made in our agronomy division over the last few years, which contributes to our overall loss, but this portion of our loss is non-cash related. We have minimal long term debt so our position remains very strong.
Having a strong cash and balance sheet position will allow us to redeem our member equity from the year 2007. The board approved the equity redemption of $117,000 at our last board meeting. This is a commitment by our board to keep our estates and equity redemptions as current as possible.
Despite last year’s loss, Luckey Farmers is positioned strong for the future. Our commitment to technology and traceability has Luckey Farmers as a leader in water quality discussions. Our investment in our software is allowing our crop consultants and operators to track everything we apply on your fields in real time. We can also share that information with you digitally so your records are updated as well. If you are doing your own application, we also have tools to help you track that information for your own field records. It won’t be long before legislation requires us to trace everything. The voluntary programs are in place to address the water quality issues but I fear that between public pressure and our governed agencies, they will soon make it a requirement. Luckey Farmers is positioned to assist you in this area.
With all of the uncertainties we face, know that you can count on Luckey Farmers as a resource in providing solutions for your farm and help you navigate these unprecedented times. We don’t take your business for granted and we are constantly looking at ways to improve. Thanks for your support and we look forward to serving you in the future.