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Scenic Central sees steady growth

Feb. 11, 2014 | 0 comments

RICHLAND CENTER

Scenic Central Milk Producers Cooperative was formed 16 years ago by a handful of concerned farmers and has been moving milk for 15 years.

Ken Boll helped the farmers build their co-op and served as general manager until last year when Ron Statz took over that position so Boll could retire. He continues to serve as an advisor.

Statz, speaking during the annual meeting of Scenic Central members last week in Richland Center, said the founding farmers wanted to create a marketing cooperative that met their needs and was responsive.

Because the co-op has no "bricks and mortar" it doesn't need to deduct from farmers' checks for retained earnings, he said. The founders also made it part of their bylaws that farmers could only be on the board if they milked cows.

"They saw a situation where too many boards were dominated by retired farmers.

"They designed this co-op to serve its members, not the other way around."

Over the last eight years milk being handled by Scenic Central has more than doubled and over the last 10 years it has tripled, Statz said.

The co-op has added 50 new producers during the last year but those were needed to offset nearly that same number of producers who retired. Many of the farms in the co-op grew their milk production.

"Our pounds grew but not the number of producers."

Scenic Central had $95 million in sales, moving 418 million pounds of milk. "It is just under 400 million pounds if we include milk that the co-op sells for others."

The young cooperative had $1 million in gross profit last year with net income of $75,617, which came in just about where they wanted it to be, Statz said.

Scenic Central had a 7 ½ percent growth in production.

Statz explained that nearly all the money generated goes back to the milk producers. Ninety-three cents of every dollar goes to its farmers, but with quality and volume premium that number rises to 96 cents, he explained.

An additional 3 cents of every dollar is used to subsidize trucking, so in effect that goes to farmers too. "It takes only 1 cent of every dollar to run the co-op. Ninety-nine cents goes back to producers."

One of the reasons Scenic Central can do that, he said, is that it has no debt — a point that was driven home with a giant slide showing those two words.

The co-op has also seen steady and impressive growth over the last few years, he added.

One of the programs that helps with procurement of dairy farmers is an annuity program run by Scenic Central in conjunction with Modern Woodmen. Farmers who have 5 cents per hundredweight taken out of their milk check see a match of 5 cents from Scenic Central.

"It is very, very impressive," Statz told members. "I can't tell you how proud I am of that."

The accounts are owned and held by producers and cooperative management isn't involved in it, except for setting it up and making the match, but Statz said there are probably $4-5 million in those accounts for producers.

"That's a sizable amount of money. If we were set up like a conventional cooperative those would be retained earnings. Instead they are in individually held accounts by those producers.

"We are operating under a different philosophy than other cooperative businesses."

Field representatives for the co-op told the gathering that the annuity program is often a point that seals the deal to get a farmer to bring his or her milk to Scenic Central.

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