Annual meeting goes mobile

With the goals of increasing participation and engagement among members and management, MFA Incorporated took a new approach to its annual meeting for 2024. Instead of one centralized meeting in Columbia, Mo., eight regional meetings were held Nov. 18-21 throughout MFA’s territory.

Organized in a town-hall format, each annual meeting included financial, operational and company updates from the executive team followed by a question-and-answer session led by MFA Incorporated board members. The change boosted overall attendance, reduced costs and provided delegates a chance to interact in a more intimate setting.

“By taking the annual meeting out on the road, we hoped it would give members more of an opportunity to engage in discussion with the board and leadership at MFA,” said Davin Althoff, District 9 director who helped moderate the Jefferson City meeting. “Even when you find a chance to get away from your operations, we know there are a lot of other things competing for your time. Our goal is to provide a meeting that is of value to you.”

A key purpose of the cooperative’s annual meeting is always to report on the financial performance of the previous fiscal year, which closed Aug. 31, 2024. Despite lower commodity prices, falling farm income and other challenges, MFA Incorporated recorded successes in several areas, said Karen White, chief financial officer.

“While sales dollars declined due to lower commodity values, grain volumes increased by 9%, and crop protection and seed units experienced growth,” she said. “Despite inflationary pressures and higher interest rates, the company managed to reduce expenses by 2.5%, demonstrating operational efficiencies. However, the livestock sector of MFA’s business struggled due to reduced cattle numbers, impacting feed tonnage and related sales such as fencing and cattle-working equipment.”

Although MFA benefited from improved efficiencies, increased volumes and lower expenses, fiscal 2024 ended with a pre-tax loss of $3.7 million. White explained that this loss was largely due to an $11 million adjustment stemming from an overstated crop protection rebate accrual made in fiscal 2023.

Net revenues were $1.7 billion, down 18% from the previous year due in large part to lower values for commodities. In particular, grain sales dropped by $177 million compared to 2023 despite a 10% increase in volume. The company benefited from a strong harvest, selling 89.5 million bushels of grain in 2024, up from 81.2 million the prior year. MFA ended fiscal 2024 with $83.5 million in working capital and nearly $597 million in total assets.

Net supply sales decreased 16% to $1 billion, reflecting price declines despite volume and market share growth in the crop protection division. Fertilizer tonnage remained steady, with margins staying favorable despite declining revenues. Feed sales, negatively influenced by reduced cattle numbers, dropped 25%, with tonnage down 17%.

For fiscal 2024, MFA’s board of directors voted to allocate $32 million in DPAD (Domestic Production Activities Deduction) to grain members. This provision, included in the Tax Cuts and Job Acts of 2017, is set to expire in 2025 unless Congress takes action to renew it.

“The team at NCFC (National Council of Farmer Cooperatives) believes the odds of extending this benefit increased with the recent election, but for planning purposes we should assume it will sunset this year,” White said. “As it stands today MFA will be able to allocate DPAD for our fiscal years 2024 and 2025, and we expect next year’s allocation to be in the $25 to $30 million range. Work with your tax advisor about the best opportunities for this deduction. It’s a really good benefit for cooperative members that we often see underutilized.”

MFA’s operating plan for the 2025 fiscal year includes a pre-tax profit of $10.6 million along with $91 million in working capital, including $13.5 million in capital expenditures, and debt levels that are comparable to 2024, White said.

“When we put the budget together, several economic factors were considered,” she said. “We have lower farm net income. We have a large carryover of bean and corn stocks. We have historically high interest rates on higher debt levels. We all have increased health care costs. Even though inflation is going down, it is still above the targeted 2% rate. Given the current economic environment, we feel $10.6 million is a realistic profit level.”

In his presentation to the meeting delegates, CEO Ernie Verslues not only addressed the 2024 loss and industry challenges but also tackled some tough topics, including consolidations and closures MFA has made in recent years.

“If we want to provide the service and the needs that you have as producers, we’ve got to structure the organization to do that,” he said. “And, unfortunately, sometimes that means change, and change can be difficult.”

Continuing that discussion, Jason Weirich, executive vice president of operations, emphasized that decisions to consolidate or close locations—as well as build new ones—are carefully considered through a detailed process that includes full board approval.

“With the limited amount of capital we have, we have to be good stewards of that money and make strategic investments to get the best return we can in a short period of time,” he said, pointing to new agronomy “hubs” in Higginsville and Ravenwood—along with a similar center now under construction in Macon, Mo.—as examples. He also assured the delegates of MFA’s commitment to livestock producers and said the same type of facility evaluations are happening with the cooperative’s existing feed mills.

MFA Incorporated Board Chairman Don Schlesselman, who helped lead the annual meeting in Higginsville, Mo., shared a personal perspective on these infrastructure changes. His local Agri Services in Concordia was among those that closed this past fall.

“I voted for closing Concordia. That was not a good day, but it was the right decision,” Schlesselman said. “We must continue to look at ways to streamline top to bottom to become a more efficient company. MFA is a 110-year-old cooperative, and our goal is to continue to thrive and get better.”

Looking past 2024 into the fiscal year ahead, Verslues said MFA is in a solid position to face the challenges in the agricultural landscape.

“It could be tough for us as a cooperative. It could be tough for you as individuals,” he said. “But when you look at the cooperative model, that’s exactly why MFA was set up—to help each other, to work together, to make it better. We’re committed to that.”   

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