Farm Beat: Ag co-ops thrive in Valley and beyond

Almonds cascade down a chute at Blue Diamond Growers' bulk warehouse in Salida.
Almonds cascade down a chute at Blue Diamond Growers' bulk warehouse in Salida. Modesto Bee file

Blue Diamond Growers is a cooperative, owned by the farmers who supply the almonds it markets. So are some of the dairy processors in and near Stanislaus County.

It’s a pretty sound way of doing business, judging by a report this week from the U.S. Department of Agriculture. It said ag co-ops across the nation had a record $246 billion in sales last year, a 4 percent gain over 2012. It was the third straight annual increase, reflecting the strength of agriculture overall.

The sales total includes farms, ranches and fishing ventures that sell their products through co-ops, along with co-ops that provide goods and services, such as seed and fertilizer, to these producers.

“These co-ops play a vital and growing role in the nation’s economy,” Agriculture Secretary Tom Vilsack said in a news release.

This business model allows members to pool their resources with the goal of getting a good price for their crops or livestock products.

It is a substantial part of the farm economy: The USDA estimates $482 billion in total gross farm income this year, including producers who sell through channels outside the co-ops, such as family-owned or publicly traded companies.

The USDA released its annual list of the 100 largest ag co-ops as part of this week’s announcement. Some highlights:

• No. 1 by far is CHS Inc. of St. Paul, Minn., which deals in crops, energy and farm supplies and had $44.5 billion in sales in 2013.

• No. 2 is Land O’Lakes Inc., also based in St. Paul, at $14.3 billion. Its holdings include Turlock plants that make Kozy Shack pudding and Purina animal feed.

• No. 3 is Dairy Farmers of America, based in Kansas City, Mo., at $12.9 billion. It has a Turlock plant that makes cheese and a Hughson plant for condensed milk and other products.

• No. 6 is California Dairies Inc., based in Artesia, Los Angeles County, at $3.9 billion. It has a butter and powdered milk plant in Turlock and a cheese and condensed milk operation in Los Banos.

• No. 25 is Blue Diamond, at $1.2 billion. It processes almonds in Salida and Turlock and at its headquarters plant in Sacramento.

• No. 71 is Pacific Coast Producers at $534 million. Its cannery in Lodi gets some of the peaches and apricots grown in and near Stanislaus County.

Although business generally is good for co-ops these days, the model is not foolproof. Tri Valley Growers, once a dominant canner of tomatoes, peaches and other fruit in Modesto and elsewhere, filed for bankruptcy in 2000 after years of losses. Other companies took over some of the plants, but the blow to the canning industry was substantial.

Back to the 2013 numbers from the USDA: It reported that ag co-ops had record net income of $6.2 billion last year after deducting costs from the sales income. Co-ops use these earnings to upgrade their operations, and they share some of it with their owner-farmers.

The USDA also reported that about 136,000 people worked full time for co-ops last year, up 5 percent from 2012.