Ag Ventures Alliance Members Receive $11.5 Million in Profits

Don Hofstrand, Value-Added Agriculture Field Specialist, Northeast Area

Problem

 Iowa agriculture has been going through a long process of farm consolidation that has reduced the number of farms and brought about the decline in economic activity in rural areas. This has caused farmers to become more vulnerable to the vagaries of commodity markets.

Response

 During January of 1998 I called together a group of farmers and agribusiness people from a six county area in North Central Iowa. I told them that it was an important time to focus on value-added agriculture projects. The group started meeting on a regular basis. We discussed what type of organization we wanted to develop and how it should be developed. A business was formally incorporated in August of 1998 as a section 501 Cooperative. The cooperative is named Ag Ventures Alliance Cooperative. Ag Ventures Alliance is an organization that develops value-added business ventures. It currently has over 1,100 members, its members have invested about $21 million in business projects AgVA has worked with, and about 50 farmers are currently working on identifying, evaluating, and developing value-added business projects.

Impact

 Two of the primary business projects Ag Ventures was involved in were Midwest Grain Processors (a large scale ethanol plant) and Golden Oval Eggs (an integrated egg layer-egg breaking facility). Midwest Grain Processors started as an Ag Ventures Alliance project while Golden Oval Eggs was an existing Minnesota company that we helped expand into Iowa. Both of these companies achieved outstanding profits levels during their last fiscal year. Golden Oval Eggs recorded a 76% return on investment of which 45% was paid in cash to its investors. Midwest Grain Processors recorded a 49% return on investment of which 25% was paid in cash to its investors. In total, Ag Ventures Alliance members invested $19 million in these two businesses of which they received a total during the last fiscal year of $11.5 million in profits of which $6.3 million was paid in cash.

May 2, 2005
121 - Adding Value and Enhancing Agricultural Products

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