Recently it was announced that the board of directors of NEW Co-op, headquartered in Fort Dodge, IA, reached out to MaxYield’s board about conducting a study to evaluate what a combined effort of the co-ops might look like. The MaxYield board of directors unanimously agreed to move forward with a unification study.
The letter below was sent to Class A (voting) members of MaxYield Cooperative on March 15th with updates on the unification study.
March 15, 2021
Dear MaxYield Cooperative Members:
In a letter dated February 16th, it was announced that the boards of directors of MaxYield Cooperative and NEW Cooperative, headquartered in Fort Dodge, IA, have entered into a unification study between the two cooperatives.
Thank you for your support and patience as we navigate this study. Since the initial announcement, a few common questions have surfaced and we are happy to provide additional details of the study.
How did conversations start between the two cooperatives?
In mid-December, MaxYield CEO Keith Heim announced his intention to retire from MaxYield. Shortly after this announcement, the NEW Co-op board of directors reached out to the board of directors at MaxYield. They asked if MaxYield’s board would consider a joint board meeting to discuss if it would make sense to evaluate what a combined effort of the two companies would look like.
The MaxYield board discussed this request and unanimously agreed that the two cooperative boards should meet. A joint board meeting between MaxYield and NEW Co-op took place in late January and on January 29th, the MaxYield board unanimously approved entering into a unification study.
MaxYield and NEW are having frequent conversations with each other regarding this study and expect that the unification study will be completed in March.
Has a unification already taken place between MaxYield and NEW Co-op?
No. Both cooperatives continue to operate separately, just as they always have. It’s business as usual for both co-ops. All that has transpired so far is the start of the unification study.
What is MaxYield’s financial condition?
Another question that has arisen after this unification study was announced was if this study is motivated by poor financials at MaxYield. That is absolutely not the case. Both MaxYield and NEW Cooperative are very financially strong organizations. MaxYield has had consistent, positive local earnings and in fiscal year 2020 we achieved the second best revenue in company history. Our balance sheet has never been stronger and our retained savings are nearly $67 million as compared to 1997 when they were ($122,242).
If MaxYield’s financials are strong, why is the board considering this unification study?
Agriculture and agribusiness are changing rapidly and will continue to do so. Technology, communication and investments in capital projects are leading drivers of this change. The Iowa agribusiness marketplace will look noticeably different in the next 5 to 10 years than it does today.
The MaxYield board of directors have an obligation to members to explore opportunities that can be beneficial to its member-owners. The board has asked us to see what a combined entity would look like for our members. Accelerating how equity is paid out, developing additional grain marketing opportunities, capitalizing on opportunities in the feed business that we don’t have today, along with evaluating and expediting capital improvements and accessing additional technology are among the many areas being explored in this study.
What happens next?
The unification study and recommendations resulting from the study will be presented to both boards in late March. MaxYield’s members will be notified in early April of the board’s decision on whether to move forward with the unification proposal or to continue to operate MaxYield as is.
If a unification proposal moves forward from the MaxYield board, MaxYield’s members will receive that information in the mail in April. In addition to the member letter in April, we will host member unification informational meetings in June and provide information about the potential next steps in this process.
MaxYield’s membership will vote on the unification proposal if this process proceeds to that point. If a proposal moves forward, any vote by MaxYield’s membership would take place in June.
Who do I contact with questions?
Thank you for your support of MaxYield Cooperative!
Howard Haas, Board Chairman & Keith Heim, CEO