Published on 07/24/02

Georgia oilseed co-op moves closer to reality

By Dan Rahn
University of Georgia

Promising higher profits for hundreds of Georgia farmers, the new Farmers Oilseed Cooperative, Inc., has moved a step closer to reality, narrowing to five the list of prospective sites for their proposed $55 million processing plant.

FOC leaders and others met with representatives of eight communities July 16-17. The co-op asked five to submit written proposals. They plan to narrow that to three before beginning formal negotiations.

"They hope to make a final decision at their board meeting Aug. 9," said George Shumaker, who accompanied the group on its mid-July site visits.

55 to 60 employees

The processing plant would employ 55 to 60 people. It will crush soybeans, canola, peanuts and sunflower seed for oils and other products.

Shumaker, an agricultural economist with the University of Georgia College of Agricultural and Environmental Sciences, has advised the co-op throughout its development.

While the co-op would be new to Georgia, it's not really new.

"This concept has proven itself time and again in the Midwest," he said. "Farmers there recognize the value of joining together to enhance their profits. And Georgia farmers are just as smart as Illinois and Iowa farmers."

Incorporated May 2001

The FOC was incorporated in May 2001, two years after the idea surfaced in Georgia. With 152 charter members from throughout the state, the co-op spent the past year developing a business plan, handling the legal paperwork required to make a stock sale and laying out the site requirements for the processing plant.

"They decided not to sell stock until they determined where the plant will be," Shumaker said. "The most common question they kept hearing was where the plant would be."

At one point, the co-op was considering 25 sites. They came up with about half of those on their own. The rest were added by industry location specialists Joe Riley of Georgia Electric Membership Corporation and Bill Dobbs of the Georgia Department of Industry, Trade and Tourism.

A whirlwind tour

When the co-op narrowed that list to eight, Riley and Dobbs set up a whirlwind tour for FOC president Billy Wayne Sellers, site selection chair Ben Deal and Shumaker to see the sites and meet with community representatives.

"All in all, the visits were very good," Sellers said. "We had some strong proposals. Now the committee will have to sort through them and make the best decision for the farmers. It's going to be a hard decision."

Once the final site is determined, Shumaker said, the co-op will develop delivery points using existing grain elevators in areas remote from the plant, so distant growers won't have far to truck their crops.

Of the oilseeds the plant would process, only soybeans and peanuts are grown to any extent in Georgia now.

Bright canola prospects

UGA researchers and extension scientists have touted the profit potential of canola for at least a decade. But growers have had no nearby processing plant. A few growers are interested in growing sunflowers. Both crops produce high-value oils.

All four crops' value will be higher for co-op shareholders.

"At current market prices (about $5 a bushel), soybean growers would get about 80 cents more per bushel by marketing through the co-op," Shumaker said. "Canola growers could add about $2.40 to the current $5 per bushel."

Sellers said that's the best thing the FOC has to offer. "The farmer will own the product until it gets to the grocery shelves," he said. The added income from the processing is money farmers don't ordinarily get.

Shareholders profit

The co-op will buy oilseeds first from shareholders. Other farmers may be able to sell to the co-op, Shumaker said, but only shareholders will get the added income for the processing.

To build the plant and begin operations, Shumaker said, FOC will need 750 to 800 shareholders with average commitments of 275 acres to the co-op. Minimum investments will be 1,500 shares at $2.25 per share.

"With the economy like it is, that's going to be a hard decision for farmers," Sellers said. "But it's a good project. It will work. And I think farmers will realize that once they understand the concept."

Dan Rahn is a news editor with the University of Georgia College of Agricultural and Environmental Sciences.