Slaughterhouse shareholders stuck in the mud
MANLIUS, Ill. -- "October is Co-op Month," says the Oct. 6 edition of Midwest Ag Journal in the High Plains Journal of Dodge City, Kan. Inside this issue, it says, "Cooperatives are special! Cooperative people are special! There is no other busin...
MANLIUS, Ill. -- "October is Co-op Month," says the Oct. 6 edition of Midwest Ag Journal in the High Plains Journal of Dodge City, Kan. Inside this issue, it says, "Cooperatives are special! Cooperative people are special! There is no other business model in which the customer has such a direct voice in the operations of the business, or shares in the economic success of the business."
The author of this quote obviously never has been a shareholder in Meadowbrook Farm Coop. of Rantoul, Ill. Just as John Kerry was "Swiftboated" in 2004, these shareholders have been "Meadowbrooked."
Let us back up for the sake of history. December is the 10th anniversary of 8-cent hogs. That was the motivation for the creation of what became MFC in January 2004. Almost 60 months of slaughtering family farm hogs as well as slaughtering those families' wealth as it relates to their hog business and their livelihoods continues daily. These 200 to 240 original stockholders now are thought to be numbered at 120 members.
Going back to the article, "The customer has such a direct voice in the operation of the business." In an August petition shareholders presented to the MFC board, 10 percent or more of the 22 membership and representing more than 10 percent of the outstanding shares, (at least 55,000 shares) petitioned for a meeting by Sept. 10.
Just an example of a few of the demands as Pursuant to Article III Section I of the bylaws of MFC:
"We demand that all MFC stockholders including MFC Board members be allowed to present their ideas . . . and that we are allowed to speak at this meeting without fear of litigation against us for our ideas and statements."
"We demand that Mr. Eugene D. Leman be invited to attend this meeting to answer any and all stockholder questions about his inspection of MFC without fear of litigation against him."
This meeting never took place. So much for a desire to hear the owners' thoughts and concerns and possible solutions. This is not a direct voice; there is no voice.
As for the "sharing in the economic success of the business," on Oct. 15, for example, the afternoon live price (hogs) for the Western Corn Belt was $45.73 per hundredweight, the southern Minnesota-Iowa bid was $45.61 and the Meadowbrook Farms bid of $37.97 for the original stockholders. This is a lost opportunity of $21.72 and $21.39 per hog. You might think they must be getting $20, $30 or $50 per hog in patronage or dividends. No patronage -- no dividend -- no return on investment, never, not one.
Why don't these farmers leave this cooperative, you might ask? They are a captive supply to their own plant. They must deliver one hog for one share per year or pay a fine for nondelivery of $24 per head.
These are not easy conversations with the shareholders, banker or spouse. Twenty dollars lost per hog (minimum) per year is not sustainable. The cleansing of MFC stockholders at this price probably will continue, unsurprisingly.
The purchase price for stock was $18 per share in 2004; some have left for a sale price of 0.01 cent per share, but only after many months of legal battles.
Another option to exit is filing for bankruptcy. Some will say that's unfortunate for everybody or almost everybody. Just as the cooperative told the original stockholders they cannot and will not pay more for their hogs, they are now about to issue 300,000-plus shares and pay those new shareholders the equivalent of Minnesota-Iowa direct price, an increase of more than $20 per hog. How is this equitable to the original shareholders?
This is a cooperative that has received almost $20 million in federal loans and more than $1.6 million in state grants; it is the people's business and the lack of transparency is overwhelming. The cost to these shareholders to date is more than $80 million of their families' wealth and disappearing more everyday. Injustice to one or 100 is injustice to all of us.
Editor's Note: Bolin, president of the American Corn Growers Association, and has farmed in Manlius, Ill., since 1978. He and his wife, Barbara, own and run his family farm of corn, oats and alfalfa and a hog operation.