ULEN, Minn. — CHS and West Central Ag Services have signed a nonbinding letter of intent for West Central Ag to join the ag cooperative giant.
“Our two cooperatives are aligned in our vision to advance the cooperative system and best serve our owners by connecting our producers to the global marketplace,” Duane Brendemuhl, West Central Ag Services Board president and chair, said in a Wednesday, May 15 statement. “This proposed transaction provides an opportunity to bring more value to our farmer owners and compete more effectively with other local ag companies, while positioning us for the future success of a combined cooperative through efficient, globally connected supply chains.”
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West Central Ag Services is based in Ulen, Minnesota, with additional locations in Ada, Beltrami, Felton, Foxhome, Lake Park, Mahnomen, Park Rapids and Perley. According to its website, the cooperative business was founded in 2000 and offers services including crop nutrients, seed, crop protection products, producer financing, crop insurance, grain marketing, tires and repair. In its 2022 financial statement, the cooperative reported net income of more than $18.67 million.
CHS, based in Inver Grove Heights, Minnesota, is the largest farmer-owned agricultural cooperative in the U.S. and is diversified into energy and lubricants — with the Cenex brand — animal nutrition, oilseed products and agronomy services and products.
The cooperative's origins date back to 1929, and it has operated under the name CHS since the merger of Cenex and Harvest States in 1998. The cooperative has a worldwide reach, with locations in 65 countries. In the second quarter of fiscal year 2024, which ended Feb. 29, the company reported quarterly net income of $170.3 million and revenues of $9.1 billion, down from $292.3 million and revenues of $11.3 billion in the second quarter of 2023.
The two companies have already worked together in a joint venture based in Hannaford, North Dakota, called Central Plains Ag Services, which formed in 2009. The cooperative has locations in the North Dakota towns of Aneta, Cooperstown, Courtenay, Luverne and McVille, along with a fertilizer hub and a 2.8-million-bushel shuttle loading facility in Hannaford.
“CHS and West Central Ag Services have a longstanding, strong relationship based on mutual trust and respect, as evidenced by our joint venture Central Plains Ag Services” Rick Dusek, executive vice president of ag retail, distribution and transportation at CHS, said in a statement. “Better connecting the global agriculture supply chain and investing in the speed and space of our assets provides better market access and creates more value for farmer owners,” says Dusek.
CHS and West Central Ag Services will now begin due diligence on the proposed transaction, which is subject to necessary approvals.
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