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Dairy Processors Managing through 2020 Volatility

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Home > Education & Events > November 2020 > Dairy Processors Managing through 2020 Volatility
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As Seen in Cheese Market News

In an especially unpredictable year for the dairy industry, processors are shifting tactics and finding new ways to achieve growth and security through taking flexible and creative approaches. 

“Volatility has been front and center in 2020, and our agility has proven to be the key on forward progress,” says Compeer Financial Senior Food and Agribusiness Relationship Manager Ty Rohloff. “In addition, market disruptions have caused a rethink on how to process, market and prepare. When well-positioned, challenges can lead to opportunities, and Compeer Financial is on deck and ready to help.”

Formed in 2017 with the merger of 1st Farm Credit Services, AgStar Financial Services and Badgerland Financial, Compeer Financial is a member-owned cooperative and third-largest association in the Farm Credit System. It has 46 offices across Wisconsin, Minnesota and Illinois. 

“As experts in the entire food chain space, which is the major industry that we serve, we have a solid understanding of the business cycle,” Rohloff says. 

Dairy processing makes up a good portion of Compeer’s business in Wisconsin. Rohloff himself grew up on his family’s farm in Fort Atkinson, Wisconsin, where he remains involved in its cash grain operation. He says his experience working on dairy farms and later in the broader ag industry has given him an appreciation for Compeer members’ needs. 

“With a specialized dairy group that works with larger dairy clients and another group that focuses on smaller operations, we finance a large portion of the fluid milk that comes into most plants,” he says. “There are a lot of variables to operating this type of plant, and complex economics and strategy go into making the different products that come out of fluid milk. We have a good understanding of butter versus cheese versus yogurt, etc., and have touchpoints in almost every one of those.”

In addition to basic financing, leasing programs, consulting and tax and accounting services are among the full-service options available to Compeer’s clients. Rohloff notes that Compeer finances a lot of real estate, and one advantage is the ability to offer long-term fixed rates on some of its financing. It also offers long-term debt products, operating lines of credit and leasing for products like plant equipment, trucks and delivery equipment. 

“It takes capital and a good business plan to put a value add on a dairy product,” Rohloff says. “We have financing in place that encompasses the processing piece and every step along the supply chain. We have financed and support a lot of the companies you would recognize in the grocery store.” 

Rohloff says Compeer is competitive on products and services that might be found at commercial banks as well as services like a robust online banking program. He notes the biggest difference is how Compeer is owned and managed. Cooperative owners receive part of Compeer’s profits in the form of cash patronage each year, and the 2019 patronage and allocated equities paid out this year totaled $177 million. 

Compeer’s board is made up of its clients, so they have a voice in how the business operates and what its priorities and goals are. Furthermore, Compeer is actively involved in the communities it serves. For example, in Wisconsin

Rohloff is on the Wisconsin State Fair Dairy Promotion Board and along with Compeer partners with organizations like the Wisconsin Dairy Products Association, Professional Dairy Producers of Wisconsin, Wisconsin Cheese Makers Association and Dairy Business Association.

“What sets us apart overall is being member-owned. It’s important for our clients to have a lot of the control in how we operate,” Rohloff says. “We’re very proud of the areas we serve and the places we call home. A lot of us have farming or manufacturing backgrounds. We’re very proactive in trying to help the next generation come in. We offer a lot of client education and do a lot with benchmarking, showing how our clients stack up against peers in business decisions. 

“Our goal is to understand each client’s business, how they operate, the opportunities and challenges they may face,” he adds. “That means we’re with that business long-term and we want to see them succeed.” CMN 
 
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