Farmland Industries Inc. Introduction Today, when we hear the slogans “better farming, better food,” or “proud to be farmer owned” one company comes to mind, Farmland Industries. We may think of this of this fortune 500 company as a leading agricultural powerhouse, which it is, however, it was not always that way. Background Farmland Industries Inc. was founded by Howard A.
Cowden, who was born and raised in Southwestern Missouri. Cowden started young in the cooperative business by working for the Missouri Farmers Association (MFA). However; in October of 1927, he had resigned from the position of secretary for the MFA and started out on his own. Immediately following, Cowden received the MFA oil contract that previously had been held with Standard Oil Company, and Cowden was now in the wholesale oil business. On January 27, 1928, Cowden Oil Company was founded.
This business was moved to Kansas City, Missouri in late 1928. In January of 1929, Cowden Oil Company was dissolved and Union Oil Company (Cooperative) was formed. It was clear that Cowden had planned to do more than just buy and sell oil to local cooperatives. A board of directors was created to run the company, yet Cowden retained full control over the company that he had created. Cowden started recruiting smaller companies to join their cooperative by signing contracts to sell certain amounts of Unions products.
In 1929, Union Oil Company had purchased its first land. “The Two Car Garage,” as it is referred to, was the building that they had purchase to become their new home. In 1935, Union Oil Company changed its name to Consumers Cooperative Association (CCA). CO-OP was decided to be its official logo. In October of 1956, CCA moved to their new home on North Oak Trafficway, in Kansas City, and the company was ready for major business.
In June of 1961, Howard A. Cowden retired as President of CCA and Homer Young stepped in to fill his shoes. In early to mid 1966, CCA changed its name again. This time to Farmland Industries, Inc., however; they still kept that CO-OP symbol for a trademark. CCA now emphasized much of its business to fertilizer, petroleum and commercial feed.
This business only grew and grew for them. “By 1967, Farmland Industries had manufacturing facilities for various kinds of fertilizer at Lawrence, Kansas; Hastings, Nebraska; Green Bay, Florida; Fort Dodge, Iowa; Joplin, Missouri, and a plant under construction in Dodge City” (Fite 281). From here, Farmland Industries only increased its size, sales, and dividends, not to mention popularity. Some of the major lines include: Food Marketing, Feed, Crop Production, Grain, Beef, and Pork. Of course, there are many, many other lines that the company has produced throughout the years. Some of these things include: Ful-O-Pep (Union Oil Companys “Antiknock” gas designed to compete with ethyl), CO-OP tires, Batteries, Groceries, Canning and Dehydration, Tractors, Paint, Twine, Steel buildings, and many other successful ventures, along with many other flops.
“Weve been working to improve margins-by lowering costs, by implementing shared margin programs, by offering prebooking, and contracting programs in fuel, crop production, products, & feed-and by increasing our emphasis on providing timely information and other services” (Annual 94 2). Organizational Culture Today, Farmland is the largest farmer-owned agricultural input cooperative in the United States. Its mission is: To be a producer-driven, customer-focused and profitable “ag supply to consumer foods” cooperative system (The Farmland Cooperative System 6). The people of Farmland Industries believe in American agriculture. They believe that everyone involved in progressive agriculture in America today is entitled to a return on their investments.
Farmlands world headquarters are located in Kansas City, Missouri. The city is located on the banks of the Missouri river in western Missouri. The metropolitan area itself includes four counties in the state of Kansas which helps make up its population of 1.65 million people (U.S. Bureau of the Census 1). According to the U.S. Census Bureau, 82.2 percent of this population are White, 12.7 percent are Black, 3.1 percent are Hispanic, and 1.9 percent include various other Races (1). In 1995, the estimated Kansas City median household income was $37,841.
Thirty-eight percent of the households in the metro area have an effective buying power (this is the discretionary income households have after paying off all debts) of more than $50,000 per year (U.S. Bureau of the Census). Kansas City also boasts one of the lowest cost of living in major metropolitan areas. It ranked third among 25 cities with populations above 1.5 million people (U.S. Bureau of the Census).
There are many exciting things to do once youre in Kansas City. If gambling is what you are looking for, the metro area offers five river boat gambling establishments (Alm 61). In addition to the casinos, year-around dog racing and seasonal horse racing is offered at The Woodlands in Kansas City, KS. Kansas City also offers sporting excitement. The Kansas City Blades for the hockey fans, the Kansas City Royals, a major league baseball team and the Kansas City Chiefs, a professional football team, in which Farmland Industries is a major supporter. Approximately 500,000 farmers and ranchers across the Midwest own the Farmland Cooperative system. The cooperative system was built to serve these people.
Their economic benefit is why it continues to exist and evolve (The Farmland Cooperative System 1). These producers own more than 1,400 farmer-cooperative associations which, in turn, own Farmland Industries, Inc., their regional agricultural cooperative (The Farmland Cooperative System 17). More than 13,000 livestock producers also own the regional co-op directly, since it is through this entity that they market and add value to their hogs and cattle. It is this network of farmers, farmer-cooperatives and regionaland the many people who work for them–that make up the Farmland Cooperative System. Each member of this network has important roles in ensuring its total, long-term profitability. Farmland is the largest farmer-owned regional co-op in America, with sales in 1995, totaling $7.3 billion and it does business in all 50 states and over 70 countries (The Farmland Cooperative System 17).
Its owners, who represent 22 Midwestern states account for 80% of U.S. grain and livestock production, set the policies and direction for their regional through elected representatives to their local association and regional boards of directors (The Farmland Cooperative System 17). Their locally based farmer-cooperative associations function as central links between the farmer and their regional in designing the systems products, services, and information to meet their individual needs. The flexibility and responsiveness of these associations give them an advantage over other agricultural input suppliers (The Farmland Cooperative System 12). Farmland and the thousands of people it employs are compelled by one common purpose: to help its farmer-owners accomplish long-term success in agriculture by positioning them and their system as competitive forces in global agribusiness.
To be competitive in the world marketplace, the systems producer-owners must continue to find ways to lower their unit production costs, increase their market access, and secure higher returns from their farm productsthat is, increase their revenues from the “farm gate to consumer” sector of the food chain. Helping them do that is the primary focus of their locally based and regional cooperatives. Lowering their production costs, increasing markets for their farm products, and improving the quality of their grains and livestock through technology are key functions their Cooperative system performs for its owners to help them improve their profitability. Expanded markets and better quality often translate into higher prices for their farm commodities. Naturally, the successes Farmland has enjoyed and the products and services they provide their patrons have not come overnight or by reckless leadership. It has been a long process led by men and women dedicated to the advancement of agriculture.
Management Style As with any major corporation, a competent management staff is critical to the well being of the company. The management staff acts as the infrastructure of the company, making sure that orders are handed down and initiated. Farmland Industries Inc. is governed by 21 Board of Directors that consist of “prominent farmers, ranchers, and managers of farmer co-ops throughout the Midwest” (Tolley 1). Each of the members of the Board of Directors is elected to a three-year term (Farmland 23). President and chief executive officer Harry Cleberg is the leader of the Farmland team and is also a member of the Board of Directors. He has been with the company for 37 years and named CEO in April 1991 and recently been named Agri-Marketer of the year (Hartke C).
As CEO, Cleberg must create a motivational factor for Farmlands employees. He does not do this by sitting in his office all day as one would think, but he actually goes into the work areas and meets with many of the 14,000 employees (Hartke C). He enjoys making unannounced visits to various areas, and even sits in “small-group meetings that he calls listening posts,” covering all 22 state trade areas every 18 months. (Hartke C). These listening posts which Cleberg speaks with consist of employees and managers ranging in size from 10 to 100 people.
According to Harry Cleberg, he spends about 70 percent of his time outside his office actively communicating with other people in their offices (Hartke D). He has a seven member senior management staff that he meets with for about four hours once a week. The senior management staff and council “are made up of highly skilled individuals” (Farmland 23). In addition to this, he also meets with staff directors every week for about three hours (Hartke D). This man did not get to the top if Kansas Citys largest private company (Kansas City Business Journal 20) by sitting in board rooms and talking on the telephone, but he makes it a point to communicate one on one with the employees and mana …