The lasting legacy of Minnesota Corn Processors
It began in the early 1980s through efforts of a group of farmers who had a vision for the future. They pooled their resources to create Minnesota Corn Processors in Marshall because of the potential of corn as a renewable resource. It was a reaction to their 1970s energy crisis complete with record high petroleum prices and long lines at the pump.
The overall goal is best summarized by the term “value added.” Like shareholders in any cooperative, MCP members wanted to add value to corn as well as livestock feed to create more income for grass roots producers.
Their determination was so far reaching that by the early 1990s MCP was the second largest producer of ethanol in the world next to the Decatur Ill.-based Archer Daniels Midland. A second MCP plant was built in Columbus, Neb., a cattle feedlot was planned near Elkton, South Dakota, for development of gluten feed by-products and plans were made to boost daily water supplies with help from the Burr Wellfield west of Canby which was being developed by Lincoln Pipestone Rural Water. The new well field also brought service to communities stretching from Porter to Green Valley as well as many rural users.
The feedlot was never built since local opposition outweighed support from others in Brookings County, South Dakota, including Elkton’s mayor. The water service went forward despite opposition from a group of Lake Cochrane, S.D. lakeshore residents and restrictions from the Minnesota Department of Natural Resources. Efforts were made to determine how much pumping could take place without damaging Lake Cochrane and nearby wetland resources.
MCP’s last major expansion effort in 1995 involved the addition of corn based sweetener refining. Opportunities existed for using corn syrup as a sweetener in many food and beverage products. Starch derived from corn grinding for value-added products such as clothing and golf tees was in greater supply after the expansion.
At that point the company faced an unexpected challenge. Record high corn market prices in 1996 made it impossible for corn plants to reach profit goals. In 1997 MCP shareholders voted to sell 30 percent of their cooperative to ADM as a silent partner.
Many people took the partnership as a sign that before long ADM would own it all. MCP continued for five more years under the leadership of new Chief Executive Officer Dan Thompson, whose previous food industry experience included companies such as BakeRite and Dr. Pepper.
Thompson, with the advisement of board chairman Jerry Jacoby of Springfield and other MCP board members, succeeded in diversifying MCP’s corn based enterprises. Examples include the development of a natural based road de-icing product known as Ice Ban and investment in a biological research company. These changes, along with more stable corn prices, enabled MCP to earn a record profit of $11 million. It also made MCP a more interesting possibility for a buyout since it was no longer in danger of going bankrupt.
Through negotiations with ADM, Thompson succeeded in bringing the offer for the rest of MCP up to $2.90 per share, enough to bring the offer to the board for a shareholder vote. The proposal was approved by a sizable majority of board members.
A meeting for a final vote at Jackpot Junction casino near Morton became the last step in the sale. Shareholders voted to sell by 81 percent, significantly more than the two-thirds margin required under cooperative by-laws. The only district out of seven that would have voted down the proposal was the district that included Marshall and the surrounding area. Even in the local district, a definite majority voted in favor.
One Marshall area farmer told the Independent that the vote was a disaster, another stop toward industrial agriculture superceding cooperatives and family farmers. A neighbor in the same township who favored the sale said shareholders would be crazy if they didn’t sell.
The Nebraska district voted overwhelmingly for the sale even though they stood to lose the most money after they invested in MCP at its peak. Older shareholders for the most part were satisfied with their long term returns while newer members wanted to accept their losses instead of taking risks of another unfavorable corn industry trend.
Thompson’s last day at MCP occurred almost immediately after the vote. As expected, almost all of the MCP office staff, about 150 people altogether, lost their jobs because of duplication with ADM’s headquarters in Decatur.
When looking at the positives and negatives for the Marshall area, we lost jobs and the chance to be the hometown of a very successful farm cooperative. The advantage was, and still remains, the fact that we continue to have a corn plant with a large volume and a valuable number of production jobs.
MCP still represents an example of the entrepreneurship fostered by the cooperative business. In a true co-op, it all comes down to one member equaling one vote regardless of how many shares the member owns. They can do what many ground floor investors in MCP did, boost their income with co-op memberships and then sell their shares when it becomes advantageous.
More than a dozen corn and soybean cooperatives have been started under MCP’s early 1980s example. Farmer shareholders continue to want to succeed as much as possible, benefit from their success, and become valuable contributors to local economies.
Someone could look back in hindsight and say MCP got too big to the point that a sale best met the individual needs of most members. That’s the nature of a co-op. Shareholders took a risk with their start-up, profited when MCP expanded, then had to be realists in 2002 by believing it was best at that point to sell. Business is business, yet MCP’s example of building a 20-year history that was mostly successful continues to serve as a model for new possibilities.