Pine Island Farmer's Elevator Company

Cooperative News:

-- Manager's Note -- by Tim Clemens

Marketing of grain can be a time-consuming effort. The marketplace itself has become more complex, very global. Events in distant places such as Argentina, Australia, and China have a quick and often major impact on the prices posted here in our office.

All of this means that today's farmer should develop a marketing plan -- a strategy to guide marketing decisions throughout the year and provide the flexibility to deal with the unexpected.

We at the Pine Island Farmers Elevator would like to introduce a new grain service we will offer this summer to help our customers. The marketing portion of this program is called CHAMP, Comprehensive Hedging and Marketing Program. This risk management program is sponsored by Country Hedging, a subsidiary of Cenex Harvest States. We are in the process of hiring a broker to implement this program. Our broker will have an office here at the elevator, but will be available out in the country.

This program will enable us to better serve our producers with crops to market through marketing plans specifically wrote for each individual. This program is not limited to crops, but can include livestock and milk hedging. With their direct involvement in the process, producers know where their marketing plan is going and why. More important, final marketing decisions remain in the producer's hands. The close working relationship between the producer and our local Country Hedging branch manager is supported by Country Hedging's headquarters personnel, who know the grain market place and the tools available to help manage the pricing risks that prevail.

Although there will be a small charge for this program to offset the costs, we feel this is a very valuable service to most every producer. If you are interested in taking a better look at the CHAMP program please let Ron or me know, as we are planning introductory meetings this summer.

Your regional cooperative system as we know it is changing rapidly. As I read my daily mail, there are many articles on the co-op systems' attempt to consolidate and gear up for the ever-changing agriculture world.

One of the latest changes has been the purchase of Terra Industries by the Cenex Harvest States / Land O' Lakes Agronomy Company. This purchase includes 400 locations in the US and Canada, which includes all retail and distributor sites for a sum of $361,000,000 . It does not include Terra's anhydrous facility. The purchase is expected to take place by August of this year and it is yet to be determined what is going to happen to these retail outlets. The early comments from the corporate office are that the purpose is to spin off or sell off the retail facilities to the local cooperatives. I will keep you informed as this unfolds during the year.

Soon after the news of the Terra purchase, Farmland and Cenex Harvest States announced that the Board of Directors from both cooperatives will focus their efforts on the consolidation of the two regional cooperatives. These merger talks are expected to take a year or so.

-- The Co-op Difference -- by Your Board of Directors

Periodically, your Board of Directors reviews the credit policy of the Pine Island Farmers Elevator. The Board reviewed the policy at their recent board meeting.

Extending credit is for the convenience of our customers. It enables them to write one check for their entire month's purchases. Our current policy states that all purchases from one cycle billing are due before the next cycle billing is processed. This gives our customers from 30 to 59 days grace period. (example, purchases made from the cycle billing ending May 10 are due June 10.)

Any account whose balance is not paid within the credit guidelines is past due and will be placed on a cash-only basis. This means that if the account mentioned above is not paid by June 10th, the account would be cash only.

After payment of an account that has been placed on a cash-only basis, the account will be required to have an up-to-date credit application on file before charging privileges are reinstated.

This policy change will become effective January 1, 2000, in order to allow our customers ample time to make any necessary arrangements. We value your patronage and thank you for it. We also appreciate your attention to these details, to help assure the health of your co-op's finances and your credit rating. Your input or questions are always welcome.

Current Board of Directors :

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