Episode #1 | The Engine Behind the Co-op

Transcript of Podcast Video

Transcripts have been lightly edited for clarity and readability. 

Intro: Welcome to At the Table with Central Valley Ag, we bring transparent leadership perspectives, innovative strategies and actionable insights to help you grow your operation and strengthen your foundation for long-term success. Whether you're in the field, in the office, or thinking about what's next, this is where ideas become action. Pull up a seat - let's get started. 

Nic McCarthy: Well, thank you for joining me here today. This is the first episode of At the Table with Central Valley Ag. I'm your host, Nic McCarthy, CEO of Central Valley Ag cooperative. I'm excited to welcome this brand new space where we pull up a seat to explore ideas, opportunities, and strategies that help producers grow their operations and strengthen their foundations for long-term success. On today's episode, we're taking a deep dive into something that impacts every part of what we do - the projects and innovations happening right here at Central Valley Ag. Joining me at the table are Brent Reichmuth, Senior Vice President of Operations, and Wes O'Bannon, Vice President at CVA. Brent and Wes bring a wealth of expertise in operations and leadership, and today they'll share insights into some of the exciting projects underway. Brent and Wes, thanks for joining us today. Before we dive in, can you each share a little about your role at CVA and your perspective on the importance of operations to the cooperative and its members? 

Wes O'Bannon: You bet. Thank you Nic. 

Brent Reichmuth: Thank you, Nic. I'm glad to be here. My role as senior vice president of operations for CVA is I have the privilege of overseeing grain, agronomy and recently feed operations for the company. Making sure that we're servicing the sale, we're serving our producers, and getting the work done as we need to make sure that our customers continue to roll. 

Wes O'Bannon: From my seat, I've been privileged to be in all aspects of operations, from grain and agronomy, a little bit of feed and even a little bit of energy over the years. And today, I'm the vice president of operations for grain, agronomy and feed for our south half of Nebraska and Kansas locations. So pretty diverse with a lot of dryland and challenges in Kansas with the weather, and then through our irrigated belt here in southern Nebraska. 

Nic McCarthy: Yeah, you have a diverse area you cover that's for sure. 

Wes O'Bannon: That's for sure. We have some of the best ground and some of the roughest I would call. 

Nic McCarthy: Most challenging, but can be productive as long as we get some rains down there which we've been blessed with this year. Well, thank you both for joining me. All three of us came up through the operations side of things, cut our teeth at some point in time with a lot of hands-on work, and I just was thinking about today when we were coming to sit down, and what's been the biggest change you've seen over your career? Wes, you've been in this a long time. I'm 25 years, Brent, you're 22 years. What's been the biggest change that you've seen? Not only in the cooperative world, but at the farm gate? 

Wes O'Bannon: Well, Nic, from my seat, they kind of go hand in hand. What changes at the farm, impacts us and we have to change and be adapted and ready for them. But 34 years ago when I started and to today, speed. Speed of everything we do, the growers' ability to plant, harvest, want information, want opportunities - everything is just so fast today. One combine today, would take care of all the dumping capacity at the first elevator I started at.  

Nic McCarthy: Wow, one combine? 

Wes O'Bannon: Yes, one combine. 

Nic McCarthy: Isn't that crazy? How about from your seat, Brent? 

Brent Reichmuth: I think one of the biggest benefits CVA has in the labor pool is we get to live and reside in rural communities, but the way we've seen rural communities change and shrink population-wise has made our labor pool tougher to acquire and how we've had to change to make sure that we have the people needed to do the job and service. 

Nic McCarthy: You think about the speed, the labor, and then just put the sheer volume in is what baffles me. We've grown yields, with yields growing at the farm gate and our producers being able to maximize what they could do on a per acre basis takes a lot more inputs. We need fertilizer, we need all those things. And that's continued to grow. And to Brent's point, we're growing volumes out of these rural communities. You think about the amount of bushels that comes to to or the amount of fertilizer that goes outbound to the fields. And we've really got less labor pool to help us do that. So it becomes a challenge and really kind of tees up what we're going to talk about this morning. As we reinvest and look at the operational piece, a lot of that has had to be built around a lack of labor and really keeping up with the speed of the farmers. So, walk us through some of the visions that operations has to have to be able to do that. 

Brent Reichmuth: Well, I think it starts with how do you do more with less? How do we become more efficient in every aspect of our operations? How do we make sure that we're utilizing our people, our equipment, our facilities, to the absolute maximum that we can, making sure that we have our personnel locations where the work needs to be done. Unfortunately, we can't continue to man every elevator that we've had over the years or every agronomy plant, but where we've made investments, how can we be more efficient? How can we make sure that we're maximizing our assets? 

Wes O'Bannon: I would echo that a little bit. The fact that when you look at our footprint, our volumes continue to go up. The producers raise more, they need more, but when you look at our locations, they continue to go down. And the one thing Im' really proud of being part of CVA is we have looked at our producers and said, how do we take care of your needs? We can't do it at every location, but we want to take care of your needs. We want to be able to service you. So as we've shut down some facilities, we've added services, we've added ability with dump speed, with hubs that we can reach out. So that's been a big deal for me. When I started in this industry, we closed some facilities and we didn't give them that option. We closed them because we didn't know how to make money. Today, when we close facilities, we're looking at how do we still take care of that producer. And to me, that's a big win-win for CVA and our producers. 

Brent Reichmuth: And not always, but in most cases, we're reinvesting before we exit. We're making improvements, we're making the necessary adjustments to get us to where we can serve that producer of today and tomorrow before we exit a location that is old and outdated. 

Nic McCarthy: And those are always tough decisions. And I think the approach to give options, not just pull those services out and say we're abandoning the area, the reinvestment that we've made into hubs and in flagship locations to so, here's where we're going to put our flag. And really the challenges with locations as a cooperative system, when we started these things back in the late 1800's and worked through the 1900's, every town, just like a school, had a co-op. And so everybody had a local co-op. And through time, we've seen consolidation. We've seen businesses change, we've seen the landscape change. In comparison to school, we've seen comparison in our schools and we've seen consolidation in our cooperatives. We've had to make some tough decisions to exit some of those and it's never fun. 

But I think doing the right thing and say, we can still service you and have opportunities for you is big. And that's the reinvestment that this cooperative needs to keep making. So as we talk about that, what are some projects that come to mind? Over the past couple of years, we've had a lot of big ones. We've reinvested heavily. The health of your cooperative is measured by the ability to retire equity, reinvest in the business and pay off debt, and we've been able to do all of that. But one of the highlight is the reinvestment into businesses and what we've built and what we've done to help continue to service the customer. So, what are some highlights you guys would like to visit with? 

Brent Reichmuth: We've made a lot of investments over the last three to four years. The majority of them centered around the grain division, probably highlighted by the addition of the Courtland Hub at Courtland, Kansas. And all of the investments we've made in Kansas over the past couple of years. We've made three or four large investments that are going to allow us to become more efficient and serve the producer of tomorrow. And certainly that is highlighted by the Courtland Hub and the vision for really creating a state-of-the-art facility for grain, agronomy and energy that really has the speed to handle the needs of today. 

Wes O'Bannon: I've been truly blessed to have the opportunity to be a part of a lot of large projects over the last three years. The Courtland Hub is a flagship. I'm very proud of it. I'm very proud of the automation we've got built into that project as we go forward. I truly hope that we'll see that to be a facility we can dump at 24/7 at some point in the near future. I hate to say unmanned elevator concept because it's something we've talked about for years and we haven't got there but, 

Nic McCarthy: It's a dream. 

Wes O'Bannon: It's a dream. 

Nic McCarthy: We have to chase it. 

Wes O'Bannon: And we are getting closer. There are investments we've made to reach that dream or that goal, and I think we'll get there. Agronomy wise, Kansas, we've done some big investments too on the agronomy side with the plant there at Courtland and now the plant at The Junction in Linn, Kansas. That'll be a big thing for us going forward. We're also part owner of NorKan Fertilizer Terminal (Concordia, Kansas) and some investments we have started there in the dry shed, I'm excited about what that does for us. But even here in Nebraska, with some of our updates in the grain side that put us in a position to be a leader and go out and start a corn cleaning plant (Hampton, Nebraska) for our producers locally here. So big investment in Bradshaw a couple of years ago for speed and space. So we could take some of the speed and space away from Hampton, and utilize it within a corn cleaning plant and still take care of our producers. So project wise, I've been blessed to have the opportunity to really impact growers and it's been fun. 

Nic McCarthy: Absolutely. What kind of investment is it to put a Courtland Hub up? 

Brent Reichmuth: I think the total project all in is about $58 million and takes an extreme amount of planning and extreme amount of work. Just making sure that we're getting to the right design and the right layout as you're spending that kind of money, you don't want to be wrong. And we feel really good that we got it right. So we've talked a little bit about speed and space, and I think just to highlight that a little bit, with the Courtland Hub we're talking about and the other investments that we made in Kansas, it has affected 10 or so locations that were tributary to those locations to where we have exited them. And we've done the some of the same in Nebraska. And as we're in the middle of corn harvest right now, we're kind of living it. We have less locations, but the last three days in a row, we've set our single day harvest take record. So while we have less locations, we have more efficient locations where we can crank the trucks through and get the dump done. And we're seeing that as we take record takes here the last three days. 

Nic McCarthy: Record takes, what are you talking? 

Brent Reichmuth: We're pushing 5.5 million bushels. 

Nic McCarthy: Wow. 

Brent Reichmuth: The last three days have been over 5 million bushels single day takes so we're set up for a record corn take this year with these facilities. 

Nic McCarthy: Which has been a challenge when we look at the export market and we heavily rely on shipping grain on these shuttle loaders out to make space. It could be a challenge this year as we start thinking about space. I know that we've been talking and we have a pretty good plan to continue to service customers here as we finish out harvest. 

Wes O'Bannon: Between our logistics conversation with CVA grain merchandising and our logistic conversations in Kansas with our AgMark LLC merchandising, I feel very confident that we've done all we can from a planning standpoint to try and keep our fluidity in our locations. To date, we've had few minor hiccups, but I'm very proud of our performance of our team, my team,Ind in getting accomplished to stay fluid and take care of our producers. When you're having those kind of (record) days, there is no room for error. There is no room for breakdown. So preventative maintenance and the ability to keep our repairs in place and costs down, but keep our facilities running smoothly has been huge. I'm proud of our teams and where we've gotten to over the years. And that again, comes back to making sure you have the right facilities, but maybe not all the facilities. So tough things to think through and decide as you put the plan together, but I'm really happy where we're at today with our facilities and our continued growth in the grain side. 

Nic McCarthy: Yeah, that's great. Well, switching gears a little bit, I know one of the key components of the operations team here at CVA is that you employ the majority of the workforce. I think 65% of the workforce lays in the operation side of things as labor needs to move bushels, move tons, are huge in our company. How's labor pool looking as we've come off of COVID when it was really strapped. How are you feeling today and what's kind of the path forward that you see the vision with operations in servicing the customer?  

Brent Reichmuth: We've seen a really good influx of domestic applications. Seems like the COVID personnel market has settled out and we're seeing more applicants for jobs that really, for a couple of years, were non-existent. So we're getting good applicants. We're getting opportunities to actually do some interviewing and choose the best candidate for positions where, unfortunately, there for a period of time that wasn't the case. At Central Valley Ag, we do rely on the H2A program. We've been everywhere from just getting our toe wet to having 140 H2A employees at CVA. The last few years, due to some changes in the program and how the CDL portion worked, we've been down to about 80 and I think that's kind of a sweet spot for CVA, but we do need them, and we rely heavily on them through the spring, summer and into harvest. Little bit concerned with a government shutdown right now. We should be filing for H2A and we should be getting our paperwork in line so that we can get them here in February and early March. And we're not able to do that right now. So we're working on getting our paperwork in line. So we can be at the front of the line when the government does open back up so we can start that process. 

Wes O'Bannon: From the labor standpoint, Brent hit a good, key point. We're finally getting good applicants. A little bit of that is, in my opinion, we're getting the perception of our facilities and what we offer for an opportunity change a little bit in our communities. Truly at CVA, you have the opportunity for a career. You may start as dumping trucks. That's what I did 34 years ago, right. 

Nic McCarthy: For sure. 

Wes O'Bannon: But if you want opportunity, we have a very extensive training plan with CVAU, and if you want to grow as an employee, you'll get opportunities. So finally getting that out to the community a little bit better gives us the opportunity to get more quality employee applicants. The H2A program has been a God blessing for us. After COVID, I don't know how we would have ran our business without it. I continue to try and figure out how to run without it. Wit it being a government program, that could go away. We want to get to a point where we're not relying on it. Automation has got to get more built into what we do. It's been expensive and labor's been cheap - I'm talking in the last 10 to 15 years in retrospect, but that cheap labor's gone. It's probably gone forever. So the opportunity for automation - instead of doing hard to do jobs, our employees are doing jobs that require their minds, and not their backs as much is the direction we're going. I don't know that it cuts employees a lot, but it certainly gives us an opportunity to grow employees into a lot better position that running the scoop shovel. 

Brent Reichmuth: He talks about an opportunity for a career, and the three of us are all products of opportunities. We all started at the front line, and CVA takes a lot of pride in growing our talent, growing our employee base and giving them opportunities for growth within the company. And so getting applicants and getting people that want to be in agriculture, and want to help grow food is extremely important. It's extremely important for the longevity of our cooperative. And it's really going to help set us up for the talent that we're going to need down the road. 

Nic McCarthy: For sure. For sure. It's a big thing. I look at the struggles that we had coming post-COVID, and I just know the positions that we struggle to fill. And a lot of that is due to we've got a shrinking labor force coming off the farm also. The farms have consolidated over the years, and one of the hardest positions to fill is an applicator. Some of the challenges come with our applicants, oftentimes, haven't run farm machinery or run big machines. So it's a big leap and a big training obstacle that we have. Well, I truly appreciate you both coming here today. Any highlights that we missed in closing or any exciting things in the future for operations that we missed that we want to cover before we wrap up? 

Brent Reichmuth: I think operationally, we've got to continue to look for efficiencies at our locations. We always have a bucket of projects that we're checking out and investigating and pricing and seeing how they fit, and what ROI looks like. And with every project, you need to evaluate locations that are around them, find efficiencies, what's going to be here for the long term, what doesn't fit for the long term, and how do we address the needs of tomorrow. So every day, we just need to continue to dig in on those types of efficiencies. 

Wes O'Bannon: One thing I would add to that, because today I'm currently working on several projects that potentially, for the future, is addressing issues today at locations that I don't have an answer for. Maybe it's a structural issue that we'd have to start building over. So how do we take care of those producers? So working on several projects, but the other part of this, and I touched on it earlier, is the automation piece. I'm trying to spend a lot of time for both grain and agronomy, trying to figure out what's coming out of other fields that we can utilize to help increase efficiencies as we go forward. 

Nic McCarthy: For sure. When you think about automation, there's so many benefits that we can bring and hopefully lower our cost of doing business while we do that. I think that's a great thing to stay focused on. Well that wraps up our first episode At the Table with Central Valley Ag. A big thank you to Brent and Wes for joining us today. Appreciate it. It was a good time to be able to visit and share the behind the scenes look of what's shaping our future in the cooperative system here. We hope today's conversation gave you a better understanding of what's happening at CVA and sparked ideas you can carry into your own operation. Until next time, keep growing, keep innovating, and keep pulling up a seat at the table. 

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