Ag is essential. CHS locations continue to operate.

Kansas Gov. Laura Kelly has issued a Stay-at-Home Order related to the COVID-19 pandemic. The order will be in effect from 12:01 a.m., March 30, 2020, through April 19, 2020. Consistent with guidance from the United States Department of Homeland Security, the order exempts certain essential infrastructureand services, including agriculture and food.

After a full review of the order, CHS has determined that its operations fit within this exemption and we will continue to operate to provide essential products and services so cooperatives, retailers and farmers can plant and grow crops, raise livestock and bring the food they produce to market.

Below is a note from CHS to our customers and growers in Kansas.

Download the letter here.

A message about COVID-19

With the impact of the global pandemic caused by COVID-19 evolving rapidly, we want to reassure you that CHS is taking steps to protect the health and safety of our employees, our owners and customers, and the communities we serve.

We are developing plans with the goal of continuing to provide the highest possible level of service to our customers and owners. Specific measures include:

  • Close coordination and collaboration to ensure safety and wellbeing of employees, customers and communities
  • Cancelation of annual meetings and other meetings of large groups and limiting visits to CHS facilities
  • Additional use of voice, video and other technology to serve you, our customers and coordinate farm visits
  • Activating plans to flex employees between locations or business units to better serve you
  • New process and rigor for interactions with vendors, suppliers, contractors or other third parties to promote health and safety
  • Fully utilizing our powerful and flexible supply chain and asset base should it become necessary to deliver to or from alternate locations

As the busy spring season unfolds, we will continue to adjust as circumstances change. We don’t take this challenge lightly, but we’re committed to working through it with effective planning, communication and execution. With our talented and committed team, best-in-class assets and our values of safety and cooperative spirit, we are confident CHS will continue to deliver products and services for customers and value for owners.

Learn ways to stay safe during Grain Bin Safety Week

grain bin safety training

Grain bins can be dangerous places. Purdue University researchers report that bin-related injuries such as entrapments, equipment entanglements and asphyxia are on the rise – more than 60 incidents occurred in the U.S. in 2018. 

As part of our commitment to safety as a core value, CHS is partnering with other ag industry leaders to support Grain Bin Safety Week, Feb. 16-22. Here are the top three things you can do to promote safe practices around grain bins:

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Freeze warning

Decrease the risk of cold-weather downtime with the right diesel.

use the right premium diesel during cold weather

When temperatures drop, a farmer’s work doesn’t stop. Keeping equipment running at its peak during colder weather requires a watchful eye on what’s in your fuel tank.

Here’s the main problem that comes when temperatures drop: Diesel fuel hits its cloud point — the temperature at which wax crystals begin to appear in the fuel, also known as gelling. Cloud point is reached in #2 diesel fuel when fuel temperatures hit 4 to 14 degrees Fahrenheit, depending on where you buy your fuel, says Chad Christiansen, manager of product quality and additives for CHS.

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DIRECTOR COMPLETES “DIRECTOR CERTIFICATION PROGRAM”

Parker Larson, a director of the CHS Inc of Holdrege, recently completed a four-phase educational program co-sponsored by the Nebraska Cooperative Council and CoBank.  He will receive a Certificate of Recognition acknowledging completion of the program.

            The Director Certification Program is a unique educational program specifically designed to assist cooperative directors to more fully understand their ever-changing responsibilities.  The program has been presented annually at various locations throughout Nebraska since its inception in 1978.  More than 8,350 phases have been completed.

            The program consists of four one-day courses designed to help participants become more effective cooperative directors.  Some of the workshop topics include legal obligations of directors; cooperative principles and practices; using financial statements in making decisions; the benefits of long-range planning; capitalization of cooperatives; and a director’s role in establishing proper controls.  Workshop segments are patterned to closely follow the growing responsibilities of cooperative directors.

            Rocky Weber, President & General Counsel of the Nebraska Cooperative Council of Lincoln, said, ‟Farm supply and marketing cooperatives are essential segments of the agribusiness industry in Nebraska.  These local cooperatives contribute to the success of today’s farmers and ranchers, and the complexities of cooperatives only grows.  This requires local directors to continually seek out training programs to enhance their skill set.  The Council continues to place a high priority on director education programs because education will be a key factor in determining the future success of Nebraska’s cooperatives.”

            The Nebraska Cooperative Council is the trade association for agricultural cooperatives.  Over 96% of the agricultural cooperatives throughout Nebraska are members of the Council.

CHS reports $177.9 million in first quarter net income

Truck delivering propane to residential home in winter

Significant increase in fall propane demand helped balance difficult market conditions

CHS reported net income of $177.9 million for the first quarter of fiscal year 2020 that ended Nov. 30, 2019. This compares to net income of $347.5 million in the first quarter of fiscal year 2019.

The results for the first quarter of fiscal year 2020 reflect:

  • Revenues of $7.6 billion compared to revenues of $8.5 billion for the first quarter of fiscal year 2019.
  • Strong supply chain performance in our propane business that was a positive contributor resulting from efficient sourcing of propane during significantly increased fall demand – brought on by unseasonably early cold and wet weather during harvest – for crop drying and home heating.
  • Less advantageous market conditions in our refined fuels business compared to the first quarter of fiscal year 2019, during which the company experienced historically wide pricing spreads between Canadian crude oil and crude oil from the United States. CHS processes Canadian crude oil at its refineries in Laurel, Montana, and McPherson, Kansas.
  • Poor weather conditions that occurred in fiscal year 2019 and the first quarter of fiscal year 2020 continued to negatively impact our Ag segment’s operations, resulting in lower crop yields, poor grain quality in some areas and lower fall crop nutrients sales.
  • Pressure on grain volume and margins due to slow movement of grain associated with unresolved trade issues between the United States and foreign trading partners.
  • Decreased fertilizer volumes compared to the first quarter of fiscal year 2019 due to a slow harvest in the first quarter of fiscal year 2020.

“We are not immune to the challenges of our industry, and our first quarter results reflect the difficulties brought on by fall weather and ongoing trade tensions,” said Jay Debertin, president and CEO of CHS Inc. “The cooperative system, however, provides CHS and its owners stability to withstand these difficult times. Our focus remains on building efficiencies in our supply chain and on operating in this challenging agricultural environment.

“During a cold and wet harvest, we leveraged our supply chain to meet the significant increase in propane needs of our owners and customers,” Debertin continued. “Our focus on meeting the needs of our owners helped deliver the successful launch of two products – Acuvant™ and Trivar™ – that will be available for spring planting.

“We know the remainder of fiscal year 2020 will continue to present challenges, and we are confident in our ability to find opportunities in those challenges, to help our owners grow their businesses and to continue to strengthen our company,” he said. “No one feels those challenges more than our owners. We remain committed to supporting communities and experts as they address the stress felt across rural America.”

First Quarter Fiscal 2020 Business Segment Results

The following segment results were reported for the first quarter of fiscal year 2020 as compared to the first quarter of fiscal year 2019.

Energy
Pretax earnings of $162.2 million in the first quarter of fiscal year 2020 compared to $232.5 million for the first quarter of fiscal year 2019 reflect:

  • Significantly less advantageous market conditions, driven primarily by decreased crude oil spreads on heavy Canadian crude oil processed at our refineries and, to a lesser extent, decreased crack spreads in our refined fuels business compared to the same period during fiscal year 2019. The decreased crude oil differentials and lower crack spreads were partially offset by favorable hedging activity in refined fuels.
  • The decrease in pretax income for refined fuels was partially offset by significantly improved propane margins from a late, wet crop combined with unseasonably cold weather across much of CHS service area that led to increased fall demand for crop drying and home heating compared to the first quarter of fiscal year 2019.

Ag
Pretax loss of $13.9 million compared to pretax earnings of $80.3 million in the first quarter of fiscal year 2019 reflects:

  • Poor weather conditions in fiscal year 2019 that culminated in a late and smaller fall harvest, resulting in decreased demand for farm supplies and crop nutrient products.
  • Ongoing global trade tensions between the United States and foreign trading partners continued to negatively impact grain volumes and margins.
  • Lower margins in our processing and food ingredients business.

Nitrogen Production
Pretax earnings of $16.5 million compared to pretax earnings of $23.7 million in the first quarter of fiscal year 2019 reflect:

  • Lower equity income from our investment in CF Nitrogen, of which CHS has partial ownership, attributable to decreased market pricing of urea and urea ammonium nitrate, which are produced and sold by CF Nitrogen.

Corporate and Other
Pretax earnings of $20.7 million compared to pretax earnings of $30.8 million in the first quarter of fiscal year 2019 reflect:

  • Results primarily from lower equity income from our investments in Ardent Mills and Ventura Foods and decreased income in our financing and hedging businesses due to market-driven interest rate reductions and lower trading activity, respectively.
CHS 1st quarter balance sheet

CHS Inc. owners elect five board members during annual meeting

Portrait of newly and re-elected CHS Board Members

CHS owners elected five board members to three-year terms during the cooperative’s 2019 Annual Meeting held Dec. 5-6 in Minneapolis. Pictured (l. to r.) are: Kevin Throener, Hal Clemesen, Mark Farrell, Alan Holm and Steve Riegel.

Officers of board also elected by board peers following Annual Meeting

CHS owners elected five board members to three-year terms during the cooperative’s 2019 Annual Meeting held Dec. 5-6 in Minneapolis. Newly elected to three-year terms are:

Hal Clemensen succeeds former director Randy Knecht, who retired from the CHS Board of Directors on Dec. 6. Clemensen represents Region 4, covering South Dakota, and has been the president of the board of directors of Agtegra Cooperative since its formation in 2018. He was president of the South Dakota Wheat Growers Association from 2005 until its merger with North Central Farmers Elevator in 2018. He is a past director and is an active member of the South Dakota Soybean Association and an active member of South Dakota Corn Growers. In 2015, the National Council of Farmer Cooperatives named him Farmer Cooperative Director of the year. He raises corn, soybeans and wheat near Conde, South Dakota. He holds a Bachelor of Science in Agricultural Economic and Agricultural Business from South Dakota State University. Clemensen was appointed to the CHS Board’s Government Relations and Corporate Risk committees.

Kevin Throener succeeds former director Dennis Carlson, who retired from the board on Dec. 6, and represents Region 3, which covers North Dakota. Throener has been a director of CHS Dakota Plains Ag since 2014 and served as vice president of the Sargent County Farmers Union Board of Directors since 2007. He has also served on the Cogswell, North Dakota, Volunteer Fire Department since 1997 and was its chief from 2010 to 2018. Throener raises corn, soybeans and alfalfa and operates a feedlot and cow/calf business near Cogswell, North Dakota. Throener and his wife Ronda are first-generation farmers who built their operation from the ground up. He studied Agricultural Systems Management at North Dakota State University. He was appointed to the CHS Board’s Governance Committee and the CHS Foundation Board of Trustees.

Reelected to three-year terms are:

  • Mark Farrell, who operates a corn, soybean and wheat farm in Dane County, Wisconsin, representing Region 5.
  • Alan Holm, who operates a corn, soybean, sweet corn, peas and hay operation and has a cow-calf herd near Sleepy Eye, Minnesota, representing Region 1.
  • Steve Riegel, who raises corn, soybeans, alfalfa, dryland wheat and milo near Ford, Kansas, representing Region 8.

Following the Annual Meeting, the board held its annual re-organization meeting. Each of the following board members was elected to one-year officer terms:

  • Dan Schurr, chair
  • C.J. Blew, first vice chair
  • Jon Erickson, second vice chair
  • Russ Kehl, secretary-treasurer
  • Steve Riegel, assistant secretary-treasurer

Matt Broekemeier named as general manager

CHS has announced the appointment of Matt Broekemeier to serve as general manager for its Holdrege-based ag retail operations.

Broekemeier has been with the Holdrege operation since July 2013 when he started as sales development manager. He most recently served as agronomy division manager before stepping into the role of interim general manager this past July. Before that, he held roles with Aurora Cooperative as seed manager, assistant safety director and energy department risk management coordinator. He also worked for CHS previously as a certified energy specialist out of Elmwood, Nebraska, where he was responsible for increasing diesel volumes by more than 1 million gallons.

“Matt has a deep understanding and appreciation for the cooperative system as he has worked at several Nebraska cooperatives since 2004,” said Todd Christensen, producer board chair. “He knows this area well, and we look forward to working with him as we serve our farmer-owners through our 13 locations in south-central Nebraska and north-central Kansas.”

A native of Aurora, Nebraska, Broekemeier graduated from the University of Nebraska at Kearney with a bachelor’s degree in business administration with a management emphasis.

© 2020 CHS Inc.