Cooperative merger passes

The Fessenden Cooperative Association and CenDak Cooperative will join forces in the new year.

The merger was made official on Monday, Aug. 21, when member-owners met separately with their respective cooperatives in Maddock, N.D. to vote on the proposed "Unification Agreement," which was announced earlier this month and already approved by both boards of directors.

Despite concerns being expressed by some member-owners, the "yeas" won out, as both cooperatives voted to approve the unification. Had the member-owners of just one of the two cooperatives voted against, the merger would have failed.

According to a press release from the cooperatives, the approval of the merger by both member bases allows the leadership teams to begin work on integration ahead of the close date on January 1, 2024.

"I am very pleased that our members voted in favor of the merger with CenDak," said Curt Olson, board president for Fessenden Co-op Association. "Not only will this combine two financially stable cooperatives, it will also ensure we will be able to continue to provide members with the goods and services they need in their farming operations into the future."

The merger talks between the two cooperatives started late last winter with a consolidation study facilitated by Land O'Lakes Strategic Asset Management Team.

"This is a great opportunity for CenDak members, customers, and team members to formalize our relationship with Fessenden Cooperative Association," said Steve Jorgenson, board chair for CenDak Cooperative, "and will ensure that we provide our combined membership with the products and services required to support them in the future."

The two agribusinesses have been serving this region of North Dakota for years, and their merger is the latest in a trend of cooperative consolidations in the area.

Fessenden Co-op Association was first incorporated in 1943 and had 46 original stock holders. In 2020, they acquired the Equity Cooperative Elevator Company of Sheyenne and Oberon.

CenDak Cooperative, meanwhile, recently merged with BTR Farmers Co-op back in 2018. Now, two of the largest agricultural cooperatives in the area are merging with each other.

The merger has caused some local farmers to express concern about a lack of competition.

Preston Meier, an area farmer, said, "From the standpoint of farmers, a wide variety of competitive market participants helps ensure the best possible prices when either buying or selling.

"By combining two of the largest entities in our region, the member-owner consumers would risk creating a monopoly, which Investopedia defines as a single business in a dominant position in an industry. Less competition usually leads to less attractive prices."

However, the leadership teams of both cooperatives believe the merger will only improve the service and value provided to their customers and stakeholders.

In a press release earlier this month announcing the proposed unification agreement, Jorgenson said the two cooperatives will be stronger together.

"Our two organizations share much in common, including geography and membership," he said. "We also complement one another with different businesses, such as energy/retail, and together can combine the strength of our respective agronomy and grain divisions."

Moving forward, the two cooperatives will begin preparations to officially merge next year.

Tony Gratton, the current general manager for CenDak Cooperative, will serve as the general manager of the new combined company.

"Over the next few months, we will work together with the employee teams from both cooperatives to determine the next steps so we can be ready to operate as a combined company next year," said Gratton. "I would like to thank the members for their strong engagement and support of the process for both cooperatives."

The latest press release from the cooperatives states that more information will be provided to members as it becomes available.