To create customer, employee and partner success to provide a safe and sustainable food supply.
Partner with customers to successfully navigate the complexity of modern agriculture and industry.
The success of our business will be determined by our ability to focus on safety, courtesy, image and innovation.
In the heartland of America, where fields stretch as far as the eye can see and the rhythm of farming echoes through generations, we have come together with a shared vision: to partner with customers to successfully navigate the complexity of modern agriculture and industry.
At MKC, “Shared growth. Shared Success.” is not merely a tag line but our guiding principle. Our journey towards shared success encompasses more than just financial gains. It is a journey that fosters a profound partnership of trust and mutual respect among our member-owners, employees, strategic partners and rural communities.
By working as a unified force, MKC can gain access to better markets, navigate fluctuating prices and make strategic investments in cutting-edge technologies and infrastructure. As a result, the cooperative not only enhances the individual livelihoods of its member-owners, but also strengthens the agricultural landscape of the entire region. Shared Growth. Shared Success.
Over the past few years, the world has witnessed more uncertainty and disruption than we could have ever predicted. Volatility has become the new normal, impacting commodity markets, product availability, supply chains, monetary policy, and more. MKC has been at the forefront of adapting to these changes. However, our mission and vision remain the same.
Our mission is to create customer and partner success to provide a safe and sustainable food supply. Our vision is to partner with customers to successfully navigate the complexities of modern agriculture and industry. Every decision we make begins and ends with how it will impact the experience for our member-owners and customers. Our tagline “Shared growth. Shared success.” is tied to the purpose of MKC and is the intrinsic driving force that brings us to work every day.
Our growth mindset is important to keeping pace with our fastest-moving customers and partners. The size of farm and ranch operations has consistently grown larger and fewer in the past decades. That trend is likely to continue. Supply partners that provide products, resources, and tools to agriculture have grown in size during that time and seek to find retailers with engaged employees that can impact markets. MKC is committed to moving at the pace necessary to be a relevant cooperative for generations to come. Investments in assets, talent, and technology will enable MKC to move quickly as the pace of change continues to accelerate.
The grain, agronomy, and energy business units were profitable again for 2023. Business unit profitability enables us to invest back into assets and growth. Past investments have allowed your cooperative to be well diversified.
On May 16, 2022, MKC completed the unification with Progressive Ag Cooperative (PAC). This strategically grows the MKC footprint an additional 12 locations in south-central Kansas. We are well-positioned to service this market. These locations surround the Sumner County Grain Terminal.
The future of the MKC grain business is strong. Recently, we broke ground on our 3rd rail loading asset in Rice County. This type of investment improves speed and space in the area locally and gives your grain access to markets domestically and around the globe. We anticipate this project to be completed in the summer of 2024.
To further this investment, in April 2023 MKC announced our expansion of Producer Ag, our grain logistics and marketing joint venture with CHS. This will allow us to maximize the
value of an end-to-end cooperative supply chain in the Southern Plains. This development will expand market access and patronage-eligible options to maximize owner value by connecting area farmers and cooperatives with end-use markets and customers.
In May, MKC launched the first agricultural apprenticeship program in Kansas. The program is designed to provide on-the-job training and technical instruction to employees hired into specific entry-level operations positions. This apprenticeship program formalizes the training and opportunities for career growth that have existed at MKC for years. Clarifying our commitment through this opportunity provides people, with or without agricultural experience, a path to a rewarding role in our organization.
Asset renewal is critical as MKC strives to serve memberowners’ needs well into the future. Our board of directors and leadership team work hard to anticipate the needs of farmers and ranchers not only today, but perhaps more importantly, well into the future. We continue to assess what assets need to be built, where improvements need to be made, and which assets have outlived their usefulness to our customers. These are all difficult decisions that are not made lightly as we consider how to position your cooperative for future generations.
Investments in technology are essential to how we transform our business in the future. It’s easy for all of us to think about technology in terms of robotics, drones, and autonomous vehicles. MKC is investing in all of these to be ready for when they all are commercially scalable. These are the investments that will help us serve our customers more efficiently in the future. Technology allows us to create a better, more consistent, customer experience through the continuity of processes and how you access information about your operation and the business you do with MKC.
We are utilizing robotic process automation (RPA) to create quicker, more consistent data collection and processing in back-office functions. This reduces errors and gets information back to you quicker and with more consistency. This technology helps us create more ways for you to do business with MKC and access your information. MKC Connect has over 1500 customers using this new technology in a year’s time from when we introduced the App. We are investing in these technologies so we can move at the same pace as you, our member-owners and our customers.
As we reflect on the rapid pace of change in agriculture, it becomes increasingly clear that partnerships and alignments
are essential for long-term success. The challenges we face today require a collective effort and a forward-thinking mindset. Our commitment to partnership and alignment will continue to guide us as we navigate the complexities of the agricultural landscape.
In our leadership letter in the 2021 Annual Report, we noted, “MKC will continue to explore and invest in partnerships to help successfully navigate the complex world of agriculture. Our future alignment strategy to serve member-owner needs will continue to be more vertical in nature.” These words continue to guide our actions today.
Our partnership with CHS on three shuttle loader facilities and the expanded Producer Ag joint venture is one way we are vertically aligning partnerships. This allows us to serve our member-owners and customers in a unique way.
One of the significant advantages of our joint venture with CHS is the expanded access to global markets. As we navigate an increasingly interconnected world, international trade plays a pivotal role in the agricultural industry. Through our partnership, we gain enhanced market intelligence, insights, and networks that allow us to connect member-owners to a broader range of international buyers and consumers.
By tapping into these world markets, we can help our member-owners expand the reach of their grain, diversify the end-user customer base, and capitalize on emerging opportunities. The global perspective offered by our partnership allows us to stay ahead of market trends, anticipate shifts in demand, and position our memberowners for long-term success.
At MKC, we firmly believe that alignment is the key to unlocking new opportunities and propelling the agricultural industry forward. The challenges we face today require us to think beyond traditional boundaries and seek partnerships that offer diverse expertise and shared visions. By aligning ourselves with organizations that share our values and goals, we can multiply resources, leverage synergies, and create a collective impact that surpasses what any single entity could achieve. When done right, there is stakeholder value created for our member-owners, the communities we serve, MKC and the aligned partner(s). This brings us back to the heart of our tagline “Shared growth. Shared success.”
We know that to remain successful for future generations we must focus on market relevance, asset renewal, talent, technology adoption, competition, and the farmer of the future. Market relevance is more important than ever in this type of environment. MKC needs to be relevant to our employees, strategic partners, and you, our member-owners and customers. The MKC Board of Directors and leadership are continually looking at what assets are needed. Our strong financials position us well for future opportunities.
Implementing the right technology allows us to be more profitable, efficient, and safe. The alignment with CHS brings forth cutting-edge technology and innovation. It is essential to embrace the latest advancements to stay competitive. We gain access to state-of-the-art technologies that will revolutionize our operations, enhancing efficiency, productivity, and sustainability across the board.
We aspire to be an employer of choice. Attracting the best talent possible, providing development and training, and ultimately creating career opportunities for those team members is a core objective for MKC. If we don’t have bestin-class talent, we cannot deliver best-in-class service and remain relevant to you. Agriculture is a dynamic industry, and it requires skilled individuals who can adapt to the evolving demands. The partnership with CHS offers our memberowners access to a wider talent pool, fostering knowledge sharing, professional development, and career growth opportunities. This is an additional development opportunity we can provide outside of the many leadership development programs MKC already offers today. By attracting and retaining top talent, we ensure that our cooperative remains at the forefront of innovation and success. We must continue to invest in our greatest asset, our people.
MKC strives to make certain we have the products, resources, and tools available to our member-owners when you need them. If we don’t add value to farmers and ranchers to make them more efficient and profitable, our role as a cooperative is unfulfilled.
Thank you to our team of employees for the dedication and passion to serve our member-owners and give back to the communities that we serve. Thank you to our strategic partners for working together to create opportunities that neither of us alone could achieve. But most of all, thank you to our member-owners and customers for your business and support. We will continue to work hard every day to earn that business now and in the future.
Shared growth. Shared success.
ALLAN WEGNER CHAIRMAN BOARD OF DIRECTORS BRAD STEDMAN PRESIDENT AND CHIEF EXECUTIVE OFFICER
Elected by their peers, these individuals collectively leverage their expertise to provide important direction and ensure the safety and soundness of the finances of the cooperative. Board members are farmers and ranchers themselves and have a deep understanding of the challenges their fellow member-owners face each and every day. Detailed biographical information on the MKC Board of Directors is available at mkcoop.com.
BRAD STEDMAN PRESIDENT & CEO
As we look back on the past year, MKC showcased a journey of growth with impactful milestones that have propelled us forward and solidified our position as a leader in our industry.
We had the pleasure of making a large donation to the Kansas Food Bank this year. Many Kansans face food insecurity. The number of families in need rises as the cost of food rises. We are thrilled that as a member-owner of Land O’Lakes we were able to partner with them to bring a 40,000 lb. donation of Land O’Lakes Macaroni and Cheese to the Kansas Food Bank! In addition, on behalf of you and our member-owners, MKC donated an additional $10,000 monetary
After 10 years of successful partnership, MKC and CHS are expanding their current grain marketing joint venture, Producer Ag, to maximize the value of an end-toend cooperative supply chain in the Southern Plains.
This development will expand market access and patronage-eligible options to maximize owner value by connecting area farmers and cooperatives with end-use markets and customers. This will provide a link to domestic and international markets for cooperatives and their farmers, including leveraging the Houston TEMCO export facility. TEMCO is a joint venture between CHS and Cargill.
Farmers and local cooperatives will gain access to a wider global market while end-users domestically and internationally gain access to a stronger origination network to source high-quality grains to meet their customers’ demands. This holds true to the Producer Ag mission of providing a grain marketing service that links the producer to the enduser giving the greatest value to both parties.
This expanded partnership will drive long-term growth through a responsive grain network and reinvestment to expand marketing opportunities and modernize rail infrastructure in this vital growing region.
MKC and CHS will continue to independently own and operate assets throughout the region. Expect
donation. This contribution will provide an estimated 40,000 meals. MKC began making targeted efforts to tackle hunger starting in 2010. Through the annual food drives, our team, in partnership with our member-owners and customers, donated over 60,000 lbs. of food to local food banks and over $150,000. We are thrilled to be able to continue this tradition of giving and helping to alleviate hunger for our friends and neighbors in our local communities.
operations for this expanded 50/50 joint venture to begin this summer.
MKC, in partnership with CHS broke ground on a new grain shuttle loader near Sterling, Kansas in December of 2022. Located in Rice County, the facility will include a high-speed shuttle loader with access to rail on the K&O Railroad. Upon completion, on-site storage will be approximately 5.2 million bushels. The project is expected to create new jobs during construction and operation. By the end of 2023, the elevator will look complete from the outside but will have internal work to be done. This project is slated to be completed by summer of 2024.
MKC collaborated with Land O’Lakes and Verizon to expand broadband internet access to residents of Whitewater, KS and the
surrounding community. A wireless communications tower has been built and turned on by Verizon at the MKC Whitewater facility. This effort to improve connectivity has the potential to provide residents in this rural area with additional broadband
services in their homes. Not only is broadband increasingly critical to daily life, it also enables precision agriculture, increasing yields, improving productivity, and boosting profits.
MKC announced the launch of an apprenticeship program in May to hire agricultural equipment operators, CDL drivers and operations specialists through Kansas Farm Bureau’s (KFB) Rural Kansas Apprenticeship Program. This is the first agricultural apprenticeship program in the state of Kansas. The program is designed to provide on-the-job training and technical instruction to employees hired into specific entry-level operations positions, regardless of an agricultural background.
In the fall of 2022, MKC created a multi-location circuit tour focused on showing local high school students career options in
agriculture. The tour visits three of our locations: the MKC Agronomy Hub in Groveland, the Shuttle Loader and Grain Terminal in Canton and the MKC Safety Center in Moundridge. While at Groveland, students learn about agronomy and technology, at Canton they learn about food safety and
storage and at the Safety Center, agricultural safety is the focus. Currently, over 150 students have experienced this tour, and we look forward to the continuation of this program as it embodies our tagline “Shared growth, Shared success.”
Safety for our employees, memberowners and community is always our top priority at MKC. Grain safety is critical because everyone deserves to make it home safely at the end of the day. Hundreds of people die or are injured each year due to
preventable hazards in grain storage and handling facilities.
Each year, MKC employees participate in Stand Up 4 Grain Safety Week. The initiative raises awareness of the life-threatening dangers of grain handling and provides first responders with the necessary equipment and training needed to save lives from grain related accidents. This year, we hosted our own grain entrapment rescue demo and had
over 60 attendees with eight fire departments represented. In addition to Grain Safety Week, MKC also provides regular safety training to employees, farmers and emergency personnel including Hands On Training (HOT) at the MKC Training Center.
Scan the QR code to watch our Grain Engulfment Rescue Demo.
with two primary metrics: customer satisfaction and customer retention.
DANNY POSCH EXECUTIVE VICE PRESIDENT & CHIEF FINANCIAL OFFICER
Over the past three years, we have experienced a tremendous amount of disruption in the world that directly impacted agriculture, including a Covid outbreak, domestic and international political unrest, logistic challenges, and a new war in Ukraine. In addition to those disruptions, in 2023 we added fears of inflation and a corresponding response by the FOMC of increasing the federal funds rate by 5.00% over ten separate meetings. The impact of significantly higher interest rates sent shockwaves through the agricultural industry. Higher interest rates impact the cost of carry for your organization of not only grain inventories, but also fertilizer, seed, crop protection, feed, and energy inventories. Most of these disruptions had some level of financial impact on your cooperative for 2023, but despite all that, we had a lot of successes to share with our members. Here is a list of key successes that impacted our member-owners and your cooperative this past fiscal year:
• The grain, agronomy and energy business units were profitable again for 2023. Business unit profitability enables us to invest back into assets and growth. Past investments have allowed your cooperative to be well diversified.
• On April 10, 2023, MKC announced that Producer Ag, our grain logistics and marketing company, will be expanded to add CHS as a partner. This expanded partnership is expected to maximize the value of our farm to end-user cooperative supply chain in the Southern Plains.
• The future of the MKC grain business is strong; the construction of a third grain terminal in Rice County has begun. This continues to build on our strategy to align Kansas producers’ grain with global market access. We anticipate this project will be completed in the summer of 2024.
• On May 16, 2022, MKC completed the unification with Progressive Ag Cooperative (PAC). This strategically grows the MKC footprint an additional twelve locations in south-central Kansas. We are well positioned to service this market. These locations surround the Sumner County Grain Terminal.
Four years ago, we identified three financial metrics to measure success of our financial performance: net earnings, net fixed assets and working capital. We also measure the value brought to our member-owners
Net earnings measure the level of success or profitability achieved, net fixed assets measure MKC’s commitment to growing and upgrading the infrastructure of the cooperative for future generations and working capital measures the strength and stability of the cooperatives’ balance sheet and overall financial position.
Our net earnings for the 2023 fiscal year were $11.1 million; although a decrease from prior years, we remain committed to performing at a strong financial level.
MKC’s net fixed assets have grown from $52 million to $190 million in the past ten years. We are often reminded that the cooperative has no end date and that we must provide future generations with a company that can serve them as well as it has served previous generations. Our commitment to future generations is demonstrated through the growth of our net fixed assets.
At fiscal year-end, our cooperative has a strong working capital position of $68 million. This is critical because it provides a platform for growth and allows the cooperative to execute its strategic goals, strengthen relationships with creditors, and allows the cooperative to maintain adequate lines of credit with lenders.
We continue down the path of issuing non-qualified patronage to our members because we believe it has significant tax savings for our member-owners and MKC. We are pleased that we were able to allocate patronage in the grain, agronomy, and energy business units again this year. In addition to patronage, our pass-through of the section 199A deduction offers significant value to our member-owners because the allocated 199A deduction can be utilized on the tax return of the member-owner.
A customer satisfaction metric measures how well our products and services meet or exceed our memberowners’ expectations, while a customer retention metric measures the ability of a business to retain customers. We are proud to report our customer satisfaction and customer retention metrics were 87% and 98%, respectively this past year. Both of those metrics are considered extraordinarily strong in any industry.
We are pleased to share our success with our memberowners, as well as our commitment to be a financially sound company that adds value for our member-owners today, and for future generations to follow.
FOR YEAR ENDING, FEBRUARY 28, 2023 AND 2022
FOR YEARS ENDING FEBRUARY 28, 2023 AND 2022
CONSOLIDATED STATEMENTS OF OPERATIONS
For Years Ended February 28, 2023 and 2022
FEBRUARY 28, 2023 AND 2022
CONSOLIDATED BALANCE SHEETS
February 28, 2023 and 2022
Net earnings for FYE2023 were $11,115,058. Net earnings are important to the organization because it allows the company to attract talented employees, redeem past patronage, retire debt and reinvest in infrastructure.
MKC’s working capital position is at $67,869,419. Working capital provides a platform for growth and is a good indicator of a company’s ability to meet upcoming financial obligations.
Total assets of the company are $569,075,103. Total assets of the company are items of economic value, which are expanded over time to yield a benefit for the company. Total assets include inventories, receivables, cash, fixed assets and investments of the company.
Net overall fixed assets reflect the ending balances of cumulative investments in property, plant and equipment of MKC and its affiliates – Mid-West Fertilizer, Producer Ag, FarmKan and Countryside Feed.
MKC strives to bring additional value to its owners by passing through Non Qualified (NQ) patronage and a DPAD (199A) deduction. NQ patronage allocation and DPAD pass through were $3,670,953 and $4,700,000, respectfully for this past year.
MKC provides benefits to over 150 communities across Kansas, Missouri, Arkansas and Oklahoma in the form of personnel costs, local taxes and other expenses. These payments have a significant impact on communities and help support the businesses and services we utilize.
