Looking forward to the year ahead
Future success doesn’t just rest on past performance but also continual improvement
For a large part of the population around the world, December and January are the months dedicated to wrapping up one year and then celebrating the start of a new one. For the hardworking farmers and ranchers dedicated to ensuring adequate supplies of food, fiber and fuel, this transition isn’t as regimented.
Planning, preparation and work for next season are already in process before harvest of crops or sales of animals are completed for the current year. In most cases, decisions are required before the past year’s operations can be analyzed.
MFA Incorporated’s annual meeting was held Nov. 21. This meeting provides management and the board of directors the opportunity to update membership on the last fiscal year and provide some insight into the future. As the meeting takes place, our 2024 fiscal year is already wrapping up the first quarter.
In my comments to members at the annual meeting, I shared a quote from Albert Pujols, who played 22 seasons in Major League Baseball for the St. Louis Cardinals, Los Angeles Angels and Dodgers. When he retired in 2022 after returning to St. Louis for a final season, Pujols was widely considered to be in the top 10 of all-time baseball greats. During a spring training that followed a very good year, he was asked about his performance. In his own humble way, Pujols responded with, “It’s not what you did last year. It’s what you’re gonna do this year. That’s more important.”
As we collectively look at our operations, focus needs to be on this year and the future. Growth—or even survival—is dependent on the ability to achieve continual improvements.
MFA enjoyed another good year financially. Profitability was above $14 million. This wasn’t the level we target, but it was an acceptable performance given the headwinds the agricultural industry faces. Devaluation in fertilizer and crop protection products, continued inflation and much higher interest rates all reduced profit opportunities in 2023.
The calculation of earnings available for patronage is complex given the member/non-member aspects of the cooperative. Member earnings available for patronage was $7 million. Management recommended and the board of directors voted to retain the earnings and invest it back into the business. We will once again take advantage of the DPAD (Domestic Production Activities Deduction) available to cooperatives. Through DPAD, we estimate $28 million will be allocated to grain customers in December, a total of approximately $100 million over the last four years.
Distribution of earnings is always a tough conversation. We need to be good stewards of the profits we generate. I believe the 2023 decision goes back to Pujols’ comment: “It’s what you’re gonna do this year.”
Our members continue to grow in different ways. For many, that includes getting bigger. The need for speed, space, technology and efficiencies continues to grow. We must be committed to that. I’m proud of what Team MFA does now, but I also know we need to give our employees the tools they need to deliver the value you demand when you demand it.
Yes, Pujols, last year is behind us. However, in my eyes, the past provides more impact on the future than you give it credit for. Previous experiences and results will certainly influence decisions to come. It is the basis from which strong, ongoing relationships are built.
MFA has a proven track record of providing products, services and technologies that have helped you grow your operations. That history certainly gives us credibility as we tackle agriculture’s changing landscape.
The year ahead is sure to present many challenges. As 2024 arrives, two major world conflicts, inflation, high interest rates, lingering supply chain challenges and the threat of a recession continue to drive uncertainty and volatility. Cooperatives were founded to address these challenges together.
Rest assured, we won’t be complacent. We continue to evaluate new products and technologies and will bring to market those that project potential for both you and MFA.
We will deliver these benefits through a passionate team. I’m thankful for their efforts to bring value to each of you, and I’m excited about what we’re gonna do this year.
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