Pendleton Grain Growers in Eastern Oregon has “been through a real challenge” in recent years but is not in danger of going out of business, the company’s general manager said.
Rick Jacobson, responding to community murmurs that bubbled up following what was a poor wheat harvest for some growers, said the co-op is “way ahead of where we were last year,” when PGG lost nearly $8 million.
The co-op sold or closed several divisions, laid off employees, reduced excess inventory, restructured its debts into a new loan package and obtained a $20 million line of credit in response to the financial problems. Jacobson said in June that PGG was positioned to make a profit in 2015.
But a lack of moisture and intense heat early in the season “pinched” dryland wheat crops for some PGG growers, resulting in yield reductions of 25 to 30 percent and protein levels higher than exporters prefer. Meanwhile, the price dropped and Gavilon, a grain handling company owned by the Japanese firm Marubeni Corp., opened a truck transfer station in Union County, giving growers another option for selling wheat.
Jacobson acknowledged the combination has complicated PGG’s comeback. He is not sure the co-op will be profitable this year.
“It’s not helpful to have an off crop and it’s not helpful to have another grain company in our backyard, but that’s the life and times of a business,” Jacobson said.
“We’re not going to fold, that’s not going to happen,” he said.
Jacobson said the soft white wheat price is in the range of $5.75 per bushel this year, compared to $7 last year.
“Most businesses can’t take those kinds of hits,” he said. “When yields are off and the price it low, it puts a lot of pressure on the grower.”
But Jacobson, a former NORPAC executive recruited out of retirement in 2012 to stabilize PGG, said the co-op is in the best cash flow position it’s been in for a long time. The company recently signed an agreement with McCoy Grain Terminal to do some wheat marketing for PGG, he said.
An industry insider who spoke on background said PGG and neighboring co-op Morrow County Grain Growers face increased competition from grain handlers with deeper pockets and that are looking to expand their territory. In tight years, companies that offer 10 cents more per bushel may attract growers even if those companies don’t offer other services such as fuel and fertilizer, the insider said.
He asked not to be identified because he works with growers and co-ops.
Pendleton Grain Growers “didn’t attend to business as well as they should have” in the past but appears to have made progress, he said.
“I don’t think they’re in danger of going under, they’re better off now,” he said.