Western Innovator: Co-op branches out
Grain handling was initially the primary purpose of the Pratum Co-op, but the company’s focus shifted and expanded in the seven decades since its founding.
The cooperative diversified into selling fertilizers, chemicals and fuel while developing an expertise in grass seed as farmers devoted more acreage to the crop in Oregon’s Willamette Valley.
Eventually, Pratum decommissioned its iconic grain elevator at the company’s headquarters near Salem, Ore., after its grain business was phased out.
This year, though, the cooperative has returned to grain storage and marketing with the purchase of the CHS cooperative’s service center in Madras, Ore.
The move has less to do with nostalgia for the grain industry than a desire to branch out.
“We can spread our risk over a larger cropping system,” said Troy Kuenzi, the cooperative’s president.
Apart from grain handling, the Madras Service Center also has agronomy, seed processing and seed marketing divisions that correspond with several units of the Pratum Co-op.
“We aligned really well with Madras,” said Kuenzi.
The acquisition of the Madras Service Center marks an eastward leap across the Cascade Mountains, opening the cooperative to a new climate and crop portfolio.
The Central Oregon region also specializes in seed crops that aren’t widely grown in the U.S., so Pratum has expertise in serving such growers, said Doug Kuenzi, the cooperative’s agronomy division manager and Troy’s cousin.
“We understand niche crops, we understand how to service them,” he said.
Pratum isn’t disclosing the purchase price for the Madras Service Center, but the cooperative expects it will increase annual sales by $14 million, for a total of about $115 million. The number of employees will also increase by 23, to 115 in total.
The acquisition, which closed in February, includes a 13-acre property, four lines of seed processing equipment, several delivery trucks, a warehouse and a fertilizer plant.
Pratum expects to break ground on replacing the fertilizer plant this autumn with an operation that has faster blending capacity and more storage space, said Troy Kuenzi.
“We feel it would be better to start over with a new, modern, state-of-the art facility,” he said.
Pratum has long shown a willingness to seize new opportunities in its 70-year history.
In reaction to the surge in grass seed production in the 1980s, the cooperative constructed its first seed cleaner for farmers in the region.
As the grass seed industry matured, Pratum assumed new roles in seed contracting and marketing with its Mountain View Seeds division, which was launched in 1998.
Today, the cooperative contracts with farmers to grow grass seed on 28,000 acres.
The company has a private label business, packaging seed under other brand names for its clients, as well as its own “Top Choice” retail trademark.
As larger grass seed companies began buying research firms, Pratum took another step in its vertical integration by partnering with breeder Steve Johnson to start Peak Plant Genetics.
The company operates on 80 acres north of Albany, Ore., and has released and licensed 125 varieties of cool season grasses since it was established in 2008.
The venture’s timing was precarious: Peak Plant Genetics was created during the severe housing downturn that cratered demand for grass seed across the U.S.
Without its own research capabilities, however, Pratum realized that it would struggle for sources of high-end genetics, said Troy Kuenzi.
Over the past nine years, the cooperative has invested about $3.5 million in research and breeding, with Peak Plant Genetics turning its first profit last year.
“We knew it was a long-term investment,” Troy Kuenzi said.
Much of Oregon’s early grass seed production was dedicated to perennial ryegrass but tall fescue has recently been gaining a foothold in the turf market, he said. Valued for its fine texture, dark green color and drought tolerance, tall fescue is making strong in-roads in northern climates.
Aside from providing seed for lawns and golf courses, Pratum works with sod producers across the country to supply turf for sports venues, Troy Kuenzi said.
“It’s evident athletes want to play on real turf. It’s cooler and it’s easier on the body,” he said. “Artificial turf is hot and it’s like a rug burn.”
Pratum Cooperative
Headquarters: Salem, Ore.
Established: 1946
Members: 315
Employees: 115
Annual revenues: $115 million
Business units: Agronomy, petroleum, seed processing, seed marketing, seed research, grain handling