7/30/02

By MARK POWELL

It appears that on-going private talks between Perdue Farms Inc. and Southern States Cooperative may result in Perdue’s ownership of the co-op’s 13 grain elevators in the Mid-Atlantic region.
Steve Norris, vice president in charge of grain marketing for Southern States, addressed Maryland corn and soybean farmers gathered at the Howard County Fairgrounds on July 25 for the Commodity Classic.
Norris said Southern States is “working aggressively” to reach some sort of agreement with Perdue. Without a deal, he added, the cooperative would be required to close down several of its elevators over the next decade.
The Southern States grain division has been showing a profit over the past two years, Norris said, but what he called “urban expansion” has been closing on some of the grain storage facilities.
Southern States’ pro-active position is seeking a deal with Perdue in advance of having to shut down any grain elevators is in the interest of its farmer members and its employees who could keep their jobs under a deal with Perdue, Norris said.
The 13 elevators presently operated by the cooperative are capable of handling between 20 and 25 million bushels of grain.
Perdue Farms Vice President John Cassidy said of the deal that his company was trying to protect the livelihood of agriculture in the Mid-Atlantic region. “In order for us to survive, we have to gain efficiencies,” Cassidy said.
Although Perdue, a $2.6 billion privately held company, and Southern States have been in private discussions for some time concerning the cooperative’s grain operations, no official announcement of a deal has been issued.
On other issues, Cassidy said Perdue was committed to keeping farming viable in the region. He quoted Jim Perdue’s mantra that the poultry company needs grain farmers and chicken farmers, who, along with Perdue, make up the three legs of a stool representing agribusiness in the region. Without all three legs, the stool won’t stand.
Cassidy addressed concerns that the loss of an Archer Daniels Midland elevator at the Port of Baltimore as an outlet for soybeans will mean decreased prices for Western Shore farmers. Using an extensive series of charts, Cassidy showed that soybeans are moving to Ohio and North Carolina from the region.
Since June 2000, Perdue’s operations in Chesapeake, Va., have handled more than 2.1 million metric tons of soybeans shipped overseas on 50 ships to meet growing demand for soy.
He also said that in 2001, the Delmarva Peninsula ceased being a soybean deficit area, with about 25.5 million bushels being produced on the peninsula, more than meeting the demand from the poultry industry for 25 million bushels of beans for chicken feed.
St. Mary’s County farmer Donnie Tennyson voiced a question that Perdue, because of its dominance in the grain purchasing business, was close to the threshold for a violation of antitrust laws.
Cassidy differed, saying Perdue was simply striving for economies of scale and wanted to ensure a profitable future for Maryland’s grain farmers.