Capital press. (Salem, OR) 19??-current, April 22, 2016, Page 9, Image 9

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    April 22, 2016
PGG board recommends dissolving co-op
Members will decide
at May 2 meeting
EO Media Group
Members of Pendleton Grain
Growers will vote at a meet-
ing May 2 whether to dis-
solve the local farmers’ co-op,
according to a letter sent to
members Friday.
If the motion passes, it will
spell the end for PGG, which
has served Eastern Oregon
farmers since 1930.
It’s been a tumultuous few
years for the co-op, which has
bled money and lopped off
multiple business units trying
to restore profitability. Re-
tail stores closed in 2014; the
agronomy division later sold
to a company based in Colo-
rado; and most recently, PGG
has been in negotiations to sell
its grain assets to multinational
United Grain Corp.
Now, PGG’s Board of Di-
rectors is recommending dis-
solution as the best course of
action. That would mean sell-
ing everything — grain, ener-
gy, seed, transportation and the
Precision Rain irrigation sub-
sidiary — in order to pay off
debt and have some equity left
over to return to members.
If growers choose not
to dissolve PGG, the co-op
would likely still fold and
members would be less likely
to recoup any equity. In the
letter, which was obtained by
the East Oregonian newspaper,
board chair Tim Hawkins stat-
ed that operating costs are too
high and grain receipts too low
to continue offering the same
“The decision to move to-
ward a plan of dissolution was
not easy, but we believe it is
the best alternative to return
what equity we can over time
to members and allow the busi-
nesses to operate independent-
ly or with partners who can
bring new resources and value
EO Media Group
Pendleton Grain Growers, formed in 1930, has bled money in recent years and has sold or closed
divisions to restore profitability. Now the PGG Board of Directors has recommended members vote to
dissolve the co-op at a meeting May 2.
to our Eastern Oregon farmers
and families,” Hawkins wrote.
PGG has 1,079 members
eligible to vote May 2. At least
50 members are required for
a quorum, and the resolution
will need a two-thirds majority
to pass.
Rick Jacobson, PGG gener-
al manager, insisted the co-op
is not insolvent and still has
support from CoBank, which
extended a $15 million term
loan and $20 million line of
credit last June. That came on
the heels of PGG losing $7.9
million in 2014, and approxi-
mately $4.4 million in 2013.
The co-op also discovered
through an audit that it had
overstated earnings by $1.8
million in 2010 and $5.7 mil-
lion in 2011, according to fi-
nancial statements. PGG did
net $434,681 in total income
in 2012.
Jacobson, who was hired
by PGG in 2012, said he is
optimistic about getting a deal
done with United Grain Corp.
to sell the McNary River ter-
minal, Feedville piles and 19
upcountry grain elevators, but
couldn’t get into specifics.
Other aspects of the business
are doing well independently,
he said, such as the energy di-
vision and Precision Rain. But
PGG is simply not bringing in
enough bushels of wheat to
generate a profit that will al-
low it to invest in those ser-
Last harvest, the co-op fig-
ured it would need at least 8
million bushels to continue as
it has. Jacobson didn’t provide
the exact number it carried, but
said it fell short.
“Some stayed with us, but
nowhere near enough,” Jacob-
son said of members. “The vote
was with their bushels.”
The board felt it would
be best to dissolve PGG and
sell off those assets to another
company, Jacobson said, thus
maintaining services and —
hopefully — retaining jobs in
the community. He said United
Grain Corp. is in a good posi-
tion to work with local farmers.
“I think it’s the best thing to
do, given the circumstances,”
he said.
Preston Winn, who leases
about 147 acres of wheat fields
near Weston, said he’s been a
member of PGG for roughly 50
years. Over the years, he said,
the co-op gradually lost focus
on customer service, while
members’ trust whittled away.
Winn, who also chairs
the agriculture department at
Blue Mountain Community
College, said PGG was slow
to change in how it received,
stored and handled larger
shipments of grain. Instead of
taking 15 minutes to unload
shipments at PGG’s old coun-
try elevators, he said, growers
decided to turn to competi-
tors that could unload them
in a fraction of the time. In
particular, he said Northwest
Grain Growers of Walla Walla
and Gavilon have both added
grain piles in nearby Athena
in recent years.
“We’re going to go to a
place that has better customer
service,” Winn said. “We’re
going to go to a place that can
unload us in an expeditious
The U.S. Department of
Agriculture also pulled PGG’s
warehouse license for 44 days
in 2012 after discovering dis-
crepancies, which Winn said
shook some confidence.
“I’ve heard people say, ‘I
don’t think I can trust them,’”
Winn said. “Anytime you
don’t have confidence ... I
think that’s where this fell
Eric Nelson, who farms
organic wheat north of Pend-
leton, said losing PGG would
be a hard hit to the communi-
ty. The co-op has been a ma-
jor supporter of local organi-
zations, Nelson said, and he
hopes whoever comes in car-
ries that same sense of com-
“It’s going to be hard to fill
that hole,” Nelson said. “It’s a
tough blow to the community
in general.”
Jacobson said the board re-
alizes how difficult the deci-
sion is, and carries the burden
of the decision. He praised the
board for its willingness to do
what they feel ultimately will
be the best for the member-
“I feel reasonably confi-
dent the best will come out of
this,” Jacobson said.
hires Utah
as associate
Capital Press
A Utah State associate pro-
fessor with expertise in tex-
tiles and apparel design has
been named associate director
of Oregon State University
Extension Ser-
begin work at
OSU on June
1. She’ll also
serve as associ-
ate provost.
S h i r l e y ’s
work at Utah State has
branched out from textiles
and apparel design to in-
clude the social dynamics
represented by clothing, ac-
cording to an OSU news
Among other work, she
developed ways to teach
design as a STEM subject,
bringing science, technology,
engineering and math princi-
ples into the study.
Shirley explains her teaching
approach in a Utah State
Her website: www.lind-
Oregon’s O&C timber counties
say they’ll file suit over BLM plan
Capital Press
An association represent-
ing 18 timber-dependent
counties says it will file a
lawsuit over the BLM’s pro-
posed new Western Oregon
Resource Management Plan.
“This isn’t saber rattling
by us,” said Columbia Coun-
ty Commissioner Tony Hyde,
chair of the Association of
O&C Counties. He maintains
the counties were “largely ig-
nored” as the BLM built the
A timber industry group
also might take legal action
against the BLM. The Amer-
ican Forest Resource Council,
based in Portland, said the
plan denies Oregon loggers
and mills the opportunity to
demonstrate how “sustain-
ability, forest health and eco-
nomic growth are not mutual-
ly exclusive.”
AFRC President Travis Jo-
seph said the council’s board
will decide whether to file suit
over the plan.
The association includes
counties that receive mon-
ey from timber harvests on
former Oregon & California
Railroad land, a checkerboard
pattern covering 81 percent
of the 2.5 million acres in the
Western Oregon plan. The
feds took it over from the rail-
road long ago and the BLM
manages the land.
For decades, the coun-
ties received half the annual
timber harvest receipts and
used the money to provide
sheriff’s patrols, operate jails
and other services. As timber
harvests declined, the coun-
ties received less money and
drastically cut services. Voters
for the most part voted down
property tax increases that
would have offset some of the
revenue loss.
The BLM’s management
proposal, released this past
week, sets aside 75 percent
of the forestland as reserves
for fish and wildlife habi-
tat, stream protection and to
maintain older and complex
The O&C counties and
timber industry groups be-
lieve the plan should allow
more logging, which they
say could revive the shattered
economies in much of rural
The BLM estimates it will
be able to provide 278 mil-
lion board-feet of timber for
harvest annually, an increase
over average harvests since
1995 but far below what the
O&C counties and industry
groups favor.
Hyde, of Columbia Coun-
ty, said the O&C lands could
provide 400 million to 500
million board-feet annually.
“We’re not asking for ex-
clusive use of these lands for
revenue production,” Hyde
said. “We can get higher (har-
vest) levels while still provid-
ing for endangered species,
clean water and fish habitat,”
Hyde said relations between
the counties and BLM are not
particularly acrimonious, but
have reached the point where
the plan’s legality must be
Hyde and Joseph of the
AFRC say the language of the
1937 O&C lands act is clear:
The land is to be managed un-
der a “sustained yield” princi-
ple in order to provide a per-
manent timber supply, protect
watersheds, regulate stream
flow, provide recreation and
contribute to the “economic
stability of local communities
and industries.”
The BLM maintains the
proposal strikes a balance
between multiple statutory
mandates, including the En-
dangered Species Act. The
annual timber harvest is set
by determining an Allowable
Sale Quantity. or ASQ.
The proposal, technically
called a Resource Manage-
ment Plan and final Environ-
mental Impact Statement,
covers operations in the
BLM’s Coos Bay, Eugene,
Medford, Roseburg, and Sa-
lem Districts, and the Klam-
ath Falls field office of the
Lakeview District.
Conservation groups have
criticized the proposal as well.
They say it doesn’t do enough
to protect drinking water,
streams, recreational activity
and threatened or endangered
northern spotted owls and
A 30-day protest period
began April 15. The BLM ex-
pects to reach a final decision
this summer.
The Oregon O&C counties
are: Benton, Clackamas, Co-
lumbia, Coos, Curry, Douglas,
Jackson, Josephine, Klamath,
Lane, Lincoln, Linn, Marion,
Multnomah, Polk, Tillamook,
Washington and Yamhill.