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30 posts categorized "Ag biz"

March 06, 2015

10 years of blogging Rochester

On March 4, 2005, I wrote my first blog post. Kiger's Notebook blogo 2x

It was my sixth year at the Post-Bulletin. I created the "Heard on the Street" column about three years before the blog began. 

More  than 6,200 posts, stacks of columns, mountains of tweets and many gray hairs later, I'm still here writing about business and things vaguely related to businesPhoto on 2015-03-03 at 18.11s in southeastern Minnesota.

It'syou, the readers, who make this career such a fulfilling and entertaining one. Thank you everyone for your feedback, criticism and support over these past 10 years. 

10 years of blogging Rochester

On March 4, 2005, I wrote my first blog post.Kiger's Notebook blogo 2x

It was my siPhoto on 2015-03-03 at 18.11xth year at the Post-Bulletin. I created the "Heard on the Street" column about three years before the blog began. 

More than 6,200 posts, stacks of columns, mountains of tweets and many gray hairs later, I'm still here writing about business and things vaguely related to business in southeastern Minnesota.

It's you, the readers, who make this career such a fulfilling and entertaining one. Thank you everyone for your feedback, criticism and support over these past 10 years.  

February 13, 2015

Reuters: Hormel's near big buy of organic hot dog, bacon maker

Reuters' Olivia Oran filed an interesting story Thursday about Austin's favorite Fortune 500 company.

363Hormel Foods reportedly is "in late-stage talks" to snap up Applegate Farms. Applegate is in the organic pork biz and makes organic hot dogs, bacon and sausage.

Here's a snippet from the Reuters' piece:

A deal for Applegate Farms could be announced as early as next week and value the Bridgewater, New Jersey-based company at between $600 million and $1 billion, the people said, asking not to be named because the matter is confidential.Spamproducts

This would make a lot sense. Applegate is in Hormel's sweet spot.

It processes a lot of hogs. It would extend Hormel's geographic reach. Plus it would them more deeply into the trendy market of organic meat.

We'll have to see if Oran's insider is right and/or if Hormel can close the deal.

 

October 28, 2014

Firewood biz turns up the heat on ash borers

A local firewood business plans to use a new Rochester retail site to heat things up for the insidious tree pest, the emerald ash borer.

Procut Firewood, which has been operating in the area for 25 years, launched its first Rochester sales spot last week at 2660 N. Broadway, next to Space Concepts. And soon, Procut owner Marv Sawyer plans to add his wood kiln to the site.

Procut uses the wood kiln, which Sawyer says has been certified by the Minnesota Department of Natural Resources and the U.S. Department of Agriculture, to sterilize firewood. That's significant now that the emerald ash borer has been found in local trees. To keep the tree-killing pest under control, the state has set up a restrictive quarantine to keep any possibly tainted firewood from leaving the county.

The only exception is wood that has been sterilized in a kiln, like Procut's. Basically, the kiln kills the borers, while also drying the wood for better burning in fireplaces, wood stoves or campsites, Sawyer said.

"The best thing about this is that we can utilize these trees that city and tree services are taking down. Within 24 hours, we can turn these trees into firewood that's good, safe and can be used anywhere," he said.

The city of Rochester or tree-cutting services bring the wood of any type, including ash, for Procut to process.

Procut now is selling firewood for pickup or for delivery by its two trucks on North Broadway. They are awaiting a natural gas hookup to soon be installed before bringing in the kiln.

Mike Haley, of Braasch Commercial Real Estate, handled the deal for Sawyer to acquire the lot space from Keith Witter, of Space Concepts.

September 10, 2014

Workers at Lakeside Foods to lose jobs when Hormel ends contract

PLAINVIEW — About half of the year-round workers at Lakeside Foods workers learned last week that their jobs at Plainview's largest employer will be ending soon, as Austin's Hormel Foods pulls its contract with the plant.

4965162612_d023537c6b_oWhile the Manitowoc, Wis.-based Lakeside isn't releasing the number of jobs being cut, insiders are estimating that between 75 and 90 workers will lose their jobs when Hormel Foods pulls its production contract at the 650,000-square-foot plant.

Lakeside executives have previously said the Plainview plant employs about 80 full-time people, plus about 85 others that work solely on the Hormel contract. The Hormel contract with Lakeside to produce its Top Shelf products was a year-round contract.

Hormel says it plans to move that production to other facilities by late fall.

“This was a difficult decision to make, but moving the operations to other facilities within our company will provide greater production, purchasing and distribution efficiencies," said Donald J. Temperley, Hormel's vice president of Grocery Products operations, in a message this morning.

When the plant is packing seasonal vegetables, Lakeside's employment swells to a temporary peak of about 270 workers, who work 60 to 70 hours a week to get the fresh vegetables canned and frozen.

Plainview Economic Development Director Judith O. Jordan said when the community's largest employer loses such a major contract and needs to cut positions, it's a serious situation.

"We are all concerned about how this impacts Plainview. We hope Lakeside will be able to identify a new co-packer to work with to replace the Hormel production," she said.

The Lakeside Foods facility in Plainview is just one of eleven food processing plant in the Lakeside system. The Plainview facility is also one of six distribution facilities.

September 09, 2014

114-year-old family farm sells for $1.85 million in NW Roch

Since the city of Rochester surrounded his family's 114-year-old farm, developers and real estate agents have regularly talked to Jim Till about selling his island of prime real estate on 19th Street Northwest.

After years of turning down offers, Till sold the remaining 28 acres of his family farm to Jack Remick for $1.85 million last week. Remick also owns Rochester Athletic Club across the road from the farm.

540f1b17a71bf.image"You look back, you hate to leave, but you've got to go sometime," said Till of selling the farm that he has lived on for all of his 61 years. "It's just time to hang it up."

Remick calls the purchase an investment at this point.

"It's a nice piece of property. I don't really have any specific plan for it," he said. "Some of it is across from the club, and some is across from Lourdes (the high school built on land he donated). I would be very interested in what goes in out there."

Till has six months before he needs to move out. He plans to move to his other farm, outside of Byron. He'll continue to farm more than 300 acres with his brother, Charles Till.

Till bought the farm from his mother, Leone Till, in 2006. The house on the farm, which has been expanded and remodeled several times over the years, was originally built in 1900. Till's grandparents lived there. The family has photos of his father, who was born in 1910, as a baby in front of the house. Jim Till grew up on the farm with his eight sisters and his brother.

The family milked cows and raised fields of corn and alfalfa on their farm and on nearby leased fields. In the 1980s, the brothers each bought farms near Byron.

While the Till farm was originally outside of the city, development slowly encircled it.

West Circle Drive started bringing a lot more activity to the area. Manufacturers such as Crenlo and Pemstar/Benchmark built there. Mayo Clinic expanded into that part of the city. The leased fields on the corner of 19th Street and West Circle Drive, where the Tills grew alfalfa for their cattle, was shaped into a commercial development by Kwik Trip for Costco and other businesses.

"For a long time, there wasn't a lot of traffic. Now, it's just traffic all of the time," said Till.

After Costco went in, he moved the dairy cattle to his Byron farm, which means he has been spending a lot of time on the road going between the two farms.

"The only ones profiting were the gas companies and tire companies. It has been a lot of hassle," he said.

The surge in activity in the area also brought crime. Till has been burglarized a number of times in recent years, which prompted him to install gates and move many things to the Byron farm. He then had a stroke about four years ago, which slowed him down.

"I always said I'd sell when the offer was enough to laugh all the way to the bank," he said. "Well, it was just time to sell, though I'm not laughing too hard."

May 28, 2014

Analyst speculates that Hormel may be target of takeover bid

There's a lot of merger and acquistion activity cooking in the meatier aisles of the financial markets these days.

Spammy2The latest was Pilgrim Pride's surprise move to buy Hillshire Brands. Lots of investors with stock options profited from the $6.4 billion deal and that's leading to speculation about the next meat deal to hit the grill might be.

I spotted a very speculative column today on Barron's website by Scott H. Fullman of investment research firm, Increasing Alpha, on that topic. Fullman focused Austin's favorite Fortune 500 company and the creator of Spam, Hormel Foods, as a takeover candidate.

I have no idea if his theories make sense.

Here's some from Fullman's piece:

"Often when such an acquisition takes place, we look for other candidates. One stock seeing increased interest re Spamproductscently is Hormel Foods Corp, which rose back above its 100-day moving average Tuesday and was attempting to break above its 50-day moving average, but ended the day just below it. Momentum is rising sharply and volume is higher as well.

We are seeing a slight increase in implied volatility for Hormel, even as the shares jumped. The 30-day implied volatility is up more than 0.7% for calls, and down 0.8% for puts, indicating a sharp shift in bullish sentiment.

Despite the rise, those risk premiums are still close to their 52-week lows. Clearly, other traders are having the same thought as we are.

If you are looking for a low-cost, low-dollar-risk entry, consider purchasing the Hormel July $50 calls, which are offered at 40 cents. The delta on that option, which shows the current relationship between the movement of the stock and the option, is 23%, but it is expected to rise as the call becomes closer to being at-the-money, thereby increasing the leverage of the option. If the stock rises 10% from here to $52.58, the options will be worth $2.58, for a gain of $2.18 per share, or 545%. If the shares fail to rise, you will lose 40 cents per share, or 100% of your investment.

That compares, however, to a potential loss of $1.14 for those purchasing shares if the stock reverts to Friday's closing price.

Our suggestion is to purchase an equivalent number of calls to the amount of stock you can afford to buy, thereby keeping your risk in check.

October 25, 2013

Roch. Feed and Seed to plant 2nd store

Rochester Feed and Seed plans to fill a need by opening a second store here.

Netta Putzier and Bob Kopplin, who co-own the popular pet food and country living store at the corner of South Broadway and U.S. 14., doubled their presence by opening another Rochester Feed and Seed at 3155 Wellner Dr. N.E. That puts them across East Circle Drive from the Paragon Chateau 14 movie theater.

Rochfeedseed"Customers have been asking when we're opening a store on the north side of town for a while, so now we are," said Putzier. "There are a lot of people in that area who own companion animals."

Painting and construction already are underway, and she hopes to open the new 2,800-square-foot store by mid-November.

"The colors are great there. We're very excited about this," she said.

She expects to add three or four more employees to handle staffing for the second store. The original store in southeast Rochester has 10 on staff.

The store will carry an array of pet foods, accessories, bird seed for feeders and more. In an effort to control quality, Rochester Feed and Seed stocks products made in the U.S., whenever possible.

"People are very protective of their pets. They are members of the family these days," she said.

While the new, smaller shop will have the same focus as its older sibling, Putzier said it won't carry the clothing lines nor will it offer pet grooming services provided at the other site.

In 2008, Rochester Feed and Seed relocated from Marion Road to the spot at the corner of South Broadway and U.S. 14. That proved to be a very good move for the store.

"The people of Rochester are great. They buy local and support stores like ours," said Putzier. "You treat them right and they keep coming back."

December 03, 2012

Railroad puts brakes on DM&E expansion plan

Here's some from a good piece by my colleague Mike Klein. It looks like the more-than-a-decade battle to keep the DM&E from running more coal through Rochester may have come to an end with a whimper rather than a bang.

Of course, now that silca sand and fraccing is hot, that might become the new coal and be a future reason to ramp up. Life on the rails is unpredictable.

-

Canadian Pacific is dropping plans to extend its rail network into the Powder River Basin, abruptly ending Rochester's decades-long fight to stop the increased coal train traffic through town planned as part of that $6 billion plan.

DM&EThe railroad's announcement this morning will likely be followed by more news, as new CEO Hunter Harrison will be meeting with executives Tuesday to announce plans moving forward, spokesman Ed Greenberg said. The railroad has been reviewing its entire network, he said.

When CP acquired the Dakota Minnesota & Eastern railroad in 2007 for $1.48 billion, it also acquired the option to build a 260-mile extension of its network into coal mines in the Powder River Basin in Wyoming. Now Canadian Pacific will take a fourth quarter charge of approximately $180 million on its books, on its option to build there.

"It is CP’s intention to defer indefinitely plans to extend its rail network into the PRB coal mines based on continued deterioration in the market for domestic thermal coal, including a sharp deterioration in 2012," the company said.

The low price and increased availability of natural gas has cut into coal usage in recent years.

"We believe it is a prudent decision to defer the network into the Powder River Basin when you consider the long-term prospects of coal," said Canadian Pacific spokesman Ed Greenberg.
Train
Olmsted County Commissioner Ken Brown said the announcement is a "good deal" for Rochester, but he cautioned that Canadian Pacific is trying to sell those tracks, and a new buyer could proceed with the Powder River Basin plan.

"In the future, who knows what could happen," said Brown, who serves on the Rochester Coalition opposing the increased rail traffic. "It could be a long time before anything could happen. It looks like it's not something to worry about imminently. In the future, if they sell it, maybe it will be, but that's down the road."

Right now, Canadian Pacific moves about about two to four trains every 24 hours through the Rochester area with "mixed freight," mainly steel and grain.

Rochester’s history of conflict with DM&E dates to 1998, when the railroad announced its plans to extend its line 260 miles west to coal fields in Wyoming’s Powder River Basin. The coal-line plan alarmed Rochester-area officials because of the likelihood it would bring increased and heavier, faster traffic through the city.

The Mayo Clinic, the city of Rochester, Olmsted County and the Rochester Area Chamber of Commerce teamed up to form the Rochester Coalition to oppose the bypass.

October 23, 2012

S.E. Minn.'s corn harvest comes in early, piled high

Forecasts about how good the corn harvest would be in parts of southeastern Minnesota have turned out to be wrong.

It is a lot better than anyone dared to predict.

In contrast to the rest of the drought-blasted Midwest, the area's rain-favored fields are bursting with a cornucopia of corn.

10232012cornharvest"I believe this is one of the largest harvests ever, if not the largest, for this area," said Tim Clemens, Greenway Cooperative's general manager. Greenway runs grain elevators  in Byron, Kasson, Dodge Center and West Concord. That puts Greenway's elevators right in the middle of the local corn boom.

With about 95 percent of this year's unusually early harvest completed, farmers are bringing in an average of 170 bushels per acre, with prices running more than $7 a bushel.

Ryan Buck, vice president of the Minnesota Corn Growers Association, farms more than 1,000 acres on a family farm in Goodhue County. He said he has already wrapped up the corn harvest, about three weeks earlier than last year. Last year's crop was "very good," but this year's harvest far exceeds it.

"Much of southeastern Minnesota is kind of a Garden of Eden," Buck said. "The quality of the corn this year is the best I've ever seen."

Clemens said all of Greenway's 5 million bushels of storage, plus more stored in related facilities, is full of grain. That's despite recently adding 1.1 million more bushels in storage.

Greenway has about a quarter million bushels on the ground outside storage bins, he said. Storing outside costs farmers and the cooperative money by lowering the value of the corn. That's not a big deal when corn is selling for $3 a bushel, but it's significant at this season's high prices.

He said the corn harvest is running 10 percent to 15 percent better than even the most optimistic forecasts. That's following a bumper crop of soybeans, which filled more grain bins than expected.

Another twist to this historic harvest is that it is happening so early. Harvests often extend into late November, but this harvest is expected to be mostly done by the end of this month.

"Everyone was kind of caught with their pants down with this harvest," Clemens said. "It is exploding. It is coming in faster than ever before."

While local grain elevators are bursting at the seams, this is an oasis amid a desert of drought-stunted fields across the Midwest. The drought is driving up prices, and grain rationing is being discussed by U.S. agriculture officials. Some livestock and dairy producers are selling off animals because they can't afford to feed them. Some ethanol plants are halting production.

"It certainly hasn't been all roses for everyone," Buck said. "This was kind of a fluke year. That's kind of the beauty of farming. No two harvests are ever the same."

That means that area farmers are in the unheard-of position of having more grain than usual just as prices are running high. Still, that doesn't add up to winning the lottery, because farmers' costs for seed, fertilizer, fuel and most everything else are also higher this year.

Much of this year's corn probably won't be sold for the sky-high prices. Farmers often contract early in the year to sell their future grain at a certain price. That means that despite the high prices, a lot of the bounty from this area could be sold for $5 to $6 a bushel.

However, there is no question that it is much better to be bringing in a record harvest than scraping together grain from drought-blighted farms, like the majority of U.S. grain farmers are doing.

As the harvest rolls to its end, the push is shifting toward figuring out how to ship all of this high-dollar corn out to buyers.