Winsted-Lester Prairie Journal, Aug. 9, 1999

Possible merger ahead for Glencoe Butter and Produce

By Gail Lipe

The Glencoe Butter and Produce Association (GB&P) board of directors announced last week that it has signed a letter of intent to negotiate a merger with Associated Milk Producers Inc. (AMPI) of New Ulm.

John Breene, general manager of GB&P, said "We wanted to let everyone know we are talking. That is basically what we are doing, talking."

"AMPI's financial strength, product diversity and a profitable track record convinced us to further pursue the merger of our cooperatives," said Mike Matousek, president of the Glencoe dairy and agricultural services cooperative.

Breene said the merger would benefit GB&P by letting the dairy plant stay open, expand and create new jobs for the area.

AMPI is a large enough business that it has different plants around the country. It can transfer products from one plant to another.

This would benefit the plant because right now the cheese is wholesale only. With the one plant there is no option to retail.

If the merger takes place, the cheese could be made in Glencoe and transferred to another plant to process it further. GB&P patrons would get the wholesale margin and the retail margin.

"All that margin passes back to the owners, which are the people milking the cows," said Breene. That creates more value on the input product.

AMPI needs another plant and has the ability to push more milk through it. "With Glencoe members located in the heart of AMPI's membership area, the two cooperatives are a perfect fit," said AMPI president Wayne Bok, a dairy producer from Geddes, S.D. "We need the processing capacity, and Glencoe is an ideal location for AMPI."

"AMPI and Glencoe have a similar vision for today's upper midwest dairy producer," said Matousek, who operates a dairy farm near Glencoe. "Together, we can more easily reach the goals of our members."

The members of GB&P own an agricultural services division and dairy manufacturing plant. The dairy manufacturing plant produces barrel cheddar and provolone cheese.

AMPI manufacturing plants are owned by the cooperative's members to maximize the value of their milk. Dairy producers from the upper midwest market milk through AMPI.

According to Breene, AMPI also has a small agricultural division. The merger would expand AMPI's agricultural division and GB&P's dairy division.

AMPI and GB&P will immediately begin negotiating a definitive agreement to merge the two cooperatives.

Breene said the talking has begun, but nothing can be done, as far as a merger, until the patrons vote.

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