With a corporate mantra like “Rising”, it’s fair to assume exciting things are happening at Aurora Cooperative. This bold statement is based in the firm’s pride in moving itself away from the old cooperative mentality, and shifting its focus toward a progressive business approach.
For more than a century, Aurora Cooperative, a grain marketer and agricultural supplier, has been a partner in the success of agriculture in its part of the world. Serving Nebraska and surrounding states, the cooperative operates locations in 31 communities in south central Nebraska and northern Kansas. It employs 475, and provides quality, competitive products and services to its 4,500 grower members.
The cooperative brings in approximately $700 million in annual sales across its four core businesses: grain, agronomy, feed and energy.
Its grain division handles 80 million bushels annually within a network of 19 elevators, all but one located in Nebraska. Keeping in line with the firm’s commitment to innovations, the cooperative took a fresh look at the static storage of grain, and has shifted toward the high-velocity movement of grain in, grain out of facilities.
“The Aurora Cooperative’s grain customers are class-leading in their ability to produce crops at an ever-increasing yield level,” says Mark Cleveland, head of Aurora Cooperative’s grain operations. To keep up with this growth, the company has sought out to solidify grain markets for its customers.
In February 2010, the cooperative announced its plan to expand its grain storage, drying and handling capabilities at its three railroad terminals located at Sedan, Grand Island and Aurora (West), NE. The goal of the $11 million expansion is simple: To access existing and emerging grain markets — especially global export markets — through ports in the Pacific Northwest, West Coast and Gulf of Mexico.
The three locations sit within 60-mile radius of each other in south central Nebraska. The cooperative also operates a fourth 27-car loading terminal in Superior, NE.
“[This expansion] is further evidence of the leadership, vision and determination of the patrons of the Aurora Cooperative — the American farmers — who make this company the market-leading entity that it is today,” Cleveland says. The message an investment of this scale sends to its members: We’re here for you, and we’re here to stay.
Feed & Grain traveled to Nebraska to check in on the progress.
Rails drives expansion
Aurora Cooperative’s grain terminal upgrades will increase the velocity of grain movement in receiving, staging and loading unit/shuttle trains operations at each facility. Once complete, each grain terminal will have the full capability to handle multiple species of grain, including yellow/white corn, soybeans and winter wheat under Class 1 railroad shuttle-train specifications.
“[The expansion] will strengthen our partnership with the railroads, Union Pacific and Burlington Northern-Santa Fe, and allow us to meet the time requirements necessary to take advantage of their incentive programs,” explains Mark Jorgenson, merchandiser, Aurora Cooperative-Sedan. “Ultimately, we’ll be able to offer the best prices to the producers; it will also allow us to access the best markets.”
With Todd & Sargent at the helm, construction began at the Sedan and Aurora West locations during the spring of 2010; both sites plan to utilize their expansion capabilities for the 2010 fall harvest. Meanwhile, Grand Island’s expansion began in the fall of 2010, and is scheduled to open in the summer of 2011.
As rail has gotten more efficient — growing more concerned about their velocity, how much they can move and how fast they can move it — it moved toward 100- and 110-car shuttles, average car size grew to 3,550 bushels per car, and with heavy axel to 4,000 bushels. With more power and increased efficiency and effectiveness, the industry struggles to keep pace with demands; and having access to at least 100-car shuttle loading is critical.
“We’re getting toward the western edge of the Corn Belt, and our ability to access to markets going west is crucial to our success as an organization,” Cleveland says.
The coop’s standard to move to accommodating 110-car shuttles at each of its terminals will allow for future expansion and better incentives from the railroads. As landlocked destinations will not be able to expand, if [the railroad has] interest to pursue and match up loaders and unloaders, these improvements put the cooperative in a better position.
Sedan improves load outs, adds storage
Over an hour south of Aurora and Grand Island, Aurora Cooperative’s Sedan rail terminal rises from the cornfields. Since the first concrete silo was erected in 1976, the location has undergone four major expansions. This round of improvements was specifically designed to load larger and faster unit trains, and to increase the site’s storage capacity.
Prior to the expansion, loading specialty trains or changing between commodities slowed Sedan’s performance. While it currently is capable of loading 400,000 bushels of one commodity within the 15-hour window necessary to make the shuttle incentive; once the expansion is complete, loading multiple commodities in succession while making shuttle time on all three.
“With the existing facility, this addition will allow us to load out rail at 50,000 bushels/hour, and will give us the flexibility to load shuttle trains with multiple commodities back-to-back,” Jorgensen says.
Functionality will also improve. “When we’re [loading] rail, unloading bins or trucks — or a combo of these — the legs can be set on the conveyor to unload bins or trucks and go directly to the rail load out,” says Mitch Woeste, location manager, Aurora Cooperative-Sedan. The new concrete silos will fill at 30,000 bushel/hour from two 15,000 bushel dump pits.
The cooperative is adding an additional 560,000 bushels of storage at the Sedan location, bringing its storage capacity to more than 3 million bushels.
In addition to meeting the 15-hour loading demands and added storage, Sedan also upgraded from its old dryer 1,000 bushel/hour to a new 7,000 bushel/hour GSI dryer. A new 10,000 bushel/hour leg pulls from two existing concrete bins to feed the dryer; and the dryer runs product to a another 10,000 bushel/hour leg to keep product moving in and out.
“Even though we’re speedy — when you have 12 million bushels coming at you — we’re going to find ourselves trying to keep up with the dryer,” Woeste says. Sedan brings in 200 to 250 trucks a day when harvest is at full peak.
Sedan operates nine concrete silos, six receiving pits and a 1.1 million steel bin; and is staffed by eight full-time and three part-time employees. In a year, it handles 12 million bushels of grain: 85% yellow and white corn, 14% soybeans and 1% wheat.
Aurora West automates
Aurora Cooperative took a unique approach to meeting demand with its three-year-old Aurora West facility — and for good reason. The Aurora West rail terminal has a unique supply agreement with Aventine Renewable Energy, Inc. and feeds two ethanol plants located on either side of the facility on a loop track while loading shuttle trains for export.
“The amount of volume we handle makes Aurora West unique,” Panko notes. “We’re constantly providing quality, consistent product to the ethanol plants while managing our inventory.”
The site will be moving around 200,000 bushels of grain per day; moving a million bushels of corn a week to the ethanol plant — plus loading shuttle trains with 400,000 bushel/week. Panko anticipates Aurora West to handle “incredible amount of grain” making it “comparable to the major players” during the 2010 harvest.
To aid Panko and his team in this large undertaking, Aurora Cooperative invested in making it the company’s first completely automated elevator. The automation software, developed by Morrow Engineering, allows users to place grain in designated bins by pulling up the program, identifying that it should move from Point A to Point B and hit go.
“From unloading trucks to opening gates, everything is automated here,” Panko says. “The system does everything for you — starting up every piece of equipment involved in that process and basically monitors that equipment and the load as its working because it has sensors everywhere doing that for you. Instead of monitoring the equipment, you’re monitoring what you’re doing, what kind product you’re putting in that bin, what’s running, managing your grade — you’re managing the product rather than the equipment.”
Less labor translates to the delivery of better products to the client at a better cost, Panko explains. It also allows bare bones staff of four full-time and four part-time employees to move grain quickly and efficiently.
Also expanding to contain increasing demands for storage capacity, Aurora West also added a 500,000 bushel concrete storage bins, upping the sites capacity to 1.5 million bushels. The facility operates four dump pits, using two 30,000 bushel/hour legs; and loads rail cars at 60,000 bushel/hour.
Grand Island: The year of the bean
As producers rotate their crops and the cost of growing soybeans remains low, Nebraska has experienced more than a 40% increase in soybean production over the last decade. Acknowledging the area’s handling needs, Aurora Cooperative’s Grand Island facility will soon offering soybean handling capabilities to its services.
“We’ve only been handling yellow corn so introducing soybean handling will allow us to tap into a huge opportunity in the soybean market,” says Scott Hart, operations supervisor, Aurora Cooperative-Grand Island. “Being able to load soybean shuttles at this terminal should prove to be a great strategic move.”
The location will take in more soybeans than the co-op’s other locations — with predictions leaning toward the handling of up to 2 million bushels — made possible by with the addition of a new 560,000 bushel soybean tank.
The existing elevator’s current corn storage capacity is 2.5 million bushels; on average, it handles around 6 million bushels annually. In the next fiscal year, Scott predicts Grand Island will handle 7 million bushels of corn.
Grand Island will be able to load out 25,000 to 30,000 bushels/hour with its automated system, and will be able to bring in 15,000 bushels/hour. Last year, it took in over 100,000 bushels/day during the harvest.
Investing in the future
Huge yields, faster equipment, advancements in technology, the need to feed the world — agriculture has become more demanding, placing more pressure on grain handlers to keep up with volume and speed. To keep up with new combines facilities must improve or they’ll get left behind as the farmer’s capacity is exceeding theirs, Woeste says: “The smallest John Deere combine they make today was the largest one they made 10 years ago.”
“Farmers require more from us, and we require more from them,” Panko says. “It used to be more laid back, and takes more money to process."
“Customer expectations are high, it’s easy to business with someone else,” Jorgensen says. “The pressures are there. Price dictates a lot, but pumping speed and customer service offer a lot of sway during harvest.”
Aurora Cooperative and its employees strive to provide the best service have been rewarded with a dedicated patronage. “A farmer at any given area has four or five places to do business with, and we want to give him the right reasons to choose us,” Jorgenson says. “We provide competitive prices and services to keep him satisfied — and do so in a fiscally responsible way.”
While it requires a greater investment to provide these services, the cooperative aims to keep grain flowing to keep its cost low, but to grow it must balance between competitiveness and profitability, and build for the future.
“This was not a light investment as a light decision wanted to make sure we could financially put it together,” Woeste says. “It’s a big company so there’s a lot of financial need and you need to prioritize where to allocate those resources on where the best investment will be placed and I think they do a good job with this oversight.”
Jorgensen agrees: “We try to be competitively priced, but the other thing we have to look at if we have requirements to advance toward the future. To pay for a project of this magnitude while being sensitive toward profitability of business, it had to envision were it wants to be 10 years down the road.”