St. Paul to São Paulo

Inside the Inver Grove Heights headquarters of CHS, Inc., the world’s third-largest agricultural co-op and the largest in the United States, clocks are set to the time in St. Paul, Geneva, São Paulo, and Shanghai—all locations where CHS, a Fortune 500 firm, conducts business. Flat-screen televisions located throughout the company’s offices are tuned to CNN. After all, a strike in Brazil, an economic slowdown in China, or drought in Australia could disrupt the company’s operations.

For decades, CHS and its predecessor firms have had one boot in the global grain-marketing business as an exporter of U.S. grain, most of it grown by its farmer members. Six years ago, president and CEO John Johnson began to push for CHS to place its other foot there and buy South American–grown soybeans to sell worldwide, and wheat from Australia and Eastern Europe to ship to the Pacific Rim. That would mean going head to head with major players in agribusiness—Cargill, Bunge, and Archer-Daniels-Midland.

The only possible objection to the idea: CHS is owned by 60,000 U.S. farmers directly—and 350,000 indirectly through 1,000 locally owned co-ops. How could Johnson convince Midwestern farmers to go along with his plan to open offices outside the United States? And to sell other countries’ grain?

But Johnson and his management team were able to prove to skeptics that having CHS sell other countries’ soybeans, corn, and wheat as well its own members’ production was essential to the company’s long-term financial strength. In other words, to continue selling its members’ grain and soybeans, it also needed to be a year-round source for these crops, even when its members’ soybeans were still in the ground.

“If we are going to be competitive 365 days a year, we need to be positioned to originate grain in those major areas,” Johnson says.

And originate it 365 days a year.

The Big Two

CHS became the biggest ag cooperative (perhaps more accurately, a company owned cooperatively) in the U.S. by coming out on top of an industry consolidation process that accelerated roughly a decade ago. It got its name from the merger of two St. Paul–based farmer co-ops, Cenex and Harvest States.

Founded in 1931 as the Farmers Union Central Exchange, Cenex opened its first offices in downtown St. Paul. Harvest States was born in 1983 out of the merger of Idaho-based North Pacific Grain Growers and the Farmers Union Grain Terminal Association, which opened for business in St. Paul in 1938. Over time, Cenex and Harvest States gobbled up other co-ops to become two of the largest in the country.