1. Experience With International Membership
Bill Davisson
GROWMARK, Inc. CEO

2. Point of Reference GROWMARK is:
Regional farm supply & grain marketing cooperative
Based in Bloomington, Illinois
$2.8 billion in sales (2005)
Nearly $1 billion in assets
Ranks among the largest agricultural cooperatives in North America

3. Point of Reference GROWMARK: Began as Illinois Farm Supply Co. in ’27
Expanded to Iowa/Wisconsin in ’60s
Consolidated with Ill. Grain Corp. in ’80 to form GROWMARK
Purchased assets of UCO in ’95
(35 member cooperatives in Ontario)

4. Point of Reference GROWMARK: Expanded marketing territory in ’90s
Investment in Mexican feed company in ’96
Purchase of AgWay agronomy assets in ’02
Today, business in 21 states, Ontario, and Mexico

5. Point of Reference
GROWMARK Strategic Direction
Maintain strong member system
Grow & expand from core products
More involvement with “value added”
Expand marketing territory
Mergers/acquisitions supporting business strategies

6. GROWMARK Ventures/Investments: Benefit to core membership
Point of Reference
GROWMARK Ventures/Investments:
Benefit to core membership
Related to core business competencies
ROI (15%)
Further strategic direction

7. Canadian Member Business
Acquisition of UCO assets (1995)
Factors in the decision…
UCO structure – similar to GROWMARK
Federated
Loyal members
Farmer focused
A “system” approach to business
Common agriculture
Corn
Soybeans
Livestock

8. Canadian Member Business
Factors in the decision continued…
Core businesses
Agronomy
Energy
Feed
Grain
Consumers
Economic opportunity/growth

9. Canadian Member Business
Where is Ontario agriculture?

10. Canadian Member Business
Why approach as member business?

11. Canadian Member Business
Why approach as member business?
Ownership options:
- Canadian General Business Corp
- Canadian Cooperative Subsidiary
- Operate in Canada as GROWMARK
(member basis)

12. Canadian Member Business
Why operate on member basis?
Largely a philosophical decision…
- UCO members wanted to “buy” a regional co-op
- UCO members willing to invest in GROWMARK up front & over time
- UCO members desired to be “equal” with U.S. members
(Note: All but 2 of the former UCO members became members of GROWMARK)

13. Canadian Member Business
Challenges: Legal and tax issues
- Revenue Canada rulings
- Canadian Securities Commission issues
- Anti-Trust laws in both countries
- Bankruptcy issues (UCO)
- Pension/benefit laws/programs
- “Doing business with Cuba”

14. Canadian Member Business
Other challenges:
- Expatriate management & Customs
- Governance (GROWMARK Board)
- Acceptance of U.S. company in Canada
- Acceptance of decision by U.S. members
- How would ownership investment by members be equalized?

15. Canadian Member Business
Other challenges:
- Cultural issues
- French Canadian issues
- Acceptance of U.S. company in Canada
- Acceptance of decision by U.S. members
How would ownership investment be equalized?
- Currency issues

16. Canadian Member Business
Process of assimilation:
- It’s about the people!
- Joint meeting of member co-op managers/ board presidents
- “Teaming” of co-op leaders (US/Canadian) for facility tours
- Employee meetings
- We discovered our similarities were great

17. Canadian Member Business
Process of assimilation:
- Staffing started as combination of former UCO and a few key, long-term U.S. employees
- Today, the Ontario region staff is all Canadian

18. Canadian Member Business
Given 20/20 hindsight,
would we change anything?
Not much –
- Pleased with Revenue Canada rulings
- May have kept some things separate (patronage pools, etc.)

19. Canadian Member Business
No more “one size fits all”
Tension: Unity vs. Uniqueness

20. Canadian Member Business
Keys to success:
In this instance, having Ontario member cooperatives as full, “equal” members was essential
Recognize differences, but blend the family

21. International Non-Member Business Example
maltaCleyton
2nd largest animal feed company in Mexico
Diversifying into pet food/ aquaculture
44% management ownership
44% GROWMARK ownership
12% private investor ownership

22. maltaCleyton Non-Member Business Why make the investment?
Supports strategic direction
- Core business
- Geographic expansion
- Solid ROI
- Growing market
- Market for grain

23. maltaCleyton Non-Member Business Why non-member investment?
- Not a cooperative to begin with
Different risks/challenges:
Country’s economy/government
Security
Language
Culture

24. Determining the Appropriate Strategy
Let principles guide
Think globally
Calculate risks
Monitor results
Nurture relationships
Be aware of issues/attitudes in each country

25. Questions?