Va. Poultry Cooperative Reorganizing
Group To Operate Under Two Subsidiaries Starting On Jan. 1
Posted: December 13, 2012
HARRISONBURG — The Virginia Poultry Growers Cooperative is reorganizing, but its members and customers shouldn’t be alarmed. While that term is often code in the business world for bankruptcy, it’s anything but in this case.
In a letter dated Dec. 5 that went out to stakeholders last week, the cooperative announced that it’s reorganizing under two separate subsidiaries.
Starting Jan. 1, GUS LLC will own and operate the co-op’s grain unloading station in Linville, while VPGC LLC will own and operate its two other operations: the feed mill in Broadway and the processing plant and garage in Hinton.
Both subsidiaries will operate under the larger parent company, which is still called Virginia Poultry Growers Cooperative Inc.
The internal switch doesn’t represent a downsizing effort, according to co-op controller Sue Hottel.
If anything, it’s just the opposite: It “absolutely” indicates that the co-op is doing well, she said.
Operating under subsidiaries is “a common way of doing business,” she said. “We’ve just grown to the size that it is now appropriate for us as well. Everything is still owned by the co-op and its members, but it’s just organized in a way that’s better for business.”
James Madison University economics professor William Wood agrees that the shift doesn’t raise any red flags and indeed looks like a positive change for the organization.
“It looks like a sensible internal move to position the enterprise for future growth,” he said.
The co-op got its start in 2004 after Pilgrim’s Pride announced it would sell or close its Hinton plant. That would have left more than 1,300 workers without jobs and 169 growers without contracts.
While 144 growers pledged support at the first co-op interest meeting in May of that year, 134 secured contracts with the organization.
In September 2004, the group bought both the Hinton processing plant and the Broadway feed mill from Pilgrim’s Pride with money raised through co-op members, investors, banks and the U.S. Department of Agriculture.
Now, the co-op contracts with about 155 growers who produce approximately 130,000 40-pound toms every week, Hottel said. The organization has about 550 employees in all.
The co-op grossed about $200 million annually, she said, although she wouldn’t comment on the yearly net profit. Although Hottel would not say how that compared to the co-op’s early years, she said the business turned a profit its first year and has only had one “wash” year.
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