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Co-op marketing alliance dissolved

Staff writer

Arbitrators have ordered involuntary dissolution of a marketing alliance serving six area grain cooperatives, according to court documents filed this week.

Team Marketing Alliance was formed in 2000 by Cooperative Grain and Supply in Hillsboro, Farmers Cooperative Elevator Co. in Halstead, Central Prairie Co-op in Sterling, Mid-Kansas Cooperative and Midwest Fertilizer of Moundridge, and Producer Ag of Topeka. It was created as the marketing wing for all six cooperatives.

Minority owners Cooperative Grain and Supply, Farmers Cooperative, and Central Prairie Co-op contend they have not been paid a fair share of TMA profits. They filed a petition Feb. 2 in Marion County District Court seeking that TMA be dissolved, that $19.5 million be paid to the minority owners, and that an audit be ordered.

Arbitrators Ted Svitavsky, Keith DeVoe, and Todd Eskelsen heard testimony and questioned representatives of the co-ops June 8 and 9.

In a decision written Aug. 20, the panel ordered TMA dissolved, an audit done, and all owners be paid a share of profits as determined by the audit.

TMA chief operating officer Ted Schulz was appointed receiver, and Jerry Osborne was appointed adviser for the panel and the receiver.

“Mr. Osborne was someone the arbitration panel selected to help oversee the dissolution,” Cooperative Grain and Supply chief executive officer Jerry Fenske said. “None of us know him or are familiar with him at all. Hopefully, we will learn more about him as he works to put a timeline together for us all.”

Schultz was ordered to promptly identify an auditing firm and tell the panel his choice for approval.

He also was told to promptly develop a plan to liquidate and wind-up TMA in a reasonably expedition manner and submit the plan to the panel for approval.

In its ruling, the panel specifically noted testimony by Danny Posch, chief financial officer and vice president for MKC, director and secretary for Producer Ag, representative for Producer Ag in TMA, and chief financial officer for TMA.

“This testimony … indicates Danny Posch’s obvious superior attitude and arrogance toward the minority members,” the panel wrote.

The panel wrote that Posch did not review the TMA operating agreement, knew that a secondary cooperative had found inconsistencies, and did not provide auditors an amended operating agreement in a timely manner.

“We’re pleased that the arbitration panel found in our favor,” Cooperative Grain and Supply board chairman Sarah Olsen said. “Our patrons can rest assured that their grain will be safe in our elevators and that all contracts will be honored. We’ll keep all our patrons informed as this process moves forward. We’re really excited about the opportunities that this will open up for our farmer-owners.”

Nichole Gouldie, communications director for MKC, said that the majority owners remained committed to TMA and its existing obligations would be honored.

“At this time, the extent of what the TMA brand will look like moving forward is uncertain,” Gouldie said. “This dissolution has no impact on any of the physical assets owned by MKC and Producer Ag.”

Last modified Sept. 1, 2021

 

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