Cooper Farms diversifies into pork and egg products

Cooper Farms thrives in a poultry market crowded with larger, branded competitors by being efficient in live production and staying close to customers as a private-label value-added meat processor. The Oakwood, Ohio-based company has operations in turkeys, chicken eggs and the production of live market hogs and pigs. Annualized gross sales for Cooper Farms in fiscal 2014 were $525 million.

Cooper Farms ranks 12^th largest among U.S. turkey producers in WATT PoultryUSA‘s rankings of U.S. poultry producers. The company ranks as the 23^rd largest U.S. shell egg producer, with approximately 5.5 million laying chickens, according to Egg Industry.

Major moves in pork and eggs businesses in 2014

2014 saw an explosion of deal-making by Cooper Farms that has clinched its transition from poultry and egg producer to integrated, diversified producer of meat proteins.

Cooper Farms built on its strength in value-added turkey production in 2014 with joint ventures in pork processing and egg further processing and an acquisition in the egg business that added specialty egg products as well as significant added volume to the company’s existing shell egg business.

• In December 2014, Cooper Farms announced it will partner with 11 hog farms and Clemens Food Group (family-owned integrated pork operation based in Pennsylvania) to build a fresh pork processing plant in Coldwater, Michigan. The plant, which is to be operational by late 2017 or early 2018, would be the state’s only pork processing plant.
• Also in December, Cooper Farms formed CW Egg Products, a liquid eggs business, as joint venture with Weaver Brothers, with the purchase (50/50) of Perham Egg facility (from North Central Equity L.L.C.) in Fort Recovery, Ohio.
• In August 2014, Cooper Farms acquired the Fort Recovery Equity egg layer and pullet cooperative, and gained a 2-million chicken egg layer and inline egg processing operation and feed mill, along with 42 contract growers. The operation includes a variety of specialty egg laying flocks for niche markets. The newly acquired feed mill provides ability to create specialty feeds and accept specialty grains.

Juggling deals in pork and egg businesses

With the three business agreements being consummated in close succession, it’s only natural to inquire as to the strategy involved.

Cooper Farms Chief Operating Officer Gary Cooper said, “The motivation for each of the agreements was opportunistic; there wasn’t a grand strategy behind pursuing them at that particular time. It was truly coincidence that the three major projects all came to fruition in the same year. Each one was on its own path, but we brought them all to a positive ending at about the same time.”

Handling simultaneous negotiations for the agreements over several months was an interesting challenge, Cooper admitted. “My son, Luke, and I were on a hunting trip in South Africa during the negotiations, and due to the time differences involved, some Cooper Farms team members were a little surprised to be receiving texts and emails at 3 a.m.

“Our management style at Cooper Farms is not to over-analyze business decisions,” he continued. “In these agreements, we simply were responding to the opportunities that had been presented.”

Strategic goals focus on corporate strengths

The recent acquisitions and the planned venture in the pork business will allow Cooper Farms to diversify its business into three core segments – turkey, pork and eggs, according to Cooper. The deals fit with the strategic goals he outlined:

• Building on the company’s strength in growing animals
• Focusing on value addition in private-label meat proteins (staying out of the commodity business where possible and avoiding head-to-head competition with larger, branded producer-marketers)

“We have a group of people at Cooper Farms who love working with animals and are good at it, so it was easy for us to diversify into the hog production business in the first place and to get more deeply involved in the egg business at this time,” he said.

Egg business poised for value addition

Cooper Farms entered the egg business after it acquired half interest in St. Clair Mills in 1978 and later bought out its partner, Staugler Brothers. Cooper Farms’ layer flock had increased to 1.6 million hens by 2010.

Today, with Cooper Farms’ recent acquisitions in the egg business, the layer flock numbers 3.4 million hens, but the position in the egg products business is significant in Cooper’s business plan.

“We have been working towards developing our egg division into a more core business for us in recent years,” Cooper said. “We have pursued a few different opportunities for our egg division, and we’re very happy with our Fort Recovery Equity Co-op acquisition. It gives us a much needed fourth feed mill, an egg grading-processing inline farm, as well as more pullet and layer production. This acquisition fits our company model well and includes many growers who are already growing hogs or turkeys for us.

“The Perham Egg Breaking facility gives us and Weaver Brothers another option to sell some of our egg production through. Plus, we have plans to enhance those operations into the next level for value added liquid egg sales.”

Cooper indicated the company is also looking at the feasibility of producing cooked egg products in the future.

Coldwater pork processing deal

The 550,000-square-foot Clemens Food Group pork processing facility to be located in Coldwater, Michigan, is expected to cost $255.7 million.

Cooper Farms, along with 11 other independent hog producers, bought preferred shares in Clemens Food Group in the deal that gives them, along with Clemens Food Group, use of the pork processing facility.

The plant in southern Michigan is strategically located in an area near the state’s borders with Ohio and Indiana, and is close to the partnering farms like Cooper Farms that are raising hogs. The plant also is accessible to what is anticipated to be an available strong workforce in Coldwater and the surrounding communities.

The plant initially will be a fresh pork plant but in time may also produce bacon and cooked pork products.

“Closing the Clemens Coldwater Pork Processing deal enables us to take our hog division to the next value-added step or, in other words, 'farm to fork.' This addition to our core hog business will somewhat mimic our fully integrated turkey division,” Cooper said.

Deal-making opens way for integration, diversification

Cooper Farms' recent acquisitions and joint ventures open the way for further integration and diversification in the company’s egg and pork divisions. They are a continuation of dramatic changes at the company.

Gary Cooper explains, “Cooper Farms was only a turkey hatchery supplying poults to the industry through the 1950s. In the 1960s, we started growing more of our own turkey flocks and expanding from then forward. The main difference between us and some other turkey farming families is that we did not start up a processing plant early on. Ours didn’t come into existence until April 1988.

“These recent acquisitions allow us to diversify our business model into three core businesses – turkey, pork and eggs. We look forward to further enhancements in the years to come for Cooper Farms.”