Fourteen hundred Iowa pork producers have purchased shares in Iowa Premium Pork Co. (IPP).
Producers had until March 31 to become charter members at a cost of $300. The fee included a common stock offering of $50 and a $250 non-refundable membership fee. Organizers estimated that 2,000 pork producers attended 60 meetings across the state.
In order to join the cooperative, producers have to be an Iowa Pork Producers Association member, own their hogs in the state and be a producer bearing financial risk on hogs. The average producer in IPP markets between 3,000 and 8,000 hogs annually.
The first phase will begin by June 1 when producers receive marketing information. IPP has contracted with Producers Livestock Association, Omaha, NE, to provide market hog pooling, information sharing, hedging and commodity programs and credit services to members.
Roger Coon serves as the president of the IPP board and is a Lohrville, IA, producer. "We would like to see producers use the marketing services," he says. "That will help us get a handle on the quality of the hogs, the number of hogs and with the logistics in preparation for Phase II."
The board of directors has a goal to announce the details of Phase II by the end of the year, Coon says. Board members are negotiating for the next phase with packers and processors. IPP is researching joint venture opportunities with existing packers and processors.
The goal is to use existing packing and processing capacity, build on an existing branded product line and possibly create its own brand to capture more value, says Resource Development Director Rex Hoppes. "It is now our responsibility to create a system to which producers will commit their hogs."
Producer Commitments During the membership drive, producers were asked what percentage of their annual production they could commit to the co-op. They responded with 45% of their hogs for the initial phase and 55% of production for the second phase.
After the board announces the agreements, producers will have the opportunity to purchase preferred stock. That one-time purchase, for which the cost has yet to be set, will determine the number of hogs producers must deliver for IPP. That delivery of hogs, Hoppes stresses, is the key to success of the cooperative.
"At that point, we will have to have a commitment, both financially and morally, from producers," Hoppes says. "This will be a significant investment for producers."
For more information, contact Rex Hoppes at (800) 372-7675.