FCStone Conversion to a Public Corporation

FCStone Group (FCS) is a publicly held corporation that converted from a cooperative to a private corporation in 2005, and then converted to a public corporation in 2007. It is an integrated commodity risk management company that provides risk management consulting and transaction execution services to commercial commodity intermediaries, end users, and producers. This case study focuses primarily on the period from the first conversion in 2005 to six months after the public offering in March 2007. Because the financial benefits received by each of the cooperative owners of FCS are dependent on the timing of their sale of FCS stock, stock price information and benefit estimates are provided up to early November 2008.Agribusiness,

A Comparison of Traditional and Newly Emerging Forms of Cooperative Capitalization

This paper compares the traditional forms of capitalization used by American co-ops to newly emerging forms. It is based on an in-depth review of several case co-ops. A broad framework is provided that may be beneficial in more extensive studies of capitalization practices of cooperatives and similar organizations. It is divided into three parts. Part One outlines the alternative capitalization forms being used by cooperatives and their antecedents, where conversions to other structures and forms have occurred. Two basic capitalization forms have been used by cooperatives: traditional (open) and new generation (closed). Cooperatives using both forms have elected to add new capitalization features, such as use of publicly listed stock, or have elected to convert to different forms, such as an LLC or a C corporation. Several perceived advantages have motivated these changes besides the traditional advantages utilized by cooperative corporations, limited liability and single taxation. They include access to capital, liquidity and appreciability of stock. Part Two provides a brief description of the nature and experience of several modern cooperative organizations using the framework presented in Part One. The descriptions are based on in-depth case studies. The case study selections are from a broad cross-section of cooperatives that include the following: (1) Mid-Kansas Cooperative (traditional, centralized, local grain marketing and farm supply using only internally generated equity); (2) Land O'Lakes (traditional, centralized and federated, regional dairy marketing and processing and farm supply using only internally generated equity and registered debt financing); (3) CHS Cooperatives (traditional, primarily federated, regional grain marketing and processing and farm supply, with the recent addition of publicly listed preferred stock); and (4) U.S. Premium Beef (new generation, centralized, regional beef processing using closely held but tradeable common stock and proposal to convert to an LLC with member and non-member tradeable stock). In addition brief mention is made of other cooperatives including (5) Dakota Growers Pasta (new generation, centralized, regional durum wheat processing with recent conversion to C corporation); (6) South Dakota Soybean Processing (new generation, centralized regional soybean processing with conversion to LLC); (7) Pro-Fac and Birds Eye Foods (new generation centralized regional frozen vegetable processing with publicly listed stock and transition of processing entity, Birds Eye, to majority ownership by investor-oriented partner likely to exit through an IPO) and (8) Gold Kist (traditional, centralized regional poultry processing with proposed conversion to publicly traded C corporation). Part Three will briefly outline some of the challenges facing cooperatives in the future with reference to capitalization.Financial Economics, Agribusiness,

Sources of Financial Stress in Agricultural Cooperatives

Financial stress in agricultural cooperatives may be due to a combination of three factors: inadequate profitability, excessive debt, or high interest rates. This paper uses an analytical technique to determine the relative degree of financial stress in agricultural cooperatives attributable to each factor. Roughly 30 percent of agricultural cooperatives in our sample suffered financial stress from 1987 through 1992. The analysis indicates that the greatest portion of financial stress, 54 percent, originated from low earnings. High interest rates accounted for roughly 24 percent of the financial stress while leverage accounts for the remaining 22 percent. The results also indicate that smaller cooperatives are more than twice as likely to face financial stress than larger cooperatives. Small cooperatives are more likely to face profitability problems whereas large cooperatives are more likely to face debt and interest rate problems.Agribusiness, Agricultural Finance,

Optimal Capital Structure in Centralized Agricultural Cooperatives

Agribusiness,

Land O' Lakes

The case begins with an examination of Land O' Lakes' diversified portfolio of businesses. The business had undergone significant changes since 1998 - it dominated market share in butter and deli cheese, had become the largest crop protection, plant nutrient, and feed manufacturer in the US, and was the fourth largest US seed company. Land O'Lakes used mergers, joint ventures, acquisitions of public and private firms, and divestitures/closing of assets to restructure its portfolio to build its portfolio. The main issue was to evaluate its diversified portfolio of businesses and find ways to improve future performance.Dairy, Agribusiness, Portfolio, Cooperative, Agribusiness, Livestock Production/Industries,

Current Challenges in Financing Agricultural Cooperatives

Agricultural, Cooperatives, Finance, Agribusiness, L10, L23, L16, Q13,

An Analysis of Efficiency of Midwestern Agricultural Cooperatives

Agribusiness,

Uncertainty quantification in mechanistic epidemic models via cross-entropy approximate Bayesian computation

This paper proposes a data-driven approximate Bayesian computation framework for parameter estimation and uncertainty quantification of epidemic models, which incorporates two novelties: (i) the identification of the initial conditions by using plausible dynamic states that are compatible with observational data; (ii) learning of an informative prior distribution for the model parameters via the cross-entropy method. The new methodology's effectiveness is illustrated with the aid of actual data from the COVID-19 epidemic in Rio de Janeiro city in Brazil, employing an ordinary differential equation-based model with a generalized SEIR mechanistic structure that includes time-dependent transmission rate, asymptomatics, and hospitalizations. A minimization problem with two cost terms (number of hospitalizations and deaths) is formulated, and twelve parameters are identified. The calibrated model provides a consistent description of the available data, able to extrapolate forecasts over a few weeks, making the proposed methodology very appealing for real-time epidemic modeling

Biological controls to manage Acropora-eating flatworms in coral aquaculture

Coral aquaculture is expanding to supply the marine ornamental trade and active coral reef restoration. A common pest of Acropora corals is the Acropora-eating flatworm Prosthiostomum acroporae, which can cause colonial mortality at high infestation densities on Acropora spp. We investigated the potential of 2 biological control organisms in marine aquaria for the control of P. acroporae infestations. A. millepora fragments infested with adult polyclad flatworms (5 flatworms fragment(-1)) or single egg clusters laid on Acropora skeleton were cohabited with either sixline wrasse Pseudocheilinus hexataenia or the peppermint shrimp Lysmata vittata and compared to a control (i.e. no predator) to assess their ability to consume P. acroporae at different life stages over 24 h. P. hexataenia consumed 100% of adult flatworms from A. millepora fragments (n = 9; 5 flatworms fragment(-1)), while L. vittata consumed 82.0 +/- 26.36% of adult flatworms (mean +/- SD; n= 20). Pseudocheilinus hexataenia did not consume any Prosthiostomum acroporae egg capsules, while L. vittata consumed 63.67 +/- 43.48% (n = 20) of egg capsules on the Acropora skeletons. Mean handling losses in controls were 5.83% (shrimp system) and 3.50% (fish system) of flatworms and 2.39% (fish system) and 3.50% (shrimp system) of egg capsules. Encounters between L. vittata and P. hexataenia result in predation of P. acroporae on an Acropora coral host and represent viable biological controls for reducing infestations of P. acroporae in aquaculture systems