Clearing Up Some Misconceptions: Responding with Facts
January 17, 2016
Written By Mark Fenner
“It must be true, I read it on the Internet!” You’ve probably heard something like this from a friend, relative or, more likely, one of your kids. I’m guessing most of us have had enough experience with the Internet and social media to know we can’t always believe everything we read.
Recently, we discovered a dialogue about MFA Oil on an online agricultural forum. We know it’s normal for our customers to share their opinions about MFA Oil on the Internet, and we take the concerns seriously. Certainly, everyone is entitled to their opinion. However, we would be remiss if we allowed certain misconceptions to be perpetuated without response.
I learned a long time ago that if you are going to argue with someone you should always stick to the facts. Emotions can sometimes get the best of us, but sticking to facts will many times douse emotional fires that arise through misguided perceptions. The postings below come from two different farmers in the same chat group discussing MFA Oil. I am responding with facts to both of their comments.
Farmer A: “Who runs MFA (Oil)? How weak and ineffective has the Board of Directors become. Like most organizations and cooperatives over time it becomes a top down driven affair. The local plant took out E-85 a couple months ago. I’m guessing they didn’t sell enough to tie up a tank. Of course they priced it within a dime or less of E-10 most of the time so why would they sell any…MFA (Oil) should be dissolved and their assets returned to their shareholders.”
Fact: MFA Oil is governed by an eight-member Board of Directors composed of farmers and ranchers who are elected by their local delegates. Our board is very effective, listens intently and provides excellent feedback to the MFA Oil management team. They always have the cooperative’s member-owners in mind. As president and CEO, I report directly to the board, and my team and I are fully accountable to them.
Fact: MFA Oil has been supporting ethanol blending for decades. We are one of the largest ethanol retailers in the Midwest and we have more E-85 sites than any other Missouri retailer.
Fact: MFA Oil (as well as most retailers) has difficulty selling higher ethanol blends without substantial discounts for those higher blends. It often takes more than a 40-cent-per-gallon discount for us to sell much E-85, compared to E-10. For some time, the lower energy market has caused the price we pay for ethanol to be higher than the price we pay for gasoline.
Farmer B: “I have a problem with them using my patronage to buy out the competition, in order to limit my choices and ultimately charge me more. Their magazine recently had information about all their acquisitions the last few years. It seems they’ve went on quite the buying spree. I wonder where they got all the money?”
Fact: Yes, it’s true we do list our recent acquisitions in this magazine and we can agree we’ve been on a bit of a buying spree. However, we did not use patronage dollars for these acquisitions. These acquisitions were funded in two ways:
- The sale of our interest in the refinery in McPherson, Kan., happened at a great time and has given us millions of dollars of capital. Frankly, we had no choice in the sale and were quite fortunate that we were not bought out of our stake much sooner. It was a bit scary, because the refinery earnings represented approximately 70 percent of our income over the last 15 years; however, the sale has also provided us with an excellent opportunity. Management and the board agreed we needed to use these dollars to replace the refinery income. Together, we decided the best way to accomplish this task was by strategically acquiring similar businesses that fit our area of expertise.
- Earnings from our own operations, which include strong earnings from our non-member business, provided the second source of funds for acquisitions. Our non-member business consists of our Break Time, Big O Tires and Jiffy Lube stores, in addition to the non-member business we do in our bulk fuel and propane plants.
Fact: This strategy has strengthened our income statements and balance sheet. So, instead of depleting member patronage or equity, we’ve improved our balance sheet. This allows us to pay a higher percentage of member earnings in cash and retire deferred member equity more quickly.
While negative comments easily outpace positive ones in this day and age, we did have customers defending us during the very same chat. See below comments from Farmers C and D.
Farmer C: “I only buy fuel from MFA Oil…here, they have good prices and services…Have you taken time to talk with your plant manager, your district manager and your districts board member to express your concerns?”
Farmer D: “Their gas and diesel prices are lower than competitors here. I’ve bought from them for 35 years and am a satisfied customer. They shoot straight unlike other places we’ve tried to buy.”
We don’t know who these individuals are, but we appreciate their comments. Farmer C does a great job of pointing out the ability to discuss any concerns our customers might have with their plant managers or others, if need be.
We do our best to add value. Value can be defined in many ways: service, price, safety, relationships, philanthropy, etc. What one customer may find as a value, others may not. We know we are far from perfect, but at the end of the day, you have a say in the matter as a member-owner. We wouldn’t want it any other way, and we thank those who actively participate in and defend this great cooperative.