Sharing in the Company’s Success

January 17, 2016

Written By Marion Kertz

Farmers are generally considered to be financially conservative, and the same is true of the MFA Oil Board of Directors, says Marion Kertz, who farms in Ste. Geneveive, Mo. and represents District 4 on the board.

The MFA Oil Board of Directors is elected by the company’s farmer-owners to govern the company and to provide the membership with oversight of the cooperative’s operations and finances.

“We have a responsibility to ensure the company is run efficiently and provides a good return to our fellow farmer-owners,” Kertz says.

One of the most important financial decisions the board makes annually is how much of the company’s profits should be disbursed to members in the form of patronage and how much to retain to keep the cooperative operating at a high level.

“Patronage is a valuable advantage to being a member of MFA Oil, and it’s something that benefits all of our farmer-owners,” Kertz says. “Everyone always wants to know how much they’re going to get back in patronage for the year, and the company has done a great job of consistently paying a high percentage of its profits back to members in recent years.”

MFA Oil members are eligible to receive patronage refunds based on a percentage of the total money they spend on products such as gasoline, diesel, propane and lubricants purchased through the company’s refined fuel and propane plants, as well as at Petro-Card 24 stations.

MFA Oil announced an estimated $10.4 million in patronage refunds for the 2016 fiscal year at its 2016 Annual Delegate Meeting in November. Combined with $1.4 million in member equities from 2003, the total amount of money that will be paid in cash to the membership adds up to $11.8 million.

“This is the third year in a row that we’ve approved paying out 80 percent of the company’s profits for the year in patronage,” Kertz says. “It’s nice to be able to return so much of our profits to our members, especially in years like this when the farm economy is down. It really helps the younger farmers who need the cash to keep their operations going.”

Kertz says the percentage of patronage paid in cash and the distribution of equities from past years is approved by the board and is dependent on the financial health of the company.

“The board strives to strike a balance between returning cash to our members and reinvesting profits to improve the company,” Kertz says. “Just like with our farms, we need to make sure we’re allocating enough funds to buy new equipment and upgrade our technology when needed.”

The excellent financial standing of the company has enabled the board to approve the recent high percentage of cash returns, Kertz says. He points to two factors that have greatly contributed to MFA Oil’s strong balance sheet.

“First, our employees have made great strides in improving our cooperative’s operations, which can be seen in the earnings,” Kertz says. “We also received a great deal of money from the sale of the NCRA refinery that we partially owned. We’ve been reinvesting the proceeds of the refinery sale to fund our recent acquisitions, which, in turn, will help us produce greater returns to the membership in the future.”

Since 2007, MFA Oil has returned approximately $132.2 million in patronage distributions and equity redemptions to the membership, averaging $13.2 million in cash payments annually.