Yazoo Valley Oil Mill of Greenwood to merge with Texas concern

New merger will control 30 percent of the processing capacity of the U.S. cottonseed oil mills

BY HUGH D. PALMER

Delta Business Journal

Two of the largest oil mills in the U.S. are in the process of merging. The Boards of Plains Cooperative Oil Mill of Lubbock, Texas, and Yazoo Valley Oil Mill, Inc. of Greenwood, have announced their intention to merge the two cottonseed organizations.

The new merged cooperative will serve over 20,000 cotton growers in eight southern states and market 30 percent of the U.S. cottonseed.

"This has been in the talking stages for years," says Billy G. Clark, president and general manager of Yazoo Valley Oil Mill. "Our talks started off with other oil mills involved, but when it came down to the final point it was just Yazoo Valley and Plains that agreed to merge."

Plains Cooperative Oil Mill, with annual sales of $150 million, processes over 675,000 tons of cottonseed a year. Yazoo Valley Oil Mill processes a combined total of 550,000 tons from its locations for annual sales of $100 million.

In addition to processing vegetable oil for cooking, both companies market the by-products of cottonseed production. Cottonseed meal and hulls are primary ingredients in livestock feed. Cottonseed linters are utilized in the manufacture of mattresses, upholstery padding, and high-quality paper.

"By polling our resources, we increase our ability to compete in the vegetable oil market. The cottonseed industry must have the strength, position, and capacity to support the requirements of food and snack companies as well as the food service industry," said Wayne Martin, chief executive officer of the Texas-based cooperative. He added, "We also aim to increase consumer awareness of the benefits of cottonseed oil."

Merger discussions were precipitated by the need for a single entity to create an overall presence across the cotton belt and leverage combined market share to pursue future growth opportunities in food and consumer markets. Initially, all facilities will continue to gain efficiencies in accounting, sales, and marketing.

"Our job is to keep the farmer on the farm. The best way to do that is to pursue market development strategies that secure a greater demand and price for our product," says Clark. "With the shared expertise and new opportunities presented by this merger, we expect our members will see improvements to their bottom line."

The new arrangement will also assure members of an outlet for their seed during bumper crop years. Additionally, it will provide access to a much broader market for their products, while connecting them to the food chain in a more efficient and profitable manner.

The proposed merger will be presented to members of each cooperative at separate meetings in July. If approved, the parties expect a completion date of August 31, 1999. The new entity will operate under a new name yet to be announced.

Texas cotton growers founded Plains Cooperative Oil Mill in 1936. Today, the membership totals 75 gins serving over 10,000 producers. Plains employs 230 people. The mill refines cotton oil to its final stage and markets it under the brand name "Plainsman" - a premium cooking oil used for its flavor enhancing properties and low saturated fat levels.

Yazoo Valley Oil Mill, Inc. was founded in 1957 and is the surviving entity from the 1975 merger between Yazoo Valley and Minter City Oil Mill. The company further increased its capacity by acquiring seven additional area oil mills. Yazoo now serves over 100 cotton gins and employs 150 people.

"This merger will be a real advantage to our producers that send their seed to Yazoo Valley," says Aven Whittington, Yazoo Valley board chairman. "It will be a big advantage in the future for sure and I think it will be a big advantage right away."