Note From the CEO

Council Members,

I hope this update finds you well, planted, and catching the rain you need. In this update, I would like to focus on the recent memo you received concerning this fall’s Drier Division operating plan.  

During our winter meetings in February and March, I did my best to alert the membership a downsizing was likely due to the expectation a very small rice crop will be planted, and, unfortunately, that has become reality.

At the May Board Meeting, staff presented a draft plan to operate the Drier Division in response to our current estimate of the smallest green rice receipts in decades. Why did we present it in May? This allowed for credible planting information to be gathered during March and April. Gave the team time to put together an estimate based on information gathered and allow for an announcement to the membership at least a month before the sign-up deadline. We wanted to give the membership as much notice as possible using the best information.

Obviously, the USDA March 1 Plantings Intentions Report was used, but our best information came from the membership. Our hard-working Drier Managers reached out to their core members and got an estimate for rice and beans. Using this data, a plan was formulated by the Leadership Team to serve the membership while reducing expenses.

Being a cooperative does not shield us from basic business economics. When units go down (bushels), expenses must go down in like manner. Why don’t we take more soybeans? Soybeans do not generate revenue (drying charges) for the Drier Division like rice. One bushel of soybeans cannot make up for the loss of one bushel of rice. Consolidating fewer rice bushels at fewer receiving locations lowers expenses while also giving the membership a delivery option. Yes, not all the options are ideal for every member, but there is no plan that will be ideal for all members.

As a management team and board of directors, these types of decisions are the hardest ones to make. Temporarily closing facilities is not a decision anyone wants to make, but we have a fiduciary responsibility to make the best decisions for the whole, even if it negatively impacts individual locations.

These decisions do not reflect a lack of respect for our members or our employees. Our members are the heart and soul of the organization, and the employees are the backbone that makes it all work. This leadership team and board of directors work for and serve this cooperative out of great respect for our members and employees.  

As we said in the memo, the team will continue to monitor the carry-in inventory, the need for early soybean receiving, and, of course, rice sign-up. If the determination is made, the plan needs to be adjusted, we will pivot and make the necessary changes.

Those that are directly impacted by recent announcements, I understand why you are upset and emotional, but be assured these hard decisions were made by members (Board of Directors) and employees (Leadership Team) who bleed Riceland blue and only desire is for the future success of our members and team members. What is success? Success is producing competitive settlements every year by adjusting Riceland to compete in the rice industry of today. To be the employer of choice for our industry in the areas we operate.

To get to that future state will require hard decisions. The decisions that we have made in the last two and a half years, the decisions we are making now, and more in the future. It is a painful process to adjust the organization at the same time the rice industry is in the middle of a generational struggle, but at the end of the process will be success for our members and team members.    

Sincerely,

‍Kevin McGilton

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