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Southern States co-op era coming to an end Dec. 31 Members vote to close ailing operation that opened 62 years ago


After doing business with local farmers for 62 years, the Southern States Cooperative in Westminster will shut its doors at the end of the month.

In a meeting Friday, co-op members voted 289-52 to close the feed mill, store and fertilizer plant Dec. 31. Members also appointed trustees who will handle the liquidation of the cooperative's assets to cover debt and pay off stockholders' investments.

Officials at Southern States headquarters in Richmond, Va., and the Westminster cooperative's local board recommended closing the business after years of losses and mounting debt.

Three other county cooperatives -- in Hampstead, Taneytown and Mount Airy -- will remain open, as will the Southern States Petroleum Service in Westminster.

About 50 co-op members attended Friday's vote at the Westminster store; the other votes were cast by proxy. The decision to close the co-op left several farmers wondering whether farming has a future in the county.

"When you lose the services that the farmers need, you put a nail in their coffin," said Lorraine A. Gibson, a grain farmer in Gamber, whose family has bought feed, fertilizer and farming supplies at the Westminster co-op since it opened in 1934.

"They're telling the farmers to go to other places [co-ops], but what happens when they decide to close those, too?" Gibson asked.

Farmers criticized corporate managers of Southern States for not doing enough to save the cooperative.

"I didn't see any evidence at all that they tried to look on the positive side," said Ron R. Frederick, who raises beef cattle in Union Mills. "It's a lot easier to dissolve something than it is to work out the problems in a meaningful way."

Farmers become co-op members by committing to a certain amount of business with Southern States each year. In profitable years, members received dividend checks and co-op stock.

Southern States executives said that closing was the only way to avoid bankruptcy and protect shareholder investments.

"We don't have any other course of action," said W. Donny Dunbar, division operations manager of Southern States in Richmond. "Based on the losses, the cooperative needs to stop operation to protect the equity of the membership before it erodes any further."

The Westminster co-op has not turned a profit since 1990. The cooperative reported a loss of $346,000 in 1994 and ended last year with a loss of $188,000. The loss this year is projected to be $100,000.

Despite the improving financial picture, Southern States managers maintained that the available equity has been reduced to the value of the real estate owned by the cooperative. The feed mill and store are on a 3-acre site at John Street and Englar Road. The fertilizer plant sits on 1.9 acres on Railroad Avenue.

At Friday's meeting, co-op members raised questions about the legitimacy of the voting process and whether proxy votes should be counted. They also claimed that corporate officials failed to inform them about the deteriorating financial health of the cooperative.

"It looks to me like this is a done deal, and this vote is a formality," said Robert H. Smith, who raises beef cattle in Westminster.

Barry C. High, chairman of the Westminster co-op, is one of the three trustees appointed to handle the dissolution of the business. The trustees are charged with selling off the assets to cover debts and refund the stockholders.

The cooperative's debt stands at just over $2 million and stockholders' investments total about $260,000.

A 1993 appraisal put the value of the co-op property and equipment at $475,000, but High said he expects a new appraisal to show that the property has appreciated significantly.

"Going by some recent sales of properties in the Westminster area, we feel it should be worth considerably more," High said.

Southern States officials said they are working to transfer Westminster co-op employees within the area, with more than half of the nine full-time staff members already reassigned.

Pub Date: 12/15/96

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