Spending on comforts lifted the financial performance last year for Land O’Lakes Inc., one of the nation’s largest farmer cooperatives, as it delivered more products to people who coped with the pandemic by baking, taking better care of their pets and starting backyard menageries.
Land O’Lakes on Wednesday reported a profit of $266 million for 2020, up 29%. Two of its three businesses saw improvements in a year that started slowly but ended with full-year revenue at $13.9 billion, the same as 2019.
Though best known with consumers for its butter and dairy products, Land O’Lakes gets most of its revenue from animal feeds and crop products for farmers.
“The variety of the enterprise showed up,” in the results, said Beth Ford, the company’s chief executive. “It was a phenomenal performance in a really difficult environment.”
The cooperative, based in Arden Hills, opened the year experiencing some of the pressure it did in 2019, when low commodity prices squeezed margins on dairy products. Executives planned several initiatives to bolster dairy sales. But they gave up on one aimed at food service customers when restaurants, cafeterias and the like were forced to close because of the pandemic.
Land O’Lakes continued throughout the pandemic to buy and process all the milk that dairy herds of its member farmers produced.
One reason was that butter sales took off, driven by the home baking craze the flourished in the early months of the pandemic, and finished the year up 27%. Land O’Lakes also quickly produced some products, such as mozzarella snacks in new packaging, that consumed milk.
“We didn’t end up having to dump any because of our ingenuity as a team. They came up with creative solutions,” Ford said.
Animal nutrition sales, anchored by Purina products, performed strongly as farmers and pet owners, in contrast to the last U.S. recession in 2008, kept spending heavily. Horse feed and related products showed some of the fastest growth. And Ford said the growing phenomenon of backyard chicken coops could also be seen in feed sales.
Its biggest business, Winfield United, provider of crop inputs and other products and services to farmers, saw a decline in profit due chiefly to reduced planting by farmers and price competition in seeds and chemicals.
The cooperative for several years under Ford has been a leading promoter of the need to develop better broadband services in rural America, an effort that intensified when the need for remote schooling put more of a spotlight on the difference levels of internet access between kids on farms and those in town.
“We keep this front and center,” Ford said. She noted Land O’Lakes worked with retailers as varied as Tractor Supply and McDonald’s on Wi-Fi installations to allow rural kids to work from laptops in parking lots. Mayo Clinic, she said, also joined with Land O’Lakes on telemedicine projects.
Evan Ramstad • 612-673-4241