Lake Cumberland Milling (LCM) in Monticello is an example of a business merger that provides a dynamic challenge and good potential.
   The idea for LCM began around 2001 when a group of Wayne County farmers developed a proposal for a soybean extrusion plant to produce meal, hulls, and oil for local use. As the company began looking for funding sources and locations to build the plant, the opportunity arose to purchase an existing feed mill in the county. The owners decided to expand beyond their original idea and purchased the existing feed mill and elevator business.
   LCM took over operation of the feed mill and grain elevator in 2004, in conjunction with the approval of $1 million in Agricultural Development Funds, as a loan, for the construction of the soybean extrusion plant.
   The opening of the soybean extrusion plant in 2005 was the final key to establishing the three-prong business structure that exists today at LCM: the farm/feed store, the grain elevator operation, and the soybean extrusion plant.
   As with any business, LCM has faced obstacles from both the financial and development sides. On the development side, the company faced several technical and operational obstacles in the establishment of the soybean extrusion plant.
   “We probably weren’t to the point of running 80 percent until about a year after the plant was completed,” explained general manager J.D. Mullins. “It was a challenge at times with the machinery; we would get one problem fixed and then another would come up. It was a lot to learn.”
   At current production levels, Mullins says that the soybean extrusion side of LCM is purchasing beans from farmers in about seven counties.  While, LCM isn’t able to compete with the prices paid by larger operations, it does pay a premium over what the feed mill used to offer producers. Plus, producers save on the cost of transporting their beans to markets in the western part of the state.
   As for products produced within the soybean extrusion side of the business, Mullins says it is the hulls that are flying out the door this year.
   “A lot of people were of the belief that the beef farmers in the area would buy the meal for the extra energy,” said Mullins. “In reality though, they want a cheaper product, like the hulls, and it is area dairies that are the main market for the meal. We just need more of them (dairies).”
   The owners of LCM did not make significant changes to the daily operations at the feed store and elevator when they took over the businesses.  When Mullins came on board as the manager of LCM last summer, he began evaluating the direction the business.
He soon realized that he needed more than just the monthly or yearly statements to know where the business stood financially.
   “You get used to seeing something in the same place day after day, or doing something the same way every day, and then you get to where you don’t even see it at all,” said Mullins.
   “I’ve seen this from both sides of the counter and realize the need of an outside person or group come in to help re-evaluate a situation.”
In the early development, the owners turned to KCARD for business assistance with the initial feasibility analysis. In the fall of 2006, KCARD became reengaged with LCM when the group began the task of updating their business plan.

FROM KCARD
Editor’s Note: KFB is among the KCARD cooperators.
KFB First Vice President Mark Haney serves on the KCARD board.