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Published 11:38 am Thursday, October 29, 2015

Pendleton Grain Growers, which has been hammered in recent years by financial problems and poor wheat harvests, will explore the option of detaching its grain division, General Manager Rick Jacobson announced Wednesday.

The co-op will consider selling, merging or entering into a joint venture with a third party before the next growing season, Jacobson said. An export company or neighboring co-op might be interested, he said, but there are no offers on the table.

The grain division will continue to buy and operate as usual until a transaction is completed, Jacobson said in a prepared statement. The decision was approved by PGG’s board of directors.

Board Chairman Tim Hawkins said it didn’t make economic sense for the co-op to continue operating the grain business itself.

“The grain business is one that requires scale to ensure competitiveness, and our grain division did not attract enough handle this year for us to effectively move forward,” Hawkins said in a prepared statement.

The board’s first choice is to have another co-op handle the grain division, but exporters are considering the investment as well, he said.

“The decision will come down to who offers the greatest value for our members,” Hawkins said in the statement released Wednesday morning.

“We had informed the growers in meetings that the future of the grain business would be evaluated based on the size of the handle this year,” Hawkins said in the statement. “PGG greatly appreciates the support of the producers that brought us their grain, but there simply were not enough of them.”

PGG does not have a deadline for striking a deal, other than before the next harvest season.

The co-op has been wobbling for several years. Since 2014 PGG has sold or closed several divisions, laid off employees, reduced excess inventory, restructured its debts into a new loan package and obtained a $20 million line of credit in response to the financial problems. Jacobson said in June that PGG was positioned to make a profit in 2015.

Earnings at the end of June were $4 million above the same time in 2014, the co-op reported.

But a lack of moisture and intense heat early in the season “pinched” dryland wheat crops for some PGG growers, resulting in yield reductions of 25 to 30 percent and protein levels higher than exporters prefer. Meanwhile, the price dropped and Gavilon, a grain handling company owned by the Japanese firm Marubeni Corp., opened a truck transfer station in Union County, giving growers another option for selling wheat.

PGG’s members include about 300 wheat growers, Jacobson said.