State mill reports record profit of $13.2 millionBISMARCK — North Dakota’s state-owned flour mill posted a record annual profit of $13.2 million on Friday, a year after the Grand Forks mill sustained its biggest loss ever.
By: By Dale Wetzel, The Associated Press, The Jamestown Sun
BISMARCK — North Dakota’s state-owned flour mill posted a record annual profit of $13.2 million on Friday, a year after the Grand Forks mill sustained its biggest loss ever.
During its budget year that ended June 30, the mill shipped more than 1 billion pounds of flour for the first time, its general manager, Vance Taylor, told the state Industrial Commission. Gov. John Hoeven, Attorney General Wayne Stenehjem and Agriculture Commissioner Doug Goehring make up the commission, which is the mill’s board of directors.
“On the one hand, it’s just a number,” Taylor said of the 1-billion-pound milestone. “But on the other hand, we’re pretty excited about it. We’re just excited to be able to grow the business.”
The mill buys most of its wheat from North Dakota farmers, and uses it to manufacture flour for baked goods and pasta, most of which is sold in bulk to food makers. It markets 5- and 10-pound bags of flour in grocery stores, along with packaged pancake flour and bread machine mixes.
The record profit followed two consecutive unprofitable years, which were blamed on volatile wheat prices, futures market turbulence and weakening flour demand. The mill suffered its largest loss ever, $9.7 million, in 2009, after losing $821,607 the year before. Its previous profit high was $6.2 million in 2006.
About half of this year’s profits were attributable to a 14 percent increase in flour shipments, from 8.9 million hundredweight to just more than 10 million, Taylor said. Ten million hundredweight is a billion pounds of flour.
The remaining profit came from deferred gains from flour sales originally recorded in the previous budget year, and profits from instances when the mill got better prices than it expected for its flour at the time it bought the wheat used to manufacture it.
“Some of our customers bought flour more than a year ahead, worried that prices would continue to be high, or go even higher,” Taylor told The Associated Press. Instead, prices declined, and the mill booked its profit when the flour was shipped.
Some of the mill’s profits go into North Dakota’s general fund, which the state Legislature uses to pay for state aid to education, health care and other programs. About $6.3 million of the sum has been transferred into the general fund, with another $659,000 going to the Agricultural Products Utilization Commission, which provides grants for farm-based business ventures.
The mill’s 130 employees will also split up more than $1.2 million in profit-sharing payments. Its profit-sharing plan sets out goals for flour production, employee efficiency and workplace production, which begin kicking in once mill profits total more than $1 million. Payments are a set percentage of each employee’s salary or wages made the year before.
Mill employees will get profit-sharing checks averaging about $9,500, Taylor said. The checks will be distributed at a state mill employee picnic on Tuesday.
In the future, the mill has “a lot of positive momentum,” Taylor said, although he does not expect it to match its record financial performance in 2011.
“We continue to be very busy ... and indications are that we have a large, high-quality wheat crop on the way,” he told the industrial commission. “I do expect (2011) to be a very good year.”