Began With Michigan Sugar in 1970s;
Minn-Dak President & CEO Since 2001
Among the Michigan Sugar Company (MSC) officers listed in the Manual of Sugar Companies, 1954/55 was “David C. Roche, Sales Mgr.” The career MSC manager’s son, David H. Roche, was seven years old when that directory was published in 1955.
David C. obviously could not have envisioned that nearly 40 years later his son, David H., would be elected president of Michigan Sugar Company. Nor could the younger Roche have conceived that in the distant future of 2013, he would be closing out a long sugar industry career in the southern Red River Valley of western Minnesota and eastern North Dakota, retiring from a cooperative that was still in its infancy when he himself began working for Michigan Sugar Company in 1976.Dave Roche
But that’s exactly what transpired.
A dozen years after he came on board as president and chief executive officer of Minn-Dak Farmers Cooperative, Dave Roche is preparing to leave the Wahpeton, N.D.-based co-op and return to Michigan with his high school sweetheart and wife of 43 years, Rae Ann. Until then, he’ll be working with incoming president and CEO Kurt Wickstrom through the end of August, ensuring a smooth transition. “It’s been a great ride, but it’s time for the next generation — and I’m sure Kurt will provide the leadership,” Roche says. “We have a great crew here at Minn-Dak, and a great board of directors.” Still, though he looks forward to spending his first autumn in Michigan in many years, Minn-Dak’s retiring president admits old habits may be hard to (fully) break: “I’m sure I’ll ‘dial in’ to see how the Minn-Dak harvest went the day before and what the slice rate is,” he quips with a smile.
Growing up in Saginaw, young Roche had no intention of following in his dad’s sugar industry footsteps. He graduated from Saginaw Valley College (now Saginaw Valley State University) in 1970 with an accounting degree. The next year, he received an MBA from Michigan State University and began working for a national CPA firm based out of Detroit.
David C. Roche was Michigan Sugar Company’s vice president of sales and a member of its board of directors when he passed away in 1975. At his funeral, Ernest Flegenheimer, MSC’s president, mentioned to the younger Roche that the company was looking for a controller, and asked him to think about applying for the post. “I was in public accounting at the time and was anxious to look into other fields,” Roche recalls. He decided to interview for the job — and was hired.
That was in 1976. Roche rose through the ranks, becoming vice president of administration in 1980, executive vice president in 1990 and chief operating officer the following year. On January 1, 1994, upon Ernest Flegenheimer’s retirement, Roche became Michigan Sugar Company’s president and chief operating officer.
Ten years earlier, in 1984, Michigan Sugar had been acquired by Georgia-based Savannah Foods & Industries. At first glance, it was an odd courtship: cane sugar refiners like Savannah had often worked against the beet sugar sector during farm bill deliberations, believing the nation’s sugar legislation slanted too far in favor of sugarbeets. “But they finally said, ‘If we can’t beat ’em, let’s join ’em,’ ” Roche recounts. “So they became more diversified, involved not only in cane sugar but also in beet sugar through Michigan Sugar.”
In 1996 Savannah Foods asked Roche to move to Georgia and take on additional responsibilities. There, he became a senior vice president and also president of one of the company’s business units, Savannah Foods-Industrial. In that post, he oversaw their U.S. cane sugar refineries — while simultaneously continuing on as president of Michigan Sugar Company.
The corporate acquisition route took another twist in 1998, when Texas-based Imperial Holly Corporation purchased Savannah Foods & Industries. Roche became a managing director for Imperial Holly, but remained in Georgia. “It turned out that the cultures of Savannah and Imperial were significantly different,” he relates. “As a result, I ended up leaving Imperial Holly about six months before they declared bankruptcy in 2001.” (It later emerged from bankruptcy as Imperial Sugar Company. In June 2012, Imperial Sugar Company became a wholly owned subsidiary of Louis Dreyfus Commodities Sugar Holdings.)
Roche’s departure from Imperial was fortuitous for both him and Minn-Dak, as the Red River Valley beet sugar cooperative was, at the time, searching for a new president/CEO to succeed Larry Steward. “I’d obviously known about the Red River Valley and its dominance in beet sugar production — but I’d never visited the area,” Roche recounts. He applied for the job and was hired, officially beginning work at Minn-Dak on March 1, 2001.
Then, as now, there was plenty going on — at both the local and national levels. “The sugar industry was in the throes of the farm bill renewal (in 2001), and I remember quite vividly the negotiations involved with it,” Roche says. “That farm bill reintroduced marketing allocations, which presented a whole new set of issues. There was lots of discussion at the industry level as to how that would work.
“At the same time, Minn-Dak had gone through quite an expansion between 1995 and 2000. [The co-op] proved out the expansion; it had been well conceived, well engineered, and it was working well.” Minn-Dak’s board was looking to plant more acres and also focusing on factory efficiency — “all at the same time that allocations were coming into place. So it became a balancing act to match production with the allocation,” Roche affirms.
“But we’ve been able to ‘dance between the raindrops’ on those issues, and I think we’ve made it work over the years.”
Another big item on the Minn-Dak plate during Roche’s early years with the cooperative was energy use. “We were in need of energy conservation, and they had done preliminary work on a new steam-powered pulp dryer,” he says, “drying pulp by reusing heat already generated by the boilers and used during processing. That was a large project — $10-12 million — and went online in 2003. It has proven to be a good investment for the co-op, with great returns over the years since then.”
On the production side, a major development during the past decade, of course, has been the introduction of Roundup Ready® sugarbeet seed — and the ensuing legal battles impacting beet processors and growers throughout the nation. “It has consumed a lot of time, but it’s simultaneously been a very important issue for our shareholders,” Roche says. “Right now, ‘knock on wood,’ the legal challenges seem to have dissipated a bit, and growers continue to have the ability to plant Roundup Ready sugarbeets.” All — 100% — of Minn-Dak’s acreage is sown to Roundup Ready varieties as of 2013.
Minn-Dak Farmers Co-op is now in the midst of constructing a $70 million molasses desugarization add-on to the Wahpeton factory. Scheduled for completion in latter 2014, the plan was initially presented to shareholders in mid-2012, and they responded by committing about $24 million toward the project. As of summer 2013, the project is “basically on budget and on timeline,” according to Roche.
Several other U.S. beet sugar processors have had desugarization capabilities for well over a decade. “About the time other companies were putting it in — during the mid- to late ’90s — Minn-Dak was busy increasing its core assets: our ability to slice sugarbeets,” Roche explains. “So they had plenty on their table, taking the acreage from around 75,000 up to 100,000. That was consuming the capital at the time.
“During the early 2000s, we were digesting all that and inching the acreage up a bit, working within the constraints of allocations and the farm bill.” A couple years ago, Minn-Dak was “at the point of asking, ‘Where’s the next big return?’ ” Roche says. “And this (desugarization) is what we saw.”
Since the co-op made the 2012 decision to proceed with the desugarization project, sugar prices have, of course, fallen dramatically. But a review and renewed analysis of the projections left the co-op’s management and directors in favor of pushing forward. “We believe we can still make this work,” Roche says. “The past two or three years have provided our shareholders with the capital they could deploy back into the business, to reinvest in the operation.”
That long-term vision is very much in sync with Dave Roche’s personal philosophy. Though a “bean counter” by education, he knows that successful businesses also need risk-takers, visionaries — dreamers.
“One of the things I learned in Michigan, as well as at Savannah Foods, was that even when times are tough, you can’t give up on reinvesting in your plant and your operation,” he emphasizes. “Because if you spend and ‘suck it up’ a bit in the tougher years, you stand to reap the rewards in the better years when the market price is higher or the crop is stronger. If your physical assets are up to date and well-maintained, you can make good returns when conditions are better.”
Minn-Dak’s retiring president believes a big reason for the co-op’s success across its 40-year history is that its directors and shareholders “have not been reluctant to reinvest in the operation. Whether it’s additional pile ventilation for sugarbeet storage, an extended diffuser to increase extraction or considering molasses desugaring, all of that is just good sound business sense in maintaining a viable long-term operation.” Not every project turns out exactly as planned, Roche concedes, “but most of them have delivered the kinds of returns we had in mind when the board approved and authorized them.”
An annual balancing act, of course, is authorized planted acreage. Minn-Dak has tended to push the envelope in recent years in its quest to maximize factory efficiencies. That approach generally has worked — though it did get a little dicey this past season. The board authorized 1.6 times the stock acreage, and with the exceptional crop harvested last fall (27-ton average), it was a race to get all the sugarbeets processed. “We like to think our capacity to slice beets is 2.8 to 3.0 million tons,” Roche notes. “Last year we were a little over 3.0 — and we barely got through them all.” Given the late spring in 2013, the board authorized 1.75 times stock acreage, or potentially 126,000. Minn-Dak growers ended up planting 120,000 acres with virtually no replants required. But with a significantly lower average yield projected compared to 2012, “we should be in good shape,” Roche believes.
His interactions with Minn-Dak’s directors, shareholders and employees rank at the top of Dave Roche’s memory bank as he prepares to leave the Red River Valley and return to his home state in retirement. The co-op atmosphere was not something he’d been exposed to while at Savannah Foods or even at Michigan Sugar Company, since MSC was not yet a co-op during Roche’s tenure there.
“In the corporate world, directors would fly in, be there for a half-day meeting — and they’d be gone,” he points out. “We had their attention, and they were good quality people. But they didn’t eat and live this co-op lifestyle. The biggest difference for me, after I’d arrived at Minn-Dak, was to be pumping gas or going to the grocery store and running into shareholders or board members. We could talk about sugar content or the past week’s factory operations — and I’d see that keen interest in their eyes. They want to know how their investment is going.
“It was a different kind of atmosphere than I’d had before — and a very positive one. It convinced me of the value of cooperatives. The interest and enthusiasm of the owners is terrific. And employees, too. It’s a tight-knit community, and we’ve all been rowing in the same direction.”
Brent Davison, Minn-Dak board chairman, affirms the cooperative’s gratitude for Roche’s service and the strengths he brought to the job. “Dave’s knowledge of the sugar industry is extraordinary, as is the breadth of people he knows and has worked with throughout his career — in both beets and cane,” Davison says. “Those things, along with his extensive understanding of the business side of running a sugar company, have been great assets for Minn-Dak. He’s also been a superb communicator — whether in Washington, D.C., at industry meetings or when talking with shareholders. We’ve been very fortunate to have him here for the past dozen years.”
The Minn-Dak board is simultaneously looking forward to having Kurt Wickstrom at the helm as the cooperative moves ahead, Davison adds. “Kurt’s a very sharp guy, a good communicator — and another excellent business mind,” he says. “We’re very pleased to have him here to succeed Dave as our new president and CEO.” — Don Lilleboe
Editor & General Manager of The Sugarbeet Grower