A Sea of

Greens

Low-income farmers use

vegetable processing,

marketing co-op to create

new opportunity in

north Florida

A Sea of

Greens

Low-income farmers use

vegetable processing,

marketing co-op to create

new opportunity in

north Florida

USDA / Rural Development July/August 1999
As I write this message in early August, Congress

is in the midst of work on legislation to deliver some

degree of financial relief to farmers who are facing

depressed prices in many commodity sectors. Other

producers — particularly in the Mid-Atlantic and Northeast states — have had to watch their crops wither

under the assault of what may become the worst

drought of the century.

There is not much farmers can do about the

weather, and the marketing of commodities poses

some tough challenges. But there are still many

actions producers can take to increase their probability

of success. This publication is, of course, dedicated to

promoting public understanding of one of the primary

steps farmers and others can take to improve their

“financial odds” in the marketplace: creating and managing cooperatives.

Because the marketplace is ever changing, cooperatives are also evolving with the times. That is the

point of the article “Amber Waves of Change” in this

issue. This article focuses on actions being taken by

Kansas wheat co-ops to ride the wave of change,

rather than be crushed by it. These co-ops are finding

ways to maximize the revenues they generate for their

members’ crops. New varieties of white wheat look

very promising for export markets and greater use of

market pooling is paying off for many co-ops. As Bob

Gales of the FCA co-op observes, some grain buyers

have had to raise the price they pay farmers when

neighbors decide to cooperate, rather than compete

with each other. This concept is the foundation of the

cooperative movement.

Another good example of Kansas co-ops pooling

their marketing is discussed in “Big Steps in the

Plains,” which details how four wheat co-ops have

merged their grain marketing departments and are

jointly constructing a 110-rail car loadout facility. This

should greatly increase the marketing clout of the

farmers who own these co-ops.

Our cover story, “A Sea of Greens,” is an inspiring

story about how co-ops can also help small-scale, 

low-income farmers improve their lot in life through 

collective action. The New North Florida Cooperative is

processing and packaging vegetables and fruits grown

by its 15 members, then marketing them to Florida

schools. While the farmers were well versed in the art

of growing quality crops, they had little experience in

how to add value to their crops or in how to market

them. These are the areas where USDA has been providing the co-op with technical assistance. The co-op

has so far been a great success story.

Of course, we learn not only from our successes,

but also from our failures. That’s the perspective USDA

livestock and marketing co-op specialists Brad Gherke

and James Matson take in their article “Planning to

Prosper,” which examines the lessons learned from

nearly a century of livestock processing co-ops. Livestock processing remains an area of the farm economy

where co-op influence is fairly minor. But the interest

level among ranchers remains intense. They feel that

they must reach farther up the food ladder to reap

more of the profits generated from livestock if they are

to be successful.

Strong cooperatives are an essential part of a

healthy rural economy. I hope the articles in this issue

will provide you with some ideas that will help you

strengthen your co-op.

Jill Long Thompson

Under Secretary, USDA Rural Development

2 July/August 1999 / Rural Cooperatives

Catching the Wave
4 Amber Waves of Change

Kansas grain cooperatives adapting to global marketplace

Pamela J. Karg

12 Hog-tied in Kentucky? 

No, thanks to a co-op helping small-scale hog producers survive in

a depressed market

Bill Brockhouse

14 Boosting Rural New Mexico 

Farmer co-ops key element in effort to help Hispanics and Pueblo

Indians build sustainable communities

Kristen Kelleher

16 A Sea of Greens

Low-income farmers use vegetable processing, marketing co-op 

to create new opportunity in north Florida

Pamela J. Karg

22 Co-op Member Education Needed in 21st Century

William J. Nelson

24 Planning to Prosper: 

Recalling lessons learned from livestock slaughter and meat

packing co-ops

Brad Gehrke and James Matson

28 Co-ops Remain Major Players in Dairy Industry

K. Charles Ling

11 IN THE SPOTLIGHT

29 NEWSLINE

32 NEW PUBLICATIONS

RURAL COOPERATIVES (1088-8845) is published bimonthly by

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Unless otherwise stated, contents of this publication are not

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Dan Glickman, Secretary of Agriculture

Jill Long Thompson, Under Secretary,

Rural Development

Dayton J. Watkins, Administrator,

Rural Business–Cooperative Service

La Jaycee Brown, Director,

Public Affairs & Legislative Staff

Dan Campbell, Managing Editor

USDA Design Center, Design

Rural

July/August 1999 

Volume 66 Number 4

Have a cooperative-related question? Call 

(202) 720-6483, or FAX: Information Director,

(202) 720-4641.

This publication was printed with vegetable oil-based ink.

On the Cover: These collard greens picked by

Spencer Lewis will be washed, chopped and

packaged before being shipped to one of 30

schools in northwest Florida. Processing and

marketing are being performed by the New North

Florida Cooperative. USDA photo by Dorothy Staley
4 July/August 1999 / Rural Cooperatives

By Pamela J. Karg

Field Editor

The winds of change are blowing

across Kansas, ushering in

changes that may seem small at

first glance. But when strung together

like bits of cloth on a kite’s tail, the compound impact of these changes is helping

farmers and their cooperatives re-direct

their efforts to meet the challenges of an

expanding global marketplace.

One cooperative literally made chicken feed of a disaster and created new

markets for farmers and jobs for a rural

community. State legislators have

amended tax laws, providing incentives

that encourage construction and repair of

grain storage facilities. Farmers are

funding research into new varieties of

wheat and their potential uses by food

manufacturers around the world. USDA

is also helping them, examining a program to encourage cleaning wheat bound

for export markets.

The king of Kansas

Wheat rules over the economy of

Kansas. Amber waves of grain dominate

not only the physical, but also the cultural landscape of the region. Tourists and

native Kansans alike stop to watch teams

of combines move through the countryside in June and July. Wheathearts, an

auxiliary organization of the Kansas

Association of Wheat Growers, stages a

national annual Bake-and-Take promotion the fourth Saturday in March to

encourage people to make baked foods for

neighbors. Dozens of similar events and

celebrations are held across the state

each year in honor of the state’s top crop.

Kansas wheat groups even sponsor Web

sites to help kids learn about wheat.

Of its 31 million acres of cropland,

Kansas farmers harvested 495 million

bushels of wheat last year, down 1 percent from the 1997 record crop of nearly

502 million bushels. The ‘98 harvest was

94 percent above the 1996 crop, which

was devastated by exceedingly wet conditions that prevailed in large portions of

the state. The 1998 crop would make

nearly 34.6 billion loaves of bread, or

enough to provide every person on earth

with nearly six loaves of bread. Kansas is

also tops in wheat flour milled and wheat

flour milling capacity.

Mennonite immigrants from southern

Russia introduced Turkey Red wheat

seed in Kansas during the 1800s. Today,

hard red winter wheat dominates the

Kansas countryside. However, crop prices

have been seriously depressed in recent

years, so farmers are experimenting with

hard white wheat varieties. This year’s

field trials should yield some answers to

farmers’ and marketers’ questions about

how these varieties will fare in the

Kansas soils.

“Farmers want to know if there’s going

to be anymore money in these varieties

and buyers want to know how they are

going to mill,” says Bob Gales, president

and chief executive officer of Farmers

Cooperative Association (FCA), a grain

marketing and farm supply cooperative

headquartered in Lawrence. 

Red vs. white wheat

Two-thirds of the Kansas wheat crop

is exported even though the world wheat

demand is far greater for the white kernels. That makes some people wonder if

the entire state should convert to white

wheat. But if the conversion happens too

quickly, premium payments for white

wheat could be lost. Others believe total

conversion to white wheat — combined

with a strong marketing program, a commitment to identity preservation of individual grain deliveries and investments

in cleaning facilities — would position

the state’s farmers as global players.

Foreign buyers take white wheat from

other countries before purchasing red

wheat from the United States, according

to trade reports. So Kansas agricultural

experts are encouraging farmers to plan

their transition to white wheat as red

wheat clogs shipping channels.

“Hard white wheat is a tool we can use

to regain our presence in the world wheat

market,” says Eldon Lawless, a Belle

Plain farmer on the Kansas Wheat

Commission. “We can become competitors again, rather than the suppliers of

last resort.”

A handful of elevators have been designated for white wheat deliveries this

summer. That number will rise over the

next two years it will take producers to

switch while maintaining the integrity

and purity of their new white wheat

stands. Government and agribusiness

are opening communication with each

other and with global buyers in the hopes

of producing a product that will sell better in the global market.

More consolidations

Meanwhile, business consolidations

are impacting the Kansas countryside.

“I have been saying for a long time the

grain industry would consolidate, like the

livestock industry,” says Ron Koehn, general manager of Midwest Cooperative, a

grain marketing and farm supply co-op in

Quinter. “If this happens, it will give us a

stronger cooperative presence in the

grain industry,”

This spring, the nation’s two largest

regional grain marketing and farm supply cooperatives, Farmland Industries

and Cenex Harvest States, announced

plans to consolidate. A feasibility study

and governmental review of the proposal

could be completed by late this year. If

the proposal passes this review, member

meetings would take place in early 2000,

followed by a vote of the memberships of

both cooperatives. The cooperatives have

tentatively set June 1, 2000, as a goal for

completing the transaction to create a

$20 billion cooperative.

Like Koehn, Gales also applauds the

announcement of the consolidation. If

Amber Waves of Change

Kansas grain cooperatives adapting to global marketplace
Rural Cooperatives / July/August 1999 5

grain farmers hope to be equal players

with multi-national corporations, their

cooperatives need to grow to at least the

size Farmland and Cenex Harvest States

would achieve through their proposed

consolidation, he says. The market power

that size offers to growers is also the reason Gales’ FCA has redesigned its grain

marketing strategies.

FCA farmers were already taking

grain to Farmland’s Topeka and Kansas

City facilities when the two cooperatives

decided to work out a new arrangement.

Farmland allocated one million bushels

of its terminal storage at the two sites to

FCA. Farmers now delivering grain to

either location receive a term price, earn

patronage on the delivery and still

receive settlement from FCA — their

local cooperative that they know best.

The move also means FCA will not have

to invest in railroad infrastructure,

which saves its members money. Gales

estimates about one-seventh of the cooperative’s assets would have been tied up

in building a new rail loading facility if

the arrangement had not been worked

out. At the close of its 1998 fiscal year, the

agreement between FCA and Farmland

also meant 2 cents per bushel in patronage on grain delivered directly to the terminals.

At the same time, FCA’s grain merchandiser moved to Farmland’s Kansas

City marketing office. The move has

opened up communication and improved

marketing programs at FCA, as well as

at other local cooperatives. The FCA merchandiser can sell grain from any of the

cooperative’s locations to anyone. He is

not limited to marketing exclusively to

Farmland.

“Our grain merchandiser, Larry Coffman,

has over 30 years of experience and

Farmland has always tried to get the best

prices for us,” Gales says. “But moving up

there to work side-by-side with Farmland

has shown us more places we can market

our grain.” 

Farmland also holds regular marketing strategy conference calls, which the

FCA merchandiser and merchandisers

from other local cooperatives attend.

They gain market intelligence on a global

perspective while providing Farmland

with current information about what’s

happening on Kansas farms, he says.

Because of the Farmland terminal

allocation combined with the increased

market intelligence, FCA can offer

effective “price later” and “minimum

pricing” contracts to farmers, as well as

cash markets. “Price later” contracts

allow the cooperative to take title of the

grain so it can sell or move it. Producers

are then paid on request. “Minimum

pricing” contracts allow producers to

sell grain to the cooperative to stop

storage charges. The cooperative then

purchases “calls” on behalf of farmers,

who pay the costs incurred in purchasing the call.

Says Gales, “Local buyers have had

to raise their prices paid to farmers a

bit because it was their job to pit me

against my neighbor. But now we’re

working with our neighbors through

Farmland. We’re doing what we were

supposed to be doing all along — coopMost grain growers in Kansas say they are supportive of the consolidations occurring

among grain co-ops, which they feel are necessary to help growers match the

marketing power of large multi-national and foreign grain companies. USDA photo
6 July/August 1999 / Rural Cooperatives

By Kent Miller

Communications Director

Farmway Co-op, Inc.

Four Kansas cooperatives took a giant

step this spring when they formed a joint

venture which will benefit grain producers throughout the north-central region of

the state.

Farmway Co-op of Beloit, Delphos Coop, Cloud County Co-op of Concordia and

Randall Farmers Cooperative Union

merged their grain marketing departments into AgMark LLC. It will be located in Beloit. At the same time, the joint

venture between the cooperatives began

construction on a 110-car load-out facility

in Concordia. The site was formerly

owned by Cloud County Co-op, which sold

it to the limited liability corporation.

When completed in early 2000, the

new facility will be capable of handling

about 1.6 million bushels. Its five

employees will be able to load out 110 rail

cars at one stop in 10 hours.

AgMark LLC will generate efficiencies

for producers by combining warehouse

licenses and marketing efforts, standardizing grain accounting systems and by having a cooperatively owned train loader/terminal facility. These translate into profits

distributed back to local co-ops to pay

patronage dividends, cooperative leaders

note.

According to Byron Ulery, chief executive

officer of Farmway Co-op, the most worthwhile projects are not simple. “These four

cooperatives have stayed together and

formed AgMark LLC for the common good

of the members of the cooperatives,” Ulery

says.

The cornerstone of this project, notes

Pat Breeding, chief executive officer at

Delphos, is to do together what the four

cooperatives could not accomplish alone.

“The four local cooperatives will continue

to operate their own facilities,” he says.

“Checks will be written on AgMark LLC

checks and will continue to be written at

each location, as they are now.”

Jeff Bechard manages grain marketing for the LLC. He says the venture will

improve the grain prices relative to historical values. “The difference in freight

and/or handling fees could result in a different bid at each elevator location of the

cooperatives,” he says. “We will become

more aggressive in picking up on-farm

stored grain, price improvement and we

will have the ability to load big trains

plus still be able to utilize the short-line

railroads at the different elevator locations.”

Mark Paul, who joined AgMark in fall

1998 as manager of the Concordia terminal, says the facility is being built for the

future. Everything is computer-controlled

— from unloading farm trucks to loading

grain onto rail cars. “I see this as one of

the best grain facilities around. It has the

ability to get the grain shipped out, which

has been a glut to them in the past. The

new facility also allows the four cooperatives involved to be in a new market and

to get the grain to a market where it is

going to make them even more productive. It also helps the four cooperatives

because they are working together as a

group instead of as competitors.”

The State Grain Inspection Service will

have a grain inspection lab at the

Concordia facility. Paul says the

increased rail traffic makes the lab a sensible addition. Inspectors also can service

surrounding area elevators. “There will

be a lot of samples brought here from

other elevators that can be graded here

just like they do at Salina or Topeka. With

(inspectors) on site, it gets them a lot 

closer to where the grain is being loaded

and where the main volume of

grain is being shipped,” Paul says.

The economic impact on the

north-central Kansas area due to

the AgMark terminal will be significant, according to a feasibility

study conducted by the four

founding cooperatives prior to

entering into the joint venture.

Up to 14 counties could feel its

impact.

“The trickle effect will amount

to approximately $7.5 million a year coming back to the local economy,” says Paul.

“You will see a grain price increase in

some areas due to the freight difference.

A producer will still need to get the grain

to the terminal. It doesn’t matter if you

are a member of Farmway, Randall,

Delphos or Cloud County — any profit

AgMark makes goes back to the local

cooperative and they can utilize the profit

to their advantage to help their producers.”

Adds Paul, “You don’t get an opportunity like this very often to come in and set

up an elevator to do what it’s supposed to

do, and that is to move grain in a hurry.

This facility is designed to run fast and

easily. I believe the producers will be very

happy.”

In 1996, Farmland, Midland

Cooperative of Hays, Kan., and Midwest

Cooperative of Quinter, Kan., completed

construction on a 100-car grain load facility

at Ogallah, Kan., called Westland

Terminal.

Big steps in the Plains

Kansas grain producers create new venture

Mark Paul, manager of the AgMark

terminal in Concordia, stands at the

future site of a 110-railcar loadout facility.

Photos courtesy Farmway Co-op Inc.

Farmway Co-op board members

discuss plans to expand facilities at

AgMark’s Concordia terminal.
Rural Cooperatives / July/August 1999 7

erating with our neighbors!”

Grain marketings through Farmland

by FCA had dropped off before these new

communication systems were put in

place. Today, the amount marketed by

FCA through Farmland has doubled.

Golden egg emerges from ashes

“There’s been a lot of internal growth

as well as mergers among cooperatives

here,” observes Bob Nattier, general manager of Mid-Kansas Co-op Association. His

organization has experienced both. In

rapid succession, Nattier runs through

the steps his cooperative has taken in a

shifting Kansas agricultural environment.

Headquartered in Moundridge, the

cooperative went through a growth spurt

in 1992 and today includes 16 grain elevators with combined sales volume of $90

million. Wheat receipts average 9 million

bushels annually. The co-op also handles

grain sorghum, corn and soybeans.

The feed grains raised by members fill

the needs of a local, diversified livestock

industry. In fact, after a fire destroyed a

co-op mill in 1986, Mid-Kansas formed a

business alliance with egg processor CalMaine. The commitment between the two

allowed the cooperative to justify re-building the mill. Now it runs two shifts a day

and the cooperative supplies the processor

with 25,000 tons of feed annually.

The cooperative is also part of Haven

Commodities LLC, a pork production

system. It annually markets 150,000

hogs which are fed with 55,000 tons of

Mid-Kansas feed.

In a partnership with Farmland Industries, Mid-Kansas has access to a

100-car rail loader. Members don’t have

ownership in the loader, yet their cooperative does gain a stronger position to do

more grain business.

Three years ago, the cooperative started

working with cooperatives in Walton and

Andale to do joint grain merchandising.

Other arrangements, including mergers,

could be in the offing between the organizations. Nattier believes anything is possible as local boards of directors and

farmers consider the future.

“Kansas farmers are getting a better

understanding of global marketing,” he

explains. “They’re looking at ways to

reach out to those markets. When they

get to that point, they can cut out the

middle people and capture more for

themselves.”

Mid-Kansas is one of 11 cooperatives

that formed Cen-Kan LLC. The company

collects the problematic straw left after

wheat harvesting and converts it into

strawboard.

“It’s been a painful experience because

we all thought we had a better handle on

the market,” Nattier explains. Everyone

thought it was enough to be a “green”

product. No trees are cut down to produce

this board. No formaldehyde is used in its

processing. Unlike its wood chip fiberboard cousin, though, strawboard is still

considered a new product in some market

segments.

“We could just sell it to builders and

contractors, but that’s a very commoditybased market. We want to develop a

niche market,” Nattier explains.

There were equipment problems and

major production down-times. But the

manufacturing system is now in its third

year. Slowly, a market is being built for

the strawboard.

“I think members appreciate that

we’re trying. Anything we can do that’s

new or innovative, members and directors will give us a certain honeymoon

period to try it. They want us to look outside the box — and inside the box, too.”

At FCA in Lawrence, Gales agrees

Kansas farmers harvested just under 424 million bushels of wheat this summer, a

bumper crop, but grain quality in some areas suffered because of a late harvest

caused by wet weather. USDA photo
8 July/August 1999 / Rural Cooperatives

that farmers are willing to examine

options that lie both inside and outside

the traditional realm of agricultural cooperatives. His grain marketing and ag

supply association was founded in 1953

and grew through six mergers to now

serve over 12,000 rural and urban customers in 13 Kansas counties and two

Missouri counties. FCA owns 19 elevators with a combined grain storage

capacity of 12.1 million bushels and

shipped 15 million bushels of grain during the past fiscal year.

In 1997, members of Pauline Farmers

Cooperative in Pauline established a

closed cooperative called P&B Processors. In turn, P&B became majority

owner of Soy King, a limited liability

company that produces and sells soybean oil and meal from an expulsionextrusion mill derived from its members’

soybeans. It was one step taken by producers to add value to their soybeans.

The Pauline cooperative merged into

FCA in late 1998.

Today, Soy King ownership is split

between farmers (50 percent), private

investors (30 percent) and FCA. As the

Pauline facility went up, soybean crush

margins narrowed.

“Every idea farmers and their cooperative come up with is worth considering,

but timing is everything,” Gales says.

“Any new venture needs to assure it has

adequate start-up capital to weather

those first years of operation.”

Adding more value

“A major challenge facing farmers

and other rural people is the need to

make the transition from being producers of raw commodities to producers of

value-added products, thereby keeping

more of the profits from their labor at

home,” says USDA Under Secretary for

Rural Development Jill Long Thompson.

The members of 21st Century

Alliance would agree.

After years of reading about the success stories of other closed farmer cooperatives in North and South Dakota and

Minnesota, 750 producers from Kansas

and six other Midwest states decided it

“Every idea farmers and their

cooperatives come up with is

worth considering,” says Bob

Gales, president and CEO of

Farmers Cooperative

Association (FCA) in Lawrence.

FCA has grown through a

number of mergers, and today

operates 19 elevators with storage

capacity of 12.1 million bushels. USDA

photo by Bill Tarpenning
Rural Cooperatives / July/August 1999 9

was time to make their own moves

toward the marketplace through valueadded products. They invested $750

each to develop value-added businesses

and were given the first opportunity to

purchase delivery rights with U.S.

Premium Beef Ltd., a vertically integrated beef cooperative (see Jan./Feb.

1998 issue of Rural Cooperatives). The

Alliance has started five new-generation

cooperatives in the past three years,

including a flour mill, two commercial

dairies, a dry edible bean cooperative

and a cooperative to procure straw for

new value-added ag fiber companies.

Recently, 21st Century’s Chief

Executive Officer Lynn Rundle said that

“getting farmers to build relationships

with consumers is the future of agriculture. It won’t be for everyone, but for

farmers who have a vision of being true

food farmers and not just commodity

growers, it’s going to be a big part of

their future. I think we’re just at the

very beginning of it.”

In 1997, 375 of the Alliance members

created 21st Century Grain Processing

Cooperative, a wheat delivery cooperative, and then bought and renovated a

Rincon, N.M., flour mill. Farmers invested $5,000 per share of stock and

promised to deliver 2,850 bushels of

hard red winter wheat for each share.

The membership stock drive raised $3.2

million to buy the mill.

Its formation is part of a trend by

wheat farmers to get into the milling

business and closer to consumers.

Thirteen southwest Oklahoma cooperatives formed Southwest Grain Marketers

LLC, and invested $16 million in a flour

mill in Saginaw, Texas, near the DallasFt. Worth area. The other partners in

the LLC formed in 1996 are Farmland

Industries Inc., of Kansas City, Mo., and

family-owned Bay State Milling Co. in

Quincy, Mass. 

Hispanic and Native Pueblo grain

farmers in New Mexico are also eyeing

an organic milling operation (see page

14 of this issue).

Back at the Alliance, value-added

ventures continue. On the heels of the

mill acquisition announcement came

news that the Alliance would build a

1,500-head dairy with farmer investments. This summer, cooperative officials announced that a 2,800-head dairy

was expected to be up and running by

year’s end. It will employ 32 people with

an annual payroll of more than

$600,000.

The Alliance has formed 21st Century

Agriculture Fiber Procurement Cooperative, also known as Golden Forest Ag

Fibers. It aims to be a front-runner in

the development of the agriculture fiber

and wheat straw particle board industries, Rundle says. The cooperative

members will contract to deliver straw

to manufacturing companies. The cooperative could even expand into other ag

fiber such as corn stalks for paper.

“There are a lot of opportunities out

there for farmers,” Rundle says. “I could

spend all my days talking to new customers working on new ideas where

farmers can make money in this system,

but the key part is building credibility

with the customer.”

USDA provides loans

Late last year, USDA made $200 million available to support the creation of

cooperatives and stimulate rural economic development. Several Kansas

cooperatives have invested in infrastructure through use of USDA funds, including its Business and Industry Guaranteed Loan program.

“We are convinced that producer- and

consumer-owned cooperatives can provide a powerful economic vehicle to help

rural people meet the challenges they

will face in the 21st century,” USDA’s

Long Thompson says.

Rather than duplicating services and

investments, north-central Kansas cooperatives are striving for more cooperation

and communication between cooperatives.

For example, Farmway Co-op of

Beloit, Delphos Co-op, Cloud County Coop of Concordia and Randall Farmers

Cooperative Union merged their grain

marketing departments into AgMark

LLC. The joint venture is now constructing

a 110-car loadout facility in Concordia.

The site was formerly owned by Cloud

County Co-op which sold it to AgMark.

When completed in 2000, the facility will

handle 1.6 million bushels. Its five

employees will load rail cars in as little

as 10 hours (see related story, page 6).

While some cooperatives are investing in loading facilities, another Kansas

cooperative has sold its rail line. Garden

City Co-op sold short line Garden City

Western Railway to Pioneer Rail Corp,

of Peoria, Ill. The cooperative had operated the line since 1982.

With five grain facilities and one fertilizer facility on the lines, the railway

was purchased to ensure service to those

operations. The co-op made certain the

line went to a company capable of running it, General Manager Irv Clubine

reported to members in a recent newsletter. Selling the line enables the cooperative to focus on upgrading its grain storage and fertilizer facilities, he added.

Changing never stops

Remember this: When you’re through

changing, you’re through. So says a sign

that sits on Gales’ desk. He repeats the

slogan often to himself, fellow employees

and the cooperative’s members.

“We’re not going to be — in five or 10

years — the same as we are today, “ says

Gales. “We know that. And our jobs, as

cooperatives, are going to be to manage

risk and help our members understand

how to manage risk. If the lean times in

agriculture haven’t brought this fact to

light yet, the next year or two will. And

it’s the people who can manage that risk

who will survive.” ■
10 July/August 1999 / Rural Cooperatives

By Doug Ohlemeier

Marketing Specialist

Kansas Wheat Commission

Two Kansas hard white wheats have

excellent baking characteristics for pan

breads and rolls, according to a research

update by Kansas State University

(KSU). The project, funded by wheat

producers through the Kansas Wheat

Commission, examines hard white

wheats — Betty and Heyne — for quality breads, Asian noodles and tortillas.

A KSU-bred variety being considered

for release in 2000, KS96HW115, also

shows promise for Asian noodle production. KS96HW115 represents a new generation of Kansas hard white wheats in

that it produces bright, white Asian salt

noodles, and bright, pale, yellow alkaline noodles. None of the current Kansas

hard white or hard red wheat varieties

produce low-browning doughs. To Asian

consumers, noodles must not turn brown

or dark.

Asian noodles are broadly classified as

salt (Japanese-style) and alkaline (Chinese-style). Salt noodles are made with

soft wheat flour and appear bright white.

Alkaline noodles are made with hard

wheat flour and appear bright yellow.

White wheat must produce doughs that

remain bright white or bright yellow after

aging.

Noodles account for a third of Asian

wheat consumption, similar to the entire

Kansas crop.

“The cooked texture of the alkaline

noodles from KS96HW115 was similar to

a commercial Japanese alkaline noodle

flour. Moreover, the Wheat Quality

Council ranked its bread-baking quality

as high. KS96HW115 is a multi-purpose

wheat suitable for several sizable markets including bread, Asian noodles and

tortillas,” said Paul Seib, KSU grain science industry professor.

Betty and Heyne are not only as good

as their red counter-parts in standard

dough-mixing texts, but they produced

bread with greater loaf volumes and a

whiter crumb color. “It is critical that

any white wheats developed for international markets and for specialty products

also be superior in terms of their breadmaking quality,” notes researcher Finlay

MacRitchie.

“This data confirms that the new hard

whites are excellent wheats for use in the

bread-making industry. For wheat producers, this is reassuring news as

Kansas moves toward increased production of hard white wheat. It means the

new white wheats can be used to produce

almost any bread or roll product on the

market today, as well as compete in

international and specialty markets,”

says MacRitchie.

Tortillas and flat breads are niche

markets for Kansas hard white wheats

and currently the fastest growing U.S.

flour-based product market. Betty and

Heyne, milled to an 80 percent extraction rate, produced high-quality tortillas

comparable to tortillas produced from 72

percent extraction red wheats.

Bran color is critical because hard

white wheat bran in tortilla flour

improves a number of the textural properties of a tortilla. Due to the absence of

tannins, white wheat bran can impart a

sweeter taste. White bran from these

two varieties appears to improve a tortilla’s textural properties of strength,

tearing and the ability to be rolled without cracking. Tortillas produced from

Betty and Heyne also better retained

moisture during storage and maintained

their textural properties for a longer

period of time.

The study indicates the new white

wheats can be milled to very high extraction rates to produce superior quality

wheat food products, resulting in added

value for producers and processors.

For a complete report on the producer-funded KWC research project, go to

www.kswheat.com or call 1-785-539-

0255.

Meanwhile, Kansas-based marketing

and farm supply cooperative Farmland

Industries and AGvantage IP Inc., a

Kansas cooperative of seed growers,

announced this past spring that Farmland would offer production contracts

and guaranteed minimum premiums of

10 cents a bushel for farmers to switch

from the traditional red wheat to the

newly released Betty and Heyne varieties of white wheat. Between 20,000

and 50,000 acres of white wheat are

anticipated.

Kansas wheat goes white

Betty is ready to produce better bread, noodles and tortillas

Wheat field trials are showing that new hard white wheats such as “Betty,” “Heyne”

and “KS96HW115” can thrive in Kansas. Photos courtesy Kansas Wheat Commission
Rural Cooperatives / July/August 1999 11

Ron Lienemann

President & Chief

Executive Officer

RushShelby Energy Rural

Electric Cooperative

“The electric utility industry will

change more in the

next five years

than it has in my

20 years in the

business. We must

be leaders to

direct the change,

rather than let it

happen to our

cooperative and its

members.”

Co-op description:

RushShelby Energy Rural

Electric Cooperative is a newly formed electric system in

east central Indiana.

RushShelby Energy came into

existence March 1, 1999, with

the consolidation of the former Rush County REMC and

Shelby County REMC. The

new organization serves more

than 13,000 members in parts

of nine counties. In addition

to the traditional electric business, RushShelby Energy has

formed a for-profit subsidiary

corporation to offer new services and products to members and non-members. The

subsidiary currently is a 50

percent partner in a propane

gas business, markets a medical monitoring system, and

sells personal pagers as part

of the Cooperative Paging

Network. RSE Service, Inc. is

the fastest growing area of the

RushShelby Energy corporation and is expected to provide

revenues to lower the electric

rates over the next decade.

Background: Lienemann

grew up in western Nebraska.

The son of a Nebraska electric cooperative general manager, Lienemann earned his

degree at Wayne State College of Nebraska. He spent

15 years working in various

positions at a Nebraska electric cooperative, including

power use advisor, member

services manager, and assistant general manager. He

came to Rush County REMC

in 1987 as the general manager. In 1996, he became a

shared manager, leading both

Rush County REMC and

neighboring Shelby County

REMC through the consolidation process.

What developments are

taking place at RushShelby

Energy? “Like nearly every

industry, rapid change is coming from all directions. The

electric utility industry is the

last legalized monopoly and

state legislators are changing

that. Many states have

already made moves toward

deregulation and customer

choice. In Indiana, it looks as

if our legislature will address

that issue in January 2000.

As an electric company, we

must be ready for those

changes. As a cooperative, we

believe we have always been

more ‘customer’ focused than

other utilities so we should see

positive effects from deregulation. The other strategic planning item is diversification.

We know it will be difficult to

survive as just an electric distribution company. By

expanding into other services

and products, we will demonstrate our enhanced value to

our consumers and the community at large. Electricity

and those member/owners will

remain our priority, but we

will use the revenues of these

other activities to maintain

our primary focus. We hope

that when consumers have a

choice of their utility that they

will believe that they can’t live

without RushShelby Energy

and will make us their choice.

It will take service and reasonable prices to accomplish,

but that’s what we have been

all about since 1935.”

Goals for RushShelby

Energy: “Our primary goal is

to provide unequaled service

to our member/owners.

Whether it be electricity,

pagers, propane, the Internet,

or something that comes over

the horizon later, we want

consumers to think of us first.

We will rarely be the lowest

cost provider, but we need to

provide superior service for

the premium the consumer

may pay. As we investigate

subsidiary activities, we must

not lose sight of the fact that

we are an electric cooperative

first. The goal of these activities is to enhance what we do

as an electric utility, not to

replace it.”

Biggest RushShelby

Energy concerns: “As we

look into the next 12 months,

our focus is on the Indiana

legislature. We will work

with the other electric cooperatives of Indiana to make

sure that our organizations

are equal players in the legislative action. We also want

to make sure that deregulation protects the weakest of

our members while opening

up opportunities to those consumers who wish to make

changes. We support customer choice, as long as each

customer has the same safeguards and choices. Protecting our member/owners is a

top priority and helping them

understand and participate in

the process is a concern we

will address in the short

term. Long-term concerns

would fill more space than the

publication has. Sweeping

changes in the industry mean

they are hard to get a handle

on and we are planning to hit

a moving target. That is

always a concern.”

Key rural development

issues: “We are fortunate to

be in areas that have planned

for growth of the industrial

sector and are working to

make it fit into residential

and agricultural areas. The

biggest issue is how our cities

and counties can provide the

infrastructure necessary to

make the growth work. The

payoff in the long term is

exciting, but the up-front

costs can sometimes be terrifying. We need to strengthen

our public and private partnerships to keep our communities on the grow.” ■

IN THE SPOTLIGHT
12 July/August 1999 / Rural Cooperatives

By Bill Brockhouse

USDA Agricultural Economist

The hog industry is wallowing in

a tough market. Hog prices have

been severely depressed and

many producers have gone belly up.

But, for some small-scale Kentucky hog

producers, their cooperative has prevented them from sinking. The co-op

may help them ride out the current crisis and be poised for new opportunities

when the hog market improves. 

According to USDA’s Economic

Research Service, hog slaughter was up

almost 10 percent in 1998 compared to

1997. As a result, hog prices plunged to

an average $32-$33 per hundredweight

(cwt.), just $5 ahead of the 1972 average

of $27 per cwt. By mid-December 1998,

hog prices were as low as $10 per cwt.

Input costs declined substantially, but

not nearly as low as hog prices had

dropped. While prices have recovered

somewhat this year, they are predicted

to only average in the mid-$30 range.

Small producers, in particular, are

feeling the squeeze. But a group of producers began working seven years ago to

realize a vision that makes it more likely

they’ll survive roller-coaster market

prices.

This effort initially began in 1991,

when Phil Lyvers and Johnny Medley,

small-scale hog producers in Springfield,

Ky., talked about pooling loads of hogs

for shipment to an area packer as one

way to save on costs. Their vision led to

the creation of the Central Kentucky Hog

Marketing Association (CKHMA), a producer-owned and -controlled hog marketing cooperative. Today, Lyvers and

Medley are members of CKHMA’s board

of directors. Members are saving on shipping costs, benefiting from packer incentives for hog quality, and obtaining other services to improve their operations.

A changing marketplace

Before CKHMA, producers did not

think in terms of quality. They received

spot prices on a live-weight basis. They

didn’t know much about base prices or

pay attention to market conditions. Then

packers started offering yield and grade

programs based on quality. Forwardthinking producers like Lyvers and Medley soon realized the potential for

improved returns through genetics, as

well as lower transportation costs.

Consumer preferences also changed.

Today, leaner is better. CKHMA helps

members steadily improve hog leanness

through improved genetics, production

management education, and packer feedback. As a result, members’ average leanness (as measured by percent backfat)

has improved from 48-49 percent in 1992

to about 52.5 percent at present.

Leadership and marketing

When CKHMA formed in 1992, USDA

co-op specialists provided organizational guidance, surveyed producer interest

and wrote a business plan. With 25 members, CKHMA marketed about 20,000

hogs that first year. Today, 13 members

market about 31,000 hogs. Most of the

membership decline was due to farmers

going out of business, but those remaining actually enlarged their operations,

in spite of low hog prices.

“CKHMA has helped us stay in

production even with historically low hog

prices. It has helped members understand that they have to produce quality

to get the highest returns,” says Lyvers.

Tom Congleton, a vocational agriculture teacher at Springfield High School,

agreed to assist the producers, in effect

becoming a part-time manager. He

talked to packers, along with board members, to determine who could offer the

best deal. He also coordinated members’

hog shipments to a central stockyard in

Springfield, where they were kept

overnight and hosed down before

loading. Members originally paid 90

cents per hog for loading and marketing

services. 

However, Congleton repeatedly told

producers that “just putting together

loads of non-similar animals isn’t going

to cut it. If one or two producers were

getting higher returns because they

spent a little more time and money on

Tom Congleton, manager of the Central Kentucky Hog Marketing Association

(CKHMA), and board member Phil Lyvers, helped form the co-op in 1992 to enable

small producers to survive the market “roller coaster” by earning more for improved

herd genetics. Photos courtesy National Hog Farmer

Hog-tied in Kentucky?

No, thanks to a co-op helping small-scale hog producers

survive in a depressed market
producing higher-quality hogs, other producers would be embarrassed because

they knew they could do the same thing

if only they’d put in a little more effort.

There was no reason not to do it. It didn’t make economic sense.”

The five CKHMA directors were the

driving force. With Congleton, they held

weekly educational meetings where kill

sheet data was summarized and freely

shared. Peer pressure was instrumental

in getting producers to improve quality.

Members benefited in another way. It

was much more time-efficient to let Congleton arrange the marketing and coordinate shipments. Producers could then

concentrate on their farm operations.

The biggest advantage during the

worst periods last year was access to

packers, Congleton says.

“The biggest advantage the cooperative offers is the ability to get pigs in the

door. For some smaller producers who

weren’t members, packers were booked

out. But the cooperative never had a

load of pigs turned down,” he explains.

The cooperative has no “bricks and

mortar,” since costs such as stockyard

and loading fees are variable and hogs

aren’t actually purchased by the cooperative. Little startup capital was needed. However, the directors agreed to put

$30,000 toward a marketing bond

required by the Packers and Stockyards

Administration. After a year of operation, CKHMA reimbursed directors.

More benefits realized

Another member service includes the

purchase of feed ingredients in bulk at

lower prices. The cooperative takes

orders, buys the feed, and arranges for

members to pick it up. To promote uniform feeding practices, members are also

required to purchase feed ingredients

through the cooperative.

In 1995, USDA Rural Business-Cooperative Service staff conducted a strategic planning session with the directors.

As a result, Congleton was hired instead

of continuing on a volunteer basis. To

help pay his salary, the members agreed

to raise the fee they pay the co-op to 2

percent of the sales value of their hogs.

At first, the steeper fee drove some members away and others went out of business due to economic conditions. But ultimately, hog marketings stabilized.

Al Tank, chief executive officer of the

National Pork Producers Council, recognizes CKHMA’s success. He spoke at

CKHMA’s annual meeting in March. 

CKHMA members say the future

looks hopeful in spite of low hog prices.

USDA projects that farrowings will

decline later this year, and prices will

continue their slow improvement. Some

members are even talking about expansion. The cooperative will continue looking for the best terms possible with packers. Members will continue improving

quality. Other producers in the area may

join the cooperative and it’s possible that

another collection point will be opened,

Congleton reports.

CKMHA is always looking for new

opportunities on the horizon. With the

potential for closure of area packing

plants looming, members see a need for

exploring alternatives for adding value

to pork. Custom processing, targeting

niche markets and even ownership in a

slaughter facility could eventually

become a reality for a cooperative. 

“Small-scale producers need to get the

most out of their hog operations,” says

Lyvers. “There’s no reason CKHMA can’t

be duplicated by small producers anywhere in the country, with a group of producers dedicated to improving quality,

lowering transportation costs, and saving time. It may be the only way for

small producers to survive.” ■

Rural Cooperatives / July/August 1999 13

Hog producer Phil Lyvers says other small-scale hog producers should be able to

replicate the success his co-op has had in central Kentucky.
By Kristen Kelleher

Information Specialist

USDA Sustainable Agriculture Research and

Education

Northern New Mexicans remain

deeply linked to the dramatic

landscapes and histories of

their lands. Amid the Sangre de Cristo

mountain range and in the path of the

Rio Grande lie communities with firm

ties to the cultures of ancient Native

Americans and 16th-century Spanish

settlers, both of which highly valued

agriculture.

Even so, the influences of modern life

and competing economic development

now challenge the rural health of the

area. The pull of such boom-or-bust

industries as mining and tourism lured a

generation of people away from their

land and agrarian way of life. As in other

areas, the newer industries have proven

to be less stable and lucrative for many

local inhabitants.

Now, through a strong partnership of

northern New Mexico producers, community development leaders and agricultural professionals, a promising mix of

small-scale farming and value-added

enterprises is emerging and reconnecting

the community to its agricultural

resources.

“This year, we expect to bring in

$100,000 of agricultural income to this

part of New Mexico, where there was

essentially none a year ago,” says Craig

Mapel, a marketing specialist from the

New Mexico Department of Agriculture

(NMDA).

Team leverages SARE funds

Mapel leads a project funded by

USDA’s Sustainable Agriculture

Research and Education (SARE) program to revive agricultural production in

the region. He and a team from the New

Mexico State University Cooperative

Extension Service and the Taos County

Economic Development Center are leveraging SARE funds with other public and

private assistance to make a significant

change in the quality of rural life for

Hispanics, Native Pueblo Indians and

other families on limited incomes.

Mapel’s six-figure estimate refers to

the market value of a recent harvest of

organic wheat made by a farmer cooperative in Costilla, N.M. It’s the inaugural

crop for the growers after a generation of

local people stopped farming. The

farmer cooperative has also served as the

impetus for members’ spouses to work

together to build a greenhouse in which

they grow plants and flowers for sale to

local residents.

“The cooperative has become much

more than just a small grains project,”

explains Rey Torres of the Taos County

Cooperative Extension Service.

The small grain production project in

Costilla is one of three hands-on efforts to

re-teach Hispanic and Native Pueblo

farmer cooperatives how to grow and

market products to boost their annual

incomes and improve their quality of life.

Other initiatives to enhance sustainable agriculture in the region include a

community garden project and food processing and marketing assistance at the

Taos County Economic Development

Center, both of which intend to jumpstart value-added agribusinesses.

“This revitalization project got started

because the local people came to us and

asked for help to make it happen,” adds

Torres. “It’s been successful because

we’ve combined the grassroots desires

and interests of the community with a

leadership team that emphasizes the

strengths of its players.”

The technical expertise of Cooperative

Extension linked with the marketing

know-how of NMDA and the community

activism of development center directors

Terrie Bad Hand and Pati Martinson

have combined to create diverse, de-centralized “incubators” for long-term economic success in the region, says Torres.

Farming adds stability

Lonnie Roybal, a Costilla landowner

and first-time wheat grower, says farming is the only thing he and his neighbors

can rely on.

His friend and cooperator Juan

Montes agrees. “We’re after a strong sustainable community that’s not dependent

on tourism or other up-and-down

economies,” he says.

Del Jimenez, extension agent for the

grains project, expects far-reaching

effects from the agricultural production

efforts. “This work benefits more than

just a few small towns. The organic

wheat produced by the growers fuels

niche markets for local mills and bakers,

and launches a state product of organic

flour that can be labeled as made and

milled in New Mexico.”

In another part of northern New

Mexico, in the commercial kitchen at the

Taos County Economic Development

Center, “High Desert Delights” pastry

14 July/August 1999 / Rural Cooperatives

Boosting Rural New Mexico

Farmer co-ops key element in effort to help Hispanics 

and Pueblo Indians build sustainable communities

Chili peppers are an essential ingredient

for many of the southwestern dishes

created in a commercial kitchen

operated by the Taos County

Development Center to help create

small food processing and marketing

businesses that add value to local crops.

Photos by Jeff Caven
chef Leslie Pedlar has fashioned a business out of baking brownies, cakes, cookies and other sweets for local restaurants

and shops.

“I probably would have quit by now if

this kitchen was not available. It’s very

difficult to find a restaurant kitchen that

will accommodate a small operation like

mine,” says Pedlar.

The kitchen is part of a gleaming, upto-code food processing center housed at

the Taos County Economic Development

Center. Pedlar says combining reasonably priced, accessible work space with

the legal and financial services offered at

the business park is a great way to give

small enterprises like hers a fighting

chance to succeed.

The dynamic team behind the development center business park are co-directors Bad Hand and Martinson. They

carved out a strategy for community

action in Taos County by investigating

the desires and strengths of its citizens.

“You have to go to the people,” says

Bad Hand. “In this area, we learned

that agriculture could be a seed of

change because of its link to the people’s

heritages.”

Looking to the future, Bad Hand and

Martinson say they aim to get the development center’s commercial kitchen

functioning 24 hours a day with locally

produced goods. They also plan to have

its companion community garden act as a

catalyst for more food business opportunities for limited-income people, as well

as an entry point for healthy eating and

nutrition education.

Co-op to buy mill

On the wheat production front, Torres

says the farmers had to learn how to

work together just as they needed to

renew their agricultural skills. After

seven years of assistance and advice from

outside sources, the cooperative members

are about to take a big step. They will

mill their own flour for sale to restaurants and bakeries. The farmers want to

capitalize on the consumer trend of shopping local to support rural America.

“Because of the changing face of rural

America, people realize that, unless you

support the local economy — farmers,

producers and processors — your community is not going to survive,” Torres

says. “This is not just about supporting

an industry, though. It’s about supporting

a lifestyle.

“A few years ago,” he adds, “these producers would have just marketed their

wheat on the open market. Now these

same producers have moved on to something unique — their own mill. We know

the stamina is there. The will is there.

Moving to this critical point has given

these cooperative members great hopes

for their futures.”

First funded by Congress in 1988,

USDA’s Sustainable Agriculture Research

and Education the SARE program helps

increase knowledge about — and helps

farmers and ranchers adopt — practices

that are economically viable, environmentally sound, and socially responsible.

To learn more about how to apply for a

SARE grant, access SARE research findings or obtain SARE books and informational bulletins, contact Valerie Berton,

(301) 405-3186; vberton@wam.umd.edu

or visit www.sare.org. ■

Rural Cooperatives / July/August 1999 15

Crops flourish in the Taos County Economic Development Center community garden,

created to improve local food production.
By Pamela J. Karg

Field Editor

“As a small farmer, you’re

already on the bottom, so you

have no way to go but up,”

Spencer Lewis says. “With this new cooperative, it’s a lot better. It makes you feel

good. You know you’re moving up.”

When Lewis plants his seeds today in

the soils of Florida’s panhandle, he essentially only worries about the weather. He

and his wife, Melvina, know exactly how

many acres to rent, how much collard or

turnip seed to plant, what to do for pest

control so the greens can be harvested on

time and who’s going to purchase his produce. The Lewises and their fellow farmers credit New North Florida Cooperative

for bringing stability to their lives and

their operations.

Historically, these small-scale, black

farmers have been price takers, says

Glyen Holmes of USDA’s Natural Resources Conservation Service (NRCS) in

Florida. Farmers sold produce from

roadside stands or to local restaurants.

What wasn’t sold within days of picking

usually spoiled. One neighbor had no

idea what another neighbor was planting

or harvesting. This turned friends into

direct competitors in an already flat local

marketplace. And these producers felt

there was no hope on the horizon.

“These are small-scale producers,”

says Holmes. “They have limited land,

limited capital, limits to their experience

with marketing, and even limits in local

marketing opportunities. Some are only

part-time farmers, with jobs in town.

These people were raised on farms and

knew the production side of business,

but they had never organized to market

their products.”

That changed when 15 small-scale

farmers put their own “sweat equity” to

work in the co-op. Helping them in this

effort have been USDA’s Agricultural

Marketing Service, USDA’s Natural

Resources Conservation Service, Florida

A&M University (FAMU) and the West

Florida Resource Conservation and

Development Council.

Not all is sunshine

The number of black U.S. farmers has

steadily declined, even more rapidly than

the trend for all farmers. In 1910, there

were one million black farmers who

owned 15 million acres of land. By 1998,

that number was down to fewer than

20,000 farmers who owned about two

million acres.

At the same time, the farmer’s share

of the consumers’ food dollar had shrunk

from 37 cents in 1980 down to 23 cents in

1998. One reason for the decline is consumers who increasingly want convenient, quick, ready-to-eat products. Consumers want their cabbage washed,

sliced and packaged so that they only

need to add a few sliced carrots, mix in

the dressing, toss it all in a bowl and

serve up “homemade” coleslaw. Smallscale farmers such as Lewis don’t have

access to the processing and packaging

equipment to give consumers exactly

what they want. As a result, income has

been shifting away from farmers toward

companies that process, package and

market food the way consumers want to

buy it.

While most people see Florida for its

beautiful beaches, thirst-quenching glasses of cold orange juice, Disney World and

as a winter haven for snowbird senior citizens, the northern Florida region is

experiencing financial difficulties. Federal and state officials studied the environment within which producers wanted

to form a new marketing cooperative.

Their reports indicate that increased

urbanization of southern and central

Florida has left northern Florida as the

only region where small farming operations continue to exist in large numbers.

Small farmers are further confronted

with major problems as they attempt to

compete in today’s rapidly changing political, economic and technological environment. Add to this a lack of profitability,

16 July/August 1999 / Rural Cooperatives

A 54-row acre of greens provides enough fresh vegetables to serve lunch to each

student in all 30 schools served by the cooperative.

A Sea of Greens

Low-income farmers use vegetable processing, marketing

co-op to create new opportunity in north Florida
Rural Cooperatives / July/August 1999 17

and small farmers are leaving their operations for non-farm employment. 

“This growing trend is resulting in the

surrounding community becoming overwhelmed with a demand for employment

that it is unable to meet. The search for

employment is also taking many away to

seek employment in other communities.

Thus, the extinction of this very important agricultural group, small farm and

ranch operators, is a possibility in the

northern Florida area,” one study noted.

In eight of nine counties in west

Florida, unemployment rates range from

five to nine percent. These same counties

have between 11 and 25 percent of their

population living below the poverty rate.

The per capita income ranges from

$10,400 to $11,900. Only Leon County,

where the state capital of Tallahassee is

located, has a healthier unemployment

figure (3.9 percent), poverty rate (9.4 percent) and per capita income ($15,724).

Birth of a co-op

Committed and informed, producers

established New North Florida in 1995 to

try to increase their income through

innovative marketing. They knew there

were no guarantees for the cooperative’s

success, even with technical assistance

from USDA and local organizers. Each

farmer had to commit sweat equity for a

share in the new organization, which

they hoped would help lift them up the

economic ladder through innovative marketing. USDA and community development personnel provided management

assistance, but the farmers did not

receive any large financial grants.

The cooperative’s first delivery was

3,000 pounds of greens to the Gadsden

County School District. Food Service

Director and Registered Dietitian J’Amy

Petersen remembers the free samples.

“I met Glyen Holmes at a USDA

Commodity Food Program meeting in

Atlanta,” she says. “We started talking

about the use and how important fresh,

local produce is in feeding programs in the

public schools,” she recalls. “When driving

to the various schools, I saw fields of cabbages, tomatoes, and grapes/berries, fresh

food items that students would enjoy with

meals and salads.”

A short time later, Holmes coordinated

the delivery of cabbage, strawberries and

watermelon to the district’s central warehouse. The produce was distributed to 15

schools that daily feed about 7,000 preschool through high school students, as

well as educators and administrators.

The district also serves nearly 4,000

breakfasts daily through the National

School Breakfast Program. About 80 percent of the district’s students receive free

or reduced-price meals through the

National School Breakfast and National

School Lunch programs, the largest of

the federal child nutrition programs in

terms of spending and the number of children served nationally.

“The quality of the produce was topnotch,” Petersen says. “The leaves were

Dinner is served: packages of co-op produced and processed collard greens are about

to meet the public at the Havana North Side High School cafeteria. From the left are:

Dan Schofer, USDA Agricultural Marketing Service; Alonza McBride, cafeteria

manager; Joe Ann Yumas, lunchroom assistant; and Glyen Holmes, USDA Natural

Resources Conservation Service. USDA photos by Dorothy Staley
18 July/August 1999 / Rural Cooperatives

clean with no holes, rot or wilt. The

berries and melons weren’t mushy, which

means they were freshly picked. Glyen

was in constant contact with me, asking

how the produce looked, what the staff

thought and how the kids liked it. He still

does that today, which is real important.”

More importantly, the kids responded.

They loved the taste and texture in their

mouths of the fruits and vegetables. For

some of the smaller children, it was their

first time ever trying fresh strawberries.

The smell of fresh cooking cabbage

piqued everyone’s taste buds so they ate

more. Petersen and her local food service

managers have noted increases in student participation in the School Lunch

Program, which they attribute to the

efforts to provide children with highquality fruits and vegetables. There has

even been an increase in the number of

teachers, district staff members, and

maintenance crews who opt to stay at

school for lunch.

Working through Holmes and New

North Florida, Gadsden County schools

now contract shipments of strawberries,

watermelons, turnip and collard greens,

cabbage, blackberries and Muscadine

grapes. Jackson County School District

food service director Linda Wright also

purchased produce from the cooperative.

New North Florida continues to work

with Jackson County schools through

Aramark Food service, a private management firm the district has retained. The

Department of Defense’s Direct Vendor

Delivery payments enable districts to buy

more fresh produce without the school

food service fund footing the bill. All

invoices are sent to the state’s

Commodity Food Programs, which

retrieves money from the Department of

Defense food fund to pay the local produce bills.

New North Florida cannot supply

either district’s complete fruit and vegetable needs all year long.

“In school food service, you learn to go

with the flow, be flexible and to work with

what you have. Our menus include many

fruit and vegetable items,” Petersen

explains. “One vendor, like the New

North Florida Cooperative, cannot fulfill

all of our needs, just like one vendor cannot fulfill all the milk, bread and frozen

food items. We have to learn to work with

each specialized distributor.”

Of course, pizza and cheeseburgers

are just as popular in Gadsden County as

they are anywhere else, and Petersen’s

staff has learned to complement these

items with fresh lettuce, tomatoes,

coleslaw and fruit cups as a dessert.

“Those are definite favorites, but the

fat content can already be high in children’s diets, so the addition of fresh fruits

and vegetables with the needed high fiber

and nutrient content can be assets and

complement our school meals,” stated

Petersen. “For many of our children,

school breakfasts and lunches provide

most of the needed nutrients for brain

and body growth, and unfortunately may

be the only well-balanced meals they eat

throughout the day. We are especially

conscious of the nutritional values in

daily meal planning. By following the

USDA Dietary Guidelines and Food

Guide Pyramid, I am assuring they eat

properly therefore resulting in lower disciplinary problems, better school attendance and higher learning activity.”

The majority of fresh produce is purchased from non-cooperative sources,

local produce vendors, Petersen says. The

cooperative’s prices for some of its items

are often lower than those of local produce companies, even after the management team factors in the costs incurred

during production, post-harvesting handling, delivery and a reasonable profit

level. With strawberries, the cooperative

does not set its selling price. Rather, the

management team monitors weekly and

daily market prices and then sets its own

competitive prices.

But Petersen’s preference is to do business locally, adding North Florida farmIf collard greens are clean, with no holes or wilt, producers will cut and bag them for

delivery to customers.
Rural Cooperatives / July/August 1999 19

ers’ Muscadine grapes or melon chunks to

a breakfast fruit cup, or with seasoned

cooked greens, cornbread and barbequed

or baked chicken for lunch.

A holistic approach

There’s something deeper, even holistic, about Petersen’s commitment to the

business arrangement. “I’m originally

from North Dakota,” she says. “My

upbringing assisted in understanding

the importance of locally grown items

and utilizing them wherever possible.

The USDA Buying Guide was shared

with the cooperative and we talked

about how it is used to figure portion

sizes. We also shared prices paid for

items, the number of breakfasts and

lunches served at each school and their

locations.

Lewis, for example, plants about 54

rows of collard greens per acre of land.

The yield from his field provides enough

greens to serve during one lunch at the

30 schools across Gadsden and Jackson

counties.

“But my rural roots also create in me

a deep appreciation for local farmers,”

Petersen continues. “I was really glad to

be able to buy produce from our farmers

because, in a rural area, they’re our

backbone. I know the importance of giving back, helping the community. And

nowhere is that truer than in an economically disadvantaged area.”

Dan Schofer, an agricultural engineer

with USDA’s Agricultural Marketing

Service, says the genuine concern

expressed by Petersen and others in the

local community about the cooperative,

its members and their success was crucial to coordinating this pilot project.

“I can’t emphasize enough the personal relationships that have been

formed between the cooperative’s members, the farmers and the management

team, the cooperative and its customers.

That helped foster J’Amy’s willingness

to go with this new cooperative before it

was even standing on its own two feet.

She took a chance on us when no one

else would,” Schofer says.

Turning over a new leaf

Cooperative members now have customer demands to meet through strict

production schedules. That was a challenge at first.

“It’s one thing to grow a few greens in

your garden for use on your family’s dinner table or to sell to the neighbors,” says

Schofer. “But it’s quite another to have a

high-quality product that meets all the

customers’ expectations and is ready on a

particular date. If J’Amy wants something delivered on Monday, members had

to learn that they must deliver.”

Only once since it started has New

North Florida missed a delivery. The

greens didn’t arrive, but Petersen had

some frozen ones she could distribute to

her school cooks. Another time, through a

mix-up on the delivery dock, a fruit delivery wilted under Florida’s summer sun.

“The cooperative replaced the shipment, and it wasn’t even really their

fault,” Petersen says.

Holmes, especially, remains intimately involved in the cooperative’s daily business. He makes contacts with customers,

talks to potential customers, develops

delivery schedules and ensures that operations are moving forward. Vonda

Richardson, with FAMU’s Small Farmer

Outreach Project, works on-farm with

the members, assisting them with production issues and management questions. She acknowledges that New North

Florida is slowly learning to crawl, which

it needs to do before it can walk.

“We’ve seen in our area that the traditional way people start cooperatives —

with heavy involvement from members

— doesn’t necessarily work here,” she

explains. “These farmers want services

so they can concentrate on what they do

best — growing produce. We’re trying it

that way, giving them what they want,

the way they want it. That means Glyen

and I put a lot of intensity into the effort

every day. But we see it as part of the

careers we already have working for

USDA and Florida A&M.”

Glyen Holmes, (left) and Dan Schofer of USDA help load packaged greens into the

co-op’s air-conditioned trailer.
20 July/August 1999 / Rural Cooperatives

Growing into the future

Lewis thinks about the future, too.

He knows the cooperative has given his

family immediate financial gains. But

Lewis also knows local farmers will

eventually need to make some tough

decisions about building equity in the

organization, expanding marketing

opportunities and dealing with the challenges growth brings.

“The future does cross my mind, when

I’m out there tending to my plants or

turning my watermelons, but I haven’t

sat down to think about it much,” Lewis

explains.

As members gain self-confidence,

they’re expanding their knowledge,

building their marketing skills and realizing the power that cooperation has

given them, says Holmes. They are slowly pushing forward.

New North Florida received its first

large financial assistance from a local

bank and the Jackson County

Development Council, a non-profit orgaProducers such as Spencer Lewis know

how to grow high-quality vegetables and

fruit, and their new cooperative provides

processing and marketing services.

“The future (of the co-op) does cross my mind when I’m out here,” says Lewis.
Rural Cooperatives / July/August 1999 21

nization that helps implement the

President’s Empowerment Zone program. The loan was used to buy a new

cutting/chopping machine and a refrigeration storage system. These improvements, along with a packaging/processing shed to house them, were essential to

the cooperative’s survival, Holmes says.

Meeting with success

“We’ve had many successes and

learned a few valuable lessons,” Schofer

says. “We’ve shown that you can bring

different organizations and different people with different expertise together to

work on a project that makes a positive

difference in people’s lives. And you don’t

have to worry about who gets the credit

because, when it’s as successful as New

North Florida has been, there’s plenty of

credit to go around.”

In addition to the innovative partnership between farmers and outside

sources, the cooperative has shown producers and advisers how north Florida

producers work best when organizing

and educating themselves to new ideas

and changes. New markets have been

developed and income to small-scale

farmers has increased. New North

Florida Cooperative has developed a good

reputation for itself among state and federal agencies, as well as heightened

awareness in local communities of how

much people can achieve when they work

together.

“And I think we have a model here

that can be implemented in other communities across the U.S. where smallscale, limited-resource farmers want to

form a cooperative,” says Schofer.

“We’re making things better all the

way around,” Lewis says. “The more people see you do things, the more they’ll

want to come in to what you’re doing.

The younger generation wants to know

about the cooperative and what we’re

doing. It makes me feel good when people pay attention. Then we can plant

more because we’ll have to send out more

and we’ll make more money. We’re working hard and we’re being a success.

That’s all good for small farmers.” ■

Timely deliveries to customers have added to the reputation of the New North Florida Cooperative. Co-op members say the biggest

key to their success is hard work.
22 July/August 1999 / Rural Cooperatives

William J. Nelson

Executive Administrator

Association of Cooperative Educators 

I

s anyone surprised that we are seeing significant change occurring in

the economic and social systems in

which cooperatives are involved as the

20th century ends? And should we be

surprised that cooperatives themselves

are undergoing significant change? We

have known for some time that change at

the close of the 20th century would accelerate. We should not be surprised that

the accelerating rate of change is altering

the very structure of the cooperative system, and will continue to do so. 

In an article in Rural Cooperatives

(September/October 1998) Randall

Torgerson described several “drivers”

behind the rapidly changing cooperative

system, including: the implications of the

global economy; the combined pressures

of specialization and economies of scale;

reduction of the “safety net” provided by

the federal government; the desire for

more control over quality and defined

product characteristics leading to vertical

coordination of production and distribution; and the need and opportunity for

cooperatives to play a critical role in this

new marketplace on behalf of their members. This leads to the critical question of

who will control our destiny, and — in a

producer or consumer-owned cooperative

— will the members, directors and staff

be prepared to meet the challenge?

He closed the article by calling attention to a key issue: among the many challenges these changes create, a very

important one is “keeping the memberowners informed, involved and empowered so that benefits are clearly oriented

and delivered to them.”

While today’s changes may seem

great, even overwhelming, this is not the

first time this has happened in the cooperative system to either producers or consumers. We might be able to learn a little about how to proceed by looking back.

The modern cooperative business

structure, and the system it became,

grew out of tumultuous and difficult

social and economic stress created by the

revolutionary new technologies being created by the industrial revolution. Of

course not everyone agreed on the value

of the new technologies and, in retrospect, the “revolution” never really

ended. We emerged into a new era of civilization in which industrialized technology became a driving force, rather than

simply an extension of previous small,

incremental adaptations of tools and

techniques to meet specific human needs. 

The changes in technology and the

structure of industry created significant

social, economic and political turmoil,

which — like the change in the structure

of commerce and industry — never

ended, either. As we progressed into the

19th and 20th centuries, the pace of

change began to accelerate. Social, political, and economic change is a little more

difficult to see, describe or measure, but

the impact is nonetheless significant.

As one very important solution to the

problems created by this change, ordinary people created a new type of business structure to meet their needs: the

cooperative. From the perspective of consumers, and later as producers, they took

calculated risks in a difficult environment, knowing very little about what was

ahead of them. They started co-op businesses designed to reduce expenses,

increase income or provide a needed service, using a new strategy of combining

entrepreneurship with collective action,

in a formal business structure. When

they got it to work at the local level, they

expanded the idea into regional, national,

and even global structures and systems. 

The cooperative system has been able

to function in a range of economic, political and social systems for over 150 years.

It promotes desirable competition, creates value, adds value, meets needs and

responds to the needs and objectives of

member-owners. Is there something

unique about the system that has made it

so sustainable through so many changes?

If so, what will it take to continue?

A closer look at the formation of the

Rochdale cooperatives, the prototype of

our modern system, reveals that along

with all of the obvious business challenges they faced, they realized they

needed to know a lot more than they did,

and they devised their own elaborate

learning system, including a library,

adult education programs and a commitment from the business to support this

education effort. 

They devised a way to have the business pay for it, as an investment in the

future of their business and livelihood.

When they created their mission statement with a set of business principles to

guide them, they included education

about their business as a key guiding

principle for future success.

As the system grew, and as basic general education became the responsibility

of the public school system, the tasks and

responsibility for education on the unique

features of a co-op business gradually

shifted to what cooperative historian

Brett Fairbairn of the University of

Saskatchewan has called “the agencies.” 

These are organizations such as state

and national trade associations, universities, and government agencies, and professional associations. This worked reasonably well for a long time, even though

the commitment and capabilities of “the

agencies” fluctuates over time, depending

on resources and a host of other factors.

The leadership and commitment of

“the agencies” today are on an upswing.

For example, we have a rejuvenated fedWilliam J. Nelson

Co-op Member Education 

Needed in 21st Century
Rural Cooperatives / July/August 1999 23

eral research and information service

through the Rural Business Cooperative

Service of USDA Rural Development and

rejuvenated and expanded university

centers for cooperatives and endowed

chairs, with excellent leadership and

staff. We have very strong professional

associations of cooperative educators and

communicators, including the Agricultural Communicators in Education

(ACE) and the Cooperative Communicators Association (CCA), and we have

new models of collaboration on cooperative education emerging between state

cooperative councils. 

Foundation support of cooperative

education has increased, new electronic

technologies are being used for information delivery and increased coordination

in the development of new or updated

curriculum materials is improving communication efficiency and effectiveness.

We have some very strong co-op educational programs in place, including the

Graduate Institute for Cooperative

Leadership (GICL) and the Legal, Tax

and Accounting (LTA) conference of the

National Council of Farmer Cooperatives. Consumer cooperatives have similar educational programs. 

One key area of cooperative education,

leadership development, is being

improved on several fronts, including

programs such as GICL, and a new program for defined membership cooperatives created through a partnership

between the Quentin Burdick Center and

several other agencies, foundations and

—most importantly — the cooperatives

themselves. Other leadership development and support programs include the

Future Co-op Leaders Program of the

National Cooperative Business Association and the New Cooperative Leaders

Scholarship program of The Cooperative

Foundation, which supports professional

development in cooperative education. 

The Cenex Harvest States Foundation

has made a commitment to co-op education, including support for professional

development of co-op educators. Two new

director training series are available, and

young farmer programs emphasize leadership development.

But this is only a part of the story.

While it is important, necessary and

reassuring that “the agencies” are alive

and well in actively looking after the

principle of cooperative education, it can’t

fully substitute for a full commitment by

the cooperative businesses themselves.

We need to take another look back, to see

what we might need to do now.

When the early cooperatives made a

commitment to their own ongoing education, they ensured that they would continue to be risk-takers, innovators, successful competitors in their cooperative

marketplace. This approach, which they

supported as a necessary business

expense and investment, is what we

today call “a learning organization.” 

A learning organization is an organization which is continually expanding its

capacity to create its future, through

learning as well as earning. Cooperatives

used to do this — it was how they got

started and what they had to do to create

a new niche market in a very difficult

business environment. They started at

the most basic level and grew into a system that is locally, regionally, nationally

and globally competitive, ensuring a place

and future for member-owned and controlled business. But we have gradually

lost much of our inherent advantage.

Today, we tend to follow the rest of the

business world through one management

“innovation” after another: total quality

management (TQM), re-engineering, reinvention, systems models, networking

vs. hierarchical models of leadership and

management, niche marketing, customer

orientation, shared profits, incentives,

give-backs, adding value and even trying

new technologies to sell things. We

lament that our democratic system sometimes slows us up, because it takes too

long to get the buy-in of members who

don’t understand where we need to go on

their behalf. We try to “communicate”

more, we provide (what sometimes

amounts to remedial) education to

attract and train directors, we increase

our legal and lobbying budgets and we

try to find new ways of explaining our

unusual capitalization and financial

structures to new types of investors.

Sometimes we even consider giving up

the cooperative business model because

we aren’t sure if it is up to the challenge

of today’s business environment.

Isn’t “adding value” what we were

doing when we started? Weren’t cooperatives learning organizations, innovators,

risk-takers, networkers, partnershipbuilders, profit-sharers, customer service

providers, niche marketers, investor-controlled business innovations? Wasn’t the

system able to transcend local, regional

and national boundaries when it was the

appropriate and necessary business

thing to do (still done in service to members)? How did we do this? What was

the key ingredient? Could it have been

ongoing cooperative education? Was this

the reason it was included as a principle?

Where, then, do we go from here? Not

backwards, except to learn what we can

from the past. Just as the originators of

any cooperative — whether in Rochdale,

England in the 1840s, the Upper Midwest

states, the West and East Coasts in the

early 1900s or in the Midwest again in

the 1990s — we in the cooperative system

need to rethink the commitment to cooperative education.

We need to capitalize on the investments made in “the agencies”: the university centers, endowed chairs, state

and national councils and USDA. We

need to continually re-invest in them to

keep them strong and future-focused,

emphasizing the “learning organization”

aspect of a member-formed, owned, and

controlled business. But we also need to

make a stronger commitment within our

cooperative businesses themselves to

make sure we have a membership which

fully understands the power and potential of a member-owned and controlled

business in today’s global competitive

economic environment. 

We may need to set priorities: can we,

or do we, need to educate the pubic about

cooperatives, which some co-op education

advocates believe should be the top priority? If we want to build strong, informed,

dedicated members, at what age do we

start? What is the best access point, the

optimal curriculum, the most efficient

and effective delivery system? What does

the content for cooperative education in

the 21st century need to be?

Some of these questions are being

addressed by the agencies, but that is

not enough. We need the cooperatives

themselves to re-claim their roots as

authentic learning organizations. A key

step in this direction would be a renewed

commitment to member education, as

part of a business investment in cooperative education. This may be necessary

to, as Torgerson suggested, “keeping the

member-owners informed, involved and

empowered so that benefits are clearly

oriented and delivered to them.” ■
24 July/August 1999 / Rural Cooperatives

“Many farmers and farm groups continue to be interested in handling some

livestock through cooperative meat

packing plants. This desire to own and

operate their own slaughter, processing, and merchandising facilities

increases during periods of low livestock prices and small feeding margins.”

R. L. Fox

USDA Farmer – Cooperative Service

April 1957

By Brad Gehrke and James Matson

USDA Livestock and Marketing Specialists

At the dawn of the 21st century, R.L.

Fox’s words are no less true than they

were 42 years ago. Fox lamented that the

farmers’ share of the consumers’ meat dollar declined from 73 percent in 1946 to 52

percent in 1956. In December 1998, farmers’ share of each consumer retail pork dollar had dropped to 12 cents. During the

same period, beef producers received 44 to

50 percent of the consumer retail dollar.

While beef producers may appear to be in

a stronger position than pork producers,

note that the 44 percent share at the feedlot gate must compensate cow-calf producers and backgrounders in addition to feedlot-operators.

Increased marketing margins can be

partly explained by the addition of 

consumer-driven characteristics added

beyond the farm gate, including such

ready-to-cook items as grilling kabobs

and marinated steaks. Still, many consumer-desired characteristics are inseparable from the production process, such

as leanness, tenderness and flavor.

Market-oriented pricing and procurement methods have not always compensated producers for the value of characteristics inherent in genetics or production processes. Cooperative involvement

in value-added processing is one method

producers can be compensated for the

true value of their production.

Recent interest in cooperative slaughter and meat processing among farmers,

ranchers and feeders is driven by low

prices and smaller profit margins, as well

as by significant changes in the structural and institutional environments that

have increased risk among independent

producers. Recent changes to a more

market-oriented federal farm policy have

exposed producers to increased price risk.

Continued vertical coordination and integration can potentially reduce market

access for some producers. While the

globalization of markets increases opportunities, participation in these markets

also makes U.S. producers susceptible to

additional risk.

Randall Torgerson, deputy administrator of the Rural Business-Cooperative

Service of USDA Rural Development,

summarized the underlying interest in

cooperative slaughter and meat processing in an article he wrote for the United

Kingdom 1999 Yearbook of Agriculture:

“Two processes are influencing how

the food industry is organized and dealing with this marketing margin situation: more integration and coordination.

Cooperatively-owned businesses are a

natural vehicle for turning these processes into members’ benefit. Through joint

ownership of marketing, farm input or

service assets, cooperatives become the

off-farm business — the business beyond

the fence line, in an integrated sense.

The key is that the driving force behind

this integration is the entrepreneurial

business unit — the farmers’ operation

and not some outside dominating force.”

Successful cooperative organization

As producers attempt to move closer to

the consumer and increase their share of

the retail food dollar through the formation of off-farm businesses, they face

opportunities and risks. These opportunities and risks differ from those they

encounter as producers. To successfully

manage these risks, producers need to

develop a well-defined organizational plan.

Producers benefit if cooperative

strategies take advantage of changes in

institutional processes. Careful planning

allows producers to effectively recognize

risks. Once these risks are identified, the

cooperative can develop business strategies that limit these risks to an acceptable level.

In 1996, Galen Rapp and Gerry Ely,

USDA cooperative development specialists, codified years of experience in a 16-

step sequence for cooperative organizations. The plan may take up to two years

to develop and implement, but only after

completion of the planning steps should a

cooperative commence operations. In

“How to Start a Cooperative” (CIR 7,

available from USDA Rural Development) Rapp and Ely state that businesses are most susceptible to failure soon

after organizing. The two provide a list of

10 actions cooperative organizers should

follow to avoid common organizational

pitfalls.

10 actions to avoid cooperative

organizational pitfalls

1. Identify a clear mission for the 

cooperative with definite goals and

objectives.

2. Create detailed plans for achieving

the defined goals.

3. Make use of persons experienced in

cooperative development.

4. Involve cooperative members or

selected leaders in all decisions.

5. Develop board support among the

potential member-users.

6. Hire experienced and qualified 

management.

7. Identify risks early in the 

organizational process.

8. Use realistic business assumptions.

9. Raise sufficient capital to survive

the start-up period.

10. Keep the membership, suppliers and

financiers informed.

Planning to Prosper:

Recalling lessons learned from livestock

slaughter and meat packing co-ops
Rural Cooperatives / July/August 1999 25

Livestock slaughter and meat packing

cooperatives are just as likely to fall prey

to these pitfalls. Perhaps, given their

competitiveness and slim operating margins, these industries are even more subject to these potential problems.

Therefore, a lapse in only one area could

leave the cooperative vulnerable and susceptible to failure. With this in mind, it is

probably good to review the lessons

learned since the first cooperative

attempts to enter these industries 85

years ago.

Early livestock processing co-ops

The first recorded cooperative meat

packing endeavor took place in La

Crosse, Wis., in 1914. Twelve additional

groups attempted to establish cooperative meat packing operations between

1914 and 1920. Of these efforts, only one

lasted more than three years, and except

for one, all ceased operations by 1923.

In 1957, when Fox looked back on

these initial ventures, he saw some factors that contributed to their lack of commercial success. He summarized those he

believed to be most critical in “Farmer

Meat Packing Enterprises in the United

States.” A review of these factors shows

they still have lessons to teach for those

who plan to organize cooperatives today. 

Fox found that the most common problem associated with cooperative meat

packing efforts was lack of sufficient capital. He did not always attribute this to

insufficient producer participation.

Promoters were paid from 15- to 30-percent commissions on the capital they

raised, which significantly reduced the

net value of producers’ investments. 

Excessive valuation of existing facilities resulted in some cooperatives paying

high prices for worn-out plants that

required renovations, which further diluted the leverage of producer capital. In

some cases, producers did not fully fund

their stock subscriptions. Lack of producer support was exacerbated when farmers, ranchers and feeders became discouraged because immediate profits and

dividends did not materialize as expected.

As with any business venture, capable

management was an essential issue.

Cooperatives often hired inexperienced

and inefficient management, which manifested itself in overpayments for livestock, meat spoilage, inaccurate records,

inability to collect accounts payable,

extravagance, and lack of aggressiveness.

These conditions further eroded producer

support because producers lacked confidence in management.

Another area where these organizations had difficulties was their market

position. In some cases, unsatisfactory

sales outlets, keen competition and low

prices also contributed to losses. Other

projects were challenged by irregular and

inadequate supplies of desirable livestock, or unfavorable freight rates for

processed meat.

These conditions undermined the

cooperative’s ability to compete with

established investor-owned firms.

Because of these commercial failures,

producer interest in cooperative livestock

slaughter and meat packing remained

dormant until 1930.

Meat Processing Co-ops, 1930-1948

Five of 13 slaughter and meat processing cooperatives started between 1930

and 1948 were still operating when Fox

completed his analysis. Of the eight that

failed, six operated for less than a year.

Most of these failed attempts succumbed

to the same factors that plagued earlier

cooperative livestock slaughter and meat

packing operations. Insufficient capitalization by producers, lack of producer

commitment, inadequate marketing

operations and inadequate management

all contributed to their demise.

The factors identified by Fox have

been corraborated by the experiences of

later cooperative developers and

researchers. The lessons from the commercial failures, coupled with those

gained from commercially successful ventures, provide insight for people presently interested in organizing livestock

slaughter or meat packing cooperatives.

These lessons have been incorporated

into the recommendations included in the

10 actions to follow during the developmental and planning process.

Unfortunately, not all the difficulties

in cooperative organization remain in the

distant past. Some recent organizational

efforts did not result in commercial success. Several groups have repeated past

mistakes. A review of some of these efforts

shows the continued importance of careful planning before initiating operations.

Lamb co-op failures studied

Roland D. Smith and a team of others

from Texas A&M University funded by

USDA Rural Business-Cooperative

Services completed a case study of producLivestock producers in need of profits beyond the farmgate continue to eye co-op

owned slaughter and meat packing operations as a primary option. USDA photo
26 July/August 1999 / Rural Cooperatives

er-owned lamb processing ventures started in 1989 and 1993. They found that lamb

producers did a lot of things right in studying and preparing for the launching of the

cooperatives. However, each business operated for less than two years.

Smith’s team identified many of the

same causes for failure that Fox had found

more than 40 years earlier. The researchers categorized these factors into

five areas: 1) inadequate financing; 2) limited management expertise; 3) misguided

marketing efforts; 4) lack of consistent

supply; and 5) the failure of the low-cost

contract slaughter operation.

In describing lessons learned from the

sheep experiences, the case study refers to

planning as a critical element needed for

success: “Had the contingency planning

and effective evaluation been conducted

as a proactive strategic process rather

than as a reactive response to the existing

economic environment, some of the perceived problems with financing, operations, marketing and management expertise would have been better addressed.” 

Indiana Family Farms, a pork cooperative, faced similar challenges. It initially purchased an old plant to renovate.

But sufficient capital was not available.

Probability of success was limited further

by lack of producer support. 

Indiana Family Farms estimated that

300 members were necessary for the project, while only 60 producers joined. It

began custom slaughter, processing and

distribution operations in November

1997. These operations were suspended

in July 1998. In his column in

“Feedstuffs,” Steve Marberry concluded

that “Buoyed by $60 per hundredweight

hog markets [in 1996-97], producers

decided to ride the spot market into an

uncertain future.”

Despite several unsuccessful efforts in

organizing slaughter and processing

cooperatives, a number are commercially

successful. Farmland Industries entered

the pork processing industry in 1959 by

purchasing a plant. Today, Farmland is

the fourth largest marketer of pork products in the United States and a leader in

international value-added marketing.

In December 1997, U.S. Premium

Beef initiated operations as a new-generation marketing cooperative. Operations

began after 28 months of planning. Early

Producers did many things right in launching lamb processing cooperatives, but old

problems plagued the operations. Photo courtesy American Sheep Industry Association Inc.

Interest in forming beef cooperatives remains high all across North America as

producers seek higher profits and stability. USDA Photo by Ken Hammond 
Rural Cooperatives / July/August 1999 27

this year, Chief Executive Officer Steven

Hunt said the cooperative paid out more

than $4.8 million in premiums over the

cash live cattle market. This represents a

$9 per head premium. During its first

year of operation, the cooperative paid a

total average return of 34 percent to its

675 members.

Producers continue to eye margins

beyond the farm gate. Hog producers in

North Carolina, Georgia, Illinois South

Dakota and Minnesota; beef producers in

plains and mountain states; as well as

intermountain sheep producers are considering the potential for producerowned, cooperatively governed slaughter

and processing operations.

Prospering with co-ops

“Cooperatives are responding to the

changes in one of the most aggressive

restructuring periods in the history of

American cooperation,” says USDA’s

Torgerson. The current interest by producers to increase their share of the consumer’s retail dollar through cooperatives offers them an opportunity to benefit from changing market processes. With

care, producers can take advantage of

these changes to prosper through cooperatives. Lessons learned from more than

85 years of cooperative slaughter and

processing show how to avoid organizational pitfalls through planning. ■

The annual survey of farmer cooperatives conducted by USDA’s Rural

Business-Cooperative Service (RBS) is

the only source of detailed information

on cooperatives and their service to

American agriculture. This data source,

the only one with a national scope, provides an important view of cooperatives’

progress, growth and trends.

Data are collected annually to gauge

current cooperative activities, develop

trend lines, and obtain needed information for important research, education,

and information on cooperatives.

How are the data collected?

The data are collected through the

use of questionnaires. Similar questions are asked each year so that

important data series can be maintained. Periodically, additional questions are included for conducting special studies of various aspects of

farmer cooperatives. The 1999 survey will collect additional information

for a special study of local cooperatives’ involvement in providing crop

protectants to their members. 

Forms are mailed in early

September to all cooperatives ending

their business year between January

and June. Cooperatives whose business year ends from July through

September receive a questionnaire in

early December. Those whose business year ends in the last quarter

receive questionnaires in early March

of the following year. Cooperatives are

encouraged to furnish a copy of their

annual or audit report along with the

completed questionnaire. Such reports

provide important information not

requested on the questionnaire.

USDA/RBS staff maintain data for

use in research, education and technical assistance. Any data used in presentations or publications are combined

to maintain the confidentiality of individual cooperatives. Individual report

forms are kept strictly confidential.

How are the data used?

Data collected from the annual survey of farmer cooperatives are combined, expanded to represent the total

population, and selected data are published in reports such as: Rural

Cooperatives, Statistical Abstract of

the United States and Agricultural

Statistics. Farmer cooperative statistics are used by cooperative leaders,

educators, researchers, policymakers

and others interested in farmer cooperatives. Agency staff frequently use

the information for important studies

and presentations. Educational materials, from pamphlets to college textbooks, rely heavily on statistics collected by the agency. Many people,

including foreign visitors, contact the

agency when they want to learn about

the structure and operation of U.S.

farmer cooperatives.

How can farmer cooperative

statistics be acquired?

A copy of the annual statistics

report is sent to each cooperative.

Additional copies of the report can be

ordered from RBS. If you have questions regarding farmer cooperative

statistics, please call, e-mail or write

Charles A. Kraenzle at (202) 720-

3189, or charles.kraenzle@usda.gov, or

USDA/RBS/Statistics, STOP 3256,

1400 Independence Ave, SW,

Washington, DC, 20250-3256.

Cooperatives’ Response Needed 

for 1999 Survey
28 July/August 1999 / Rural Cooperatives

By K. Charles Ling

Agricultural Economist

USDA Rural Development

Dairy cooperatives continue to

play a major role in the U.S.

milk industry. While dairy

products represented 30 percent of the

value of all agricultural cooperative

marketings during 1997, dairy cooperatives received or bargained for 83 percent of all milk sold by farmers to the

Nation’s plants and dealers. It is the

major finding from a survey of dairy

cooperatives’ operations for the fiscal

year ending in 1997.

The number of dairy cooperatives

decreased 15 percent, from 265 to 226,

between 1992 and 1997. Similarly, cooperatives that processed and manufactured dairy products dropped from 86 in

1992 to 63 in 1997. Following the same

pattern, the number of cooperatives selling raw whole milk fell from 230 in 1992

to 204 in 1997. But cooperatives’ share

of total milk volume sold by farmers

inched up from 82 percent to 83 percent.

Sixty-one percent of total cooperative

volume was sold as raw whole milk in

1997 compared to 60 percent in 1992.

The other 39 percent was manufactured

at plants operated by cooperatives.

There were 87,938 producers delivering milk to 222 dairy cooperatives with

direct members. Three regions—East

North Central, West North Central, and

North Atlantic—together accounted for

83 percent of all member-producers and

55 percent of cooperative milk volume.

In 1997, dairy cooperatives owned

298 plants, 91 of which were shipping

and receiving facilities only. The cooperatives operated 62 plants for manufacturing American cheese, 30 for Italian

cheese, 54 for packaging fluid milk products, 43 for manufacturing dry milk

products, and 35 for churning butter.

While net sales of butter and dry milk

products decreased from 1992 to 1997,

those of cheese increased. However,

cooperatives’ shares of these products

declined.

Cooperatives’ shares of butter

decreased from 65 percent to 61 percent

during the five-year period. Dry milk

products (nonfat dry milk, dry buttermilk, and dry whole milk) also decreased, from 81 percent to 76 percent.

Cheese marketed by cooperatives

grew 3 percent, from 2.82 billion pounds

to 2.907 billion pounds, while total

cheese production increased 13 percent.

Cooperatives’ shares of the natural

cheese market declined from 43 percent

to 40 percent by 1997.

Sales of packaged fluid milk products

by cooperatives decreased both in volume and in share of market. The 7.73

billion pounds marketed was 14 percent

of the Nation’s production, down from 16

percent in 1992. Cooperatives’ sales of

cottage cheese as a percentage of national production, at 10 percent, was also

lower than in 1992. Share of ice cream

decreased from 10 percent to 6 percent.

In 1997, cooperatives marketed 11 percent of the Nation’s ice cream mix, 4 percent of yogurt, 65 percent of bulk condensed milk, and 48 percent of dry whey

products.

Most dairy cooperatives continue to

be relatively small business organizations. However, through consolidations

and mergers, an increasing amount of

dairy products were sold by larger cooperatives. The 20 largest dairy cooperatives received 77 percent of all producer

milk marketed through cooperatives.

And 89 percent of cooperative milk processing and manufacturing was conducted by the 20 largest cooperatives with

plant operations.

To obtain a copy of the full report,

please order RBS Research Report No.

173, “Marketing Operations of Dairy

Cooperatives.” ■

Co-ops Remain Major 

Players in Dairy Industry

Most dairy cooperatives continue to be relatively small

business organizations.

However, through consolidations and mergers, an

increasing amount of dairy

products were sold by larger

cooperatives.

A new report from USDA provides an

overview of the marketing operations of

the nation’s dairy cooperatives. To order

a copy, send a check for $5 ($6 for

foreign orders), payable to USDA, to:

USDA Rural Development, Co-op

Publications, Stop 0705, 1400

Independence Ave. SW, Washington D.C.

20250-0705.
Rural Cooperatives / July/August 1999 29

Michigan producers receive USDA grants

The Michigan Potato Industry Commission and the

Michigan Allied Poultry Industries have each received funding from USDA Rural Development through its Rural

Business Enterprise Grant Program (RBEG). The potato

commission will use its $90,000 to assist in construction of a

long-term storage bin for Michigan-grown potatoes. Allied

Poultry Industries received $95,000 so the newly formed

turkey growers cooperative can conduct a feasibility study

on creating a West Michigan turkey slaughtering plant.

“The development of a more advanced storage facility will

be a great benefit to Michigan’s potato producers,” says

Donald L. Hare, state director for USDA Rural Development

operations. “USDA Rural Development’s mission is to help

agricultural producers find ways to enhance the profitability

of their products. Agricultural producers can no longer rely

on simply producing a raw product to succeed. They must

look toward the process of adding value to their product and

increasing their bottom line profits.”

USDA’s RBEG program is designed to help public bodies, non-profit corporations, and federally recognized

Indian tribal groups finance and facilitate development of

small and emerging private business enterprises located in

rural areas. 

Small Farm Conference Oct. 12-15

“Building Partnerships for the 21st Century” is the

theme of the second National Small Farm Conference, sponsored by USDA, the Environmental Protection Agency and

four other organizations. It will be held Oct. 12-15 at the

Regal Riverfront Hotel, St. Louis, Mo. Registration is $125,

due by Sept. 17, 1999. Hotel reservations should be made

directly by registrants, and the deadline for special group

rates is Sept. 10.

The conference provides an opportunity for public and

private sectors, including community-based organizations,

the land-grant university system, and small- and mediumsized family farmers, to strengthen collaboration and partnerships to work more effectively with the small farm community. In addition to workshops, participants will tour

farms and ranches which emphasize direct marketing, alternative and sustainable agriculture.

Twelve USDA agencies, including USDA Rural

Development, are co-sponsors of this project. In addition to

the EPA, other sponsors include Lincoln University,

University of Missouri, W.K. Kellogg Foundation and Farm

Foundation. For more information, visit the conference

Website at www.luce.lincolnu.edu/nsfc or contact Denis

Ebodaghe, USDA-CSREES, in Washington, D.C., at 

(202) 401-4385; fax (202) 401-5179; or e-mail

debodaghe@reeusda.gov.

St. Paul Bank and CoBank merge

The stockholders of the St. Paul Bank for Cooperatives

and CoBank overwhelmingly approved a plan to merge the

two banks, effective July 1, 1999. The results of the May 24

stockholder vote were jointly announced by the chairmen of

the two banks. The merged bank will have assets of approximately $22 billion with about $1.7 billion in capital and

$17.8 billion in loans outstanding.

Michigan FCS may consolidate

The four Farm Credit Services associations in Michigan’s

Lower Peninsula continue their plans for statewide consolidation with the announcement of a joint management agreement. Under joint management, the four associations will

operate as one, but will remain as separate legal entities

until stockholder-members approve the consolidation. That

vote is expected later this year. If approved by stockholders,

the new FCS organization would have assets of $1.5 billion

and a surplus that exceeds $200 million. The association is

expected to save $2 million in annual operating expenses,

which will translate into reduced stock requirements and

more favorable interest rates for customers. The target date

for the consolidation is Jan. 1, 2000.

Cleberg on U.S. Treasury’s IMF Committee

Farmland President and Chief Executive Officer H.D.

“Harry” Cleberg has been selected to serve on the U.S.

Department of Treasury’s Advisory Committee on

International Monetary Fund (IMF) policy. The IMF has

been at the center of the effort to resolve the international

financial crisis that began in 1997. The committee is to

meet with and advise the secretary and deputy secretary of

the Treasury on the extent to which IMF programs meet policy goals set forth in the policy advocacy provisions of the

IMF funding legislation. This legislation includes strengthening financial systems in developing countries, encouraging

the opening of markets for agricultural commodities and

products, and promoting greater transparency and accountability. One of eight committee members, Cleberg will represent the agricultural industry.

Diamond Walnut forms German subsidiary

Diamond Walnut Growers Inc., Stockton, Calif., has

formed a new joint venture subsidiary company in Cologne,

Germany, under the name of Diamond of Europe, GmbH.

The new entity will be primarily responsible for Diamond’s

consumer retail business in Germany and Austria, formerly

managed by another German retail broker. Diamond of

Europe will assist Diamond in providing distribution, currency conversion and local market packaging services for

NEWSLINE
shelled and inshell customers in Germany and the European

continent. The cooperative’s leadership reports the new structure provides Diamond with a low-risk yet potentially highreturn entry into the European retail distribution business.

California growers fight Greek peaches

At a late June meeting of the California Canning Peach

Association, growers voted to fight against the intrusion of

subsidized Greek peaches into a key market Golden State

growers invested heavily to establish. The association’s

board will investigate all options, including export incentive

programs for shipping fruit to Mexico, to safeguard that

vital market, says CCPA President Ron Schuler. Presently,

California supplies nearly 10,000 tons of peaches to Mexico

with an estimated value of $10 million. 

The U.S. government has taken both formal and informal

actions against the European Community for its subsidies to

the Greek peach industry and currently includes Greek canned

peaches on the Beef Hormone retaliation list, which is being

formally announced by the United States and Canada. While

this may protect domestic and Canadian markets, Schuler says

it does not impact the vitally important Mexican market.

Chiquita to buy Agripac Division

Agripac Inc., a bankrupt Oregon-based vegetable processing cooperative, sold its frozen food division earlier this

year for $90 million to New York-based Pro-Fac Cooperative

Inc. and thought they were selling their canned food division

to Norpac Foods Inc., a Stayton, Ore.-based cooperative.

Among other items, the sale to Norpac was contingent on

reaching agreement with the union representing the cannery workers. Agreement could not be reached, thus Norpac

was unable to complete the purchase. 

It now appears that Chiquita Brands International Inc.,

will purchase the division. If the bankruptcy court accepts

the Chiquita offer, about 100 farmers who grow beets, carrots,

beans and corn will get a contract for their produce, but without any ownership in the further processing of their products.

Dakota Dairy Specialties files for bankruptcy

Dakota Dairy Specialties Cooperative shut down its

cheese plant in Hebron, N.D., and filed for bankruptcy this

spring, two years after beginning operation. Most of the 40

farmer-members now ship milk through Dairy Farmers of

America. The plant made its first batch of cheese in

February 1997. It had been operating sporadically since

October 1998 as it tried to finance $1 million of equipment to

improve operating efficiencies. The bankruptcy may affect

Rural Business-Cooperative Service’s guaranteed loan exposure to the cooperative. Dakota Dairy Specialties is the only

so-called “new generation” cooperative in the dairy sector.

FCA purchases LCCA’s Oskaloosa assets

Farmers Cooperative Association, Lawrence, Kan., has

purchased the assets of the Oskaloosa branch of the

Leavenworth County Cooperative Association. The acquisition gives Farmers Co-op a total of 19 elevators and increases its grain storage capacity to nearly 12 million bushels.

The cooperative provides complete grain handling, marketing, crop production services, feed manufacturing and delivery, and supplies to about 9,500 members and 12,000 customers in one Missouri and 20 Kansas communities.

Golden Oval Eggs to expand

Golden Oval Eggs, a farmer-owned cooperative based in

Renville, Minn., announced it has raised more than $5 million

necessary to expand into Iowa with a house for 1.8 million laying hens. The Iowa site could eventually house up to 5.4 million

hens if additional equity is raised. Golden Oval now has about

two million hens producing about 500 million eggs annually.

The cooperative, formed in 1994, is now owned by more than

600 farmers. It ranks within the top 30 enterprises in U.S. egg

production and within the top 10 in egg processing. The minimum initial investment for new members was $10,000.

American Growers offers chemical-free food

American Growers Foods, Sioux Falls, S.D., is offering 13

grain-based, chemical-free foods to consumers. Farmermembers of the cooperative receive a base price of $5 for a

bushel of corn, far above the typical market price of $2.

Similar premiums are received for oats and wheat. The

grain is tested at harvest and delivery for 300 different

chemicals. Despite the higher prices to producers, retail

prices are about the same as national brand-name products

and, in some cases, even less. Products from the one-yearold cooperative can be found in about 700 stores nationwide.

Plains, Yazoo Valley oil mills merge

Plains Cooperative Oil Mills, Lubbock, Texas, and Yazoo

Valley Oil Mill Inc., Greenwood, Miss., have announced their

intentions to merge. The new cooperative will serve over

20,000 cotton growers in eight southern states and market

30 percent of the U.S. cottonseed. Combined sales are

approximately $250 million from vegetable oil for cooking

and the by-products of cottonseed production. Cottonseed

meal and hulls are primary ingredients in livestock feed and

the linters are used in manufacturing mattresses, upholstery padding and high-quality paper.

Gerry represents U.S. in Ireland

Michael Gerry, president of the Idaho Wool Growers

Association, was selected to represent the American sheep

industry at the World Meat Congress in Ireland. The

Congress has met 12 times in the past 25 years.

30 July/August 1999 / Rural Cooperatives

NEWSLINE
Rural Cooperatives / July/August 1999 31

Representatives from all participating countries discuss beef,

sheep and pork marketing situations. U.S. Secretary of

Agriculture Glickman also addressed the meeting. Gerry’s

trip was sponsored by the U.S. Meat Export Federation.

Bison Co-op members to promote

Members of the North American Bison Cooperative, New

Rockford, N.D., voted to use 7 percent of what they get for

their bison as a promotion fund for the cooperative. The

cooperative’s marketing focus will fall in three areas: production of numerous products, a national distribution system and restaurant chain accounts. The cooperative has

members in 15 states and four Canadian provinces.

ECLSA elects three to board

Three new directors have been elected to the board at

Equity Cooperative Livestock Sales Association, Baraboo,

Wis. The 10-person board welcomed Larry Brandemuehl,

Lancaster, Wis., George Roemer, Hartford, Wis. and Joe

Schaitel, Sparta, Wis., following 10 district annual meetings

across Wisconsin and Iowa.

President and Chief Executive Officer Gregory A. Beck

reported membership attendance at the annual meetings

was up 20 percent from the 1998 meetings. Beck believes

the increased attendance was because “today’s producers

are facing the same issues which their forefathers faced 77

years ago when they formed the cooperative: price volatility,

packer concentration and lack of government supports.

Producers may be once again turning to their cooperative

for help.” The ECLSA had gross sales of $450 million last

year, making it one of the top two livestock marketing associations in the U.S.

NSAC recognizes Duft

Ken Duft, professor of agribusiness management and

finance at Washington State University and a director on

the Washington State Council of Farmer Cooperatives,

received the Martin L. Black award from the National

Society of Accountants for Cooperatives. Duft received the

award for his journal article, “Patron Demand Deposit

Account Financing by Cooperatives: Prospects and Pitfalls.”

As part of his recognition, Duft received a cash award and a

trip to NSAC’s annual meeting.

EPA Offers Sustainable Development 

Challenge Grants

The Environmental Protection Agency (EPA) is soliciting

proposals for the Sustainable Development Challenge Grant

(SDCG) program, one of President Clinton’s “high priority”

actions described in the March 16, 1995, report,

“Reinventing Environmental Regulation.” Approximately

$9.4 million will be available for the SDCG program in fiscal

year 1999-2000. This includes $4.7 million already authorized by Congress for FY 1999 and an additional $4.7 million requested for the program in the president’s FY 2000

budget request and subject to Congressional authorization.

The SDCG program challenges communities to invest in

a sustainable future that links environmental protection,

economic prosperity and community well-being. It provides

an opportunity to develop place-based approaches to problem solving that can be replicated in other communities.

The program strongly encourages community members,

business and government entities to work cooperatively to

develop flexible, locally oriented approaches that link placebased environmental management and quality of life activities with sustainable development and revitalization.

These challenge grants are intended to be a catalyst for

community-based projects to promote environmentally and

economically sustainable development; build partnerships

which increase a community’s capacity to take steps that

will ensure the long-term health of ecosystems and humans,

economic vitality, and community well-being; and leverage

public and private investments to enhance environmental

quality by enabling community efforts to continue beyond

the period of EPA funding.

Applicants may compete for funding in two ranges: (1)

requesting $30,000 to $100,000 with a total project budget

of $125,000 or less; and (2) requesting between $100,001

and $250,000 with no limit on the total project budget

amount. Proposals will compete with other proposals in the

same range. Applicants in each category are required to

provide a minimum 20-percent match from non-federal

funding sources. Project proposals must be postmarked by

Sept. 29, 1999, to be considered for funding during fiscal

year 1999-2000.

Editor’s note: Please see the full text of the Federal

Register notice (published July 1, 1999) for complete information about applying for a Sustainable Development

Challenge Grant. ■

NEWSLINE

Y2k Resources Available

Jan. 1, 2000, is only a few months away. So for all you

procrastinators, there is no more time to delay making sure

all your computer-controlled systems are Y2k ready. There

are a number of resources that can assist you with

information on this task. They include:

• USDA Y2k Program Office: www.ocio.usda.gov/y2k/index.htm

• President’s Council on Year 2000 Conversion: www.y2k.gov

• National Software Testing Lab: www.nstl.com/html/nstl_y2k.html

• Small Business Administration: www.sba.gov/y2k

• Federal Emergency Management Agency: www.fema.gov/y2k

The President’s Council on Year 2000 Conversion may also

be called toll free at 1-888-872-4925. 
What is a Cooperative?

CIR 50-S

Spanish Translation

Galen Rapp

Translated by Jim Matson

4 pages. 1999

A new, Spanish-language version

of a pamphlet that covers the

basics of cooperatives: what they

are and how they are organized. It

is intended to introduce the cooperative concept to someone who

knows nothing of cooperatives, or

as a quick refresher for those who

may have forgotten some of the

basic principles which co-ops are

founded upon. It covers why cooperatives are organized, cooperative

business principles, the 10 steps in

organizing a co-op and sources of

information and technical assistance from the Rural BusinessCooperative Service of USDA Rural Development. 

Free

Member Participation

in Ag Co-ops:

a Regression and 

Scale Analysis

Research Report 165

Tom Gray/Charles Kraenzle 

30 pages. 1998

This research report identifies

characteristics that influence member participation in cooperatives.

Participation measures include

attendance at meetings, serving on

committees or as elected officers,

and recruiting other farmers to join

the co-op. Nineteen characteristics

were found statistically related to

member participation in co-ops.

These include: farm characteristics, member demographics, beliefs

in cooperative principles, collective

action, member influence on the coop, cooperative impartiality toward

members and satisfaction with

farming and cooperative officers.

Price: domestic: $5; foreign: $6 

Lessons Learned:

Contemporary 

Producer-Owned

Lamb Processing

Ventures

RBS Research Report 167

Roland D. Smith, et.al

18 pages. 1999

This case study evaluates two producer-owned lamb processing and

marketing ventures, one in Texas

and the other in Virginia, and why

they failed. Findings have relevance to future vertical coordination efforts in the lamb processing

and marketing arena in an industry characterized by significant

concentration among a few established marketing firms. The

researchers focus on organizational background for the development

of each venture, factors that contributed to failure, positive outcomes and challenges for producer-owners in future ventures. 

Price: Domestic: $5; foreign: $6 

A New Approach

to Measuring Dairy

Co-op Performance

Research Report 166

K. Charles Ling

Carolyn Liebrand

21 pages. 1998

This report describes a new

method to evaluate and compare

operational performance of dairy

cooperatives. A business performance measurement was modified

to fit cooperatives. A cooperative is

creating extra value if its net operating margin can more than cover

its operating cost, including the

cost of operating capital (the sum

of fixed assets and working capital). The extra-value measure can

be “common-sized” by operating

capital to create an extra-value

index. The scale-neutral index is

an objective measure for comparing operating efficiency between

dairy cooperatives and dairyinvestor-owned firms.

Price: Domestic: $5; foreign $6

NEW PUBLICATIONS FROM USDA

TO ORDER... (202) 720-8381

United States

Department of Agriculture

Washington, DC 20250

OFFICIAL BUSINESS

Penalty for private use, $300

NOTICE:

❏ Check here to stop receiving this publication,

and mail this sheet to the address below.

❏ NEW ADDRESS. Send mailing label

on this page and changes to:

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Stop 3255

Washington, D. C. 20250-3255

Periodicals Postage Paid

U.S. Department of Agriculture
Rural Cooperatives / July/August 1999 33

Co-op Member Education 

Is Needed in 21st Century

Run-over