Rural

COOPERATIVES COOPERATIVES

USDA / Rural Development March/April 2002 USDA / Rural Development March/April 2002

Harnessing

prairie winds

page 4

Tree Top’s marketing

strategy bears fruit

page 8

Tree Top’s marketing

strategy bears fruit

page 8

Harnessing

prairie winds

page 4
2 March/April 2002 / Rural Cooperatives

One good strategy—not fully recognized or appreciated—for establishing cooperatives is to convert an existing company to a farmer-owned

cooperative. It happens more often

than commonly realized. Many of

these acquisitions have successfully

placed cooperatives in position as value-added marketers when farmers gain

ownership of physical facilities and an

existing marketing base.

There have been a number of examples of this process in the past 30 years.

One of the first during this period was

the conversion of the American Crystal

Sugar Co. to a cooperative owned by

Red River Valley sugar beet growers in

Minnesota and North Dakota, who were

the major suppliers of sugar beets to

American Crystal in 1970. This purchase was followed in 1971 by the acquisition of the Stolkley-Van Camp canning

plants in Lodi, Oroville and Santa Cruz,

Calif., by the then newly organized

Pacific Coast Producers (PCP) cooperative. In each of these cases, growers

belonging to associations already organized for cooperative bargaining decided

to pursue ownership of value-added

plants as a means of preserving a home

for their raw products and the opportunity to gain additional income from marketing-derived margins for members.

More recently, sugar beet growers in

Michigan and the eastern slope of the

Rocky Mountains have been negotiating purchase or lease of facilities formerly operated by the Tate and Lyle

and Imperial Sugar (Holly) companies. 

In 1996, Iowa Turkey Growers

Cooperative was formed and purchased the former Oscar Mayer (then

a Kraft subsidiary) turkey processing

plant in West Liberty, Iowa, and has

run it quite successfully. Beef producers belonging to U.S. Premium

Beef cooperative have purchased

ownership in Farmland National

Beef processing. 

Likewise, Dairy Farmers of America and Land O’Lakes jointly purchased a Kraft Foods cheese plant in

Melrose, Minn. Pork producers in

several states have acquired ownership

interests in packing plants. And olive

growers in California are in the

process of purchasing the former

Obertti olive plant, part of the liquidation of assets formerly owned by

bankrupt Tri Valley Growers.

On the farm supply side, Terra

Resources was acquired by a consortium of regional cooperatives led by

Land O’ Lakes and Cenex. Land O’

Lakes this past year also purchased the

feed business of Ralston-Purina.

These efforts require substantial

up-front capitalization by members.

The strategy is also not without its

potential perils if plant and equipment

assets are worn out or not well maintained. Similarly, the sometimes fickle,

end-product market for value-added

products has changed dramatically

with the growing concentration of

food distributors and may not be as

sound as first anticipated.

The use of this acquisition strategy

has been encouraged by two recent

Congressional actions. The Taxpayer

Relief Act of 1997 provides a capital

gains tax break for company owners that

sell their facility to growers who had

been supplying their plant. This enables

growers to negotiate a better purchase

price than might otherwise be possible. 

Secondly, the 1996 farm bill

expanded the Business and Industry

Loan Guarantee program to provide

guarantees for stock purchase by farmers in newly created value-added cooperatives. Current deliberations over

the 2002 version of the farm bill would

extend this provision to owners of

existing cooperatives that want to

engage in value-added processing.

These examples demonstrate that

farmers have been expanding their

off-farm operations through cooperative ownership in an ever-expanding

series of acquisitions. This is a sound

strategy if: marketing feasibility can

be demonstrated; experienced management is hired; proper capitalization is provided; and the acquisition

price is right. 

Randall Torgerson, Deputy Administrator

Rural Business-Cooperative Service

COMMENTARY

Co-op growth through acquisition

The use of this 

acquisition 

strategy 

has been 

encouraged 

by two recent 

Congressional 

actions.
Rural Cooperatives / March/April 2002 3

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Rural Development

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Rural Business-Cooperative Service

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United States Department of Agriculture

Rural COOPERATIVES COOPERATIVES

March/April 2002 Volume 69 Number 2

On the Cover:

The fresh apple market has been depressed in recent years, leading to the

failure of a number of packers. Tree Top, however, has used a well-honed

marketing strategy to achieve record sales of processed apple products

and has paid solid returns to its members. Story on page 8. Photo courtesy Tree

Top and Abramowitz Studio Inc., Seattle

FEATURES

4 Catch the wind

Co-op’s giant windmills work with Mother Nature to provide

power

By Steve Thompson

8 The Big Apple

New products, added plant capacity play major role in Tree

Top’s sales strategy

By C. Lyon, C. Durham, S. Buccola

12 The long haul

Is your co-op’s farm-to-plant milk hauling optimal? This case

study shows factors that can impact efficiency

By Peerapon Prasertsri, Richard L. Kilmer

15 The road up

Free-market reforms fuel growth of Ethiopia’s co-ops

By Perry Letson

22 Benefits often key to keeping best employees

By Beverly L. Rotan

24 Building commitment 

Sharpening you co-op communications can build member commitment and better reach select groups 

By David Trechter, Robert P. King

DEPARTMENTS

2 COMMENTARY

21 MANAGEMENT TIP

28 NEWSLINE
4 March/April 2002 / Rural Cooperatives

Catch the wind

Co-op’s giant windmills work with Mother Nature to provide power 

By Steve Thompson

USDA Rural Development

ind is free. So is the

sun. So why aren’t

these free, non-polluting sources of energy

in greater use as

sources of electric power? Although

cost and other considerations still limit

the applicability of solar and wind power, utility cooperatives are using them

more and more to fill power needs in

important niche markets. 

Harnessing the wind

Wind has been used as a power

source for thousands of years. Perhaps

its first use was powering ships and

boats. Later, before the use of steam

power, wind was used to power grain

mills, oil presses, irrigation and

drainage pumps in areas such as Holland, where climate or geography prevented the use of water power.

Even today, across many remote

areas of the United States, wind-powered pumps draw water from wells to

fill livestock watering troughs. These

fairly primitive wind turbines, little

changed from100 years ago, are symbolic of American agriculture, particularly in the prairie states where wind is

abundant. Across much of the Great

Plains, the annual average wind speed

is about 13.4 miles per hour—the point

at which electrical power generation is

considered economically feasible.

However, as a baseline (reliable) power source, wind has major drawbacks.

First, it’s fickle—it doesn’t always

blow, and it sometimes blows when

you don’t need it. Just as important,

areas with sufficient wind are often far

from the potential market for the

energy they can produce, and far from

available transmission lines. For these

and other reasons – including a cost

premium – the use of wind to produce

electricity is not widespread in the

United States, either among electric

cooperatives or other power utilities. 

Despite these obstacles, wind power

is on the rise. 

Basin Electric Power Cooperative, a

large power generation co-op headquartered in Bismarck, N.D., thought

that wind power could serve as a supplemental source of “green” power for

its operations. After looking at the

costs and available incentives, the coop calculated that—with available new

technology and the right location—

wind generation would not be as cheap

as conventionally produced power, but

would be “the most competitive of the

renewable technologies,” says Ron

Rebenitsch, an engineer at Basin.

“We have an advantage in this

respect over many other co-ops,”

Rebenitsch says, “because our unique

status as a not-for-profit, but taxable,

cooperative allows us to take advantage

of the 1.7-cent kilowatt-hour tax credit

available for wind energy. There are

similar incentives offered to untaxed

nonprofits, but they are renewed yearly, and there’s always the chance that

they won’t be available in the future.

You can’t take that to the bank.”

Stepping up to the plate

To help launch the wind project,

one of Basin’s largest members, East

River Electric Cooperative, with members in South Dakota and western

Minnesota, stepped up to the plate. It

W

The South Dakota prairie provides an ideal location for these wind turbines, capable of generating a combined 2.6 megawatts. The immense size of the windmills (facing page) is evident from

this perspective. When wind speeds become too high, airfoil tips are rotated to act as air brakes.

Photos courtesy Basin Electric Power Cooperative.
Rural Cooperatives / March/April 2002 5

offered to take on the liability for the

extra costs of one wind turbine.

“A general survey we took a few years

ago indicated quite a bit of interest in

green power among our members,” says

Scott Parsley, assistant general manager

for member services at East River. “So

in early 2000, we took another survey

specifically to find out if enough of them

would be willing to pay a premium for

wind-generated power. We got an overwhelming [positive] response.”

As the initial sponsoring member,

East River put out a request for proposals and got eight responses from wind

turbine vendors. Fortunately, the vendor

with the best proposal was able to offer a

project in a location that was able to

obtain power transmission approval.

“The problem is that power transmission infrastructure is not being built right

now,” says Rebenitsch. Current federal

requirements make it risky for power firms

to build transmission lines, because others

have the right to apply to use unused

capacity. If the builder is counting on that

unused capacity for future needs, this can

put a serious crimp in the business plan. 

“Transmission approval is difficult to

find nowadays, and not being able to

guarantee it could stop most projects,”

Rebenitsch says.

The Prairie Winds Project, as it was

named, found an excellent location in

South Dakota, reasonably close to

transmission lines and with an average

wind velocity of more than 16 miles

per hour. With the proposed equipment, the site promised to generate

electricity at full capacity 32 percent of

the time. “That’s the best performance

anyone’s been able to achieve so far in

the United States,” says Parsley. 

USDA provides financing 

Financing for the $2.9 million cost of

two turbines, and connecting lines to a

power substation, was provided by

USDA Rural Development’s Rural Utilities Service (RUS). “We’re glad to be a

part of Prairie Winds,” says RUS

Administrator Hilda Legg. “It’s a good

example of how green technology can

work for the individual members of power cooperatives.” Legg says RUS encourages utility cooperatives looking to

exploit wind and other green sources of

power to apply for financial assistance.

Land was leased for the project, with

royalties for the landowner that are

expected to be in the range of $2,000 to

$3,000 per turbine each year— a welcome income supplement. Two turbines were installed: one is dedicated to

production for East River, the other’s

output is available to a number of other

Basin member distribution co-ops. 

The wind turbines are built by

Nordex, a Danish company with a reputation for quality and reliability. The

turbines are immense —the biggest

available when they were built late last

year. Their rotors measure 60 meters in

diameter—or almost 200 feet—and

they are mounted on tubular towers

Most of the 50 states have areas that might be suitable for wind power. This map

shows wind resources in the United

States categorized by wind power

class, which is defined by a range of

annual average wind speeds measured at 33 feet and 164 feet above

the ground. Generally, wind power

is greater at the higher altitude

because of the “boundary layer”

effect – the natural tendency of a

moving fluid to move more slowly

next to a surface. Buildings, vegetation, hills, and other features can

also slow wind close to the ground.

The columns labeled “Wind

Power” estimate the potential wind

energy in watts available per square meter of land,

making certain assumptions about turbine size and

performance. Wind turbines are

considered feasible in Wind 

Power Classes 4 through 7.

Other considerations make

development of wind resources

problematic in some areas.

Although most of the western

states and the Appalachian

region have areas offering excellent wind characteristics, the

best are usually located on mountain ridges,

posing serious accessibility and transmission

problems. In the Upper Midwest, exploiting the

wind over the Great Lakes poses obvious dilemmas. In much of the Great Plains, remote locations and lack of nearby transmission capacity

also limit exploitation. ■

U.S. wind power resources

Map courtesy U.S. Department of Energy

Wind

Power

Class

Average Wind Speed

(At 164-ft. Altitude)

MPH

0 to 12.5

12.5-14.3

14.3-15.7

15.7-16.8

16.8-17.9

17.9-19.7

19.7-26.6
200 feet tall. Each can produce 1.3

megawatts of power. They are twice as

big as any other commercially produced wind turbines, which presented a

problem for Rebenitsch.

Nordex projected a useful life span

for the turbines of 20 years, based on

the records of smaller models. But with

no actual experience to back up that

projection, Rebenitsch decided conservatism was the better part of valor. He

initially set depreciation at 15 years,

and all cost calculations were based on

that assumption.

Basin Electric projected power generation costs at 5.5 to 6 cents per kilowatt hour. After subtracting the tax

credit and market-rate revenue, they

were left with a shortfall. Part of the

problem is that the area enjoys the lowest-cost power in the nation. Firm, or

baseline, power is available for only 3

cents per kilowatt hour. Non-firm

power, available intermittently, was

estimated at about 1.8 cents. That

amount, plus the 1.7-cent tax credit,

gave the co-op 3.5 cents per kilowatt

hour, leaving a deficit of 2.5 cents, or

(adding a safe cushion) 3 cents. 

The result is a $3-dollar premium

for a 100-kilowatt-hour block of power.

These are marketed as sponsorships:

each household pays $3 monthly. In

return, 100 kilowatt-hours of their

power consumption for the month is

generated by wind.

Blades the size of jet wings

The groundbreaking for the turbine

installations took place last Sept. 7, and

both turbines were dedicated less than

two months later. The construction

went quickly because, except for the

foundations, the parts, including the

towers, were prefabricated. Says Parsley, “It would have taken less time than

that, except that the wind slowed

things down.” On some days, high

winds made it unsafe to operate the

huge cranes lifting the tower sections,

generator assembly, and fiberglass turbine blades—each the length of a Boeing 747 wing—into place.

The turbines are far more sophisticated than the typical prairie water

pump. The mechanicals, including the

generator and transmission, are hidden

in a sleek fiberglass housing, which pivots on the top of a giant steel tube

making up the tower. Unlike the old

6 March/April 2002 / Rural Cooperatives

Though the vast majority of rural Americans have been

supplied with electric power for decades, a small minority

still don’t have access. This is mostly because they live in

areas too remote and sparsely settled (as seen below) to

make power transmission to their homes practical. Some

of these areas belong to the Navajo Nation, on a vast

reservation taking up parts of Colorado, New Mexico, Arizona and Utah.

Traditionally, Navajos have lived in

widely scattered dwellings. While

many today have moved to towns and

villages, a large number of families

and individuals still live far from each

other and from paved roads. With

power transmission lines costing an

average $30,000 a mile, many of these

households make do without any kind

of electric power. A few use gasoline

generators to power lights and small appliances. 

So in 1994, when the Department of Energy offered a

grant through the Western Power Administration to provide a small number of individual solar power generators, the Navajo Tribal Utility Association (NTUA) took

the chance to offer electricity to households that had

never had it before.

The grant was enough to pay for the purchase and

maintenance of 40 small photovoltaic generators, each

producing only 200 watts. This is only about enough to

power a light bulb or two and a small transistor radio –

not much more. Even so, a number of isolated homesteads found it worth the $40 monthly fee.

When it comes to solar power, the Navajos have an

advantage because the vast majority of their days have

sunshine – often without a cloud in the sky.

The program was successful

enough that in 1999, the management

board of the utility decided to authorize the purchase of 100 new, larger

units, using $1 million of the co-op’s

own money. The tribal utility co-op

purchased 100 units built by Kyocera,

each producing 640 watts – much

more than the previous units, but still

not a lot of power by the standards of

most American households.

Simple devices

The units are quite simple. A horizontal rectangular

metal frame provides a base on which are mounted a

panel of photovoltaic cells, a box holding eight, 12-volt

lead- acid batteries, and another box holding a controller

and an inverter. The later device converts the low-voltage direct current put out by the batteries into 120-volt

alternating house current. The photovoltaic (solar) cells

are mounted so as to face the sun in the middle of the

day. They convert sunlight directly into electricity, 

Isolated Navajos tap solar power 

Photos courtesy Navajo Tribal Utility Association 
Rural Cooperatives / March/April 2002 7

prairie “windmills,” they do not use a

weathervane-like tail to turn them into

the wind. Instead, hydraulics turn the

turbine assembly, obeying a computer

using information from a small wind

vane mounted on top of the housing. 

The same computer also takes constant note of the current wind speed,

from an anemometer mounted next to

the wind vane. It adjusts the angle of

attack of the rotor blades for efficiency

and to keep the speed of rotation within

safe limits. If rotational speed goes higher than 19.2 rpm, centrifugally-operated

airbrakes automatically deploy from the

ends of the rotor blades. Should they

malfunction or prove insufficient to slow

the rotor in high winds, a large disk

brake mounted on the generator shaft

can smoothly bring the turbine to a halt.

The turbines are remotely monitored

using telemetry that transmits wind

speed, temperature, hydraulic pressures,

rotational speed, and other important

data, allowing their operators to keep

constant tabs on them without being on

site. They are built to survive wind

speeds of up to 145 miles per hour with

the rotor stationary. The windmills begin

producing electricity at 6 miles per hour

and reach their peak output at 33.5 mph.

While it’s too early to declare total

success for the project, both Parsley

and Rebenitsch are optimistic. So far

the turbines have performed at, or

above, expectations. “It’s been an

exciting project, and a lot of fun,”

Parsley says. “One thing I enjoy is

people’s reactions when they first see

the turbines. Often they don’t realize

the size of these things until they see

them in person.”

Meanwhile, wind technology is

marching on. Nordex is now taking

orders for a monster wind generator with

twice the power output of each of the

Prairie Winds turbines. Its rotor diameter will be half again as big: 300 feet. 

Other wind turbine manufacturers

are offering similar products. Increases

in economies of scale and other developments in this rapidly advancing field

promise that costs will continue to

decline, albeit gradually. Add the

enthusiasm of many power customers

and the Bush administration’s policy of

encouraging the use of renewable energy sources, and it seems that wind turbines may be an increasingly common

sight in much of America. ■

which is collected and stored in the batteries. 

The generators are limited in size not only by cost –

photovoltaic cells are very expensive for their power

output – but by the need for portability. The roads over

which they must be hauled are rudimentary, and they

are loaded on 16-foot trailers towed by four-wheel drive

vehicles for the trips to the installation sites.

Despite these challenges, the new generators were

up and running by 2001.

NTUA charges a $95 per month

flat fee for the use of each 640-

watt solar generator. So far, they

have proven reliable, much like

their smaller predecessors, of

which about 24 are still in use (the

company that made the smaller

units has gone out of business,

and parts are no longer available). 

However, not all customers are

happy with them. Some complain

of the cost — most of the users are

on public assistance, and for them $95 a month is a steep

price to pay. Says Paul Denetclaw, who runs the program, “Some folks really like it, some think it’s too expensive. The ones that seem to appreciate it the most are

those who had a generator before, and had to keep it

gassed up and serviced.” 

Denetclaw says that young people who have lived

where electricity is available are often disappointed when

they find that the generator can’t supply enough power for

all the appliances and electronics they are used to.

Overload problems

The biggest problem with the units, says Denetclaw, is

that users sometimes overload them. When this happens,

the batteries discharge faster than they can be recharged

by the photocells. Most service calls center around this

issue, even though the users are supplied with an indoor

monitor that reveals the state of charge. “All we can do in

those cases is turn off the power and let the batteries

charge for a few days,” he says.

Another problem stems from the

use of an inverter that supplies alternating current in square waves, rather

than the rounded, sine waves produced by conventional generating

equipment. Some modern electronic

gadgets don’t function well on this kind

of current. Light bulbs, on the other

hand, take either type current. NTUA

provides customers with information

on models of appliances that operate

well on the power from the solar units. 

Despite the inherent limitations of the solar generators, NTUA believes that their advantages outweigh the

problems in providing a necessary service for people who

otherwise couldn’t have electric power. USDA Rural Utilities Service encouraged the co-op to apply for a lowinterest loan to pay for more of the 640-watt generators

and maintain them for 15 years. On Dec. 21, 2001, RUS

approved a loan of $4.8 million. Initially, NTUA plans to

draw on $1.6 million to put new generators into service. ■

—Steve Thompson
8 March/April 2002 / Rural Cooperatives

By Carmi Lyon, Cathy Durham,

Steve Buccola

Oregon State University

Editor’s Note: The authors are agricultural

economists. Lyon is a former staff member

and Durham is the Markets and Trade Economics program leader at Oregon State

University’s Food Innovation Center Experiment Station. Steve Buccola is a professor in

the Department of Agricultural and

Resource Economics at Oregon State University. This article is the result of a research

project funded by USDA’s Rural BusinessCooperative Service to explore issues related

to exporting and importing high-valued

products by cooperatives. 

ree Top, a Washingtonbased fruit processing

cooperative, is pursuing

a multi-faceted marketing strategy that increasingly is focusing on new technology,

both as a marketing tool and means to

develop unique, value-added fruit

products for the food ingredients

industry. These and other efforts to

increase returns to the 2,000 growermembers who own the cooperative

have proven especially important during the past five years, as juice and

peeler market apple prices have

declined sharply.

Much of Tree Top’s marketing success is the result of a state-of-the-art

research and development (R&D) facility, staffed with creative technicians

who work to develop specialty products

that expand possible uses for fruit. Tree

Top’s R&D employees often move laterally to other parts of the organization, such as sales, spreading a “product-development mentality” throughout the cooperative. Richard Bailey,

Tree Top’s chief financial officer, says

the pilot plant at its headquarters in

Selah, Wash., is state-of-the-art. Tree

Top’s R&D unit has developed unique

methods for drying and quality control

and many special fruit ingredients used

by their further-processing customers.

The cooperative, established in

1960, sells products across the entire

range of food product buyers: retail,

Hotel-Restaurant-Institutional (H.I.),

and other food processors, including

cereal-maker Kelloggs and the

Orowheat bread company. Tree Top

packs juices and applesauce in readyto-consume form for retail and institutional distribution, concentrates for

H.I. and other juice bottlers, and a

wide range of ingredients for further

processing. 

One of the co-op’s more ambitious

recent product introductions is Tree

Top packaged fresh apple slices for the

retail market. The co-op introduced

the apple slices in a retail test market in

June 2001. However, at the request of

its member fresh-apple warehouses, the

distribution process was changed in

The Big Apple

New products, added plant capacity play major role in Tree Top’s sales strategy 

T

Apple juice is Tree Top’s best known product, but its state-of-the-art research and development

facility turns out a wide variety of other products, including fruit ingredients for the cereal and

baking industries. Photo courtesy Tree Top
Rural Cooperatives / March/April 2002 9

January. Tree Top is now selling the

slices directly to member warehouses.

They, in turn, make the slices available

to their customers. Since both products

require refrigeration, Tree Top slices

are a perfect “traveling companion” for

fresh apple shipments out of the Pacific

Northwest. 

Tree Top’s management is broken

down into a consumer packaged

goods division, which focuses on

juices for retail sale, and the ingredient division, which provides specialized processed apple products to other food processors.

Tree Top’s members are primarily

apple producers that pack first for the

fresh market and use the cooperative as

an outlet for culls. Known to the public

for its Tree Top fruit juices and applesauce, the company is the largest

provider of apple juice west of the Mississippi. It also produces a range of

products for further processing. 

Tree Top earnings rise

despite depressed market

The past five years have been a time

of struggle for the U.S. apple industry.

Grower returns significantly decreased

from 1996 through 2001 due to severely depressed tree fruit prices. In 1995-

96, grower returns on juice and peeler

apples were $193.80 and 209.63 per

ton, respectively, and $91.77 per ton

for processed pears. In the 2000/01

processing year, juice and peeler apple

returns were $61.73 and $91.08 per

ton, respectively, and processed pear

returns were $47.51 per ton. These

precipitous drops in grower returns are

solely due to the dramatic decline in

commodity prices.

While coping with fluctuating supplies and depressed

prices, Tree Top managed to increase its profits per ton from $10.86

for juice apples and

$4.34 for pears in 1996

to $18.80 and $7.52 in

2001, an increase of 73

percent for both commodities in 5 years.

Improved profits are

attributed to a number of

factors, including an

ability to maintain prices

for its premium juice

products and increased

category sales due to

promotions and overall

lower prices. The ability

to achieve higher plant

efficiencies due to

increased scale, and

increased production

allowing the company to

re-enter world markets

for bulk concentrate also

helped it boost profitability. 

Tree Top is maximizing the efficiency of its

plants by processing more

non-member fruit products, such as cherries, for

use in yogurt and other products. The

earnings of non-member business have

been sufficient to satisfy the financing

needs of the cooperative. This has

enabled Tree Top to distribute all of its

grower earnings in cash for the past

nine years. 

Increasingly, international markets

are proving to be a major factor in how

the U.S. industry fares. Tree Top has

shipped apple products into more than

50 countries in the past 20 years.

While the domestic market is definitely

Tree Top’s primary target, international

sales have traditionally been viewed as

a way to maintain and increase market

share and increase sales quantities.

Chinese exports trigger

U.S. trade action 

Critical changes in international

apple product markets have led Tree

Tree Top’s 2,000 grower-members depend on the fresh apple market for the majority of their income, with 

peeler and juice apples shipped to Tree Top providing an important secondary source of income. 

USDA Photo by Ken Hammond
10 March/April 2002 / Rural Cooperatives

Top to adjust its international sales

focus in recent years. World production

of, and trade in, apple juice and apple

juice concentrate has expanded dramatically. A major force behind this trend is

the expansion of apple production in

China and that nation’s entrance into

the juice concentrate market. 

In 1991, China surpassed the United

States to become the

world’s second largest producer of apple concentrate

(the Soviet Union was then

first). While U.S. production has remained fairly

steady and the United

States is still the No. 2 producer, Chinese production

passed the 20-million-metric-ton mark in 1999, more

than four times larger than

U.S. production.

China’s influence on

the world apple market is

primarily in its export of

apple juice concentrate.

In 1999, low prices for

Chinese concentrate

exports led the U.S.

Department of Commerce and the U.S. International Trade Commission to file an anti-dumping petition

against China. Tree Top and other

industry leaders backed this effort.

The successful petition resulted in the

imposition of a retroactive import

duty (up to 50 percent of import

price) on apple juice concentrate

imported from China into the United

States. However, the duty rate actually imposed has reportedly been considerably less than 50 percent.

While production has continued to

rise, the rate of increase has dropped

considerably and China’s reported production area began to decline after

1996. But its influence on domestic U.S.

apple juice markets is likely to be important in the near future. Chinese apple

concentrate is still being exported to the

United States, which also impacts U.S.

prices due to its effects on world supply.

These developments in the world

juice and concentrate markets have led

Tree Top to focus on the domestic

market, where it has an advantage in

market knowledge, transportation and

brand name recognition. However, it

continues to ship juice and concentrate

to overseas markets where demand

exists. Tree Top does the shipping for

these products but uses brokers to

handle the sales.

The cost of exporting juice is an

underlying factor in Tree Top’s licensing its juice brand in France. Since

France is a major producer of apples

and apple juice, it is not possible for

Tree Top to competitively price its own

juice there. The licensing agreement

provides an opportunity to gain some

income while increasing international

recognition of the Tree Top brand.

Web site revolutionizes

international marketing

Tree Top marketing efforts include

taking advantage of the World Wide

Web. Its Web site, http://www.treetop.com, is a sophisticated marketing

site with links to product-specific

request forms and even a credit application. This marketing tool is proving

to be especially effective in international marketing efforts. Indeed, John

Twomey, the co-op’s ingredients sales

marketing manager, says the Internet

has revolutionized Tree Top’s international marketing. 

The Web site makes the company

visible to buyers all over the world and

has led to inquiries from places Tree

Top would otherwise not have reached

through trade shows, such as the Middle East. On a typical day in his office

at the cooperative’s

headquarters, Twomey

fields over 20 inquiries

from all points around

the globe. 

Twomey estimates

that in 1997, 80 percent of his sales leads

came via fax and 20

percent by e-mail. In

2000, nearly all his

communications were

by e-mail, with many

potential customers

coming to him

through the Tree Top

corporate Web site.

Twomey has not done

a formal study of the

efficacy of the Web

site. However, he

feels it has had a significant impact on the

number and quality of leads he

receives.

The home page provides three main

links: to company information, to consumer packaged goods and to the

ingredient division. The latter pages

provide information on product lines

and a description of processing methods. The consumer goods page links to

recipes and frequently asked questions;

the ingredient division page links to

descriptions of how Tree Top’s products can be used as ingredients in a

wide variety of processed foods. 

The company has also adopted a

Uniform Communications Standard,

implemented through Electronic Data

Interchange (EDI) to allow for a more

efficient exchange of business documents, such as orders and invoices, benefitting Tree Top as well as its customers

by improving information exchange and

reducing transaction costs.

Packaged apple slices are one of Tree Top’s newest branded products. Photo

courtesy Tree Top
Rural Cooperatives / March/April 2002 11

Baking products market 

requires special strategy 

Tree Top’s sales strategy for its 

cereal and baking ingredients differs

markedly from that used for its juices.

With ingredients, the company has a

technological advantage and it isn’t

constrained by the high transportation

costs and the

commodity-like

nature of the

juice concentrate

market. Tree Top

has positioned

itself in the

international

bakery and cereal

ingredient market as a highquality producer

that sells technical service along

with the physical

product. 

Twomey

worked as superintendent of

Tree Top’s

Wenatchee,

Wash., plant

before becoming

regional

sales/service

manager in the

ingredient division. He says to

prevent Tree

Top’s products from being viewed solely as a commodity, technical service to

customers is crucial. He routinely

works with cereal manufacturers, bakers and others to develop specific products that meet their individual requirements. For example, he helped to

customize a flavor formulation for a

food processor in Russia, fashioning

pineapple- and melon-flavored apple

pieces that are specifically targeted to

Russian tastes.

The broad range of activities in

which Tree Top is engaged – retail,

H.I. and ingredient products, in both

domestic and international markets –

clearly follows from its strategy:

“accommodating as much member

fruit as we can profitably sell, ” as stated in the 1999 Tree Top annual report.

Tree Top continues to adapt to the

rapidly changing domestic and international market by developing new products and improving old ones, implementing new marketing and

communications technologies and

working closely with customers. It has

found success in developing products

that are less vulnerable to commodity

price swings and achieve a better return

to members’ raw product and will continue to pursue that strategy in the

years ahead. ■

Tree Top has recently followed an aggressive

expansion path, buying three existing businesses to

expand its core processing base to seven plants. In

the 2000-01 fruit year, Tree Top received 533,000 tons

of fruit at five plants in Washington and one plant in

Oregon. The seventh plant, in California, bottles juice

for the large Southwest market. Tree Top has a total

workforce of 1,300. 

With the three new plants, the co-op’s total assets

increased by $46 million, to $218 million. The acquisitions were financed principally through long-term debt.

The new plants provide Tree Top with additional capacity to process juice, applesauce and frozen products.

Tree Top’s members (growers from Washington, Oregon and Idaho) had $51.9 million in equity invested in the

cooperative in 2000, accounting for 36.3 percent of its

assets. The Tree Top equity program provides for a 7-

year retirement. In 2000, nearly $2.18 million in member

equity was retired. 

For the past 9 years, all profits generated by Tree Top

have been returned to the growers. All allocation certificates have now been repaid. 

Tree Top’s board approves all capital acquisitions.

Capital spending decisions are framed by the criteria of

“very high returns” and those required by regulations

and prudent business practices. The board of directors

is made up of 12 member-growers elected by the membership. The board oversees policy and grower relations, compensation issues, investment and finance, and

audit issues. ■

Three new plants boost production

USDA Agricultural Research Service Photo
12 March/April 2002 / Rural Cooperatives

By Peerapon Prasertsri,

Graduate Research Assistant

Richard L. Kilmer, Professor

University of Florida, Gainesville 

Editor’s Note: This article is based on

research conducted by the University of

Florida under a cooperative agreement

with the Rural Business-Cooperative Service of USDA Rural Development. 

n 1992, firms in

food retailing

became aware of a

major new competitor: WalMart. Wal-Mart arrived on

the food-retailing scene with a

very cost-efficient inventory,

warehouse and trucking system that allowed it to reduce

operation costs by 5-percentage points below the food

retailing industry average. In

reaction to Wal-Mart, supermarket chains (through their

trade associations) started an

initiative called “Efficient

Consumer Response” (ECR),

the objective of which was to

design a more efficient fooddelivery system.

The efficiency of this system is now

affecting milk marketing cooperatives.

Milk processors, milk marketing cooperatives and dairy farmers need to

improve their cooperation. They also

need to be aware of how the action of

each member of the vertical market

influences the business operation of

the others.

A major function of a milk-marketing cooperative is transferring and balancing the supply and demand of fluid

milk from dairy farmers to milk processors. Farmers and processors want milk

collected and delivered on a well-timed

schedule. It is the cooperative’s task to

ensure that the milk routing and scheduling are performed efficiently to

improve coordination among farmers,

the cooperative and milk processors.

This study focused on a state where

most milk production is shipped to the

fluid market, going directly from farm

to private bottling plants in tanker

trucks. The only storage the cooperative provides is on the tanker, and thus

the logistics of operating a good

tanker-transportation network is even

more critical than in most other states.

Delivery routes and schedules have

been honed to a fine science here. But

could they be doing even better?

A case study of a dairy cooperative’s

milk hauling operation was the basis for

this article. Data was gathered for the

farm-to-plant routing algorithm; the

most efficient routing system for the

cooperative was determined, as was the

cost reduction from the most efficient

routing system with the current routes

operated by the cooperative. Sensitivity

of the most efficient set of routes to

imported milk procurement, changes in

the dairy farm pick-up schedule and

changes in the processing plant delivery

schedule were also examined.

Routing complexity

Routing and scheduling are important activities for distributing highly

perishable agricultural commodities in

the vertical-market system. This is

especially true for fluid milk, which

requires virtually instantaneous transportation from producers to processing

plants to maintain product quality. 

The routing and scheduling problem is very complex. As the number of

producers and processors increase, so

do the possible ways to route and

schedule trucks. The problem increases

in complexity when farm and processing plant time windows are added.

Routing and scheduling software, such

as ArcLogistics Route 2 (ALR), have

been developed to help solve the problem. ALR seeks efficient routes by

using data about farms, trucks and processing plants in its street and road network database.

Truck-scheduling data were provided

by the study cooperative for the period

of October 3-9, 1999. The benchmark

run was the actual milk collection and

delivery routes used by the cooperative.

The cooperative had a scheduled pickup time for each farm and a delivery

time schedule for each plant. A plus-orminus 30-minute processing plant time

window was included in the benchmark

model, with no farm time window. In

contrast, the alternative run was routed

and scheduled by ALR with a plus-orminus 30-minute processing plant time

window and a plus-or-minus 2-hour

farm time window.

The long haul

Is your co-op’s farm-to-plant milk hauling optimal? 

This case study shows factors that can impact efficiency 

I
Rural Cooperatives / March/April 2002 13

The number of miles and the number of time window violations (a time

window is violated if a truck visits a

farm or processing plant before or

after its time window) are two key

results examined. The number of miles

is directly related to the cooperative’s

cost of scheduling and routing miles

from producers to processors. The

number of time window violations

(number and hours) implies the timeschedule performance of the cooperative’s dispatchers. 

Fewer farm time violations improve

the satisfaction level of milk producers.

The processing plant managers are

more satisfied with lower processing

plant time window violations. The

benchmark and alternative runs were

performed and compared in all of the

cooperative’s six service areas.

Plotting cost savings

The total mileage reduction

between the benchmark and alternative

runs range from a low 0.74 percent for

the Service Area 1, to a high 14.01 percent for the Service Area 2. For all service areas, 3.36 percent (5,726 miles) of

total mileage was eliminated by the

alternative run when compared to the

benchmark run. Based on $1.29 per

mile, the cost savings corresponding to

mileage reduction in all service areas

was $7,387.26.

One reason for the different

mileage reductions might be the

nature of the service areas. More multiple-stop routes allow for more combinations in the route construction

process, which has the potential for

mileage reduction. For example, most

farms in Service Area 1 (96.9 percent)

provided a full load of milk for each

truck. Thus, more than 95 percent of

the trucks in this area made only one

stop. The mileage reduction between

the benchmark and the alternative run

was 0.74 percent. 

For Service Area 2, which had the

highest mileage reduction (14.01 percent), only 53.2 percent of the total

routes were one-stop routes. In other

words, the more multiple-stop routes,

the more potential mileage reductions. 

However, these findings were mixed

in Service Areas 5 and 6, where there is

no direct milk-load delivery from dairy

farms to processing plants. All trucks in

the these two service areas returned to

their terminals after completing the

pickup process; there were no time

window restrictions, unlike with the

processing plants. Service Area 5

adhered to the correlation between the

mileage reduction percentage and the

percentage of multiple-stop routes;

Service Area 6 did not.

Schedule violations

impact efficiency 

The hours of plant time window

violations and the total number of

time window violations are important

components of overall dispatching

efficiency for moving milk to milkprocessing plants. The reduction in

hours of plant time window violations

between the benchmark and alternative runs was 83.71 percent for all service areas. The reduction in the number of plant time window violations

between the benchmark and alternative runs was 55.20 percent for all service areas. 

The reduction in hours of farm

time window violations between the

benchmark and alternative runs was

98 percent for all service areas.

Meanwhile, the reduction in the

number of farm window violations

between the benchmark and alternative runs was 95.69 percent for all

service areas.

Sensitivity analysis shows how the

results change if some constraints are

relaxed. Results from sensitivity runs

were compared with those from the

originally constrained alternative run. 

Timely milk pick up and delivery is a crucial cost factor for most cooperatives. USDA Photo by Ken Hammond
In the first case, the sensitivity analysis results involving

imported milk indicates little

effect (less than a 0.4 percentage reduction in all categories)

on the transportation system

resulting from inclusion of the

imported milk loads. In the

second case, the reduction

between the alternative and

sensitivity runs was 3.25 percent for mileage and 69.49

percent in hours of plant-time

window violations. 

Mileage reductions were

small, while plant time window

reductions were large. This

indicates that if the cooperative were allowed to pick up

milk loads without farm time

window restrictions, the processing plant time window violations would be reduced by

almost 70 percent. Moreover,

results from the third sensitivity run (no farm and plant time

window constraints) showed

little further improvement

from the second sensitivity run (less

than a 0.5 percentage reduction in

mileage and total used time.).

Case study routes rated “efficient” 

This case study concluded that the

co-op’s current truck routes are efficient. The route mileage could only be

improved by 3.36 percent (5,726 miles)

for a saving of $7,387.26. This is a low

savings rate when the cooperative’s

actual mileage is compared to the actual

route mileage (as determined by a software package that does not include all

of the real-world uncertainties encountered by the cooperative drivers).

Even though all service areas taken

together are efficient, Service Areas 2, 4,

5 and 6 have routes that may be reorganized to reduce route mileage and route

time. They have the lowest percentage

of one-stop routes and the largest

reductions in route mileage between the

benchmark and alternative runs. Routes

in these four areas need to be re-evaluated and possibly reorganized.

Processing-plant time window violations and farm time window violations

for the alternative runs in all service

areas imply a disparity between when

milk is available from the farm and

when the processing plants need the

milk. Processing-plant time window

violations (56) represent 6.46 percent

of all loads. This means that 6.46 percent of the loads were not on time. 

For farm time window violations,

1.38 percent of farm pick ups were not

on time. These violations occurred

with time windows that were 1 hour

(the scheduled time of delivery plus-orminus 30 minutes) and four hours (the

scheduled time of pick up plus-orminus 2 hours) in length at the processing plant and the farm, respectively. 

There is no way to meet all the

plant-time window requirements and

farm-time window requirements with

the current time windows. To increase

the ability to pick up loads from farms

and deliver milk loads to plants with the

current delivery schedule would require

an adjustment in farm and processing

plant time windows.

Adding the 4-hour time

window to the scheduled farm

pick-up time in the alternative

run significantly reduced the

number of time window violations (470 to 19 for farms and

125 to 56 for processing

plants) and the violation hours

(427.40 to 7.71 hours for

farms and 287.33 to 46.81

hours for processing plants)

for farms and processing

plants compared to the benchmark run. An adjustment in

time window length at the

farm level not only reduced

the time window violations at

the farm level, but also at the

processing-plant level. 

Increasing the time window

length also reduced the total

route time for all service areas

by 4.88 percent, or $4,095.88,

and the total route miles by

3.39 percent (5,726.56 miles),

or $7,387.26 for the seven-day

period.

Schedule modification 

could help in some areas

The implications point to scheduling as the over-riding problem, and

that modifications in the current

schedule could improve efficiency in

some smaller service areas. Current

farm-to-plant scheduling does not

allow direct farm-to-plant delivery

without delays. 

An efficiently routed and scheduled

transportation system reduces mileage

and route time. Adjusting the time

windows and/or the scheduled pickup

and delivery times reduces the total

cost and time of moving milk from

the farm to the processing plant.

Areas with multiple-stop routes possess the potential for more route

improvements than areas with mainly

one-stop routes. 

What is done at one level of the vertical market system has an impact on

other levels of the system. To improve

vertical coordination, processors, farmers and cooperatives must know how

their actions influence each other. ■

14 March/April 2002 / Rural Cooperatives
Rural Cooperatives / March/April 2002 15

By Perry Letson

Editor’s Note: Letson is assistant vice president for communications at ACDI/VOCA, a nonprofit international economic

development organization which is an arm of the U.S. farmer

cooperative community. For information on ACDI/VOCA, or to

volunteer for service overseas, go to www.acdivoca.org, where

current volunteer assignments are listed and candidates can

apply online, or call (800) 335-8622.

he U.S. foreign-assistance program emphasizes cooperatives because its architects

understood the important role co-ops played

in developing rural America. Not only do

cooperatives enhance the bargaining power of

producers and increase farm efficiency and income, they

make important contributions to civil society. They influence the self-help approach farmers take to problem-solving, reinforce grassroots democracy and, ultimately, build

communities.

The East African nation of Ethiopia is benefitting from America’s international cooperative

development work. More than 80 percent of

Ethiopians work in agriculture and live

more than a day’s walk to the nearest

road. Farms here are small and

margins tight. Cooperatives can

be a valuable asset in providing services and supplies to

these farmers.

Ethiopia is a likely

place for a new vision

of co-ops to take hold

for reasons other

than demographics.

Because of conflicts

with neighboring

states as well as internal

disruption, Ethiopia’s

people desperately

need the societal glue

that co-ops can help

provide. Yet despite

the on-paper existence of 4,052 agricultural cooperatives in

Ethiopia, with a membership of 4.5 million people, smallholder farmers do not always enjoy the benefits of modern

cooperatives. Ethiopian farmers are still largely underserved, exploited and marginalized. 

Ethiopia’s checkered co-op history

Self-help cooperative community groups have been part of

Ethiopian peasant life for centuries. During the rule of Haile

Selassie I in the 1960s, the government began promoting Western-style co-ops, but ran up against an unwieldy land tenure

system and inadequate marketing and manpower resources. 

After the revolution of 1974, cooperatives took on a socialist cast. They became vehicles for farm collectivization and

acted as extensions of the government, which set prices and

established quotas. Many smallholder farmers had to buy

grain on the parallel market at high prices and sell to the government at lower, fixed prices. Corruption and mismanagement were standard features of the co-ops, which also

became a recruiting ground for soldiers to fight in

Ethiopia’s increasing internal conflicts and the

war with Somalia.

It was not an era in which modern co-ops

could thrive. Werqu Mekasha,

ACDI/VOCA’s country director in

Ethiopia, who holds a Bachelor’s degree

from Purdue and a Master’s from

Nebraska, spent 8 years in a communist prison without ever being

charged with a crime. He was suspected of sedition because he was

educated and worldly.

Faced with civil unrest and economic decline, a new “Mixed Economic Policy” was announced in

1974 by the government, and within

weeks the cooperative structure

came crashing down. Offices were

looted and disbanded. Collectively

owned land was redistributed

among peasants. 

ACDI/VOCA’s Tewodros Fesseha remembers the challenge:

The coffee beans harvested by this Ethiopian woman will be marketed

through the Oromia Coffee Farmers Cooperative Union, which is a

direct exporter of its members’ coffee. Photo courtesy ACDI/VOCA 

The road up

Free-market reforms fuel growth of Ethiopia’s co-ops 

T
16 March/April 2002 / Rural Cooperatives

“The legislature

thought cooperatives

were communist, the

farmers thought they

were governmental

entities, and the professionals were convinced that they just

won’t work.”

Democracy revives

cooperatives

Now, Ethiopia is

moving toward a more

decentralized and market-oriented economy.

The government recognizes the importance of privatizing

business and rehabilitating agriculture. It is promoting business-oriented cooperatives, based on farmers’ needs and

founded on principles of voluntary participation, private

ownership and democratic decision-making. As in the United States, the government has created an enabling environment for the development of modern, farmer-owned and

farmer-controlled cooperatives.

ACDI/VOCA, with funding from the U.S. Agency for

International Development (USAID), is helping to

build the capacity of Ethiopia’s farmer cooperatives.

This Washington, D.C.-based, nonprofit international aid organization is an affiliate of the National

Council of Farmer Cooperatives and the Farm Credit

Council. It is working to empower the small farmers

of Ethiopia to form competitive, profit-oriented and

professionally managed input supply, marketing and

credit cooperatives. 

Under the Farmer-to-Farmer program in the mid1990s, ACDI/VOCA carried out training in cooperative management, credit, marketing and finance. As a

result, in the 1995-96 growing season, co-ops nearly

doubled their rate of short-term loan repayment to

Ethiopian banks, from 50 percent to 98.5 percent.

And, best of all, dividends were paid to members for

the first time in Ethiopian cooperative history: 25,000

farmers received an average of $10.44. While that

amount would be insignificant to a U.S. farmer, the

fact that a dividend was paid at all to these poor farmers is extremely significant. 

As one farmer who received a dividend put it,

“Cooperative members in the past were forced to sell

their farm products at low prices on a quota system

and give their sons and daughters for the war in the

north. But today you are giving us a dividend for the

product we sold to the cooperative. According to our

tradition, we simply say to you, God bless you.”

Today, Ethiopia’s co-ops are

operating with varying degrees

of efficiency. Their ability to

maximize member profits is limited by their small size and lack

of purchasing and marketing

clout. They typically do not possess the management skills and

organizational structures necessary to realize their full potential, nor do they enjoy the purchasing and marketing

advantages or economies of scale

that could be realized through

the integration of small-scale coops into larger business partnerships. But, thanks to U.S. assistance, things are looking up.

CUP runneth over

In 1997, the USAID mission in Ethiopia approved a proposal from ACDI/VOCA to launch the Cooperative Union

Project (CUP). The purpose of CUP was to test the premise

that primary cooperatives consolidated into unions would

create the bargaining power, management capacity and

economies of scale to solve market access and efficiency

problems that primary cooperatives on their own could not. 

Last summer, ACDI/VOCA hosted a group of Ethiopian cooperative leaders and

local officials who came to the United States to gain a greater understanding

of what makes some of our cooperatives successful. Here they are learning

about forage crop management from Pennsylvania dairy farmer Titus Martin.

They also learned about co-op management structure, marketing strategies

and bookkeeping practices. Trainees returned home energized and armed with

new tools to build up their own cooperative system. Photo courtesy ACDI/VOCA

The Romanat Cooperative supplies farmers with consumer goods, fertilizer and chemicals. It also provides grain storage and processing

service. Photo by Galen Rapp 
Rural Cooperatives / March/April 2002 17

With ACDI/VOCA assistance, the newly formed Lumme

Farmers’ Cooperative Union in

East Shewa, the first of its kind

in Ethiopia, initiated a competitive bidding process, which

reduced the price of fertilizer to

all cooperatives in the district by

$175,000. ACDI/VOCA also

provided advice on procedural

issues, accounting and record

keeping. Co-ops in other districts subsequently formed buying groups to replicate the bidding process used in Lumme. As

a result, the price paid by smallholders for fertilizer has been

reduced by $4 million. Lumme

also introduced tractor service to

member co-ops initially purchasing two tractors from a local

assembly plant.

The original Lumme Union

has since expanded to include

another district, Adama, and has

now become the Lumme-Adama

ACDI/VOCA volunteer Ron Atkinson, far right, has been on seven ACDI/VOCA missions, including

one this past summer to Ethiopia, where he trained 20 extension agents, whom he says were

“eager to learn.” Photo courtesy ACDI/VOCA 

The U.S. government recently issued a plan that

emphasizes overseas cooperative development in order

to improve living conditions in impoverished nations.

The plan was issued under the Support for Overseas

Cooperative Development Act. 

“The plan is the most significant cooperative

development event in 40 years,” says Ted Weihe,

executive director for the U.S. Overseas Cooperative

Development Council (OCDC). The boost, he says,

comes from the Bush administration and Congress,

which want to “scale up and expand cooperative programs to solve new problems in the post-Sept. 11

world.” U.S. cooperatives are deeply engaged in

assisting Islamic countries and introducing grassroots democracy to counter extremist forces (a goal

highlighted by President George W. Bush in his State

of the Union address).

Cooperatives can help bring stability, economic

development and democracy to the post-Sept. 11

world, according to Senator Chuck Hagel of Nebraska, a principal sponsor of the legislation. “USAID

can tap cooperative methodologies to bridge ethnic

and sectarian differences to build communities in

areas that are rife with conflict,” he said.

About 20 years ago, U.S. cooperative development

programs were funded with about $23 million. Today,

these programs are funded with $200 million to deliver

services in 62 countries. 

The plan calls for U.S. cooperative development

organizations to:

• Test new cooperative solutions to help rebuild communities in East Africa devastated by the HIV/AIDS

pandemic;

• Seek better understanding and methods to adapt

Western cooperative approaches to emergingmarket countries;

• Target assistance to local co-ops to achieve greater

scale and impact;

• Strengthen networks of co-ops to solve multiple

economic and social challenges and advance coops that specialize in agriculture, finance, and community infrastructure and services;

• Develop new analytic tools for gauging the strengths

and weaknesses of co-ops to better promote them

with multilateral institutions to reach areas that cannot attract private investment capital. ■

Co-op development: a tool to promote democracy, self-reliance
18 March/April 2002 / Rural Cooperatives

Cooperative Union, serving 12,000 farmer members.

Expanding from two to seven tractors, the union now provides tractor service to a wider membership and to nonmembers on a fee basis in order to increase the business

base. Also, four new district-level cereal cooperative

unions similar in size and scale to Lumme-Adama have

been established.

The Lumme-Adama union has also bought and stored

grain from primary cooperative members. Extensive training

in cooperative management has been given to union managers

and staff, and to local cooperative members. All four unions, as

well as 24 primary societies, have hired professional managers

ACE project

Once the cooperative union concept proved successful,

USAID approved a 5-year plan to expand it to the country’s

four major production regions. ACDI/VOCA’s current project, called Agricultural Cooperatives in Ethiopia (ACE),

was launched in September 1999. It seeks to increase productivity, reduce food insecurity and enhance rural incomes

through the establishment of competitive, profit-oriented

and professionally managed cooperatives. 

Activities include: 

■ strengthening the capacity of regional cooperative

offices and bureaus;

■ increasing the bargaining power of cooperatives;

■ increasing the membership and participation of women

in cooperatives;

■ increasing environmental awareness and improving natural resource management at the farm level;

■ upgrading the skills of cooperative members and management, the staff of the cooperative promotion

bureaus, educators and support professionals enabling

them to develop, manage and support sustainable organizations, and

■ diversifying and broadening services and products.

The focus is on smallholder farmers in the Oromia,

Tigray, South and Amhara regions. Besides working with 

By Galen Rapp

Editor’s Note: The author recently retired from his

post as a cooperative education and development specialist with USDA Rural Business-Cooperative Service.

Prior to that, he was a business and management consultant for local grain and farm supply cooperatives. 

Despite language obstacles and a changing legal

system, a budding group of

African cooperators now

have a stronger educational

foundation on which to build

cooperatives that can help

feed a hungry, impoverished

nation. Helping them in this

effort are volunteers with

ACDI/VOCA. 

I made my first visit to

Ethiopia and other African

nations last year on a co-op

development mission for

ACDI/VOCA, although I’d

been on other foreign missions with USDA. The task

there is daunting and the

needs of the people are great. Ethiopia is one of the

poorest countries in the world. As many as 4.6 million

people need food assistance annually. Less than 15 percent of its land is suitable for cultivation. Eighty-five

percent of the population lives in rural areas. 

Ethiopia’s agricultural sector suffers from drought

and poor cultivation practices as well as lack of organization. Soils that were tilled by oxen for centuries have

responded with increased yields from tractor-powered

plowing. The limited number of tractors are primarily

owned by regional cooperatives, which should help to

place more acres into production in coming years. 

Crash course in cooperative

basics

I participated in a 3-week

training mission for 21 government co-op specialists at

a school near Mekele. Steven

Johnson, corporate attorney

for Norbest Cooperative of

Midvale, Utah, focused on

cooperative organization.

Rich Perline, a technical advisor for ACDI/VOCA, covered

rural finance and credit while

I taught marketing and purchasing.

Most of the students stayed at the school, which

included a computer center. Some traveled 4 days to

reach the school. They were chosen for leadership

Ethiopian co-ops help farmers transition from ox-power to tractor-power 

Ox power is still common in Ethiopia. The limited number

of tractors available in much of the country are largely

owned by regional cooperatives, which are using them to

help their members put more acres into production. Photo

by Galen Rapp
primary co-ops, ACE is assisting in the

establishment of 27 secondary level commodity-specific unions. They will allow

members to take advantage of economies

of scale in purchasing and marketing and

will provide focal points for organizational activities, particularly training. 

This is a large-scale effort. Working

with nearly 400,000 farmers, ACE

focuses on training at all levels of the

cooperative community, from farm owners, cooperative directors and managers

to government and union management

staff. Training and technical assistance

will be provided to 285 primary cooperatives to strengthen their operations,

and nearly 2,000 cooperative board

members and staff will receive management training. Personnel of the regional

skills, education and geographical location. All had limited English conversation skills, so it took four of them

with advanced training to act as interpreters. To support the program, students received an array of cooperative booklets published by the USDA Rural Business-Cooperative Service. Other copies of these

publications were supplied to regional libraries as

resource materials. 

Recent changes in Ethiopia’s cooperative law

made it necessary to educate the government

employees about the new law and cooperative basics.

Although patterned after similar U.S. legislation, the

Ethiopian law significantly differs in the area of governance. It provides for committees to exercise certain

controls vs. the more direct control exercised by

cooperative boards in the United States. So training

directors there in U.S.-style cooperatives didn’t necessarily meet the tenor of the Ethiopian cooperative

law, but it did provide basic background in cooperatives and their operation. 

Marketing and purchasing in a competitive economy,

as in the United States, offers different strategies than a

command economy. Teams were assigned to four class

projects focused on developing a strategic marketing

plan. Despite language difficulties and the introduction

of new terms, the plans they developed were excellent. 

Long- and short-term goals

The immediate need in Ethiopia is to help organize

local farmer cooperatives and, subsequently, regional co-ops so that they conform with the 1998 law.

They also need assistance in the recovery of shortages and farmer debts owed to the cooperatives.

The long-term strategy is to enable these regionals

to provide additional agribusiness services and processing facilities and strengthen the locals and their

farmer members.

The Tigray Regional Cooperative Promotion Bureau

has 128 employees, 39 of them involved in cooperative

development. It trains farmer directors, offers management improvement techniques and supports the development of cooperatives. Each employee is assigned a

specific area in each region. Tigray is the northernmost

of the 11 semi- autonomous regions in Ethopia. Less

than 20 percent of its 31,000 square miles are tillable

because of the rocky terrain. 

The Romanat Cooperative, near Mekele, is a local

cooperative that serves farmer members in a seven-mile

radius with consumer goods, fertilizer and chemicals. It

also provides grain storage and processing services. A

new grain-storage facility was recently completed.

Grain is stored in 100-kilo bags, which move from the

farm to the cooperative on donkeys and from there by

trucks to urban markets. Export sales are limited

because Red Sea shipping ports were lost during a border conflict with Eritrea.

The challenge facing Ethiopian farmers is huge,

and—given the economic conditions there – organizing

cooperatives is a difficult and complex undertaking.

But the people we worked with seem committed to

building a cooperative foundation that can offer better

future for Ethiopians. I found the experience rewarding,

and urge others to consider volunteering for an

ACDI/VOCA mission. ■

The Oromia Coffee Farmers’ Cooperative Union, launched in June 1999,

received permission from the government to become a direct exporter of its

members’ coffee, bypassing the central auction and giving more control and

market share to producers. With ACDI/VOCA assistance the union – which

represents 21,891 coffee growers – last year exported 144 tons of coffee and

is developing partnerships with key players in the specialty and gourmet

coffee markets. 

For ACDI/VOCA’s Werqu Mekasha, the greatest experience of his lifetime

of work in Ethiopian agriculture is “to see, for the first time in Ethiopia, the

direct export of smallholder-grown specialty coffee to Europe and America

without exploitation by coffee merchants.” ■

Co-op finds success in 

gourmet coffee market 

Rural Cooperatives / March/April 2002 19
agricultural cooperative

bureaus will acquire the skills

to extend improved management techniques to unions and

cooperatives. 

Until now, farmers have had

little access to credit to fund

crop marketing activities, but

with USAID support the ACE

program has enticed a private

commercial bank to enter into

a loan guarantee program.

Using USAID funds to guarantee 50 percent of net losses, the

Bank of Abyssinia has made

$625,000 in local currency

available to cooperative unions

to purchase grain from their

member cooperatives for later

sale. This has boosted the bargaining power of the unions,

which can now pay dividends to

their member cooperatives.

ACE will also help set up 27

saving and credit cooperatives

and, eventually, a national federation of cooperatives.

“The bureau, supported by

ACDI/VOCA and with

USAID funding, is revolutionizing the cooperative

movement in Ethiopia,” says Zerihun Alemayehu, head of

the cooperative promotion bureau in the prime minister’s

office. “Cooperatives under the previous regime were

characterized by mismanagement, corruption and embezzlement. Farmers were exploited and marginalized from

their efforts. The new model cooperatives currently being

promoted by the government and ACDI/VOCA are

democratic, business-oriented and professionally managed

with increased income to member farmers as the primary

objective.” 

U.S. volunteers key

Much of ACE’s work will be carried out by 175 U.S. volunteers on short-term ACDI/VOCA assignments. (See

Galen Rapp’s account of his volunteer service in an accompanying article.) Many ACDI/VOCA volunteers are members

or employees of U.S. agricultural cooperatives and farm

credit banks. Beyond applying their practical skills revolving

around organization and information, they are demonstrating

their personal concern and are injecting hope and a valuable

cooperative spirit.

One of them is farm management specialist Ron Atkinson, a veteran of six ACDI/VOCA assignments, who

trained 20 extensionists in Ethiopia this past summer. “I felt

better about this assignment

than just about any of my others because the participants

were so eager to learn,” he says.

“They were attentive, showed

up on time and couldn’t wait to

tackle the case studies.” The 20

trainees will in turn train others

in order to multiply Atkinson’s

contribution.

He reflected, “These farmers

face a challenge because of the

scale of their farms. About the

only way they can make it is by

banding together to create

some sort of volume. They

seem eager to do that when

prices are low, such as in today’s

coffee market. The trick will be

to keep the union going when

prices improve.” 

The 2001 Cooperative Agriculture International Volunteer

Award, presented by the

National Council of Farmer

Cooperatives and ACDI/

VOCA, was won by Professor

Doug Bishop of Bozeman,

Mont. Since his retirement

from Montana State University,

Bishop has engaged in what

seems like a regular commute to Ethiopia, going eight

times to develop curriculum and teach cooperative organization and management. His manual on co-op structure

and management (developed in part with materials from

USDA’s Rural Business-Cooperative Service) is the essential text for Ethiopia’s cooperative promoters. He has also

helped to revise the curriculum at Ethiopia’s Cooperative

Institute, which will be a critical resource base for sustaining the cooperative movement. 

Bishop’s contributions have gone beyond the terms of his

2-3 week assignments. After each visit, he remains in contact

with the host organization in Ethiopia and he has sent hundreds of documents, videos and books to reinforce his work.

ACDI/VOCA’s Werqu has described Bishop as “being completely in tune with the culture of the country.” In fact, Bishop’s son adopted an Ethiopian baby, and now the fate of a faraway nation has become a family affair. 

ACDI/VOCA’s project has given Americans the opportunity to take co-op reform and development in Ethiopia

personally and to share our success. Ethiopia, a nation

with a recent history of difficulty, but one blessed with

extraordinary beauty and talent, has made an important,

and so far rewarding, commitment to the cooperative form

of business. ■

A display of Ethiopian coffee varieties at a trade show. Photo

courtesy ACDI/VOCA 

20 March/April 2002 / Rural Cooperatives
Rural Cooperatives / March/April 2002 21

Editor’s Note: Upon reaching milestone anniversary, many cooperatives commemorate the event by publishing a history of the cooperative.

Blue Diamond Growers, a Sacramento, Calif.-based cooperative of

about 4,000 almond growers, recently published an award-winning

history book. The following article discusses the project and may provide

ideas for other co-ops considering such an undertaking. 

ackground on co-op and history project: In

celebration of its 90th anniversary, Blue Diamond Growers—one of California’s most successful farmer-owned cooperatives—decided to

publish a pictorial and narrative history of the

cooperative and the industry that it helped build. The twoyear project produced “The Almond People,” a 200-page, fourcolor book that was presented to members who attended the

cooperative’s 90th annual meeting in November 2000. Copies were also sent to the news

media, customers, suppliers, government officials and friends in the almond industry.

The board of directors approved the project

in 1998. “This first-ever history of our cooperative tells a fascinating story of vision, courage

and determination,” says Board Chairman

Howard Isom, an almond grower who also runs

an accounting business near Chico, Calif. “That

story began in 1910, when a small group of

almond growers formed a cooperative to wrest

control of their crops from unscrupulous buyers

who for years had denied them a fair return.

They succeeded in spite of difficult odds and

built not only one of the world’s most successful farmer-owned

cooperative, but also an important new industry in America.

Why produce a co-op history? Isom says today’s growers sometimes lose sight of the important roles that processing and marketing cooperatives play in the farm economy.

“We tend to forget the reasons behind the formation of our

established institutions,” he notes. “And when we do, we

invite history to repeat itself, often to the detriment of the

grower. We hope that in reviewing how Blue Diamond

worked for better grower returns, developed new products

and markets, and gave almond growers an effective voice in

government and the media, younger members will better

understand the importance of cooperative marketing to their

livelihoods.”

Target audiences: “The Almond People” reaches out to

audiences beyond the cooperative’s membership, says Susan

Brauner, the co-op’s public affairs director, who initiated and

oversaw the project. “The book does more than preserve and

celebrate Blue Diamond’s history among our growers. It also

informs and motivates our employees and gives our customers

and suppliers new appreciation of our long-term value to

them,” she says. “We believe that as government officials, other almond industry representatives and the news media read

about the cycles that this industry has experienced over nine

decades and the role that Blue Diamond played in stabilizing

prices and markets, they will better appreciate the value of a

strong cooperative in a commodity business.”

In short, “The Almond People” serves as

another effective tool in Blue Diamond’s

long-term program of building greater

understanding and appreciation of the importance of farmer-owned cooperatives in America’s economy, says Brauner. It serves as background and as a reminder, and as a valued

resource for future generations.

How the project was conducted: The history project got underway in 1998 when

Brauner contracted with Gray Allen, local

writer and photographer, to develop a production plan and budget. Research and writing

began immediately after the board approved the expense, and

continued through most of 2000. Allen scoured company files,

local libraries and archives for early-day photos of almond production. He also interviewed Blue Diamond officials (past and

present), toured facilities, and obtained copies of company

records. He advertised in the co-op’s member magazine for

grower reminisces, and received several batches of notes and

photographs from the early days of the cooperative. He wove in

historical references to the origin of the almond, its uses and

role in the diets of ancient societies. A historical time-line runs

throughout the book to place Blue Diamond’s growth and

development in the context of world history.

Co-op history books should

target both members and public 

B

MANAGEMENT TIP

continued on page 31
22 March/April 2002 / Rural Cooperatives

By Beverly L. Rotan

USDA/RBS Agricultural Economist 

Editor’s Note: This article is excerpted from

RBS Research Report 189, available on line

at www.rurdev.usda.gov, or in hard copy for

$5 (order by calling (202) 720-8381).

n today’s economy, many

companies are downsizing their labor force, creating a greater need to

keep the most productive

employees on board. In order to retain

the best employees, cooperatives try to

keep pace with the salaries and benefit

packages offered by other employers,

while still keeping their costs down. 

One way to do this is to evaluate benefit plans. Look at employee needs,

expectations and eligibility, cost escalation, tax considerations, benefit quality

and the benefits packages offered by

competitors. Interview employees, consult government agencies, read various

benefit publications, compare benefits

of like-businesses and monitor benefit

activities of other businesses in the area.

What benefits are essential and how will

they be financed? Will they be paid for

by the cooperative or the employee? Or

will the cost be shared? In this article,

references to “benefits” include retirement benefits; health, life and disability

insurance, and educational assistance.

The study included the following job

categories: 1) chief executive officer

(CEO), president or general manager; 2)

office manager, accountant or controller;

3) division manager; 4) field representative; and 5) sales representative. Most

benefits were extended across all job categories. Differences in how cooperatives

finance their benefits are examined, based

on cooperative type, region and size. 

Benefits by cooperative type

Many cooperatives of all types paid for

life and disability insurance and educational assistance, while health insurance and

retirement cost was covered by both the

cooperative and employee for all employee groups (table 1). The exceptions were

dairy and “other” cooperatives. In these

cases, the cooperative paid solely for the

retirement of general managers, office

managers, field representatives and sales

reps. This trend has remained unchanged

for a number of years. The largest percentage of cooperatives paid retirement

insurance for general managers, office

managers and sales representatives. 

“Other” benefits usually offered were

paid vacations and sick days, first-class

travel, use of a company car and mileage

reimbursement (private car when on

cooperative business). The availability of

these benefits were more broadly spread

across all cooperative types and job

groups. By cooperative type, at least

one-fourth or more indicated general

and office managers were paid for vacations and sick days. First-class travel was

offered only to general managers. 

Mileage reimbursement for all

employees in grain and farm supply

cooperatives were more evenly distributed, but responses were limited.

Benefits by region

Most cooperatives in all regions said

retirement was paid by both the employee and cooperative. Health insurance percentages were almost evenly distributed

between the cooperative paying all benefits to being shared by both. Education

assistance was more likely paid for by the

cooperative in the Great Lakes states.

Life and disability insurance was usually

paid for by cooperatives in all regions. 

Other benefits or “perks,” such as

paid vacations/holidays and sick days,

were paid by the cooperative. Paid

training or mileage (private car) was

the next largest percentage in all

employee groups. First-class travel

privileges were quite limited.

With a few exceptions, large majorities of co-ops in all sales size groups

(small, medium, large and super) paid

the entire cost for life and disability

insurance. Smaller majorities in most

size groups also shouldered the cost for

educational assistance. A majority of coops paid the entire cost of health insurance in all but the super-sized group

(see table 19 in the on-line version of

this article). Retirement cost was largely

shared by co-ops and employees in all

five job categories and all sizes groups. 

Rethinking benefit payments 

From a financial standpoint, cooperatives may need to rethink how benefits

are paid. Trends show that benefit costs

once paid solely by the cooperative are

now usually being shared with the

employee. Conversely, some cooperatives that previously shared-costs are

now covering it all. In other cases, some

said co-ops that in the past shared the

cost with staff for benefits have now

been shifted entirely to employees.

Cooperative leaders must look at

internal and external influences when setting salaries and benefits and use all available resources. Look at today’s society.

Try keeping pace with other businesses’

salaries and benefit packages, avoid

Benefits often key to 

keeping best employees 

I
Rural Cooperatives / March/April 2002 23

employee turnover, and adapt salaries and

benefits to remain competitive. 

Here are some significant survey

findings:

■ Most employees in the five job

categories surveyed had bachelor’s

or associate’s degrees.

■ Job responsibility was ranked as

the most important factor for setting salary by a majority of

respondents for all job categories.

Performance ranked next.

■ Thirty-four percent of the co-ops

surveyed said all of their employees received bonuses, usually

based on the financial performance of the cooperative.

■ Cooperatives were more likely to

pay for life and disability insurance

and educational assistance for the

general and office managers. Retirement benefits were usually shared by

the employee and the cooperative.

More responses indicated that programs of locals were tied to their

regional’s retirement plan.

■ Directors were usually paid per

diem for travel while on cooperative business along with a fee for

attending board meetings. Annual

expenses for directors ranged

from $1,200 to $6,000.

■ The East/South Central region

had the highest salaries for all job

categories, except for sales representatives in the West. ■

Table 1—Benefits and how paid, for specified employees, by cooperative type, 19991, 2

Health Life Disability Educational

Type and Retirement insurance insurance insurance assistance

job category C E S C E S C E S C E S C E S

Percent

Dairy

General manager 57 14 29 29 14 57 80 0 20 83 0 17 75 25 0

Office manager 57 14 29 29 14 57 75 0 25 83 0 17 75 25 0

Division manager 40 20 40 20 20 60 75 0 25 80 0 20 75 25 0

Field representative 50 25 25 25 0 75 75 0 25 75 0 25 75 25 0

Sales representative 60 20 20 40 0 60 75 0 25 72 0 25 75 25 0

Fruit and vegetables

General manager 32 11 58 45 0 55 82 6 12 100 0 0 45 9 45

Office manager 32 11 58 48 4 48 85 6 12 100 0 0 50 8 42

Division manager 23 15 62 47 6 47 85 8 8 100 0 0 63 13 25

Field representative 11 0 89 56 0 44 86 0 14 100 0 0 40 0 60

Sales representative 29 0 71 56 0 44 75 0 25 100 0 0 40 0 60

Grain

General manager 30 4 67 64 2 34 80 4 17 89 2 9 71 3 26

Office manager 30 4 67 63 2 36 79 4 17 90 0 10 74 3 23

Division manager 26 3 72 56 0 44 76 5 19 94 0 6 74 3 23

Field representative 29 0 71 56 0 44 77 3 20 93 0 7 73 4 23

Sales representative 26 0 74 54 0 46 80 6 14 94 0 6 79 0 21

Farm Supply

General manager 19 4 77 49 0 51 51 15 34 76 3 22 50 15 35

Office manager 19 6 75 47 2 51 49 19 33 78 5 16 48 15 37

Division manager 15 6 79 33 0 67 45 13 42 71 11 18 48 13 39

Field representative 5 5 90 33 0 67 45 10 45 65 12 24 56 19 25

Sales representative 23 3 74 40 3 57 42 18 39 79 7 14 39 17 43

Other3

General manager 57 0 43 33 0 67 71 0 29 54 21 25 73 0 27

Office manager 47 0 53 35 0 65 71 0 29 83 6 11 50 0 50

Division manager 57 0 43 38 0 62 69 0 31 83 8 8 100 0 0

Field representative 57 0 43 10 0 90 78 0 22 75 13 13 50 0 50

Sales representative 56 0 44 17 0 83 73 0 27 73 9 18 100 0 0

1/ Total may not add due to rounding.

2/ C = cooperative pays only; E = employee pays only, and S = cooperative and employee pays.

3/ Other includes marketing cooperatives–cotton, livestock, poultry, dry beans and peas, rice, sugar, fishing, and miscellaneous–with low responses.
24 March/April 2002 / Rural Cooperatives

By David Trechter

and Robert P. King

Editor’s Note: Trechter is a professor of agricultural economics at

the University of Wisconsin-River Falls. King a professor of applied

economics at the University of Minnesota. They received funding

from USDA Rural Development’s Rural Business-Cooperative

Service to look into the communication practices of cooperatives in

Minnesota and Wisconsin. Based on their survey of 37 cooperatives

and 759 members, they have gained new insights into the impact of

communications on member loyalty and the preferences of members

for different types of communications. Highlights from a talk

Trechter gave on this subject were also included in the Sept.-Oct.

2001 issue of “Rural Cooperatives.”

ost businesses

actively try to

enhance the commitment or loyalty

of customers to their

products. Airlines offer frequent flyer programs, Amazon.com develops

a sophisticated customer profile that

helps customers find other books

they are likely to enjoy, and motel

chains offer discounts and special

privileges to repeat customers. 

Cooperatives, too, expend a

good deal of effort trying to

increase their members’ commitment. Indeed, cooperatives probably have an advantage in this

regard. Cooperatives are memberowned, meaning that their customers have an investment in the

business. Thus, because a portion

of a member’s wealth is linked to

the on-going well-being of the

cooperative, they may be more

committed to it. In addition, the

democratic nature of cooperatives

(one person-one vote) and the voice

that members have in the running of the business (through

the board of directors) are likely to lead to greater patron

commitment. 

Committed cooperative patrons are likely to be important

for a variety of reasons. First, members who are committed

to the cooperative are more likely to stick with the cooperative during difficult times. They are also more likely to elect

a strong board of directors to help guide the cooperative.

Committed members are more likely to be demanding.

Demanding members are beneficial to cooperatives because

they push the business to constantly improve on goods, services and pricing. In short, demanding members help keep

cooperatives on the cutting edge. 

Finally, agriculture is an industry in the midst of massive

Building commitment

Sharpening your co-op communications can build 

member commitment and better reach select groups 

M

A highlight of CHS’ most recent annual meeting in Portland, Ore., was a tour for members through

the United Harvest shipping facility in Vancouver, Wash. Annual meetings can be an important

communications conduit, particularly for members who have been active in the co-op, serving on

committees and the board. Photo by David Lundquist, courtesy CHS 
Rural Cooperatives / March/April 2002 25

restructuring. We see this in terms of the ever-increasing

farm size and in the wave of mergers and consolidations that

have created large-scale supply chains. Committed members

are more likely to understand these trends and the implications for their cooperative. 

This article identifies how cooperatives can use communications to build member commitment and the factors

that influence preferences for some key communication

options. 

The study

Table 1 summarizes some of the key financial characteristics over the 1997–1999 time period for the 37 cooperatives that participated in this study. The sample included

roughly equal numbers of cooperatives that attained relatively high standards of financial performance (determined

by local return on investment (ROE) greater than 10 percent, debt-to-equity ratio of less than 0.25,

revolving equity in less than 15 years, and issuing

more than 40 percent of patronage refunds as

cash) and low levels of performance (negative

ROE, debt-to-equity of greater than 1, equity

revolvement greater than 75 years, and less than

20 percent cash patronage refunds).

Table 2 provides a breakdown of characteristics

of the 759 cooperative members who participated

in this study. The table shows that, typical of the

farm population as a whole, the respondents were

primarily middle aged or older. The members in

this sample did have a relatively high level of education, with 50 percent having at least some college education.

In the survey, co-op members were asked to

indicate on a scale of 0 to 100 (0 = totally

uncommitted, 100 = totally committed) their

level of commitment to a specific cooperative

to which they belonged. Table 2 shows that the

majority of members in this sample reported a

relatively high level of commitment to their

cooperative (in excess of 60 percent). However,

nearly 20 percent of the sample indicated they

were 40 percent or less committed to their

cooperative. In short, there was a widely varying level of commitment to their cooperative

expressed by these members. Members can get

information about their cooperative in a wide

variety of ways. Some communication channels

are informal, such as conversations with the

manager, employees, board members or other

members. Other communication channels are

more formal: newsletters, cooperative Web

sites, or press releases. Still other channels,

while not necessarily explicitly designed as

communication vehicles, may play an important

communications role. For example, the annual

meeting, focus groups with members, and member surveys have varying amounts of communications imbedded

in them.

Members were asked to rate ten channels by which they

might receive information about their cooperative. The

results of this evaluation are summarized in Table 3. The

most important sources of information about the cooperative, as indicated by this survey, were informal conversations

with employees and with the manager. Only two other communication channels—newsletters and news articles—were

rated as important or very important by more than half of

the members in the sample. 

Interestingly, the least important source of information,

judged by the proportion of respondents who rated it as

important or very important, was electronic communications. Clearly, the majority of cooperative members are not

yet living in an e-world.

Table 2—Selected characteristics of cooperative 

members in sample

Percent of Cooperatives per Category 

Age of Member < 30 31–40 41–50 51–60 60+

3 18 35 23 21 

Educational Level < High High Some College 

School School College Degree 

5 45 30 20 

Level of 0–20% 21–40% 41–60% 61–80% 81–100% 

Commitment to 12 7 22 28 31

Sample Co-op 

Table 1—Selected financial characteristcs of 

sample cooperatives

Percent of Cooperatives per Category 

Avg. Local ROE <0% 0%–2.5% 2.6%–5.0% 5.1%–10.% 10.1%+

14 32 19 22 14

Debt/Equity Ratio <1.1+ .76–1.0 .51–.75 .26–.50 <.25

22 22 30 19 8

51–75 26–50 16–25

Equity/Equity 76 years years years years <15 years

Revolved 11 22 38 16 14

% Cash Refunds <20% 21%-30% 31%–40% 40%+

22 42 28 8
26 March/April 2002 / Rural Cooperatives

Building member commitment

through communications

Member commitment to a cooperative may stem from a broad array of

factors. For instance, characteristics of

the member (family history with the

cooperative), characteristics of the

cooperative itself (how big it is) or the

cooperative’s financial performance

may influence member commitment.

The cooperative’s efforts to communicate with its members might also affect

member commitment. 

Communication strategies are a particularly interesting factor in terms of

building member commitment, both

because of the wide variety of mechanisms available for touching base with

members and because communications

are largely under the control of the

cooperative. This contrasts sharply

with the other factors (member characteristics, cooperative characteristics

and the financial performance of the

cooperative) that are likely to influence

member commitment, but are wholly

or partially outside the control of the

cooperative.

The survey results support the proposition that member

commitment can be influenced by the cooperative’s communication strategy. In terms of specific communication tools

that increase member commitment, informal communications with the manager and press releases appear to have the

greatest impact. The importance that most members attach

to informal communications with the manager and employees indicates that cooperatives would be well served by making sure that employees who interact with members receive

training in public relations and that the cooperative develop

message points they would like these employees to convey to

their members.

Co-op communications preference factors 

Trechter and King also looked at factors that are associated with greater appreciation of each different type of communication. Their results are summarized in Table 4. These

results in the Member Characteristics section of the table

suggest that different communication tools appeal to distinctly different types of members. For instance, older members

and those with less formal education prefer news articles as a

source of information about their cooperative. In contrast,

members with more education would rather speak to

employees or use electronic communications to get information about the cooperative. Members who have served on the

board of directors or on a cooperative committee (whose

attachment to the cooperative is, perhaps, the strongest), the

annual meeting is an important source of information. 

Reading down the columns in table 4, the results also suggest means by which the impact of a given communication

tool might be increased. Newsletters, for example, appear to

have more impact when they are issued more frequently (e.g.

monthly newsletters seem to be more effective in building

member loyalty than do quarterly publications). Interestingly,

newsletters are also enhanced if the cooperative has a Web

site (newsletters and Web sites complement each other) or if

it issues few press releases per year (newsletters and press

releases are substitutes). In contrast, press releases are more

influential if they are relatively rare and the existence, or lack

of, a Web site seems unrelated to their ability to enhance

member commitment. 

Finally, the results for electronic communications reported

in table 4 present an interesting story. Recall that table 3 indicated that electronic communications were rated as the least

important of the ten communications channels considered.

The results reported in table 4 are broadly consistent with this

result, in that electronic communications are not important to

the average cooperative member. However, it is still probably

important for local cooperatives to consider having a presence

on the Web. Electronic communications appeal to the more

highly educated members of the cooperative, a segment that is

hostile or neutral to traditional communication methods

(annual meeting, newsletter, press releases). Electronic communications also appear to enhance the ability of cooperative

Table 3—Member evaluation of communication techniques

Percent of Members per Category 

Very Very 

Unimportant Unimportant Neutral Important Important

Communications 

with employees 3% 4% 16% 44% 33%

Communications 

with manager 5% 9% 22% 38% 26%

Co-op Newsletter 5% 7% 31% 47% 11%

News Articles 6% 8% 32% 45% 9%

Annual Meeting 8% 11% 32% 30% 19%

Communications with 

board of directors 7% 11% 37% 32% 13%

Communications with 

Other Members 5% 9% 41% 36% 8%

Member Survey 11% 13% 45% 26% 5%

Focus Groups 15% 19% 47% 16% 3%

Electronic 

Communications 21% 25% 39% 11% 4%
Rural Cooperatives / March/April 2002 27

newsletters to influence member commitment and extend the

ability of managers to communicate with members (substituting for direct face-to-face contact). 

Conclusions

Committed members are important to cooperatives for a

variety of reasons. The communication strategy followed by a

cooperative in getting information about itself to its members

can affect the level of member commitment. Given that the

cooperative has much more control over its communication

strategy than it does over other factors that would be expected

to influence member commitment, this is a very positive conclusion. Specifically, managerial communications with the

members and the use of press releases showed a strong statistical relationship with higher levels of member commitment.

This research suggests that different types of members

have distinctly different preferences for communication

tools. Older, less-educated members seem to like to read

about their cooperative in their newspapers. More highly

educated members, in contrast, prefer electronic communications and informal discussions with cooperative employees.

Several means were also identified by which different

forms of cooperative communications can be strengthened.

Of particular interest to this discussion is the role of electronic communications. While electronic communications

are not important to the vast majority of cooperative members, they are important to a potentially influential segment

(college educated members), complement some traditional

communication tools (newsletters), extend the ability of managers to communicate with members, and substitute for communication channels that are somewhat problematic for

cooperatives (press releases).

Cooperatives should, it appears, take a buffet approach to

communications: use a wide array of communication tools to

appeal to different segments of the membership. Cooperatives

should not overlook the importance of informal channels of

communication, particularly the interactions between members

and the general manager and other cooperative employees. ■

Member 

Characteristics

Cooperative

Characteristics

Communications Practices

Newsletter 

Longer 

Managerial

Tenure 

More Newsletters per Year

Fewer Press

Releases

Co-op Website

Annual Meeting 

Board

Experience

Committee

Experience

Education

Less Education 

Few Business

Sites

No Recent

Mergers

Non-Marketing

Co-op 

Managerial

Communications 

Average 

Member 

Newer Manager

Non-Service

Cooperative 

Few Newsletters per Year

No Website 

Employee 

Communications

Average 

Member

More 

Education

No Board 

Experience 

Few Newsletters per Year 

News Articles 

Older Members

Less Education

Few Years as

Member

More Business

Sites

Marketing or

Service Co-op 

Few Press

Releases per

Year 

Electronic 

Communications 

Unimportant to

Average 

Member

More Formal

Education 

Longer 

Managerial

Tenure

Marketing or

Service Co-op

No Recent

Joint Ventures 

Table 4—Factors having a positive impact on communication preferences
28 March/April 2002 / Rural Cooperatives

Earnings double for AGP 

Favorable market conditions which

gave the Ag Processing Inc. (AGP)

cooperative of Omaha, Neb., a substantial boost in earnings for fiscal

2001 are expected to continue into

2002, CEO Marty Reagan told delegates attending the cooperative’s annual meeting. The world’s largest cooperative soybean processor showed pre-tax

earnings of $46 million, more than

double the 2000 rate. Sales of $1.8 billion were up 9 percent, not counting

the result of sold operations. After taxes, net income reached $26.9 million,

up 61 percent from $16.6 million in

2000. AGP will also return $14 million

in cash patronage to its local and

regional cooperative members.

Nebraska perch co-op

helping meet demand 

Nebraska ranchers looking for new

sources of income have combined some

unproductive acres, abandoned hog

farms and a natural resource to go into

the fish business. Nebraska Sandhills

Yellow Perch Cooperative was formed

about 5 years ago to help satisfy a

national, unmet demand for the small

panfish, which are common in the shallow lakes sprinkled throughout the

state’s Sand Hills. Perch can be raised

with a little effort and limited expense in

cleaned, converted waste pits and

lagoons of abandoned hog operations.

The Nebraskans are following the pattern of Mississippi producers who 30

years ago began digging pits to convert

cotton acres into a catfish aquaculture

industry – led by the Delta Pride Catfish

cooperative. This industry now produces

$3 billion each year in Mississippi.

Although it’s aquaculture industry is

much smaller as this point, Nebraska

has good natural water resources and

its young aquaculture industry is supported by 50 fish farms. The perch

cooperative grew from discussions

about economic development options

in the traditional Sand Hills ranching

areas. Pollution, overfishing and predators have left the Great Lakes fishery,

which used to provide 1 million fish

per week, in dramatic decline. Producers from Nebraska, Tennessee and

North Carolina are part of the trend to

send fingerlings to Wisconsin and

Michigan for fattening. The cooperative’s future plans include securing a

processing plant to fillet the perch with

less waste. It also plans to secure

portable sorting tanks to separate fish

by size for shipment. 

Dairy industry aids 

victims of terrorist attacks 

Victims of the Sept. 11 terrorist

attacks will benefit from $83,300 in

dairy industry contributions to the

American Red Cross Liberty Fund.

Dairy farmers supported the relief

effort via the National Milk Producers

Federation, in conjunction with Dairy

Relief Inc.

The largest contribution of

$45,500 came from Dairy Farmers of

America, followed by United Dairymen of Arizona, $13,799, and California Dairies with $10,000. Other coops have contributed many tens of

thousands of dollars through other

relief funds. 

Koligian resigns from

raisin association 

Vaughn Koligian brought to an end

his 12-year reign as chief executive

officer of the Raisin Bargaining Association based at Fresno, Calif., with his

resignation in late December. The resignation came even though the board

had earlier extended his contract for 3

years. Koligian had successfully negotiated annual prices with packers for

more than a decade, but last year’s

negotiations were extremely contentious, and binding arbitration was

invoked for the first time in the association’s 34-year history. A world raisin

surplus has resulted in low prices, but

many in the industry have credited

Koligian for making the best of a difficult situation.

Reports at press deadline for this

issue were that Glen Gotto has been

selected to replace Koligian. Gotto

works for a handler, Pacific Sourcing,

and serves on the Raisin Administrative

Committee (RAC) as a medium-size

handler member. He is also chairman of

the RAC’s Reserve Sales Subcommittee. 

Sen. Grassley launches 

ag marketing center 

A new agricultural marketing center

at Iowa State University (ISU) in Ames

dedicated to collecting and distributing

information to promote value-added

agriculture was formally launched Jan.

9 with the presentation of a $5 million

check from USDA Rural Development. Iowa Sen. Charles Grassley said

the center will play a crucial role in

helping farmers earn more from their

crops and livestock.

NEWSLINE
Rural Cooperatives / March/April 2002 29

“Farmers know that to remain competitive, they must capture more income

through value-added processing of their

commodities,” Grassley said. “Timely

flow of information will be critical to

the success of such efforts, and this center promises to play an exciting part in

the exchange of crucial ideas.”

The center will be supported by a

multi-state consortium that includes

Iowa State University, Kansas State

University, Oklahoma State University

and the University of California-Davis.

Mary Holz-Claus of ISU Extension,

will administer the grant. The partnership will provide resources to support

marketing initiatives of value-added

cooperatives throughout the United

State, said Randall Torgerson, deputy

administrator of USDA’s Rural Business- Cooperative Service. Accepting

the $5 million ceremonial check was

ISU President Gregory Geoffroy.

Lamb processor partners 

with Wyo. producer co-op

Wyoming’s Mountain States Lamb

and Wool Cooperative (MSL&W) has

announced it is partnering with B.

Rosen & Sons Inc. (Rosen), a leading

supplier of fabricated lamb meats and

products. Under the terms of an agreement, MSL&W and Rosen will join

forces as Mountain States/Rosen, LLC.

MSL&W will supply its highest quality

lambs to existing Rosen processing and

distribution facilities in New York,

N.Y., and Greeley, Colo. 

The new entity will continue to use

Rosen’s labels and trademarks, including the “Cedar Springs” line of lamb

products. New product lines, capitalizing on the “Mountain States” and

“producer-owned” images will be

developed in the near future.

Golden Growers shows profit

A North Dakota corn processing

cooperative, once on the brink of

bankruptcy, has extended its profitability record to 3 years, according

to chairman Carl Larson. For fiscal

2001, Golden Growers Cooperative

reported earnings of $2.9 million.

Shareholders, however, will not

receive dividend payments, although

the stock value increased about 19

cents per share.

The co-op lost $16 million in its

first 2 years of operations due to plummeting corn fructose prices. In 1997 it

entered into a joint venture with

Cargill to manage its facility. 

Golden Growers represents 1,900

corn growers in North and South

Dakota and Minnesota. It joined

American Crystal Sugar Co. and

Minn-Dak Farmers Cooperative in

building the $261 million ProGold

processing plant near Wahpeton in

1996. Current profits, said executive

vice president Mark Dillon, represents

lease payments and plant improvements more than corn syrup sales.

However, the processing plant has

increased corn prices about 10 cents

per bushel above local elevators in the

region to ensure a supply for the plant

which consumes 85,000 bushels of

corn every day.

West Liberty Foods expands

The community of Mount Pleasant,

Iowa, will gain 225 jobs when a meatprocessing plant owned by a poultry

cooperative opens in 2003. West Liberty Foods is owned by Iowa Turkey

Growers Cooperative, which supplies

90-million pounds of meat to the food

industry, including Subway Sandwiches. The cooperative will invest $7 million to buy an existing building and

add an annex to suit the operation.

The new plant will be named Mount

Pleasant Foods. West Liberty Foods

also operates Sigourney Foods.

Oregon farm supply 

cooperative to close

In a sign of further fallout from

troubles in the Northwest fruit and

vegetable processing industry, the 445-

member Eugene (Ore.) Farmers Co-op

has opted to close. The 67-year-old

local supply cooperative hopes to gain

some limited return on a sale of assets.

Factors contributing to the closure

were low crop prices being earned by

members, fewer farmers and the earlier

demise of Agripac, a vegetable processing cooperative.

Pro-Fac co-op pays dividend

A dividend of 43 cents per share was

paid in late October by Pro-Fac, the agricultural marketing cooperative based at

Rochester, N.Y., to its Class-A preferred

stockholders. The cooperative has more

than 600 member-growers who process

their fruit, vegetables and popcorn

through Agrilink Foods, Pro-Fac’s wholly owned subsidiary. The food cooperative, with $1.3 billion in annual sales,

owns a number of nationally known

brands, such as Birds-Eye and Veg- All.

LOL, DFA shifting

milk to Kraft plant

Both Land O’ Lakes (LOL) and

Dairy Farmers of America (DFA) are

shifting milk supplies to the former

Kraft Foods cheese plant at Melrose,

Minn., which they jointly purchased

last year. The shift in supplies is resulting in altering of operations at some of

the two co-ops’ smaller plants. LOL

closed its cheese manufacturing operations at Perham, Minn., in February

Semolina Specialties in

Cosby, N.D., is now

Bushel 42 Pasta. The

name comes from the

fact that 42 pounds of

pasta can be made

from one bushel of

wheat. The co-op is

making final preparations for its spring

opening. It is owned by

250 durum wheat growers from North Dakota and Montana.
30 March/April 2002 / Rural Cooperatives

while continuing to focus its operations

on high-potential, high-value whey

proteins. Cheese production had earlier been cut back at Perham due to

reduced milk supply.

“The adjustments in product mix

will enable us to improve milk utilization in our Upper Midwest operations,”

said Fernando Palacios, LOL vice president for dairy foods operations and

supply chain. DFA earlier stopped

cheese production but continued whey

operations at Fergus Falls, Minn. 

Welch’s shifts staff 

from Westfield

Welch’s, the standard bearer in the

grape processing industry, has ended a

traditional presence in Westfield, N.Y.,

which began more than 100 years ago

when the company founder moved the

operation there. In a move to save money and blend its corporate office operation into its headquarters staff at Concord, Mass., Welch’s pulled its 93

employees from Westfield, offering

some an opportunity to relocate and

others telecommuting jobs. Welch’s parent firm, the National Grape Cooperative, will retain a staff of 12 in Westfield

plus another 25 at a processing plant. 

Concord and Niagara grapes used in

the operation are still grown in the

area. When Welch’s moved its corporate offices to Concord in 1983, it had

380 employees at Westfield. The original Welch’s plant, built in 1897, still

exists. During its tenure in the community, the company and its employees

were deeply involved with local school,

contributing both time and money. In

2000, company employees founded a

Junior Achievement chapter at the

middle school and last fall Welch Treasurer Steve Robbins received the district’s Friend of Education award. 

DFA gains plants from 

Suiza/Dean merger 

Dairy Farmers of America (DFA)

will increase its holdings as a result of

facility spinoff required by the merger

of Dean Foods’ and Suiza Foods. Suiza

was already the nation’s leading dairy

processor and distributor prior to the

merger, and the new company (to

operate under the “Dean” name) will

have annual sales of about $10 billion. 

To satisfy Justice Department concerns about competition in particular

areas, 11 dairy plants in eight states –

Alabama, Florida, Indiana, Kentucky,

Ohio, South Carolina, Virginia and

Utah – are being sold to National

Dairy Holdings LP (NDH). The newly

formed partnership is half owned by

DFA, which earlier joined with the

same three partners to purchase six

dairy plants in Southeast and Midwest

areas where Dean and Suiza overlapped. While DFA will not operate

any of these new plants, its members

will benefit from their sales.

Meanwhile, members of Minnesotabased Land O’Lakes (LOL) gained

about $44 million from the sale of five

milk processing plants in 2000 to Dean

Foods. LOL members continued to sell

milk to Dean which, under a licensing

agreement, markets milk, yogurt, sour

cream and cottage cheese under the

LOL brand. The two firms formed a

joint venture to develop and sell convenience-oriented dairy products, including the Grip n’ Go line of single-serve

milk bottles. 

New directory shows 

Wis. co-op diversity

Providing a useful snapshot and

guide to the state’s diverse cooperative

sector, the University of Wisconsin’s

Center for Cooperatives has published

a 2001 co-op directory, the first

update since 1993. Dr. Robert Cropp,

center director, says the state has

nearly 800 cooperatives which serve

almost 2.7 million members, although

many people belong to more than one

cooperative. Funding or the report

came in part from the U.S. Department of Agriculture’s Rural BusinessCooperative Service. 

In Wisconsin, “cooperative” may

only be included in the name of companies incorporated under Chapter 185

of the state’s statutes. During the

1990s, the state saw the greatest resurgence of cooperative development

since the 1920s. Despite the declining

number of farms and farmer cooperative members, significant growth is

coming from other areas, such as rural

Wisconsin co-op camp

focus of TV documentary

Mae Johnson of Superior, Wis., (right) holds a

photo from her youth, which was spent growing up

as part of a Finnish cooperative in Wisconsin. She

is featured on “Camp Co-op,” a documentary

about the history of cooperatives in Wisconsin that

aired on Wisconsin Public Television Feb. 21 and

24. The program marks the 50th anniversary of

Kamp Kenwood, a summer camp sponsored by the

Wisconsin Farmers Union that teaches kids how to

run co-ops. The program aired on the popular “Wisconsin Stories” series.

The program provides a glimpse into the lives of people who built the

state’s cooperative foundation. It also focuses on the self-proclaimed “Co-op

City” of Westby, home to one of the state’s oldest Norwegian dairy co-ops,

the role of co-ops in bringing electricity to rural Wisconsin and the state of

cooperatives in Wisconsin today. 

Impetus for the program came from the University of Wisconsin Center for

Cooperatives, which secured $100,000 in funding from the state historical

society for research and production of the program, which took six months.

Photo courtesy WPT TV 
Rural Cooperatives / March/April 2002 31

electric and telephone service, natural

food cooperatives and credit unions.

Today, they are marketing themselves

as “financial cooperatives,” even

though they are organized under 

different statutes. 

“They still share the democratic

control principles and are user owned

and controlled,” said Cropp. “Their

identification as cooperatives re-establishes a link that was long neglected.” 

The oldest cooperative, Mount

Horeb Farmers Co-op, still exists as

part of Premier Co- op. Eleven of the

309 original telephone cooperatives in

1912 still operate and serve more than

44,000 members. 

Today, 25 rural electric cooperatives provide electricity to almost

190,000 members and their families.

In 1938, 89 years after Anne Pickett

pooled her neighbors’ milk, a group

of Waukesha County farmers chipped

in $50 per cow to form Golden

Guernsey Dairy. Today, the brand is

marketed by Foremost Farms, one of

the regional dairy cooperatives which

together in 1999 generated $2 billion

in sales in Wisconsin. Good Earth

Co-op of Algoma, a food cooperative

incorporated in the summer of 2001,

is the newest entry.

“As these events suggest, cooperative history is dynamic and continues

to be written,” said Cropp. Copies of

the directory may be obtained from

the University of Wisconsin Center

for Cooperatives, Room 230 Taylor

Hall, 427 Lorch St., Madison, Wis.

53706. 

Soybean cooperatives on rise

Interest in soybean processing

cooperatives is on the rise, from

Kansas to Minnesota, and North

Carolina to Wisconsin. In some cases, producers are turning to soybeans

as a replacement for lost tobacco

markets. In others, animal feed and

oil for conversion to diesel fuel are

the goals. 

Jim Dunphy, a soybean specialist

with North Carolina State University,

helped a dozen Tar Heel grain farmers form Grain Growers Cooperative.

The impetus came from national

tobacco settlement funds. Small, thincoated Nato soybeans are popular in

certain areas in Japan. The hefty premiums they are willing to pay are

attracting grower interest, although

no contracts had been signed at the

time. Earl Hendrix, cooperative president, said farmers needed a number of

similar niche markets to replace lost

tobacco income. 

Minnesota Soybean Processors

Cooperative plans to build a 100,000-

bushels-per-day crushing plant at Brewster. If construction begins this summer,

production could start in 2003. The

plant will be managed by South Dakota

Soybean Processors, which operates a

successful plant at Volga. Since 1996, it

has paid more than $10 million in dividends to its members. 

In Wisconsin, a steering committee is using an updated 1998 feasibility study to explore development

of a similar facility. Wisconsin is

the only major soybean-producing

state that lacks a major processing

plant. Crushed soybeans there

would be used for livestock feed and

the oil would be converted to

biodiesel fuel.

At Grinnell, Kan., Co-Ag Cooperative is studying construction of a $1-

million plant to extrude 760,000

bushels of beans per year that could be

operational for the 2002 soybean harvest. Co-Ag supplies feed for hogs in

eastern Colorado and cattle and sheep

in northwest Kansas.

Swiss Valley Farms 

wins NMPF honors

Both the Swiss cheese and Web

site of Swiss Valley Farms, in Davenport, Iowa, were honored at the

annual meeting of the National Milk

Producers Federation. The cooperative’s wheel of Swiss Traditions Swiss

cheese was considered the most outstanding in the annual contest. In

addition, the Web site launched last

spring was rated tops in the communications competition.

New grain venture 

named Horizon Milling 

CHS Cooperatives and Cargill Inc.

have chosen Horizon Milling as the

name of their wheat-milling joint

venture. It will combine the capacity

of five CHS mills and 16 Cargill mills

to give the firm a leadership position

among U.S. millers. It will offer a

broader, more consistent and reliable

source of flour varieties. Cargill is the

managing partner.

Management Tip continued from page 21

Management reviewed the text and mock-ups, but

largely left the project to the author and designer, under

Ms. Brauner’s supervision. Layout and design were by Jenni Haas, free-lance designer of Blue Diamond’s member

magazine, Almond Facts, and annual report. A local printer

handled the presswork. A dozen case-bound copies and 4

thousand soft-cover copies were bound by a plant in the

northwest. 

The completed books were delivered a couple of weeks

before the annual meeting and readied for distribution.

Excerpts from the book text and photos were used in a historical display that was a highlight of the annual meeting, and

an important event for many growers.

Reaction: Since the annual meeting, co-op staff has been

talking with various news media about basing future stories

on the story of Blue Diamond. The book provides a tangible

focal point for such discussions. Interest in the co-op is

building, says Brauner, and she looks forward to long-term

public relations benefits from the project. ■
32 March/April 2002 / Rural Cooperatives Rural

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