Rural

COOPERA COOPERATIVES

USDA / Rural Development May/June 2004

Defending Your Turf Defending Your Turf

Why co-op legislative

efforts are so essential

SPECIAL SECTION

Organizations

serving co-ops

page 18
2 May/June 2004 / Rural Cooperatives

No man is an island, nor is any

cooperative. 

Regardless of what purposes cooperatives serve, they are all strengthened

— and the scope and impact of their

operations amplified — through a supporting network of private sector and

governmental organizations dedicated

to the belief that, through cooperative

businesses, there is nothing Americans

cannot achieve for themselves. 

More than 120 million people are

members of 48,000 cooperatives in

the United States alone. Worldwide,

cooperatives serve some 730 million

members. Those are numbers often

trumpeted each October during

Cooperative Month. But they should

be cited in speeches and articles

throughout the year to help communicate just how far-reaching the co-op

system of business has become.

Whether it is to process and market

their crops, to gain access to dependable

and affordable energy and telecommunications services, to secure credit or

housing, or for nearly any other service

or product under the sun, cooperatives

are delivering every minute of every day

for their members. This wouldn’t be

possible without an infrastructure of

supporting organizations that do everything from giving their member cooperatives legislative clout to providing

director training programs and educational materials needed to attract and

inspire the next generation of co-op

leaders and members. 

A special section of this issue, which

begins on page 18, provides an

overview of some of the major organizations supporting cooperatives and

highlights some of their recent accomplishments. To provide an idea of the

scope of these efforts, here are just a

few highlights from the special section:

• National Milk Producers Federation

is strengthening the dairy industry

through the Cooperatives Working

Together (CWT) program, a selfhelp effort to balance milk supply

and demand, and by proposing

changes to the dairy price support

program that will prevent farm-level

prices from dropping below $9.90

per hundredweight. 

• National Council of Farmer

Cooperatives is striving to improve

co-ops’ access to capital and is supporting legislation that would eliminate the third layer of taxes imposed

on farmer cooperative dividends.

• National Cooperative Business

Association has organized opposition

to a ruling that threatens to throw

the balance sheets of thousands of

co-ops into chaos by reclassifying

member equity as debt, and has

launched an initiative to expand the

role of co-ops in creating economic

opportunity in inner cities.

• National Rural Electric Cooperative

Association’s legislative and regulatory efforts are focusing on controlling

costs for consumers, protecting them

against market power abuse and anticompetitive behavior, and on preserving the co-op governance structure of its members. 

We’ve also provided an overview of

how USDA Rural Development is

helping to improve the quality of life

and create jobs in rural America, and

— in particular — the many ways its

Cooperatives and Rural Utilities

Programs help the nation’s farm and

utility co-op sectors. Also check out

the Newsline section of this issue for

several news items that describe more

than $500 million in USDA loans and

grants recently awarded (or soon to be

awarded) for rural electric, broadband

and renewable energy projects. 

Space didn’t permit us to list every

organization that has played a major

role in helping cooperatives. On the

agricultural front alone, the American

Farm Bureau Federation, National

Farmers Union and National Grange

have played key roles in helping establish and promote cooperatives. So do

numerous other ag commodity boards

and associations.

Likewise, virtually every arm of

USDA — the Farm Service Agency,

Natural Resources Conservation

Service’s RC&D committies and

Cooperative State Research, Education

and Extension Service, to name just a

few — in one way or another impact

farmer cooperatives. You can find out

more about these and any other USDA

agency or program through the

www.usda.gov website. We’ve also

included websites and other contact

information for every organization

included in the special section, and we

urge you to find out more about them. 

So, while “user owned, user controlled and user benefited” remains the

mantra of the nation’s family of cooperatives, let’s never forget that we’d be

a pretty dysfunctional family, providing

fewer benefits to fewer people, without

a solid infrastructure of supporting

organizations. 

Dan Campbell

Editor

COMMENTARY

The extended family
Rural Cooperatives / May/June 2004 3

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Building, 14th and Independence Avenue, SW,

Washington, D.C. 20250-9410, or call (202) 720-5964

(voice or TDD). USDA is an equal opportunity

provider and employer.

Ann Veneman, Secretary of Agriculture

Gilbert Gonzalez, Acting Under Secretary,

USDA Rural Development

John Rosso, Administrator, Rural BusinessCooperative Service

Pandor Hadjy, Acting Deputy Administrator,

USDA Rural Business-Cooperative Service

Dan Campbell, Editor

Vision Integrated Marketing/KOTA, Design

Have a cooperative-related question?

Call (202) 720-6483, or

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This publication was printed with vegetable oil-based ink.

Rural COOPERA COOPERATIVES

May/June 2004 Volume 71 Number 3

On the Cover:

A field of Red River Valley sugarbeets greet the new morning. American

Crystal Sugar Co. members increasingly look to the co-op’s legislative office to

help “defend their turf” in trade talks. Likewise, many of the co-op organizations featured in the special section of this magazine also tackle critical legislative issues for their member co-ops. Photo courtesy American Crystal Sugar Co.

p. 4

p. 11

p. 14

p. 18

FEATURES

4 Defending their turf

Growers see co-op’s legislative action as 

essential to future of nation’s sugar industry

By Dan Campbell

9 Co-op born of growers’ frustration with

processor’s lack of long-term outlook

11 USDA co-op development efforts 

support commercial farming in Ghana 

By John Dunn

14 Election and voting policies 

of agricultural cooperatives

By Bruce J. Reynolds

18 Special Section: 

Organization Serving Cooperatives

DEPARTMENTS

2 COMMENTARY

45 NEWSLINE

48 NEW USDA CO-OP PUBLICATIONS 

Includes: 

State Co-op Councils (Pg. 18);

CoBank (23); 

National Council of Farmer 

Cooperatives (24); 

National Cooperative Business 

Association (25); 

National Milk Producers 

Federation (26); 

National Association of 

Housing Cooperatives (26);

National Society of 

Accountants for 

Cooperatives (26); 

Farm Credit Council(28);

Cooperative Finance Corp. (29);

National Rural Electric 

Cooperative Association (30);

Federation of Southern 

Cooperatives (31); 

Rural Cooperative Development 

Centers (32); 

UW, KSU & NDSU Centers for 

Cooperatives (34); 

Cooperative Communicators 

Association (35); 

Association of Cooperative 

Educators (36); 

ACDI/VOCA (37); 

Credit Union National 

Association (39); 

National Telecommunications 

Cooperative Association (40);

National Cooperative Bank (41); 

USDA Rural Development (42).
4 May/June 2004 / Rural Cooperatives

By Dan Campbell, editor

e-mail: dan.campbell@usda.gov

f American farmers weren’t supposed to grow

sugarbeets, surely there would be no Red River

Valley — quite possibly the world’s most perfect garden for cultivating the crop. Not only

do sugarbeets love the black-clay soil of this

river valley that both divides and unites Minnesota and

North Dakota , but the rainfall is more than adequate in

most years to raise the crop without irrigation. And the cold

winters allow the crop to be piled outdoors and stored for up

to 200 days or more, creating a longer processing season that helps maximize

factory utilization. 

But the world is a fiercely competitive place when

it comes to production of

sugar and other sweeteners.

Indeed, some 110 nations

grow sugarbeets or sugarcane, and many of them

seek to export their surplus,

even if it means dumping

sugar at prices below the

cost of production in order

to “buy” market share.

About 25 percent of the

world’s sugar goes into foreign trade, and virtually

every producing nation

uses some kind of tradedistorting sugar subsidies to support their producers.

High fructose corn sweeteners also are taking an increasingly large slice of the nation’s sweetener pie (55 percent in

2000, up from 16 percent in 1970, according to USDA). And

artificial sweeteners also jockey for their place in the food

ingredient trade. 

So despite all of the Valley’s natural advantages, growers

here have their work cut out for them if they want to maintain their market share. About 55 to 60 percent of all sugar

produced in the United States, and 90 percent of all of

America’s beet sugar, is processed and marketed through

producer-owned cooperatives. In the Red River Valley, the

nation’s largest sugar co-op, American Crystal Sugar Co.,

just celebrated its 30th anniversary. 

The roots of the co-op go back to 1935, when area growers

began organizing the Red River Valley Sugarbeet Growers

Association, which ultimately purchased the privately owned

American Crystal in 1973. Today, the company markets about

18 percent of the nation’s sugar. It is often looked to as a role

model for new-generation co-ops and as a blueprint for how

farmers can buy a major processor (see sidebar). 

Other U.S. producer-owned sugarbeet processing co-ops

include: Minn-Dak Farmers

Cooperative, Southern

Minnesota Beet Sugar

Cooperative, Amalgamated

Sugar, Michigan Sugar and

Western Sugar Cooperative,

the latter two having been

formed in 2002 when growers acquired plants that

were formerly investorowned. 

Legislative actions seen

as crucial to industry’s

future 

Sugar producer Mark

Nyquist spent much of the

past winter in his farm shop

repairing and overhauling

cultivation and harvesting

equipment in preparation

for the 2004 growing season. Nyquist — whose father served

as American Crystal’s board chairman and grandfather was a

founding member of the board — has spent many another

long night in the farm office, preparing for this season by

pouring over the farm’s financial books, doing cost analysis

and budget projections, filing tax reports and doing all the

other paperwork which is now just as necessary as seed and

fertilizer to produce a crop. 

During the course of this season, Nyquist will consult

closely with an agronomist from the co-op to produce the

Defending their turf

Growers see co-op’s legislative action as 

essential to future of nation’s sugar industry 

I

“The world market and related political issues increasingly control our

destiny,” says Mark Nyquist (center), seen here doing maintenance on a

beet harvester. USDA photo by Dan Campbell 
Rural Cooperatives / May/June 2004

best crop he can — both in terms of tonnage and sugar content. When harvest season rolls around in mid-October, he’ll

also coordinate closely with the co-op regarding harvest timing and delivery. Nyquist says he takes pride in knowing the

co-op operates five efficient sugar processing plants up and

down the Valley, and that its joint marketing venture —

United Sugars — has an expert team of agents selling the

co-op’s sugar worldwide. 

Just as important as all those co-op functions, Nyquist

says, is American Crystal’s legislative effort. The United

States has been under intense pressure in trade negotiations

to open up the domestic market to more imported sugar.

American Crystal and other co-ops and industry trade organizations have had to go to a full-court press to make certain

that their industry’s position is represented in these talks.

The North American, Central American and Australian free

trade agreements have all been tracked closely in America’s

sugar-producing states.

Although more imported sugar is gradually being allowed

into the nation, the industry’s legislative efforts have been

generally successful in limiting these increases to manageable

levels. But Nyquist and his fellow growers say their co-op

and the industry must continue to make their voices heard. 

“One stroke of the pen in Washington, and it could

potentially eliminate the sugar industry in the Valley,”

Nyquist says while walking through one of his fields. “The

world market and related political issues increasingly control

our destiny,” adds

Nyquist, who spent several years after college as

a pit trader in the dog-eatdog world of the Chicago

Mercantile Exchange before

returning to take over the

family farm in 1996. He still

trades part time, mostly in

the winter, but sees the

farm and sugarbeets as

his future. 

Fast track deals a

major concern

David Kragnes,

who grows about

1,400 acres of sugarbeets, wheat and barley near Felton,

Minn., shares

Nyquist’s concerns.

“We’re worried that

we could be sacrificed

if we aren’t active legislatively,” says

Kragnes, a board member of both American

Crystal and United

Sugars. Fast-track trade

deals are of particular concern, he stresses, because if

approved, they can’t be

amended by Congress.

“In this battle, we want the

export subsidies [of foreign

nations] reduced before we

reduce our border protection,”

Kragnes says. Unlike grain, sugar

has a very finite shelf life. “Sugar

has a life-span of one year,” says

Kragnes, who, like Nyquist, was

born and raised on his family farm.

“After that, it turns into brick.”

Small countries produce sugar

under labor and environmental conditions that would never be tolerated

in the United States, Kragnes notes. 

The domestic industry currently

supplies 85 percent of the nation’s

sugar, with 15 percent imported. 

“By rationing up and down the level of

imports, the government has been able

to control the supply and demand and

therefore control market conditions,”

A real slice of Americana: fresh-baked pies and a pitcher of lemonade made with American Crystal sugar. The co-op used this photo in

a recent annual report to promote the wholesome goodness of real

sugar. Photos courtesy American Crystal Sugar Co.
6 May/June 2004 / Rural Cooperatives

says American Crystal President and

CEO James Horvath. “They have

done a pretty good job of doing that

over the years.” 

But in 2000, a glut, brought on by a

number of factors, forced the nation to

adopt a payment-in-kind (PIK) program — which American Crystal lobbied for — to remove excess

supply from the market. 

American Crystal employs a

full-time lobbyist, Kevin Price,

in Washington. Although

these days his home is in the

corridors of the Capitol and its

office buildings, this native of

the Red River Valley is equally

at home in the beet fields and

knows what’s at stake for

growers in the trade talks.

“We cannot sit back and wait

for things to fall in our lap,”

says David Berg, the co-op’s

vice president for operations.

“You have to find out what the

issues will be, propose solutions and then work like heck

to get it done.” 

The PIK program is a case

in point, Berg says. “Within two weeks

of the concept being floated, Kevin

and I were in the offices at USDA of

the people who administer the program.” With them was Earl Pomeroy,

North Dakota’s member of Congress,

who worked on the legislative authorization. “Our efforts helped make it

(the PIK) a reality. When we see

opportunity, we are not shy about

going out and getting it done. Not just

the co-op, but the whole industry benefits from our efforts.” 

In the Australian Free Trade talks

this past winter, the United States elected to totally exclude sugar, based on a

decision that Australia was a developed

country and therefore didn’t need any

increased access to the U.S. market.

“We were obviously very pleased with

that outcome and we believe that it

should become the template for future

trade deals,” says Horvath. 

One major concern on the international front is that if Mexico were to

switch from using sugar to high fructose corn sweeteners in its soft drinks

(as does the United States), it would

result in a sudden surge of sugar

imports — perhaps 2 million tons, or

20 percent of total U.S. consumption,

which would be allowed under

NAFTA, Horvath notes. 

“We are working toward a new

agreement that sets a specific amount

of sugar that Mexico can bring into the

United States and a specific amount of

high fructose corn syrup that can go

from the United States to Mexico,”

Horvath says. “The industries are relatively close to coming up with that

deal, from my perspective. This, of

course, will ultimately need to go to

each of the governments for negotiation and implementation.”

Sugar factories: use ‘em or lose ‘em

One major reason for so much government involvement in sugar production worldwide, Berg explains, is that

once a sugar factory shuts down, it

very seldom starts up again. The cost

of retrofitting a plant that has been

idled for even a few years — and the

toll that temperature and humidity can

take on a shuttered operation — make

it very unlikely it will reopen successfully.

“Therefore, most countries try very

hard to keep the revenue stable to

their growers so that they produce

enough to keep the plants operating

over the long term,” Berg says. To do

this, “the 14 largest sugar-producing

countries all intervene, in one way or

another, through interest rate subsidies, direct payments, tariffs, export

enhancements, etc. 

“Relying on foreign sugar

can work for a time, but when

prices spike upwards, your

consumers will pay through

the nose, if they can buy

sugar at all. Most people here

don’t know what they pay for

sugar because the price is

affordable and stable — so it’s

not an issue for most

Americans. That hasn’t always

been the case,” Berg says.

When the United States

becomes dependent on foreign suppliers, it can become

vulnerable: think oil or coffee.

The U.S. imports nearly all of

its coffee, and those prices

periodically spike and have

climbed steadily. “When coffee prices soar, people are

outraged; ‘How can they do that to

us?’ they ask.” But there’s not a lot

Americans can do about it, he notes.

Even though U.S. sugar policy has

maintained a stable supply at an affordable price, “the program keeps getting

beat up, because you look at the world

price for raw sugar and see it at six

cents a pound. Domestically, it’s around

21 cents a pound. How can we justify

that? Well, the average cost to produce

sugar worldwide is 18 cents a pound;

the average selling price for the past

five years has been 8 cents a pound.

You can’t sell a product long-term for

less than half the cost of production. At

least you can’t do it unless there are

subsidies going to the producers.” 

U.S. grain industry groups are often

proponents for free trade deals. So

U.S. trade negotiators have the unenviable position of making someone

angry regardless of their stance. Other

critics of U.S. sugar policy, including

the candy and bakery industries, say

American consumers would benefit

How U.S. sugar growers fare in future trade negotiations is a top

concern for American Crystal Sugar board member David Kragnes.

USDA photo by Dan Campbell 
Rural Cooperatives / May/June 2004 7

from lower food prices if the U.S.

market was open to more imported

sugar.

“But the only way sugar can sell at

such low prices is if you are getting a

government subsidy,” Berg maintains.

“Once a producing nation meets its

domestic sugar needs, they put the

surplus on the world market at whatever they can get for it, because

whatever they earn is gravy. It’s a

dump market that doesn’t reflect the

economics of producing it. If people

say they want 6-cent sugar, they must

realize that were it not

for the domestic sugar

supply, they would likely be paying 18 cents to

20 cents or possibly a

lot more.”

“The domestic price

in the United States is,

in fact, in the lowest

one-third of the world,”

Horvath says. “The

United States doesn’t

export any sugar,” he

stresses, and limits

domestic producers in

order to balance supply

and demand. “The

result is that every sugar

exporting country

would like nothing

more than to get a bigger chunk of the United

States market.”

To put the picture into perspective,

Horvath says the U.S. sugar market is

about 10 million tons, of which U.S.

growers produce 8.5 million tons. More

imported sugar, he says, would result in

lost sugarbeet acreage in America. 

“By taking away [sugarbeet]

acreage...there will be more corn

planted, more soybeans planted in this

particular area, creating an oversupply

there as well. It would result in lower

prices and in more deficiency payments. It is a serious problem.”

Co-op buys plants to 

maintain acreage base

As a result of the market glut in

2000 and 2001, the 2002 Farm Bill

reinstituted a marketing allotment system to better balance supply and

demand. In 2002, USDA set the allotment at 7.7 million tons, raising the

bar to 8.5 million tons in 2003.

“The [sugar portion] of the 2002

Farm Bill was designed to fix the oversupply problem,” Horvath says.

“Market allocations were established so

each of the companies in the United

States had the ability to market only a

certain amount of sugar.”

For American Crystal, that would

have meant cutting back acres by about

10 percent, which Horvath says would

have threatened the co-op’s ‘critical

mass.’ “We would have had to cut back

from 500,000 acres to 450,000 acres.

That would have increased our fixed

costs and driven down returns to our

grower-owners. So we had to look at

that as a serious situation and search

for ways to solve that.”

In part to help maintain its acreage

allotment, American Crystal in 2002

and in 2003 acquired four plants in

other parts of the nation: Moses Lake,

Wash., Sidney, Mont., Torrington,

Wyo., and Hereford, Texas. The

Torrington plant has been leased to the

new, Denver-based Western Sugar

Cooperative, while the plant in Sidney

is being operated under a wholly

owned subsidiary of American Crystal,

called Sidney Sugars Inc. The Texas

and Washington plants are being left

idle, with no plans to put them back

into production. 

Nyquist says the plant acquisitions

represent a solid business strategy. “I

support the cooperative’s aggressiveness in purchasing these other plants.

We’re not trying to push anyone out of

the market — we’re just defending our

turf. To do that, we need to acquire

these plants just to keep the same share

and acreage base.”

When the sugar

market took a dive in

2000, some investors

quickly fled and a number of plants were put

on the block. Some

other plants were

bought by producers

(such as Western Sugar

and Michigan Sugar).

“There isn’t much else

you can do with a sugar

factory; so some got

sold at fire-sale prices,”

Berg says. Since then,

the market has been

generally stable, with

producers earning reasonable returns. 

Kragnes says farmers, with their commitment to the long-range

future of their industry, make the ideal

party to own the processing and marketing operations. But he says he’s

worried that talk regarding possible

changes in the co-op model could

lessen grower control of the industry.

“The bedrock of American farm

cooperatives has always been, and must

continue to be, the Capper Volstead

Act,” which gives them the power to

jointly market their crops and products. “If you start messing with the

definition of a co-op, I fear you could

jeopardize Capper-Volstead,” Kragnes

continues. “I’m not happy with any

changes that allow large investors to

get their foot in the door and buy a

piece of our co-ops. Control follows

the money.” 

CEO James Horvath talks with growers in one of a series of "summer shop meetings" held around the Red River Valley each July. 

Photo courtesy American Crystal Sugar Co.
8 May/June 2004 / Rural Cooperatives

No option but

to remain on guard 

Giving up on the trade battle is not

an option for the U.S. sugar industry.

“It takes a lot of lobbying, and this coop has been — and will continue to be

— a strong advocate for its members

on the legislative front,” Kragnes says.

So has the American Sugarbeet

Growers Association, the Red River

Valley Sugarbeet Association and a

number of other farm industry groups.

With sugarbeets grown in 14 states,

Kragnes says the industry can muster

considerable clout in the halls of

Congress.

But much as farmers might like to

think otherwise, Nyquist says he does

not believe the average American 

consumer cares if their sugar is U.S.

grown or not. “They want good quality cereal, cake mix or whatever at the

most affordable price. If those products are made with sugar from Brazil

or Cuba, well...I’m not sure there is a

whole lot of loyalty there. I don’t

know that locally grown sugar can

command a premium.”

Nor do most consumers stop to

think what would be lost if the sugar

industry stopped providing jobs and

economic synergies that boost the

standard of living throughout the

Upper Midwest and other regions

where it is grown, he says.

The impact of losing sugar would

ripple far beyond the sugar industry if

beet farmers are forced to shift to

other crops, such as grains and potatoes. The University of Idaho did a

study in 2001 which projected that in

just Idaho, if the 200,000-plus acres of

sugarbeets were switched to potatoes,

growers of the latter crop would lose

$105 million annually. 

American Crystal alone has an

annual economic impact of over $1.5

billion in the communities where its

members and employees live and

work.

The multiplier effect of actual dollars

and jobs generated by the nation’s farm

economy is often estimated at a factor

of seven, and some have estimated that

20 percent of the nation’s workforce is

involved in the food and fiber system,

ranging from production through processing, distribution and retailing.

Nyquist says his basic outlook

remains “cautiously optimistic.” That

was not the case in 2000, when sugarbeet payments fell to $32-$36 per ton

and margins were near breakeven levels for most producers. “I was not very

optimistic then at all. There was real

cause for concern. 

“Despite all of our natural advantages, it is not easy to compete against

third world countries with labor costs

that are a small fraction of ours and no

environmental standards,” he says.

“We can’t go down to their standards,

and it’s awfully hard to bring them up

to ours. So through their co-ops,

growers must remain vigilant.” ■

American Crystal pumps $1.5 billion annually into the economy of the Red River Valley, where it operates five processing plants, including

this one in Moorhead, Minn. Photo courtesy American Crystal Sugar Co.
Rural Cooperatives / May/June 2004 9

Editor’s note: The following article is largely excerpted from “A Heritage of Growth,” which traces the history of American Crystal Sugar and the Red River Valley

Sugarbeet Growers Association.

Nothing frustrates a sugarbeet grower more than not

being able to deliver harvested beets to the processing

plant on a cool, dry autumn day. But there were a lot of

frustrated growers around the Red River Valley on such

days in the late 1960s and early 70s. That’s because the

Valley’s dominant processor – American Crystal Sugar,

then an investor-owned company – was not investing in

piling equipment needed to keep up with farmers, who

had made giant leaps in their ability to rapidly dig and

deliver sugarbeets. Virtually no maintenance

was being done on pilers during the offseason, which lead to frequent breakdowns

during harvest. 

Indeed, it appeared more and more

that “the company was being bled to

maximize short-term profits, without

making the type of critical capital

investments needed for the long-term

future of the industry,” says American

Crystal board member Dave Kragnes, who

grows beets and grain on his Felton, Minn., farm.

“The growers [including his father] could see that there

was money to be made if the plants were operated more

efficiently; truck drivers needed to be paid to drive, not

sit. When the company needed money, it simply cut

back on capital expenditures. The trust was milking the

company dry. The growers felt they could run it better. ”

The Red River Valley Sugarbeet Growers Association

even offered to pay for some new facilities to help speed

the harvest and stockpiling, but the company refused,

fearing that growers might then want a voice in how the

facilities were operated. In 1971, growers became more

worried when the company suddenly shut down its plant

in Chaska, Minn., rather than investing several million dollars to meet stricter air pollution standards. While earlier

plant closings had concerned growers, this one scared

them. The company was also threatening to cut back

acres, along with rumors of a factory closing in the valley.

In the face of these cutbacks, growers concluded

that they could only influence the company’s direction

from the inside. Al Bloomquist, the association’s executive vice president, learned that food giant Borden was

willing to sell 100,000 shares, or 9 percent, of American

Crystal’s common stock, for $2.3 million. Through the

purchase of those shares, they hoped to gain a voice in

the future direction of the company. Bloomquist

informed the company of the association’s intent to buy

the shares while simultaneously including a note that

asked whether the company’s board would entertain a

buyout offer based on book value for its facilities. 

During an industry meeting in Phoenix in March 1972,

the company indicated it would be interested in a sale,

although most officers and the directors had serious

doubts that the farmers could pull off such a deal. At

that time, the company’s book value was 66 percent

higher than its stock was trading for, hence ears

perked up when there was mention of a sale

at those terms. Bloomquist was told to

invite the growers’ executive committee to meet with the American Crystal board in Denver in one week.

If the idea of buying a sugar

company scared the growers, losing such an opportunity was

worse. So the committee unanimously decided to pursue the buyout.

Bloomquist may not have been universally loved by the growers, but he was well respected and known as a man of integrity who was not afraid

of big ideas. The growers also had faith in their attorney,

William Dosland, one of the Valley’s most respected

legal counsels. He advised the growers’ executive committee that the key to making a good deal was to hire the

right legal and financial professionals who could help

them through mountains of paperwork, including

prospectus and proxy statements, and through potentially rancorous negotiations with skilled corporate lawyers.

This they did, although the board had to swallow hard

before agreeing to spend $500,000 for such services. 

The law firm they hired quickly concluded that the

company was not doing as well as indicated by the generous dividends it was paying; they suspected the company was playing tricks to keep stockholders happy.

Uncovering the company’s true worth, they advised,

would not be easy. 

Undaunted, on March 8, the full 40-member association board voted 37-3 to pursue a deal. 

After meeting with the St. Paul Bank for Cooperatives,

it was decided the company should be operated as a

Co-op born of growers’ frustration with 

processor’s lack of long-term outlook 
10 May/June 2004 / Rural Cooperatives

cooperative if a deal could be reached. Not only were

commercial lenders not interested in offering long-term

financing, but a co-op offered tax advantages and liability protections that a for-profit business did not. The

cost was calculated at $60 million, plus $26 million more

to retire short and long-term loan obligations. The bank

wanted growers to come up with $20 million. 

One week after making the initial proposal, the

growers’ team flew to Denver to meet the company’s

board. American Crystal directors were impressed by

what the growers brought to the table and gave them

one month, until April 15, to raise the money. The growers then hired the Wall Street investment firm of Loeb

Rhodes to polish their offer and, at the bank’s insistence, hired a German company, BMA, to more closely

appraise American Crystal’s seven sugar factories.

BMA concluded that the factories were in better shape

than the growers thought, and could be operated as

they were. The Bank for Cooperatives issued a letter of

credit for $66 million for the purchase, and $30 million

more for seasonal operating loans. It said it was willing

to study further loans for capital improvements.

The growers were advised it would be best to form a

stock corporation to buy American Crystal, which in turn

would immediately be purchased by the co-op. But that

also necessitated bringing in an intermediate lender,

since the Bank for Co-ops could not finance a stock corporation. A consortium of four banks was forged to

finance the initial buyout, until the co-op took over. 

To finance the growers’ $20 million investment, the

association developed a plan to expand the Valley’s

beet acreage and required growers to invest $100 for

each acre of beets they raised. Total acreage base was

set at 200,000 – or 40,000 more than contracted for in

1972. Most growers supported the

plan, although some were unhappy

about having to pay for something

they previously got for free –a beet

contract. But Bloomquist countered

that a beet contract was never guaranteed as long as someone else

owned the company. 

Organized grower opposition circulated flyers saying it would be better to let American Crystal go broke,

or to ship their beets to processors outside the Valley.

The proponents’ education efforts stressed that the

buyout meant growers would own their beet contracts,

that they could vote in how the company was operated

and that they would share in any profits. Further, the

co-op would increase acreage and invest in plants for

the long term. 

In the end, hope of success spoke louder than fear

of failure. 

On April 10, 1973, 1,500 growers jammed into the

Grand Forks Armory to vote. Seventy percent of them

(1,065) voted in favor. 

The growers’ experts had to make sure there were

no unresolved liabilities or outstanding tax issues. After

a month of negotiating, during which the growers’ team

had flown 100,000 miles back and forth to Denver, a

deal was approved pending completion of financial

arrangements and approval by American Crystal’s

shareholders.

Financing for growers’ still hinged on the cooperation of small, local banks and production credit associations. In the end, nearly 60 Valley banks and PCAs

loaned money to cover the growers’ investment. 

Company shareholders overwhelmingly approved

the sale on Jan. 23, 1973. On Feb. 21, Crystal Growers

Corp. paid $86 million, then merged into American Crystal and ceased to exist as a corporate entity.

Later that night, a joint celebration dinner was held

at Denver’s Brown Palace hotel. Bloomquist recalls

that several company directors told him they had never

even been in the Red River Valley, nor ever seen a sugarbeet. Most said they had doubted the farmers could

pull off the deal. “You really showed us

something” one said to Bloomquist. 

The transition to a co-op was completed on June 14, 1973, and – after 74

years of being headquartered in Denver or New York City – American Crystal had truly found a home in the Red

River Valley. ■

In the end, 

hope of success 

spoke louder than

fear of failure. 
Rural Cooperatives / May/June 2004 11

By John R. Dunn, Director

Co-op Resources Management Division

USDA Rural Development

ince 2000, the

Cooperatives Program of

USDA Rural

Development has been

working in

Ghana to build westernstyle cooperatives that

help Ghanaian farmers

successfully market their

farm products. The vital

work in this poor, West

African nation is carried

out under the banner of

the Consultative

Committee on

Agriculture and Rural

Development (CCARD).

CCARD is a formal, government-to-government

relationship between

USDA and the Ghana

Ministry of Food and

Agriculture (MOFA). 

The purpose of the

Ghana Cooperative project is to extend western

cooperative models into a

Ghanaian setting to help

farmers there transition to

a more commercial level

of food production. The

project operates with a

two-pronged strategy of

direct advisory assistance

and training which targets

existing cooperatives

and intervenes with

Ghanaian institutions

that can help sustain the adoption of

western cooperative models over the

long haul.

CCARD conducts a series of joint

activities that serve the agricultural and

trade interests of both nations. USDA

agencies with active involvement in

CCARD include: Rural Development;

Cooperative Research, Education and

Extension Service, Foreign Agricultural Service; Natural Resources Conservation Service; and the

Agricultural Marketing

Service. Activities conducted by CCARD are funded

primarily by the U.S.

Agency for International

Development (USAID). 

The Ghana Cooperative

Assistance project, managed

by the Cooperatives

Program of USDA Rural

Development, was initially

funded under USAID’s

African Trade and

Investment Program

(ATRIP), but has since been

adopted by USAID’s mission in Ghana. The ATRIPfunded project covered work

both in Senegal (in partnership with the Federation of

Southern Cooperatives) and

in Ghana (in partnership

with OIC International).

Current efforts focus exclusively in Ghana and parallel

Rural Development’s

Nigeria cooperative development project (see Rural

Cooperatives, Jan./Feb. 2004

issue). 

USDA co-op development

efforts support commercial

farming in Ghana 

S

Pineapples are inspected and packed for the export market at the

Farmapine Ghana Ltd. Co-op. Top: Rice is harvested by members of

Dawhenya cooperative, which is helping members sell higher value,

milled rice. USDA photos by John Dunn and Tracey Kennedy 
12 May/June 2004 / Rural Cooperatives

Capacity building at 

Ghana Cooperative College

The Ghana Cooperative College is

a small institution in Kumasi, the

Ashanti region capital. It is charged

with training managers and directors

of Ghana’s cooperative system in basic

cooperative principles and business

skills. This college is extremely lacking

in resources and was sliding into

decline, a result of diminishing public

funding and, more significantly, of

reliance on the teaching of outdated

and ineffective top-down models of

cooperative enterprise. Reform and

rejuvenation of the Cooperative

College became one of the centerpiece

projects under CCARD. 

As a first step, former USDA

Cooperatives Program staff member

Rosemary Mahoney was contracted to

conduct a curriculum review and

assessment for the college. This

resulted in a series of recommendations and strategies for improving the

overall conditions of the college. 

In February, one of the centerpiece

recommendations was implemented

with the opening of a new computertraining facility at the college. The

new computer lab will provide students

with basic training in business software

and IT methods essential to contemporary business operations. The opening

of the center represents a true publicprivate partnership. Partially funded by

USAID, with computer donations from

the National Cooperative Bank,

National Rural Telecommunications

Association and the Cooperative

Development Foundation, the center is

managed by volunteers of the U.S

Peace Corps.

Future activity will include staff

development, planning, and cooperative course designs, to be done in partnership with the Cooperative Center

at the University of Wisconsin. 

Cooperatives provide

technical assistance

Rural Development’s Cooperatives

Program contracted with OIC

International, a Philadelphia-based

nonprofit organization, to provide the

in-country presence for the project,

which worked directly with a set of

selected cooperative associations.

Project coordinator Ferdinand

Nyantakyi- Dapaah worked with

cooperative organizations identified as

“high potential” organizations. He

provided training and advisory assistance. The focus was on structural or

operating issues that were constraining the organizations from taking the

next necessary step toward business

success.

Farmapine Ghana Limited at

Nsawam, eastern region is a ‘farmerowned’ limited liability company

owned by five pineapple cooperative

societies (with an 80 percent share) and

two limited liability companies (with a

20 percent share) that received its original capitalization through a World

Bank loan. The cooperative’s goal was

to build an export- based marketing

program for Ghanaian pineapples.

Farmapine’s major challenges included

restructuring its finances to replace the

expiring World Bank loan, improving

product handling practices, and resolving significant schisms within the

membership base. 

The Cooperative Development project coordinator provided formal training to 320 members of the five pineapple cooperatives to help in the development and implementation of workable business plans, cooperative basic

principles and governance, and pineapple crown reduction to meet export

requirements. In addition, there is ongoing mediation to help the cooperative work through these issues and

move to a more sustainable footing.

Within two years of operation,

Farmapine Ghana Ltd. became the

second largest exporter of fresh

pineapples in Ghana.

Dawhenya Irrigation Cooperative

Rice Growers Society is an irrigatedrice cooperative composed of about 120

farmers, each farming 1-2 hectares of

rice. This cooperative, formed around a

Ghanaian government irrigation plan,

enabled farmers to produce high-quality

rice, but they lacked capacity to mill

more than about 10 percent of the

members’ production, meaning they

had to sell lower value, in-hull rice. 

The development project worked

with the cooperative to establish a

more formal business plan that provided the foundation for the co-op to

arrange milling services for all of its

Ghana Co-op College staff members try out computers at a new training center in Kumasi. 
Rural Cooperatives / May/June 2004 13

members’ crop. This basic, valueadded improvement produced a product farmers could sell for nearly twice

the value of their unprocessed rice.

Through the cooperative development

project, the members have also been

linked to a large- scale buyer,

Continental Commodity Trading Co.

This company provides inputs for

farmers on credit and buys the majority of the rice produced by these farmers, processes and packages it, then

markets the rice under the Ghana

Pride brand.

Cassava-starch project

has major potential 

A major poverty reduction initiative

under Ghana President J. A. Kufour

involves the creation of a starch-manufacturing industry to help Ghanaian

farmers increase income from their

cassava crop. Cassava, a root crop that

is a staple of Ghanaian diet, has historically been subject to considerable losses. President Kufour’s program is

intended to build 10 cassava-starch

production plants over a five-year period. They will sell commercial-grade

starch, primarily to European markets.

The first of these plants, the Ayensu

Starch Company (ASCo), established

at Bawjiase in the central region, was

formally commissioned by President

Kufour on Feb. 24. 

The cooperative development project is working with the Ghanaian

Ministry of Trade and Industry to

develop farmer cooperatives to supply

cassava root to the plants and, eventually, to take an ownership position.

Some 10,000 small farmers have been

organized into cooperative units to

support the initial plant of this

nationwide program. The grassroots,

democratic structures established for

these co-ops have facilitated production planning, input supply and technical assistance. Additionally, two new

farmer cooperatives are being organized for two new cassava-processing

plants for Eastern and Ashanti regions

this year. 

Many challenges remain

Business success is never guaranteed

for cooperatives, even in the most

advanced economies. The vulnerabilities and fragilities present within

economies of developing nations make

the cooperative development process

even more daunting. For example, in

spite of its significant gains, the survival of Dawhenya Irrigation

Cooperative Rice Society Ltd., is very

much in doubt. The situation is the

same for another cooperative targeted

for assistance, Weiji Irrigation

Cooperative Vegetable Growers

Society Ltd.

Significant changes in electricprice policies of the Ghanaian government have jeopardized the viability of

all agribusinesses tied to public irrigation projects. Many other challenges

will continue to face Ghanaian cooperatives. 

Other needs include: better transportation systems, more reliable utilities and communications systems, better post-harvest handling practices,

adoption of meaningful grades and

standards and modern processing and

packaging capacities. These are just

some of the needs against which

Ghanaian farmers must struggle to

realize a degree of the success of their

counterparts in the developed world.

Yet by addressing their problems

together, in cooperative businesses that

they own and in which they actively

participate, Ghanaian farmers are

learning the power of cooperation. ■

Often, when hearing of USDA’s efforts to help

cooperatives in developing nations, people ask

“why?” This is understandable. The answer is based

on both pragmatism — it helps us — and a humanitarian philosophy of helping others learn to support

themselves. 

Successful cooperatives will generate income for

farmers and directly contribute to economic growth.

Increased income will, eventually, lead to increased

demand for U.S. products. Stronger cooperative businesses in developing nations will also facilitate trade

between those cooperatives and U.S. trading partners. 

Activities of this sort — which improve the economic and social conditions in developing nations —

build permanent reservoirs of goodwill toward the

United States. The benefits of this can be far reaching. 

Finally, participatory democracy is a fundamental

principle of the cooperative form of business. In a time

of challenge such as this, what better “product” can

the United States export than democracy? ■

Why help Ghana’s cooperatives?

By addressing their

problems together,

in cooperative 

businesses that they

own and in which

they actively participate, Ghanaian

farmers are learning the power of

cooperation.
14 May/June 2004 / Rural Cooperatives

By Bruce J. Reynolds,

Economist

USDA Rural Development/RBS 

bruce.reynolds@usda.gov

Editor’s note: This article is the second in a

three-part series on selecting and compensating directors. The first article discussed

methods cooperatives use to select and 

nominate board candidates (see page 21 

of the November-December 2003 issue, 

on line at: www.rurdev.usda.gov/rbs/pub/

openmag.htm.). This second article examines election and member voting policies.

he critical trade-off in

cooperative voting policies is the need to establish sufficient voice for

members in electing their

directors, while at the same time providing for a certain amount of board

independence from disruptive member

pressures. Election and voting policies

are designed to choose directors who

will exercise leadership in reconciling

member interests and prioritizing goals

that will yield the most long-term benefits for membership as a whole.

Survey results of election and voting

policies show different ways that cooperatives have sought to establish leadership that both represents members

and achieves business success. The following six policies influence this balance: 

• board size in relation to 

membership; 

• term lengths;

• term limits;

• competitive elections; 

• outside directors;

• member voting power. 

Many of these policies have various

kinds of interrelations. For example, in

the first policy issue, the number of

board seats is influenced by the size of

the membership. As another example,

cooperatives with the longest director

terms more often apply limits on the

number of times a director can be reelected. In addition, the much-debated

issue of member voting power centers

on whether larger producers should

have more votes than provided by a

one member-one vote policy. This

point was raised in an article about

preparing for the future in the NovDec 2003 Rural Cooperatives. A question for research is whether voting

method influences a tendency for

either relatively large or small farmers

to serve on cooperative boards of

directors. To help answer this question,

data were collected on the farm size of

directors in relation to the membership as a whole.

Board size

Table 1 reports the number of

director seats on cooperative boards,

sorted by different membership size

intervals. Seven-member boards are

the most popular board size, with nine

and five-member boards being the next

most popular sizes. Only in the largest

membership size interval, 3,000 and

above, are nine directors the most frequent board size (occurring in 16 out

of 80 cooperatives). 

Election and voting policies 

of agricultural cooperatives 

T

Table 1: Size of board of directors for 437 respondent cooperatives in

2003, expressed as a percent of membership size intervals and in total.

Number of directors on respondent boards

Members 5 7 9 : 6&8 >9 : Cooperatives

<800 13% 52% 19% : 6% 10% : 144

800-1,499 10% 35% 23% : 10% 22% : 107

1,500-2,999 8% 26% 25% : 6% 35% : 106

>3,000 9% 17% 20% : 15% 39% : 80

Total 11% 35% 22% : 8% 24% : 437 

Election and voting

policies are designed

to choose directors who

will exercise leadership in reconciling

member interests and

prioritizing goals... 
Rural Cooperatives / May/June 2004 15

As membership size increases, so

does the frequency of boards with

more than nine directors (see column

>9, table 1). For boards that exceed

nine directors, no particular board size

predominates, being widely dispersed

in the range from 10 to 51 directors.

But the fact that nine directors is the

median for co-ops with 1,500 or more

members shows that large organizations also tend to restrain the size of

their boards. 

Table 2 reports the data for survey

respondents that have only at-large

directors (no districts), and for those

with districts. There were 145 respondents without districts and 292 with

districts. The latter generally have

larger boards, with a much higher percent having more than nine directors,

while 48 percent of cooperatives without districts have a board size of 7

directors. Another distinction, though

not reported in Table 2, is cooperatives

with membership districts where members, or delegates, elect only the director for their district (and perhaps one

or two at-large directors), vs. those

where directors are elected by district,

but all members get to vote for all

directors, regardless of which district

they live in. 

Term lengths

Length of board terms varied

between one to seven years, with three

years being the overwhelmingly popular choice. The survey results for this

question are reported in table 3. The

seven cooperatives with seven-year

terms are all in Tennessee, suggesting

that at the time these cooperatives

organized there, the state incorporation statute may have specified that

particular term length. 

Term limits

Limits on the number of consecutive

times directors can serve (term limits)

are used by 154 cooperatives (35 percent), while 281 (65 percent) have no

limits on consecutive terms (based on

435 responses). Term limits are now

more frequent than in the past, as indicated by comparison with the 1949 survey.1 In that survey, 76 cooperatives 

(8 percent) had term limits, while 827

cooperatives (92 percent) let incumbents run for election to board seats for

an unlimited number of terms. 

Furthermore, out of 31 respondents

with term lengths of one or two years

(those in the first two columns of table

3), none have term limits. This seems

only practical, since the incumbents

have to run for election so frequently.

Three of the seven respondents having

a seven-year term prohibit directors

from running for a second term, but

the other four have no term limits. 

Of the 154 cooperatives reporting

the use of term limits, 149 also reported the maximum number of consecutive terms directors may serve. Four of

these respondents prohibit election to

consecutive board terms, i.e., a oneterm limit. Table 4 reports the number

of respondents with term limits. In

each of six instances where co-ops limit

directors to five or six consecutive

terms, the term length is three years.

Many cooperatives allow members who

have reached the limit on consecutive

terms to run again after they have been

off the board for one term. 

Competitive elections

Many democratic organizations,

including some cooperatives, have

nominating committees that follow the

recommendations of Robert’s Rules of

Order in submitting only one candidate for each board vacancy.2 However,

cooperatives have traditionally been

advised to run more than one candidate per seat, usually by encouraging

open and flexible processes for nominating candidates.3 About one-third

(148) of respondent cooperatives

require that at least two candidates run

for each board seat.

Table 2: Size of board of directors for 437 co-ops surveyed in 2003,

expressed as a percent of co-ops without districts and with districts.

Number of directors on the boards

Cooperatives 5 7 9 : 6&8 >9

Without districts 17% 48% 22% : 5% 8%

With districts 7% 29% 22% : 10% 32%

Total 11% 35% 22% : 8% 24%

Table 3: Length in years of an elected term on the board, reported by 434

cooperatives, 2003.

Term length (years) 1 2 3 4 5 6 7

Number of cooperatives 19 12 382 9 4 1 7

Table 4: Single term and consecutive terms that members may serve on

the board, reported by 149 cooperatives with term limits, 2003.

Number of terms 1 2 3 4 5 6

Number of cooperatives 4 17 90 32 5 1 
16 May/June 2004 / Rural Cooperatives

There is no practical reason for

nominating committees to limit their

selection and nomination to one candidate per seat. Robert’s Rules have for

more than a century been a useful procedural guide, but their applications

ought to be flexible. The rules have

influenced some organizations to adopt

governance policies that might be

impractical for many applied situations, as noted by one scholar.4

One survey respondent from a

cooperative without an opposing candidate requirement commented that it

still always has two candidates run for

board seats. Ten other respondents

commented that, although not

required, they still make extra efforts

to recruit second candidates, but do

not always succeed. 

Several respondents commented

that two opposing candidates are

preferable, but finding members to run

for the board is difficult. Another

respondent mentioned that the cooperative recently terminated the policy

of having at least two opposing candidates because “members got tired of

getting beat” when running against

incumbents.

Outside directors

One of the traditional requirements

for directors is that they are members

of the cooperative. Various objectives

can be accomplished by requiring

cooperative boards to exclusively consist of members, with member control

being especially important. Members

can also establish control when a

minority of non-members may serve on

a board, so long as member directors

can exercise a majority under all voting

and decision rules where more than a

simple majority might be required. 

In this survey, 18 cooperatives

reported having outside, or non-member, directors with the power to vote

on decisions. Two of the 18 cooperatives define their outside board members as “public directors,” while 16

cooperatives select outsiders to serve

from the general community of business leaders and professionals. Four of

the 16 had more than one seat on

their boards designated for outside

directors. 

An equally important trade-off is to

have a board that

can pursue independent deliberation,

and not simply

deliver mandates

from their supporters or districts.

Photo by Richard G. Biever, courtesy Indiana Statewide Association of RECs.
Rural Cooperatives / May/June 2004 17

Some respondents commented that

their bylaws permit outside directors,

but that they did not exercise that

authority. Others said they were studying the use of outside directors. In surveys completed by co-op managers,

several wrote that having one seat on

the board designated for a non-member with special business or professional experience would be very helpful to

management. 

Farm size and voting method 

Does a policy of one member-one

vote result in disproportionate influence by relatively small farmers? This

question can only be answered on a

case-by-case basis, but the composition

of boards in terms of relative farm size

is worth a look. The survey results

show the extent to which boards are

made up of the largest farmers in a

cooperative’s membership. There are

no presumed advantages or disadvantages of directors having either large or

small farms. Of course, the critical distinction is differences in patronage volume, and farm size is only an approximation. But above all, electing the best

directors possible is the key task. 

The issue of member voting power

is often debated under the assumption

that the one member-one vote procedure results in boards with under-representation for large farm operators

(large volume patrons). Some argue

that proportional voting corrects such

imbalance, and feel that this method is

used too infrequently. Out of the 379

survey responses on the relative farm

size of directors, only 27 have proportional voting. 

Table 5 reports the percent of directors in the four quartiles (the smallest

25% of members are in the 1st quartile). The percent of directors in the

largest and smallest halves for cooperatives with proportional voting and for

those with one member-one vote are

also reported in table 5. Even though

the size of the two comparative groups

is lopsided, it shows that proportional

voting resulted in more of the larger

producers being elected to boards of

directors. The 4th quartile of farm

operators by size held 37% of the

board seats in 27 proportional voting

cooperatives, in contrast to 26% in the

352 one member-one vote cooperatives. Still, most one member-one vote

cooperatives also prefer to elect directors from among the relatively largest

farmers in their membership. About

63% of one member-one vote cooperatives elect directors who are among

the largest half of farm operating size

in the membership. 

Policy by design

Designing policies for board elections and member voting can be a simple matter of adopting commonly

reported practices or implementing the

recommendations from manuals such

as Robert’s Rules. It can also be more

demanding when members take it upon

themselves to design a system that

reflects their values and, more specifically, try to balance attributes that

while creating some friction, can

induce more pressures for superior

leadership. Election and voting policies

usually try to offer members good

choices and enough influence from voting so that elected directors will represent their interests. But an equally

important trade-off is to have a board

that can pursue independent deliberation, and not simply deliver mandates

from their supporters or districts.

Another trade-off, discussed in the

article on selecting candidates, involves

the importance of election and voting

policies that support the development

of strong team-building on the board.

Yet, brought to an extreme, a cohesive

team can be complacent and unreceptive to new ideas that challenge the status quo. 

Election and voting policies used

most frequently are not necessarily the

best. That evaluation has to be made

in the context of each individual organization. When members are involved

with designing or revising their policies, a fresh and creative approach can

make the difference between the merely functional and the achievement of

excellence in the governance of cooperatives. 

1 Nelda Griffen, H. N. Weigandt and K. B.

Gardner, Selecting and Electing Directors of

Farmers’ Cooperatives. USDA/Farmer

Cooperative Service, General Report #14,

1955.

2 Henry M. Robert III, et al, Robert’s Rules of

Order. 10th edition, 2000, (1st edition, 1876) p.

419.

3 Helim H. Hulbert, David Volkin, and Nelda

Griffen, Bylaw Provisions for Selecting Directors

of Major Regional Farmer Cooperatives.

USDA/Farmer Cooperative Service, General

Report # 78, 1960, p. 12-13. 

4 Russell Hardin, Liberalism, Constitutionalism,

and Democracy. Oxford University Press, 1999,

p. 110.

Table 5: Percent of directors in farm size quartiles of the membership for

cooperatives with proportional voting and with one vote per member.

Proportional voting One member-one vote

(27 co-ops) (352 co-ops)

Percent Percent

1st quartile 9 12

2nd quartile 17 25

3rd quartile 37 37

4th quartile 37 26

100% 100%

Smallest half 26 37

Largest half 74 63

100% 100% 
18 May/June 2004 / Rural Cooperatives

By Pamela J. Karg

Editor’s note: Karg is a freelance journalist

based in Baraboo, Wis., with more than 20

years experience writing about cooperatives.

t started as a way to tackle issues swirling around

deregulation of the electric industry. But the

effort led to a merger

that has since become the organizational norm, rather than the exception,

for the nation’s state cooperative councils. As individual members and cooperatives change, America’s state cooperative councils have had to change

along with them to survive.

The trendsetter for broader-based

co-op councils was Wisconsin in the

late 1980s. Rod Nilsestuen, now the

state’s secretary of agriculture, then

headed the Wisconsin Federation of

Cooperatives (WFC), which had a primarily farm co-op membership base.

The Wisconsin Rural Electric

Cooperative Association (WRECA) sat

down to talk with WFC about working

together to educate legislators and others about electrical deregulation issues.

At that time, Wisconsin and California

were in a dead-heat to be the first to

deregulate. Each had proponents who

wanted to win that race.

“We knew each other,” Nilsestuen

explains of the relationship between

Wisconsin’s farm and electric co-op

associations. “Many rural electrics

were members of WFC. We had crossover membership where, for example,

a dairy farmer representative to WFC

might also be a rural electric representative to the state electric association.”

The net result of the meeting of the

two organizations was an interim management plan for the rural electric

association to reorganize and restructure, initially to ward off any fall-out

from deregulation, Nilsestuen says.

The management plan turned into a

coalition. That, in turn, led to a consolidation of office space and, eventually, a

merger of staff. 

Unbeknownst at the time, this joining of the state co-op farm and the

electric councils was the forerunner of

similar moves made by a number of

cooperative councils in other states,

which are broadening their membership to include farm and non-farm

cooperatives. 

A changing rural landscape

Cooperative service and trade associations, including state councils, have

been at the vortex of a changing rural

landscape. In agriculture, for example,

there are fewer, larger farming operations. In turn, there are fewer, yet larger farmer-owned cooperatives. Smaller

co-op organizations are consolidating

to better serve larger farming operations. 

Fewer cooperatives means fewer

dues-paying members in state co-op

councils. Simultaneously, technological

advances are making it possible for

people to communicate from opposite

sides of a state, the nation or even the

world just as though they were in the

same room.

Amid the multi-faceted business

changes, Wisconsin and Minnesota

farmers began talking about how their

state co-op councils could better serve

them. As a center of America’s dairy

industry, milk producers from both

states had been working together

through cooperatives for much of the

past century. The two states also had

worked together in other organizations

to form an Upper Midwest powerhouse of cooperative activities. 

So it came as no surprise when

WFC and the Minnesota Association

of Cooperatives (MAC) announced an

alliance in 1999. Nilsestuen says the

history of working together helped the

two state councils grow together,

develop a cooperative research consortium and establish the Cooperative

Development Service. MAC, in particular, had been struggling in a number

of areas, and it was felt it could be

strengthened through the union with

Wisconsin. 

When the separate boards approved

the alliance, each organization kept its

separate identity, yet gained the single

membership benefits from shared programs that increase program efficiency

and effectiveness. The alliance is proving successful by coordinating education, dairy and communications programs, as well as certain administrative

functions, he observes. Each state continues to operate its own legislative

affairs office. 

“It proved to be a mechanism for

members to do things together that

they just couldn’t do separately,”

Nilsestuen says. 

Volunteers are essential 

“What keeps these organizations

going is the volunteer help they get,”

says James R. Barnett, past president

of the Mid-Atlantic Alliance of

Cooperatives (MAAC). “As individual

cooperatives merge and look at their

budgets, they try to reduce their costs

and decide to pay for only one membership where, prior to merger, they

would have had to pay for at least two

memberships. With fewer and fewer

Sharing the umbrella

State co-op councils broaden base to serve consolidating co-op sectors 

I
Rural Cooperatives / May/June 2004 19

employees and members, you have

less people to carry out programs.

The people you do have, have less

time to commit to helping put on

programs.”

Something had to give before all

was lost in the region. So the leaders

from 24 Pennsylvania- and Marylandbased cooperatives formed a joint

organization. They recognized they

would individually gain strength by

combining efforts to meet their specialized needs and interests.

“It’s not always easy,” admits

Barnett. “People with both organizations — some for 30 years — ask,

‘How can you let this go away? I

helped build this up — how can I let it

go?’” 

According to the MAAC leader,

cooperatives face many challenges: the

need to increase profitably and competitiveness; managing change; the

need to expand membership; hiring,

training and retaining employees.

Through MAAC, the member cooperatives are creating services that will

help them deal with a host of priorities

in today’s business world. The organization’s primary thrusts are education,

networking, encouraging appreciation

for co-ops and strengthening communities through cooperatives.

Pennsylvania and Maryland state

council directors initially served on the

new MAAC board. They fed the new

organization hundreds of ideas of what

programming to maintain to meet its

goals. The directors decided to take

the strengths of the founding councils

— including youth programs, young

cooperator workshops and director

training sessions — and parlay them

into the common ground on which to

build MAAC.

“We had been using the National

Institute on Cooperative Education

(NICE) as a carrot — an incentive —

to get youth to our programs,” Barnett

explains. “When they participated, we

had a process to select several youths

to attend NICE. With the reorganization of NICE [now held strictly as a

youth co-op education conference], we

looked at the programming, found

ways to keep our youth involved in the

new NICE program and we have some

success stories.”

Even though MAAC found fewer

youth with cooperative experience, it

decided to target groups for specialized

cooperative training. For example, 75

percent of last year’s state FFA officers

participated in a MAAC program.

Meanwhile, the director-training

workshops become more sophisticated

because, as farms and cooperatives

grow, so do oversight issues.

“When you make a decision any

more, it’s not just a million-dollar

question, but a $5 million or a $500

million question,” Barnett says. “So we

need to make sure our programs give

directors a better understanding of

financing, how to ask the right questions of general managers and how to

speak up at meetings to make themselves heard.” 

Gaining political power

through co-op unity 

Back in Wisconsin, the WFC-MAC

Alliance headed to the statehouse

rather than concentrating on the

schoolhouse. While communication

and education are important, the real

value comes from its political knowhow and perseverance.

“We are very ‘retail’ oriented,” says

Bill Oemichen, president and CEO of

the WFC-MAC

Alliance. He and the

Alliance were seemingly

made for each other.

Oemichen formerly

served as deputy commissioner of the

Minnesota Agriculture

Department and then as

Wisconsin’s top consumer protection official

at the Wisconsin

Department of

Agriculture, Trade and

Consumer Protection —

the agency Nilsestuen

now heads. The attorney

stepped into his Alliance leadership

role in 2002. That ‘retail’ orientation

means the Alliance continually listens

to its members to determine what they

expect of their trade association.

“What a lot of cooperatives are

telling us is that we need to function as

their trade association, representing

their legislative interests to the governor, legislatures, state and federal

administrations and agencies and to

Congress,” Oemichen says. “Our

members and leadership put forward

ideas that they want us to enact to

make the business environment easier

for cooperatives to operate.”

While many cooperatives are getting larger, it creates niches for smaller cooperatives to serve other members’ needs. The Alliance strives to

put forward legislation that helps

cooperatives regardless of size, services, sector and other distinguishing

features. Bringing together nearly 800

“Our members and leadership put forward ideas they want us to

enact to make the business environment easier for cooperatives

to operate in,” says Bill Oemichen, president of the MFC-MAC

Alliance. Photo by Pamela J. Karg

“What keeps these organizations going

is the volunteer help they get,” says

James Barnett past president of the

Mid-Atlantic Alliance of Cooperatives. 
20 May/June 2004 / Rural Cooperatives

separate cooperatives — some of them

competitors in the marketplace or the

countryside — is often a struggle,

Oemichen admits.

With its Scandinavian background,

Minnesotans are more government

activists. They’re very involved in

developing new agricultural cooperatives. By contrast, Wisconsin’s

German Lutheran and Catholic background gives it a more conservative

flavor. 

“But we’re learning from each

other, blending different attitudes and

engaging in healthy discussions that

are leading us to make more innovations,” he says. 

“Yet it’s efficient, because

Wisconsin and Minnesota cooperatives face similar challenges and they

realize the alliance can bring political

power to the lobbying process. In our

diversity, we’re finding our power,”

Oemichen says. “But our real power is

that unity, because we come together

as cooperatives to talk to political

leaders. That’s 2.9 million

Wisconsinites and 3.4 million

Minnesotans. That’s 20 percent of all

the members involved in the 48,000

cooperatives across the United States.

That’s pretty powerful.”

Legislative focus benefits all 

Dairy producer Edward Brooks also

sees great value in regional co-op organizations. Brooks, who milks 50 Brown

Swiss cows, serves as board chairman

of the Foremost Farms USA dairy

cooperative, headquartered in Baraboo,

Wis., and as chairman of WFC, with

offices in Madison, Wis. (The MAC

half of the Alliance is housed in St.

Paul, Minn., and it is chaired by Curt

Eischens of CHS Cooperative.)

Foremost ranks as the 26th largest

cooperative in America, according to

the National Cooperative Business

Association. But even large co-ops like

Foremost rely on trade associations

such as the WFC-MAC Alliance,

Brooks says.

“I don’t think Foremost would have

enough resources to cover all the different legislative issues that could

impact its business operations and its

members in the seven different states

where we have a presence,” Brooks

says. “The Alliance has people who can

follow all those issues. They know how

they all work together and they have

people who are respected in state capitals who can communicate our points

of view.”

The Alliance backs up legislative

positions presented by staff with its

members’ CEOs and directors, making

legislative contacts and testifying

before committees. These local cooperative leaders such as Brooks are on

the frontline, living within current legislation and ably equipped to provide

first-hand explanations for making new

laws, Oemichen says.

Brooks sees other advantages to

working together through the Alliance.

For example, when Wisconsin cooperatives pushed to develop rural group

health cooperatives, it could examine

and build on Minnesota’s experience.

Or, when Minnesota cooperative leaders across sectors wanted to delve into

some type of dairy investment tax

credit program, they could pull out the

best parts of a Wisconsin plan. 

“I think working together through

the Alliance has made us wiser and

allowed us to feed off of each other’s

experiences so that we’re all stronger

in the long run,” Brooks says.

Follow the member trail

Recently, Chuck Cruickshank

addressed Mid-Atlantic members

attending their first-ever annual meeting. The director of procurement and

member services for the Mid-Atlantic

region of Land O’Lakes, Cruickshank

talked about profitability, staying

competitive, keeping current and

meeting price expectations. Yet, he

cited survey results where 44 percent

of respondents worried whether their

co-op would be able to compete in

the future. 

With challenges of government

regulation, dwindling numbers, pressures to consolidate and a volatile

economy, Cruickshank said that if

cooperatives are to survive, they have

to move ahead of the customer, avoid

commodity pitfalls, demonstrate

strategic agility and form partnerships

with other cooperatives and with the

private sector.

If a cooperative is only as effective

and profitable as its individual members,

how do the changes taking place across

rural America then impact the organizations that serve the cooperatives?

Examine what individual members are

doing and figure out where the organization needs to head, advises Bruce

Anderson, professor of business management and marketing in the College

of Agriculture and Life Sciences at

Cornell University, Ithaca, N.Y.

Anderson also serves as an advisor to the

Northeast Cooperative Council

(NECC), which focuses on co-op education issues, and as a director of a purchasing cooperative owned by Cornell

sororities and fraternities. Strategic

planning is one of Anderson’s specialties. 

When farm numbers decreased in

New England, so did the number of

cooperatives. Like other regions, the

surviving farms and cooperatives were

larger. NECC responded by expanding

its membership area to include all

Northeastern states’ agricultural co-op

councils, extending to the New YorkPennsylvania border. 

“I think we realized that our interests are so diverse that we couldn’t get

consumer cooperatives or credit unions

involved with agricultural cooperatives,” Anderson says. “It could happen

in the future,” he speculates. “If the

financial pain ever gets high enough,

people do come together in the same

room and start to think about working

together. But, right now, things look

pretty good.”

There’s no doubt in his mind that

more consolidations will come —

whether across sectors, within industries or among state councils — as the

cooperative movement goes forward.

Whether they fill education voids or

form a political front, Anderson says

all cooperatives will still need to work

together through some type of trade

association to tackle issues unique to

their business structure. ■
Rural Cooperatives / May/June 2004 21

CALIFORNIA

Agricultural Council of California

Donald G. Gordon, Jr., President

1225 H Street

Sacramento, CA 95814-1910

Telephone: (916) 443-4887 

FAX: (916) 443-0601 

E-Mail Address: info@agcouncil.org 

Home Page: www.agcouncil.org

COLORADO

Colorado Cooperative Council, Inc.

Doyle Smith, Consultant

P.O. Box 506, 

Eaton, CO 80615

Telephone: (970) 454-4054 

FAX: (970) 454-4082 

E-Mail Address: 

DNSmith@coloradocoops.com

FLORIDA

Florida Council of Cooperatives

Perry Hansen, President

P.O. Box 287

Waverly, FL 33877

Telephone: (813) 439-3602 

FAX: (813) 439-2639 

GEORGIA

Georgia Cooperative Council, Inc.

Dick Schermerhorn, Executive Director

P.O. Box 447

Bethlehem, GA 30620

Telephone: (706) 542-0768 

FAX: (706) 542-0851 

E-Mail Address: 

dschermerhorn@agecon.usa.edu

Home Page:

www.agecon.uga.edu/~gacoops/

IDAHO

Idaho Cooperative Council, Inc.

Rick C. Waitley, Executive Director

55 SW 5th Avenue, Suite 100

Meridian, ID 83642-3030

Telephone: (208) 888-0988 

FAX: (208) 888-4586 

E-Mail Address: rwaitley@spro.net

ILLINOIS

Illinois Cooperative Coordinating

Committee

Jim Fraley, Secretary

1701 Towanda Avenue

Bloomington, IL 61701

Telephone: (309) 557-3109 

FAX: (309) 557-3729 

E-Mail Address: fraley@ilfb.org

IOWA

Iowa Institute for Cooperatives

David Holm, Executive Director

2515 Elwood Drive, Suite 104

Ames, IA 50010-8263

Telephone: (515) 292-2667 

FAX: (515) 292-1672 

E-Mail Address:

info@iowainstitute.coop 

Home Page: www.iacoops.org

KANSAS

Kansas Cooperative Council

(Vacant), Executive Vice President

816 SW Tyler, Suite 300

Topeka, KS 66612-1635

Telephone: (785) 233-4085 

FAX: (785) 233-1038 

E-Mail Address: 

council@KansasCo-op.coop

Home Page: www.kansasco-op.coop/

KENTUCKY

Kentucky Council of Cooperatives

Dr. Lionel Williamson, 

State Coordinator APES

306 Charles E. Barnhart Building

University of Kentucky

Lexington, KY 40546-0276

Telephone: (859) 257-1637 

FAX: (859) 323-1913 

E-Mail Address: lwilliam@uky.edu 

Home Page: www.uky.edu/Ag/

AgEcon/apes_2002prog.html

LOUISIANA

Louisiana Council of Farmer 

Cooperatives

Lenny Waguespack, Secretary

P.O. Box 67

St. James, LA 70086

Telephone: (225) 265-4056 

FAX: (225) 265-4060 

E-Mail Address:

Lenny@SLSCoop.com

MID-ATLANTIC

(Serving Maryland, Pennsylvania,

Delaware and New Jersey)

Mid-Atlantic Alliance of Cooperatives

Patricia E. Heuser, Executive Director

526 Brittany Drive

State College, PA 16803

Telephone: (814) 238-2401 

FAX: (814) 238-7051 

E-Mail Address: 

info@MAACooperatives.org

Home Page:

maacooperatives.org

MID-AMERICA 

COOPERATIVE COUNCIL

(Serving Illinois, Indiana, Michigan and

Ohio, some of which still maintain state

councils for some functions)

Martin Hall, Executive Director

P.O. Box 223

Caledonia, MI 49316

Telephone: (616) 891-5547

FAX: (616) 891-5598

E-Mail Address:

midamericacouncil@charter.net

Home Page: www.macc.coop

MINNESOTA

Minnesota Association of Cooperatives

Amy Fredregill, Managing Director

Blair Arcade West, Suite Y

400 Selby Avenue

St. Paul, MN 55102

Telephone: (651) 228-0213 

FAX: (651) 228-1184 

E-mail Address: 

amy.fredregill@wfcmac.coop 

Home Page: www.wfcmac.coop

MISSISSIPPI

Mississippi Council of Cooperatives

Harry Dendy, Secretary/Treasurer

P.O. Box 122

Clinton, MS

Telephone: (601) 925-5423

State or regional cooperative associations
22 May/June 2004 / Rural Cooperatives

MISSOURI

Missouri Institute of Cooperatives

Kristi Livingston, 

Education Coordinator

University of Missouri

125C Mumford Hall

Columbia, MO 65211-6200

Telephone: (573) 882-0140 

FAX: (573) 882-3958 

E-Mail Address: 

livingstonk@missouri.edu 

MONTANA

Montana Council of Cooperatives

Walter Coffman, Executive Secretary

2250 8th Lane NE

Dutton, MT 59433

Telephone: (406) 753-2296 

FAX: (406) 753-2296 

E-Mail Address: mtcocoop@3rivers.net 

NEBRASKA

Nebraska Cooperative Council

Robert C. Anderson, President

134 South 13th Street, Suite 503

Lincoln, NE 68508-1901

Telephone: (402) 475-6555 

FAX: (402) 475-4538 

E-Mail Address: boba@nebr.coop 

Home Page: www.nebr.coop

NORTH CAROLINA

Cooperative Council of 

North Carolina

Carlyle Teague, President

P.O. Box 10426

Raleigh, NC 27605

Telephone: (919) 834-5544 

FAX: (919) 828-9322 

E-Mail Address: carlylet@touchnc.net

NORTHEAST

Northeast Cooperative Council

Dept. of Applied Economics 

& Management

Brian Henehan, 

Senior Extension Assistant

Room 203, Warren Hall

Cornell University

Ithaca, NY 14853-7801

Telephone: (607) 255-8800 

FAX: (607) 255-9984 

E-Mail Address: bmh5@cornell.edu 

Home Page:

www.cooperative.aemcornell.edu

OKLAHOMA

Oklahoma Agricultural 

Cooperative Council

Mike Frickenschmidt, 

Executive Director

P.O. Box 251

Enid, OK 73702

Telephone: (580) 233-2115 

FAX: (580) 242-1030 

E-Mail Adress: mike@okagcoop.org 

Home Page: www.okagcoop.org

OREGON

Agricultural Cooperative Council of

Oregon

John H. McCulley, Executive

Secretary

P.O. Box 2042

Salem, OR 97308-2042

Telephone: (503) 370-7019 

FAX: (503) 587-8063 

E-Mail Address: assoc@wvi.com 

SOUTH CAROLINA

South Carolina Cooperative Council

Marie Stiles, CMP, Executive Director

151 Rocky Ridge Road

Leesville, SC 29070

Telephone: (803) 463-9706

FAX: (803) 604-9141 

E-Mail Address: marie_stiles@msc.com

SOUTH DAKOTA

South Dakota Association of 

Cooperatives

Brenda Forman, Executive Secretary

222 East Capitol Avenue, Suite 1

Pierre, SD 57501

Telephone: (605) 945-2548 

FAX: (605) 945-2269 

E-Mail Address: bforman@sbtc.net 

Home Page: www.sdvalueadded.coop

TENNESSEE

Tennessee Council of Cooperatives

Hubert King, General Maganer

P.O. Box 272

McMinnville, TN 37110

Telephone: (931) 473-3116 

FAX: (931) 473-4939 

TEXAS

Texas Agricultural 

Cooperative Council

Tommy Engleke, Executive 

Vice President

6210 Highway 290 East, Suite 300

Austin, TX 78723

Telephone: (512) 450-0555 

FAX: (512) 450-0655 

E-Mail Address: coop@mytacc.com 

Home Page: www.texas.coop

UTAH

Utah Council of Farmer Cooperatives

Christopher Falco, General Manager

8700 South 700 West

Sandy, UT 84070

Telephone: (801) 255-4228 

FAX: (801) 255-4678 

VIRGINIA

Virginia Council of Farmer 

Cooperatives, Inc.

Hugh Harris, Executive Secretary

P.O. Box 25202

Richmond, VA 23260-5202

Telephone: (804) 281-1452 

FAX: (804) 281-1141 

E-Mail Adress:

hugh.harris@sscoop.com

Home Page: www.vcfc.net 

WASHINGTON

Washington State Council of Farmer

Cooperatives

Dan Coyne, Executive Director

9103 Chestnut Hill Lane, SE

Olympia, WA 98513

Telephone: (360) 786-8180 

FAX: (360) 438-9170 

E-Mail Address: wscfc@wscfc.org 

Home Page: www.wscfc.org

WISCONSIN

Wisconsin Federation of Cooperatives

Bill Oemichen, President and CEO

131 West Wilson Street, Suite 400

Madison, WI 53703-3269

Telephone: (608) 258-4400 

FAX: (608) 258-4407 

E-Mail Address: 

bill.oemichen@wfcmac.coop 

Home Page: www.wfcmac.coop ■
Rural Cooperatives / May/June 2004 23

en years ago, none of the

2,500 U.S. cooperatives

and other rural businesses that make up

CoBank’s membership

connected electronically with the

Denver-based bank.

Today, nearly 1,000 of CoBank’s

customers manage their loan accounts

and company funds through the bank’s

online delivery platform, CoLink®,

with a growing number of them using

a more robust line of cash-management services: CoBank Cash Manager.

Online banking and cash management is just one way CoBank has

responded to its customers’ changing

business needs in recent years. Faced

with increasing consumer demands,

along with pressing regulatory, political, environmental and trade policy

issues, CoBank’s customers have

required greater resources and capabilities to compete in the marketplace. As

a major provider of financial products

and services to rural America, CoBank

has actively focused on anticipating its

customers’ changing needs and delivering the competitive advantages they

require to succeed in their businesses. 

“We are continually looking for ways

to deliver more value and adapt to our

customers’ needs and to the marketplace,” says Douglas D. Sims, CoBank’s

CEO. “Adaptability has been key to our

customers’ success and to CoBank’s.”

For example, CoBank, a federally

chartered bank in the Farm Credit

System (FCS), is part of a broad coalition of cooperatives and agricultural

associations that support legislation to

allow CoBank to finance a new generation of farmer-owned cooperatives.

Increasingly, CoBank’s cooperative customers are adjusting their corporate

structures so they can access new

sources of nonmember equity capital.

Some of these new structures create eligibility issues for organizations which

want to do business with CoBank.

“We believe these new cooperative

structures can be especially useful for

value-added farmer-owned cooperatives in certain situations,” Sims says.

“This legislation will continue to allow

the flow of capital to rural America.

Access to capital is key to any growing

and changing business. CoBank must

have the same ability to adapt as its

customers if the bank is going to succeed in today’s business environment.” 

In an increasingly competitive environment that has produced fewer, but

larger, cooperatives, building CoBank’s

financial capacity remains an ongoing

priority. In November 2003, CoBank

strengthened its capital position by

issuing $200 million in perpetual preferred stock under favorable market

conditions. This outside infusion of

capital — CoBank’s second in three

years — further positions the bank to

meet the growing needs of its customer-owners.

Building capacity extends beyond

financial transactions, such as preferred

stock issuance, to business expertise

and people. To help the bank continue

to fulfill all aspects of its mission of

serving U.S. agriculture and rural

America, CoBank has established complementary strategic partnerships and

alliances that broaden CoBank’s access

to capital, products and services. Some

of these partners are Farm Credit

System banks and associations; others

are well-known commercial banks or

international correspondent banks

around the globe. This network helps

CoBank bring billions of dollars in

loan capital to CoBank’s customers,

deliver cash management services to

rural America, and finance $200 million in ag exports sales monthly.

In addition, in early 2004, CoBank

increased its ownership stake in Farm

Credit Leasing Services Corporation

(FCL) from 82 percent to 100 percent. As a wholly owned subsidiary,

FCL strengthens the bank’s ability to

deliver on its value proposition of

bringing market-competitive leasing

services to rural America. To reach

such a wide market, FCL will partner

with Farm Credit associations to

ensure that the leasing needs of their

customers are met.

In a post-Enron age shaped by the

Sarbanes-Oxley Act, CoBank has furthered its long-standing commitment to

good governance and transparent disclosure practices. A special restructuring

committee of the bank’s board of directors is developing recommendations to

enhance CoBank’s governance. One

result is likely to be a reduction in size

of CoBank’s board, which now numbers

26 directors. The committee is also

considering the need for additional outside or independent directors, and for

increased attention to the qualifications

of future board candidates. 

For the past five years, CoBank

shareholders have received an average

of $125 million per year in cash

patronage as a result of their investment in the bank. ” 

“It’s balancing the right combination

of so many things,” Sims emphasizes.

“It’s serving your customers’ needs better than anyone else, employing prudent risk management practices, controlling expenses, improving business

processes, strengthening your financial

capacity, and maintaining the right

strategic partnerships.” 

With $31 billion in assets and $2.8

billion in capital, CoBank has built a

strong cooperative bank for rural

America. But as CoBank’s CEO notes,

“The job is never done.”

Contact information: 

website: www.cobank.com, phone 

1-800-547-8072; address: 5500 S.

Quebec St., Greenwood Village, Colo.

80111. CEO: Douglas D. Sims;

President and COO: Robert B. Engel;

Board Chairman: J. Roy Orton,

President, Orton Farms, Ripley, N.Y. ■

CoBank keeps pace with co-ops’ changing needs

T
24 May/June 2004 / Rural Cooperatives

ince 1929, the National

Council of Farmer

Cooperatives (NCFC)

has been the national

association representing

America’s farmer cooperatives. There

are nearly 3,000 farmer cooperatives

across the United States whose membership includes a majority of our

nation’s more than 2 million farmers. 

NCFC ensures that farmer cooperatives have a strong and effective

voice in addressing public policy

issues at the national level. It synthesizes a wealth of information to keep

members current on antitrust and tax

legislation and other legal issues, as

well as agriculture, trade, energy,

transportation and environmental policy. It also tracks and analyzes economic trends. 

A member-led committee system

forms the basis for NCFC’s policy

direction. Among these committees

are: The Legal, Tax and Accounting

Committee — through its subcommittees and task forces, it provides NCFC

with policy guidance in the areas of

law, cooperative accounting and

finance and tax policy. The

Government and Public Affairs

Committee — identifies the national

public policy issues affecting farmer

cooperative businesses and their members and develops, with NCFC staff,

strategies for addressing these issues. 

The Cooperative Education

Committee — plans the director’s

education conference held in conjunction with the NCFC Annual Meeting,

which gives the farmer directors of

NCFC members the opportunity to

come together and address issues of

cooperative governance, board responsibilities and the changing nature of

the food and fiber marketplace.

NCFC has a proven track record of

effectively communicating, through its

close working relationships, the interests of its members to Administration

officials and members of Congress,

including the Congressional Farmer

Cooperative Caucus. 

Recent issues on which NCFC has

taken a lead role include:

• Access to equity capital — As

farmer cooperatives must compete

in a rapidly changing marketplace,

one of the greatest challenges faced

by farmer cooperatives is access to

the equity capital necessary to modernize, expand and take advantage

of new market opportunities.

NCFC strongly supported introduction of legislation in both the House

and the Senate to eliminate the

third layer of tax imposed on farmer

cooperative dividends paid on capital stock under the Dividend

Allocation Rule. This discriminatory tax structure (regular corporate

dividends are taxed only twice)

unfairly limits the ability of cooperatives to raise equity capital and

reduces patronage paid to a cooperative’s farmer members.

• Addressing changes to cooperative laws — A number of states

have either changed or are planning

to change their cooperative laws to

allow outside investment in farmer

cooperatives as a means of raising

equity capital. Through its LTA

Committee, NCFC has carefully

monitored these developments, and

is looking at how such changes may

affect federal policies and programs.

In particular, NCFC has been

active in efforts to ensure that these

new generation cooperatives will

continue to have access to a competitive source of credit from

CoBank.

• Strengthening USDA programs

for cooperatives — NCFC was

instrumental in ensuring that farmer

cooperatives have the ability to participate in USDA programs, including: the commodity purchase program, export programs, Value Added

Producer Grants, 2002 Farm Bill

conservation programs and the

Business and Industry Loan program. NCFC continues to work to

ensure sufficient funding for these

programs and continued eligibility

for farmer cooperatives. 

• Interaction with policy makers —

The annual NCFC Washington

Conference brings farmer cooperative directors, CEOs and senior

management to Washington help

further the policy interests of farmer

cooperatives. Attendees meet with

top policy makers from Congress

and the Administration to help put a

farmer’s face on cooperatives for

these officials.

Contact Information: Web site:

http://www.ncfc.org. Telephone: (202)

626-8700. Facsimile: (202) 737-6430.

address: 50 F Street, N.W., Suite 900,

Washington, DC 20001. President &

CEO: Jean Marie Peltier; Board

Chairman: John E. Gherty, President

& CEO Land O’ Lakes Inc. ■

NCFC champions issues crucial to ag co-ops 

S

Agriculture Secretary Ann Veneman addresses an NCFC meeting in Washington. NCFC’s primary mission is to make sure farmer co-ops have a strong voice at the national level on public policy issues. USDA Photo by Dan Campbell
Rural Cooperatives / May/June 2004 25

he National Cooperative

Business Association

(NCBA) is a national

membership organization

representing cooperatives

of all types and in all industries. Its

members operate in areas including

agricultural supply and marketing, childcare, energy, financial services, health

care, housing, insurance, telecommunications, purchasing and shared services,

and food distribution and retailing.

Through its education, co-op development, public policy and international development programs, NCBA

helps co-ops compete in a changing

economic and political environment. It

also provides a strong, unified voice for

co-ops on Capitol Hill.

Founded in 1916, the National

Cooperative Business Association was

known as the Cooperative League of

the USA until 1985. It was the first

national organization for cooperatives.

Although NCBA’s name has changed

over the years, its primary mission

never has. For nearly 90 years it has

been dedicated to developing, advancing and protecting cooperatives. 

In the United States, NCBA has

played a key role in creating many new

self-help organizations to support the

cooperative sector. It helped form

North American Students of

Cooperation in 1946, the National

Association of Housing Cooperatives

in 1950, Parent Cooperative

Preschools International in 1960,

Cooperative Business International in

1984, and both Cooperation Works!

and the Cooperative Grocers

Information Network in 1999. In the

1970s, NCBA lobbied Congress to

create the federally chartered National

Cooperative Bank. 

In the 1990s, NCBA played a leading role in convincing Congress to

establish the USDA’s Rural Cooperative Development Grants program as

a new source of funding for cooperatives in rural areas. The program has

since provided more than $35 million

to a network of centers nationwide that

help develop cooperatives that enhance

farmers’ income and boost rural

economies. Today, NCBA remains a

strong advocate for increased funding

for the program. 

In 2000, NCBA brought co-ops to

the cutting edge of technology by winning approval for a new top-level

Internet domain exclusively for cooperatives. The new domain, .coop, joins

.com and .org at the end of web and email addresses. The .coop registry,

launched in January 2002, has registered more than 8,000 .coop Internet

addresses. 

Over the past half century, NCBA

has also played a prominent role in

making cooperatives a key component

of international development policy.

In 1944, it formed the Freedom Fund

to help cooperatives recover in wartorn Europe. The following year, it

played an integral role in creating the

Cooperative for American

Remittances to Europe, which provided economic relief to war-torn

Europe. Today we all know this organization as CARE. 

Since the 1950s, in partnership with

the U.S. Agency for International

Development, NCBA’s CLUSA

International Program has managed

more than 200 long-term international

development projects in 53 countries. 

Today, NCBA is using its development expertise to help troubled inner

cities. Its new Urban Cooperative

Development Initiative seeks to expand

the role of cooperatives in creating

economic opportunity in inner cities,

both through self-help and legislative

solutions.

As it looks to the future, NCBA

continues to address the challenges

facing cooperatives and to identify

solutions that will help co-ops overcome those challenges. Its current

agenda includes countering efforts to

limit or repeal cooperative tax exemptions and studying the conversion of

co-ops to other business structures. In

addition, in recent months, NCBA has

organized opposition to a ruling by a

national accounting standards board

that threatens to throw the balance

sheets of thousands of co-ops into

chaos by reclassifying member equity

as debt. 

With these and other issues in

mind, in early 2004 the NCBA board

approved formation of a Cooperative

Tax and Finance Council that will

focus on key cross-sector legal, financial and tax issues. 

Contact information: website:

www.ncba.coop; Phone: (202) 638-6222.

Address: 1401 New York Ave. NW,

Suite 1100, Washington, D.C. 20005.

President and CEO: Paul Hazen; Board

Chair: Ann Hoyt. ■

NCBA helps co-ops compete in time of change

T

Richard Dines, NCBA’s director of co-op development, testifies before the House Financial

Services Subcommittee. Photo by Robert Visser/Photopress Washington
he National Society of

Accountants for Cooperatives (NSAC) is a professional society of 2,000

accountants, attorneys,

financial officers, bankers and others

actively involved in the financial planning and management of cooperative

businesses. NSAC strives to enhance

the professional performance of its

members in their service to cooperatives by providing information, education and training on issues affecting

cooperative management, accounting,

taxation and finance. NSAC acts as a

technical representative for cooperatives in formulating accounting principles and auditing standards.

Since its formation in 1936, NSAC

has sponsored an annual meeting and

tax seminar. The annual meeting provides a forum for addresses by, and discussions with, recognized experts in

accounting, taxation, finance, management, and government. The tax seminar features concurrent sessions for

varying interests and experience levels.

he National Milk

Producers Federation

(NMPF) represents dairy

marketing cooperatives

throughout the United

States and is the “granddad” of commodity organizations, formed in 1916.

Soon after formation, NMPF formalized and focused efforts of several

dairy leaders to secure passage of the

Capper-Volstead Act, the “Magna

Carta” of farmer cooperatives. This

essential legislation provides a limited

exemption from anti-trust laws, allowing farmers and associations of farmers

to lawfully act together to market their

commodities. 

NMPF continues to provide the

forum for dairy-farmer involvement in

the formation of national public policy.

The federation, headquartered in

Arlington, Va., provides dairy farmers

and their cooperatives an organization

to develop policy positions and longrange objectives. These positions are

represented to Congress, executive

agencies and regulatory bodies affecting the dairy industry. 

NMPF tries to maintain and improve

the economic well-being of dairy farmers and their cooperatives and to assure

consumers an adequate supply of wholesome milk and dairy products. A majority of NMPF’s voting delegates, board of

directors and executive committee

members are active dairy farmers.

Federation activities focus on legislative and regulatory actions concerning federal milk marketing orders, the

dairy price support program, product

standards and quality programs, international trade, child nutrition programs, animal health, and food safety.

A few of NMPF’s major accomplishments in the past year

include:

• Creating a unique new

milk supply-and-demand

balancing program,

Cooperatives Working

Together, to help

improve low producer

prices;

• Working to strengthen

the dairy price support

program by proposing

changes that will prevent the

farm-level price from dropping

below $9.90/cwt.;

• Gathering more support for legislation restricting the imports of Milk

Protein Concentrate (MPC) and

Casein;

• Developing a new dairy proteins

program to encourage the production of a domestic supply of Milk

Protein Concentrate;

• Helping to ensure that mad cow disease in the United States does not

adversely affect dairy operators;

• Seeking the best-possible treatment

of the U.S. dairy production sector

as the White House negotiates trade

deals within the World Trade

Organization, Australia, Chile and

Central America.

Numerous information services of

the federation are designed to help

interpret the dairy industry to government leaders, the media and various public audiences, plus keep

dairy farmers informed of

federal actions affecting

them. A biweekly newsletter, “News for Dairy Coops,” reports on congressional and regulatory

developments and federal

administrative action. An

annual booklet, “Dairy

Producer Highlights,” contains

a wide variety of data about milk

production, purchases, utilization and

related statistics.

“The Regulatory Register” and

“Import Watch” are regular newsletters that cover key areas of interest to

the dairy industry.

Contact information: website:

www.nmpf.org; phone: (703) 243-6111;

address: 2101 Wilson Boulevard, Suite

400, Arlington, Va. 22201. President

and CEO: Jerry Kozak. BoardChairman: Charles Beckendorf (DFA). 

■

26 May/June 2004 / Rural Cooperatives

NMPF tackles tough issues for dairy co-ops

T

T

NSAC: Making sure co-op numbers add up right
Rural Cooperatives / May/June 2004 27

Each of NSAC's 12 chapters sponsor

an annual technical session and tax

seminar. All the programs offer continuing professional education credits to

participants, as do the NSAC Audit

and Accounting (A&A) Seminars. The

basic course targets accountants and

accounting employees of cooperatives

and public accounting firms who have

limited experience in the field. The

advanced course was designed for the

experienced cooperative accountant.

NSAC publishes a quarterly magazine, The Cooperative Accountant, which

furnishes members with timely information on accounting, tax and miscellaneous financial and economic topics

about co-ops and their patrons. 

NSAC is dedicated to ongoing

research, seeking solutions to problems

unique to cooperatives. NSAC goals

and policies are established by a

national board of directors, which

meets twice a year. Its five-member

executive committee is authorized to

act on its behalf between meetings. 

Contact information: NSAC is

managed by Advanced Management

Concepts, 136 South Keowee St., Dayton, Ohio, 45402. (937) 222-5794. ■

NAHC advocates for co-op housing nationally

he National Association

of Housing Cooperatives

(NAHC) helps low- and

moderate- income families govern, operate and

preserve affordable cooperative housing communities for themselves and

future residents. Over 1.2 million

families in 44 states benefit from

cooperative homeownership. 

NAHC is the national advocate

for affordable housing development

and preservation through the cooperative form of ownership. It provides extensive training to boards of

directors of housing cooperatives to

make them more effective in managing their communities and providing service to residents. NAHC

also trains on-site management personnel, who represent the first contact in providing service and attracting new residents. 

NAHC works with other nonprofit groups in sponsoring the creation of new cooperatives for lowand moderate-income families and

senior citizens.

In rural areas, housing cooperatives

can be financed with the USDA Rural

Development’s Section 515 program or

the U.S. Department of Housing and

Urban Development’s Section 213

program. Manufactured-home parks

can be developed as cooperatives under

HUD’s Section 207 mortgage insurance program. 

In 2003, NAHC successfully persuaded Congress to increase the HUD

mortgage limit for manufactured home

co-op parks from $9,000 to $17,000.

President Bush signed the increase

into law in December 2003.

Many NAHC member cooperatives

are coming to the end of their original

HUD-insured mortgages. NAHC is

creating new educational workshops

and publications to help cooperatives

through that transition, addressing refinancing and rehabilitation needs,

adopting policies to replace HUD regulations, and deciding whether to

retain sales price or income restrictions. 

The aging of cooperative

leadership creates serious governance challenges, and bad governance is one of the three biggest

threats to co-op survival. NAHC

recently adopted a code of ethics

for co-op board members and

appointed a committee to develop a series of workshops on

excellence in governance.

NAHC is a member agency in

the Combined Federal

Campaign through the Human

and Civil Rights Charities of

America. NAHC is also an eligible recipient in the United Coop Appeal workplace giving campaign and the United Way of the

National Capital Area.

Contact Information: website: www.coophousing.org;

phone: (202) 737-0797; address:

1707 H St., NW, Suite 201,

Washington, D.C. 20006. President:

Bill Magee, Noble Square

Cooperative, Chicago, Ill.; Board

Chairman: Barbara Meskunas, San

Francisco, Calif. Executive Director:

Douglas Kleine. ■

T

Residents of the Meredith Center Cooperative — New

Hampshire's first manufactured housing park co-op —

gather for a "family" photo. Photos courtesy New Hampshire

Community Loan Fund
28 May/June 2004 / Rural Cooperatives

he Farm Credit Council

(FCC), based in

Washington, D.C., is the

national trade association

of the Farm Credit

System and represents the system’s legislative and regulatory interests, as well

as providing a wide range of business

services to Farm Credit institutions.

The Farm Credit System’s mission is

to maintain and improve the quality of

life in rural America and on the farm,

through constant commitment to competitive lending, expert financial services and advice, and a feeling of partnership with our customers. 

Council membership is comprised

of five district Farm Credit Councils

and five Farm Credit banks, whose

membership in turn, comes from nearly 100 direct lending associations

across the country. The cooperative

associations and banks in the Farm

Credit System are owned by the member-borrowers. Together, they are the

leading lender to agricultural producers and rural businesses and communities. Through the national network of

lending institutions, the Farm Credit

System:

• Provides more than $93 billion in

loans and manages over $116 billion

of total assets;

• With more than $18.9 billion in capital, Farm Credit has the strength to

ensure that agricultural producers

and others in rural America have a

constant source of competitively

priced credit in good times and bad;

• As a customer-owned organization,

Farm Credit returned more than

$365 million in cash distributions

and patronage dividends to our customer-owners in 2003.

• Knowing the difficulties faced by

young, beginning and small farmers,

Farm Credit takes seriously its obligation to assist the next generation of

agriculturists. In 2003, the System

had $11.5 billion in loans benefiting

farmers age 35 or younger; $16.9 billion in loans that benefit beginning

producers who have 10 years experience or less; and $28.6 billion in

loans to small producers with less

than $250,000 in annual gross sales

of agricultural products. 

• With five banks, nearly 100 lending

institutions and more than 1,000

branch locations, Farm Credit is in

the communities and areas of our

more than 450,000 customer-owners. 

The Farm Credit Council was

established in 1983 to provide an effective voice with the U.S. Congress and

government agencies on farm credit

issues. The structure for developing

positions on legislative issues is provided by the district councils. The process

begins with the farmer-directors of the

member organizations. 

The Farm Credit Council is governed by a 23-member board that

implements the Council’s public policy

positions. The current board chairman

is M. Wayne Lambertson, a poultry

and crop producer from Pocomoke

City, Md. Under the direction of the

board, Kenneth E. Auer, President and

CEO, coordinates and directs the daily

affairs of the Council, carried out

through its Washington-based staff.

Council funding comes from dues

assessed to its member organizations. 

The Council’s mission is to enhance

the political effectiveness of the membership and their member institutions,

and in doing so, the Council centers its

attention on legislative, governmental

and regulatory issues that affect agricultural credit. The Council staff

maintains close liaison with government agencies such as the Farm Credit

Administration, the U.S. Department

of Agriculture and with Farm Credit

System standing committees, among

others. 

As a regular part of its operation,

the Council serves as a conduit of

information from Washington to its

membership, and serves to inform

Congress and government agencies on

the views of its members. 

Contact information: website:

www.fccouncil.com; phone: (202) 

879-0854; address: 50 F Street, NW,

Suite 900, Washington, D.C. 20001.

President and CEO: Kenneth E.

Auer; Chairman: M. Wayne

Lambertson. ■

Farm Credit Council promotes lending system

dedicated to improved quality of farm life 

T

The winter issue of Financial Partner

magazine is a product of Farm Credit

Financial Partners Inc. (FPI), Agawam,

Mass., and the four Northeast Farm Credit

Associations. FPI provides Farm Credit

Associations nationwide with customer

service for information technology, operations, human resources, legal services,

marketing, communications and training. 
Rural Cooperatives / May/June 2004 29

he National Rural

Utilities Cooperative

Finance Corporation

(CFC) is a privately

owned, non-governmental organization that provides low-cost

capital and state-of-the-art financial

products and services to its owners, the

more than 1,000 electric cooperatives

across the United States. CFC is the

primary private market lender to rural

electric systems, which serve more

than 32 million end-users of electricity. 

CFC’s owners consist of electric cooperative distribution systems, power supply

systems, statewide

associations and service organizations. It

serves as the sole

source of financing for

more than 200 electric

cooperatives and supplements the credit

programs of the

USDA Rural

Development’s utilities

programs. 

CFC was launched

in the mid-1960s,

when the electric

cooperative program

began to seek alternative funding sources to

supplement federal

financing of cooperatives’ growing capital

needs. In 1967, the

National Rural Electric Cooperative

Association (NRECA) proposed the

creation of a nonprofit financing institution that would be cooperatively

owned by the electric cooperatives.

NRECA members approved this plan,

and on April 10, 1969, CFC was incorporated.

As a financial powerhouse with

more than $21 billion in assets and

some $34 billion in total credit commitments, CFC offers rural electric

systems the financing they need to

ensure a dependable source of energy

for rural consumers.

Guided by a 22-member board of

directors representing the managers

and directors of its member cooperatives, CFC operates from its corporate

headquarters in Herndon, Va., with

more than 200 employees, 15 of whom

are regional representatives located

throughout the United States. By

maintaining high credit standards and

credit ratings, CFC provides its owners

with competitively priced financing

and investment opportunities through

its role as a conduit to the worldwide

private capital markets.

CFC manages several related organizations. Rural Telephone Finance

Cooperative (RTFC) is a memberowned, nonprofit finance cooperative

created in 1987 solely to serve the

needs of the rural telecommunications

industry. RTFC has carried out an

essential role in rural telephone financing, providing

needed funds for system

upgrades, new technology,

acquisitions, and an array of

service enhancements.

National Cooperative

Services Corporation (NCSC)

is a privately funded, member-owned, taxable cooperative that began operations in

1981. NCSC provides electric

cooperatives and their affiliates with specialized financing

and related financial services.

NCSC offers a loan program

that provides financing to forprofit and nonprofit associates

affiliated with CFC owners,

generally for rural economic

development initiatives.

CFC works closely with

NRECA, the National Rural

Telecommunications

Cooperative, USDA Rural

Development, Federated

Rural Electric Insurance Exchange,

and similar organizations to ensure

that electric cooperatives have the

tools they need to prosper in a changing marketplace.

Contact information: website:

www.nrucfc.coop ; phone: (703) 709-

6700; address: 2201 Cooperative Way,

Herndon, Va., 20171. CEO: Sheldon

Petersen. ■

CFC: rural electric co-ops’

own financial powerhouse

T

CFC — the Herndon, Va., headquarters of which is seen here — is the primary private market lender to rural electric systems serving more than 32

million consumers. Photo courtesy CFC 
30 May/June 2004 / Rural Cooperatives

ational Rural Electric

Cooperative Association

(NRECA), located in

Arlington, Va., represents

the national interests of

the nation’s more than 900 cooperative

electric utilities and the consumers they

serve. Organized in 1942, NRECA

provides national leadership and member assistance through legislative representation before Congress and the

executive branch. It also provides: representation in legal and regulatory proceedings affecting electric service and

the environment; communication services; education and consulting for

cooperative directors, managers and

employees; energy, environmental and

information research and technology;

training and conferences; and health

insurance, retirement benefits and

financial services. Programs are funded

through dues and fees.

NRECA’s member cooperatives

serve 37 million people in 47 states

and 80 percent of the nation’s counties.

Most of the 865 distribution systems

are private, consumer-owned cooperatives, although some are public power

districts. NRECA membership

includes other organizations formed by

these local utilities: generation and

transmission cooperatives (65);

statewide and regional trade and service associations; supply and manufacturing cooperatives; data processing

cooperatives; and employee credit

unions. Associate membership is open

to equipment manufacturers and distributors, wholesalers, consultants and

other entities that do business with

electric cooperatives.

Two major publications inform and

educate members, decisionmakers and

the interested public: RE Magazine,

published monthly, and Electric Co-op

Today, a weekly newspaper that reports

on activities and issues important to

electric cooperatives and NRECA.

NRECA’s

annual meeting is

one of the largest

national gatherings of cooperative and rural

leaders and consumers, often

attracting more

than 12,000 directors, managers,

employees and cooperative memberowners. Delegates consider and act on

policy resolutions that guide NRECA’s

issue and organizational agenda, hear

addresses by key public figures and

attend panel sessions on major issues

affecting cooperatives, electric utilities

and their consumer-owners.

Concurrently, the TechAdvantage

Conference and Expo commands more

than 50,000 square feet of exhibit

space, showcasing more than 250 leading-edge suppliers of power production, information technology, power

delivery, and customer management

products and services.

NRECA and its member cooperatives administer a program of technical

advice and assistance in developing

countries around the world. NRECA

International Ltd. has helped more than

50 million people in the world’s poorest

countries achieve the economic and

social benefits of reliable, affordable

power by adapting the successful model

of locally owned electric cooperatives.

Programs are designed with close attention to local demand conditions and use

the most appropriate power generation

methods, including distributed generation and renewable energy systems. The

NRECA International Foundation,

funded by voluntary contributions,

coordinates the Sister Cooperatives

Program and directs the collection and

shipping of donated equipment and

materials to support overseas projects.

As new demographic and economic

patterns emerge, electric cooperatives’

operations evolve and their needs

become more diverse. NRECA’s legislative, legal and regulatory agenda

has become more diverse, embracing

hundreds of issues affecting electric

utility generation, transmission and

distribution; energy policy and the

environment; finance and tax matters;

telecommunications; jobs creation;

federal disaster assistance; the cooperative business model and governance;

and consumer protections. 

Efforts in the last two decades to

forge a national energy policy through

legislation in Congress and sweeping

regulatory initiatives at the Federal

Energy Regulatory Commission

(FERC) have the potential to alter radNRECA programs benefit 865 co-ops,

37 million consumers nationwide

N

Touchstone Energy Cooperatives teach 

middle-school students about the science,

history, and value of electricity through the

"Get Charged!" program, in cooperation 

with the Discovery Channel School. 

Photo courtesy NRECA
Rural Cooperatives / May/June 2004 31

ically the relationship between electric

utilities and their consumers. NRECA’s

legislative and regulatory advocacy

efforts focus on controlling costs for

consumers, protecting them against

market power abuse and anti-competitive behavior, and on preserving member co-ops’ governance structure by

keeping operational and policy decisions in the co-op boardroom. 

One of the toughest challenges electric cooperatives face as employers is the

ever-increasing cost of healthcare coverage for their employees and retirees.

The association’s legislative efforts in

this area focus on employer flexibility,

access to quality programs and providers

and equity for rural Americans.

Education, training and leadership

programs have evolved to focus attention on the increasing level of public

and policymaker scrutiny of American

business resulting from the latest wave

of illegal activity in the corporate

world. Courses cover director fiduciary

responsibility and conduct; cooperative

business principles and ethics; effective

working relationships between directors, CEOs, attorneys and auditors;

development of principle-centered

policies; and strategic planning.

The Touchstone Energy®

Cooperatives brand supports the communication and marketing efforts of

electric cooperatives. Award-winning

materials developed for member systems help unify advertising, marketing

and community relations activities and

provide a consistent image of electric

cooperatives nationwide.

NRECA also assists its member systems through community and economic development support, including a

wide array of resources for financing,

planning, and partnering through public and private organizations across the

country. 

Contact Information: website:

http://www.nreca.coop; Telephone:

703-907-5500; Address: 4301 Wilson

Blvd., Arlington, VA 22203. President:

David J. Cowan, Gettysburg, Pa.;

Chief Executive Officer: Glenn

English. ■

ince 1967, the

Federation of Southern

Cooperatives/Land

Assistance Fund

(Federation) has successfully provided self-help economic

opportunities and hope for many lowincome communities across the

South. The Federation is, in fact, the

only organization in the Southeast

United States that has as its primary

objectives the retention of blackowned land and the use of cooperatives

for land-based economic development.

“Cooperatives are businesses that

are locally controlled and build wealth

through the participation of people,”

says Federation Executive Director

Ralph Paige. “They are an ideal way

of helping poor folks advance their

own interests and provide for their

own destinies.” 

In 1984 the Emergency Land Fund,

the pioneer organization in black land

retention, merged with the Federation.

This led to a much stronger and

more comprehensive program that

retains, acquires, manages and develops land and other resources using

cooperative principles.

Membership includes 12,000 black

farm families, who individually own

small acreage, but collectively own

more than a half million acres of land

and work through 35 agricultural

cooperatives to purchase supplies, gain

technical assistance and market their

crops. It also includes 15,000 small

savers in 16 community development

credit unions that have accumulated

$24 million in shares and made $113

million in loans since inception.

The Federation owns and operates

the Rural Training and Research

Center (RTRC) on 850 acres of land

near Epes, Ala., where members learn

farming skills, rural business development practices, leadership skills and

ways of working together in cooperatives and credit unions. 

The programs of the Federation are

comprehensive. They cover agriculture, credit, housing, markets, land

retention and advocacy. While its programs are implemented in its offices in

Federation of Southern Co-ops:

Three decades of sustaining rural Southern communities, 

saving black-owned farmland 

James Nesmith says there simply aren’t

any better organic tomatoes than those

grown in South Carolina by his dad,

Theodore Nesmith, a member of Peoples

Cooperative. Photo by D.J. Johnson, courtesy

S.C. Extension Service

S
32 May/June 2004 / Rural Cooperatives

Mississippi, Alabama, Georgia and

South Carolina, the RTRC is the hub

of the Federation’s outreach and training efforts. Primary programs include:

• Small Farm and Sustainable

Agriculture — The Federation is

committed to providing outreach and

technical assistance to black family

farmers as integral to its overall

thrust. One of the avenues of outreach to farmers was the 1990

Minority Farmers Act (Section 2501

of the Farm Bill). As an initiative of

the Federation, Section 2501

addresses the need for USDA to

offer more services to limitedresource minority farmers by offering grants to community-based organizations and landgrant colleges to

offer outreach services. The primary

goal of the sustainable agriculture

program is to help farmers develop

successful family farm businesses

through: financial analysis of farms;

technical assistance in setting individual farm goals; technical assistance

in farm management; assistance in

debt restructuring; and alternative

crop analysis.

ARKANSAS

Arkansas Rural Enterprise Center

Donna Uptagrafft, Program Associate

38 Winrock Drive

Morrilton, AR 72110-9537

Telephone: (501) 727-5435 

Fax: (501) 727-5242

E-Mail: Dju@winrock.org

Home Page: www.winrock.org

COLORADO

Rocky Mountain Farmers’ Union

Cooperative Development Center

Bob Mailander, Director

5655 S. Yosemite St., Suite 400

Greenwood Village, Co 80111

Telephone: (303) 752-5800 

FAX: (303) 752-5810

E-Mail: center.director@co-ops.org

Home Page: www.co-ops.org

KENTUCKY

Kentucky Cooperative 

Development Center

Larry Snell, Executive Director

411 Ring Road

Elizabethtown, KY 42701

Telephone: (270)763-8258 

FAX: (270) 763-9927

E-Mail: lsnell@kccd.info

Home Page: www.kccd.org

MASSACHUSETTS

Cooperative Life/Cooperative

Development Institute

Lynn Benander, CEO

277 Federal Street

Greenfield, MA 01301

Telephone: (413) 774-7599 

FAX: (413) 773-3948

E-Mail: info@cooplife.coop

Home Page: www.cooplife.coop

MISSISSIPPI

Mississippi Center for 

Cooperative Development

Melbah Smith, Director

233 E. Hamilton Street

Jackson, MS 39202

Telephone: (601) 354-2750 

FAX: (601) 354-2777

E-Mail: mscenter@mindspring.com

Home Page:

www.supermarketcoop.com/mac.htm 

MISSOURI

Missouri Farmers Union 

Family Farm Opportunity Center

Russ Kremer, President

325 Jefferson Street

Jefferson City, MO 65101

Telephone: (573) 659-4787 

FAX: (573) 659-4787

E-Mail: 

rkremer@missourifarmersunion.org

Home Page: 

www.missourifarmersunion.org

MISSOURI

Missouri Incutech Foundation

Russell C. Lindenlaub, Executive

Director

800 W. 14th Street, Suite 111

Rolla, MO 65401

(573) 364-8570

www.missourienterprise.org

Rural Cooperative Development Centers

The Federation is helping Eugene Hall and other farmers in Sumter County, Ala., form a goat

producers’ cooperative. Photo by Jim Alexander 
Rural Cooperatives / May/June 2004 33

MONTANA

Lake County Development Center

Billie J. Lee, Executive Director

319 Main St.

Ronan, MT 59814

Telephone: (406) 676-5901

E-Mail: lccd@ronan.net

Home Page: www.lakecountycdc.org

NEBRASKA

Nebraska Cooperative 

Development Center

Dr. Lynn H. Lutgen, Director

217 H.C. Filley Hall 

Lincoln, NE 68583-0922

Telephone: (402) 472-3406 

E-Mail: llutgen1@unl.edu

Home Page: ncdc.unl.edu

NORTH DAKOTA

Dakotas Cooperative Business

Development Center

Bill Patrie, Rural 

Development Director

3201 Nygren Drive, NW

PO Box 727

Mandan, ND 58554-0727

Telephone: (701) 663-6501 

FAX: (701) 663-3745

E-Mail: bpatrie@ndarec.com

NORTHWEST

Northwest Cooperative 

Development Center

Diane Gasaway, Project Manager

1063 Capitol Way South, Suite 214

Olympia, WA 98501

Telephone: (360) 943-4241 

FAX: (360) 570-8415

E-Mail: nwcdc@qwest.net

Home Page: www.nwcdc.coop 

OHIO

Ohio Cooperative 

Development Center

John Ellerman, Coordinator

1864 Shyville Road

Piketon, OH 45661

Telephone: (740) 289-2071 

FAX: (740) 289-4591

E-Mail: ellerman.5@osu.edu

Home Page: 

www.aede.osu.edu

PENNSYLVANIA

Keystone Development Center

860 Ridge Road

Carlisle, PA 17013

Telephone: (717) 243-2765 

FAX: (484) 214-0115

E-Mail: info@keystonedc.org 

Home Page: www.kdc.coop

SOUTH CAROLINA

South Carolina Center for

Cooperative Business Development

Dr. Emmanuel N. Onunkwo, Director

PO Box 7568

Orangeburg, SC 29117

Telephone: (803) 533-3682 

FAX: (803) 533-3639

E-Mail: emonunkwo@hotmail.com

SOUTH DAKOTA

Value-Added Agricultural Center

Dallas Tonsager, Executive Director

303 Illinois Avenue SW 

Huron, SD 57350 

Telephone: (605) 352-9177 

FAX: (605) 352-9179

E-Mail: tonsager@eastriver.coop

Home Page: www.sdvalueadded.com

WISCONSIN

Cooperative Development Services

Kevin Edberg, Executive Director

131 West Wilson Street, Suite #400

Madison, WI 53703

Telephone: (608) 258-4396 

FAX: (608) 258-4394

E-Mail: 

cds@co-opdevelopmentservices.com

Home Page: www.cdsus.coop 

• Land Assistance — Black rural land

ownership has declined drastically

over the last century, from 16 to 19

million acres owned in 1910 to only

7.8 million acres in 1997. And the

decline continues. To help retain and

protect rural land ownership, the

Land Assistance Fund Program

focuses on: legal assistance; education; tax sales; wills and estate planning; adverse possession; eminent

domain and condemnation; mineral

rights; and financial assistance.

• Cooperative Marketing — The

average size of an African American

farm is just over 100 acres. The

Federation encourages alternative

crop production that is more suitable

to smaller farm size to help ensure

sustainability of the farm. The focus

of our marketing program is: production/marketing assessments; cooperative development; value-added projects; rural/urban marketing; and

emerging market opportunities.

• Credit Unions — The focus of the

credit union department is to provide technical assistance and training to individuals from low-income

rural communities who have determined a need for low-cost, community-controlled consumer credit.

Technical assistance is offered in the

following areas: chartering; computerizing; non-member deposits; business plans; youth credit unions;

auditing; board training; and committee training.

• Housing — The Federation has

been instrumental in building quality

affordable housing and manages its

housing programs through the

Panola Land Buyers Association.

The housing department focuses on

three major areas: multi-family housing development; multi-family housing management, and technical assistance for single family housing

• Advocacy and Coalition Building

— To ensure appropriate and relevant program services for rural communities, the Federation works in

coalition with other organizations

and advocates for: rural communitybased economic development;

affordable rural housing; farmers’

rights; fair trade policies; cooperative

and credit union development;

renewable energy strategies; environmental policy.

Contact Information:

www.federation.coop; (404) 765-0991;

2769 Church St., 

East Point, GA 30344; 

Executive Director: Ralph Paige. ■
In addition to the University of

Wisconsin Center for Cooperatives,

there are two other U.S. universitybased cooperative research and education centers.

Arthur Capper Cooperative

Center (ACCC) — Located at Kansas

State University, ACCC serves as a

premier center of excellence in cooperative education. Its focus is on

research, business development,

finance, leadership, strategic management and marketing for cooperatives.

Its primary objective is to increase

understanding of the cooperative form

of business. It conducts teaching,

research and educational extension

programs to help students and cooperatives understand and improve decision

making in cooperatives, cooperative

performance, customer service to

patrons of cooperatives, cooperative

industry standards and the ability of

cooperatives to compete with other

businesses in the marketplace.

Contact information: www.agecon.ksu.edu.accc/; phone: (785) 532-

1508; address: ACCC, Dept. of Ag

Economics, 305 Waters Hall, K.S.U.,

Manhattan, Kan. 66506. Director:

David G. Barton

Quentin Burdick Center for

Cooperatives (QBCC) — Located at

North Dakota State University,

QBCC functions in four primary

areas: (1) education, including academic and executive; through academic

education, QBCC seeks “to create a

pool of university graduates who thoroughly understand cooperative philosophy, principles and management

strategies.” It is also involved in providing in-service, executive-level training for directors and management; (2)

research — academic research topics

tend to be general, with results published and accessible to the public;

specific research is usually undertaken

for a single cooperative, with results

confidential to the client; (3) outreach/communication — by spreading

the word about cooperative business

systems, QBCC fulfills the traditional

role of a land grant university; and (4)

coordination/cooperation — QBCC

seeks to coordinate its activities with

other organizations and agencies in

the region. In some areas it takes on a

leadership role, while in others it plays

a supportive role. 

Contact information: website:

www.ag.ndsu.nodak.edu/qbcc; phone:

(701) 231-1016. address: QBCC, 301

Morill Hall, N.D. State University,

Fargo, N.D. 58105. Director: Dr.

William C. Nelson. ■

34 May/June 2004 / Rural Cooperatives

By Ashwini Rao, Associate

Outreach Specialist

UW Center for Cooperatives

he University of

Wisconsin Center for

Cooperatives (UWCC)

was established in 1962

to provide co-op training, assistance and education programs

to international and domestic cooperatives, and to conduct research directed

at all aspects of a cooperative business.

Decades later, the Center continues to

promote and research cooperative

action as a means of meeting the economic and social needs of people. 

So what has changed?

“While the Center’s core mission

has not changed, the focus of our work

has definitely shifted,” explains Bob

Cropp, professor emeritus and former

director of the Center. Adds Interim

Director Anne Reynolds, “We are

doing more work with a wider variety

of co-ops,” a reference to the broad

client base that the Center interacts

with, which has expanded over the past

few years to now include forestry, utilities, health care, housing, food and

worker co-ops, among others. For others at the Center, the shift has been in

gaining a “deeper understanding of the

issues” in our society and “achieving

greater impact through a broader range

of contacts” within our community. 

The research arm of the Center

remains as robust as ever. Assistant

Professor and Senior Faculty Associate

Kim Zeuli joined the Center in 2001 to

strengthen research in the areas of agricultural co-ops and co-ops in rural

communities. “There has always been a

lot of emphasis on research, and it continues to remain a strong and critical

part of the organization,” says Zeuli. 

The shift in focus, however, has

affected much of what the Center does

on a regular basis. The educational

workshops that UWCC organizes, in

partnership with the Wisconsin

Federation of Cooperatives and the

Minnesota Association of

Cooperatives, have seen a progression

toward topics on joint ventures, mergers/acquisitions, alternative co-op

structures and resulting financial

implications.

UW Center for Co-ops:

Working together...then and now 

T

KSU, NDSU Centers researching co-op issues
eteran cooperative communicator Ann Mosby

says the decision to stop

publishing CCA News in

printed form was

“painful progress.”

The GROWMARK communications director led the Cooperative

Communicators Association (CCA)

committee that recommended the

group move to an electronic newsletter

rather than the traditional black-andwhite paper version. The decision mirrors those Mosby and her peers make

at cooperatives everyday. It also highlights how changes within the business

world, in general, and cooperatives, in

particular, have a rippling effect.

“CCA provides a testing ground for

innovative communications strategies

and tactics,” says CCA President

Sheryl Doering Meshke, Associated

Milk Producers Inc. communications

director in New Ulm, Minn. “Our

peer network enables communicators

to speed the learning curve.”

Formed in 1954 after Minnesota

and Wisconsin editors of cooperative

publications got together to share ideas

and learn how to better perform their

jobs, the organization now counts

membership across the United States,

Canada and England. CCA is committed to keeping pace — or a few steps

ahead — of the changing communications needs of the cooperative community. Members’ duties include writing,

editing, photography, videography,

design and all the other skills needed

to help cooperatives tell their story. 

The steps CCA took to determine

what to do about its member newsletter within the context of consolidating

cooperatives and skyrocketing printing

and postage costs provide insight for

cooperative communicators faced with

similar decisions at their own organizations.

The volunteer-driven CCA conducted a readership survey, reviewed

the results by committee and acted on

a recommendation to change the way

the newsletter was delivered. “Given

all this, I had to admit that leveraging

available mechanisms to communicate

with members made real sense,”

Mosby says. “The change offered

interactivity, it would save expense, it

would provide more timely delivery

and it meant that technical issues could

be resolved without members having

to struggle with them.”

Mosby’s involvement exemplifies

how members learn new skills from

one another and exercise their knowhow on behalf of the association, as

well as their cooperative employer.

“The association work gives CCA

members a forum for trying innovative

ideas where the stakes are not as high

as in their ‘real jobs’,” says CCA

Executive Director Susie Bullock from

the organization’s headquarters in

Lubbock, Texas. Once tried, the communicator can adapt those skills or

knowledge to the particular challenges

faced in real-life cooperative settings.

CCA’s successful ideas and programs

are replicated in its members’ daily

work – from the planning stages to

their implementation. Those stages, in

Rural Cooperatives / May/June 2004 35

“The focus on such topics reflects the

changing needs of our clients,” says

Cropp. “As University of WisconsinExtension state specialists, we need to be

flexible and be able to respond to their

[clients’] needs.” Annual conferences

such as the Farmer Cooperatives

Conference, started a few years ago by

the Center, stimulate critical thinking on

how cooperatives need to address major

issues as well as engage researchers and

co-op leaders in a dialogue about best

practices and future trends impacting

agricultural cooperatives. 

The response to changing trends is,

perhaps, more clearly reflected in the

Center’s initiatives to extend its services

beyond the university. A website

(www.wisc.edu/uwcc) offering extensive

information and resource links has

resulted in increased visibility for the

Center, expanding its reach beyond the

physical borders of the state of

Wisconsin. The availability of funds

and a heightened interest in rural development start-ups and cooperatives have

also helped position the Center as a

resource for cooperative development

in the areas of agriculture, housing,

healthcare delivery and emerging markets, such as organic foods. 

The ever-increasing demand for

value-added agriculture, along with the

continuing strength of the co-op

movement and new opportunities in

cooperative development ensures that

the Center’s efforts to promote co-op

education and research will continue

for some time to come.

“The Center plans to continue to

partner with co-op leaders, educators

and researchers, and use these partnerships to enhance the work that we do

for co-ops,” says Reynolds. 

Contact information: website:

www.wisc.edu/uwcc; phone: (608) 

262-3382; address: 230 Taylor Hall,

427 Lorch St., Madison, Wis. 53706.

Officers: Interim Director: Anne

Reynolds; Senior Faculty Associate/

Center for Co-ops: Kim Zeuli. ■

V

CCA: Reflecting change, setting the pace

50 years of promoting innovative co-op communications
he Association of

Cooperative Educators

(ACE) has a big vision:

to strengthen cooperatives and the cooperative

movement by promoting innovative

educational responses to social and

economic changes.

From the outside, ACE appears to

be an unassuming organization. Its

part-time executive administrator

works from her home in Arlington, Va.

The Cooperative Foundation provides

many of the organization’s support services out of the CHS Inc. offices in

Inver Grove Heights, Minn. Its website is hosted by the University of

Wisconsin Center for Cooperatives in

Madison, Wis.

At a time when cooperatives have

been cutting back on education staff,

ACE’s membership has been growing.

“ACE gives a lot of bang for the

buck,” says Leslie Mead, ACE executive administrator. “The combination

of a committed board, organizational

and foundation supporters, and technology allows ACE to serve its diverse

membership and promote cooperative

education very efficiently.” 

ACE brings together researchers,

educators and cooperators from across

cooperative sectors as well as national

boundaries, linking an otherwise decentralized field. Most ACE members

come from the United States, Canada

and Puerto Rico with membership from

the rest of the world growing. 

The Internet not only offers a costeffective way to reduce administrative

expenses, but it also allows frequent

communications with members and

offers a wealth of information on

cooperative research, education programs and developments. 

“The ACE newsletter contains a lot

of information gleaned from websites,” says Mead. “The web makes

available information on some very

good cooperative education resources

and innovative programs from all over

the world. Few people have the time

36 May/June 2004 / Rural Cooperatives

themselves, reflect how sophisticated

communication is today. One doesn’t

just speak and expect to be heard.

Rather, the messenger speaks in many

different venues and different ways,

depending on the audience, yet with

the same key messages.

Though communication

methods change, organizations such as CCA still help

members hold true to the

cooperative principle on

education, training and

information.

“CCA operates much

like a growing and changing cooperative, striving to

effectively manage and

deliver member resources,”

Meshke says. “We’re a

microcosm of the cooperative community.”

Mosby agrees, saying

recommending an electronic newsletter forced

her to leave the “comfort

zone” behind for CCA and

made her think about her

own cooperative’s communication

delivery systems. “With that, this laggard became an adopter and an active

supporter of the process to improve

CCA communications,” 

she says.

The change is indicative of the

group’s – and their cooperative’s –

changing needs. As CCA goes, so goes

cooperatives – or maybe it’s the

reverse.

CCA members gather for an annual

Co-op Communications

Institute each June for

three days of seminars

and discussion designed

to improve the skills of

members in the full

spectrum of communications. This year the

institute will be held Jun

12-15 in Louisville, Ky.

The 2005 institute will

be held in Denver.

Contact information: website: www.communicators.coop ;

phone: (806) 777-6489;

address: 5307 43rd St.,

Lubbock, Texas 79414-

1315. Executive

Director: Susie Bullock;

President: Sheryl

Meshke (AMPI). ■

Association of Cooperative Educators 

Cross-border membership and collaboration brings growth

T

CCA board member Leta Mach (right) and Jamie Gasper of the Ag Communicators of Tomorrow participate in a communications exercise during a

recent CCA Institute. USDA photo by Dan Campbell 
Rural Cooperatives / May/June 2004 37

to search for it. The newsletter provides a valuable service by distilling

this information and making people

aware that it’s available.” 

ACE recently began publishing its

newsletter electronically. The change

reduced printing and mailing costs

and allows greater flexibility in size,

design and color. The newsletters are

posted on the ACE website and available to all.

While the Internet has expanded

ACE’s information and communication

capacity, the annual ACE Institute

remains an important event for cooperative education and networking. 

The Institute includes recognition

of the best cooperative education programs and honors cooperative educators at the annual awards banquet.

This year, ACE member Cooperativa

de Seguaros Múltiples de Puerto Rico

commissioned an artist to redesign the

ACE awards. The result is a stained

glass trophy that symbolizes the

national and sector diversity of ACE

membership.

This year’s institute in Montreal will

be simultaneously translated in Spanish,

French and English. (The 2004

Institute will be held Aug. 4-7.)

Though ACE has been around for

over 40 years, its importance grew significantly in recent years as events and

organizations once considered cooperative education institutions were curtailed or eliminated. 

“Despite continual changes in

demographics and economies, there

remains a significant interest in cooperative education and recognition

that education is essential to member

commitment and support of cooperatives,” says William Nelson, president

of the CHS Foundation and The

Cooperative Foundation.

“Cooperative Centers, universities

and state and national organizations

are all components in the revitalization of cooperative education. The

Cooperative Foundation sees the networking and information services

provided by ACE as very important

to this process.”

Contact Information: website:

http://www.wisc.edu/uwcc/ace/ace.html ;

Phone: (651) 355-5481; address: ACE

C/O The Cooperative Foundation,

P.O. Box 64047, St. Paul, Minn.

55164. President, Anne Reynolds

(University of Wisconsin); Executive

Administrator: Leslie Mead. ■

ACDI/VOCA spreads co-op model worldwide

“The future belongs to the organized.” 

—motto of the National

Smallholder Farmers

Association of Malawi 

nonprofit arm of the

U.S. cooperative community, ACDI/VOCA works

overseas to foster broadbased economic development and vigorous civil society. It assists

developing and transitional countries in:

enterprise development and trade; food

and agricultural systems; financial systems and crisis recovery.

In the early 1960s Congress sought

to reprise overseas the role co-ops had

played in developing rural America.

Thus, landmark foreign aid legislation

welcomed member-owned and democratically run business and financial

organizations as partners in America’s

international assistance efforts, and

ACDI/VOCA was born. Today, the

U.S. government funds most of the

organization’s activities.

ACDI/VOCA is a bridge between

the advantages and expertise of

America’s cooperatives and pressing

needs abroad. Sometimes the

link is person-to-person:

approximately 500 U.S. volunteers serve in two- or threeweek assignments each year to

provide technical and management assistance. 

Improving the well-being of

people overseas is a win-win

proposition since increased

income abroad fuels U.S.

exports. And developing

nations, where populations are

burgeoning, are this country’s

growth markets of the future.

ACDI/VOCA, using U.S.

farm credit volunteers, helped

privatize 400 cooperative

banks in Poland. It spearheaded a U.S. co-op community project to

set up India’s largest fertilizer company

as a cooperative. 

Today ACDI/VOCA carries the

co-op banner in Paraguay, Brazil,

A

Town hall-style meetings in Iraq are a means of

determining community priorities and organizing

infrastructure improvement projects. Photos courtesy

ACDI/VOCA

ACE brings together

researchers, educators and cooperators

from across cooperative sectors...
38 May/June 2004 / Rural Cooperatives

Mozambique, South Africa, Tajikistan

and 30 other countries with a program that approaches $100 million in

value. Even where its work is not

strictly co-op related, it always

manifests the principle of people organizing for their own

self-improvement. 

Last year Andrew Natsios,

administrator of the U.S.

Agency for International

Development, affirmed that

approach and called

ACDI/VOCA “the premier

agricultural development NGO

[nongovernmental organization] in the world.” 

The economic efficiency

and organizational impetus of

cooperatives are especially

valuable in countries that are

struggling. As Norway’s

Minister of International

Development, Hilde Johnson,

said, “For the poor around the

world, cooperatives can provide a much-needed opportunity for self-determination and

empowerment.”

By pooling resources and

will, cooperative members position themselves to obtain services, negotiate preferred terms

in the marketplace and exercise

political clout. Co-ops represent the grassroots and they

balance corporate power, which

are both welcome roles given

globalization’s inequities. Coops are founded and shaped by healthy

democratic principles, which they, in

turn, foster.

ACDI/VOCA builds cooperatives

based on sound business practices so

that producers and marketers can

move into the market, achieve

economies of scale and capture more

of their goods’ value. 

Crisis? Call on co-ops

As U.S. foreign assistance focuses

increasingly on helping countries avoid

or recover from crisis, ACDI/VOCA’s

co-op development work is doubly

important. 

Cooperation helps knit together

torn societies. From Ethiopia, where

agricultural co-ops assisted smallholders to recover from war and repressive

government and ultimately sell highquality coffee to Starbucks, to Iraq

where nation-building and economic

progress depend on communities organizing for self-benefit, ACDI/VOCA

helps people under stress overcome

crisis, win freedoms and reach for

prosperity. 

In fractional Serbia, 49 collectives

have been assisted by ACDI/VOCA

since 2001 to create unity, stability and

economic progress. Staffer Gene Neill

says: “We provide lasting solutions by

establishing functioning, memberowned, democratic units that serve all

members in the area to achieve a common goal whether it is livestock

improvement, agricultural marketing,

providing machinery to increase production, etc. Each of these projects has

a sustainability element often

lacking in pre-crisis cooperatives funded by the state. In

addition, we are encouraging

cooperation among producers

to increase their incomes and

provide better lifestyles for

themselves and their families.”

ACDI/VOCA’s cooperatives enlist hard-to-reach rural

people in the fight of their

lives against HIV/AIDS. Food

security and economic sustainability often depend on the

productivity of smallholder

farmers, and HIV/AIDS can

in one generation turn food

surplus into shortage. As rural

livelihoods are undermined,

social disintegration is the

result. 

In Ethiopia, where infection rates range up to 50 percent, ACDI/VOCA is helping

400 co-ops, with a total family

member population of 2.5

million, develop HIV/AIDS

educational materials, sell

condoms in cooperative shops,

host frank trainings and use

music and drama to powerfully convey health messages. 

ACDI/VOCA’s activities

revolve around helping farmers and entrepreneurs overseas participate in the global economy. But ACDI/VOCA’s cooperative

and association partners show their

true colors in also rising to meet

members’ social, political and even

health needs.

Contact information: website: 

See www.acdivoca.org; phone: 

(202) 879-0269; address: 50 F St.

NW, Suite 1100, Washington, D.C.,

20001. ACDI/VOCA is affiliated 

with the National Council of Farmer

Cooperatives and the Farm Credit

Council. Interim President: Don

Crane; Board Chair: Jean Marie

Peltier. ■

ACDI/VOCA helped establish the 100,000-member-strong

National Smallholder Farmers’ Association of Malawi, which

provides a solid array of member services. Its fiery birdseye chili

peppers fetch premium prices on the international market. 
Rural Cooperatives / May/June 2004 39

redit Union National

Association (CUNA)

works in cooperation

with all the state credit

union leagues and the

District of Columbia for the betterment of America’s credit unions —

not-for-profit cooperatives that provide affordable financial services to

people from all walks of life. More

than 90 percent of the nearly 10,000

credit unions in the United States —

which are owned by more than 83 million consumer members — are affiliated with CUNA through

membership in their

leagues. 

CUNA, chartered in

1934, is headquartered

in Madison, Wis., and

Washington, D.C.,

where it maintains a

governmental affairs

office. CUNA provides

national leadership, a

liaison with Congress

and the various federal

agencies, publications

and Internet-related services, market and demographic research, new

product development,

economic analysis, public relations, education and training

and other services to its affiliated credit unions. 

United with CUNA and the leagues

through a combined management and

leadership structure is CUNA

Strategic Services, Inc. (CSSI), the

association’s financial products and services affiliate. CSSI provides credit

unions with access to high-quality

products, services and technologies

delivered with a competitive advantage

made possible through volume pricing

and strategic program development.

Products offered by CSSI’s chosen

providers include: office supplies,

imaging equipment, promotional products, rate intelligence services, money

handling equipment, ATM access,

security systems, membership and

audio marketing programs, share

drafts, member business lending, ID

verification, money orders, IRAs, travelers checks, etc. 

Another CUNA affiliate, U.S.

Central Credit Union in Lenexa, Kan.,

provides investment, liquidity and correspondent financial services to credit

unions through a network of state or

regional ‘corporate’ credit unions,

which are essentially credit unions for

credit unions. 

Some of CUNA’s recent accomplishments and challenges facing it include:

• Privacy and the Fair Credit

Reporting Act: FCRA reauthorization was passed as part of the “Fair

and Accurate Transactions” (FACT)

Act of 2003. President Bush signed

it into law on Dec. 4, 2003. CUNA

played an integral role for credit

unions and consumers in advocating

passage of the legislation, which

ensures that our national system of

credit reporting continues without

interruption and, in turn, assures

that our nation’s consumers have

easy access to credit and receive fair

and appropriate protections of their

personal financial information to

help protect against identity theft.

CUNA was the only national trade

group for credit unions to testify

before the full House Financial

Services Committee on this legislation.

• Challenges from banks: Banks are

continuously lobbying to have credit

unions pay federal income taxes —

despite credit unions’ exemptions

through their not-for-profit status.

These additional taxes would ultimately prove detrimental to credit

union members, as this exemption

allows credit unions to return their

would-be “profits” to their members

in the form of lower loan rates, higher deposit rates and lower fees than

other financial institutions.

Additionally, these lower rates benefit all American taxpayers, because

they ensure that other financial institutions stay competitive and avoid

usury — which was a major contributing factor behind the beginnings of credit union organization.

• Financial literacy: CUNA works

tirelessly to inform credit unions, the

government, the media, America’s

youth and the general public on the

importance of financial literacy. 

• Hispanic Initiatives: As a tribute to

another founding principle - serving

people of modest means - CUNA

works to help credit unions better

serve the financial needs of the United

States’ growing Hispanic community.

Here are some of the ways that

CUNA has worked to achieve this

goal. CUNA has published a free

resource guide for Hispanics and the

newly translated version of the

National Endowment for Financial

Education’s High School Financial

Planning Program student guide

designed to help build financial literacy among high school seniors. CUNA

is also fostering use of IRnet to provide a lower cost remittance alternative to Hispanic and other immigrant

populations. 

Contact information: website:

www.cuna.org; phone: (800) 356-9655;

address: P.O. Box 431, Madison, Wis.

53705. President/CEO: Daniel A.

Mica; Board Chair: Dick Ensweiler,

(Texas Credit Union League). ■

CUNA: Meeting the needs of 83 million members

C

Credit Union House in Washington, D.C., includes rooms that

credit unions can use for meetings or receptions when engaged

in lobbying efforts in the nation’s capital. Photo courtesy CUNA 
40 May/June 2004 / Rural Cooperatives

he National

Telecommunications

Cooperative Association

(NTCA) is a nonprofit

association representing

about 560 small and rural telephone

cooperatives (or “telcos”) and commercial telephone companies. These telcos

serve more than 3.6 million rural businesses and residences and employ

more than 14,000 people.

In an era of rapidly evolving technology, deregulation and marketplace

competition, NTCA’s goal is to ensure

that rural Americans receive telecommunications service on par with those

available to urban residents — and at

comparable rates. 

NTCA’s members are complete

communications providers, offering

every service from basic phone to highspeed broadband Internet to video

entertainment. NTCA is a full-service

association, offering a wide array of

member services, including: an effective

government affairs program; expert

legal and industry representation; a

broad range of educational services;

comprehensive regular and special publications and public relations programs;

assistance with business and technology

programs; and a complement of national and regional meetings. 

NTCA also offers a complete range

of employee benefits programs through

its wholly owned subsidiary, Services

Management Corporation (SMC). The

$1 billion benefits program ensures that

members and their employees have

health care, retirement income, savings

plans, and insurance. The

Telecommunications Education

Committee Organization (TECO) is the

association’s political action committee.

The Foundation for Rural Service

(FRS) is NTCA’s nonprofit, 501(c)(3)

organization. The foundation’s mission

is to promote, educate and advocate to

the public on rural telecommunications

issues in order to sustain and enhance

the quality of life within rural communities. Funded solely through contributions, FRS supports a number of programs that address the needs of rural

communities and, in particular, the

youth of rural America. The foundation

sponsors a college scholarship program

and an annual Youth Tour that brings

rural high school students to the

nation’s capital to learn about the

telecommunications industry and to

witness the legislative process. It also

runs an advocacy campaign, providing

information to help increase awareness

of important telecom issues facing rural

consumers across the country.

NTCA’s record of service and

achievement has led policymakers and

the public, alike, to have confidence in

its capabilities. This year marks

NTCA’s 50th anniversary as the voice

of rural telecommunications. While

much has changed in 50 years, the one

thing that has remained constant: dedication to members and the success of

rural telecommunications. 

Recent NTCA accomplishments

include: 

• Its intercarrier compensation work

group undertook an extensive data

collection to evaluate the impact of

access charge reform proposals on

rural incumbent local exchange carriers.

• Lobbied successfully to change the

Federal Communication

Commission’s attribution rules

requiring a cooperative to include a

director’s outside income in the company’s revenues when applying for

spectrum bidding credits.

• With other associations, NTCA filed

a joint petition with the FCC and a

notice of appeal with the U.S.

Circuit Court of Appeals for D.C.,

challenging the FCC’s intermodal

(wireline-to-wireless) local number

portability rules. 

• Successfully challenged Financial

Accounting Standard Board 150

rules requiring cooperatives to treat

retained capital credits as liabilities

rather than equity.

• Was instrumental in the creation and

passage of a new communications

law in Nigeria. 

• Conducted a comprehensive case

study of its work in the early 1990s

to create two Polish telecom cooperatives, both of which are still thriving, more than 10 years later. 

Contact information: website:

www.ntca.org; phone: 703-351-2000;

address: 4121 Wilson Blvd., 10th floor,

Arlington, Va. 22203. CEO: Michael

E. Brunner; Board President: Norman

T. Welker, president, McDonough

Telephone. ■

National Telecommunications 

Cooperative Association

Responses to evolving technology, deregulation key to members’ future 

T
Rural Cooperatives / May/June 2004 41

National Cooperative Bank

Grocery, housing & purchasing co-ops on spectrum of organizations financed 

An independent organic

grocery in San Francisco

makes the transition to

100-percent employee

ownership. An Alaska

native corporation based in Nome

starts a clothing manufacturing business in Puerto Rico. A New York City

co-op apartment building refinances to

make long-overdue capital improvements. A Native American tribal entity opens a stunning, award-winning

golf course on Pueblo Indian lands in

New Mexico. A charter school in a

low-income Bronx neighborhood

moves from a makeshift temporary

location to a new, state-of-the-art

high-tech campus.

These are just a small sample of

recent projects made possible by

financing from National Cooperative

Bank (NCB), headquartered in

Washington, D.C. For more than 20

years, NCB has been providing a comprehensive array of financial services to

cooperatives and other member-owned

organizations throughout the country.

Currently owned by more than

1,800 of its customers, NCB serves a

spectrum of cooperatives, including

wholesale grocery co-ops, retailerowned purchasing co-ops and housing

co-ops. Beyond this customer base,

however, NCB also meets the needs of

other enterprises, each grounded in a

spirit of cooperation and democratically organized, even though they are not

cooperatives in the strictest sense. 

These groups, for example, may be

nonprofits that deliver services to their

local communities. They may be

ESOPs (Employee Stock Ownership

Plans) giving workers an equity stake

in their companies. Or they may be

Alaska Native enterprises that, by their

very nature, are member-run and

member-driven.

NCB is unique because it was created

to serve the financial needs of this

underserved market-niche — people

who join together cooperatively to meet

personal, social or business needs, especially those in low-income

communities.

Chartered by Congress

in 1978, NCB was privatized in 1981 as a memberowned financial institution.

As a bank whose mission

is to serve and promote

cooperatively organized

enterprises, NCB’s success

is measured by the degree

to which its customers succeed. So, the bank continually changes and innovates

as its customers seek new financial

solutions in an increasingly competitive environment: 

• In real estate lending, NCB promotes

multifamily homeownership by offering an array of financial services to

housing cooperatives and other types

of community associations.

• In commercial and small business

banking, NCB helps member-driven

organizations of all shapes and sizes

grow with customized financial services.

• In community development, NCB

assists at-risk communities with a

unique blend of technical assistance

and development finance.

• In personal banking, NCB provides

financing for co-op and condo apartments, as well as checking and savings for consumers nationwide.

Working to ensure the continued

vitality of the cooperative sector as a

whole is also very much a part of

NCB’s mission. Which is why, every

year, the bank publishes the NCB Co-op

100, in both print and online versions,

highlighting the nation’s top 100 coops and their contributions to

America’s economy. 

Each October, NCB also plays a

role in the celebrations surrounding

National Co-op Month. In 2003, as

part of this annual observance, the

bank produced a video and accompanying brochure titled “What is a Coop? You’d be Surprised.” It shows how

cooperatives are interwoven throughout American life. Copies can be

obtained by calling NCB at (202) 336-

7742 or by sending an e-mail request

to marcom@ncb.coop.

The enterprises NCB serves are large

and small. They are located in rural and

urban communities. They affect the

lives of Americans in essential ways,

enabling them to realize their dreams of

owning a home, running a competitive

business, giving their children a good

education and making sure they have

access to quality health care now and as

they grow older. NCB helps them by

crafting financial solutions tailored to

their continually evolving needs.

Contact information: website:

www.ncb.coop; phone: (800) 955-9622;

address: 1725 Eye St. N.W., Suite 600,

Washington, D.C. 20006. President &

CEO: Charles Snyder; Chairman:

Stuart Saft, Council of New York

Cooperatives. ■

A

NCB provided a $5 million line of credit to help an Alaskan

Native Corporation launch this garment-manufacturing

plant in Orocovis, Puerto Rico. Photo courtesy NCB 
42 May/June 2004 / Rural Cooperatives

SDA Rural Development

is committed to helping

improve the economy

and quality of life in all

of rural America. It helps

to build a stronger nation by promoting development of rural housing and

community facilities, investing in rural

businesses, promoting development of

new cooperatives and improved operations of existing co-ops, and building

an infrastructure of modern electrical, telecommunications, water and

waste disposal services. 

USDA Rural Development

achieves its mission by helping rural

individuals, communities and businesses obtain the financial and technical assistance needed to address

their diverse and unique needs. The

agency provides about $13 billion

per year in direct loans, guaranteed

loans and grants; it has an $86 billion loan portfolio.

To help raise homeownership

rates, USDA Rural Development

administers both direct and guaranteed homeownership loan programs.

It also has a self-help housing program, under which low-income people can use “sweat equity” to

become homeowners. Rural

Development also helps to build

affordable rental housing and farmworker housing in rural areas.

USDA supports loans to businesses through banks and community-managed lending pools for projects that create or preserve quality

jobs and/or promote a clean rural environment. The agency’s financial

resources are often leveraged with

those of other public and private credit

source lenders to meet business and

credit needs in under-served areas.

Recipients of these programs may

include individuals, corporations, partnerships, cooperatives, public bodies,

nonprofit corporations, Indian tribes

and private companies. 

USDA Rural Development operates through a network of 47 state

offices and more than 800 field offices

located throughout the nation. Many

of these are located in USDA Service

Center offices. 

Because readership of this magazine

is primarily cooperative-oriented, the

following information focuses on Rural

Development’s Cooperatives and Rural

Utilities Programs.

Rural Cooperatives Program 

The mission of Rural Develop-ment’s

Cooperatives Program is to promote

understanding and use of the cooperative form of business for marketing and

distributing agricultural products. It

serves cooperative members, directors,

management, educational institutions,

rural residents and all others with an

interest in the cooperative form of business. USDA maintains a library of more

than 200 cooperative publications and

videos, ranging from How to Start a

Cooperative and Co-ops 101, to multivolume sets on tax laws for cooperatives.

More than 50,000 of these publications

are distributed every year, making

USDA the world’s leading distributor of

co-op educational materials. Many more

are distributed electronically via the

Rural Development website.

Primary co-op program areas

include:

Technical assistance — is provided to existing cooperatives facing specific problems or challenges.

Examples of this aid can include:

helping a cooperative develop a

strategic marketing plan to cope with

changing competitive forces; assisting

a co-op in making a crucial decision

whether to merge or form a joint

venture; finding ways to turn raw

products of cooperative into valueadded products. These matters are

often life and death issues not only

for a cooperative, but for the rural

communities in which they operate. 

USDA co-op staff can help

improve a cooperative’s business

structure and operating efficiency.

This work often involves an analysis

of operations or assessing the economic feasibility of new facilities or

adding new products or services.

Technical assistance is largely

designed to benefit a specific cooperative business or group. However, the

results often provide business strategy

for all cooperatives.

Cooperative research — creates a

knowledge base necessary to support

cooperatives dealing with changing

markets and business trends. Studies

include financial, structural, managerial,

policy, member governance, legal and

social issues, as well as various other

economic activities of cooperatives.

Research is designed to have direct

application to current and emerging

USDA Rural Development: committed to the

future of America’s rural communities

U

Under USDA’s Mutual Self-Help Housing Program,

rural people can become homeowners through an

investment of “sweat equity.” USDA Photo
Rural Cooperatives / May/June 2004 43

requirements of cooperatives. Recent

research studies have focused on equity

redemption plans used by cooperatives,

identification of new niche markets for

cooperatives and opportunities and

obstacles cooperatives face when

exporting goods overseas.

Cooperative education — The

Cooperative Marketing Act of 1926

mandates that USDA “promote the

knowledge of cooperative principles

and practices and cooperate in promoting such knowledge with educational

and marketing agencies, cooperative

associations, and others.” To meet this

goal, Rural Development’s Co-ops

Program provides a wide range of

training and educational materials.

The agency’s bimonthly magazine,

Rural Cooperatives, reports significant

achievement by cooperatives and

examines the key issues facing them,

presents the most advanced thinking of

cooperative leaders and provides highlights of agency research, technical

assistance and educational activities.

Cooperative development — this

assistance can range from conducting an

initial feasibility study to the creation

and implementation of a business plan

and development of bylaws. We also

provide training for cooperative directors. The overall goal is to provide a

realistic view of what it will take to make

a new cooperative succeed, and to help

guide the leaders through the various

stages of launching a cooperative. 

Cooperative statistics — are collected and published to detect growth

trends and changes in structure and

operations of cooperatives. Data help

identify and support research and technical assistance activities. This information is used extensively by legislative

and executive branches of government

in formulating agricultural and cooperative-related policy.

Some recent special co-op initiatives

include: 

• Value-Added Producer Grant

Program — Now in its fourth year,

this grant program provides matching grants to cooperatives and others

in agriculture seeking to produce

value-added products from U.S. farm

commodities. These grants cannot

be used for agricultural production.

The awarding of the grants — $13.2

million for 2004 — is as competitive

process, in which detailed applications and business feasibility plans

are reviewed by panels. Website:

www.rurdev.usda.gov/rbs/coops/

vadg.htm.

• Agricultural Marketing Resource

Center (AgMRC) — Funded in

part by USDA Rural Development,

this is a national “virtual resource”

center providing the latest information on value-added agricultural

enterprise development. The center

has grown from a small website with

a few areas of expertise to more than

150 different commodity areas.

Website: www.agmrc.org.

• Rural Cooperative Development

Grants — help establish operating

centers for cooperative development

to improve the economic condition of

rural areas through the development

of new cooperatives and improving

operations of existing cooperatives.

Eligible applicants are nonprofit corporations, including institutions of

higher education. Applications are

solicited annually and scored according to defined selection criteria. In

2003, $6.3 million in grants were

awarded to 21 applicants. 

Rural Development’s 

Other Business Programs 

The rural business programs help

provide financing to rural business owners, nonprofit organizations, cooperatives, public bodies, and Indian tribes for

business ventures which create quality

jobs and stimulate the economy of rural

areas. The Business and Industry (B&I)

Guaranteed Loan Program creates partnerships with commercial lending institutions, the Farm Credit System and

Farmer Mac to provide financing for

qualified rural business enterprises,

including cooperatives. This often takes

the form of loan guarantees which bolster existing private credit structures in

funding projects which foster lasting

community benefits. 

B&I loan guarantees can cover as

much as 60 percent of a loan of $10

million to $25 million, or as much as

80 percent of a loan of $5 million or

less. This assistance is available to

businesses in areas outside the boundary of urban areas with populations

under 50,000.

Charles Ling, left, dairy economist with USDA Rural Development’s Cooperatives Program,

gets a tour of a milk bottling plant in Wisconsin. USDA photo by Ken Hammond
The Cooperative Stock Purchase

Program, which operates as part of the

B&I program, can help ag producers

buy stock to join a new-generation or

other stock-ownership cooperative, up

to a maximum of $400,000. USDA will

guarantee up to 80 percent of these

loans for as long as seven years. 

The Rural Business Enterprise

Grant Program provides grants to

public bodies and private, nonprofit

organizations serving rural areas outside the boundary and adjacent urbanized area of a city with a population of

50,000 or more. Priority is given to

applications from rural areas and

towns with populations of 25,000 or

less. These grants can finance small

and emerging private businesses and

cooperatives, or fund a revolving

loan program.

For more details of these and

other Rural Development Business

Programs, visit:

www.rurdev.usda.gov, or call 

(202) 720-7287. 

Rural Utilities Programs 

Modern utilities came to rural

areas of the nation through some of

the most successful government initiatives in American history, carried

out through USDA working with

rural cooperatives, nonprofit associations, public bodies and for-profit

utilities. Today, USDA Rural

Development’s Utilities Program

carries on this tradition, helping rural

utilities expand and keep their technology up to date, helping establish

new and vital services such as distance

learning and telemedicine. 

The public-private partnership

which is forged between USDA and

these industries results in billions of

dollars in rural infrastructure development and creates thousands of jobs for

the American economy. 

Rural Electric Program 

Providing reliable, affordable electricity is essential to the economic

well-being and quality of life for all of

the nation’s rural residents. The electric program provides leadership and

capital to upgrade, expand, maintain

and replace America’s vast rural electric infrastructure. Under the authority of the Rural Electrification Act of

1936, USDA Rural Development

makes direct loans and loan guarantees to electric utilities to serve customers in rural areas. USDA is the

majority noteholder for more than

700 electric systems.

USDA’s Electric Program makes

loans and loan guarantees to finance

the construction of electric distribution, transmission and generation facilities, including system improvements

and replacement required to furnish

and improve electric service in rural

areas, and for demand-side management, energy conservation programs,

and on-grid and off-grid renewable

energy systems. 

Loans are made to corporations,

states, territories and subdivisions and

agencies, such as municipalities, people’s utility districts and cooperative,

nonprofit, limited-dividend, or mutual

associations that provide retail electric

service needs to rural areas or supply

the power needs of distribution borrowers in rural areas. USDA also provides financial assistance to rural communities with extremely high energy

costs to acquire, construct, extend,

upgrade and otherwise improve energy

generation, transmission, or distribution facilities. USDA’s Rural Utilities

Program services approximately 686

active electric borrowers in 47 states.

Rural Telecommunications Program

USDA continues to provide many

programs for financing rural

America’s telecommunications infrastructure. The traditional infrastructure loan program — consisting of

hardship, cost of money, Rural

Telephone Bank and guaranteed

loans — provides financing of broadband and other advanced services.

Since 1995, every telephone line

constructed with USDA financing

has been capable of providing broadband service using digital subscriber

loop (DSL) technology. The

Distance Learning program continues its charge to wire rural schools to

tap into a rich universe of educational classes and resources; the

Telemedicine program is helping to

improve health care delivery in rural

America by “linking” small clinics

and hospitals to major medical facilities. 

The Broadband Program is a loan

program designed to increase the rate

of deployment of broadband technology to small towns in rural areas.

Under this program, Rural

Development can fund borrowers

serving communities of up to 20,000

inhabitants. 

Contact information: Rural

Development website:

www.rurdev.usda.gov; phone numbers:

Cooperatives Program (202) 720-7558;

Rural Business Program (202) 690-

4730; Rural Utilities Program (202)

720-9540; Rural Housing and

Community Facilities Programs: 

(202) 690-1533; address: (Cooperatives

Program): USDA Rural Development,

Cooperatives Program, Stop 3250,

1400 Independence Avenue, S.W.,

Washington, D.C. 20250. 

E-mail: coopinfo@rurdev.usda.gov. ■

44 May/June 2004 / Rural Cooperatives

A lineman repairs damage following a winter storm

in Texas. Rural telecommunications and electric

cooperatives throughout the nation look to USDA

for much of their financing needs. USDA photo by

Dan Campbell 
Rural Cooperatives / May/June 2004 45

USDA to award $23 million

for renewable energy projects

Agriculture Secretary Ann M.

Veneman announced in early May the

availability of approximately $23 million

in grants to support President Bush’s

energy plan to develop renewable energy systems and promote energy efficiency improvements. Veneman said

the Renewable Energy Systems and

Energy Efficiency Improvements program was created as part of the 2002

Farm Bill to assist farmers, ranchers and

rural small businesses develop renewable energy systems and make energy

efficiency improvements to their operations. In 2003, the Bush administration

invested $21.7 million to assist 114

applicants from 24 states develop or

improve wind power, anaerobic

digester, solar, ethanol and other bioenergy related systems or energy efficiency improvements.

Applicants must be agricultural producers or rural small businesses, U.S.

citizens or legal residents and have

demonstrated financial need. USDA

Rural Development grants may be used

to pay up to 25 percent of the eligible

project costs. Eligible projects include

those that derive energy from a wind,

solar, biomass or geothermal source, or

hydrogen derived from biomass or

water using wind, solar, or geothermal

energy sources. 

Applications must be completed and

submitted with a postmark no later than

July 19, 2004. Detailed information

about program requirements and information on how and where to apply is

included in the funding notice in the

May 5 Federal Register. Awards will be

made on a competitive basis for the

purchase of renewable energy systems

and to make energy improvements.

UW’s Ann Hoyt elected

NCBA board chair 

Ann Hoyt, one of the nation’s most

respected and widely published experts

on cooperatives, has been elected to a

two-year term as board chair of the

National Cooperative Business

Association (NCBA). Hoyt is a professor of consumer science at the

University of Wisconsin-Madison and a

senior faculty associate at the university’s Center for Cooperatives. She teaches, does research and develops training

materials for all types of cooperatives. 

For more than two decades, Hoyt has

trained hundreds of cooperative directors and managers for nonprofits. She

has also written widely on the history

and development prospects of consumer

cooperatives. Hoyt holds a Ph.D. from

Kansas State University and is currently

doing research on urban cooperative

development in the United States. 

NEWSLINE

Compiled by Dan Campbell

Send items to: dan.campbell@USDA.gov

For their tremendous, lifetime contributions to the nation’s cooperative system, the Cooperative Hall of Fame in Washington recently inducted

three new members: (from left): Ralph Paige, executive director of the Federation of Southern Cooperatives; Henry Schriver (holding plaque), a

co-op educator and leading proponent of cooperatives for 61 years, and Allen Thurgood, founder and CEO of 1st Rochdale Cooperative. With

Schriver are: NCFC CEO Jean Marie Peltier, DFA Executive Vice President Don Schriver (Henry’s son) and CoBank CEO Douglas Sims. For details

about each of the inductees, see the January-February 2004 issue of Rural Cooperatives, page 32. Schriver photo by Agi Schafer, courtesy DFA; Paige

and Thurgood photos by Art Jaeger, courtesy NCBA
46 May/June 2004 / Rural Cooperatives

“Ann is extremely knowledgeable

and has led numerous other co-op

boards over the years,” NCBA

President & CEO Paul Hazen says.

“The depth of experience she brings to

NCBA will be a tremendous benefit

for us.” Hoyt succeeds Charles M.

Snyder, president and CEO of the

National Cooperative Bank. 

Elected to replace Hoyt as 1st vice

chair was Steven Cunningham, president and CEO of IMARK Group in

Oxon Hill, Md. Elected 2nd vice chair

was Andrew Brown, vice president for

industry and member relations of the

National Rural Telecommunications

Cooperative in Herndon, Va. Elected

secretary-treasurer was Kathy Brick,

senior vice president and chief financial officer of U.S. Central Credit

Union in Lenexa, Kan. The only new

board member elected was Ruffin

Slater, general manager of the Weaver

Street Market, a worker-owned and

consumer-owned food cooperative in

Carrboro, N.C. Headquartered in

Washington, D.C., the 88-year-old

NCBA represents cooperatives across

all sectors of the economy, including

agriculture, food distribution and

retailing, childcare, credit unions,

housing, healthcare, energy and

telecommunications. 

Wisconsin’s Co-op Care Program 

finalist for prestigious award

Representing a major change in the

delivery of home care services,

Waushara County’s Cooperative Care

has been named one of 15 finalists for

the esteemed Innovations in

Government Award, a program of the

Ash Institute for Democratic

Governance and Innovation at

Harvard University’s Kennedy School

of Government. The program is now

eligible to win $100,000 in what is

often referred to as “the Oscars” of

government award programs.

The Waushara County Department

of Human Services facilitated development of the co-op in 1999 in an effort

to strengthen and expand its home

care workforce by transferring management of the service from the county

to the care providers. With guidance

from USDA Rural Development and

other organizations, the care providers

created a business plan reflecting their

wishes for decent pay and benefits.

Cooperative Care was officially

launched in 2001 by 52 workers who

voted to incorporate, paid dues and

elected a board of directors.

Today, with 84 members,

Cooperative Care is fulfilling the mission of its founding members by providing the county’s home care workers

with fair pay and benefits through a

business they democratically own and

operate themselves. The best aspect of

this program is that it gives this oncedisenfranchised group of workers a

voice on the job.

Cooperative Care was one of nearly

1,000 applicants for the 2004

Innovations in American Government

Award. The committee will select five

winners, which will be announced on

July 28 at the Excellence in

Government 2004 Conference, in

Washington, D.C. 

Co-ops eligible for

Value Added Grants 

USDA Rural Development is providing more than $13 million in federal funds for the Value-Added Producer

Grant (VAPG) Program in 2004.

Eligible applicants include farmer- and

rancher-owned cooperatives, independent producers, agricultural producer

groups and majority-controlled producer-based business ventures.

Grants may be used for planning

activities and working capital for marketing value-added agricultural products and for farm-based renewable

energy. The maximum amount that

can be awarded is $500,000, and all

VAPG funds must be matched by an

equal amount of funds from the applicant or a third party.

At press deadline for this magazine,

the announcement of fund availability

was scheduled to be published in late

May the Federal Register, website:

http://www.gpoaccess.gov/fr/index.htm

l, and on the USDA program website:

http://www.rurdev.usda.gov/rbs/coops/

vadg.htm. Deadline for application is

45 days from the date of publication.

Farm Credit Bank of Texas 

doubles earnings in 2003

The Farm Credit Bank of Texas

(FCBT), a $7.4 billion wholesale

lender, today reported strong earnings

for 2003 and one of the largest patronage distributions in the bank’s 87-year

history. Bank net income of $64.8 million for 2003 was nearly double the

previous year’s income of $32.5 million, due largely to the sale of the

bank’s mineral rights holdings in

November 2003 — a one-time event.

These strong earnings allowed the

FCBT to declare $50.8 million in

patronage distributions last year to its

stockholders — 22 rural financing

cooperatives in Alabama, Louisiana,

Mississippi, New Mexico and Texas.

These lending associations provide

loans and financial services to agricultural producers, agribusinesses, country homeowners and other rural

landowners.

“We are extremely pleased that we

were able to share our success with our

stockholders, who are also our customers, by paying them a substantial

patronage on our earnings. That is our

way of reducing their effective net cost

of borrowing, and it is the single greatest advantage of doing business with a

cooperatively owned bank,” says bank

CEO Larry Doyle. 

The bank’s gross loan volume of

$5.8 billion at Dec. 31, 2003, reflected

a modest $8 million increase from

Dec. 31, 2002. This figure was impacted by the bank’s sale of $300 million in

participations in its direct notes from

associations in November 2003. The

Texas bank is part of the nationwide

Farm Credit System, which reported

combined net income of $1.82 billion

for the year ended Dec. 31, 2003, as

compared with combined net income

of $1.773 billion for the prior year.

ACDI/VOCA’s Deegan resigns

Michael Deegan announced his

immediate resignation on April 29 as

president and CEO of ACDI/VOCA.
Rural Cooperatives / May/June 2004 47

Deegan said he plans to pursue other

career opportunities. The

ACDI/VOCA board immediately

launched a search for a replacement.

Don Crane, executive vice president of

ACDI/VOCA, will carry out the dayto-day chief executive functions until

an interim president is appointed.

During Deegan’s eight-year tenure

as ACDI/VOCA president, the organization experienced unprecedented

growth and success in its development

operations worldwide, Crane noted.

ACDI/VOCA, headquartered in

Washington, D.C., is a private, nonprofit organization which promotes

broad-based economic growth and the

development of civil society in emerging democracies and developing countries (see page 37). 

New logo adopted for

California Tree Fruit

The California Tree Fruit

Agreement (CTFA) has approved a

new logo for use in the marketing of

fresh California peaches, plums and

nectarines. “The new logo is designed

specifically to promote California

peaches, plums and nectarines and

communicates images of sunshine and

health that are associated with these

fruits,” said CTFA President Blair

Richardson. He said the old logo —

which depicted a tree illuminated with

sun rays — seemed to work better at

promoting the organization rather

than the fruit. 

“First and foremost, CTFA exists to

promote our growers’ fruit and is not

an organization that promotes itself,”

Richardson said. He noted that the

new logo will be used in both trade

and consumer marketing efforts and

will appear on new point-of-sale materials being developed for the 2004 season. Initially, the logo will be printed

with the words “peaches, plums, nectarines.” “Eventually, we expect that

the logo will stand on its own without

the need for these tag lines,”

Richardson said. 

Forum for Dairy Women

slated in Madison, Sept. 26-27

The 2nd International Forum for

Women in Dairying (IFWD) will be

held Sept. 26-27 in Madison, Wis. The

forum strives to enrich the lives of global dairy women by encouraging them to

share challenges and contributions to

the industry and to provide a venue to

learn, network and be inspired.

Jackie Pflug, who survived an airline

terrorist attack, will give the forum’s

keynote address, sharing how we can

become peak performers through our

attitude and reaction to change, adversity and challenge. A full program can

be found at www.world-dairyexpo.com. For a registration packet,

contact Marlene Schmidt, World

Dairy Expo visitor services manager, at

(608) 224-6455 or mschmidt@wdexpo.com. 

USDA awards $385 million

for rural electric expansion 

Agriculture Secretary Ann M.

Veneman in March announced 28 rural

electric guaranteed loans totaling nearly $385.6 million to expand rural electric infrastructure in 16 states.

“Expansion of rural infrastructure is a

first step in opening the door for

expanded rural economic development

and improved quality of life for rural

residents,” said Veneman. “These projects will serve 62,980 future customers,

build 4,300 miles of new line and fund

general system-wide modernization.”

Through USDA Rural

Development’s utilities program, loans

and loan guarantees are made to

finance the construction or replacement of electric transmission and generation facilities. In fiscal year 2003,

the Bush administration invested over

$6.3 billion in grants, loans and loan

guarantees to support the development

and/or improvements to rural electric,

telephone and water/wastewater infrastructure that will help to create or

save an estimated 150,000 jobs.

The loans announced today include

25 distribution projects and three

transmission and generation ventures.

A complete list of the loan recipients

can be viewed at USDA Rural

Development’s website at: www.rurdev.usda.gov. 

USDA announces $190 million

in high-speed internet loans

Agriculture Secretary Ann M.

Veneman in early May announced the

approval of 20 rural broadband and

telecommunication loans totaling

$190 million to expand access to

advanced technology in 19 states.

The funding is part of the Bush

administration’s effort to expand the

availability of broadband technology

in rural areas.

“President Bush is committed to

ensuring that every household in

America has access to broadband by

the year 2007,” said Veneman. “This

technology is important for families

and businesses to succeed in a global

environment.”

Veneman announced in January

2003 that USDA would expand

efforts to bring farmers, rural residents and businesses greater access to

improved telecommunication technology through loans and loan guarantees to rural telecommunications

providers. Funds for the program

were authorized through the 2002

Farm Bill. To date, over $206 million

in broadband loans have been

approved in this program.

The rural broadband access program provides loans and loan guarantees for the construction, improvement, and acquisition of facilities and

equipment for broadband service in

eligible rural communities. Priority is

given to applications that are proposing to serve areas where no residential

broadband service currently exists. ■
48 May/June 2004 / Rural Cooperatives

United States

Department of Agriculture

Washington, DC 20250

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