Rural

COOPERATIVES COOPERATIVES

Cooperative

Marketing Act:

7 5 Ye a r s Yo u n g

Cooperative

Marketing Act:

7 5 Ye a r s Yo u n g

USDA / Rural Development July/August 2001 USDA / Rural Development July/August 2001
2 July/August 2001 / Rural Cooperatives

Randall E. Torgerson, 

Deputy Administrator for

Cooperative Services, RBS

When Congress enacted the Cooperative Marketing Act of 1926, it spelled

out a federal program of services to

associations of agricultural producers

that is as fresh and useful today as

when it was written 75 years ago. That

these services continue to be carried

out attests to the value the public and

agricultural community place on business conducted cooperatively.

The value of producer-owned cooperatives as a critical dimension of market structure is derived from the virtue

of people working together for their

common good. The public interest is

thereby served. Help through self-help

is the bottom line. Programs providing

the tools and encouraging people to

help themselves have proven to be

among the finest forms of governmental assistance available.

When Congress passed the 1926 Act,

cooperatives were in their heyday, with

thousands being organized and thousands more already in existence. Significantly, it was recognized that a federal

source of assistance was necessary to

document best principles, practices and

structure that could serve farm interests.

This enabled the Department of Agriculture (USDA) to identify what worked

in different parts of the country and to

help existing cooperatives—as well as

newly organizing groups of producers—

to benefit from this knowledge. It also

enabled USDA to assist rural America

in maintaining a standard of what constitutes operating on a cooperative basis.

“Cooperative Development and the

State,” a series of case studies of the

cooperative sector in various nations,

was published in 2000 by Professor

Brett Fairbairn, University of

Saskatchewan. It concluded that the

United States, through USDA, stands

out among other countries in its support of cooperative development.

In that report, Fairbairn says of

USDA’s Cooperative Services program:

“Its effectiveness is related to several

factors which include not only the size

of its budgets and its networks of cooperative and third-party arrangements,

but also – and perhaps most significantly

– the fact that it has a dedicated agency

whose mandate is to support cooperative development . . . This example

appears to show that there can be a

niche in a federal system for an active,

cooperative-development role at the

national level, and that having an agency

dedicated to this role likely makes a

practical difference both to the focusing

and delivery of government resources,

and to the actual results in development

of cooperatives and communities.”

The success of USDA’s Cooperative

Services program can be attributed to

its service orientation of helping to

facilitate cooperatives’ adjustments and

changes to fast-moving industry conditions. By contrast, governmental programs in other countries usually have a

regulatory element, if not an exclusive

focus on regulation.

Despite recognition of this institutional presence and achievement in a

worldwide context, it can be noted that

program performance has been best

when agency status was granted to Cooperative Services programs within USDA.

It can also be noted that the existence of

farm commodity programs have tended

to weaken the incentive for farmers to

effectively organize to represent their

economic interests. As a result, the role

of cooperatives in U.S. agricultural policy

has been less than its potential. 

Active engagement with cooperatives

by USDA’s Cooperative Services staff

over the years has evolved with the

changing needs of farmers and other

rural residents for different bundles of

services. Group purchasing of carload

lots of salt, binder twine, fertilizer and

coal in earlier days has given way to

sophisticated manufacturing and application of crop protectants, fertilizers,

feeds and fuels. Related services, such as

frozen food lockers, statewide insurance

programs and county artificial breeding

services have now been replaced by

COMMENTARY

USDA marks 75th anniversary of service to cooperatives

Former Agriculture Secretary Earl Butz

stressed the vital role cooperatives play in

the nation’s rural economy during an event

held at USDA headquarters in Washington,

D.C., to mark the 75th anniversary of the

Cooperative Marketing Act. Looking on are

Secretary of Agriculture Ann Veneman and

RBS Deputy Administrator Randall Torgerson. 

continued on page 31
Rural Cooperatives / July/August 2001 3

Rural COOPERATIVES (1088-8845) is published

bimonthly by Rural Business–Cooperative

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address change to: Rural Cooperatives,

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and brand names does not signify endorsement

over other companies’ products and services.

Unless otherwise stated, contents of this publication are not copyrighted and may be reprinted

freely. For noncopyrighted articles, mention of

source will be appreciated but is not required.

The United States Department of Agriculture

(USDA) prohibits discrimination in all its programs and 

activities on the basis of race, color, national origin, sex, religion, age, disability, political beliefs,

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(Not all 

prohibited bases apply to all programs). Persons 

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To file a complaint of discrimination, write USDA,

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Whitten 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

Randall Torgerson, Deputy Administrator, USDA Rural

Business-Cooperative Service

Dan Campbell, Editor

Vision 2000/KOTA, Design

Have a cooperative-related question?

Call (202) 720-6483, or

Fax (202) 720-4641, Information Director,

This publication was printed with vegetable oil-based ink.

United States DeDepartment of

Agriculture

Rural

COOPERATIVES COOPERATIVES

July/August 2001 Volume 68 Number 4

On the Cover:

On the cover: The Cooperative Marketing Act, which marked its 75th “birthday” in early July, forms the legal foundation for USDA’s Cooperative Services

program. A series of articles describing the work of the agency and how it

impacts cooperatives begins on page 9 of this issue. USDA archive photos 

FEATURES

4 Finding a niche

Dakota Growers Pasta co-op finds success in a highly 

competitive market

By Michael Boland and David Barton

9 Turmoil of early 20th century led to USDA

role in assisting co-ops

By Patrick Duffey

13 USDA’s expanding cooperative development

assistance role

By John Wells

15 Significance of the Cooperative Marketing Act’s

other key provisions

By Randall E. Torgerson

16 Research and technical assistance work are

heart of Cooperative Services mission

By John Dunn

18 Statistics show cooperative status, progress 

and trends

By Charles A. Kraenzle

19 USDA’s commitment to cooperative education

By Jim Wadsworth

21 African village banks project shows renewed

emphasis on international co-op development

By James Haskell

DEPARTMENTS

2 COMMENTARY

22 MANAGEMENT TIP

24 NEWSLINE

Years
By Michael Boland and David Barton

Editor’s note: Michael Boland is an associate professor of agricultural economics at Kansas State University in Manhattan, Kan.

David Barton is professor of agricultural economics and Director of

the Arthur Capper Cooperative Center at Kansas State University.

akota Growers Pasta (DGP) is a defined- (or

closed) membership cooperative organized in

1991 as a vertically integrated operation that

assembles its members’ durum wheat, mills

durum wheat into semolina, produces pasta

from semolina and markets the pasta. DGP’s success in

adding value to its members durum has made it one of the

nation’s more noteworthy “new- generation”

cooperatives and one which other grower-owned cooperatives are

attempting to emulate. 

It has succeeded in a highly competitive industry characterized by wide swings in

the price and availability of

the key input: durum wheat.

The price paid to memberproducers for durum wheat

has been substantially higher

than the market price once

the processing net margin is

distributed to members.

The net earnings of DGP

and net price received by

members appear to influence the market price of

stock.

DGP’s earnings on a

per bushel, or per share, basis increased from 1994-1998 and

then declined in 1999-2000. Year-to-date results for the first

two quarters of 2001 were negative, but it is projected that it

will turn a profit again for the last two quarters of 2001. Dakota Growers Pasta continues to face significant competitive

challenges. Following is a description of the competitive environment in which the co-op operates and its history, based on

a soon-to-be published case study of Dakota Growers Pasta.

Marketing agreements

Grower marketing agreements are commonly used by

closed-membership, or new-generation, cooperatives as a

mechanism to acquire member-producer commodities that

the cooperative processes into finished products. These contractual agreements create a delivery right and an obligation

for members. Members are required to purchase one share of

stock for each commodity unit (such as bushels of a crop or

number of animals) which they want to deliver and sell annually to the cooperative. The total number of shares sold usually matches the capacity of the processing plant. 

The stock is an investment and asset that can be privately traded or exchanged between eligible members at a

negotiated price. This means the stock price can appreciate

or depreciate in value from the initial issue price or subsequent exchange price. However, the stock is always carried on the balance sheet of the cooperative at

its nominal issue, or book,

price. And it is carried

on the balance sheet

of the member at the

purchase, or

exchange, price.

Over time, the stock

market price increases

and decreases in value

due to privately negotiated agreements. Producers

often have questions

about what causes

these changes in prices.

This article is based on

a cooperative agreement research study

funded in 1998 by the

Rural Business-Cooperative Service of USDA Rural Development. The study sought to evaluate changes in stock prices of

two closed-membership cooperatives, one of which was

Dakota Growers Pasta. 

Dakota Growers Pasta (DGP) used grower agreements

with its members which obligate producers to deliver one

bushel of high-quality durum wheat for every unit of stock.

Stock was initially offered at $3.85 per bushel and conveyed a

Finding a niche

How Dakota Growers Pasta co-op found success in a highly competitive market 

D

4 July/August 2001 / Rural Cooperatives

In addition to this line of pasta products bearing its own brand, Dakota Growers

Pasta cooperative also owns the Pasta Sanita and Zia Briosa labels. The majority

of DGP’s pasta sales are under private-label products. Photo courtesy Dakota

Growers Pasta Cooperative 
Rural Cooperatives / January/February 2001 5

right and an obligation to deliver durum wheat as specified in

the growers’ agreement. The growers’ agreement obligated

each member to deliver a set amount of durum wheat to the

cooperative from their own production, based on the number

of shares they had purchased. If the member could not supply

the wheat with the desired quality, DGP would purchase the

wheat on behalf of the member and charge them purchase or

the current market price, plus a service fee. 

Competitive forces

In order to best understand why the value of stock changes

over time, it is useful to conduct a competitive analysis of the

industry and then examine the individual firm’s actions within that competitive environment. In addition to DGP’s vertically integrated durum milling and pasta manufacturing plant

in Carrington, N.D., the cooperative also operates a second

pasta plant in Minneapolis, Minn., which it acquired in 1997. 

Porter’s Five Forces economic model will be used below to

analyze competition in the durum milling and pasta manufacturing industries. Rivalry between firms, barriers to entry,

substitute products and the competitive power of buyers and

sellers are five forces that affect an industry and, ultimately,

influence a firm’s profitability within that industry. Availability of substitute products is not a major influence on this

industry, so it is not included in the following discussion. 

Pasta buyers

Buyers include retail supermarkets, food service providers

and food manufacturers that use pasta as an ingredient in

other processed foods. In the case of non-vertically integrated firms, buyers are pasta manufacturers that purchase

semolina flour and process it into pasta product. Ultimately,

consumers represent the final buyer based upon their

demand for pasta.

Pasta consumption in the United States was relatively stable between 1967 and 1984, at approximately six-to-seven

pounds of durum wheatbased food products

(pasta) per capita. Since

then, U.S. pasta consumption rose about one

pound per year, reaching

a maximum of 14

pounds per capita in

1994, and then decreasing slightly. 

The U.S. Department

of Agriculture (USDA)

notes that there are four

primary reasons for the

per capita increase in

demand for pasta:

changing lifestyles,

increased availability of

pasta sauces, increased

attention to healthy eating and increased numbers of Italian

restaurants. In addition, the number of American households

with two working parents has increased, leading to changes

in where and how meals are prepared and eaten. 

Meals that are healthy, easy and relatively quick to prepare

have become commonplace, and pasta fit this description.

The abundance of prepared sauces has served as a “complementary catalyst” and has improved the quality and variety of

the choices available for consumption. 

The increase in the number of Italian-style restaurants

fueled the growth in the food service sector of the pasta industry. Italian food has become a mainstream food, evident by the

growth in the number of Italian restaurants. Consumers are

eating outside the home more often, they are eating healthier

foods, and per capita incomes are increasing, causing the

uptrend in restaurant numbers. Americans spent 46 percent of

their food expenditures on away-from-home meals in 1998, 

up from 34 percent in 1970 and 39 percent in 1980.

Five billion pounds of pasta (4.5 billion in dry pasta and 0.5

billion in frozen and fresh pasta) were consumed in 2000, compared to about four billion pounds in 1992. The 2000 total value

was $2.6 billion. There are four principal dry pasta market segments: ingredient (which accounts for about 43 percent of the

market), private and brand label retail (37 percent of the market), food service (10 percent) and government bids (10 percent). 

Within each segment, there are both private-label and

brand-label products. Private-label products are products

manufactured by a firm that had another firm’s label on it. 

For example, a company such as Mueller’s which has brand

assets, but no manufacturing assets, would contract its brand

production with a company that had manufacturing assets,

such as American Italian Pasta Company. 

Within the retail market segment, private-label pasta had

been growing at a faster rate than brand-label pasta as private labels increased from 19 percent to almost 24 percent

of the market from 1994 to 2000. In the ingredient market

Number of Mills

1990 1992 1994

Figure 1 Durum milling industry capacity and number of mills, 1990-1998

30

25

20

15

5

0

1996 1998 2000

■ Capacity

■ Number of Mills

10

180,000

150,000

120,000

90,000

60,000

30,000

0

Capacity, per cwt

Source: Industry Annual Report, Milling and Baking News
segment, 75 percent is manufactured

by firms for their own internal needs,

with the remainder being purchased

on the quality specifications needed in

their products. About half the food

service market segment is private label

and the government market segment

is considered brand label.

Bargaining power of suppliers

Durum wheat is the only wheat that

can be used for pasta due to its high

protein percentage, which is higher

than any other type of wheat. Poorquality durum results in pasta noodles

that break easily, causing problems in

packaging. North Dakota, eastern

Montana, northwestern Minnesota,

southern Alberta and southern

Saskatchewan are the primary production regions due to cool nights and

warm, but not hot, summers that are

ideal for durum wheat. Although

durum wheat is also grown in Arizona

and California, the northern Great

Plains states are expected to remain

production leaders in the future.

One major problem in 1999 and 2000

was the poor quality of the durum

wheat. The poor quality was caused by

scab disease problems in early-planted

durum and sprout damage from rain and

frost at harvest. The poor quality caused

millers to remove more screenings

(which became mill feed and was used as

an ingredient in feed rations) from the

durum wheat. Thus, more durum wheat

was needed to manufacture a unit of pasta, which increased costs. Consequently,

millers imported durum wheat from

Canada and other regions rather than

using North Dakota wheat.

Rivalry between firms

This industry has undergone change

as large pasta firms, which had produced both private label and brand

label, have exited private-label production to focus strictly on their core

brands. Some retailers prefer private

label because of higher margins and

greater control of merchandising.

Although there is no direct evidence,

retailers and pasta manufacturers

believe that consumers prefer “Italian”

brand names and regard imported Italian pasta as higher quality. Thus, some

firms are beginning to develop domestic pasta with an Italian brand name.

The perceived quality of a brand is

related to its image as well as product

characteristics such as shorter cooking

time, ease of cleaning (e.g., less stickiness inside a pan), and innovative products that are easy to prepare and convenient to use by consumers. 

Through lower-cost technology, new

entrants in the pasta industry have

focused on innovative products and

manufactured them as private-label

products for other firms that have

brands. Thus, private-label brands are

becoming more competitive because

they have higher quality product attributes and are priced competitively. Price

competition among retail brands lowered the average price of retail-brand

pasta by the end of the 1990s. Thus, the

price differential between private-label

pasta and brand label-pasta declined,

slowing private-label pasta growth. 

Barriers to entry or 

threat of new entrants

Thirteen major companies milled

durum wheat in the United States in

1991 when DGP was organized, but

there have been significant changes

since then. Well-known firms have exited durum milling (such as Pillsbury and

Cargill) and new firms have entered

(such as American Italian Pasta Co. and

Dakota Growers Pasta). By 2001, Italgrani USA, Harvest States Cooperatives

and Miller Milling Company comprised

about 60 percent of total U.S. durum

6 July/August 2001 / Rural Cooperatives

Table 1—Selected income statement and balance sheet information for Dakota Growers Pasta (in $1,000),

inception to first quarter 2001.

1993a 1994 1995 1996 1997 1998 1999 2000 2001b 

Net revenue 0 19,706 40,441 50,694 70,702 119,621 124,869 139,203 64,915 

Net income from patronage (423) (248) 1,394 2,579 6,890 9,359 7,845 7,624 (2,897) 

and non-patronage business 

available for members

Total assets 24,818 45,215 47,842 49,894 68,739 124,534 135,873 131,857 134,494 

Long-term debt 11,557 28,477 29,097 19,752 30,218 66,056 59,116 51,626 48,914 

Members’ investment 12,183 12,107 13,497 24,866 29,956 36,875 58,982 60,533 53,170 

Number of stock shares 4,674c 4,674c 4,674c 5,568c 7,356 7,356 8,603 11,166 11,253 

Earnings per share (0.09) (0.05) 0.30 0.46 0.94 1.27 0.91 0.68 (0.10) 

a Dakota Growers Pasta was formed Dec.16, 1991, and was in development stage through July 31, 1993. Full operations began January 1, 1994.

b Reflects unaudited first quarter (through October 31, 2000) 2001 data only.

c Adjusted for the 3-for-2 stock split that was declared in 1997. Expressed in thousands.

Source: DGP 10-K reports.
Rural Cooperatives / July/August 2001 7

milling capacity. Durum milling plants

have traditionally been located near

durum wheat production or in regions

with favorable rail transportation access

to North Dakota. Milling capacity

increases kept pace with consumption

in the early 1990s but outgrew consumption by 1995. Capacity then began

to decline as older and higher cost

plants began to be shut down (Figure

1). By the late 1990s, capacity was concentrated in Minnesota and North

Dakota, and in Midwestern states such

as Missouri that are on a direct rail line

to eastern North Dakota. 

There are currently 141 pasta plants

that manufacture dry pasta in the United States, but 67 of those plants

accounted for the majority of pasta sales

in 2000. The industry changed with the

entry of vertically integrated firms, such

as American Italian Pasta Company

(AIPC), which had little market share in

1991 but had the largest production

capacity by 1998. The main U.S. pasta

manufacturers, with about 55 percent

market share, are: Hershey Foods,

AIPC, Borden Food Holdings Co.,

DGP, Philadelphia Macaroni Co., A.

Zerega Sons Inc., and Gooch Foods

(owned by Archer Daniels Midland). 

Another 25 percent of market share

is owned by companies that produce

pasta for their internal needs, such as

Kraft Foods, General Foods Inc.,

American Home Foods Products, Con

Agra Inc., Pillsbury, Campbell Soup

Co. and Stouffers Corporation. In

2000, Barilla, an Italian pasta manufacturer, built a plant in Iowa. 

Pasta imports increased in the 1990s

but leveled off when a trade ruling

found that several Italian pasta companies were importing U.S. durum wheat

and selling pasta to the United States at

prices below their marginal costs (i.e.,

dumping pasta). Imports in 2000 represented another 13 percent, while total

domestic capacity was estimated at 3.8

billion pounds per year.

General conclusions about

competition

The change in durum milling capacity and geographic location, coupled

with imports had increased durum

wheat and semolina flour price volatility in the late 1990s. The Minneapolis

Grain Exchange established a durum

futures contract in February 1998, but

it is not widely used due to lack of liquidity. Durum wheat prices rose

because of increased demand for pasta

and lower production yields in North

Dakota due to disease problems. In

addition, the increase in milling capacity in the late 1990s has helped increase

demand for durum wheat, which

increased durum prices. As durum and

semolina flour prices rose and pasta

demand began to plateau, pasta manufacturers found it more difficult to pass

along higher input costs and their 

Table 2—Dakota Growers Pasta timeline of activities, 1991 to 2001

Year Transaction 

1990 North Dakota durum wheat farmers contributed

cash for a feasibility study of an integrated durum

milling/pasta manufacturing plant. 

1991 Results came back positive (15% return on investment over and above the ten year durum wheat

average price per bushel of $3.85). Tom Dodd was

hired as general manager and Gary Mackintosh as

national sales manager in December. 

January-February 1992 1,200 durum wheat farmers from western Minnesota, North Dakota, and northeastern Montana

pledged $12.5 million in equity towards a $40 million durum mill and pasta plant in Carrington,

North Dakota, by purchasing stock at $3.85 per

share and per bushel of delivery rights. 

July 1995 Completion of its first year of operation with 3.2 million bushels of durum milling capacity and 120 million pounds of pasta (almost perfectly aligned as 36

pounds of semolina in a bushel of durum wheat

yields 115.2 bushels of semolina flour for pasta). 

October 1995 Board of directors decided to double durum wheat

capacity. 

February 1996 1,085 producers contributed over $9.7 million in

equity towards the expansion by purchasing stock

at $3.80 per share. 

Summer 1996 Durum mill expansion (6 million bushels of durum

per year). 

July 1997 Three-for-two stock split. 

Summer 1997 Pasta plant expansion was completed (240 million

pounds). 

Fall 1998 Acquired Primo Piatto’s two pasta plants in Minneapolis (200 million pounds of pasta), expanded

Carrington facility to 12 million bushels of durum

milling per year and added an additional 30 million pounds of pasta capacity. 

Winter 2000-2001 Signed agreement with Semolina Specialties, closed

one small plant in Minneapolis, and voted to allow

Canadian members or associations to purchase stock.

Current annual capacity is 450 million pounds of pasta. 

Source: DGP 10-K reports. 
8 July/August 2001 / Rural Cooperatives

margins began to decline (i.e., pasta

prices declined). By 1999, durum

milling capacity was greater than pasta

demand.

History of Dakota Growers Pasta

The 1,084 members of DGP are

durum wheat producers who operate in

the states of North Dakota, Minnesota

and Montana. Dakota Growers Pasta’s

state-of-the-art durum wheat mill and

pasta production facility in Carrington,

N. D., was completed in 1994. The

cooperative has gone through many

changes since its inception (Table 2).

The company uses its semolina in its

own pasta production process. The

vertically integrated facility consists of

a grain elevator, a mill, four pasta production lines, two of which manufactured short goods (such as macaroni)

and two of which produced long goods

(such as spaghetti), and a warehouse to

store the finished goods. 

The cost savings from integration

provide a competitive advantage relative to other firms. Dakota Growers

Pasta has become successful in a very

short period of time and it became the

third largest pasta manufacturer in the

United States (Table 1). Members have

received patronage refunds in every

year since 1996. In addition, a threefor-two equity stock split was declared

in July 1997. The company has

remained profitable during its brief history by increasing the value that members received for their durum wheat relative to non-members in North Dakota

who did not invest in DGP. 

Because the plant had lower costs

relative to others in the industry, it

increased its market share and, hence,

net income. Qualified cash patronage

refunds and non-qualified retained

patronage refunds per share since 1995

are shown in (Figure 3). 

In the beginning, DGP focused

mainly on the private-label business

because that was the quickest way to

enter this industry. During the plant’s

first two years, it produced, among other things, pasta for other companies

that were short on inventory due to

unexpected demand or because of a

shortage of durum wheat (this was

called co-packing). However, DGP’s

sales increased to where co-packing was

less than 1 percent of sales. The retail

private-label and ingredient market

segments comprised the bulk of DGP’s

sales. Branded pasta products represent

an important market segment for the

company. Approximately 60 percent of

its business is retail (primarily private

label), followed by 20 percent in food

service, and 20 percent in the ingredient market. The majority of DGP sales

are under private label although it has

its own label, Dakota Growers, as well

as Pasta Sanita and Zia Briosa. 

Dakota Growers Pasta had grown so

fast that the Carrington plant was already

running at maximum capacity by 1997.

The firm would not be able to sustain

any new growth without additional

capacity. In 1997, DGP acquired Primo

Piatto, which owned two pasta plants in

Minneapolis, Minn. The plants produced

200 million pounds of pasta per year.

Dakota Growers Pasta continued to

meet customer demand for additional

pasta products. In 2000, DGP began a

certified organic pasta product line. In

addition, the cooperative entered into a The sum of patronage refund and retained patronage refund is earnings per share.

Source: FGP annual reports

0.0 0.20 0.40 0.60 0.80 1.00 1.20 1.40

Figure 3 Dakota Growers Pasta qualified cash patronage refund and nonqualified retained patronage

Refund, 1995 to 2000a

2000

1999

1998

1997

1996

1995

■ Qualified cash

patronage

refund

■ Nonqualified

retained

patronage

refund

a The DGP price represents the purchase price, patronage refund, and stock appreciation on a per bushel basis

Source: DGP annual reports

Figure 2 Durum wheet prices for Dakota Growers Pasta members vs. average North Dakota price,

1994 to 2000a

$8.00

$7.00

$6.00

$5.00

$4.00

$3.00

$2.00

$1.00

$0.00

■ Dakota Growers Pasta Members

■ North Dakota Pricex

1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01

continued on page 30
Patrick Duffey

USDA Rural Development

he federal government

has had a long relationship with agricultural

cooperatives, viewing

cooperatives as part of a

national farm policy aimed at fortifying

the income of agricultural producers.

But it took until the 1920s for a formal

policy to jell. The 69th Congress

approved, and President Calvin

Coolidge signed, the Cooperative Marketing Act on July 2, 1926, two days

ahead of the nation’s annual observance

of Independence Day. By its passage,

“helping farmers to help themselves”

became national policy.

This summer marks the 75th

anniversary of that historic legislation

as still another new administration

finds cooperatives a useful part of its

national farm policy. During a special

anniversary observance at the U.S.

Department of Agriculture in Washington, D.C., on June 28, Secretary of

Agriculture Ann Veneman spoke of

the importance of cooperatives to the

rural economy. 

“Our mission provides some valuable tools in the food and agriculture

industry’s toolbox to help them better

compete in today’s changing food system,” Veneman said. “Seventy-five

years after its creation, Cooperative

Services recognizes these changes, and

our employees are playing a major

role in helping promote the opportunities that lie ahead in what promises

to be a world of opportunity.”

In the face of several years of declining commodity prices for farmers,

some farmer-owned cooperatives have

taken a severe economic hit. Mergers

and consolidations have been the order

of the day among cooperatives that are

faced with the declining number of

Rural Cooperatives / July/August 2001 9

From the Northwest comes Tillamook cheese (in this 1940s-era photo), long-cherished by cheese lovers. USDA’s Cooperative Services 

program has produced numerous reports and studies over the years to help maintain a strong co-op presence in the dairy industry. 

All photos for 75th Anniversary section are USDA archive photos, except where noted.

Turmoil of early 20th

century led to USDA role

in assisting co-ops 

T

Years
10 July/August 2001 / Rural Cooperatives

producers and rising energy-based and

other costs. 

This special section of the magazine

reflects on why and how USDA supports cooperatives as an effective farm

policy tool that bolsters the income of

the nation’s food producers and why

that support for cooperatives has continued for 75 years. 

What the law says 

The 1926 law directed the secretary

of agriculture to form a Division of

Cooperative Marketing in USDA’s

Bureau of Agricultural Economics. Seventy-five years later, an expanded and

more refined program supporting agricultural cooperatives is contained within

the Rural Business-Cooperative Service

(RBS) of USDA Rural Development.

While the department’s cooperative

assistance program was formalized in

1926, it was preceded by two studies.

Both are chronicled by Wayne Rasmussen, USDA’s official historian, in his

1991 book, “Farmers, Cooperatives and

USDA: A History of the Agricultural

Cooperative Service,” which also traces

the historical development of cooperative activity in the United States.

In 1901, the department’s first comprehensive study of cooperatives was led

by George Holmes, a statistician in the

Division of Statistics. He tied cooperative failures to the lack of sufficient capital, cooperatives’ need for more experienced business managers and a poor

credit policy. Although Holmes’ 432-

page manuscript was never published, it

“provided our best picture of agricultural cooperatives as they existed at the

turn of the century,” said Rasmussen.

The Commission on Country

Life, appointed by President

Theodore Roosevelt, issued a report

in 1908 that said the greatest need of

country life was “effective cooperation among farmers, to put them on

a level with the organized interests

with which they do business.” The

commission further proposed formation of a cooperative farm credit system. It took until the Federal Farm

Loan Act of 1916 for Congress to

create such a system. 

Eventually, most of the commission’s recommendations were adopted.

Agriculture Secretary James Wilson’s

administration initiated the first specific cooperative research project,

which focused on cotton handling and

marketing.

Unlike other sectors of the national

economy, agriculture was suffering from

over- production after World War I.

The post-war period of American life,

from 1920 to 1932, was one of considerable change, such as the switch from

horse power to motor power. The rapid

In the 75 years since it was signed into law, the Cooperative Marketing

Act has provided the legislative mandate for USDA’s role in helping to

expand knowledge of the cooperative method of conducting business. The

program helps rural residents form new cooperatives and improve the

operations of existing co-ops. The Act specifically directs USDA to:

• Promote knowledge of cooperative principles and practices;

• Gather, analyze, and disseminate economic, statistical and historical

information about cooperatives;

• Study the economic, legal, financial, and social aspects of cooperatives

and publish the results;

• Provide technical assistance and disseminate information useful in the

development of cooperatives;

• Promote the use of U.S.-style cooperatives internationally.

“When the idea of a cooperative comes in contact with felt needs and

the readiness of people to act, it takes root, grows and flourishes. The association of people and enterprise forms a symbiotic relationship of mutual

support...and the business prospers.” ■

– International Joint Project on Cooperative Democracy 

USDA’s Role in Promoting Cooperatives

Group purchase of farm supplies – such as salt, binder twine, fertilizer and coal – by early

farm supply co-ops has now shifted to manufacture and application of crop protectants,

fertilizers, feeds and fuels by major supply co-ops. Above, Southern States Cooperative has

been supplying members’ farm supply needs since 1923, when it was organized as the

Virginia Seed Co.
Rural Cooperatives / July/August 2001 11

business consolidation also applied to

farmers. It brought on what one historian called a “cooperative explosion.”

Knapp’s observations

A historian and author of numerous

books on agricultural cooperatives, the

late Joseph Knapp was administrator of

USDA’s Farmer Cooperative Service (a

forerunner of today’s RBS Cooperative

Services program) from 1953 to 1966.

In his book, “The Advance of American

Agricultural Enterprise,” Knapp said

the most important factor during this

period was “the severe post-World War

I depression which led to chronic agricultural distress in the face of general

business recovery.”

He listed several events which led

to a farm price collapse in 1920: government decontrol of railroads, which

led to higher freight rates on agricultural traffic; the Federal Reserve

Board raised discount rates to curb

inflation; the War Finance Corporation, which had financed agricultural

exports during World War

I, was discontinued; and

the government halted its

support of wheat prices.

Record farm prices at

the start of 1920 spurred

increased production

which caused prices to

plunge. Farm index prices

which stood at 219 in January collapsed to 140 in

December, Knapp said.

Farm commodity cooperatives strong enough to

control prices were advocated as an approach to

solving farm problems

such as this. The legal status of cooperatives was

clarified when Congress

passed the Capper-Volstead Act of 1922. It gave

farmers the right to form

cooperatives without fear

of antitrust action. 

“The law protected cooperatives as they organized

but never gave cooperatives

the right to establish

monopolies with complete immunity

from antitrust laws,” Rasmussen noted.

E. G. Nourse, a leading agricultural

economist of 1920, felt cooperatives

would offer a competitive yardstick in

the business world – a measure against

which to judge traditional investorowned businesses. That yardstick philosophy is still

being used today

to advocate cooperatives.

Cooperative

activity grows

Significant

cooperative

developments

occurred during

this period. In

1916, the National Milk Producers’ Federation

began playing a

key role in advocating the need

for legislation to assist cooperatives.

The National Council of Farmer

Cooperatives Marketing Association

(predecessor of today’s National Council of Farmer Cooperatives, or NCFC)

was formed in 1922, the American

Institute of Cooperation (now part of

NCFC) was organized in 1925 to promote cooperative education, agricultural colleges were devoting more

attention to cooperatives in their

research work and courses of study,

and USDA’s Extension Service and the

American Farm Bureau were actively

promoting formation of cooperatives.

Other leading farm organizations, such

as the National Farmers Union and the

Grange, played active roles during this

early period of cooperative activity. 

By 1925, “the monopoly-control

philosophy of cooperative marketing

had lost adherents; cooperative leadership was shifting to marketing efficiency as the primary objective of cooperative marketing,” Knapp wrote.

Is the Act still effective?

So why is this law still significant

to cooperatives 75 years later? The

act widely interpreted the term “agricultural products” to cover agricultural, horticultural, viticultural, dairy,

livestock and related products, those

from poultry and bee raising, edible

products of forestry, “and any and all

products raised on farms and

processed or manufactured products

CHS’s Savage Terminal Elevator in Minnesota transports

members’ grain to barges for shipment down the

Mississippi River. USDA Cooperative Services grain specialists constantly monitor and report on actions and

trends that impact grain cooperatives.

American Fruit Growers Inc. – seen here circa 1930 – was an early

apple co-op in Wenatchee, Wash. 
12 July/August 2001 / Rural Cooperatives

thereof, transported or intended to be

transported in interstate commerce

and/or foreign commerce.”

The law’s Section 3 covered services

to associations, federations or subsidiaries of agricultural producers

“engaged in cooperative marketing of

agricultural products, including processing, warehousing, manufacturing,

storage, cooperative purchasing of farm

supplies, credit, finance, insurance and

other cooperative activities.” 

The new division’s duties – as outlined in seven subsections – reflected

activities still conducted by today’s RBS

(see box, page 10).

Wider coverage

RBS is part of USDA’s Rural

Development mission area, which was

created in 1994 when USDA consolidated rural economic programs that

has previously been scattered among

various agencies. RBS encompasses

the former Agricultural Cooperative

Service and some of the economic and

business development programs of the

former Rural Development Administration and the Rural Electrification

Administration. 

While agricultural marketing and

farm supply cooperatives remain the

primary focus of USDA’s Cooperative

Services program, its educational

materials are widely used by all types

of cooperatives.

Cooperatives are often a mainstay

and a major employer in rural communities. By one estimate, nearly onethird of the population belongs to some

type of cooperative. Application of the

cooperative business structure is virtually limitless. By working together for

their mutual benefit in cooperatives,

rural residents are often able to reduce

costs, obtain services that might otherwise be unavailable, and achieve greater

returns for their products. 

Although the concept of farmerowned cooperatives has been around

for generations, there has been a

renaissance in the past decade as farmers try to stay afloat by getting a bigger

piece of the food production chain,

according to Mark Drabenscott of the

Center for the Study of Rural America

at the Federal Reserve Bank’s Kansas

City branch. 

From 1997 to 2000, the combination of adverse weather and declining

sales led to retrenchment by many

cooperatives. Some have been selling

selected assets, purchasing private

businesses to strengthen core facets

of the cooperative business, or consolidating or merging with other

cooperatives. 

More producers are forming closed

agricultural cooperatives to produce

products such as beef, bread, turkey,

sugar or pasta to glean more from the

consumer food market, or ethanol fuel

extenders to stretch fuel supplies, protect the environment and provide a

livestock feedstock. ■

Cooperatives operate major shipping terminals to export grain to foreign markets.

In 1934, horse-power was still needed to help a cabbage growers’ co-op get its crop to a

railhead of the Norfolk and Western railway. 
Rural Cooperatives / July/August 2001 13

By John Wells, Director

USDA/RBS Cooperative

Development Division

ven before the Cooperative Marketing Act of

1926, the U.S. Department of Agriculture was

in tune with the development of cooperatives in the United

States and was responding to the growing needs for information regarding

cooperatives. USDA’s first cooperativespecific project, the “Farmers Cooperative Cotton Handling and Marketing

Project,” was authorized by USDA’s

Bureau of Plant Industry in 1912. 

This project included: devising a

simple form of cooperative organization; compiling state laws relating to

cotton ginning and warehousing; surveying freight rates and surveying cotton handling mechanisms. This was the

genesis of the research and service

assistance to cooperatives now

administered by the Cooperative

Services program of USDA’s Rural

Business-Cooperative Service.

Possibilities of cooperation in

agriculture appeared unlimited to

many people during the 1920s. As

interest and public support for

cooperatives grew, so did the problems facing these relatively inexperienced organizations. This led to

greater demands on USDA for advisory assistance on economic and

business problems.

Scope of work changes 

Over time, the scope and direction

of assistance to cooperatives by the

Department of Agriculture changed

with the needs of farmers and their

associations. The Cooperative Marketing Act created a focal point for carrying out government efforts for improving cooperatives as a way to benefit

farmers. Essentially, this legislation

directed the secretary of agriculture to

establish a unit that would carry out a

comprehensive program of service,

research and education for agricultural

cooperatives on a permanent basis.

It should be noted, however, that

after passage of the Cooperative Marketing Act, the department’s newly

formed Cooperative Marketing Division did only limited work in direct

consulting, or advising, with producer

U S DA’s e x p a n d i n g c o o p e r a t i v e

development assistance role

E

From co-op boardrooms to the fields and packing plants, USDA Cooperative Services staff

travel wherever needed when providing technical assistance, as seen here circa 1930.

USDA staff can help with all stages of starting a co-op, from feasibility study to drafting

bylaws and developing a marketing strategy. (Lower) The number of black farmers in the

United States has dropped sharply, but some—such as Ben Burkett of the Indian Springs

(Mississippi) Farmers Cooperative (right)—are using cooperatives to increase their ability

to compete. USDA photo by Bob Nichol 

Years
groups seeking to form cooperatives.

Rather, the emphasis was in providing

the general background information

that would be useful to those who were

actively engaged in assisting producers’

organizing efforts. During this time,

many field marketing specialists and

county extension agents were active in

the formation of local cooperatives.

As the need for cooperative support

shifted, so did the emphasis of the

Cooperative Marketing Division. During these early years, the cooperative

program was transferred several times:

from the Federal Farm Board to the

Farm Credit Administration, then being

elevated to agency status in 1953 as the

Farmer Cooperative Service (FCS). It

was with FCS that cooperative development technical assistance began to take

on added emphasis. The agency became

more directly involved in helping unorganized producers form cooperatives. 

This direct involvement had become

necessary because cooperative organizational efforts were not being assisted

by others. This type of technical assistance was made available in addition to

the ongoing research and preparation

of various publications on cooperative

interests and organization.

Providing direct technical assistance

to producer groups interested in organizing cooperatives has been an ongoing effort since the days of FCS,

through its successor organizations, to

the Cooperative Services program of

today’s Rural Business-Cooperative

Service. The initial cooperative development program was comprised of

international, rural services and training functions which responded to needs

beyond those of established cooperatives. The program emphasis was on

rural and cooperative development

activities that encouraged the organization of new cooperatives and provided

training to those seeking to form them.

A small number of field offices were

established to bring this direct assistance closer to those areas where the

need was greatest for organizing and

developing new cooperatives.

Larger field staff aids development 

Today, as a result of USDA’s most

recent reorganization efforts, direct

cooperative development assistance to

rural and agricultural producers is

accessible through 47 state Rural

Development offices and a national

office staff based in Washington, D.C.

The role of these cooperative specialists

is to work with producer groups and

assist in the organization of new cooperatives using a disciplined approach to

business development and educational

activities. This “hands on” approach to

co-op development assistance is just as

important today as it was 75 years ago. 

Within the past five years, additional financial resources have been

made available through the Department to encourage the development

and use of cooperatives as an economic tool for farmers, ranchers and

other rural residents to improve their

financial well-being. A Rural Cooperative Development Grant (RCDG)

program has been funded, with

increasing amounts, over the past five

years (growing from $1.5 million in

1997 to $4.5 million in 2001) to

encourage establishment of regional

cooperative development centers

throughout the country. 

The purpose of the centers is to

supplement, not replace, USDA’s

ongoing assistance to cooperative

development initiatives. In fiscal year

2000, 21 different centers were funded

to expand cooperative efforts in the

United States. Other programs,

including loan and grant programs of

the Rural Business-Cooperative Service, have established “set-asides” and

funding opportunities for producers or

groups of producers wanting to form

new cooperative ventures. Programs

such the “Cooperative Stock Purchase

Program” provide loans to producers

seeking to join new cooperatives that

produce value-added goods.

Today, the U.S. Department of

Agriculture continues to provide not

only direct technical assistance to

“groups of producers desirous of

forming cooperative associations,” but

also financial assistance to cooperative

business efforts and encouragement of

others to engage in cooperative development assistance work. The Cooperative Marketing Act of 1926 established the foundation for this kind of

assistance to producers and 75 years

later the need for this type of service

still exists. ■

14 July/August 2001 / Rural Cooperatives

Whether in a church basement, a modern boardroom or an annual meeting at a high

school gym, cooperative meetings are a crucial part of the fabric of rural life across

America. Here, USDA co-op development specialist Wade Binion and a co-op board discuss strategy for opening a small crab-meat packing plant on Smith Island, Md.. USDA

photo by Bob Nichol 
Randall E. Torgerson, 

Deputy Administrator

USDA Rural Business-Cooperative

Service

t is natural that the

anniversary marking 75

years since passage of the

Cooperative Marketing

Act of 1926 should focus

on services that USDA provides to

associations of agricultural producers

authorized in the act. However, two

other provisions included in the Act

hold great importance for how cooperative systems are structured to represent the economic interests of farmers

and for how the agriculture secretary

can receive advice regarding cooperative business activity. 

Section 5 (7 U.S.C. § 455) of the

Act says farmers, through their associations, “may acquire, exchange, interpret, and disseminate past, present, and

prospective crop, market, statistical,

economic and other similar information by direct exchange between such

persons, and/or such associations or

federations thereof, and/or by and

through a common agent created or

selected by them.”

This provides for more than farmers

exchanging price information at a local

cooperative meeting. It means farmers

and their local, regional and national

cooperatives can legally exchange a host

of information within their marketing

systems. This is a critically important

strategic authorization that enables federated cooperative systems and marketing agencies-in-common to effectively

function as coordinated entities.

It was recognized in the 1920s that

to empower farmers to effectively represent farm interests, their local and

regional cooperatives had to broaden

their scope of activities through affiliation with other cooperatives. This

helped farmers to develop critical mass

and market presence in both purchasing and marketing activities. Only by

this means could economies of size be

realized to meet market demand and

develop a degree of marketing power

for farmers and ranchers. 

This provision extends and expands

cooperatives’ authority to act on behalf

of members beyond the provisions of

the Capper-Volstead Act of 1922. Capper-Volstead clearly permits use of federations and marketing agencies-incommon in its provisions which

provide farmers a limited antitrust

exemption when organized for jointmarketing purposes. To the extent that

the 1926 act addressed the needs of

farmers for exchanging information in

coordinated marketing systems, it is

viewed as their legal authorization for

further exemption from the antitrust

statutes. In short, it builds upon the

landmark Capper-Volstead Act.

Section 4 (7 U.S.C. § 454) of the Act

authorizes the secretary of agriculture

to call advisors to counsel him or her

on specific problems of cooperative

marketing of farm products or any other cooperative activity. To carry out this

advisory function, the Secretary may

pay actual transportation expenses and

a per diem to cover subsistence and

other expenses associated with such

travel. This provision enables the Secretary to draw on the full range of

available expertise to solve producer

problems through cooperative marketing activity. ■

Rural Cooperatives / July/August 2001 15

I

Significance of the

Cooperative Marketing

Act’s other key provisions

President Dwight D. Eisenhower signs the Farm Credit Act of 1953, the legislation that created the Farm Credit Administration as an independent agency and the Farmer Cooperative

Service (now RBS Cooperative Services) as an agency within USDA.

Years
16 July/August 2001 / Rural Cooperatives

By John Dunn, Director

Cooperative Resources Management Division

USDA/RBS Cooperative Services 

esearch on cooperatives is the root and cornerstone of the intellectual services provided to

farmers, cooperatives and rural residents by the

RBS Cooperative Services program of USDA

Rural Development. A range of research activities relating to the economic, legal and social aspects of agricultural cooperatives provides farmers and their cooperatives

with a more thorough understanding of the challenges they

face in building and maintaining strong cooperative businesses. Research covers such diverse areas as finance, planning,

commodity and product marketing, membership roles and

relations, organization and governance, compensation, sales

and management practices. 

The outcomes and products of Cooperative Services

research activities are targeted to several audiences, as well as

internal uses in Cooperative Services’ technical assistance, statistical, cooperative development, and educational activities

assigned under the 1926 Cooperative Marketing Act. The

first and primary audience is composed of farmers and cooperatives who benefit from using Cooperative Services research

results and products within their own organizations. Other

important audiences include public policy makers, academic

researchers, nonprofit and trade associations and students. 

Cooperative Services research projects are conducted by

staff members on an individual and study-team basis. Most

Cooperative Services staff are involved in various research

projects as well as providing technical assistance to cooperatives. Research is frequently conducted in conjunction with

landgrant universities through cooperative research agreements and other collaborative efforts. On occasion, research is

also conducted in partnership or collaboration with other

government agencies or trade associations. Cooperative Services staff are specialists in a diverse range of cooperative and

product market areas, and are able to provide research on a

wide variety of needs of the farm and cooperative community. 

Cooperative Services research findings are disseminated in a

variety of ways and methods. In addition to hard

copy reports published by USDA, reports are

posted on the Internet and staff members submit

papers to various academic journals and make

presentations before various professional associations. Research findings and products produced

under cooperative research agreements with

landgrant universities are disseminated through

the routes mentioned above, as well as a vast

array of university, extension service, and state

publications and information systems. 

Technical assistance

With its expertise in a broad range of subject

R

Research and technical

assistance work are heart of

Cooperative Services mission

Customers get expert advice

and the farm supplies they need

at a Southern States

Cooperative store in North

Carolina. USDA Cooperative

Services has staff economists

who specialize in farm supply

operations and who regularly

issue reports and articles

designed to help improve the

competitiveness of supply coops. USDA Photo by Ken

Hammond 

In 1959, farmers delivered grain for grinding at their co-op feed mill

in Beloit, Kan. Co-ops often create jobs in small towns where every

job is important to the local economy. Then and now, research conducted by USDA Cooperative Services economists has helped coops, large and small.

Years
Rural Cooperatives / July/August 2001 17

matters, Cooperative Services staff can assemble highly effective

teams to analyze and assist individual cooperatives in dealing

with the unique circumstances they face. Cooperative Services

provides a range of types of technical assistance to cooperatives.

This technical assistance generally takes the form of business

consulting services provided to cooperatives on a client basis. 

Technical assistance includes special studies and well as various forms of training and facilitation of planning activities.

Findings of studies become proprietary to the recipient organization. Use of the findings and recommendations provided

through technical assistance is a private and wholly independent decision of the recipient as well.

Common types of technical assistance studies include

merger analysis, operational reviews, comparative cost studies,

member attitude studies, equity or capitalization plan reviews,

product market development and assessment planning, and

industry prospect assessments. Projects are initiated at the

formal request of a cooperative or group of cooperatives and

are carried out by Cooperative Services staff at no cost to the

recipient group. While Cooperative Services technical assistance is used by a wide-range of sizes and types of cooperatives, a typical recipient of this service is a local cooperative

that is not large nor sophisticated enough to employ staff or

contract for complex business or financial analysis. 

Because Cooperative Services research and technical assistance activities are tightly interwoven, information and expertise gained by staff members through research activities are

directly applied in carrying out technical assistance. In turn,

technical assistance helps identify emerging and crucial issues

for research and can, with the permission of recipient groups,

provide information and data for use in research projects. 

These synergies don’t end with technical assistance and

research activities. Studies’ findings and staff expertise are critical

to the production of educational materials and programs produced by Cooperative Services and are an interactive part of the

statistical analysis mandate of the Cooperative Marketing Act. ■

Then and Now

The USDA Cooperative

Services staff in 1926 and in

2001 — the faces and styles

have changed, but their goal

remains the same: working to

ensure a strong cooperative

sector. Randall Torgerson,

Deputy Administrator for RBS

Cooperative Services, is at far

left in bottom photo. While all of

the women pictured in the 1926

photo were clerical staff, many

of the women pictured in the

current staff photo are economists, statisticians and education specialists. Top: USDA

archival photo; Bottom: USDA

photo by Dan Campbell 
18 July/August 2001 / Rural Cooperatives

By Charles A. Kraenzle,

Director, Statistics Staff

USDA Rural Business-Cooperative

Service

nderstanding farmer

cooperatives requires a

detailed analysis of statistics. The Statistics group

in the Rural BusinessCooperative Service (RBS) of USDA

Rural Development has the responsibility of collecting, editing, tabulating

and presenting these important statistics related to cooperatives’ status,

progress and growth. Statistics provide

information for education, research

and other work that improves the

cooperative way of doing business.

Through RBS, USDA is the only

source of detailed information on U.S.

farmer cooperatives and their service to

American agriculture.

The Cooperative Marketing Act of

1926 (CMA) authorized gathering statistics and other information about farmer

cooperatives. Specifically, this Act gave

USDA authority “to acquire, analyze

and disseminate economic, statistical and

historical information regarding the

progress, organization and business

methods of cooperative associations in

the United States and foreign countries.”

Although the Act authorizes the collection of statistics and other information in

foreign countries, RBS focuses this effort

on U.S. cooperatives.

Statistics on farmer cooperatives

were important long before Congress

passed the CMA. The earliest statistics

on cooperatives were compiled about

1863, profiling the operations of 35

cooperative cheese factories (see 

Cooperative Information Report 1, Section 26, “Cooperative Historical Statistics”). The first nationwide survey of

farmer cooperatives was conducted from

1913 through 1915 by USDA’s Office of

Markets and Rural Organization.

The Bureau of Census in the United

States Department of Commerce conducted the second nationwide survey of

farmer cooperatives in 1919. In early

1922, USDA’s Bureau of Agricultural

Economics, within the Division of

Agricultural Cooperation, began

another nationwide survey of cooperative buying and selling activities. This

annual collection of data on farmer

cooperatives continued through 1926.

During the 1925-26 marketing year,

when Congress passed the CMA, USDA

listed 10,803 farmer cooperatives. That

number reached a high of 12,000 in

1930. The number had declined to 3,466

farmer cooperatives by 1999 due to dissolutions, mergers, consolidations and

acquisitions. Many of these mergers and

acquisitions, however, have resulted in

the merged or acquired organization

becoming a branch operated by the

headquarters operation. For example, in

1999, 2,209 grain and farm supply cooperatives operated an estimated 5,330

branches serving member and nonmember patrons.

At the same time, the gross business

volume of farmer cooperatives has been

increasing, especially in the early

1970s. When adjusted for price

changes, however, the real increase has

not been that significant. One could

look at the effect of price changes in

another way. A cooperative in 1926

with $5 million in marketing sales

would be similar to one with $21 million in sales in 1999.

While cooperative numbers have

declined, the survivors became larger.

Analyses of historical data show some

interesting trends. Data on cooperatives grouped by size of business were

not published until the mid-1950s. In

1955-56, the business volume of

9,493, or 96.6 percent of U.S. cooperatives, was less than $5 million. This

had dropped to 4,545 (70.5 percent of

all cooperatives) in 1979 and 1,719

cooperatives (49.6 percent of all cooperatives) by 1999. This reflected the

growth in cooperative business volume over the years. 

By 1989 and 1999, 38.9 percent and

50.4 percent of all cooperatives had

business volume of $5 million or more,

respectively. Those cooperatives with

$25 million or more in sales increased

from 295 (4.6 percent of all cooperatives) in 1979 to 503 (14.5 percent of all

cooperatives) in 1999. ■

U

Statistics show cooperative

status, progress and trends

What was the value of fruit and vegetables

marketed by cooperatives in 1940—or in

2000? The statistics staff of USDA’s

Cooperative Services can tell you. 

Years
Rural Cooperatives / July/August 2001 19

Jim Wadsworth

Program Leader, Education and

Member Relations

USDA/RBS Cooperative Services

ooperatives are different

from other forms of

business because they

are organized according

to fundamental,

immutable tenets known as cooperative principles. As mandated by the

Cooperative Marketing Act of 1926,

the USDA/RBS Cooperative Services

program takes seriously its responsibility to promote knowledge of cooperative principles, as well as other

cooperative practices. Cooperative

education has been a mainstay of

USDA’s co-op program for 75 years.

This long timespan alone might

make one logically surmise that knowledge of cooperative principles and practices should , by the year 2001, be well

ingrained in the American business and

farm culture. However, reality is far different. Even third- and fourth-generation cooperative members often have

only a superficial understanding of

cooperative principles. Thus, education

on cooperative principles and practices

is as important today as it ever was. 

With changing demographics and

scope and structure of agri-business, a

highly competitive business environment,

complex decisions for producers and new

concepts such as new-generation (valueadded) cooperatives, there is still a critical

need for cooperative education. 

Co-op education improves 

odds of success 

Cooperative education continues to

be necessary for a number of reasons.

When a co-op education program is

well developed and wide-reaching, it

should: 1) provide a higher probability

for a successful cooperative; 2) provide

producers with sufficient understanding of cooperatives as a form of business enterprise to make an informed

assessment of a whether to pursue the

cooperative business option; and 3)

provide improved understanding for

individuals, the public and policymakers leading to continued support for

cooperatives.

Cooperatives are more likely to be

successful when their members fully

understand their responsibilities to

cooperative principles and the practices

they involve. Odds of success for a coop also improve when the public knows

how cooperatives work and can see

their benefits to members and to communities, and when young people learn

what cooperatives are and how they

operate so that their interest in cooperatives takes hold. 

When groups of producers and/or

rural residents looking to develop a

business idea fully understand the

unique workings and benefits of cooperatives, they are better able to adequately assess the cooperative model as

a potential option for prospective business endeavors.

When responsible individuals

working in the public arena or making

policy have a solid understanding of

cooperatives, they are able to clearly

see the value cooperatives bring to

individuals and their industry. They

are then in a better position to debate

and formulate cooperative-related

support, policy and law.

Education activity

Cooperative Services provides cooperative education in a number of ways.

Education is proffered through a wide

variety of booklets and research reports

and Cooperative Services’ own bimonthly magazine, Rural Cooperatives.

These publications are available both in

hard copy and on the Internet. Educational materials and programs developed for high school and other ag-education programs have also been widely

distributed. Videos for use by cooperative educators are available, as well.

Cooperative Services acts as a library

for much of the cooperative community

by housing and providing a vast array of

materials about many aspects of the

cooperative way of doing business. 

Cooperative Services research on

numerous relevant cooperative topics

add to the literature on cooperatives

which contribute to overall education

and knowledge about cooperatives.

Advanced study of cooperative principles, practices, statistics, marketing,

management and theory offer greater

understanding of cooperatives to those

involved in the cooperative arena.

Cooperative research agreements with

institutions of higher learning provide

another vehicle for cooperative material development.

Technical assistance offered through

workshops, short-term consulting and

feasibility studies provide a pointed

method of education to specific cooperative audiences. Educational forums

and workshops are held for various

cooperatives and cooperative audiences.

Cooperative Services works with other

cooperative professionals and educators

via institutes, seminars, conferences,

U S DA’s c o m m i t m e n t t o

cooperative education 

C

Years
20 July/August 2001 / Rural Cooperatives

committees, joint projects, etc.

USDA’s cooperative education services and products are made available

to cooperative members, boards of

directors, managers and employees, as

well as farmer groups, young farmers,

young cooperators, youth and the general public. 

Delivery mix combines 

new and old methods

Given advanced technology, cooperative information and education materials are taking new forms. PowerPoint

presentations have become popular in

educational settings. CD-ROM and

Web site interactive programs are being

developed to teach cooperative principles and practices through electronic

means. Web sites of government agencies, cooperatives, cooperative development centers, cooperative associations,

etc., are proliferating and a major goal

of these platforms is to inform people

about cooperatives. These electronic

delivery systems will see further development and refinement in the years

ahead. Cooperative Services is also

working toward greater involvement in

this important area.

At the same time, it is important to

realize that cooperative education is still

developed and delivered the old-fashioned way—these efforts are often individually tailored to specific audiences.

This is done largely on a piecemeal

basis, where educators develop “packaged” materials dependent on the specified cooperative-topic needs of given

groups. Hard copies of quality educational pamphlets and reports remain in

demand and are still used extensively.

It is apparent that cooperative education will be delivered as a mix of systems

in the future. Cooperative Services and

other educators will rely on blending

quality components of both the old ways

and the new to spread the word of cooperative principles and practices. 

An enduring commitment

Cooperative Services is a leader in

providing public assistance to cooperatives, much of it in an educational vein.

As RBS Deputy Administrator Randall

Torgerson says: “Public sector assistance to the cooperative sector is distinguished in this country as being

facilitating—not regulatory—in nature.

An underlying rationale for use of taxpayers’ dollars supporting this activity

is that cooperatives assist those in the

marketplace who are structurally disadvantaged by their relative size and

access to markets, and the fact that

cooperatives actually are viewed as a

competition-enhancing force in the

marketplace from which all of society

benefits.” 

It is with this philosophy—in conjunction with the mandate of the

Cooperative Marketing Act of 1926—

that Cooperative Services extends

cooperative education services and

products to cooperatives, rural residents, and the general public. The

ongoing need for education on cooperative principles and practices will not

diminish and Cooperative Services has

an enduring commitment to being a

principal provider. ■

Conducting business-like, informative meetings that encourage member participation is essential for a strong cooperative. For 75 years,

member education services and information products from USDA’s Cooperative Services program have been helping co-ops conduct better

meetings and member-relations programs. 
Rural Cooperatives / July/August 2001 21

By James Haskell,

Assistant Deputy Administrator

USDA/RBS Cooperative Services

lthough still in a rudimentary state, a string of

more than 50 village

bank cooperatives have

been established to bring

a measure of individual and community

stability via financial services to the

former “Homelands” of South Africa.

Dozens more are in the development

stage. All are operating with a small

profit and have no delinquencies.

For the first time, thousands of

these rural African residents have

access to financial services. Project

funding came principally from USAID,

with development work administered

by staff of USDA/RBS Cooperative

Services and private firms under contract for specialized financial services.

Cooperative Services developed models of a business plan, a marketing

strategy and an operations manual for

use by the cooperative banks. A twoweek study tour in the United States

was conducted for two South African

government officials to acquaint them

with our systems for delivering financial services to rural areas.

This type of international development work is an adaptation of authority

contained in the Cooperative Marketing Act of 1926 and the Agricultural

Marketing Act of 1946. The 1926 law

directed the Secretary of Agriculture

“to work with institutions and international organizations throughout the

world on subjects related to the development and operation of agricultural

cooperatives.” That activity today is

conducted by Cooperative Services .

One drawback to Cooperative Service’s international development work is

that Congress has not provided a specific

budget marks for the program’s international work. So most of our assistance

over the years has either been through

information exchanges and meetings, or

through in-country technical assistance

activities funded by international donor

groups outside the appropriations

process. This effort has tended to center

around U.S. foreign policy directions at

any given time (Central and South

America in the 1960s and 1970s, the

Pacific Rim in the 1980s, and Africa in

the 1990s). Numerous requests for technical assistance came in from Eastern

European countries following the fall of

the Iron Curtain.

Each year, Cooperative Services

hosts hundreds of foreign visitors who

are interested in U.S. cooperatives and

want additional information or advice

on how our cooperative practices and

operations might be adapted to their

countries. These groups often involve

farmers (or representatives of farmer

associations), parliamentarians or other

policy makers, and state or national government officials. Some of the initial

contacts are received directly by Cooperative Services while others stem from

a variety of donor agencies, such as the

World Bank and USAID. In some cases,

they come through foreign or U.S.-

based economic development entities.

Cooperative Services publications

that explain how U.S. cooperatives are

structured and function are in high

demand from these groups and

through direct communications with

other foreign and domestic entities.

Many of these basic cooperative publications have been reprinted in several foreign languages and are widely

distributed by governments, non-government organizations and through

the Internet. The “U.S. style” of

structure and operations, where farmers are the users, owners and beneficiaries of successful cooperatives, has

obvious global appeal.

This is certainly true in South Africa.

During the apartheid years in South

Africa, the black population was shuttled into these remote rural “Homelands” areas with no services. They

carved out a subsistence living. They had

no access to financial services and had no

place, for instance, to deposit their small

monthly government pensions. 

Although still small in terms of the size

of the country, these locally owned cooperatives are located principally in agricultural areas and some are starting to make

loans. The banks are self-regulated 

A

African village banks project

shows renewed emphasis on

international co-op development

South Africans on their way to pick up pension

checks scan the goods in a street market. Cooperative Services is helping establish a network of

cooperative “village banks” to provide financial services to rural areas in South Africa. Photo courtesy

Jon Greeneisen 

Years

continued on page 30
22 July/August 2001 / Rural Cooperatives

By R. Jon Lee, CEO, Jel

Productions

Editor’s note: This is the first of two

columns dealing with major communications projects undertaken recently by Blue

Diamond Growers, a California-based

almond cooperative. In this issue, the focus

is on development of the co-op’s new Web

site. The author is the CEO of Jel Productions, a web development firm. In an

upcoming issue, the focus will switch to how

the co-op produced a new book tracing the

history of Blue Diamond.

he Internet is an excellent medium for a cooperative or other business

seeking to save money,

reduce the amount of

time required to market its product or

service and strengthen its position in

an industry. However, in today’s economy, gone are the days when an

Internet project can go online

simply by a CEO boldly proclaiming, “Make it happen!”

without first asking, “Can it be

done in less time and with less

money?” Blue Diamond

Growers, an almond growerowned cooperative, recently

built an exceptional Web site

in record time. But it didn’t

happen by accident. 

12 ways to save

Any project, online or off,

can be broken into four phases:

Discovery, Design, Development and Deployment (the

four Ds). Removing any one of

the four phases is not a viable

means to reduce costs. Indeed, adhering

closely to the goals of each phase avoids

cost over-runs and scope creep (the

process by which costly add-ons are

tacked on to a project mid-stream). 

In the Discovery phase, the project

team (determined by scope and budget)

meets to answer the basic questions of

Who, What, Where, When, Why and

How. A vital step in producing the

“road map” for the project, this phase

is time and resource intensive as it

requires representation from the major

divisions of your co-op. 

(1) Blue Diamond assigned an internal project manager, Joe Potts, manager

of information and technical services, to

the project. This gave Jel a central point

of contact for all project decisions,

avoiding unnecessary delays when management and other co-op decisionmakers were unavailable. Having an internal

project manager also creates a sense of

ownership and accountability for clientspecific deliverables.

It’s surprising the number of times

we’ve been told that the target audience is “everybody.” Instead, a business

must get to (2) know its audience and

identify their spending habits, income

brackets, behaviors and motivations. It

is essential to be honest about your

product or service and its ability to

meet the audience’s needs. 

Ryan Thompson and Craig Rolfe of

Jel worked with Potts to determine the

Blue Diamond strengths to be emphasized in the Web site and the obstacles

to overcome. “We broke their audiences into four categories and assigned

a priority to each. Then we asked what

services or products could be made

available online to serve each audience,” Thompson says.

Most importantly, (3) do the research

before hiring a development firm. Spend

time on the Internet visiting

the sites of competitors or other businesses in the same

industry. Visit nationally

branded sites to become familiar with what is standard in a

site and what functionality

might need to be included.

Read up on new technologies

for online ventures. 

“We researched our industry, reviewed client feedback

and performed a departmentby-department needs analysis

prior to the redevelopment of

our corporate Web site,” says

Potts. As a result, Blue 

Diamond asked Jel to perform a complete redesign and

development of its corporate

Moving e-fficiently into e-commerce 

A guide for businesses ready to go online, big time

T

MANAGEMENT TIP

Joe Potts, on the right, led the team that developed Blue Diamond’s

new Web site. Photo courtesy Blue Diamond Growers 
Web site, including the addition of ecommerce capabilities. Because Blue

Diamond had performed preliminary

research, the discovery process was

more productive and the solutions and

services provided to it resulted in a

higher return on investment.

Building from the Discovery phase,

the Design phase tackles the structure

of the site (primary, secondary and tertiary navigation) as well as the more

complex functions and application

design. In others words, chosen technologies need to meet objectives. 

To get a headstart, (4) draw a diagram or flowchart of the desired site

and pinpoint what information will be

needed for each section of the site. A lot

of time can be chewed up deciding what

to label the primary navigation tools.

Instead, decide these elements before

signing with a development firm.

Tell your development firm what

you want, (5) and be specific. Blue 

Diamond outlined the business logic

behind the desired application. To 

support its new online store, Blue 

Diamond’s customer service needed an

administrative application that would

change orders, perform refunds, take

phone orders and update inventory. Jel

programmed and deployed an easy-touse administrative application for order

tracking in less than one month.

The design phase is comprehensive

in scope, tackling everything from 

content and design to functionality and

user interface. Rather than launching

and waiting to hear how the target

audiences react, spend some time on

(6) usability testing prior to launch. This

is an invaluable tool that can save time

and money, not to mention face. Blue

Diamond tested the new site with users

of all skill levels. The feedback assisted

in refining the entire site.

(7) Begin the content gathering,

writing and editing process as early as

the discovery phase. Content is the No.

1 cause of project delays. 

“It can be difficult to ask busy managers and directors to participate when

they are focused on other priorities.

You must provide these professionals

plenty of lead time,” Potts said. 

The Development phase is when

the Web firm rolls up its sleeves and

produces the site. From static HTML

coding to dynamic, online applications,

the site is produced, integrated and put

through a series of quality assurance

tests. Improvements are catalogued and

scheduled. At the end of this phase, a

series of “beta” tests are conducted in a

secure environment, allowing the client

to preview the product prior to launch.

We advise that the team be held

accountable for delays. Throughout

the timeline, Blue Diamond was asked

to review, sign and turn over deliverables to the development firm and to

review designs, pages or applications. 

(8) Stick to the schedule. Delays on

the client side can impact production

schedules and create project conflicts

for the development firm. Rush fees,

cost creep and delays can be avoided by

sticking to the schedule. The Blue 

Diamond site was a challenging project

under tight deadlines, but all concerned were pleased that the final

result met all project criteria within

eight weeks. Last-minute changes,

adding new functions or changes in

client personnel can hinder the project.

(9) Avoid surprises by taking extra

time in the discovery and design phases.

This can eliminate “Oh, I’ve got a great

idea!” change orders that can affect 

project costs and launch date. The development phase is notoriously non-client

related. At this point in the project, the

development firm should have all the

answers and deliverables it needs. It may

check in with project status and lastminute corrections, but for the most part

this phase requires less client interaction. 

This is an advantageous time to (10)

prepare for launch. Work on the marketing plan for announcing your new

site, upgrade internal processes to handle online product sales or train customer service staff on how to handle

Internet customers. Blue Diamond

trained each department on the procedures for updating the new site, as well

as the e-mail communication assignments, prior to launch. 

Deployment is the exciting phase,

when the switch is turned on and the

site is live. Training and documentation

are provided if needed and a maintenance plan generated for the upkeep of

the site. (11) Review the documentation produced in the discovery phase.

Has anything been left out? Were decisions made along the way that affected

the end product negatively? Are project

goals and objectives fulfilled by the finished site? These are questions that

should be asked throughout the project,

but most importantly prior to launch.

And remember that no matter how

beautifully designed or easy to use, your

site will never succeed if your audiences

don’t know it exists. (12) Promote it,

update it, change it often to keep it

fresh. Blue Diamond launched a banner

campaign to announce the launch of its

new online store. Blue Diamond also

initiated a press campaign announcing

the launch of the new corporate site,

www.bluediamond.com. And, to continue the growth of online product sales,

Blue Diamond frequently provides

online product discounts.

Following these simple steps, corners can be cut without jeopardizing

the project. ■

Rural Cooperatives / July/August 2001 23

Blue Diamond Growers is the world’s largest tree nut processor and marketer. Headquartered in Sacramento, Calif., 4,000 California almond growers

deliver more than one-third of the state’s almonds annually to their cooperative. The crop is marketed to all 50 states and more than 90 foreign countries. Almonds are California’s No. 1 food export, and the sixth largest U.S.

food export, based on value. The California crop is valued annually at about

$1 billion. Blue Diamond’s sales average about $500 million annually. ■

About Blue Diamond Growers
Farmland sells grain division 

to joint venture with ADM

A new joint venture between Farmland Industries and Archer Daniels

Midland (ADM), being managed by

ADM, completed takeover of Farmland’s grain division on June 1. ADM

absorbed 280 of Farmland’s employees, but 175 were left unemployed or

seeking relocation elsewhere in the

cooperative’s system. 

The joint venture gives ADM control over the bulk of Farmland’s grain

operation of 24 elevators with a total

capacity of 174 billion bushels. Included in the action was the cooperative’s

brokerage arm, Atwood Commodities,

and grain-testing laboratory at Bonner

Springs, Kan. Both services are duplicated elsewhere by ADM’s operations.

Profits from the new joint venture will

be shared by ADM and Farmland.

The pact was the latest in restructuring steps Farmland has been taking

to improve its financial standing. The

co-op suffered a $29.25 million loss

for fiscal 2000, its first loss since 1993.

The rising price of natural gas, a

major component in fertilizer manufacturing, has been a prime factor in

its losses. The cooperative also plans

to close its canned ham plant at Carroll, Iowa.

On the brighter side, Farmland’s

operations for the first six months of

fiscal 2001 are showing after-tax earnings of $5.4 million, up from a $48.6

million loss a year earlier. Total sales

reached $6 billion, up from the $5.8

billion reported for the corresponding

period in 2000.

Meanwhile, the cooperative has

shut down its fertilizer plants at

Lawrence, Kan., and Pollock, La., due

to a weak fertilizer market and high

gas costs. The plants produced urea

ammonium nitrate and anhydrous

ammonia. Operations at the fertilizer

plant at Enid, Okla., have been

reduced. Cooperatives can purchase

and sell fertilizers brought in from

the Gulf of Mexico cheaper than it

costs to produce them at Lawrence.

About 60 of its 158 employees were

laid off. 

Looking ahead, Farmland hopes to

wean itself away from the high-cost of

natural gas by buying energy from

SynFuel Technologies, a growing

young company in the alternate fuel

industry.

Farmland and SynFuel will participate in an $800-million coal gasification plant adjacent to Farmland’s fertilizer manufacturing plant at Enid.

Under a long-term supply agreement,

Farmland will purchase steam and

nitrogen from SynFuel for use at

Enid. 

This will be the first plant for the

two-year-old firm, based at Glen Carbon, Ill. The plant should be ready in

June of 2004 if necessary permits are

obtained. Plant engineering has begun

and construction could start in August

of 2002.

The company also expects to sell gas

to a power utility to generate electricity. The process also creates nitrogen

that can be used to make fertilizers. 

Farmland believes coal gasification

could generate a savings of 40 percent

below the current natural gas price. A

similar technology is being used at

Farmland’s new fertilizer plant at Coffeyville, Kan.

Agri-Mark has $1.9 million profit

Improved butter markets and

record sales of Cabot products were

credited for $1.9 million in profits for

Agri-Mark’s fiscal 2000 business year.

The New England dairy cooperative’s

branded products continued to grow,

said President Paul Johnston. The

new whey protein plant and other

manufacturing facilities are operating

well, he said. During the year,

improvements were made in butter

operations, cheese packaging and cultured products to keep pace with the

growing demand. “The growth and

success of our Cabot brand shows

what dairy farmers can do if they

belong to a cooperative like AgriMark and work together to market

their milk,” said Chairman Carl

Peterson, a dairy farmer from Delanson, N.Y. The board has allocated six

cents per hundredweight to all members based on their milk production

during fiscal 2000. Meanwhile, Cabot

has introduced a Greek feta-cheddar

cheese to the market. The new cheese

is made exclusively by Cabot.

24 July/August 2001 / Rural Cooperatives

NEWSLINE
Rural Cooperatives / July/August 2001 25

Wosje: ‘Stay alert, flexible 

& profit from opportunities

“We need to stay alert to changing

conditions and pay attention to business every day,” Walt Wosje, general

manager of Michigan Milk Producers

Association told the cooperative’s

members in his annual meeting report.

“We have experienced some good fortune of market price increases when we

have had large product inventories in

our warehouses. But that is not going

to happen every year,” he cautioned.

“We need to be flexible, fleet footed

and be able to change course in midstream when positive opportunities

present themselves.”

In looking at the wave of dairy

cooperative mergers and consolidations during the past 10 years, he

observed, “Today, they (co-ops) market

a larger percent of the milk supply than

ever before,” even though the number

of dairy cooperatives continues to

decline. “Three cooperatives now market almost 50 percent of all the milk

produced in the United States. Our

organization handles and markets as

much milk today as we ever have, even

though we look smaller than other

cooperatives.

“That shouldn’t give us any sense of

inferiority as long as we concentrate on

the basics of our business and operate

the company in a very controlled manner. We can successfully fulfill our mission objective,” he said. “Our relative

size causes us to be more intense in

running the business. We concentrate

more intently on servicing our customers who purchase our milk and

dairy products. Our performance in

terms of customer service and product

quality has never been higher.” 

Livestock certification to help 

reassure public that beef is OK 

A Wisconsin livestock marketing

cooperative has instituted a producersigned certification program aimed at

assuring consumers of the safety of beef

supplies. Greg Beck, president and chief

executive officer of Equity Livestock

Cooperative Sales Association, Baraboo,

instituted the program April 1.

“We know that our patrons produce the safest, most wholesome beef

in the world and we are proud to certify that to the consuming public,”

Beck said. The move was in part

prompted by letters the cooperative

received from every major packer

indicating they wouldn’t purchase

livestock without the certification.

“This certification is a direct result of

the outbreak of Bovine Spongiform

Encephalopathy (BSE, or “mad cow”

disease) in Europe and the subsequent

worldwide media attention on food

safety,” said Beck.

Specifically, he said, “All slaughter

cattle marketed through or to Equity

must be accompanied by a signed producer certificate, which indicates that

to the best of the producer’s knowledge, the cattle have not been fed any

feed containing protein derived from

mammalian tissues – meat or bone

meal – and that none of the cattle have

an illegal level of drug residue.”

Beck pointed out that even though

the feeding requirement has been on

the books since 1997, the U.S. cattle

industry – producers, marketers, packers and retailers – “is taking the proactive step to assure meat consumers (and

world export markets) that the U.S.

food supply is the safest in the world.”

Certificates must be signed prior to

marketing and will be held on file by

the cooperative. Beck said that while

the certification may inconvenience the

cooperative’s 60,000 patrons, it “is

small compared with the benefits of

reassuring the beef-consuming public.”

Marketer for Idaho potatoes 

favors statewide planning 

The marketing director for an Idaho

seed potato cooperative believes growers must cut back acreage this year to

reduce the surplus that is depressing

prices. Dan Margraves, who represents

Teton Seed Marketing Association, is

quoted in press reports as saying the

state needs better planning in the

amount of acres grown in Idaho. 

Margraves would like to see a reduction of about 80,000 acres of fall potatoes this year, which would be about a

10- to 15-percent reduction from last

year. He said the state’s biggest problem was the failure to develop a

statewide potato marketing plan. 

Teton Seed, which markets Idaho

seed potatoes in the Northwest, had 16

growers who supplied the cooperative

when it formed four years ago. Today,

only eight remain, but during that time

the cooperative has expanded its market by about 15 percent. The cooperative shipped 3,000 semi-truck loads of

seed potatoes this season, which represents its entire crop. 

A federal program pays growers

$1.50 per hundredweight to divert

quality potatoes from the market, even

though the producer’s cost is about

$7.50. Margraves said only 2 of the

past 12 seasons have been successful

for producers and he is worried about

how many growers will survive a 13th

losing season. 

Many growers are heavily mortgaged and have reduced equity in their

farms, which makes them less attractive

to lenders. He fears that unless growers

develop a statewide marketing plan

that emphasizes the fame of Idaho

potatoes, industry fortunes won’t

change. And worse yet, some growers

may increase their plantings this year

and hope to cash in while many others

are cutting their acreage. On the other

hand, a sharp cutback could boost

industry morale, Margraves said. 

Sunkist taps Gargiulo 

as new president

California-based Sunkist Inc., the

nation’s oldest and largest citrus marketing cooperative, has named Jeffrey D.

Gargiulo, at

one time one of

the state’s

largest producers of fresh fruit

and vegetables,

as its new president and chief

executive officer. James

Mast, Sunkist’s

former chairman, had been

Jeffrey D. Gargiulo
26 July/August 2001 / Rural Cooperatives

It didn’t take David Roche, the new CEO at MinnDak Farmers Cooperative, a Wahpeton, N.D.-based

sugarbeet cooperative, long to learn the difference

between being president of a large publicly held

company and CEO of a cooperative. As an officer of a

billion-dollar, investor-owned company, it was highly

unlikely that Roche would ever bump into one of the

company’s directors or large stockholders while he

was pumping gas or shopping for groceries. However, as the new CEO of Minn-Dak Farmers Cooperative, Roche has those chance

encounters with stockholders and

directors on a regular basis.

Outgoing by nature, Roche

welcomes these conversations,

noting that there is something

very positive that happens in

informal, unplanned meetings

with members and staff. “I

enjoy the spirit of community

I’ve found in the Red River Valley,” he says. “There are many

opportunities for me to interact

with the people in informal settings. I find that refreshing.”

After four months on the job,

Roche is fitting comfortably into

his new post as Minn- Dak’s CEO.

From the beginning, he made it a priority to get out

to meet as many of the cooperative’s

stockholder/growers as possible, and within weeks

he had done just that. In addition to three

grower/stockholder meetings held across the

region, he has also visited with growers on their

farms and as they picked up seed for the new crop.

“I want to have an open-door policy with growers and employees,” Roche says. “I give them my

office number and encourage them to call whenever they have a concern.” 

Roche says that Minn-Dak directors have a

strong direct interest in the success of the overall

operation because they are all active growers of

sugarbeets and have a better understanding of

operation, production and even local politics.

Roche’s own experience and knowledge of the

sugar industry also runs deep. In fact, it dates back to

his childhood when his father worked at Michigan

Sugar. Although Roche didn’t set out to make his

career in the sugar industry, it didn’t take long for him

to join the ranks. After earning his MBA with an

accounting emphasis, he worked for five years in one

of the largest public accounting firms in the nation. 

After that he accepted the position of controller at

Michigan Sugar, which was bought by Savannah

Foods and Industries in 1985. He rose steadily

through the company’s ranks until he was named

president of Michigan Sugar in 1994. Eventually,

Roche went on to serve as president of a subsidiary,

Savannah Foods Industrial, and then was named

managing director and senior vice president at Imperial Sugar Co. after it bought out

Savannah Foods and Industries.

The domestic sugar industry

was going through major

changes associated with difficult economic times in the

industry and, in October 2000,

Roche resigned from Imperial

Sugar Co. and considered leaving the industry. But when the

CEO position at Minn-Dak Farmers Cooperative became available, he applied.

“Minn-Dak is known as a

cooperative owned by productive, efficient farmers and the

employee team is recognized as

top notch,” Roche explains. That

reputation made the job opening attractive to Roche.

“The cooperative is well focused and in equilibrium in an industry that had lost its equilibrium, experiencing bankruptcies, closures, sales and reduced

financial returns. This co-op is coping well in tumultuous times, and I wanted to be a part of that.”

As for the future, Roche believes Minn-Dak will

need to contribute in every way possible to help

the sugar industry reach some stability. Otherwise,

he feels outside factors could eventually put MinnDak’s continued success at risk.

“The problems hitting the sugar industry are

complex,” Roche says. “But I believe that being a

strong cooperative gives Minn-Dak an edge. From

day one, I could see that Minn-Dak keeps its focus

on the right things, providing a good return to our

grower/owners and a good working environment

for our employees. This is a cooperative that operates under the assumption that everyone involved

will put forth the best effort possible. And they really do just that, year after year. I am thoroughly

honored to be a part of that kind of team effort.” ■

Roche takes helm as Minn-Dak CEO

Minn-Dak CEO David Roche, left, has lunch

with member picking up seed for the 2001 crop.

Photo courtesy Minn-Dak
Rural Cooperatives / July/August 2001 27

acting president during the interim. 

Gargiulo is currently chairman and

president of Gargiulo Landco, a diversified company that deals in agricultural

land and real estate development, owns

a wine grape vineyard in Napa and is a

wholesaler and distributor of fine wines

in Florida. Sunkist chairman Al

Williams said Gargiulo is recognized

throughout the industry and knows the

growing, packing and export markets.

Organic cooperative shapes

national product rules 

George Simeon, a Wisconsin organic farmer and chief executive officer of

the nation’s largest organic cooperative,

has been appointed to a five-year term

on the National Organic Standards

Board, which advises the U.S. Department of Agriculture on standards for

organic products. Simeon is a former

dairy farmer. He and his wife now raise

chickens and horses at their farm near

LaFarge, Wis. He has a national reputation as an advocate of organic foods. 

In 1988, he and a group of neighbors formed Coulee Region Organic

Produce Pool, more commonly known

as CROPP. The cooperative sells a

variety of products, ranging from milk

to juice and meat to cheese. It has 450

members in 14 states, stretching from

California to Florida to Maine. Annual

sales this year exceeded $100 million.

The cooperative has a list of 50 dairy

producers waiting to join.

SSC to close 47 stores,

cut staff in restructuring

Caught up in a slumping farm economy, Southern States Cooperative

(SSC), based at Richmond, Va., plans

to close 47 of its 233 retail stores in

nine states. It will also close five other

facilities involved in the manufacturing, marketing and distribution of

farm supplies and services. The

restructuring will cut 300 employees,

or about 6 percent of the co-op’s workforce. The distribution center in Richmond is being closed in favor of larger

centers near Roanoke, Va., and in

Pennsylvania. 

These actions represent the latest

wave in SSC’s efforts to counter an

economic crunch confronting much of

the nation’s farm sector. SSC earlier cut

55 corporate employees in its restructuring. In March, SSC transferred its

livestock marketing division to United

Producers Inc., a Midwest livestock

marketing and credit cooperative based

at Columbus, Ohio. About 20 facilities

and 190 jobs were involved. 

Wayne Boutwell, SSC president and

chief executive officer, said the decisions

were “painful,” but necessary. “We must

seize opportunities to consolidate for

improved efficiency and to eliminate

operations that generate more cost,”

Boutwell said. “The reality of today’s

farm economy and ongoing consolidations of farming operations is that the

market won’t support as many local

farm supply and other agribusiness facilities as in the past. Most industries,

including every aspect of agriculture, are

undergoing consolidation. Our actions

are driven by our goal as a producerowned cooperative to provide goods and

services to our member-customers as

efficiently as possible,” he said.

The cutbacks won’t affect other

SSC facilities associated with its annual 350-million- gallon petroleum business or its 34.5-million-bushel grain

marketing operation. Contributing to

the restructuring are depressed corn

and soybean prices, severe floods and

drought in some parts of the MidAtlantic trade territory, expansion

through acquisitions in recent years

and declining farm numbers. 

Poor demand and costs associated

with the closings are expected to produce losses for SSC this year. For fiscal

2000, net earnings were $4.96 million

on revenues of $1.55 billion. SSC has

about 5,000 employees in 25 states and

serves 300,000 farmer-members.

Meanwhile, SSC will continue to manage 85 local cooperative facilities and

work with a distribution network that

includes 1,000 independent cooperatives and dealers.

Bison farmers market directly

via supermarket freezers

Bison ranchers in North Dakota

have taken steps to directly market

their meat products to customers.

About 50 members of the North

Dakota Buffalo Association are buying and stocking supermarket freezers

themselves to increase demand for

their bison meat. Their Adopt-AFreezer program brought more than

40 freezers to supermarkets throughout North Dakota, said Paul Thomas,

executive director of the association.

Three others are in Montana, four are

in Minnesota and one is in South

Dakota. Growing pains in the industry two years ago prompted the association to develop the program,

Thomas said. Lagging demand was

driving down prices, so members

decided to take control and boost

demand for their product themselves.

Each $2,000 freezer is owned by

individual members. They are responsible for keeping the store stocked,

advertising the product and conducting in-store promotions. Grocers clear

about a 25 percent profit on sales in

exchange for providing floor space,

powering the freezers and keeping

them full each day. Featured under the

North American Bison Cooperative’s

Buffalo Nickel brand are steaks, roasts,

ground meat, patties and prepared

chili. The cooperative has about 350

members across the Great Plains and

operates a processing plant in New

Rockford. 

Some Canadian ranchers want to join

the program and one association member is interested in placing 30 freezers in

Minnesota supermarkets. Meanwhile,

the North Dakota Agricultural Products

Utilization Commission has awarded an

$18,500 grant to the group to promote

and market the freezer program.

Jantzen to lead NCBA education unit 

Jean Jantzen, former vice president

of CHS Cooperatives at St. Paul and

currently board chair for HealthPartners Inc., a Minnesota-based health

plan, will head the new education

committee for National Cooperative

Business Association (NCBA) in

Washington, D.C. The committee

was formed in January to direct
NCBA’s new strategic initiative on

cooperative education. Jantzen has

more than 36

years of experience in the

cooperative

sector. She is

also vice chair

of the Cooperative Foundation board

of trustees.

Meanwhile,

Byron Henderson has been named a vice president and will head development of

.coop, the new Internet domain

approved for exclusive marketing 

use by cooperative organizations

worldwide.

Leonard new ACDI/VOCA VP 

Carl Leonard has joined ACDI/

VOCA as senior vice president of the

Latin America and Global Programs

division. He brings more than 30 years

of USAID project management and

leadership experience. As acting

administrator of USAID, he directed

programs in the Western Hemisphere,

including 16 field missions and three

regional programs.

Accelerated Genetics is 60

Accelerated Genetics, an innovative

livestock breeding cooperative based at

Baraboo, Wis., is marking its 60th year

in the livestock breeding industry.

Among its innovations: the first young

sire program, one of the first to provide

a mating program, working with World

Wide Sires. Now, 30 years later, it is

one of the new owners of a global marketing network, the first to use computerized freezing and a pioneer in

genetic market research. President

Roger Ripley said the cooperative’s

future lies in vision and long-range

planning and evaluating technologies

and their potential applications on

behalf of customers.

NCBA honors Sen. Kohl 

U.S. Sen. Herb Kohl (Wis.) has

been named an honored cooperator by

National Cooperative Business Association (NCBA) for his continuing commitment to cooperative businesses.

“Sen. Kohl has always been a champion of cooperatives as an ownership

solution to some of the toughest challenges this country faces,” said Rod

Nilsestuen, president of the Wisconsin

Federation of Cooperatives, one of the

award sponsors. Kohl was cited for

supporting USDA’s rural cooperative

development grants program. The

program helped Wisconsin-based

Cooperative Development Services

(CDS) develop new forestry cooperatives that provide farmers with an

additional long-term source of

income. CDS has received nearly $1

million in grant assistance from the

fund. The award was sponsored by 16

cooperatives, including five Midwest

dairy cooperatives.

At its spring annual meeting, NCBA

re-elected all its officers including

Chairman Pete Creer, chief operating

officer for Credit Union National

Association and affiliates. During

Creer’s first term, NCBA introduced

the new Internet cooperative domain –

.coop – exclusively for cooperatives.

Other elected officers are: Charles Snyder, National Cooperative Bank, first

vice chair; Ann Hoyt, University of

Wisconsin, second vice chair, and

Steven Cunningham, IMARK Group

Inc., secretary-treasurer. 

Meanwhile, NCBA has launched

DotCooperation LLC, a wholly owned

subsidiary that will provide domain

name registration for .coop and other

technology services starting this summer. NCBA President Paul Hazen said

DotCooperation would help position

cooperatives in online markets.

Co-op, army cut energy costs

Faced with a $7 million electric bill

last year, the U.S. Army’s Fort Knox in

Kentucky is joining forces with Nolin

Rural Electric Co-op in nearby Elizabethtown to slash its energy costs. The

energy conservation effort responds to

an executive order to cut energy use in a

half million federal facilities by 35 percent by 2010. The cooperative is one of

three utilities serving Ft. Knox. The contract is open ended. Installing energyefficient lighting was the cooperative’s

first project. Once these energy-efficient

plans are approved, the cooperative will

finance the project through the National

Rural Utilities Finance Corp. Fort Knox

will repay the loan over 10 years as part

of its electric bill.

Agrilink recognizes farm partners

Diversification for New York State

farm partners has proved the key to

their successful operation that led to

Agrilink Foods (owned by Pro-Fac

Cooperative) citing them with its

annual Hugh Cummins Cooperator of

the Year Award. The award recognizes

individuals who have made significant

contributions to the agricultural

industry through cooperative and

civic pursuits. Craig Yunker and P.J.

Riner of CY Farms in Elba, N.Y.,

operate 5,700 acres of cropland in

west-central New York, where they

grow 2,000 acres of snap beans and

peas for the cooperative and operate a

custom bean harvest unit for the

cooperative, a dairy heifer enterprise

in partnership with Agway and the

Batavia Turf business, which provides

instant lawns to customers across the

state. “The award means a lot to us,”

said Riner, “because Agrilink has been

an integral part of our business. Without it, I don’t think we could have

grown so quickly.” Yunker credited

CY Farms success to the partnership

with its 40 employees.

Eggstravaganza in Minnesota

The tanker truckloads of liquid eggs

being shipped from Golden Oval Eggs

to the fast food market, the baking

industry and companies that make

processed eggs for grocery stores might

be termed an “eggstravaganza.” But it’s

routine business for the new-generation egg cooperative formed at

Renville, Minn., in 1991. The cooperative is planning to open its ninth barn

of a planned 2.7-million-bird egg plant

later this year. The stock offering in

Iowa last year expanded the cooperation to about 250 members.

28 July/August 2001 / Rural Cooperatives

Jean Jantzen
TFC, GROWMARK will not consolidate

There will be no consolidation of

Tennessee Farmers Cooperative

(TFC) of LaVergne and GROWMARK, Inc., of Bloomington, Ill.,

after the TFC Board of Directors

voted July 9 to end a feasibility study

launched on March 26. The board

voted to halt the study process after

determining that consolidation of the

two regional cooperatives “would not

be in the best interest” of TFC, its 70

member co-ops across the state and

some 73,000 farmers who own the

farm supply cooperative system, said

Vernon L. Glover, TFC president

and chief executive officer.

“From the very start of the study,

TFC’s directors have stressed that the

well-being of members and how they

would benefit would be foremost in

anything that is decided,” said board

chairman David Rieben of Franklin

County, Tenn. “One of the concerns we

had was low projected cost savings to

our member co-ops as a direct result of

consolidation.” Glover stressed that the

vote was “by no means a vote against

GROWMARK.”

“The feasibility process was a positive and beneficial exercise for everyone involved,” he said. “TFC directors and employees as well as managers of some of our member co-ops

have visited with counterparts at

GROWMARK.” Additionally, Glover

said, each cooperative studied closely

the internal operations of the other,

noting similarities and differences and

working to determine how consolidated efforts could be beneficial.

“While our board recognized that

TFC and its members could potentially derive some benefit from the

consolidation, it felt that this was not

the proper time to present the issue

to the membership for a vote,”

Glover said. ■

Rural Cooperatives / July/August 2001 29

2001 USDA co-op survey on the way

Every year, the Rural Business-Cooperative Service

(RBS) of USDA Rural Development collects key data

about the cooperative sector through a mail survey. A

questionnaire is sent to each cooperative two to three

months after the end of their business year. Questionnaires focus on the type of cooperative and dollar sales

of farm products marketed and farm supplies sold, basic

financial items, number of members, full-and part-time

employees and wages and benefits. Questionnaires for

the 2001 survey will soon be mailed.

Each cooperative is also asked to provide a copy of

its annual, or audit, report. Information from the annual

report is used to complete the questionnaire, verify the

information reported and gather additional data. Every

other year, questions are added to the questionnaires

to gather information on cooperative sales and memberships by state.

RBS expands the data collected to represent all

farmer and fishery cooperatives and publishes preliminary findings. In the fall, USDA publishes an

annual report summarizing progress, changes and

trends. This year’ report, Farmer Cooperative 

Statistics, 2000 will be placed on the Internet, as

were the 1999 results (Service Report 59). See:

www.rurdev.usda.gov/rbs/pub/layout-s.pdf.

Other data uses include the development of cooperatives’ market share estimates at the first-handler level. In 1999, cooperatives’ share of U.S. farm marketings was 27 percent, down from 30 percent in 1998.

The co-op share of major U.S. farm production expenditures was 27 percent, down from 29 percent in 1998.

Market share estimates are published in USDA’s Rural

Cooperatives magazine. 

Farmer cooperative statistics are also published

in the magazine, Agricultural Statistics, Statistical

Abstract of the United States and American Cooperation. Selected summary data are provided to the

Bureau of Economic Analysis in the Department of

Commerce and to USDA’s Economic Research Service for use in their Economic Indicators of the

Farm Sector.

Data are also used to update a Directory of Farmer

Cooperatives, which can be found on the Internet 

at www.rurdev.usda.gov/rbs/pub/sr22.htm and 

Cooperative Historical Statistics at

www.rurdev.usda.gov/rbs/pub/cir/s26.pdf.

Cooperative leaders, educators, researchers and

policy makers, among others, also use farmer cooperative statistics. Cooperative Services staff frequently

use the data for important studies and presentations.

Educational materials, from pamphlets to college

textbooks, rely heavily on collected cooperative statistics. Foreign visitors also contact RBS for information about the structure and operation of U.S. farmer

cooperatives.

Specific information about individual farmer cooperatives collected by RBS is kept strictly confidential.

Information published is combined to avoid disclosure

of individual cooperatives. RBS is willing to work with

persons seeking aggregated data where no individual

cooperative can be identified. 

For questions regarding farmer cooperative statistics, please call, e-mail or write Charles A. Kraenzle at

(202) 720-3189, or charles.kraenzle@usda.gov, or

USDA/RBS/Statistics, STOP 3256, 1400 Independence

Ave., SW, Washington, D.C. 20250-3256. ■
an agreement with the second largest

Italian pasta manufacturer, Gruppo

Euricom, to serve as its exclusive distributer of private-label and brandlabel retail products and food service

products in North America. Finally,

DGP’s main brand, Dakota Growers,

underwent an image change as the

brand began to penetrate more markets

outside North Dakota and Minnesota.

The members of Dakota Growers

Pasta also voted to change its bylaws to

enable Canadian producers or associations to become members and to purchase stock in DGP. The rationale is

that as members retire, some may want

to transfer their shares to other members. However, under current import

restrictions, Canadian members are not

allowed to deliver Canadian-produced

durum wheat to DGP’s U.S. facilities.

In addition, the poor quality of North

Dakota-grown durum wheat in 1999

and 2000 increased DGP’s procurement

costs, because many of the co-op’s members’ wheat crops were of poor quality,

forcing DGP to purchase high-quality

durum wheat from other sources.

In 2001, DGP signed an agreement

with Semolina Specialties, a producerowned cooperative in Crosby, N. D.

Semolina Specialties produces hard-tomake pasta specialty products and flavored pasta products. Under that agreement, DGP sold the pasta equipment

from one of its two plants in Minneapolis to Semolina Specialties in exchange

for $50,000 worth of preferred stock

and $1 million in cash. The equipment

from the Minneapolis plant (which was

then closed) was installed in the Crosby

plant. Dakota Growers Pasta also was

to supply 35 million pounds of semolina

flour and assume marketing of the

Semolina Specialties pasta products.

In 2001, first and second quarter

earnings were lower than in previous

years due to the higher costs of procuring high-quality durum wheat, as well

as to increased energy and other input

costs. The inability to pass along price

increases due to excess capacity within

the pasta industry has also hurt earnings. The cooperative anticipates a

return to profitability later in the year.

Summary

The value of marketing rights or

growers agreements changes in response

to a cooperative’s own profitability and

the industry conditions in which that

cooperative operates. In the case of DGP,

the value of its stock reflects the cooperative’s profitability due to its competitive

advantage from vertical integration and

use of producer equity. Increases in

industry capacity, entry and exit of durum

millers and pasta manufacturers, slower

growth in pasta consumption, increased

use of private-label brands, and poorquality durum wheat changed industry

conditions and caused greater rivalry

among competitors. This increased rivalry caused changes in DGP’s stock price,

as can be seen in Figure 2.

Authors’ note: This article is

based on an extensive case study that

will be published in the Case Research

Journal later this year. We would also

like to thank Tim Dodd, chief executive officer of Dakota Growers Pasta,

and his staff for cooperating with us

in this case study. We would also like

to thank Tom Stafford and USDA

Rural Business Cooperative Service

for assisting us with this cooperative

30 July/August 2001 / Rural Cooperatives

Finding a niche continued from page 8

with no government interference. Their

financial services include taking deposits,

making loans, providing insurance and

transferring funds. However, to fit into

the country’s legal system, they were

required to have a relationship with a

commercial bank. 

The local pattern was taken from

three pilot village banks operating in

the North West Province of South

Africa. In time, the equivalent of our

Farm Credit Administration will be

developed to become a regulator of

these village banks. RBS’ role in

assisting with this growth was multifaceted. Initially, a short-term research

project conducted by RBS and South

Africa’s National Department of Agriculture (NDA) determined the “Village Bank” model was applicable for

providing rural financial services. 

The Cooperative Services staff

helped gain an exemption to South

Africa’s Banks Act for these financial

services cooperatives (FSCs) by the

Central Bank and the minister of

finance. It allowed them to legally

receive deposits, but exempted them

from conforming to stringent requirements of the Central Bank for being

recognized as a bank. Nearly as important was the registration of these village

banks as FSCs, which was accomplished by working closely with the

NDA’s Registrar of Cooperatives who

is responsible for all cooperatives in

South Africa. The licensing established

the cooperatives as legal entities so

they could purchase deposit insurance. 

It also raised their stature in the villages and made it easier to attract new

members. Cooperative Services also

provided extensive training for FSC

directors and employees, as well as officials in the NDA. 

A final component of the project by

Cooperative Services was assistance in

establishing a regulatory framework for

use in providing supervisory oversight

of the FSCs. This framework was considered essential, not only to preserve

the character of the individual cooperatives, but more importantly to protect

the fragile “system” of FSCs. Although

the project is “officially” concluded,

USDA continues to monitor the

progress of FSC development because

it holds so much promise for the economic growth of rural areas throughout South Africa. ■

African village banks continued from page 21
Rural Cooperatives / July/August 2001 31

Or, to go straight to the Library of Publications, access: http://www.rurdev.usda.gov/rbs/pub/newpub.htm

If you know the title or publication number of the report you want, scan down the list until you come to it.

To locate a breakdown of publications by subject matter:

1. Click on any one of the four “Reports” categories in the middle of the “RBS Library” menu.

2. Access our catalog by clicking on “Rural Cooperative Publications” in the first line of the second paragraph

on the screen that appears (regardless of the type of “reports” accessed).

3. The first option under “Contents” is “Publications by Subject Matter.”

It’s easy to read and/or download USDA 

publications about cooperatives from the Internet

The Rural Business Cooperative Service has more than 150 cooperative reports (as well as

past issues of this magazine) available on the Internet for viewing or downloading. These

titles cover a vast array of topics, ranging from the general, such as “How to Start a

Cooperative” or “Cooperatives 101,” to technical subjects, such “Tax Treatment for

Cooperatives” or “Managing Cooperative Antitrust Risk.” 

To access any of these reports, follow these easy steps:

Go to the USDA Rural Development home page, “http://www.rurdev.usda.gov”

Click on “Publications” in the lower blue bar at the top of the page

Click either “Rural Cooperatives magazine” or “Business/Cooperative Publications”

If you chose “Business/Cooperative Publications” in step 3, you can then click either “Cooperative Information

Reports,” “Research Reports,” “Service Reports” or “Miscellaneous Reports.”

1.

2.

3.

4.

USDA marks 75th anniversary of service to cooperatives continued from page 2

activities such as integrated pest management programs, use of satellite technology in field applications, genetic

record keeping and propagation of

crops and livestock, expanded farm

credit services and regional electric and

telecommunications programs.

Marketing, an early focus of cooperative efforts to enhance farmers’ marketing power, has evolved vertically into

regional and nationally known branded

products and private-label product distribution. Coordinated cooperative marketing efforts of locally owned cooperatives and regionals have extended the

reach of farmers’ outputs to national

and international markets. Many cooperative brands have developed a strong

consumers franchise for their products

and are looked upon with envy by competing national marketers.

Horizontal marketing efforts have

also achieved new heights through

negotiated pricing over contract terms

by cooperative bargaining associations,

and through joint use of marketing

agencies-in-common for pricing and

moving manufactured products into

trade channels, as well as through the

use of e-commerce technology as a

means of lowering transaction costs.

What is remarkable is the resiliency

and capacity for change demonstrated

by many cooperatives. While some

have failed due to faulty practices and

weak financial management, survivors

have demonstrated awareness of the

need to stay involved in a global, hightech and consumer-driven environment. They have an acute sense of

anticipating and knowing members’

needs, adapting to new technology and

gearing their products to changing

consumer desires. While adapting

operations to emerging needs, huge

opportunities challenge cooperative

businesses and their leaders in terms of

growth in the share of marketing activity, and of expanding horizons to fulfill

unmet needs in rural America. 

The goal of USDA’s Cooperative Services program is to expand knowledge—a

form of intellectual capital—of the cooperative method of doing business. Consistent

with the missions identified in the 1926

Act, Cooperative Services does this by collecting statistics, providing technical assistance, facilitating new cooperative starts,

conducting cooperative-related research,

and producing a wide variety of educational/ informational products to promote

public understanding of cooperatives. Our

nation has benefitted from this work for 75

years, and will continue to reap the

rewards for decades to come in the form of

a stronger rural economy. ■
32 July/August 2001 / Rural Cooperatives Rural COOPERATIVES COOPERATIVES

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