By Dallas Tonsager, Under Secretary

USDA Rural Development

hese are exciting times for the cooperative

movement in America. There is a

groundswell of grassroots interest in forming

new cooperative enterprises.

Almost weekly, it seems, we hear of a new

co-op being formed to meet the growing demand for local

food or for organic/natural foods, to operate farmers markets

and to develop new community-supported agriculture

networks. Other co-ops are being formed to produce

renewable energy, to provide in-home care services for the

elderly and handicapped, to build senior housing, to establish

community gardens and to help workers operate their own

businesses as co-ops, to cite just some of the sectors where we

are seeing co-op development action.

What a great background this is, and an extra cause for

celebration, as we observe Cooperative Month in October!

This issue of Rural Cooperatives includes a Co-op Month

special section (see page 14) spotlighting the nation’s network

of cooperative development centers, a number of which are

featured in this issue. These co-op development centers are

playing an important role in stimulating interest in, and

facilitating the development of, new cooperatives. In addition

to the men and women who staff co-op development centers,

we should also recognize the many established cooperatives

and co-op organizations that sit on the boards and offer other

assistance to the centers.

Usually working with small staffs and limited resources,

these co-op centers nonetheless are seeing more results for

their efforts. As you will read in this issue, the types of

projects these centers are involved with show that the co-op

business model is flexible enough to address almost any need.

The work of the Montana Cooperative Development

Center underscores this diversity of co-op applicability. Two

projects it chose to highlight underscore both the “macro”

and “micro” aspects of cooperative development. Regarding

the former, the Montana Center has helped to form a new

transportation cooperative created to improve bus service

across a three-state Rocky Mountain region. On the “micro”

side, you can’t get more rural and local than the work the

Center did to help reopen the Last Chance Café as a co-op.

Of the latter effort, some

people might scoff at expending

effort on a business that created

only three jobs. But as Brian

Gion, the Montana Center’s

executive officer, notes, every job

is crucial in small rural towns, and

the continued operation of at least

one café can be so important to a

rural town, where it often serves

not only as place to get a meal

away from home, but as a social

center of the community.

In the article submitted by the

Keystone Development Center, you’ll read about a

Pennsylvania co-op of Amish and Mennonite farmers —

formed to supply organic produce to Philadelphia and New

York City — that has seen its sales soar from $300,000 to

$6.5 million in just the four years it has been in operation. In

Nebraska, the Omaha Farmers market, which reopened in

the mid-1990s after being closed for nearly 30 years, now

attracts 10,000 shoppers each season. In Maine, a co-op was

formed — with a big assist from the Organic Valley

cooperative — to reopen the state’s only organic feed mill,

which is a vital source of feed for the state’s organic dairy

farmers.

These are just a few of the examples you will read about in

this magazine. There are so many more promising new co-op

stories to tell, but all we can offer here is a small sampling.

And while the focus of this special section of the magazine

is largely on the co-op development centers and some of the

start-up co-ops they are involved with, I would be remiss if I

didn’t also use this space to salute the nation’s wellestablished co-ops. These include conventional farm

marketing and supply co-ops, farm credit co-ops and credit

unions, rural utility co-ops and the many other types of coops that deliver such crucial services for their members and

the public. It is their successes, and the roads they followed,

that serve as a model for today’s new co-ops.

As the theme of this year’s Co-op Month says, co-ops

really are: Local, Trusted and Serving You. Experience the

Co-op Difference. ■

2 September/October 2010 / Rural Cooperatives

Commentary

Co-op Movement Gaining Momentum

Dallas Tonsager
Features

Rural Cooperatives / September/October 2010 3

Volume 77, Number 5

September/October 2010

Rural Cooperatives (1088-8845) is

published bimonthly by USDA Rural

Development, 1400 Independence Ave.

SW, Stop 0705, Washington, DC. 20250-

0705.

The Secretary of Agriculture has

determined that publication of this

periodical is necessary in the transaction

of public business required by law of the

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send address change to: Rural

Cooperatives, USDA/RBS, Stop 3255,

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Mention in Rural Cooperatives of

company and brand names does not

signify endorsement over other

companies’ products and services.

Unless otherwise stated, articles in this

publication are not copyrighted and may

be reprinted freely. Any opinions expressed are those of the writers, and do not

necessarily reflect those of USDA or its

employees.

The U.S. Department of Agriculture

(USDA) prohibits discrimination in all its

programs and activities on the basis of

race, color, national origin, age, disability, and where applicable, sex, marital

status, familial status, parental status,

religion, sexual orientation, genetic

information, political beliefs, reprisal, or

because all or part of an individual’s

income is derived from any public

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bases apply to all programs.) Persons

with disabilities who require alternative

means for communication of program

information (Braille, large print, audiotape,

etc.) should contact USDA’s TARGET

Center at (202) 720-2600 (voice and TDD).

To file a complaint of discrimination, write

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1400 Independence Avenue, S.W.,

Washington, D.C. 20250-9410, or call (800)

795-3272 (voice), or (202) 720-6382 (TDD).

USDA is an equal opportunity provider

and employer.

Tom Vilsack, Secretary of Agriculture

Dallas Tonsager, Under Secretary,

USDA Rural Development

Dan Campbell, Editor

Stephen Hall / KOTA, Design

Have a cooperative-related question?

Call (202) 720-6483, or email:

coopinfo@wdc.usda.gov

This publication was printed with vegetable oil-based ink.

p.4 p. 14

04 Ag co-op sales and income second highest on record

06 Chipping In

Austrian co-ops play role in making nation a leader in wood biomass energy production

By Scott Bagley and Bob Parker

12 Canadian farmers see benefits of local farm machinery co-ops

By Colette Lebel

13 Look Who’s Minding the Store

Student-run supply co-ops short-lived, but the concepts they teach live on

14 Taking Root

Co-op Month special section

35 eXtending Co-op Knowledge

Extension Service website to include co-op education area

By Lynette Spicer

36 Biofuel Prometheus

Like its namesake, Promethean Biofuels hopes to better mankind with new source of energy

By Stephen Thompson

Departments

2 COMMENTARY

10 UTILITY CO-OP CONNECTION

38 NEWSLINE

p. 25 p. 33

ON THE COVER: The nation’s network of Cooperative Development

Centers play a major role in helping new co-ops sprout. A Co-op Month

special section, beginning on page 14, takes a look at some of these

centers and the co-ops they are helping.
Editor’s note: Information for this article was compiled by

the Cooperative Programs statistics staff of USDA Rural

Development: Katherine C. DeVille, Jacqueline E. Penn

and E. Eldon Eversull.

armer, rancher and fishery

cooperatives had their second highest

sales and income in 2009, trailing

only record 2008 levels. With lower

commodity and energy prices, gross

business volume of $170 billion in 2009 was down 11

percent from the record $192 billion in 2008. Sales

increased in 2009 for farm supplies, crop protectants,

seed and feed. There were also increased marketing

levels for rice, processed fruits and vegetables, sugar

and tobacco. All other sales of supplies and crop/livestock marketing fell from the record levels of 2008.

Dairy products sales had the largest declines, down

more than $9 billion from 2008, followed by declines

in grain and oilseed marketing of almost $3 billion;

cotton sales declined by more than $1 billion. Dairy

products and grain/oilseed sales were lower due to

price declines, while cotton experienced lower prices

and a large decline in production. In the farm

supplies sector, petroleum products sales declined by

almost $7 billion due to a combination of lower

prices and demand.

Net income (before taxes) of $4.4 billion was also

the second best showing ever for farmer co-ops,

although down almost 9 percent from the record $4.8

billion in 2008. This minor downturn in net income

breaks the string of four consecutive years where the

nation’s agricultural cooperatives set a record for net

income.

“These sales and income figures for 2009, while

down slightly from records posted in 2008, show that

the nation’s agricultural cooperatives remain strong

4 September/October 2010 / Rural Cooperatives

AG CO-OP SALES

AND INCOME

SECOND HIGHEST

ON RECORD

Table 1—U.S. cooperatives, comparison of 2009 and 2008

Item 2009 2008 Change

Number Percent

Sales (Gross, Billion $)

Marketing 102.1 116.8 -12.60

Farm supplies 63.2 70.2 -10.07

Service 5.0 4.8 3.40

Total 170.2 191.9 -11.27

Balance sheet (Billion $)

Assets 61.2 69.1 -11.41

Liabilities 37.3 46.1 -18.96

Equity 23.8 23.0 3.71

Liabilities and net worth 61.2 69.1 -11.41

Income Statement (Billion $)

Sales (Gross) 170.2 191.9 -11.27

Patronage income 0.9 0.9 4.63

Net income before taxes 4.4 4.8 -8.86

Employees (Thousand)

Full-time 122.6 124.4 -1.47

Part-time, seasonal 57.8 53.8 7.45

Total 180.4 178.2 1.22

Membership (Million) 2.2 2.4 -5.98

Cooperatives 2,389 2,473 -3.40

Figure 1 — Cooperatives’ Gross and Net Business Volumes, 2000-2009

Billion dollars

200

175

150

125

100

75

50

25

0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

1 Includes inter-cooperative business.

2 Excludes inter-cooperative business.

●

●

●

●

● ● ● ●

●

●

●

●

●● ●

● ● ● ●

●

|||||||| |

■ Gross1 ■ Net2
Rural Cooperatives / September/October 2010 5

Table 2—U.S. cooperatives net business volume, 2009 and 2008

Item 2009 2008 Change

Billion $ Percent

Products marketed:

Beans and peas (dry edible) 0.167 0.191 -12.5

Cotton 2.022 3.332 -39.3

Dairy 27.894 37.817 -26.2

Fish 0.197 0.208 -5.5

Fruits and vegetables 5.481 5.233 4.7

Grains and oilseeds 43.899 46.222 -5.0

Livestock 3.025 3.240 -6.6

Nuts 0.835 0.832 0.3

Poultry 1.171 1.457 -19.7

Rice 1.686 1.395 20.9

Sugar 4.220 4.092 3.1

Tobacco 0.168 0.135 24.1

Wool and mohair 0.006 0.006 -2.5

Other marketing 4.471 5.615 -20.4

Total marketing 95.241 109.776 -13.2

Supplies purchased:

Crop protectants 5.452 4.497 21.2

Feed 8.826 9.277 -4.9

Fertilizer 10.659 9.941 7.2

Petroleum 15.844 19.247 -17.7

Seed 2.518 2.396 5.1

Other supplies 4.225 5.320 -20.6

Total supplies 47.522 50.677 -6.2

Services and other income 4.978 4.814 3.4

Total business 147.741 165.267 -10.6

Figure 2 — Cooperatives’ Assets, Liabilities, and Net Worth, 2000-2009

Billion dollars

80

70

60

50

40

30

20

10

0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

●

● ●

● ● ● ● ● ●

● ● ● ● ● ● ● ● ● ●

●

|||||||| | |

and viable and are a crucial business structure in the

economy of rural America,” says Dallas Tonsager,

under secretary for USDA Rural Development.

“Dairy prices remain low in 2010, but livestock

prices are rebounding and the economy is moving

forward, pointing to increased sales.”

Net business volume hits $148 billion

Marketing of food, fiber, renewable fuels and

farm supplies by cooperatives in 2009 all declined by

about 11 percent from 2008 (table 1), according to

the Cooperative Programs office of USDA Rural

Development. Net business volume of $148 billion

(which excludes sales between cooperatives) was also

the second largest ever, halting a general upward

trend in sales that started in 2002 (figure 1 and table

2).

The value of cooperative assets fell in 2009,

mainly as a result of decreased inventories and

receivables due to lower prices of products marketed

and sold (figure 2). Liabilities fell by 19 percent

while equity capital held by cooperatives increased

almost 4 percent, to nearly $24 billion. Equity

capital still remains low but is 6 points higher than

last year and now represents 39 percent of all assets.

Patronage climbs 5 percent

Patronage income (refunds from other

cooperatives due to sales between cooperatives)

grew almost 5 percent, to $904 million, up from

$864 million in 2008.

Farmer, rancher and fishery cooperatives remain

one of the largest employers in many rural

communities, with 180,000 workers. The number of

full-time employees decreased slightly in 2009, to

123,000 (down 1,800 from 2008), while the use of

part-time and seasonal employees increased 7

percent, to 58,000.

Farm numbers continue to decline, with USDA

counting 2.2 million in 2009, losing less than 100

farms from 2008. The number of farmer

cooperatives also continues to decline — there are

now 2,389 farmer, rancher and fishery cooperatives,

down from 2,473 in 2008. Mergers account for most

of the drop, resulting in larger cooperatives.

Producers held 2.2 million memberships in

cooperatives in 2009, down 6 percent from 2008.

The number of U.S. farms and cooperative

memberships is now about equal, but this does not

mean that every producer is a member of an

agricultural cooperative. Previous studies have found

that many farmers and ranchers are members of up

to three cooperatives, so the decline in farm

numbers and cooperative memberships is not strictly

comparable. ■

■ Assets ■ Libilities ■ Net Worth
Austrian co-ops play role

in making nation a

leader in wood biomass

energy production

Chipping In
Rural Cooperatives / September/October 2010 7

By Scott Bagley,

Center for Cooperative Forest Enterprises

Bob Parker,

Oregon State University Extension

Editor’s note: This article is based on a report Bagley

and Parker produced for the Center for Cooperative

Forest Enterprises, which is part of the National

Network of Forest Practitioners, based in Athens,

Ohio, where Bagley is a Program Director. He can be

contacted at: scott@nnfp.org, or 740-593-8733.

Parker is an associate professor and Extension forester

based in Baker County, Oregon, and can be reached

at bob.parker@oregonstate.edu or 541-523-6418.

For additional details of the trip and photos, visit:

http://nnfp.org/Resources/ Biomass.php.

ast June, we traveled to Europe

to attend a symposium on smallscale forestry. Before the

meeting, the National Network

of Forest Practitioners

organized a tour to visit some of Austria’s

innovative cooperative biomass-related projects,

which we had been hearing much about.

We read as much as we could about these

operations in advance of the trip, but the

opportunity to see biomass facilities and talk to

the people involved in establishing and operating

them provided us with a much better feel for

what was happening and of the significant

progress the Austrians are making in this area of

renewable energy, often through the use of

producer-owned cooperatives.

First stop: Linz, Upper Austria

Our first stop was in the city of Linz, in the

state of Upper Austria. The primary purpose of

this visit was to meet Christiane Egger, deputy

manager of the O.Ö. Energiesparverband (the

Upper Austria Energy Agency). OOE was

founded in 1991 by the regional government to

promote energy efficiency, renewable energy

sources and innovative energy technologies by

targeting residential households, municipalities

and businesses. She is also the manager of the

Ökoenergie-Cluster, a network of 150

companies active in renewable energy and

energy efficiency.

Egger was recommended as someone we

should talk to by the U.S.-based Biomass

Thermal Energy Council (BTEC), a nonprofit

association dedicated to advancing the use of

biomass for heat and other thermal applications

in the United States.

In advance of the trip, we had asked our

contacts at BTEC and the U.S. Forest Service

for any leads and/or contacts that could help

improve our understanding of the Austrian

wood-biomass system. Egger had been in the

United States several times to discuss the

Austrian experience in diversifying their energy

mix, most recently last April to address the

“Heating the Northeast with Renewable

Biomass” conference in New Hampshire.

During our meeting, we talked about the

work of her agency in Upper Austria, focusing

on some of the specifics pertaining to woodbased biomass. While Upper Austria has taken a

comprehensive approach to energy

This district heating facility (left) in Austria is located just down the hill from a historic cathedral.

Above: Bins of firewood dry prior to use in the high-efficiency, wood-gasification boilers that are

common in Austria. This creates a good market for split logs produced by farmers and forest owners.

Above (right): The Pölstal Biomass Logistics Trade Center (BLTC). Photos courtesy the authors
8 September/October 2010 / Rural Cooperatives

diversification, it has demonstrated

significant advances and leadership

in the field of biomass heating.

More than 40,000 wood chip and

pellet heating installations can be

found in Upper Austria, along with

some 300 district heating networks

and 12 biomass power stations. All

of this is occurring in an area the

size of Vermont with a population

of 1.4 million. These

accomplishments owe much to

targets having been set early on by

the regional government, and

further advanced by the availability

of comprehensive information,

energy advice, awareness-raising

activities and financial incentives.

Or, as the Austrians like to note, by

a combination “carrot-sticktambourine” approach (the

tambourine is a metaphor for the

awareness-raising activities

underwritten by the state).

The steep upward trend in

biomass heating generation in

Upper Austria is impressive, but

there is still a long way to go before

meeting the government’s target of

producing 100 percent of the region’s

space heat and electricity from

renewable energy sources. That is the

goal set for 2030, which — if met —

would be quite a feat, considering that

Upper Austria is a highly industrialized

region with an extensive manufacturing

base.

Second stop: Hartberg, Styria

From Linz, we headed southeast to

the Austrian state of Styria, also known

as Steiermark. Here, we met Christian

Metschina of the Austria Chamber for

Agriculture and Forestry. He gave us a

tour of a new facility near Hartberg,

known as a “biomass logistics and trade

center” (BLTC).

The Hartberg BLTC was opened last

fall by the Maschinernring

Hartbergerland (Hartberg-area

Machine Ring), a cooperative of

farmers originally organized to share

farm machinery, such as tractors, and to

trade labor. We were also hosted by

Franz Schieder, managing director of

the Machine Ring cooperative and who

oversees operations of the BLTC.

The BLTC in Hartberg provides a

staging and sales outlet for firewood,

enabling local customers to have the

peace of mind of knowing that they will

have a readily available supply of suitable

quality wood for their heating needs.

Later in the visit, we toured a pellet

mill, but in general, a surprising

amount of biomass material consumed

in Austria is used as wood chips and

firewood. The Austrians have developed

some astoundingly sophisticated

technologies that have enabled them to

engage in large-scale use of these lessprocessed forms of wood-based

biomass. As a result of their

technological advances, some of the

common arguments against wood

heating systems — i.e., that they are

inefficient, polluting and a hassle to

manage and maintain — are no longer

valid, at least where these technologies

(and technicians to install and maintain

them) are widely available. The

Austrian systems are highly automated,

so they do not require much attention

once they’re up and running.

Also noteworthy is that the lessprocessed forms of wood-based biomass

require less energy during production,

meaning a smaller carbon footprint and

a better score on the “carbon neutrality

scale.”

While at the Hartberg BLTC,

Christian Metschina gave us a short

presentation on the development of the

facility and described how it fits within

the overall cooperative. He also

outlined the broader, multi-country

learning network and support program

from which the Hartberg project

emerged. This has involved partners in

Finland, Sweden, Germany and several

other European countries.

At the time of our visit, the Hartberg

facility was the newest BLTC, although

another one was launched this past

August. The network of BLTCs is

expected to operate under certain

guidelines to uphold standards. Each

BLTC, though owned and operated by

independent cooperatives, collaborates

with one another for branding and

marketing purposes, including

Christian Metschina (center), of the Styrian Chamber of Forestry and Agriculture, and Franz

Schieder (left), managing director of the co-op that owns the Hartberg BLTC, explain their

operation to author Scott Bagley. The Styrian Chamber was instrumental in supporting the

establishment of the Hartberg center, similar to the way USDA-supported Rural Cooperative

Development Centers serve cooperatives in the United States.
Rural Cooperatives / September/October 2010 9

use of a common logo.

Stop 3: Hartberg-area wood

energy contractor

Our third stop was at a small farm

near the village of Hartberg, where we

visited a farmer who is a member of a

cooperative that provides energy

services — in other words, he is a

“wood energy contractor” who sells

heat. The cooperative built a heating

system and woodchip-storage facility at

a member’s farm, which delivers heat

(in the form of steam) to neighboring

customers through a system of pipes.

The cooperative signs contracts with

customers, making it responsible for all

aspects of their heating. The

cooperative also serves other groups of

customers through arrangements that

involve renting a cellar or outbuilding

to hold the heating systems and for

wood chip storage. It then sells heat to

the user or owner of the building (and

adjacent buildings if they are part of a

“district” or network of facilities).

Similar systems are in place for heating

other groups of buildings and multitenant structures.

Stop 4: Weinbach Biomass

Logistics and Trade Center

We then drove a couple of hours to

Weinbach, also in Styria, where we met

Christian Schnedl, the director of the

Styrian Forest Owners Association,

which has also been helpful in

supporting the cooperatives in gearing

up as biomass and heat sellers. Our first

visit with Schnedl was at another BLTC

that provides processing and is a

distribution point for wood chips and

firewood.

Stop 5: Weinbach-area wood

energy contractor

We next visited another wood energy

contractor with a set up similar to that

of the farmer we had met earlier. In this

case, however, the farmer delivers

services through the equivalent of a

U.S. limited liability corporation-type

business structure, making him a

diversified farmer who has added “heat

seller” to his resume.

He made it very clear, however, that

handling the energy part of his

operation is not even close to being a

daily task. Once his system was set up,

it proved to be extremely lowmaintenance and a mostly “hands-off”

operation. The system automatically

feeds chips to the boiler and sends him

updates on his mobile phone and a few

times each year indicates when ash

needs to be disposed of (which he does

by spreading it on his garden).

Stop 6: Pölstal Biomass

Logistics and Trade Center

Next we took an unguided tour of

the BLTC in Pölstal, which opened in

2007, the first such operation in Styria.

Like the other BLTCs, it is

cooperatively owned, in this case by 13

farmers. It produces wood chips for use

in small-scale heating systems and

district heating plants, as well as

firewood for residential customers.

Reflections

There are some good reasons why

Austria has invested so heavily in

support of wood-based biomass and

renewable energy. Kicking its

dependence on imported oil and

avoiding natural gas supply disruptions

are two of the major incentives for

pursuing renewable energy

development. A clear policy framework

in Austria on greenhouse gas emissions

is another incentive, which has led to an

interest in reducing coal use. The

opportunity of providing additional

markets for Austrian farmers and forest

owners is another motivating force.

We also sensed a pride and

seriousness within the citizenry in

trying to do their part to contribute to

climate change mitigation. The

alignment and comprehensive nature of

their “carrot-stick-tambourine”

approach has proven to be an effective

way of developing renewable energy

industries for the benefit of rural

producers. In the United States, we

have important programs, such as the

USDA Value Added Producer Grants,

that can help incentivize cooperative

efforts along the lines of Austria’s

Biomass Logistics and Trade Centers.

But the scale of public and private

investments in biomass energy

development is overwhelmingly higher

in Austria than in the United States, as

are resources dedicated to spreading

information and awareness of biomass

energy to complement and bolster the

efforts of private enterprise.

Investigating “best practices”

emerging from the cooperative

developments in Austria, as well as the

programs and policies that are

supporting them, can help fine-tune

and deploy frameworks for enabling

renewable energy to expand biomass

energy production in the United States.

We met many great people in Austria

who are more than happy to share

information about their progress and

help others, including cooperatives in

America interested in developing

similar enterprises that are distributed

and scaled to more readily benefit rural

producers and communities, while also

encouraging sustainable land use

practices.

As we move forward with our wood

biomass industry, we must balance our

enthusiasm for expansion of biomassto-energy developments with a

determination that we don’t deplete the

resilience and future productive

potential of forests and woodlands. ■

“Wood is not only a crisis-proof and cheap energy source, but also a home-grown raw

material that adds local value by creating and securing jobs and income within regions.”

— T. Loibnegger (author of: Telling the Story in Austria: Sustainable Wood Energy Supply)
By Anne M ayberry

Public Affairs

USDA Rural Development

e-mail: anne.maybe ry@ w dc.usda.gov

any electric

cooperatives have

embarked upon

significant changes in

the way they provide

electricity to rural members. O ne of the

more significant changes is the growing

use of renewable fuel to produce

electric power.

To assist with the development of

renewable energy, rural electric

cooperative utilities across the country

have joined forces to form a new

cooperative: T he N ational Renewables

C ooperative O rganization (N RC O ).

T his new co-op for cooperatives was

established in 2008 to find ways for

rural electric cooperatives to access a

diversified, renewable-power portfolio.

Because renewable resources are not

evenly distributed throughout the

country, gaining access to wind, solar,

geothermal and biomass fuel resources

is much harder for co-ops in some

regions.

10 S eptember/O ctober 2010 / Rural C ooperatives

N R C O helping rural electrics

pur sue renewable energy

The 35 w ind turbines of the Stony Creek W ind project can produce a combined 52.5 megaw atts of pow er. Southern M aryland

Electric Cooperative and Old Dominion Electric Cooperative in Virginia are purchasing pow er from the project. Photos courtesy

Stony Creek W ind

Utili ty Co-op Connection

r
Rural Cooperatives / September/October 2010 11

Most states now require electric

utilities to establish renewable portfolio

standards and supply electricity from

renewable-energy resources by a

specific date, so many rural electric

cooperatives are looking for reliable and

affordable sources of “green energy.”

This is where NRCO plays a role.

Cooperative members of NRCO can

either purchase power from, or invest

in, renewable energy projects. This

helps cooperatives without access to

renewable resources to tap into

renewable energy. As the rate of

development of renewable resources

increases, NRCO can help cooperatives

meet government requirements.

Initial agreement

delivers wind power

NRCO recently announced its first

agreement to provide wind power to

two member-systems: Southern

Maryland Electric Cooperative Inc.

(SMECO) and Old Dominion Electric

Cooperative (ODEC) in Virginia.

NRCO is making this happen through

an agreement with E.ON Climate &

Renewables North America, a

subsidiary of E.ON AG, one of the

world’s largest energy companies.

Under the purchased-power

agreements, the two cooperatives

(SMECO and ODEC) will purchase

wind power from the Stony Creek

Wind Project for the next 18 years.

Located in Somerset County, Pa., on a

surface mine that once produced coal,

the 35 Stony Creek wind turbines have

a total possible output of 52.5

megawatts.

“The Stony Creek Wind project will

help SMECO meet Maryland’s

renewable portfolio standard,” says Joe

Slater, SMECO’s chief executive officer.

“This agreement will provide a longterm source of renewable power at a

competitive cost. It is an innovative way

to use the cooperative business model

— which has been successful in

delivering electric power to rural areas

for nearly 75 years — to help rural

electric cooperative utilities participate

in renewable energy projects,

benefitting rural communities.”

In addition to benefitting the

environment, increased use of

renewable resources represents a major

economic opportunity for rural areas,

adds Jonathan Adelstein, administrator

of the Rural Utilities Service of USDA

Rural Development. “Rural America

has the ability to supply this nation’s

growing energy requirements,”

Adelstein says. “By 2025, rural America

is likely to provide 25 percent of our

total energy needs. Renewable energy

development promotes energy

independence and creates jobs in rural

communities. It is no surprise that rural

electric cooperatives are leading the

way.”

According to data from the National

Rural Electric Cooperative Association

(NRECA), nearly 90 percent of the

nation’s cooperatives offer renewable

energy options to consumers. About 11

percent of the electricity that

cooperatives distribute is generated

from renewable fuel sources, including

hydropower.

Aggregating demand

The idea for a renewable energy

cooperative originated with discussions

on how to address a fairly new, but

quickly growing, industry issue.

“NRCO is the result of discussions

among generating and transmission

cooperative utilities that wanted more

access to renewable projects. This has

grown as an issue — driven both by

consumer requests and, more recently,

renewable energy and (potential)

carbon legislation,” explains Todd

Bartling, NRCO director of renewables

development. “As a cooperative entity,

we are promoting the use of renewable

projects and facilitating their

development. Our role is to aggregate

demand.

“You need critical mass for financing

these projects and to get them built,”

Bartling continues. “Ultimately, we look

for projects that make sense for our

members. The long-term benefit is the

potential for us to own and develop

projects to meet member needs.”

Bartling says that wind projects are

popular because they can be

constructed within a year, while woody

biomass projects take several years to

build.

In addition to developing renewable

power, SMECO’s goal is to offer a

diversified energy portfolio, which can

help reduce the volatility of power

prices by offsetting fluctuations in fuels

such as natural gas. The cost of power

represents the biggest portion of rural

electric cooperative utilities’ operating

expenses.

Power-purchase contracts that expire

at the same time traditional fuel costs

increase can pose affordability issues for

both business and residential

consumers. “We look for ways to

diversify our energy portfolio in

keeping with our risk-management

policy and keeping our rates

affordable,” Slater says. “The Stony

Creek Wind agreement does that.” ■
12 September/October 2010 / Rural Cooperatives

Canadian farmers see benefits

of local farm machinery co-ops

By Colette Lebel

Director Cooperative Affairs

La Coop fédérée

e-mail: colette.lebel@lacoop.coop

Editor’s note: this article is slightly

condensed from the July-August issue of

Le Coopérateur agricole, the member

publication of La Coop fédérée, based in

Montreal, Quebec.

t’s true, our farm machinery cooperatives (FMCs) are

new and relatively few. But they still deserve

attention and support because they help to focus our

vision on sustainable development. The notion of

sharing naturally leads to a logical way of farming in

terms of economics, environmental conservation and maintaining

good neighbor relationships.

Not surprisingly, economics is probably what motivates most

farmers to subscribe to an FMC. The beneficial impact of an FMC

on a farmer’s budget can easily be proven. By sharing the

equipment’s ownership, the cost of purchasing and operating the

equipment is reduced for each member. This boosts profitability and

thereby helps members to meet other budgetary obligations.

In terms of the environment, farm machinery cooperatives also

encourage responsible consumption of resources. The equipment’s

“life cycle” begins with the consumption of a huge amount of energy

when it is manufactured. When obsolete and discarded, farm

equipment can become a blot on the landscape. Limiting individual

consumption by sharing material is therefore a responsible gesture

for the environment.

FMC fills gap when sawmills close

Several sawmills in the Abitibi region of northwestern Quebec

used to supply farmers with inexpensive, good-quality livestock

bedding (litter). For the past few years, the forest industry has been

experiencing a crisis that has resulted in the shutdown of several of

these plants. The La Sarre and Macamic hospitals, in the Abitibi

region, have also endured the loss or reduction in waste wood to

supply their biomass boiler, which heats their buildings.

The FMC of Abitibi-Ouest has, since 2007, been involved in a

pilot project that is helping to offset the lost residual wood supplies

La Coop fédérée:

a strong network for

farmers and consumers

By its nature as a cooperative – rooted in

Quebec’s agricultural industry – and by its

key role in the greater

agri-food chain, La Coop

fédérée and its network

are natural partners to

those who take to heart

the harmonious

development of the

country’s rural and semiurban areas.

La Coop fédérée

now represents some

90,500 members divided

among 109 cooperatives

of all types, from

agricultural supply

cooperatives to consumer cooperatives to

processing cooperatives. These

cooperatives meet a wide range of needs for

agricultural producers and consumers who

have joined together to gain access to

competitively priced, high-quality products

and services.

The cooperative employs 11,336 people in

Quebec, Ontario and Alberta, and generates

sales nearing $3.9 billion [Canadian]

annually.

As a wholesaler, La Coop fédérée

provides agricultural producers from

Quebec, Ontario and New Brunswick with

the goods and services essential to

operating their businesses, including oil

products. Via its subsidiary, Olymel l.p., La

Coop fédérée processes and markets pork

and poultry to local and international

markets. It also oversees other activities

with the help of co-enterprises, such as

merchandising pork genetics and soybeans

for human consumption.

La Coop fédérée is also responsible for

keeping the agricultural cooperative

movement’s community life alive, as well as

promoting the interests of its members to

various public authorities and to the general

population. ■

continued on page 42

Photo courtesy La Coop fédérée
Rural Cooperatives / September/October 2010 13

Editor’s note: article courtesy National

Farmers Union

he business cycle may

be speeding up these

days, but consider the

case of a supply

cooperative that is

capitalized, patronized and then

liquidated all in the space of a week.

Does this sound improbable? Yes.

Educational? Definitely, and — in the

end — that is the reason the co-op

existed, if only briefly.

To introduce youth to the concept of

cooperative businesses, summer camps

hosted by state and national Farmers

Union organizations guide campers

through the business of cooperatives by

having the students actually begin their

own co-op. Based on a proven business

model that meets an obvious need,

these co-ops sell the “essentials”

campers need: soft drinks, chips, ice

cream, sunscreen and souvenirs. More

recently, the offerings have come to

include a wider choice of healthy snack

foods.

On the first day of camp, staff or

education directors explain how

cooperatives work and why they are

different from other types of businesses.

Campers are given the choice of

forming their own snack supply co-op.

Given the market need, this choice

results in youth investing some of their

pocket change in shares in the new

cooperative. It doesn’t stop there. They

also elect a board of directors, hire a

manager and prepare a marketing plan.

Time and money on the line

“Encouraging youth to form their

own camp co-op stores incorporates all

kinds of learning opportunities,” says

Maria Miller, education director for

National Farmers Union. “Our

curriculum focuses on leadership for

rural America. When young people put

their own time and money into their

own cooperative, they become more

serious about being actively involved in

a project. And, they employ the

organizational and leadership skills that

they can use when they return to their

hometown communities or college.”

Gina Dethlefsen of South Dakota

was president of the co-op board

elected by youth attending All-States

Camp July 11-16 at National Farmers

Union’s Education Center at Bailey,

Colo. She found that this “learn-bydoing” approach really connects with

the participants. “I have learned all the

necessary parts that it takes to have a

fully functioned cooperative,”

Dethlefsen says. “I have also learned

that it takes a lot of responsibility to

have a successful cooperative that

people want to buy shares in.”

At the end of camp, the co-op board

gives the financial report. This includes

shares sold, overall sales and profits to

members. The campers — make that

Look Who’s Minding the Store

Student-run supply co-ops short-lived,

but the concepts they teach live on

continued on page 43

The camp co-op store was popular with camper-members, who voted to

donate the proceeds to charity. Photo by Bob Kjelland
14 September/October 2010 / Rural Cooperatives

Northwest Cooperative Development Center

Olympia, Washington

ervices provided

and area served:

Northwest Cooperative Development

Center (NWCDC) acts

as an advisor and provides facilitation

and access to information and tools that

promote effective cooperative business

governance and management. Specific

services include feasibility assessment

and analysis, organizational

development, cooperative education,

business planning, strategic planning,

market research, board training and

grant writing. NWCDC is a nonprofit

501(c)(3) organization, working with

co-ops in Hawaii, Idaho, Oregon and

Washington.

Center history:

Founded by cooperatives in 1979,

NWCDC has grown into the

Northwest’s leading provider of co-op

business development services.

Formerly known as Puget Sound

Development Foundation, the Center’s

mission is to promote and strengthen

cooperatives in the region. In the spring

of 2000, NWCDC was reorganized and

renamed to include a broader

geographical area. To maximize

resources, skills and expertise,

NWCDC works collaboratively with

community, government and economic

development agencies, as well as

established cooperatives.

Noteworthy project:

NWCDC works in a variety of

sectors involving consumer, producer

and worker cooperatives. The Center

endeavors to provide consistent quality

services to its clients. NWCDC

recently entered into the ROC USA

Network as a certified technical

assistance provider to residents of

manufactured-home communities

seeking to purchase their property. As a

member of the ROC USA Network,

NWCDC has access to 100 percent

commercial financing with reasonable

terms and conditions through ROC

USA Capital. The Center’s professional

staff can efficiently determine

community residents’ interest in

purchasing a property. Staff can help

them form a cooperative corporation to

purchase the community and manage it

on their behalf.

Impact of project on

community/area:

ROC USA supports homeowners in

their desire for economic security

The nation’s network of cooperative development centers are a

primary force in the creation of new cooperatives and support for existing

cooperatives. The centers also play a major role in helping to spread

knowledge of the cooperative system of business. Through its Rural

Cooperative Development Grant (RCDG) program, USDA Rural

Development is a supporter of these centers, a number of which are

featured on the following pages, along with examples of some of the

cooperatives they have helped launch or otherwise provided support for.

As we observe Cooperative Month in October, it is fitting that we

recognize the important contributions that these centers are making to

the nation’s cooperative business system.

Taking Root CO-OP MONTH

continued on page 16
Since 1923, Cowiche Growers has packed and shipped

some of the finest Washington apples and pears, which it

grows in the fertile soils of the Yakima Valley. As a growerowned cooperative, it is committed to the preservation of the

family farm. As a supporter of NWCDC, it is also committed

to helping to promote the development of new cooperatives

in the Northwest.

“Grower-owned cooperatives give small family farmers

the unique ability to compete with large commercial growing

operations,” says Mike Sliman, the co-op’s president and

general manager. “Over the years, the value of the

Northwest Cooperative Development Center has been

invaluable to our success. The opportunity to go to one

source to get assistance for planning, education and training

on cooperative matters has been especially helpful.”

This grower-owned cooperative currently consists of

more than 65 members who farm about 3,000 acres, where

they produce apples, pears and cherries. The volcanic and

alluvial soils in the valley are rich and the growing season is

long. The warm days and cool nights naturally enhance the

color, crispness and quality of the fruit.

Cowiche Growers provides cold storage and packing

facilities for its members. Modern, state-of-the-art packing

facilities and controlled-atmosphere storage enable the coop to provide high-quality fruit to its customers year round.

Its facilities, situated on 27 acres, are centrally located to

the farms, allowing for quick and functional procession from

the tree to the packed box. The co-op’s fruit is sold through

Domex Superfresh Growers, one of the top fresh fruit

marketing firms in Washington state. The co-op packs about

1.5 million boxes of apples per year.

Rural Cooperatives / September/October 2010 15

Top: Antonio Artega and his son, Carlos Lopez, and the Chuck and

Debbie Turner family (above) are members of the Cowiche Growers

cooperative, which packs about 1.5 million boxes of apples

annually. Photos courtesy Domex Superfresh Growers and

Cowiche Growers

Cowiche Growers: dedicated to producing

quality fruit and spreading co-op concepts
16 September/October 2010 / Rural Cooperatives

through resident ownership.

Goals are to: preserve and

improve affordable communities;

build individual assets; and foster

healthy, mutually supportive

communities and leaders.

NWCDC is currently in the

process of assisting the

conversion of five manufacturedhome communities in

Washington and Oregon that

represent more than 600

households.

Quote from staff member:

“The moment is transformational when residents

recognize that they are moving

from a rental relationship —

where they had no control over

their home security — into an

ownership position with their

neighbors.” — Ben Dryfoos-Guss,

Manufactured Home Cooperative

Development Specialist ■

CO-OP MONTH

Taking Root

Services provided and area served:

Paradise Home Care Cooperative (PHCC) is a

worker-owned business with a mission to be the

premier home care provider in Hawaii County (on

the Big Island). PHCC represents professional,

compassionate worker-owners devoted to

helping their clients live comfortably and

independently. The members are dedicated to

enhancing the well-being of others through

innovative, loving care and commitment to serve

the community.

Cooperative history:

PHCC has been six years in the making.

Beginning with a 2004 USDA grant from the Rural

Home Care Cooperative Demonstration Program,

the Big Island Community Task Force was formed

to establish a home care co-op in East Hawaii

County. Results of the feasibility study, completed

in 2006, were favorable.

With the assistance of the Northwest

Cooperative Development Center (NWCDC),

charter members completed a business plan and

secured a working-capital loan. The loan came

as a result of an application by NWCDC to USDA

to establish a revolving loan fund through the

American Recovery and Reinvestment Act of

2009.

Growing need:

The need for businesses that can retain a

workforce of caregivers is crucial for the

growing population of people needing in-home

care, which this co-op will help to address. In an

industry plagued with high turnover, the

cooperative business model supports an

environment where workers have incentives to

stay on the job for the following reasons:

• The majority of workers are co-op members,

and, as such, own the business;

• Owning the business — with hired professional

management — enables worker-owners to do

what they do best: provide care.

• Profits go back to co-op workers via higher

wages and patronage dividends for members.

• Benefits worker-owners receive include health

insurance and someone to offer backup care for clients when workers are

ill or on vacation.

Impact on community/area:

PHCC represents a major employer

in the sparsely populated Puna District

of Hawaii County. In its first year of

operation, it will employ about 15

caregivers and support staff; it expects

to grow to 50 caregivers over the next

five years. ■

Paradise Home Care Co-op meets critical need

Tim O'Connell, of USDA Rural Development's state office in Hawaii, explains the steps required to form a

worker-owned cooperative during a workshop held prior to the formation of the Paradise Home Care Co-op.
Rural Cooperatives / September/October 2010 17

hen Larry Snell was

asked in 2002 to head

up the then-new

Kentucky Center for

Agriculture and Rural

Development (KCARD), he never

imagined the organization would

become a leading resource for

entrepreneurs and established

businesses in Kentucky and beyond.

”I knew the business development

services that KCARD was designed to

provide to the community were needed

in Kentucky,” says Snell, KCARD

executive director. “That is what

intrigued me about the job. But we have

gone far beyond what I originally

envisioned when the organization was

first beginning.”

Today, KCARD has clients across the

commonwealth, ranging from

individuals or producer groups with

only an idea for a new business, to

established cooperatives or businesses

looking at ways to become more

profitable in a challenging economy.

The KCARD staff provides a wide

array of services to assist clients at all

levels.

“KCARD is dedicated to facilitating

the development and growth of

agricultural and rural business

throughout our state,” explains Snell.

“We have an experienced and

professional staff to help analyze a

business idea, to help structure and

incorporate the business and to assist

with capitalizing, management,

marketing, accounting and legal

concerns.”

Fostering business succcess

KCARD is a nonprofit 501(c)(3)

organization. Its mission is to foster

business success and growth in rural

Kentucky by developing and delivering

technical assistance and by providing

educational opportunities for

agricultural and rural businesses seeking

to enhance their economic

opportunities. As a cooperative

development center, KCARD is

dedicated to improving the economic

conditions of rural Kentucky by

promoting new cooperatives and

continuing efforts to improve existing

cooperatives.

KCARD’s staff is familiar with

various types of incorporated

agribusinesses and consults with groups

on critical questions related to

organizing, incorporating, financing,

management, marketing, accounting

and legal concerns. It networks with

other cooperative development centers

and state and national organizations to

assist with all aspects of agribusiness

development.

One important business service the

Center offers is Strategic Profitability

Planning & Implementation (SPPI), a

very intense, hands-on service. During

the SPPI process, KCARD helps the

business identify

opportunities to

improve profitability,

develop steps to

address and follow up

on these opportunities,

and monitor and guide

the implementation of

the action steps

outlined. SPPI includes

many strategic

planning components,

but it focuses more on

short-term actions to

improve profitability.

KCARD plays a

much larger role than

just acting as a

facilitator in the group’s

planning. KCARD is

also very involved in

the implementation of

the action plan

developed and stays

involved after the initial

implementation.

SPPI can be a very effective tool for

a business to improve its operations, but

the SPPI requires a strong commitment

from the business’ management team

members if it is to have a positive

impact on the business’ bottom line.

SPPI requires a series of working group

meeting about six to eight weeks apart.

BMOA reveals

strengths, weaknesses

The Business Management and

Operations Analysis (BMOA), a

comprehensive study of a business’

operations, is another support service

offered by KCARD that is growing in

popularity. Snell explains that the

objective of the BMOA is to provide

management and the co-op owners and

board of directors with information and

materials that will help in planning and

decisionmaking. During the analysis,

the strengths, weaknesses, opportunities

Kentucky Center for Agriculture & Rural Development

Elizabethtown, Kentucky

Chaney's Dairy Barn near Bowling Green, Ky., has found success

with agri-tourism, inlcuding a giant corn maze, homemade ice

creams and crafts. Debra Chaney (above) discusses the corn

maze with Kentucky Ag Commissioner Richie Farmer.
The Campbell County Beef Association (CCBA) is a

cooperative of beef producers who are jointly marketing

naturally grown “freezer” beef. CCBA incorporated as a

cooperative in the winter of 2010 and began operations early in

the summer of 2010. Kentucky Center for Agriculture and Rural

Development (KCARD) attended numerous meetings of the

steering committee, provided educational resources on the

cooperative business structure, assisted with drafting the

articles of incorporation and bylaws and developed a

comprehensive business plan.

CCBA expects to market 50 head of beef produced by nine

local farmers direct to local consumers this year. The co-op

has already asked KCARD for further assistance in developing

a more comprehensive marketing plan in the near future. ■

Campbell County Beef co-op members deliver processed beef to customers;

it all starts with members’ herds grazing on rich Kentucky pastures.

18 September/October 2010 / Rural Cooperatives

and threats facing the

business are identified.

At the end, KCARD

staff provides the

business with

benchmark materials

from which to

measure progress and

growth during the

next few years.

“This is really a hands-on process,”

says Snell. “It is an intense, week-long

study of the business’ operations.”

During the BMOA, KCARD

interviews key business personnel

(board members, manager, and key

staff), members/owners, customers,

suppliers and community leaders to

identify common themes in the business

operations. KCARD also conducts a

detailed investigation into the financial

condition, recordkeeping and legal

documents of the business. A verbal

report is given to the business immediately after the completion of the BMOA

and is followed by a written report.

“A BMOA is an intensive process

where you not only work with the

client, but also with their staff, suppliers

and customers,” says Snell. “To make

the BMOA successful, it takes the

commitment of the business owners not

just during the evaluation, but to

implement recommendations once the

analysis is complete.”

Partnering for success

“Over 70 percent of the

agribusinesses that KCARD has worked

with since 2002 are still in business

today, and many of them have

experienced significant growth,” Snell

says, noting that these businesses create

many jobs.

Snell is quick to say that this success

would not be possible without the

Center’s board of directors and other

agriculture organizations that

collaborate with it. “They are critical to

the daily operations and continuing

support of the organization,” he says.

Snell also points out that it would not

be possible to operate without the

financial support provided by the Rural

Business-Cooperative Service of USDA

Rural Development and the

Agricultural Development funds

provided by the Kentucky Agricultural

Development Board.

“We owe any success that KCARD

has had in working to grow and

improve our state’s rural economy to

these individuals and agricultural

partners,” says Snell. “They deserve the

credit for any accomplishments that

KCARD has had in developing

successful, sustainable agribusiness

across our state.”

KCARD was incorporated as a

nonprofit in February 2001 by a group

of Kentucky agricultural leaders

representing the University of

Kentucky, the Kentucky Council of

Cooperatives, Kentucky Department of

Agriculture, Kentucky Farm Bureau,

CoBank and others. ■

Campbell County Beef Association

CO-OP MONTH

Taking Root
he Indiana Cooperative

Development Center

(ICDC) is a nonprofit

organization founded in

2003 to fill a void in

services for cooperatives in Indiana.

The Center is committed to providing a

range of innovative, results-oriented

and cost-effective services to

cooperatives and related organizations.

The Center provides technical

assistance and education to help startup and emerging cooperatives across a

wide variety of industries. Drawing on

the skills and expertise of an

experienced and knowledgeable staff,

ICDC has participated in the

development and launch of cooperative

organizations of all kinds, including

retail food cooperatives, community

supported agricultural associations

(CSAs), aquaculture, farmers markets,

renewable energy, childcare and

housing, among others.

Four years ago, the Center hosted

the first Cooperative Summit in

Indiana, which has been held annually

since then. The mission of this day-long

event is to provide a forum for

networking, to promote cooperative

businesses and to increase opportunities

for cooperative business-to-business

relationships. This year’s Summit is

scheduled for Nov. 5 and will focus on

the theme of “communications.”

“We have a stellar line up of

speakers,” says Debbie Trocha, ICDC

executive director. Summit speakers

include: Martin Lowery, executive vice

president for external affairs with the

National Rural Electric Cooperative

Association; Roberta MacDonald,

senior vice president of marketing for

Cabot Creamery Cooperative; Susie

Hinkle, cofounder of Direkt Approach

(a training and consulting company)

and David Cain, president of

MediaSauce.

This year will mark the introduction

Rural Cooperatives / September/October 2010 19

Indiana Cooperative Development Center

Indianapolis, Indiana

Laughery Valley Growers Cooperative (LVGC) in Batesville, Ind., serves as an

aggregator of fresh fruits, vegetables and produce for its grower-members to

supply their Community Supported Agriculture (CSA) association. The CSA has

many local subscribers around Batesville, but the primary customer base is in

Cincinnati, Ohio. A partnership with the Greater Cincinnati Healthcare Council

(GCHC) and Christ Hospital, less than 50 miles away, helped increase the CSA’s

subscriptions.

Cooperative history:

LVGC was formed five years ago by several area growers to better market

their produce. ICDC helped in the formation of the co-op and with director

training. The number of grower-members continues to increase and the

customer base has tripled since the early days.

As their partnership with the GCHC continues to grow, LVGC will need to

increase the number of growers to keep pace with the increase in CSA

subscribers. LVGC plans to form an educational arm to educate new subscribers,

many of whom are from the urban sector, about co-ops. Due to the increase in

subscribers, the LVGC is experiencing growing pains as it struggles to identify

new facilities for the packaging and processing of the food boxes for its

subscribers.

Impact on community/area:

Now that the member-producers have a steady and growing demand for their

produce, these predominantly small farms have become economically

sustainable. The growing demand for local foods has also created a heightened

interest among new and beginning farmers.

The local farmers’ market has highlighted the co-op and its success, which in

turn has led to increased success for the farmers’ market. Increased consumer

demand for local foods has helped increase the viability and sustainability of the

region’s small farmers.

“The Indiana Cooperative

Development Center has played

a significant role in the evolution

of our local initiative to empower

family farmers in our area to

create direct markets for their

produce,” says Sister Claire

Whalen, executive director of the

Laughery Valley Growers

Cooperative. ■

Laughery Valley Co-op

meeting need for local food

Produce from the Laughery Valley Growers Coop is boxed for delivery to its CSA subscribers.
20 September/October 2010 / Rural Cooperatives

of new awards that

will be presented

during the conference:

the Cooperator

Community Service

award and Cooperator

Heroes award. “We

want to recognize the

outstanding

contributions made by cooperators to

both their cooperatives and to their

communities, says Trocha. Details

about the summit can be found at:

www.icdc.coop or

www.indianasummit.coop.

Assistance from the ICDC has led to

the successful development and launch

of a number of cooperatives in Indiana

which, in turn, have helped to anchor

and improve the economic stability of

their rural communities.

According to Trocha, “The

cooperative model is a sustainable form

of business that empowers people and

enhances the economic stability of the

communities in which they operate and

grow.” ■

CO-OP MONTH

Taking Root

Rural Electric and Telecommunications Development Center

Mandan, North Dakota

he Rural Electric and

Telecommunications

Development Center

serves all of rural North

Dakota by providing

technical assistance to emerging and

expanding cooperatives and mutually

owned businesses. Hosted by the rural

electric and telecommunications

cooperatives across the state, the Center

has been operating since 1994. Its

mission is to: Add new wealth to the

economy by creating, retaining and

expanding rural cooperatives and other

primary-sector business enterprises.

Services provided:

The staff works with farmers and

other rural residents to assist them with

the development of ventures such as

agriculture processing facilities,

manufacturing companies, rural

housing, grocery stores and supply

cooperatives. The Center staff guides

projects through all the steps of

business development, from start to

finish.

It provides assistance with:

• Developing the organizational

documents;

• Fundraising for development work;

• Completing feasibility studies;

• Business planning;

• Selecting qualified consultants;

• Conducting equity drives;

• Developing finance packages;

• Providing start-up administrative

services.

The Center also brings innovative

ideas to rural North Dakota by

organizing semi-annual Rural

Developers’ Roundtable Talks. These

events feature an innovative

development concept that can easily be

replicated in other rural areas, while

providing rural developers and resource

providers with an opportunity to

network.

Noteworthy endeavor:

Many dairy farmers are being pushed

out of their current locations by urban

sprawl. In response to a rapidly

declining dairy industry in North

Dakota and a regional dairy processing

cooperatives’ desire for a supply of

locally produced milk, the center

launched a program to help increase the

number of dairy cows in the state. This

was accomplished by helping producers

expand their operation and

by relocating displaced

farmers from other states to

North Dakota.

Through this program,

the Center has helped to

attract six new dairy farm

families to rural North

Dakota. These families milk

3,700 head that generate

$26.9 million in milk sales

annually — a critically

important new source of

economic wealth for their

rural areas.

Quote from director:

“As rural populations continue to

decline in North Dakota, more

communities are seeking the assistance

of the Center to help them work

together to provide for their area’s

needs, whether by organizing

cooperatively owned grocery stores,

housing or daycare centers. Through

our connections in the state’s economic

development community, our Center is

poised to assist a wide variety of

business development projects.” — Lori

Capouch, Center Director ■

Hayrides were part of a dairy social held at the recently

expanded Kenton Holle farm.
he Nebraska

Cooperative

Development Center

(NCDC) at the

University of

Nebraska-Lincoln is Nebraska’s center

for cooperative-based businesses

development. It provides education,

training and technical assistance to

developing and existing user-owned

business — including cooperatives,

limited liability companies (LLC) and

other business structures. The Center

is committed to creating sustainable

communities in Nebraska in which

people work together to meet their

needs and reach their goals.

Among specific services offered are:

strategic planning; group facilitation;

access to outside professional services,

such as legal and accounting services;

assistance with feasibility studies;

market analysis and business plan

development; financial projections and

budgeting assistance; project

management; assistance with

membership development and

development planning and training.

Center’s mission:

To build a strong, engaged and

sustainable network of people with

access to local, state and national

resources; that is dedicated to assisting

people in rural areas by helping them

to work together to increase their

incomes via cooperative development,

and to help facilitate value-added

opportunities.

Center goals:

• Create and/or expand successful

group efforts, including cooperatives,

that promote value-added agriculture,

local food systems, renewable energy

and “main street” businesses, as well

as other types of entrepreneurship;

• Increase cooperation and sharing

among producers, especially those

Rural Cooperatives / September/October 2010 21

Nebraska Cooperative Development Center

Lincoln, Nebraska

Staff members of Community CROPS (Combining Resources, Opportunities and People for

Sustainability) help grow healthy food on 16 community gardens around Lincoln. Photo

courtesy CROPS
who are interested in exploring

the possibility of transitioning

to a new type of agriculture;

• Provide customized and

continuous service to

organizational groups

throughout the life of relevant

projects;

• Facilitate and support favorable

public policy by increasing the

awareness of rural people’s

needs and the role of cooperative development.

Buy Fresh, Buy Local

Nebraska

“Buy Fresh, Buy Local

Nebraska” is an outreach and

marketing initiative to promote

and support local foods. The

initiative began in 2006 after

much research by a group of

consumers, farmers, nonprofits

and small local businesses that

were seeking ways to benefit all

Nebraska communities.

The Buy Fresh, Buy Local

Nebraska initiative includes

media outreach and public events

to raise awareness of the benefits

of eating locally and the diversity

of local food options available,

and to increase the visibility and

viability of a locally based food

system. Members of the effort

include farmers, restaurants,

institutions and groceries.

“Anyone who meets the

criteria is welcome to join,” says

NCDC Cooperative Business

Development Specialist Elaine

Cranford. “There's a place for

22 September/October 2010 / Rural Cooperatives

From early May through mid-October each year, more than

10,000 shoppers visit the Omaha Farmers Market in the city’s

Old Market for fresh produce, smoked meats, jams, gourmet

baked goods, flowers and everything else under the sun. It is

one of dozens of farmers markets, CSAs (community supported

agriculture) and other local farm operations that are working

together under the marketing umbrella of Buy Fresh, Buy Local

Nebraska (visit: www.buylocalnebraska.org for more

information).

Even chefs from nearby restaurants frequent the market to

stock up on just-picked tomatoes, salad greens, berries and

more. Two Saturdays each month, they share their tricks-ofthe-trade (and offer delicious samples) for customers in the

Everything under the Nebraska sun

CO-OP MONTH

Taking Root

The Omaha Farmers Market attracts more than

10,000 shoppers annually.
Rural Cooperatives / September/October 2010 23

market’s demonstration area.

The market traces its roots back nearly 100 years, to a

farmers’ market that operated on the corner of 11th and

Jackson Streets. Until 1964, this was where growers came to

sell everything from fruits and vegetables to herbs and honey.

After a hiatus of 30 years, the Omaha Farmers Market was

revived in 1994 on the very corner lot where the original market

thrived.

CSAs also join in

Another organization active in the “Buy Fresh” effort is

Community CROPS (Combining Resources, Opportunities and

People for Sustainability), a community gardens project based

in Lincoln, which helps people work together to grow healthy

food and live sustainably.

Community CROPS, which started with one community

garden in 2003, has grown to become an organization of 16

community garden sites, a training farm, a successful

Community Supported Agriculture program and a regular stand

at the Old Cheney Road Farmers’ Market, among other efforts.

It currently has five full-time staff positions, three AmeriCorps

members and numerous volunteers who help with projects, as

well as a group of farmers and gardeners.

“Our gardens provide the opportunity to share knowledge,

educate, experience personal growth, and provide green

spaces for mental, spiritual and physical healing and wellbeing,” the group’s website says. “We are creating a resilient

system where people can earn a living by feeding our

community and conserve precious resources for future

generations.” For more information, visit:

www.communitycrops.org.

Family farm direct marketing

Farm families with their own direct marketing efforts are

also members of the Buy Fresh network, including Doug and

Krista Dittman, owners of Branched Oak Farm. As the

stewards of a 230-acre dairy farm 15 miles north of Lincoln,

Doug Dittman says “We take pride in knowing that our

products are made with sustainable, certified organic methods

and with a positive impact on the environment.

Branched Oak Farm, in the hills of eastern Nebraska known

as the Bohemian Alps, was started by Doug in 1991. When he

married Krista in 1999, they began raising grass-fed beef and

free-range chickens. Customers began asking for milk, which

led them to buy some Jersey cows, build a dairy facility and

start milking.

They then joined forces with friends Charuth and Kevin Loth

and stared making cheese. Charuth Loth had produced goat

cheese under the ShadowBrook Farm’s Dutch Girl Creamery

label, while Krista Dittman produced cow-milk cheese under

the Branched Oak Farm name. Through this collaboration

came Krista and Charuth’s own corporation: Farmstead First

LLC, which NCDC provided technical and other assistance in

forming. Farmstead First, LLC Branched Oak Farm is now a fully

functioning, certified-organic, grass-based dairy specializing in

creating farmstead cheeses. ■

everyone at the table...farmers,

restaurants, groceries as well as

friends of Buy Fresh Buy Local

Nebraska” (see sidebar). This

collaborative effort was

founded by the University of

Nebraska-Lincoln’s Nebraska

Cooperative Development

Center, the Nebraska

Sustainable Agriculture Society

and Great Plains RC&D.

The national partner

in the effort is the FoodRoutes

Network, established in 1997

to foster and promote sustainable food

systems in regions of the United States

by using state-of-the-art

communications techniques and public

policy innovations. In 2000,

FoodRoutes Network became a

nonprofit, 501(c)(3) organization

focused on having an impact on the

public policy arena, generating

marketplace opportunities and

stimulating partnerships around

sustainable food systems. There are

currently 75 Buy Fresh Buy Local

chapters in the United States. ■

Krista Dittman and Charuth Loth with an array of their

specialty cheeses.
24 September/October 2010 / Rural Cooperatives

Cooperative Development Institute

South Deerfield, Massachusetts

ervices provided

and area served:

The Cooperative

Development Institute

(CDI) provides

education, training, networking and

technical assistance, including

organizational development, feasibility

assessment, business planning, strategic

planning, marketing, communications,

financial systems and board training.

Clients are existing and start-up

cooperatively structured enterprises in

New England and New York. These

clients come from all business sectors:

food, housing, energy, agriculture, arts,

health, forestry, fisheries, retail and

more.

Center history:

In 1994, a broad range of

cooperative leaders from the

agricultural, telecommunications,

worker-ownership and financial sectors

who shared a vision of a thriving

cooperative economy in the Northeast

came together to form CDI. The

Institute has been a leader in

cooperative development in the region

and as an advocate that works with

partners throughout the country.

Noteworthy endeavor:

At the 2010 National Cooperative

Business Association annual conference,

“Co-ops Seeding Co-ops,” CDI

presented an analysis of the ways that

existing cooperatives can meet more

member and community needs by

investing in new cooperative

enterprises, through spin-offs, supplychain management or diversification.

The presentation was inspired, in part,

by CDI’s participation in the

development of Maine Organic Milling.

This effort involved the Organic

Valley/CROPP Cooperative helping its

Maine dairy farmer-members to

purchase and operate an organic feed

mill as a farmer-owned cooperative (see

sidebar). In the coming year, CDI plans

to leverage its cross-sector co-op

expertise to bring multiple benefits to

new manufactured-home park

cooperatives in the region, including

helping them to form energy and foodpurchasing co-ops.

Impact on area:

Since 1997, CDI has worked

intensively with well over 150 start-up

and established cooperatives to launch

CO-OP MONTH

Taking Root

continued on page 26
Rural Cooperatives / September/October 2010 25

Maine Organic Milling in Auburn is a farmer owned

cooperative, organized in response to the closure of Maine’s

only organic feed mill.

“When the mill in Auburn stopped operations, it left many

Maine organic dairy farms with limited options,” says Steve

Russell, an Organic Valley/CROPP Cooperative farmer-owner

and member of the Maine Organic Milling’s board of

directors. “As local, organic dairy farmers, it is essential to

our businesses — and, frankly, to the survival of our farms —

to source the highest quality organic feed for our animals at

prices that keep us profitable. We need this feed mill right in

our own backyard. Our cooperative model and the attitude of

banding together is what made this come together.”

Discussions among farmers began in June 2009 about

whether it would be feasible to buy and operate the former

Blue Seal feed mill. These talks were joined by a team of

resource people, including: cooperative specialists from the

Cooperative Development Institute and USDA Rural

Development; a business counselor from the Small Business

Development Center at the Androscoggin Valley Council of

Governments; an agricultural business management specialist

from the Maine Department of Agriculture; an agriculture and

real estate business consultant; and the farm resources

manager from Organic Valley/CROPP Cooperative.

Together, farmers and their advisors worked though the

complex feasibility study, business planning, organizational

development and financing needed to leverage the

commitment and capital to buy the mill. Papers to seal the

deal were signed in January 2010.

Along with member equity, the new cooperative received

financing assistance in the form of donations and preferred

stock purchases from supporting organizations, as well as

loans from the Maine Rural Development Authority and the

Agricultural Marketing Loan Fund. The co-op is partnering

with Organic Valley/CROPP for ingredient sourcing, inventory,

technical support and logistics.

“The relationship between Maine Organic Milling and

Organic Valley represents a unique cooperative partnership,”

says Lowell Rheinheimer, CROPP’s farm resources manager.

“It offers an example of two cooperatives cooperating

together for mutual benefit in fulfillment of their common

mission.”

Maine Organic Milling, or MOM, began selling high-quality,

competitively priced complete organic dairy concentrate in

May 2010. It didn’t take long for rave reviews to come back

from the initial buyers. Dairy producers reported that cows

took to the new feed very well and maintained good

production.

Surprisingly, the butterfat and protein components of their

milk shot up even as their cows spent more time on pasture,

compared to past years. Since dairy producers get paid

according to their milk components, they are a happy bunch.

Indeed, “this new cooperative business is happy news for

all Maine’s organic livestock and poultry farmers,” says Lynda

Brushett of the Cooperative Development Institute. “As their

operations evolve, these farmers will have access to locally

milled and mixed feeds and to grain farmers, who will have a

new market.” ■

Milling co-op crucial to Maine’s organic dairy farms

Opposite page: Bill Andrews Jr., left,

delivers a load of organic grain to

Maine's first organic feed mill, where

he is met by Gregg Varney. Left: Jason

Jordan of Lewiston loads a truck.

Photos by Daryn Sloven, courtesy Sun

Journal
26 September/October 2010 / Rural Cooperatives

new businesses,

expand existing

operations and

address critical

business issues. These

cooperatives

collectively serve

more than 10,000

members; employ more than 150

people (not counting their contribution

to the livelihood of many small

producers); strengthen the region’s local

food system; expand clean energy

choices and provide good homes and

jobs.

CDI’s vision is to help promote “a

cooperative economy centered on an

inter-dependent, dense network of

enterprises and institutions that meet

their members’ needs through

principled, democratic ownership; they

will care for the community, combat

injustice and inequity and promote

conscious self-governance.” ■

CO-OP MONTH

Taking Root

Montana Cooperative Development Center

Great Falls, Montana

ervices Provided

and Area Served:

The Montana

Cooperative Development Center

(MCDC) provides cooperative

education and project management;

assists with feasibility studies, business

and marketing plans; provides assistance

in the development of articles of

incorporation and bylaws; and provides

clients with access to local, state and

federal funding sources. It also analyzes

resources, assesses project eligibility,

structures financial packages and

develops applications. MCDC, which

covers all of Montana, offers grant

writing assistance and provides direct

financial assistance for legal costs.

MCDC history:

Since its inception in 1999, MCDC

has provided hands-on, cooperative

education and project management

assistance to 123 entities. It has

managed and directed 44 feasibility

studies and managed and directed 58

business and marketing plans. The

Center has also provided legal

assistance to 41 projects, provided

financing for 37 projects and provided

21 entities with applied research. The

Center has provided training for 75

projects and guided the formation of 34

cooperatives.

Noteworthy projects:

Linx Regional Transportation

Cooperative

Linx Regional Transportation

Cooperative was formed to maximize

the use and integration of

transportation resources to close service

gaps through the creation of a tri-state

(Montana, Idaho and Wyoming) bus

service. The cooperative’s service area

covers more than 73,992 square miles,

which includes many under-served

areas. Because of the vast area, it

required a well-coordinated planning

effort involving several entities.

The cooperative has engaged

interested riders, stakeholders and

public and private transportation

providers in Idaho, Montana and

Wyoming, as well as state

transportation officials and federal land

management agencies.

The co-op will provide:

• A trip planning and ticketing system

with multiple customer touch-points;

• Improved marketing of existing and

emerging services;

• Coordination of route schedules and

transfer points;

• Innovative technology applications

that benefit both transportation

operators and their riders;

• A centralized location for information

on all modes of mobility.

The project area encompasses 28

counties in Idaho, Montana and

Wyoming that surround Yellowstone

and Grand Teton national parks.

Presently, it has 20 members with a

projected impact of $10.8 million

annually, providing 197 jobs in 28

counties in three states.

Riverside Crossing

The senior housing cooperative

model is new to Montana. Housing

available to seniors has generally come

in the form of assisted living, lowincome housing or nursing homes. The

cooperative model offers an opportunity

for seniors looking to “downsize” to be

free of yard work and other home

maintenance. The cooperative model

also offers a way to build an affordable

housing complex, allowing seniors to

stay in their community – which is

important for maintaining the

economic stability of rural Montana

communities.

Riverside Crossing, Montana’s first

The Linx Regional Transportation Co-op is

attempting to improve bus service in three

states.
ervices provided

and area served:

The Value Added

Agriculture Development Center (VAADC)

uses a “hands-on” approach for

providing technical and executive

services to new and existing agricultural

businesses across the state of South

Dakota. Consultation with cooperatives,

entrepreneurs and organizations results

in an individual work plan from the

Center’s menu of available services,

which include: project management,

feasibility assessment, business

planning, education, funding access,

applied research and networking. The

VAADC also provides educational

outreach opportunities to heighten

interest and awareness of cooperative

and agribusiness development.

Center history:

VAADC is a not-for-profit

organization formed in 1999 by a

contingency of 17 rural-based agricultural commodity groups, trade organizations and co-operatives committed to providing entrepreneurs and

business owners with assistance

necessary to help rural cooperatives

Rural Cooperatives / September/October 2010 27

housing cooperative for active adults

age 55 and over, offers a unique

retirement opportunity in the

community of Hamilton, in the middle

of a broad valley banked by the

Bitterroot Mountains to the west and

the Sapphire Mountains to the east.

Riverside Crossing is an affordable

alternative to homeownership, complete

with tax benefits, community oversight,

economic security and the elimination

of interior and exterior home

maintenance.

Last Chance Café Co-op

Having at least one good café or

restaurant can play a critical economic

and social role in keeping a small rural

community viable. So when the

previous owners closed the only café in

Sunburst, Mont., about 18 months ago,

it sparked an effort to reopen it under

new ownership. Sunburst is a small

community on Interstate 15, about 10

miles from Canada. It is the last place

to stop to get something to eat for

many miles, hence the name: Last

Chance Café.

MCDC worked with a steering

committee from the community of

Sunburst, and the café has reopened as

a cooperative. The café created three

full-time jobs in an area where every

job is needed. More workers could be

hired in response to wind-power

development in the area, some of whom

may look for a place to get a good,

home cooked-style meal. A catering

business may also be launched to serve

jobsites where workers don’t have the

time to drive into town for meals.

“It may seem trivial to some to talk

about a project that creates only three

jobs,” says Brian Gion, MCDC’s chief

executive officer. “But, we also have to

look at the impacts it brings to the

other businesses in the area. When

people stop and eat, they may also fill

their vehicle with gas or shop at other

stores.”

Midwife Co-op

Underscoring the broad scope of coop projects MCDC is working on —

and the flexibility of the co-op business

model — the Center is also in the

process of forming the Montana

Midwives Cooperative. It plans to open

a birthing center that provides quality

childbirth care in Northwest Montana.

There is a demand for safe, professional

care from qualified staff from those who

are seeking an alternative to a hospital

for childbirth. This co-op will help

medical entrepreneurs, nurses and

midwives) to start their own business

and increase their earning potential.

The co-op will create up to10

professional positions.

Quote from Center CEO:

“To stabilize our rural communities

and keep them thriving, we need to

maintain and build our base

businesses,” says Brian Gion, MCDC’s

chief executive officer. “These are local

businesses that provide the necessities

which keep our rural communities

functioning. Without a strong base,

communities cannot survive, cannot

grow and cannot attract new businesses.

The cooperative business model has

provided opportunities to maintain and

grow businesses in Montana.”

To find out more about MCDC, go

to: www.mcdc.coop or call 406-727-

1517. ■

Service with a smile: the staff of the Last

Chance Café co-op.

Value Added Agriculture Development Center

Pierre, South Dakota The South Dakota Oilseed Processors plant.
28 September/October 2010 / Rural Cooperatives

grow and prosper.

The VAADC is

established as the

state’s “go to” place

for customized service

delivery of support

stemming from

testing the concept to

carrying out business

development phases

through accomplishing online company

expansions.

Noteworthy projects:

South Dakota Oilseed Processors is a

state-of-the-art oilseed expeller facility

producing high-quality natural oil and

meal products. The VAADC assisted

with various business development

aspects resulting in commencement of

plant operations in December 2008. It

is currently supporting a proposed

expansion into a multi-feedstock

processing facility by collaborating with

the cooperative to outline strategy

options and develop a business plan.

The $17 million project employs 40

people and uses 4.1 million bushels of

locally grown soybeans. Additionally, it

is spurring economic growth of

ancillary businesses in surrounding

small communities.

VAADC also provided support for

Natural Gold LLC, a soy-oil processor

that opened in Aberdeen in 2008. The

plant has the capacity to crush 5 million

bushels of soybeans annually. The

chemical-free, soybean crush process

used by Natural Gold lends itself to

multiple applications. The refined, allnatural vegetable oil is available for use

in products for human consumption,

livestock feed, industrial and technical

uses, as well as renewable fuels.

Some of its soy oil is being used for

making Dakota Ag Additive, which the

company says can be blended with

ethanol and biodiesel for enhanced

engine performance and mileage. Soy

meal, a co-product of the production

process, is made into a high-value

livestock feed ingredient for area

producers.

VAADC provided technical

assistance to foster the business

development, teamed up with the

Governor’s Office of Economic

Development to use the Value Added

Ag Subfund to help fund a feasibility

study and collaborated with the Region

III Small Business Development Center

on developing financial projections for

the business plan.

Quote from board president:

“Agriculture is the foundation of

South Dakota’s economy. The support

of our agricultural community and

USDA’s Rural Cooperative Development Grant program allows the

VAADC to provide services needed to

start and grow cooperative businesses in

our rural communities,” says VAADC

board president Merlin Van Walleghen.

“Delivery of VAADC services has

played a significant role in starting or

expanding more than 130 endeavors.

Our client base will continue to grow as

our resources assist the next phase of

value-added agriculture that includes

not only traditional commodities, but

also co-product processing, new

commodities, global markets and

increased entrepreneurialism.” ■

CO-OP MONTH

Taking Root

Keystone Development Center

York, Pennsylvania

ervices provided

and area served:

Keystone Development Center (KDC)

serves Pennsylvania,

Maryland, Delaware and New Jersey. It

provides a “one-stop shop” for

cooperative development services.

These include feasibility studies,

incorporation, bylaw development,

business plans and conflict resolution.

Center history:

The Keystone Development Center

is in its 11th year of operation and is

approaching a cumulative total of 100

clients who have been provided

significant technical assistance in

support of their cooperative. The

Center’s nine-member board represents

organizations such as Adams Electric

Cooperative, Pennsylvania State

University Extension, Pennsylvania

Association for Sustainable Agriculture

and the Center for Rural Pennsylvania.

One of KDC’s greatest strengths is its

involved, “hands-on” board, which is

committed to cooperative development

and whose members have a broad range

of expertise.

The Center provides complete

development services and regularly does

feasibility studies and business plan

development. Feasibility studies have

been conducted for nearly 40 groups.

Lancaster Farm

Fresh Cooperative

The Lancaster Farm Fresh

Cooperative (LFFC) serves Amish and

Mennonite farmers in the Lancaster,

Pa., area and is considered one of the

Center’s greatest success stories. Started

by seven farmers, the co-op has grown

to more than 50 farmer-members. The

co-op’s high-quality, mostly certified

organic products are marketed in

Philadelphia and New York City,

among other locations.

Cooperative sales have grown from

about $300,000 in its initial year of

operation in 2006 to well over $6.5

million in 2010. The Keystone

Development Center helped LFFC
Rural Cooperatives / September/October 2010 29

incorporate, develop bylaws and hire

employees. The co-op currently has

eight full-time employees and is

conducting interviews to hire two

additional full-time workers. It also

employs five full-time or seasonal

drivers and about 10 part-time office

staff and warehouse packers.

Two spin-off businesses of the co-op

have also been created: a trucking

company and a co-packing business.

Several farms have become certified

organic operations based on

membership in LFFC. As a result of the

cooperative, the farmer-members have

seen a significant increase in their net

farm income.

The development of the cooperative

has made a tremendous impact on the

farmer-members economic viability. To

learn more about the co-op, visit:

www.lancasterfarmfresh.com.

Quote from Center director:

“Lancaster Farm Fresh is an

excellent example of the power of

cooperation. The farmers who helped

form LFFC and those who joined later

are able to access markets and to earn

prices that would have been impossible

without cooperation.” — Cathy Smith,

KDC Executive Director ■

One of the newest initiatives KDC is involved with is the MidAtlantic Food

Cooperative Alliance (MAFCA). MAFCA represents the beginning of what is

hoped will grow into a federated cooperative of food co-ops in the region. This

effort is aimed at developing the local food system by organizing the consumer

end of the food system by helping them more easily find sources of local

products.

The group has met several times and currently has 30 member-cooperatives

involved. These food cooperatives have an estimated total membership of about

43,000 individuals or households, with current aggregated gross sales of nearly

$99 million (this does not include the projected sales from the start-up co-ops). It

is estimated that MAFCA members are already purchasing $16 million of local

products annually.

The current membership includes 12 start-up businesses, most of which KDC

has been advising throughout their launch process. These start-up businesses

have already benefited a great deal from exposure to mature co-ops in MAFCA.

The objectives of the Alliance are to:

• Establish a regional network of consumer food co-ops, businesses and farmers;

• Promote a marketing brand for regional co-ops;

• Publicize, promote and enhance resources for established and start-up co-ops;

• Promote the principles and values of the cooperative movement.

The group has selected a steering committee and currently has four work

groups: Food System Development, Regional Network, Cooperative

Economy/Education/Marketing and Start-ups. ■

MidAtlantic Food Cooperative

Produce from Lancaster Farm Fresh

Cooperative members, including David

Fogarty-Harnish (left), has proven to

be a hit with consumers in New York

City and Philadelphia. Below: About 30

food co-ops, with $99 million in annual

sales, have formed a federated co-op:

the MidAtlantic Food Cooperative.
CO-OP MONTH

Taking Root

desire to support

regional economic

development and

locally grown food —

coupled with a

reduction of small- and mid-sized

grocery stores — has fueled growth of

cooperative food stores in California.

Interestingly, rural communities and

inner cities are the locales for this

resurgence of food co-op development.

California’s inner city “food deserts”

and rural communities both have

trouble attracting mid-sized grocery

stores that offer a variety of fresh

produce and foodstuffs.

Historical overview:

California’s first cooperative (the

United Workingman’s Boot and Shoe

Manufacturing Co.) was formed in 1867

in San Francisco. The Consumer

Cooperative of Berkeley, the state’s

most prominent food cooperative,

started in 1937 and opened two

additional stores during the depression

years. During the 1960s and 1970s,

CCB grew to include 12 stores serving

various cities just outside of the San

Francisco Bay area.

In the 1970s, a second wave of

independent food co-ops grew around

California. This wave included rural

communities such as Quincy, Grass

Valley, Chico, Humboldt and Arcata.

These rural food co-ops are not only

still standing, but thriving, as strong

cooperative businesses.

Despite these “waves” of cooperative

development, there were no new

consumer food co-ops formed between

1985 and 2000. Also during that time,

the Consumer Cooperative of Berkeley

dissolved in bankruptcy. This chilled

any prospective cooperative organizer’s

zeal for initiating a new food co-op.

As memory of that failure faded, new

initiatives throughout California,

Nevada and the Pacific Northwest are

gaining momentum and generating a

third wave of cooperative development.

Resurgence of cooperative

development

The third wave of cooperatives is

taking shape in many of the same ways

as their first and second wave

predecessors. Some are using existing

resources, some are starting out as food

buying clubs using 21st century tools,

such as the Internet and software tools,

while others are pioneering new

strategies. In each case, cooperative

30 September/October 2010 / Rural Cooperatives

California

experiencing

surge in

food co-ops

Coffee time at the Arena Market and Café in Mendocino.

The California Center for Cooperative Development (CCCD) promotes

cooperatives as a vibrant business model to address the economic and social

needs of California’s communities. CCCD fulfills this mission by:

• Educating the public, community institutions and government agencies to foster

and promote the understanding of cooperatives;

• Identifying and disseminating information about successful practices and

models for cooperatives;

• Encouraging cooperation and coordination among various types of

cooperatives;

• Providing technical assistance and education for the development of

cooperatives to best address economic and social needs. ■

California Center for Cooperative Development

Davis, California
development is responding to

community desires, such as a

fundamental need for a grocery store

with fresh, healthy food or to make

locally produced foods accessible and

create a sustainable local economy.

During 2009, two new California

food cooperatives opened their doors,

and at least four more cooperatives are

in the development process. One of the

new co-ops is Mandela Foods Cooperative, a worker-owned co-op in a

designated “food desert” in Oakland,

which saw its major supermarkets leave

the area throughout the 1980s and

1990s. The cooperative also benefits

rural farmers through its concerted

effort to purchase from minority

farmers in the Salinas Valley and Fresno

County.

The co-op works closely with

Mandela Marketplace, a charitable

nonprofit that assists the community

through a host of community programs

that have a healthy foods theme,

including links with local farmers.

The second new food cooperative,

Arena Market and Café, sits on the

coast of Mendocino, a beautiful,

rugged, and isolated community.

Without a grocery store for more than

40 miles in any direction, the residents

up and down the nearby coast rallied

with their committed memberships and

member loans to establish the

community co-op in a renovated

building on the main road where

Highway 1 runs through town. The

store reaches out to local farmers by

featuring their produce and products.

CCCD’s Lake County effort

The California Center for

Cooperative Development (CCCD) has

been helping rural residents in Lake

County strengthen their buying club

and prepare a feasibility study for a

retail food cooperative. Lake County is

a rural area that is home to the largest

lake entirely within the state. The 50-

mile, two-lane road that runs around

the lake creates access challenges of

many kinds.

The core members of the buying

club (which has about 200 total

members) were burdened by the size

and breadth of the club. CCCD helped

link members to the Internet and use

software programs that were adapted

from the Oklahoma Food Co-op by coop consultant Roy Gusinger, who has

also been working with similar foodbuying clubs across the Pacific

Northwest.

The board of the buying club is

reviewing a recently completed

feasibility study to evaluate whether it is

the right time to develop a retail food

co-op.

Other food cooperatives currently in

development are divided among urban

and rural areas. One rural endeavor is

attempting to retain a valued local

natural food store that will likely close

when the owner retires. CCCD and

other food cooperatives in the region

are helping the steering committee with

this cooperative development process.

Another urban endeavor has been

receiving telephone advice and referrals

from CCCD.

Recent development projects are

drawing on lessons from the failures of

previous cooperatives, the best practices

of successful co-ops, and the resources

of cooperative development

professionals. These resources are more

essential in today’s climate than they

were in the past. — By Luis Sierra and

Kim Coontz (CCCD staff members) ■

Rural Cooperatives / September/October 2010 31

Ohio Cooperative Development Center

Piketon, Ohio

ervices provided

and areas served:

The Ohio

Cooperative

Development Center

(OCDC) enhances rural economic

development in the Appalachian and

other rural areas of Ohio and westcentral West Virginia, as well as for

some multi-state and nationwide

cooperatives. OCDC has been

providing technical training and

support for new and emerging

cooperatives since 2000 at the Ohio

State University South Centers (OSUSC). OSU-SC is strategically located

within rural Appalachia, which provides

maximum integration with the targeted

geographic areas and audiences.

OCDC is also well-positioned to

work closely with all programs based at

OSU-SC and statewide with the

Extension Service in providing a strong

network for clients.

OCDC is integrated with the OSUSC Business Development Network,

which provides services that include a

business incubator, one-on-one

technical assistance, training/

workshops and a network of resources

to help business owners and

entrepreneurs. The team operates the

region’s Small Business Development

Center and Manufacturing and

Technology Small Business

Development Center. The personnel of

James Bell rings up a food purchase at the

Mandella Food Cooperative, a worker-owned

co-op in Oakland.
32 September/October 2010 / Rural Cooperatives

the Business

Development

Network provide

valuable technical

assistance in

financing, marketing

and management.

Center history:

From 2007 to 2010, the

OSU-SC Business Development

Network assisted 1,448

businesses/clients with one-on-one

assistance. Some 227 training sessions

were conducted, which attracted more

than 2,500 attendees.

During this same time period,

OCDC assisted in the legal

incorporation of 16 cooperatives, eight

501(c)(3) business and one limited

liability company. OCDC accomplished

this by investing more than 4,560 hours

of directed client services, which

included more than 610 face-to-face

sessions with 68 potential new/

emerging cooperatives. OCDC staff

provided 48 presentations/workshops

for more than 1,591 participants.

Impact on area:

The businesses assisted acquired

nearly $19.5 million in loans and

invested $12.7 million in equity. Gross

sales of these businesses exceeded $18.8

million, which includes $5.47 million in

government contracts. The Center says

these businesses retained 510 jobs and

created 540 new jobs. These businesses

also received more than $1.4 million

from Ohio’s Internship Program, which

offset half the wages of technologybased interns.

Quote from director:

“From 2000 to 2010, OCDC has

worked closely with many agencies and

community partners to achieve it

mission.” — Tom Worley, Director, OSUSC ■

CO-OP MONTH

Taking Root

The United Regional Purchasing Cooperative (URPC) is a

purchasing/marketing partnership between the South Central

Manufacturing Network Inc. (SCMN), in Chillicothe, Ohio, and

Benefit Unlimited Inc. (BUI), in Marietta, Ohio. It contracts

with vendors for core-business supplies and services, as well

as for employee benefits.

SCMN was formed in 2007 to provide training and

purchasing services for its 10 members, which are local

manufacturers with more than 7,000 employees. Skilled-trade

and “soft-skills” training was the first service provided by

SCMN. Its second major effort was to provide preferredvendor purchasing services for members involved in both

manufacturing and non-manufacturing businesses. This

cooperative service leverages the power of numbers, helping

to obtain best prices.

As a major local preferred vendor, Benefits Unlimited Inc.

(BUI) was selected as a contractor. BUI was formed in 2007

to provide cost-effective healthcare benefits and to promote

a consumer-driven approach to healthcare with a system

that addresses most of the current healthcare issues.

The cooperative business structure addresses some of

these challenges and gives patients and physicians more of a

voice in the system. After the pilot project in Ohio, it is hoped

that the effort can be expanded nationwide as BUI develops

multi-state infrastructures.

SCMN and BUI went “live” with URPC services in May

2010. Since then, new URPC membership applications have

been received, representing more than 500 small businesses

and 2,000 employees.

The cooperative saved $1.1 million in annual healthcare

plan premiums for one company that employs more than 200

employees. The co-op saved a small chamber of commerce

more than $10,000 in annual premiums for its three

employees. Many businesses are currently in the process of

reviewing this option for their employees.

It is estimated that URPC will save up to $5 million

annually for its members.

“The United Regional Purchasing Cooperative is making a

significant difference in reducing operational costs for our

members and making an impact on the businesses’ bottom

line,” says Tom Markley, SCMN board president. ■

Purchasing cooperative provides savings for members

Horizon communications and Adena health

services are both members of the SCMN

purchasing co-op. Horizon recently received a

$66 million grant under the federal Broadband

Technologies Opportunity Program (BOTP) to

extend and enhance broadband service to 34

counties in southeastern Ohio. Photo courtesy

SCMN
Rural Cooperatives / September/October 2010 33

La Montañita Food Co-op

Albuquerque, New Mexico

roducts or

Services:

Retail groceries and

wholesale delivery of

natural, organic and

local foods with two stores and a

distribution facility in Albuquerque, one

store in Santa Fe, N.M., and one store

in Gallup, N.M.

Number of members

and annual sales:

More than 15,000 members; annual

sales of $27 million.

Co-op history:

La Montañita Co-op Natural Foods

Market was incorporated in 1976, when

it had about 300 member-owner

families. The co-op added a second

store in 1999, added two additional

stores in 2005 and warehouse in late

2006.

Noteworthy innovation or new

endeavor:

In late 2006, after much study and

the creation of a strategic business plan,

La Montañita Co-op embarked on a

Co-op Trade/Food-Shed Project. This

project is designed to provide farmers,

ranchers and value-added producers a

much needed wholesale outlet for the

distribution of their products. It serves

a 300-mile radius around Albuquerque.

Impact on

community/area/famers:

The Food-Shed Project was an

untested idea; there was no prior

business model to use as guidance. In

four years of operation, the Food-Shed

Project and the 7,000-square-foot

Cooperative Distribution Center

(CDC) have increased the number of

local producers served from about 300

to nearly 700. The co-op’s stores

currently carry more than 1,100 local

products in all grocery categories,

which comprise 20 percent of its local

purchases and sales.

Quote from board member:

“We have unique challenges serving

the fifth largest state with a small

facility and communities separated by

hundreds of uninhabited miles. I’m very

proud of our staff — despite many

challenges they have achieved

significant progress in the development

of local food

production. —

Martha Whitman,

Board President ■

Editor’s note: The National Cooperative

Grocers Association (NCGA) is a business

services cooperative for natural food co-ops

throughout the United States. Its 114

independent co-op members operate more

than 145 storefronts in 32 states with

combined annual sales of nearly $1.2

billion. NCGA helps unify natural food coops, optimize operational and marketing

resources, strengthen purchasing power and,

ultimately, offer more value to co-op owners

and shoppers.

A noteworthy trend in recent years has

been the growing cooperation and alliances

between food co-ops, farmers markets and

local/regional farmer’s co-ops. In observance

of Co-op Month, NCGA selected the two

co-ops featured on the following pages as

examples of outstanding, member-owned

food stores.

La Montañita Co-op Natural Foods launched the Co-op Trade/Food-Shed Project to help farmers

such as Tomas Apodaca (above) of Tijeras, N.M., and the state's cherry farmers (below).
34 September/October 2010 / Rural Cooperatives

The Marquette Food Co-op (MFC), in Marquette, Mich., is an organic

and natural retail food cooperative that also serves as an information

hub for “all things food.” The co-op has about 2,500 members and is

growing, predominantly in Marquette and Alger Counties of Michigan’s

Upper Peninsula. MFC had 2009 sales of $3.6 million and will top $4

million in sales for 2010.

Founded in 1971 as a natural foods buying club for a few families,

MFC grew into a small storefront that was run by one paid staff

member and some volunteers throughout the 1990s. Eventually, the

store became a full-service organic and natural grocery store and

joined National Cooperative Grocers Association. It expanded into its

current store, which has 3,200 square feet of retail space. The co-op

employs 26 full-time and 16 part-time staff.

Noteworthy innovation or new endeavor:

Lower Michigan is known nationwide for its agricultural abundance,

but farming contributions made by Upper Peninsula farmers are

overlooked, due to its geographic remoteness.

MFC stepped in to give Upper Peninsula farmers the recognition

they deserve. By publishing the Upper Peninsula Farm Directory,

sponsoring farm tours, assisting farmers’ markets, carrying local food

in its retail store, creating a communication network among farmers

and cultivating relationships with diverse businesses and organizations,

the Marquette Food Co-op has given the area’s farmers a venue for

selling their goods and a voice in Michigan’s agricultural community.

Simultaneously, MFC runs an outreach department that educates

Upper Peninsula communities about healthy eating, nutrition and the

economic benefits of “buying local.” The co-op has positioned itself as

the driving force behind a vibrant local food network in the Upper

Peninsula.

Impact on community/area:

MFC provides a market for locally grown and produced goods,

financially supports five area farmers’ markets and fills a retail gap for

organic and natural food. Through its

payroll and purchases of local goods,

the co-op accounts for at least $1.5

million in annual economic impact in this

rural and economically struggling area

of Michigan.

MFC provides employment,

promotes agricultural expansion,

entrepreneurialism and community

ownership of a thriving business. In 2009,

in the midst of a severe recession, MFC

paid $60,000 in patronage to its

members.

“Beyond providing access to healthy foods, the Marquette Food Coop serves to ‘connect the dots’ of a whole and vibrant local food

system in an area previously dependent on food imports,” says Matt

Gougeon, MFC general manager. ■

State Center

AL Federation of Southern Cooperatives ■

http://www.federationsoutherncoop.com

AK University of Alaska Anchorage Center for Economic

Development ■ http://ced.uaa.alaska.edu/

CA California Center for Cooperative Development ■

www.cccd.coop

CO Rocky Mountain Farmers Union Cooperative

Development Center ■ http://www.rmfu.org/co-op/

IN Indiana Cooperative Development Center ■

http://icdc.coop/

IA Iowa State University ■ www.isucoops.org

KY Kentucky Center for Agriculture and Rural

Development ■ http://www.kcard.info/index.php

MA Cooperative Development Institute ■

http://www.cdi.coop

MI Michigan State University / Product Center for

Agriculture & Natural Resources ■ http://www.

aec.msu.edu/product/index.htm

MT Montana Cooperative Development Corporation, Inc.

■ http://www.mcdc.coop

MT Mission Mountain Cooperative Development Center

■ http://www.lakecountycdc.org/mission-mountaincoop-development-center.html

NC North Carolina State University ■ leah_chesterdavis@ncsu.edu

ND North Dakota Association of Rural Electric

Cooperatives ■ http://www.ndarec.com/

aboutUs.htm

ND Common Enterprise Development Center ■

http://www.cooperationworks.coop/about/members/

common-enterprise-development-corporation

NE Nebraska Cooperative Development Center ■

http://ncdc.unl.edu

OH Ohio Cooperative Development Center ■

http://ocdc.osu.edu

OH Kent State University OEOC Ohio Employee

Ownership Center ■ http://www.oeockent.org/

OH National Network of Forest Practitioners ■

http://www.nnfp.org/index.php

PA Keystone Development Center, Inc. ■

www.kdc.coop

SD Value-Added Agriculture Development Center ■

http://www.sdvalueadded.coop

VA Virginia Foundation for Agriculture, Innovation &

Rural Sustainability ■ http://www.vafairs.com

WA Northwest Cooperative Development Center ■

http://www.nwcdc.coop

WI Cooperative Development Services ■

http://www.cdsus.coop

Co-op builds community around food Co-op Development Centers

Aleut Hatfield helps with his

family's produce stand at the

Marquette Co-op's annual

open house.
Rural Cooperatives / September/October 2010 35

Extension Service website to include co-op education area

By Lynette Spicer

eXtension News Coordinator

rofessionals from state Cooperative

Extension services, industry and USDA are

collaborating to provide a new, web-based

source of educational information about

cooperatives. The team is using wiki software

— which allows users to collaboratively create and edit web

pages using a web browser — to write and review

information about cooperatives. The team is working to

improve and expand the available resources and to reach new

audiences with information on cooperatives.

The platform being used is eXtension, an educational

partnership of 74 land-grant universities that provides

research-based information and learning on one website:

www.eXtension.org. eXtension complements the “on-theground” work of the nationwide Cooperative Extension

system.

eXtension resource areas are created by “communities of

practice” that contribute content in Mediawiki, the same

software that Wikipedia (an online encyclopedia) uses. A wiki

is a website that allows the creation and editing of interlinked

web pages using simple “mark-up language.”

An eXtension community of practice is a virtual network

of faculty, professional and para-professional staff, county and

regional educators, industry experts and federal government

representatives with expertise in a given subject matter —

cooperatives, in this case. They share knowledge through

educational articles, programs and electronic interactions.

eXtension facilitates peer review

Phil Kenkel, director of the Bill Fitzwater Cooperative

Center at Oklahoma State University and a member of the

cooperatives eXtension community, notes having peers

review information before it’s published on the web is an

important component of eXtension.

“eXtension is a well-respected national forum that allows

us to increase the visibility of the cooperative business model

and gives people looking for information confidence in the

educational materials they find,” says Madeline Schultz of

Iowa State University and a co-leader for the cooperatives

community of practice.

The leadership team hopes its work will have an impact in

three areas:

• More citizens will value and use the cooperative business

model;

• More youth will be engaged as cooperative businesses

members, employees, board directors and managers;

• Communities will achieve greater economic and social

improvements.

Cooperatives on eXtension will launch on Oct. 5, during

the USDA National Cooperatives Month celebration in

Washington, D.C., with six content areas: 1) basic

cooperative principles; 2) cooperative development; 3) youth

and cooperatives; 4) management and marketing; 5)

cooperative finance, and 6) board of director strategy.

60 communities of practice involved

eXtension has nearly 60 communities of practice, more

than half of which have published content on the website.

Each community of practice develops articles and frequently

asked questions and hosts an “ask an expert” section, a

calendar of events and news. eXtension was launched in early

2008 with 16 resource areas. Today, eXtension has more than

200,000 unique site visitors each month.

The cooperatives community of practice is working to

maximize public outreach about cooperative principles and

functions. It is also sharing decision tools, case studies and

other research-based information. “Our audience is broader,

and interest in cooperatives grows, when economic times are

tough,” says Brian Henehan of Cornell University. “People

eXtending Co-op Knowledge

continued on page 42

Farm fields and classrooms are traditional settings for the work of Extension Service agents, but its expertise will now also be available on a new

website designed to promote understanding and use of cooperatives. Photos courtesy Cornell Cooperative Enterprise Program
36 September/October 2010 / Rural Cooperatives

By Stephen Thompson, Assistant Editor

alifornia’s wine country isn’t

the first place you’d look to

find a biodiesel operation.

But in the town of Temecula,

a new cooperative has begun

operating with the goals of providing local

farmers and vintners with ways to cut energy

costs and add value to their products, while

simultaneously advancing the development of

alternative energy sources.

Promethean Biofuels cooperative may be

relatively modest in size, but it is the largest

biodiesel operation on the West Coast.

Unlike most other biodiesel production coops, the co-op members include farmers,

restaurants looking for an outlet for waste

cooking oil, consumers and even people who

want to make their own biodiesel (but need a

little help).

The co-op was starated by local

entrepreneur Todd Hill. He started the

cooperative after his previous business, an

electronics-recycling firm employing 60

people, went out of business.

“I wanted to encourage the development

of alternative energy sources, create markets

for local farmers and create employment

without having to maximize short-term

profits at the expense of long-term

sustainability. And I also wanted to encourage

other people who want to expand

opportunities.”

The cooperative is named after

Prometheus, the titan of Greek mythology

who stole fire from the gods to give to

humans, and was then chained to a rock.

The facility began running in April with a

capacity of 2.25 million gallons per year. Hill

says that the plant is designed to be profitable

running at about half that pace, giving the coop a bit of leeway for expansion. Currently,

it’s producing at a rate of about 1.5 million

Todd Hill, holding a sample

of the co-op's biodiesel,

says goals of the co-op

include developing

alternative markets for

local farmers and creating

employment opportunities.

Photos courtesy

Promethean Biofuels

Biofuel Prometheus

Like its namesake,

Promethean Biofuels

hopes to better mankind

with new source

of energy
Rural Cooperatives / September /October 2010 37

gallons per year, using restaurant grease

and oil from other local sources.

“Right now, the availability of

feedstock is our limiting factor,” he

says. W ith a large number of vintners in

the area, H ill sees grape seed as a

potential major source of feedstock,

which would give wine growers a new

value-added source from a byproduct.

Both employees and customers are

members of the cooperative, which

operates on a full-service, business-tobusiness model. O il is purchased from

producer-members and collected from

restaurants — which are also members

— and finished biodiesel is made

available for their operations at a

substantial discount from market rates

for petroleum diesel.

M embe rs only

O nly members may buy the co-op’s

products, and they receive a share of

any profits. T he cooperative also uses

its market power to supply ingredients

of production — such as methanol and

caustic chemicals — at a discount to

“home-brewers,” members who prefer

to produce their own biodiesel. T he coop also provides an outlet for them to

market their surplus.

T he main byproduct of biodiesel

production, raw glycerin, can be a

problem for small producers to dispose

of. T he co-op can also take care of that.

Technical help is also available from

the co-op. An in-house laboratory

provides research and development

services to members. H ome-brewers

dealing with fuel-quality problems can

also get help. All such assistance is free

to members.

T he cooperative bylaws recognize

three kinds of members: founders, who

invested a total of $500,000 toward

start-up costs; employee-members; and

consumer-members. Employees vote to

establish work rules. Wages, hiring and

promotions are overseen by H ill, in his

position as manager.

C onsumers pay $50 annually for

their shares in the co-op. T he bylaws

give them voting rights on issues

affecting distribution of the product.

Founder-members have limited input

into management decisions until their

contributions have been repaid.

T he board of directors consists of

three of the five founders, H ill (as the

managing principal) and an open spot

for an attorney. H ill wants to see the

founders paid back with a “reasonable”

return on their investment.

H ill says that most of the consumermembers are actively involved in

running the cooperative beyond the

roles laid out by the bylaws. “T hey're

enthusiasts,” he says. “T hey enjoy

helping the cooperative to succeed.”

T he cooperative structure allows for

regular distribution of profits to the

consumer-members, as well.

Grow e r-membe r

makes ow n biodiesel

O ne of those consumer-members is

Isaac M oore, the proprietor of

M orningstar Ranch. M oore grows

grapefruit, avocados, persimmons and

organic produce for local retailers. H e

makes his own biodiesel using a 200-

gallon reactor and used oil collected

free from local restaurants.

M oore buys his methanol and caustic

chemicals from the cooperative at a

discount. H e says he finds the co-op’s

glycerin-disposal service very helpful.

“It works really well,” he says.

H e’s exploring the idea of growing

his own oilseeds as a winter crop, which

the cooperative would crush for him to

extract the oil. “I'm looking forward to

expanding our relationship. You know,

you don’t go into business, you grow

into it.”

H ill would like to see Promethean’s

full-service approach expanded into

what he calls “full-circle integration.”

“We have local restaurants that make

a point of supporting local farmers,” he

says. “I'd like to see the cooperative

supply cooking oil to the restaurants at

a discount brokered by the co-op, then

collect the used oil to make biodiesel,

some of which would be used by the

farms to run their equipment. T he

profits would be distributed to the

members.” H e says that some major

fast-food chains already use a similar

system.

T he cooperative is currently working

toward meeting the certification

requirements of both the ISO 9000

standard — which addresses product

quality and meeting customer needs —

and the ISO 1400 standard, which sets

environmental performance goals.

“W hen we’ve got those

certifications,” he says, “they'll support

continuity in the organization when we

have personnel changes. We’ll have a

foundation of standards that’ll help us

maximize value to our members.”

Launch problems

G etting the cooperative up and

running posed special problems,

including more legal and regulatory

issues than he had imagined, as well as

his own inexperience in the field.

“Biodiesel has been around for 100

years,” he says, pointing out that

Rudolph D iesel originally saw his

invention as allowing farmers to grow

their own fuel. “I thought that it would

be something you could set up like a

M cD onald’s. After all, they were doing

this kind of stuff in the 1940s during

the war.”

In fact, he discovered that each

biodiesel plant is unique, with a

bewildering number of variables

affecting the final design. “T hat really

affected our budgeting,” he says. “We

went over budget by maybe 150

percent.”

Although the city of Temecula

agreed to accelerate the granting of

permits, challenges still cropped up.

Plans had to be approved by the fire

department and environmental

standards also had to be met. T he

expiration of the federal tax credit for

manufacturers of biodiesel is another

concern, although H ill says the

operation can survive without it.

“We have to get out of the ‘build’

mode and into the ‘how do we service

our members’ mode,” he says.

M eanwhile, the co-op is looking for

more members who want to be part of

the biodiesel movement.
38 September/October 2010 / Rural Cooperatives

Newsline

Send co-op news items to: dan.campbell@wdc.USDA.gov

Co-op developments, coast to coast

Northwest Dairy merges with

Country Classic Dairies

Northwest Dairy Association,

Seattle, Wash., and its marketing

subsidiary, Darigold Inc., have

announced a merger with Country

Classic Dairies, a Montana dairy

cooperative. Under the agreement,

approved by the members of both coops, current Country Classic members

will become part of Northwest Dairy.

The two businesses noted that they

have a long, cooperative working

relationship. Country Classic at one

time even used the “Darigold”

trademark on its products.

Formed in 1932 as Gallatin Valley

Creamery Cooperative, Country Classic

began by processing cream into butter

in Bozeman, Mont. The co-op’s 33

members produce between 13 and 14

million pounds of milk per month,

representing about 55 percent of the

state’s milk supply. Its Bozeman

processing plant will now become a

Darigold plant.

“Combining the two business

operations, especially given the

historical relationship between the two

cooperatives, will benefit all parties,”

says Northwest Dairy Association

President and CEO John Underwood.

“We will be able to provide our new

Montana member-owners with a secure

market for their milk while maximizing

its value.”

Northwest Dairy Association is

owned by more than 500 dairy

producers. Its members ship 7.2 billion

pounds of milk annually from farms in

Washington, Oregon, Idaho, Northern

California, Utah and now Montana. Its

Darigold subsidiary operates 12

processing plants throughout the

Northwest for its dairy farm families.

Co-op community mourns

passing of Rod Nilsestuen

Rod Nilsestuen, one of the nation’s

most respected cooperative leaders, died

July 21 in a swimming accident in Lake

Superior. At the time of his death,

Nilsestuen, 62, was Secretary of the

Wisconsin Department of Agriculture,

Trade and Consumer Protection.

“We are saddened to learn of the

passing of Secretary Nilsestuen,” U.S.

Agriculture Secretary Tom Vilsack said.

“He was a tireless advocate for the

farmers and ranchers of Wisconsin and

provided steady leadership and guidance

during a time of great challenge.”

Wisconsin Governor Jim Doyle

called Nilsestuen “a warm, humorous

and wonderful husband, father and

friend. Under his incredible leadership,

Wisconsin has seen the greatest and

most beneficial transformation of

agriculture in generations.

“Among many other

accomplishments,” Doyle said, “Rod’s

legacy includes dramatic increases in

milk and cheese production,

dynamic growth in organic

farming and grazing

operations, protecting our

state’s farmland through the

working lands initiative,

promoting the development

of biofuels and bioenergy to

generate homegrown

renewable energy in

Wisconsin, connecting

consumers to local farmers

through the ‘Buy Local, Buy

Wisconsin’ program and

strong support for

investments in America’s

Dairyland.”

Nilsestuen was elected

to the National Cooperative

Hall of Fame in 2003 and was

the founding chairman of the

National Rural Cooperative

Development Task Force. He

won the Cooperative Builder award in

2007 from the Wisconsin Federation of

Cooperatives and led the effort to unify

that organization with the Minnesota

Association of Cooperatives, a task that

began in 1998 and was finalized in 2004

(the name was changed to Cooperative

Network in 2009).

“The State of Wisconsin and the

cooperative business movement

nationwide have lost a leader whose

Rod Nilsestuen
Rural Cooperatives / September/October 2010 39

contributions will live on through the

people and institutions grown and

strengthened by his work,” Cooperative

Network President and CEO Bill

Oemichen added. “It would be hard to

name an individual more responsible

than Rod Nilsestuen for the vision and

focus that have energized and unified

cooperatives in Wisconsin and

Minnesota. The member co-ops of

Cooperative Network and their

member-owners have all benefited from

his single-minded commitment.”

Nilsestuen helped create the

Wisconsin Milk Marketing Board, the

Wisconsin Corn Promotion and

Soybean Marketing Boards,

Cooperative Development Services, the

Center for Dairy Profitability,

Wisconsin Rural Leadership Program

and the Midwest Dairy Marketing

Initiative.

Growmark reports

sales of $6 billion

Growmark, Bloomington, Ill., had

estimated sales of $6 billion for its fiscal

year ending Aug. 31. Senior Vice

President of Finance Jeff Solberg said

the co-op had net income of about $81

million.

“Fiscal 2010 was another good year

in a series of good years,” Solberg said.

“The result of this strong performance

is a very strong balance sheet with a

sound equity base built on a substantial

layer of retained earnings. This

minimizes the stock investment

required of members, which is

supplemented by a prudent level of

long-term debt.”

An estimated $55 million in

patronage refunds will be returned to

Growmark member cooperatives.

• Agronomy/Seed Divisions — The

Plant Food Division staged a strong

comeback after a relatively weak prior

year. Gross income is the second

highest on record, and volume

rebounded significantly from 2009 as

prices declined and product became

more affordable for farmers. The

Crop Protection Division had a third

consecutive strong year, and the Seed

Division will pay patronage for the

fifth year in a row.

• Energy Division — This division

saw volume increases for all products,

with propane volume reaching nearly

310 million gallons, an all-time

record.

• Grain Division — The co-op made

significant investments in its retail

grain business, which produced $800

million in sales and pretax income of

$16 million. All four retail grain units

were profitable.

• Facility Planning and Supply

Division — This unit expanded its

scope and offerings in 2010, with

heavy demand for bulk-seed

installation and many new farm and

commercial grain dryers. Grain bin

sales and construction continued at a

strong pace, as did sales of facility

equipment products.

• Retail Operations — Growmark’s

retail supply business segment

enjoyed another good year, producing

$1 billion in sales and $18 million in

pre-tax income.

“Change has been the strategic

theme for this decade,” Solberg said.

“More change has occurred in this

decade than in any other in our history,

and that change has produced record

levels of success and profitability for the

Growmark System.”

Florida Farm Credit

associations pursue merger

The boards of directors of Farm

Credit of North Florida and Farm

Credit of Southwest Florida have

approved a merger with Farm Credit of

South Florida, effective Dec. 31, 2010.

The associations are in the process of

obtaining regulatory approval of the

merger from AgFirst Farm Credit Bank

and the Farm Credit Administration. If

those approvals are received, a memberborrower vote on the proposed merger

is expected to occur in late October,

with results reported in November.

In a letter to members, the boards

said the merger would result in

advantages from greater risk-bearing

capacity due to a larger capital base,

improved loan portfolio diversification,

enhanced operating efficiencies and a

greater ability to attract and retain key

team members. No branch office

closings are anticipated and reduction

in staff will be minimal, the letter said.

The three boards have also agreed on a

plan to downsize the number of

director positions after a merger, but

are committed to assure regional and

agricultural commodity representation

on the new board.

Don Rice, the current CEO of Farm

Credit of South Florida, will serve as

the CEO of the merged association.

Both Charles Thompson, CEO of Farm

Credit of North Florida, and Jimmy

Knight, CEO of Farm Credit of

Southwest Florida, have announced

their intent to retire at year-end after

many years of Farm Credit service.

Growmark’s Agronomy/Seeds Division sales were the second best on record last year,

helping the co-op return $55 million in patronage to its members. Photo courtesy

Growmark
40 September/October 2010 / Rural Cooperatives

Farm Credit launches

new website

Farm Credit has launched a national,

online presence at the FarmCredit.com

website. It has also revitalized its

national giving and sponsorship

program, and established a dedicated

communications team to build

awareness of Farm Credit and its

unique mission. While Farm Credit has

served rural America for nearly a

century, the launch of FarmCredit.com

marks the system’s first centralized

online resource.

Visitors to the website can: find local

Farm Credit System associations;

research and apply for Farm Credit

career opportunities; apply for grants or

sponsorships through Farm Credit’s $2

million national contributions program,

and access photos and videos about

Farm Credit, among other features of

the website.

Farm Credit is a borrower-owned

cooperative system that was created

through an Act of Congress in 1916. It

is comprised of nearly 90 specialized

financial service organizations that help

more than a half million American

farmers, ranchers and agribusinesses

produce food, fuel and fiber.

Biofuels not a major

food price factor

The National Biodiesel Board says

that a recent World Bank report

indicates that production of biofuels is

not having a big impact on food price

increases. “Biodiesel plays an important

role in cutting greenhouse gas

emissions and reducing our dependence

on fossil fuels. Attempts to perpetuate a

myth of ‘food vs. fuel’ are invalidated as

the World Bank identifies energy costs

as the true price-driver,” National

Biodiesel Board CEO Joe Jobe says.

The recent report, “Placing the

2006/08 Commodity Price Boom into

Perspective,” drastically reduces

estimates of the impact of biofuels on

commodity prices, he notes. World

Bank economists now say that initial

estimates were too high and that “this

paper concludes that a stronger link

between energy and non-energy

commodity prices is likely to be the

dominant influence on developments in

commodity, and especially food, markets.” The report also points out that

biofuels only account for about 1.5 percent of global grains and oilseeds use.

Jansen to lead Blue Diamond

Mark Jansen has been selected as the

new president and CEO of Blue

Diamond Growers, the Sacramento,

Calif.-based almond growers’

cooperative. He will succeed Doug

Youngdahl, who is retiring at the end of

this year after a decade at the helm of

the co-op. Jensen is scheduled to

address the cooperative’s grower-owners

at their centennial annual meeting in

Sacramento on Nov. 18.

Jansen was most recently president

of Schwan’s Food Service Inc., a

division of the Schwan Food Co., based

in Marshall, Minn. The family-owned

frozen foods company employs 22,000

people in 50 countries worldwide. Prior

to joining Schwan, he worked for

Pillsbury Co., Edison Brothers Stores

Inc. and General Mills.

“Mark brings to Blue Diamond a

unique understanding of retail and

consumer brands,” says Board

Chairman Clinton Shick, an almond

grower from McFarland, Calif., and a

27-year veteran of the board. “He led a

profitable turnaround of the Schwan

Food Service Division and is a proven

brand-builder who influenced

substantial growth for Haagen-Dazs,

Betty Crocker, Totino’s, Pillsbury, Red

Baron, Freschetta, Wolfgang Puck,

Tony’s and Minh.” Jansen received an

MBA degree in marketing and finance

from the Kellogg School of Business at

Northwestern University.

“In addition to pure, unadulterated

brand strength, our ability to open new

markets, develop new products and

foster enduring customer partnerships

are strengths that will ensure Blue

Diamond’s global reach remains

unmatched in the industry,” says

Youngdahl.

Blue Diamond is owned by more

than half of California’s almond

growers. The crop is worth an

estimated $3 billion annually.

Swiss Valley acquires Faribault

Dairy; Forms cheese venture

with Swiss firm

Swiss Valley Farms Cooperative,

based in Davenport, Iowa, has acquired

Faribault Dairy Co., in Faribault, Minn.

The sale includes Faribault's blue

cheese manufacturing facility and its

line of branded cheeses, the most

Mark Jansen

Amablu is a cave-aged blue cheese that

is now part of the Swiss Valley Farms

family of products.
Rural Cooperatives / September/October 2010 41

popular of which is Amablu,

a cave-aged blue cheese.

“This acquisition marks a

significant step in our efforts

to grow in the blue cheese

category,” says Don Boelens,

CEO of Swiss Valley Farms.

The Faribault facility will

allow for an immediate

increase in blue cheese

production and serve as an

excellent companion

operation to Swiss Valley’s

other blue cheese plant in

Mindoro, Wis., he notes.

The sale brings together

the history, talent and

resources of two of America’s

most experienced bluecheese makers, Boelnes says.

“It promises to be a good

marriage,” adds Jeff Jirik, one

of the owners of Faribault

Dairy. Jirik, who will take on

a new role as vice president

of the co-op’s Blue Cheese Division,

believes becoming part of the Swiss

Valley Farms family is the best way to

continue the legacy of the Amablu

brand. The acquisition is part of a longterm plan to expand the focus on retail

branded cheeses, including Swiss

Valley's Mindoro brand.

In another move to strengthen its

position in the cheese market, Swiss

Valley and Emmi-Roth Käse USA have

announced the creation of White Hill

Cheese Co. LLC, a joint venture that

will manufacture cheese in Shullsburg,

Wis. The Shullsburg site has been

owned by Swiss Valley Farms since

2005.

The joint venture will allow the two

entities to increase production of Baby

Swiss, No-Salt-Added Swiss and other

cheese varieties. Capital improvements

at the site are underway, with cheese

production expected to begin in

February, 2011. The new plant is

expected to employ about 30 people.

Farmers market numbers soar

The number of U.S. farmers markets

jumped 16 percent in 2010, from 5,247

in 2009 to 6,132, according to the

National Farmers Market Directory

(using USDA data), which reports the

greatest surges in the Midwest. There

are 886 farmers markets open during

the off-season. This is the first year

USDA has tracked winter markets.

“Seeing such continued strong

growth in the number of U.S. farmers

markets indicates that regional food

systems can provide great economic,

social and health benefits to

communities across the country,”

Agriculture Secretary Tom Vilsack said.

“Farmers markets provide fresh, local

products to communities across the

country while offering economic

opportunities for producers of all sizes.”

Farmer Co-op Conference

in Colorado, Dec. 6-7

For over a decade, agricultural

cooperatives have looked to the Farmer

Cooperatives Conference as a source

for innovative thinking about current

cooperative issues and trends. This

year’s conference theme is:

“Cooperatives: Looking Forward.”

The conference will be held Dec. 6-7 at

the Omni Interlocken resort in

Broomfield, Colo., (between Denver

and Boulder).

Sessions will examine current trends

affecting the business of agricultural

cooperatives. Presentations and panel

discussions will include:

• An update on the global economy and

the economic, legislative and policy

implications for agricultural

cooperatives;

• A closer look at the domestic legal

landscape and the issues that have

been raised around agriculture and

antitrust enforcement;

• Innovative financing, joint ventures

and a global scope as strategies for

growth;

• Sustainability in the food industry, its

role in future profitability and

possible cooperative competitive

advantages.

The conference provides a unique

opportunity to learn and exchange ideas

with CEOs, cooperative directors and

others doing business with agricultural

cooperatives. Visit www.uwcc.wisc.edu/

farmercoops10 for conference program

updates, online registration and links to

the conference hotel website. For

questions about the conference

program, contact Anne Reynolds at

Dallas Tonsager (at podium), under secretary for USDA Rural Development, hosted leaders from a broad

cross-section of cooperatives in July for a series of roundtable discussions on the future direction for

USDA’s Cooperative Programs office. The recommendations are being weighed for possible future

directions for the agency, which supports cooperatives with educational materials (including this

magazine), research, statistics, co-op development and technical assistance. USDA photo by Bob

Nichols

continued on page 42
42 September/October 2010 / Rural Cooperatives

from the sawmills — and is turning a

profit — by collecting tree bark and

other tree remains from the region’s

parks. This is certainly a great example

of an FMC creating an environmental

benefit.

There are social, as well as economic

and environmental reasons, for forming

a farm machinery-sharing co-op. FMCs

unobtrusively cut through the obstacles

of isolation and create a network of

assistance. They can become gathering

places for members and incubators for

the exchange ideas. They can result in

neighbors lending a hand to each other

more often, and to sharing useful

information or contacts among

members.

When you’re part of an FMC, you

don’t have a choice: you need to talk to

each other, make compromises on

equipment-use scheduling and be

respectful and responsible toward other

members of the co-op. It’s a learning

process that is part of a member’s

personal development and which also

serves the group as a whole. The FMC

can respond to other needs that have

yet to be met within the community.

Obviously, this increases everyone’s

quality of life.

Most of these comments could also

apply to any other cooperative, because

cooperation means sharing. Let’s be

realistic, sharing a mill or a hardware

store is great, but in terms of member

proximity, sharing farm machinery takes

us into another dimension of

cooperation. It requires a very strong

capacity to practice cooperation on a

daily basis. That is the challenge to be

met by some 1,750 member-farmers in

our FMCs when the sowing season

begins each spring. ■

Canadian farmers see benefits

continued from page 12

are looking to cooperatives to stimulate

the economy or meet needs.”

People coming to the eXtension

website to learn about the cooperative

business model will have various levels

of business and community

development knowledge. A rural

electric cooperative member, for

example, may want to know what makes

an energy cooperative different from a

privately owned power supplier. A

board member in that same rural

electric cooperative may be seeking

better understanding of strategic

planning processes and implementation

methods required to meet future energy

needs.

CHS Foundation supporting

effort

The cooperatives community of

practice received a $25,000 start-up

grant from the CHS Foundation. “CHS

and the CHS Foundation have a long

commitment to cooperative education

and value the ongoing collaboration

among industry, the USDA and

academia,” says William J. Nelson,

president of the CHS Foundation.

Many universities, programs and

individuals are providing in-kind

services and travel expenses.

eXtension’s cooperatives team is cochaired by John Park from Texas

AgriLife Extension Service and

Madeline Schultz from Iowa State

University Extension. Leadership team

members are: Brian Henehan from

Cornell University; Chris Peterson

from Michigan State University; Phil

Kenkel from Oklahoma State

University; Gregory McKee from

North Dakota State University, and

Dixie Watts Dalton from Virginia

Polytechnic Institute and State

University.

Michael Duttweiler from Cornell

University is the evaluation leader and

Elizabeth Gregory North, of Texas

AgriLife Extension Service, is the

communications leader. John Wells,

director of co-op development for

USDA Rural Development, is the

national program leader. Edward Smith

from Texas AgriLife Extension Service

and Mary Holz-Clause from Iowa State

University Extension are the

administrative advisors. ■

eXtending Co-op Knowledge

continued from page 35

atreynol@wisc.edu or (608)263-4775.

Co-op testimony stresses need

for trade programs

Programs that promote agricultural

exports put money in the pockets of

America’s farmers and help boost the

wider U.S. economy, says Brent Roggie,

general manager and chief operating

officer of National Grape Cooperative

and a board member of the National

Council of Farmer Cooperatives

(NCFC). Roggie’s remarks came

during a Senate Agriculture Committee

hearing to examine U.S. agricultural

trade policy and the 2008 Farm Bill’s

trade title.

“Farmer cooperatives across the

country give farmers a vehicle to market

their products and compete in a global

marketplace,” Roggie testified. “The

earnings from these sales are returned

to the farmer-owners as patronage

dividends and help to provide marketbased income from beyond the farm

gate. USDA export promotion

programs, such as the Market Access

Program (MAP) and the Foreign

Market Development Program, play a

vital role in helping farmers and their

co-ops capitalize on these opportunities

overseas.”

Roggie said National Grape’s

growers have used the MAP program to

increase the co-op’s exports to Japan by

46 percent in three years. Roggie said

Welch’s juice is now on the shelves of

92 percent of Japanese food retailers.

■

Newsline

continued from page 41
“members” — then discuss how to

distribute the earnings and retire stock.

To teach one of the co-op principles

— Concern for Community — Farmers

Union encourages the youth to

contribute their profits to a charity of

their choice. Each recommendation is

made by motion, open for debate, and

then voted on.

Even “co-op kids” benefit

“Though my father has worked for

both Cenex and Farmers Union

cooperatives for years, without my

experience at Farmers Union camp, I

would not have understood the basic

structure of what makes a co-op so

unique,” says Stephanie Barnhart of

North Dakota. “My favorite part of our

camp store is that the members literally

own the co-op. This fact allows me to

say, ‘this is my business.’”

“One of the most important and

favorite aspects of our leadership camps

is the co-op store,” adds Sonny Harrell,

education director for Montana

Farmers Union. “This allows the

campers to become acquainted with

cooperative principles and business

methods.”

These camp co-ops are organized all

across the nation every summer at

junior and senior camps sponsored by

Farmers Union. The focus on

cooperative education is not surprising,

considering that Farmers Union’s

symbol is a triangle comprised of the

words: “Education, Cooperation,

Legislation.”

The general farm organization’s

founders were leaders in forming credit

unions, rural electric cooperatives and

farm supply and marketing

cooperatives. This included the Farmers

Union Central Exchange and Farmers

Union Grain Terminal Association that

were forerunners of Cenex and Harvest

States, which merged to become CHS

Inc.

Farmers Union has a long and

storied history of developing and

promoting cooperative businesses.

Annually, the general farm organization

also presents a conference on

cooperatives in Minnesota’s Twin Cities.

The event attracts college ag students

and their instructors.

Barnhart says teaching campers to

open their own co-op store encourages

youth to discuss the principles of

cooperatives and the value of a united

membership. “The pride I have in

owning something collectively with so

many other members definitely

influences me to do business at co-ops.”

To learn more, go to www.nfu.org. ■

Look Who’s Minding the Store

continued from page 13

Rural Cooperatives / September/October 2010 43
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