R

u

r

a

l COOPERATIVES

March / April 2014

The Ripple Effect

Page 4
2 March/April 2014 / Rural Cooperatives

By R.L. Condra

Editor’s note: Condra is the vice president of advocacy and

government programs at the National Cooperative Bank. He

previously worked at the National Cooperative Business Association

and served as professional staff on the Senate Committee on

Agriculture, Nutrition and Forestry. He can be reached at:

rcondra@ncb.coop.

The recent passage of the Farm Bill was an

important piece of federal legislation that will

have a strong impact on the continued

growth and development of cooperatives in

rural communities. While the bill included

provisions relating to cooperative sectors, such as agriculture

and utilities, it also highlighted the importance of the

cooperative development sector by reauthorizing a number of

key programs that support the growth and advancement of

cooperatives.

A provision in the bill that may have received little notice,

but will have tremendous benefit to the cooperative

community, is the creation of an interagency working group

that will be chaired and coordinated by the U.S. Department

of Agriculture (USDA). In leading this interagency working

group, USDA will draw on the expertise of the cooperative

community, working closely with its leadership organizations,

including National Cooperative Bank and the National

Cooperative Business Association, to raise awareness within

key federal agencies about the cooperative business model.

The coordination of these groups will certainly lead to

better federal programs and relationships to help ensure the

needs of cooperatives are heard and supported.

Why is the working group important? From my

experience working with Congress and the federal

government, it has become clear there is often a need for

greater understanding of the cooperative model. Or, in many

cases, an official or staff person may only be aware of one

type of cooperative. Additionally, almost every agency within

the federal government has initiatives or programs that

connect directly, or indirectly, with the cooperative sector. In

many cases, these federal agencies would benefit from

knowing more about how a cooperative is structured, how it

is taxed and the economic and social values it provides to a

community.

What agency is better equipped to discuss member-owned

issues than USDA Rural Development, which has the federal

government’s only unit that is exclusively focused on

cooperative programs? USDA Rural Development’s

leadership is uniquely qualified to chair this working group

and provide a level of expertise and credibility when other

agencies want to learn more about cooperatives.

Beyond the new working group, the Farm Bill

reauthorized the Rural Cooperative Development Grant

(RCDG) program, which is the only existing program in the

federal government dedicated to cooperative development.

The RCDG program is invaluable in providing grants and

resources to support cooperative development centers and

other entities providing technical assistance towards

expansion in this sector. These groups are critical to

improving the economic condition of rural areas by assisting

individuals or entities in the start-up, expansion or

operational improvement of rural cooperatives and other

business organizations.

These groups are also effective in the work and expertise

that they provide. In 2012, CooperationWorks conducted a

survey of its development center members. For the years of

2009-2011, 18 centers assisted in the development of 276

new businesses, of which 154 were cooperatives. During this

period, 6,050 jobs were created or saved, along with three

centers assisting in the development of 780 co-op housing units.

The Value-Added Producer Grant Program and the Small

Socially-Disadvantaged Producer Grants (SSDPG) program

were also renewed in the Farm Bill. The SSDPG program

provides technical assistance to minority and family farmers

through cooperatives and cooperative development centers.

This program is supported and accessed by a number of

organizations that fully understand the need to help small

farmers who work hard to make a living and provide for their

families and communities.

One of the ongoing challenges for the cooperative

community is to demonstrate the impact co-ops have on the

nation’s economic landscape. While USDA collects and

analyzes a substantial amount of information on cooperatives

Commentary

Farm Bill boosts co-op development

continued on page 41

Condra
Features

Rural Cooperatives / March/April 2014 3

Volume 81, Number 2

March/April 2014

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

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of public business required by law of the

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Unless otherwise stated, articles in this

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To file a complaint of discrimination, write

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and employer.

Tom Vilsack, Secretary of Agriculture

Doug O’Brien, Acting Under Secretary,

USDA Rural Development

Dan Campbell, Editor

Stephen A. Thompson, Assitant 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. 8

04 The Ripple Effect

Co-op uses USDA-funded program to improve education for Pakistani girls

By Twanna A. Hines and Danial Shah

18 The Precision Decision

Farm supply co-ops helping members adopt precision ag technology to boost productivity

By Luke Brummel

14 ‘A Trend, Not a Fad’ Growing markets for local foods examined during Ag Outlook Forum

By Stephen Thompson

22 The New Deal Co-ops

Depression-fighting strategies involved co-ops in agriculture, utilities and health care sectors

By Bruce J. Reynolds

27 Dairy co-ops’ milk volume up, but market share down slightly

By Charles Ling

30 Farmers, processors work together to boost Egypt’s tomato

industry

By Kristin Witting

Departments

02 COMMENTARY

11 UTILITY CONNECTION

12 CO-OPS & COMMUNITY

20 FOCUS ON

33 NEWSLINE

p. 14

ON THE COVER: Students at Government Girls

Primary School (GGPS) in Jacobabad’s Sindh province

display their art projects. Teacher Farzana Buriro (far

left) is one of 700 teachers who participated in Land

O’Lakes International Development’s most recent,

USDA-funded, McGovern-Dole Food for Education (FFE)

program in Pakistan. Photo by Danial Shaw, courtesy

Land O’ Lakes

p. 22
4 March/April 2014 / Rural Cooperatives

Co-op uses USDA-funded program to

improve education for Pakistani girls

The Ripple Effect

By Twanna A. Hines and Danial Shah

Editor’s note: Hines is a communications specialist with Land O’ Lakes International

Development. Shah is a consultant and also took the photos for this article.
Rural Cooperatives / March/April 2014 5

Teacher Farzana Buriro engages students at Mirpur Buriro girls’ school in an interactive, creative

activity. She says her approach to teaching was “transformed” after attending a 10-day program

at Nawabshah’s Provincial Institute of Teacher Education (PITE), organized by Land O’Lakes

International Development. Photos by Danial Shaw, courtesy Land O’ Lakes.

Although women and

girls comprise about

half of the world’s

population, in many

parts of the globe, they

do not have equal access to education.

Land O’Lakes International

Development — a division of the

second-largest cooperative in the

United States — has made a concerted

effort to reach women and girls through

its 300 international aid projects since

1981, which have improved the lives of

millions of people in 76 countries.

To conduct the most effective,

responsible international development

work, the company incorporates gender

into all stages of the project lifecycle as

a core consideration in program design

and start-up. The goal is to ensure that

the program staff and the clients who

benefit from the work include large

numbers of women. Monitoring and

evaluation indicators are developed to

effectively capture and disaggregate

data by sex, while measuring overall

program impact.

Land O’Lakes has increased school

enrollment and improved nutrition for

more than 240,000 schoolchildren in

Pakistan through McGovern-Dole

Food for Education (FFE) Programs,

which are funded through USDA.

These comprehensive initiatives have

also incorporated a wide range of

complementary activities beyond food

aid distribution.

These efforts are empowering young

girls to become leaders, mentoring

female educators through teacher

training programs, improving hygiene

and sanitation, and transforming the

physical infrastructure of schools.

The following three stories are

drawn from the 30,000 schoolgirls, 700

teachers and 2,500 pregnant women

who benefited from Land O’Lakes’

most recent FFE in Pakistan, which ran

from 2010-2013.

Finding her voice

through debates

Saba Hidayat loved stories, and she

secretly wanted to share a few of her

own. A fifth-grade student at Allan

Jamali — a government girls’ primary

school (GGPS) in Pakistan’s Jacobabad

District — Hidayat was pleased that her

family supported her favorite pastime:

reading. Each month, her dad dipped

into the family’s precious household

savings to buy his 12-year-old daughter

books.

Though she fell in love with the

places and people mentioned in these

books, she was most excited to be

exposed to new ideas. Learning as she

flipped through the pages, Hidayat

wanted an outlet to express the ideas

and opinions bubbling up inside of her.

Her school participated in the

Pakistan Food for Education (PFFE)

program, under which participants

earned a four-liter bottle of cooking oil

every month. School girls and teachers

who attended 80 percent or more of the

school days, as well as pregnant women

who participated in neonatal screenings,

qualified for the reward.

Cooking oil might not sound like

much of a luxury to those in the

developed world, but it typically

gobbles up a huge portion of most

Pakistani households’ monthly food

expenses. So, it serves as a strong

incentive to parents to enroll their girls

in school.

When Saba heard her school was

organizing a debate competition, she

attended as a spectator. Land O’Lakes

organized the event to enhance the

school’s lessons on listening and

problem-solving. Of course, it also

brought the girls a fun and practical

way to enhance their learning.

During the competition, Saba

noticed that fellow classmates who

debated commanded respect, whether

they won or lost. “Speaking their hearts

out gained them appreciation. I desired

the same,” she says.

A novice at public speaking, she later

entered Land O’Lakes World

Environment Day debate competition

at her school. Initially practicing at

home in front of mirrors, she built

courage by delivering speeches in front

of her first audience — her family —

and, later, her teachers at school. When
6 March/April 2014 / Rural Cooperatives

Saba’s big day arrived, as she

exited the podium after her

first-ever debate, the shy 12-

year-old girl earned a big

round of applause.

She was surprised when

she won first place.

“Everyone was praising

me,” she excitedly recalls.

“My neighbors came home

to congratulate my parents.

My parents were proud of

me. The trophy means a lot

to us. This is the accolade I

had been waiting for.”

Saba went on to win

additional competitions, with

the debates not only boosting

her confidence, but also

fueling her desire to study

harder and excel in school,

where she ranks near the top

of her class.

“Nothing is impossible if

you are determined to do it,”

she says.

Paying it forward

Traveling 24 miles

northwest from Saba’s school,

we can observe another

success story from a teacher’s

perspective. Farzana Buriro is

a teacher who genuinely

loves her job at Mirpur

Buriro GGPS, where she has taught for

the past seven years. As a female

member of the Buriro clan, her career

has been exceptional because it is

uncommon for a woman in her clan to

receive a formal education.

“I was just living an ordinary life —

I was a traditional, ‘chalk-and-talk’

teacher, just doing my job for the sake

of doing it. Yet, deep within, I had a

desire that nursed the hope of creating

a difference someday,” she says.

Buriro’s life changed when, due to

PFFE’s success, her school’s enrollment

swelled. She was delighted to see so

many new faces, but the program

presented space constraints. Schoolgirls

packed into her crowded classes and

Buriro needed to update her teaching

skills to offer her students a better

learning environment.

She heard Land O’Lakes had

organized the 10-day training at the

Provincial Institute of Teacher

Education (PITE) in Nawabshah,

nearly 168 miles south of Jacobabad.

But she didn’t think it was possible to

attend.

It was rare for women to travel alone

or leave the village for many days.

Luckily, her school’s headmistress — a

respected member of her clan who

commanded authority —

convinced Farzana’s parents

to give her permission to

attend the workshop.

“Baji is my biggest

support,” Buriro says,

referring to the headmistress,

respectfully using the locallanguage word for older

sister. After attending PITE,

the training completely

transformed how she taught.

“Now I understand

classroom dynamics and use

modern techniques of

classroom management and

integrated learning.”

Before long, Buriro was

one of 118 fully-equipped

master trainers whose skills

were improved by attending

PITE. The program reached

369 additional teachers from

Thull, Garhi Khairo and

Jacobabad, empowering

schoolgirls in their regions.

Student productivity has

improved, and the region’s

literacy rate has increased to

59 percent.

A role model for

hundreds of schoolgirls and

teachers in her village,

Farzana now holds a position

of respect in her community.

Other teachers regularly approach her

for advice and training.

“I am learning, re-learning and then

transferring it to schoolgirls and fellow

teachers,” she says. “My achievement is

to deliver my knowledge. It’s the

noblest profession.”

Water for education

Whether to quench thirst, wash

hands, flush a toilet or shower, most

people don’t think about how often they

need water until they don’t have it.

Imamzadi was well aware of its

importance. She lives in Jacobabad,

where drinking water facilities are

uncommon. Some houses in her city

receive their water supply from cans

“These efforts are empowering young girls to

become leaders, mentoring female educators,

improving hygiene and sanitation, and transforming

the infrastructure of schools.”

Saba Hidayat won first place in Land O’Lakes

International Development’s World Environment Day debate competition at her school.
Rural Cooperatives / March/April 2014 7

and via donkey carts that travel from

the central filtration plant on the

outskirts of town — a lengthy and often

unhygienic transportation process.

Each day, Imamzadi would neatly

braid her hair and dress in a pristine

blue, freshly ironed uniform before

walking to school. There, she was

disappointed to learn that not only was

there no fresh drinking water, but there

were no toilets she could use.

Initially, Imamzadi attended classes

so that her family could receive the

much-needed cooking oil ration offered

to participants. However, she soon

started skipping school.

“I would use the washroom in the

morning at home and drink just a little

water during school hours so that I

didn’t have to go to the washroom

again. I was always in pain,” she explains.

When girls such as Imamzadi missed

classes, they fell behind in their lessons

and it became increasingly difficult to

make up the loss. Thus, they fell more

and more behind, until they finally

dropped out.

Land O’Lakes knew it was important

to keep these girls in school, as it was

their best path out of poverty. Educated

children grow up to earn higher

incomes as adults, which increases their

abilities to provide their families with a

prosperous life and build a strong

economy for their country. Further,

robust economic opportunity has shown

to be one of the greatest disincentives

to violence and sociopolitical instability.

Land O’Lakes installed clean water

points and sanitation systems that

changed life for Imamzadi and

thousands of girls in 24 GGPS schools

in Jacobabad. All 24 of the schools were

fitted to receive fresh water piped

directly from the central filtration plant;

19 of them also received electric water

coolers.

Imamzadi returned to school with

confidence and without apprehension.

In the past, she recalls, “I would

leave school with my friends to use the

washroom at neighbors’ houses, and

they always scolded us. It made me feel

bad about myself.” Things are different

now, she says. “I don’t want to miss a

day at school.”

She expresses her contentment with

a glimmering smile, adding, “School is

home.”

Importance of

considering gender

Understanding the interplay between

gender and other underlying

development challenges is critical for

developing successful economic

development projects, particularly in a

place like Jacobabad, Pakistan, where

women have historically not received

equal access to education. Students and

teachers such as Saba, Farzana and

Imamzadi are just a few examples of the

many people benefitting from Land

O’Lakes’ long-standing partnership

with USDA in Pakistan.

In the first year of the PFFE

program alone, enrollment soared 325

percent — from 12,000 girls to nearly

39,000 — far exceeding the program’s

target of having 25,000 girls enrolled by

the program’s third year. Of these

students, 96 percent were attending

school 80 percent of the time when the

PFFE effort culminated in January 2014.

Although the cooking oildistribution efforts have now ceased,

the improved educational infrastructure

and empowerment of women and girls

will create lasting ripple effects across

Jacobabad for many years to come.

To learn more about PFFE, visit:

www.idd.landolakes.com, or download the

free toolkit, Integrating Gender

Throughout a Project’s Life Cycle, for

tips and guidelines than can help enable any

international development organization

integrate gender into its programming and

proposal development.

The McGovern-Dole International Food

for Education and Child Nutrition

Program helps support education, child

development and food security in lowincome, food-deficit countries around the

globe. The program provides for the

donation of U.S. agricultural commodities,

as well as financial and technical assistance,

to support school feeding and maternal and

child nutrition projects. To learn more

please visit http://www.fas.usda.gov. n

Land O’ Lakes used Food for Education program funds from USDA to install clean water and

sanitation systems in 24 girls’ schools in Jacobabad, Pakistan. The systems are making a big

difference in the ability to attract girls to school, such as Imamzadi (above), who in the past have

not been encouraged to pursue an education.
Farm supply co-ops helping members adopt precision ag technology to boost productivity

ThePrecision Decision
Rural Cooperatives / March/April 2014 9

By Luke Brummel, Economist

CoBank Knowledge Exchange Division

Precision agriculture

has been used by

growers for years.

However, a number of

new technological

innovations and sharply rising crop

revenues have spurred an accelerated

pace of adoption of precision

agricultural practices.

The basic organizing principle

behind precision agriculture in crop

production is to determine the best

combination of inputs (i.e., seeds,

fertilizers and chemicals) and proper

placement and application rates to

optimize crop yields in a sustainable

manner.

Basically, it’s a customized

prescription for increased efficiency and

optimal yields.

Crop producers are relying on these

finely tuned crop plans more and more

with strategies being customized not

only for individual farms, but also to

the fields and subsections of fields that

comprise those farms.

Growers today are tasked with

keeping track of a variety of data points,

measuring and monitoring each

possible input, satellite and unmanned

aerial vehicle imagery and in-field soil

and tissue samples. With the success of

a grower’s operation strengthened by

his or her ability to optimize yields, it is

clear that precision agriculture will

continue to shape the future of crop

production.

A moving target

Production agriculture has always

been a complicated business. To be

successful, growers have to be

knowledgeable about agronomics,

financial planning, marketing and risk

management. In recent years, the

agronomics side of the business has

become even more complicated with

the surge in new precision agricultural

products and best practices. Today,

growers must not only keep up to date

on these new products and best

practices, but also hone their

information technology (I.T.) skills.

With all of the new hardware and

software options that are now available,

end users face a bewildering array of

choices. Moreover, they have to figure

out how to run their day-to-day

operations, analyze the massive volumes

of data to optimize the operations and

keep up-to-date on the expanding array

of new precision agriculture options

that are being rolled out. For many

growers, the solution to this

predicament can be found just down the

road at their local cooperative.

Like their members, farm

cooperatives have been engaged in

different facets of precision agriculture

for many years. Long ago, many co-ops

started offering Global Positioning

Systems (GPS) technology to allow for

more efficient custom applications.

Within the next few years, automated

equipment functions and data-gathering

monitors are likely to become “standard

equipment” in many farm equipment

offerings, much like air conditioning in

cars and trucks.

With the proper data collection

equipment in place, the next logical step

is to analyze the data to figure out how

to optimize yields and production. This

is where many farm supply co-ops are

concentrating their efforts in addressing

the needs of their member-customers.

Indeed, many of them have created

their own precision ag programs.

Supply cooperatives aim to provide

their member-customers with the same

types of products, but no two precision

ag programs are exactly alike. Programs

range from an “a la carte menu” to a

full-service approach that may include

precision ag equipment sales and

support, software sales and support,

Using global positioning system (GPS) technology (above) helps farmers fine-tune their

application strategy for seeds and fertilizer. Precision ag technology helps farmers improve crop

yields while lowering their production costs and often reducing environmental impact. Photos

courtesy John Deere
10 March/April 2014 / Rural Cooperatives

crop input sales, in-season crop

scouting and imagery, yield data

gathering, soil and tissue sampling, data

analytics and prescription, variable rate

applications, and in-season fine tuning

of recommendations and prescriptions.

Few growers today purchase the full

service menu, but the trend is pointing

in that direction.

Hurdles to surmount

As commodity prices have ratcheted

higher in recent years, growers have

striven to become more efficient to

bolster their yields. In turn, many coops are experiencing rapid growth in

the demand for their precision

ag services, with their members

moving up from the barebones

minimum to more advanced

programs.

Although the use of precision

ag equipment and data analytics

is growing rapidly, the new

technology still faces many

hurdles it needs to overcome.

Some challenges are tangible.

They include geography, human

capital, concerns about where and how

to deploy resources, consumer

demographics and financial resources.

Other challenges are less tangible,

dealing with such issues as data

ownership, data collection, data

aggregation, data validity and data

consistency.

Data-centricity

Data ownership is one of the hottest

topics in precision agriculture. The

crop producer is not only the primary

collection agent for the data generated

by his farm equipment, but also the

owner of that data. Most growers today

rely on their local co-ops to interpret

the data and formulate a crop

production plan based on the data.

Traditionally, the cooperative has

served as a grower’s trusted advisor,

advocate and service provider. Most

growers are thus comfortable and

secure in providing their data to the

local co-op for use in developing

cropping plans. But by the same token,

most growers are uncomfortable and

insecure in providing access to their

data beyond the usual trusted sources.

Data collection can be cumbersome

and time consuming when data cards

are used in physically moving data to

and from machines. However, data

collection continues to improve

through the use of wireless data transfer

mechanisms. Supplementary data from

other sources, such as satellite imagery

or weather information, also have to be

integrated into the mix.

Another major challenge involves

data integration. The data generated by

different proprietary precision

agriculture platforms or systems are

often incompatible with each other.

One company’s product offering for

data recording may not interface with a

certain type of software used for

prescriptions or with other brands.

Sorting out these issues may require

the use of several software programs.

Skilled agronomists with information

technology savvy are needed to

combine the data from all the different

sources and then input it into software

programs in order to create

prescriptions. Cooperatives are

constantly trying to identify the next

big technological advance and to

determine how best to invest capital to

derive the most value for their membercustomers.

For growers who have adopted

precision ag technology and practices

and who have seen the value in higher

output and yields, these

innovations and practices have

become integral parts of their

production plans. Having done

so, however, these growers then

require a complete support

team that can help them

interpret the data and realize

the full benefits of all the

software and hardware involved

in implementing these plans.

Finding the right human

resources with the expected expertise to

facilitate grower needs is a challenge

many cooperatives face.

Crop producers and cooperatives

alike are trying to gauge the value

added and returns from precision

agriculture. It’s a difficult task. After all,

the best practices for production

agriculture in the heart of the Corn

Belt are totally different from those

used by a dry land operation in the

western plains of Kansas — and so are

the resulting yields.

Growers situated in higher yielding

areas or in areas with less extreme

weather variability are making larger

investments in precision agriculture

Many co-ops view these agronomic recommendations as the most important service

that they can provide to their member-growers.

continued on page 41

Farm supply cooperatives are increasingly

helping their members adopt precision

agriculture practices.
Rural Cooperatives / March/April 2014 11

Utility Co-op Connection

Carolina co-op uses USDA loan

to help members conserve energy

Editor’s note: This article was provided by

Brunswick Electric Membership

Corporation in Shallotte, N.C., which

serves more than 86,000 meters in

Brunswick, Columbus and parts of Robeson

and Bladen counties in the southernmost

part of coastal North Carolina.

Energy efficiency is a

hot topic these days,

and at Brunswick

Electric Membership

Corporation (BEMC),

the energy efficiency loan program is

heating up, thanks to a recent loan from

the U.S. Department of Agriculture

Rural Development’s Rural Economic

Development Loan & Grant (REDLG)

Program.

The second-largest electric co-op in

North Carolina, Brunswick has

expanded its successful 25-year old

Weatherization Loan program with the

additional $2 million loan. U.S.

Representative Mike McIntyre

presented the check to Brunswick EMC

CEO Robert W. “Chip” Leavitt, Jr., in

December.

“This allows BEMC to continue to

expand this successful energy efficiency

loan program, an extremely popular

member benefit,” said Leavitt. “It’s

simple, it’s easy and grateful folks tell us

every day what a difference this

program has made in their daily lives.”

BEMC started its Weatherization

Loan program in the late 1980s, with

funding offered by the Rural

Electrification Administration

(forerunner of today’s Rural Utilities

Service). In recent years, the co-op

obtained additional loan funds through

REDLG to bolster this popular

program. The BEMC board of

directors also commits funds annually

to accommodate member requests for

loans, with up to five years to repay.

Since 1989, BEMC has loaned more

than $11 million to its members to help

make their homes and businesses more

energy efficient. In the past year alone,

the co-op loaned more than $1.5

million. With this additional $2 million

in loan funds, even more members will

be able to take advantage of the

opportunity to save both energy and

money.

Efficiency made simple

“It is the simplicity of the program

that makes it so successful,” says Judy

Gore, who recently retired from the

position of vice

president of customer

service. “It’s easy to

apply and easy to repay.

Given the high demand

for these loans and our

successful track record

with the program, this

latest influx of funds

will greatly benefit our

membership.”

So whether it is a

loan for $600 or

$6,000, applicants are

able to tailor their

loans to their energy

efficiency needs.

Weatherization loans

are available to

members who own

their home and have at

least two years of good

credit history with the

co-op. Qualified

applicants are often

approved for loans up

to $6,000 within 24

hours; loans of up to

$10,000 can be made for qualified

businesses.

Repayment of these loans is

simplified for both borrower and lender

as each loan is divided into payments

and repaid monthly on the member’s

monthly electric bill. BEMC reports a

less than 0.1 percent default rate.

Savings big & small

Even small measures to improve

energy efficiency can make a big

difference. A sweet potato farmer’s

1,280-square-foot home in Columbus

County was producing monthly energy

bills that seemed higher than normal.

For the co-op, the energy

efficiency savings translate

to reduced load and

ultimate savings for

all members.

continued on page 41
By Janice Schyvinck,

Director of Public Relations

Equity Livestock Sales Association

jschyvinck@equitycoop.com

Editor’s note: Equity Cooperative

Livestock is just one of the many hundreds

of farmer co-ops across the nation that are

major supporters of programs such as FFA

and 4-H. Co-ops are also major sources of

college scholarships, helping the children of

their members and employees attend college

(see sidebar, below). Many, if not most, of

these scholarship winners go on to major in

agriculture-related subjects, helping to

ensure that the next generation of farm and

co-op leaders have the skills needed to keep

America the world leader in agriculture.

Last July, Equity

Cooperative Livestock

Sales Association

created a year-long

program, A Good Way to

Grow, to promote leadership and

support youth interested in agriculture.

This program began after the Equity

board of directors discussed the need to

become more involved in providing

support, including financial assistance,

for today’s ag youth.

Equity Livestock, established in

1922, is a federated cooperative, with its

corporate office in Baraboo, Wis. It

operates 11 auction markets in

Wisconsin and one in Iowa. It services

producers in Illinois, Iowa, Michigan,

Minnesota, South Dakota and Wisconsin.

For every animal the co-op markets

12 March/April 2014 / Rural Cooperatives

Co-ops & Community

Portion of co-op’s livestock sales

earmarked to support FFA, 4-H

Equity Cooperative Livestock Sales Association annually

offers one college scholarship in each of its 10 districts. To be

eligible, students need to have completed at least two

semesters at a post-secondary college or university, or one

semester at a technical school, and to have achieved a

cumulative grade-point-average of 3.0 or above (on a 4.0

scale). Either the student or their parent(s) must be active

members of Equity. Winners are selected based on their

scholastic achievements, extra-curricular activities, an essay

and dedication to a career.

The scholarships are available for all career choices,

although most applicants have a strong connection to

agriculture. This connection might be seen in their major and

career goal, or through participation in ag-related activities,

such as 4-H and FFA. Or it may simply manifest in the way the

influence of students’ parents – and the work ethic that

comes with growing up in the ag industry – reflects in their

lives and interests.

Following are brief profiles of three of this year’s

scholarship winners:

n Tierney Reilly, from Shullsburg, Wis., is currently a junior

majoring in business administration and animal science at

Colorado State University. Reilly grew up showing livestock

and was heavily involved with the care of her family’s flock of

Hampshire ewes. “Scholarships are an immense help to

students, allowing them to focus on grades, clubs and

community involvement,” Reilly says. Many scholarships only

target freshmen, so she is very grateful to Equity for its

financial support of upper classmen. Reilly hopes to work for

a global agricultural company and vows to stay active in the

sheep industry. She would also love to coach youth

basketball, possibly at the high school level.

Scholarships help students ‘follow their dreams’ Tierney Reilly
for one year, the board has agreed to

donate 10 cents to help improve the

programs and services of the Wisconsin

4-H and FFA foundations, as well as to

support FFA chapters in Iowa and

Illinois. As co-op patrons market their

livestock through Equity, a record is

kept for each animal sold. The 10 cents

isn’t deducted from the producer’s

check; instead, that amount is

subtracted from Equity’s bottom line to

fund A Good Way to Grow.

Quarterly results of the effort are

featured in the co-op’s member

newsletter, Equity News, and advertised

through posters and check stuffers. By

focusing attention as the fund reaches

key milestones, the co-op is helping

patrons realize that it is because of their

livestock marketing through the co-op

that Equity is able to make significant

contributions to these important youth

programs, and to thank patrons for

their support of the effort.

As of the half-way point of the Good

Way to Grow campaign, more than

$45,000 had been raised for 4-H and FFA.

“As a livestock cooperative, we have

a responsibility to support and

encourage growth in agricultural

organizations,” says Chuck Adami,

Equity’s president and CEO. “We chose

4-H and FFA members as recipients of

this program so we could provide our

future generation with more

opportunities to become active — and

stay active — in agricultural related

activities. Another reason we selected

these groups is to give back to the many

rural communities that have

contributed to our growth.”

The program will continue through

this June 30, with the goal of increasing

resources for these worthy youth

development programs. Special projects,

speech contests and attendance at conferences are just a few examples of how

the dollars being raised will help youth

to learn life skills and gain confidence as

they grow into the leaders of tomorrow.

“Equity is pleased to partner with

these clubs and lend a hand in changing

the lives of thousands of their

members,” says Adami. “Indeed, this is

a good way to grow.”

The “Co-ops & Community” page

spotlights co-op efforts that fulfill the

mission of commitment to community. If

you know of a co-op, a co-op member or coop employee whose efforts deserve to be

recognized on this page, please contact:

dan.campbell@wdc.usda.gov. n

Rural Cooperatives / March/April 2014 13

n “Farming is not only important to our economy, but it’s what

America began with, and we need to keep it alive,” says

Ashley Ainsworth, currently studying animal science at the

University of Wisconsin-River Falls. Since she was 10 years

old, this Shawano, Wis., native has wanted to become a

veterinarian. She plans on earning her degree and then will

apply to veterinary school at the University of WisconsinMadison. Ainsworth would love to practice somewhere

around her hometown. “I’m so grateful for scholarships like

these; they truly provide students with opportunity.”

n Phillip Mercier is currently

enrolled in the Wisconsin Academy

for Rural Medicine at the University of

Wisconsin-Madison. “My involvement

in 4-H and the local county fair helped

me gain valuable skills that could

never be taught in textbooks,” he

says. It was his rural upbringing and

interaction with the hard-working

farmers of New Franklin, Wis., that

inspired him to go into medicine. He

hopes to practice medicine in a rural

area, where he can help farmers to

“stay healthy and keep doing what

they love most.” Mercier says that

would be a perfect way for him to give

back to the many people who have

helped him get to where he is today.

“It’s a gesture of our appreciation to reward the academic

achievements of these future leaders,” says Chuck Adami,

Equity’s president and CEO. “It is so encouraging to see the

enthusiasm and fresh outlook our applicants have toward the

future. Best wishes, and keep following your dreams.”

— By Janice Schyvinck

Ashley Ainsworth

Phillip Mercier
14 March/April 2014 / Rural Cooperatives

Growing markets for local foods

examined during Ag Outlook Forum

‘A Trend,Not a Fad’

Eastern Market in Detroit, founded in 1891, has

evolved into a modern food hub. “We see our role

not as providing a gilded palace for high-end food

products, but to get good food to areas that don’t

have good fruits and vegetables,” says Dan Carmody

(above), president of the market. Facility photos

provided courtesy pictured co-ops; Ag Outlook

Forum photos by USDA photographer Bob Nichols.

By Stephen Thompson, Assistant Editor

e-mail: stephena.thompson@wdc.usda.gov
New approaches to

cooperation in

promoting local foods

was the theme of a

panel talk at the 2014

USDA Agricultural Outlook Forum,

held in Arlington, Va., Feb. 20-21. The

talk, Local Food Businesses at the

Rural/Urban Interface, was moderated by

Doug O’Brien, Acting Under Secretary

of Agriculture for Rural Development,

who called the local food movement “a

dynamic and promising avenue for

economic development.” The panel

discussed innovative ways to promote

and meet a growing demand for locally

grown and processed foods, both

among retail customers and large

institutional buyers.

First up was Dan Carmody, president

of Detroit’s Eastern Market

Corporation. Eastern Market was

started in 1891 as a wholesale

agricultural market for the metropolitan

area of Detroit, Mich. Unlike most such

markets, it has survived and evolved

into a modern food hub, with both

wholesale and retail functions.

Eastern Market operates a fivenight-per-week, midnight-to-5 a.m.,

regional wholesale farmers’ market for

growers in Michigan, Ohio and Ontario

(Canada) from June through November.

It runs a Saturday retail market for the

public, offering products from farmers,

food preparers and re-sellers.

Seasonally, it also runs a Tuesday retail

market that has become a “lifestyle,

health and fitness market,” Carmody

said.

“Interest in local food is not a fad;

it’s a trend,” Carmody stressed. “Today,

there are 2,400 breweries that weren’t

here in 1985. Small businesses can

compete very effectively with big

business. It’s already happening in food;

we just have to put it on steroids to

drive economic benefits.”

Carmody says the goal of Eastern

Market is to become the “most robust

and resilient food hub in the U.S.”

Ending reliance on

convenience stores

Detroit’s economic woes have had

significant impact on Eastern Market’s

goals. Many Detroit residents are

forced to rely on convenience stores for

their regular food shopping, said

Carmody. “There are plenty of places

to buy food in Detroit, but very few

[places] to buy produce.”

He described the offerings of most

local convenience stores as being

primarily snack and convenience foods.

“We see our role as not providing a

gilded palace of high-end food

products, but to get good food to areas

that don’t have good fruits and

vegetables,” Carmody continued. “A lot

of our work is taking Eastern Market to

the 40 percent of our residents who

can’t get to the market.”

One way they accomplish this is with

Rural Cooperatives / March/April 2014 15

Melissa Hong, left, describes how FarmLogix uses its

website to connect 120 school districts and other

institutional customers to a network of farmers in five

states. Above, panel members, including moderator Doug

O’Brien (far right), under secretary of USDA Rural

Development, share their views during the USDA Ag

Outlook Forum.

Eastern Markert is not only a great place to buy home-grown foods and ornamentals, but also to

be entertained by down-home Michigan musicians.
16 March/April 2014 / Rural Cooperatives

“pop-up markets,” held every week

during the growing season at 19 sites

around the city. Half of these markets

are sponsored by corporations and

health-care providers; half are in fooddeprived neighborhoods and are

subsidized by profits from the

sponsored markets.

“Re-localizing” food systems can

create desperately needed jobs,

Carmody said. “What if we moved from

a 3-percent market share [in Detroit] as

an organic, sustainable cohort to the

world of Big Food, to 20 percent? It

would result in 4,700 jobs, $20 million

in state and local taxes and $125 million

in household income. It’s the equivalent

of adding a major industry,” he said.

Those numbers would probably be

similar in many other cities, he says.

To accomplish such growth,

Carmody thinks the current food

distribution system has to be taken

apart and put back together. The key to

growing the regional food sector is to

operate through more partnerships, he

noted.

“We focus on processing,

distribution and retailing, because that’s

what we’ve been doing since 1891,” he

said, adding that Eastern Market

partners with others to improve

productivity and waste management, as

well as education to help restore the

“kitchen literacy that we’ve lost over the

last 30-40 years.”

Encouraging local production is an

important part of Eastern Market’s

agenda. Carmody cautioned that many

“urban agriculture” projects in Detroit

have been overhyped. Still, he says

there has been huge growth in grassroots market gardening, especially in

economically hard-hit areas.

Number of community

gardens soars

The number of community gardens

in Detroit has increased from 80 in

2004 to more than 1,400 last year. The

largest 70 of these ventures have set up

a cooperative business to sell at the

market under the “Growing Detroit”

label. Four members of the co-op have

already “graduated” into their own

entrepreneurial businesses. “On a busy

Saturday, among 150 vendors, five of

them come from Detroit,” Carmody

says.

To help encourage new growers, a

nonprofit, The Greening of Detroit,

has developed a market garden to

demonstrate how food production on

just two or three acres can support one

or, in some cases, two jobs.

Eastern Market also formed a

partnership with the Detroit Public

Schools and Michigan State University

to replace some of the highly processed

food served by the schools with fresher,

less-processed foods. The partnership

has also turned the 19-acre site of a

former high school into a large garden

to supply produce for the schools and

to foster workforce development.

Carmody sees great potential for

growth in small-scale food processing

and believes encouraging local food

processors has the greatest job-creation

potential in the regional food sector. A

new building at the market will provide

space for flower sellers and a business

incubator for food processors.

“We didn’t wait to build our kitchen.

There are many underutilized existing

kitchens already,” he said. “So, we have

a project called Detroit Kitchen

Connect which identifies unused

kitchens and tries to connect them with

people who want to make food

products.”

In fact, said Carmody, getting the

kitchen space wasn’t a problem. He

found a large number of potential

participants who wanted to share their

kitchens. “What we found was that it

was all about permitting, licensing and

food-safety training. It’s not about the

kitchen at all; that’s the easy part.”

Carmody spoke about how microgrants for food growers and vendors

can help get them from an “emergent”

to an “accelerant” business stage and

help food ventures graduate from

shared-production facilities to having

their own spaces.

“It took us three years to get an

artisanal sausage maker from the

kitchen he borrowed in a restaurant

into his own facility. Two pizza

makers wound up financing the project

with $50,000 because they got tired of

waiting for the sausages to become

available at wholesale. They sold out at

retail each week.”

“I don’t much like the term ‘urban

agriculture,’” said Carmody.

“‘Urban/regional food systems’ is about

that whole cycle. And we think the real

sweet spot is trying to incubate and

accelerate the growth of companies

making unique food products.”

Vermont food co-op

serves 7,200 members

Hunger Mountain Co-op was

established in Montpelier, Vt., in 1972.

It has since grown to include 7,200 coop members and about 160 employees.

The largest 70 of these ventures have set up a cooperative business

to sell at the market under the “Growing Detroit” label.
Rural Cooperatives / March/April 2014 17

That makes the co-op “a pretty big deal

for us in Central Vermont, where our

trade area has about 70,000 people,”

said Kari Bradley, general manager of

the co-op. “I like to say that one in ten

men, women and children here is a

member of our cooperative.”

Hunger Mountain is part of the

“second wave” of food cooperatives that

sprang up in the 1970s, like most of the

400 food co-ops that exist in the U.S.

today, Bradley said. The first wave of

food co-ops was founded during the

Great Depression as a way to lower

food costs during difficult times. A third

wave of co-ops began to form after the

stock market crash of 2008 and is

primarily focused on promoting local

foods.

Hunger Mountain generates about

$22 million in annual sales from its

single-location, 19,000-square-foot

store. “For a food co-op, we’re a good

size,” said Bradley. “But we’re small in

comparison to a big-box store.” The

cooperative emphasizes natural, organic

and local products, defining “local

food” as that which is grown, or has had

value-added, in Vermont, or is

produced within a 100-mile radius of

Montpelier, including parts of Quebec

and New Hampshire.

“Last year, we got about 31 percent

of our sales from local foods,” said

Bradley. The co-op works with

about 40 farms that grow produce, as

well as a dozen meat and poultry farms.

It is also supplied by a large number of

dairy farms, most of which produce

cheese, including goat cheese — which

is currently in high demand, Bradley

said. Micro-brew beers are also a “hot

trend,” he said.

“A retail market that focuses on local

food is a very different model than

conventional grocery stores,” Bradley

said. “If you’re focused on price, you

don’t want to deal with a lot of small

vendors. We have 400 Vermont vendors

and over 2,000 Vermont-made

products.”

Co-op works closely

with small vendors

This approach makes a big difference

when placing and receiving orders, as

well as storing them. In contrast to

large grocery chains, which seek to

streamline accounting, receiving and

ordering, Hunger Mountain writes a lot

of individual checks.

“In groceries, you want ‘just in time’

— nothing in the back of the store. And

that’s not necessarily what small

businesses want to do,” said Bradley.

“They don’t want to focus their time on

distribution. As a result, we tolerate a

lot of ‘out of stocks,’ and work with the

vendors.”

Working with vendors is a big part

of the cooperative’s approach, which

includes advising prospective vendors

Hunger Mountain Cooperative generates about $22 million in annual sales at this 19,000-

square-foot store in Montpelier, Vt. “We have 400 vendors and over 2,000 Vermont-made

products,” says Co-op Manager Kari Bradley (left).
18 March/April 2014 / Rural Cooperatives

and educating small operations about

consumer preferences and taste profiles,

price points and marketing. “Many

small vendors started with us,” Bradley

said, pointing to Annie’s Naturals, an

operation that began in 1989 and now

sells natural and organic products

nationwide.

Bradley said that merchandising and

pricing are keys to promoting small

businesses that struggle to attain

efficiency and scale. “We tend to give

favorable pricing, although that model

has some drawbacks. Eventually, small

businesses have to stand on their own

and compete on price as well.”

Marketing is “huge” in promoting

small food businesses, said Bradley.

Point-of-purchase signage, ads and food

demonstrations are vital to growing

market share. “A big part of what we do

is telling the stories of our products,”

he said. “And we find that the

producers and vendors can tell their

stories far more effectively than we can.

At any one time, we’re profiling a

feature vendor, running a sale — using

all the market channels. Events are

huge for us, as is branding. Our store is

about having a local experience.”

Dealing with many small vendors

means there are pricing challenges.

“Price image is always the biggest

challenge for us on the retail side,”

Bradley said. The store is usually

dealing with smaller produce businesses

that, in Vermont, are closed for about

half the year.

“So how do you compete on price?

It’s a big challenge in terms of

providing access for all members of our

community.” The other big challenge,

he says, is making sure there’s enough

product to satisfy the growing demand

for local, high-quality food.

“We think of ourselves as a missiondriven business,” said Bradley. “We’re

in competition with the grocery stores,

but our values are right up front.”

Creating Jobs

The cooperative made $6.7 million

in local purchases in 2013 and paid $5.5

million in employee compensation. “We

apply the Vermont Livable Wage to all

our employees,” he said. “An outside

economist determined that we have

created 205 jobs. We have about 50

percent more positions than a

conventional grocery. Our

big strategy is to grow

and take more market

share, have more impact

and create more jobs. We

have growers who tell us

that they will fill new

market share.”

“The other key

strategy,” said Bradley, “is

the recognition that we’re

not going to do it alone.

We need to work with

others, especially in

developing the supply

side of things. So we are

partners in a number of

different networks.

Vermont has a strategic

plan to double the

consumption of local foods from 5 to

10 percent by 2022.”

The co-op has created a “farm to

plate” network, he added, including

producers, distributors, nonprofits,

educators and the state government.

Hunger Mountain is also a member of

the National Cooperative Grocers

Association, which is increasingly

concentrating on regional food as a

competitive advantage for its members.

This cooperative approach is

working on a regional scale, he said.

The co-op is also a member of the

Neighboring Food Cooperative

Association (NFCA), headquartered in

Shelburne Falls, Mass.

“This is the first time that food coops have partnered together on a

regional basis,” he said. The

association, which has 34 members in

New England, was inspired by insight

from the Brattleboro, Vt., food co-op

Hunger Mountain Co-op takes pride not only

for paying competitive prices to its farmersuppliers, but also in paying its staff (above)

a livable wage. In 2013, it provided $5.5

million in employee compensation. USDA’s

Doug O’Brien (right) says cooperatives provide an

effective business structure for developing local food markets.
and the realization of its leaders that

alone, the co-op could not deliver on its

mission. Rather, “they needed to work

together with other food cooperatives,”

Bradley said.

“Our vision is a thriving regional

economy, even beyond food,” said

Bradley. “We think that cooperation

will benefit the entire region. Our

strategy is for networked partnerships;

we’re not going to do it alone, and

there are enough organizations out

there aligned with us.”

NFCA seeks to develop a marketing

partnership into something resembling

a chain of cooperatives selling regional

foods. A marketing survey found that

customers were interested in products

such as regionally grown chicken

breasts, beans and grains, as well as

frozen fruits and vegetables.

That led to a year-long “farm-tofreezer” pilot project in 2012-2013.

The goal was to sell regionally grown

frozen corn, green beans, broccoli and

blueberries. Processing, freezing and

storage/distribution were carried out by

different partners.

“It was a very complex system, but

that’s what it takes,” Bradley said. The

major challenge was distribution.

“Running trucks around New

England was a large part of the cost.”

Another hurdle is raising investment

capital to pay for expensive equipment;

each fruit or vegetable requires a

different processing machine. “One key

question is: do we make the investment

ourselves or partner with someone?”

The association found that the farmto-freezer program generated

significant benefits. “We started getting

invitations to different conferences and

calls from the press. We got interest

from Whole Foods.”

The cooperative gained this

important insight from the

collaboration: that working with

producer co-ops can generate

substantial advantages. “We have shared

values and a natural basis for

collaboration,” he said. “If they have

the ability to aggregate and bring the

crop together and can bring the

ordering together — with one point of

contact between the two co-ops — it

makes a lot of sense. We can make

commitments to each other, plan

growing seasons and share the risk.”

The next step, says Bradley, is to

study collaboration with producers and

determine what’s possible. NFCA will

be working with Deep Root Organic

Truck Farmers Co-op Inc., which

received a USDA Rural Development

Value-Added Producer Grant in 2013

to help it explore the feasibility of a

distribution co-op jointly owned by

food co-ops and supplier co-ops.

“Should we take the next step and

invest in distribution?” asked Bradley. “I

think there’s a lot of potential there.” n

Rural Cooperatives / March/April 2014 19

Melissa Hong of FarmLogix LLC provided an example of how a

collaborative distribution system of producer and food store co-ops

might work. Headquartered in Chicago, FarmLogix specializes in

distributing locally produced foods to large institutions, such as

restaurant chains, hotels and school systems that “don’t have the

resources to shop for food the way small restaurants can.”

FarmLogix uses a website to connect institutional customers,

including 120 school districts, to a large network of farms in a five-state

region. Customers choose the produce items they want, then the farmers

truck their purchases to one of three warehouses, where the firm

organizes the orders.

The orders are then picked up by the customers’ regular distributor

for delivery. Purchases are included on the distributor’s invoice, greatly

simplifying accounting for the customers. Because institutions such as

school systems often have local-content reporting requirements,

FarmLogix provides a monthly report detailing all purchases.

Each participating farm has a web page on which customers can

order by farm or by product. The firm also gives each customer a website

to make meeting reporting requirements easier.

According to Hong, this approach solves a number of problems.

Distributors won’t pick up from farms, and farms can’t afford to deliver

small orders. In addition, by purchasing for more than one customer,

smaller customers, such as small school districts in Wisconsin, have

access to lower prices by combining their orders with other similar ones.

Frozen vegetables are a big item with schools, said Hong. “We do

about 5,000, 20-pound cases a month, and we’re ramping up.”

The service provided by FarmLogix to some customers, such as

Chicago Public Schools, extends to helping them plan menus and source

food items to take advantage of local food offerings, Hong says.

Hong also discussed a new initiative: “Whole Bird.” Schools want to

use local, antibiotic-free chicken, but can only use drumsticks. But other

customers can use the other parts of the bird. FarmLogix is putting

together a customer cooperative agreement to commit to buying the

entire bird, then dividing the parts between members.

Hong and the other panelists agreed that the first step to promoting

local food sales is forming partnerships. n

New approach to food distribution
By Sarah Marquart

Public Affairs Specialist

USDA Rural Development/California

Many refugees that resettle in the United

States struggle to acclimate to their new

surroundings. Challenges are faced on all

fronts — new language, new customs and

even new food.

The International Rescue Committee (IRC) works closely

with refugees to help with this transition and teaches them

how to apply their skills in a new country. IRC is a nonprofit

founded in 1933 that responds to humanitarian crises and is

now working in 40 countries and 22 U.S. cities. It was

through their relationship with IRC that a group of Somali

Bantu refugees reconnected with their roots and took charge

of their destinies.

In the beginning, the group of 11 Somali Bantu refugee

women just wanted to get “back to the land” and start

farming in their new home, near San Diego, Calif., as they

had in Somalia. They missed growing their own food and,

more importantly, they were concerned about the physical

and mental health problems they were suffering as a result of

a poor diet and lack of exercise.

Through their advocacy, they helped establish IRC’s New

Roots Community Farm, the first permitted community

garden in urban San Diego. The farm sits on a formerly

vacant, weedy and trash-filled, 2.3-acre lot. The farm has

become a great success, not only for the group of Somali

women, but several other refugees from around the world

20 March/April 2014 / Rural Cooperatives

Focus on

Bahati Mamas Cooperative — Somali women refugees

form co-op to market produce from small farm

Bahati Mamas Cooperative member Bahati Mohamed tends crops near San Diego. The co-op was formed to help Somali Bantu refugees market

their produce locally. Photos courtesy IRC
who have farmed there as well.

Co-op formed to market produce

Not long after they started farming, the Somali women

wanted to begin selling some of their produce to earn extra

income. IRC helped the women transition to their training

farm in the rural community of Pauma Valley, just north of

San Diego. It was from this land that they made their first

produce sales. It was then that the new Bahati Mamas

cooperative was born.

In their native language, “Bahati” means “lucky,” and all of

the women felt lucky to farm again and provide nourishment

to their families and neighbors. Coming from a very

collectively minded culture, the decision to form a

cooperative was a natural step for the women.

The Bahati Mamas grow a variety of vegetables, including

those that were staples of their diet in Somalia. Their crops

include collard greens, okra, cow peas and African amaranth,

as well as items more popular with American consumers, such

as carrots, peas and lettuce.

Collard greens, one of the co-op’s main crops, are called

“sukuma wiki” in Swahili, which means “that which pushes

the week forward.” The reference is to the fact that the crop

is a poor person’s main source of energy throughout the

week, as opposed to the meat-based proteins that are

accessible to more well-to-do families.

Using resources IRC had already established, the Bahati

Mamas began selling their produce at farmers markets,

through Community Supported Agriculture (CSA)

associations and even to local restaurants. While the co-op

was finding success, the members wanted more

independence.

Rather than rely on the support from grant-based

organizations, such as IRC, the Bahati Mamas are eager to

stand on their own. They want to take charge of their lives

and the destiny of their farm business. They have plans to

manage their own customer base, sales accounts and

marketing outlets.

“The Bahati Mamas want to unleash their full passion and

full potential,” says Bilal Muya, IRC Farm Educator. “In

doing things by themselves, they will also experience even

greater freedom.”

Co-op Center, USDA aid group

To help foster the growth and independence of the Bahati

Mamas, the California Center for Cooperative Development

(CCCD) began working with the co-op in 2012. CCCD used

funds from USDA Rural Development’s Small SociallyDisadvantaged Producer Grant program to help the

cooperative.

CCCD has helped the Bahati Mamas closely examine all

the financial aspects of the farming operation, including

costs, product pricing and the returns for the business, as well

as their own finances as member-owners of the business.

Through exercises that examine what they pay for and what

IRC provides for them in services and resources, the women

better understand what they

must achieve to become

fully independent.

CCCD has also helped the

Bahati Mamas strengthen

the cooperative by

establishing a decisionmaking process using

different techniques to

arrive at a consensus.

“It’s a big change from

looking at farming in

Somalia as a means of

achieving food security to

looking at it as an incomegenerating business in the

United States,” says Luis

Sierra, CCCD assistant

director. “The Bahati

Mamas have what seems to

be an endless reserve of energy. They’re dedicated to making

this work and that keeps us motivated, too.”

The Bahati Mamas now sell independently at two

certified farmers’ markets. The co-op also successfully — and

independently — made sales via a “farm-to-table” restaurant.

In 2013, the co-op sold nearly $24,000 worth of produce

grown on just 2.5 acres.

For the Bahati Mamas, this is just the beginning. As one

member says, “Farming is our life, and we live with the earth

as it is a part of us and we are a part of the earth.” n

Rural Cooperatives / March/April 2014 21

“Coming from a

very collectively

minded culture,

the decision to

form a cooperative

was a natural step

for the women.”

Co-op member Sitey Mbere celebrates another day to bring forth food from the good earth.
By Bruce J. Reynolds, Economist

Cooperative Programs

USDA Rural Development

The development of

cooperatives was high

on the agenda of U.S.

government officials for

implementing President

Franklin D. Roosevelt’s New Deal programs during the Great Depression

(1933-1942). Two general strategies for

rural development were based on

cooperatives.

First, cooperatives had a track-record

of improving the livelihood of many

farmers, and New Deal policies

recognized a role for government

assistance to these farmer-owned

businesses with credit, research and

technical assistance.

Second, there was a unique strategy

of the New Deal in assisting with the

organization of new cooperatives to

provide rural communities with

electricity, health care, housing and new

community settlements for farming and

subsistence-gardening. President

Roosevelt’s proclivity for creating new

and independent agencies to address

problems of different economic sectors

resulted in several different cooperative

programs that were administered

through these various agencies of the

federal government.

A look back at how New Deal

programs utilized cooperatives for

economic recovery is informative when

thinking about present challenges for

rural development. Three sectors are

selected for this historical review:

agriculture, electrical utilities and health

22 March/April 2014 / Rural Cooperatives

Depression-fighting strategies involved co-ops

in agriculture, utilities and health care sectors

TheNewDeal Co-ops
care. References for this article include

some authors who played an important

part in the New Deal cooperatives and

are discussed in a sidebar (page 25).

Farmer cooperative programs

Assistance to farmer cooperatives was

not an innovation of the New Deal, but

their widespread operations throughout

rural America by 1933 made them an

indispensable resource for economic

recovery. Federal government assistance

to farmer cooperatives had been

mandated in 1926 with the passage of

the Cooperative Marketing Act. A

Division of Agricultural Cooperation

had been organized within USDA’s

Bureau of Agricultural Economics in

1922. The 1926 Act provided annual

appropriations by Congress for research

and technical assistance to farmer

cooperatives by this division.

More organizational changes

occurred in the U.S. government in

1929 with the agricultural depression,

which presaged the outbreak of the

Great Depression. The USDA division

serving farmer cooperatives was

transferred in 1929 to the newly created

Federal Farm Board.

The Roosevelt administration

abolished the Farm Board in 1933 and

implemented the first programs of price

supports directly to individual farmers.

These were administered by USDA

under the Agricultural Adjustment Act

(AAA). USDA used the services of

cotton and rice cooperatives to

implement its program of non-recourse

loan payments to farmers. The

cooperatives reduced the government’s

administrative expenses by taking

responsibility to distribute the AAA

loans to their members as advance

payments on their marketing pools and

provided record-keeping on storage and

sales of government-owned

commodities. The USDA also worked

with cooperatives in implementing

orderly marketing programs for several

perishable commodities that required

approval by producer voting

referendums.

Some of the Federal Farm Board’s

lending programs to cooperatives were

transferred in 1933 to the newly created

Farm Credit Administration (FCA). A

network of 12 district Banks for

Cooperatives was established. In

addition, responsibility for carrying out

the 1926 Cooperative Marketing Act

was moved to FCA. In 1934, FCA

launched News for Farmer Cooperatives,

the predecessor of this magazine.

FCA was moved to USDA in 1939.

Research and technical assistance were

transferred to a separate USDA agency,

the Farmer Cooperative Service, when

FCA became a lending system

independent of the federal government

in 1953. After many reorganizations

over several decades, the Clinton/Gore

“reinvention of government” in 1994

resulted in moving responsibility for

cooperative programs to USDA’s Rural

Development Mission Area, where it

remains today.

During the New Deal years, local

grain and farm supply cooperatives

expanded the development of regional

federations for improving market access

for members. In the late 1930s, the

district cooperative banks of FCA,

coupled with its technical assistance

division, helped several local

cooperatives band together to finance

federated soybean and cottonseed

processing cooperatives (see Rural

Cooperatives, July/August 2012).

Rural electric cooperatives

A major success story for

cooperatives was to help bring

electricity to rural America. New Deal

programs established lending and

technical assistance agencies to develop

rural electric cooperatives. The first

step was the creation of the Tennessee

Valley Authority (TVA) in 1933 that

built dams, public power plants and

transmission lines. The Rural Electric

Administration (REA) was established

by executive order of the President in

1934 to provide financing for bringing

electricity to all of rural America. In the

following year, Congress passed the

Rural Electrification Act to authorize

REA annual budgets for a 10-year

period.

Several years before these decisive

actions, a few rural communities located

relatively close to power plants had

organized cooperatives to negotiate

arrangements for supplying electricity

to farms. Many of these efforts were not

successful as indicated by the fact that

the Agricultural Census of 1935

reported that only 10.9 percent of the

6.8 million farms in the United States

had electricity, and most of those were

adjacent to urban power grids.

The problems of earlier efforts to

negotiate electricity supply agreements

persisted in REA’s initial efforts to

involve power companies in building

transmission lines into rural areas.

Private power companies and municipal

Rural Cooperatives / March/April 2014 23

The formation of utility cooperatives greatly

increased the rate at which electricity service

was extended to farms, such as this, and

rural communities.

The child of a migratory farm worker in Tulare

County, Calif., receives medical care from a

staff nurse of the Agricultural Workers Health

and Medical Association. The photo was

taken in 1939 by Dorothea Lange. Photos

courtesy U.S. Library of Congress
24 March/April 2014 / Rural Cooperatives

utilities believed that rural electricity

would be too costly and they refused to

work with REA.

The TVA had organized a few rural

electric cooperatives in 1934 and REA

adopted this strategy. REA assisted in

the development of rural electric

cooperatives as the primary

organizational entities to carry out

power plant projects, stringing

transmission lines, wiring rural homes

and farms and distributing appliances to

members.

During the New Deal years, the

REA had a cooperative development

division that, by 1940, had established

more than 629 borrowing customers,

most of them cooperatives. By 1980,

about 99 percent of the nation’s farms

had electricity, mostly provided by the

985 cooperatives and associations that

were financed by REA loans. By 2007,

there were 854 cooperatives providing

distribution and another 66 for

electricity generation and transmission

(http://reic.uwcc.wisc.edu/).

In 1933, President Roosevelt also

established the Electric Home and

Farm Authority (EHFA) to work with

TVA and REA in negotiating rural

consumer purchases of electric ranges,

refrigerators and water heaters. Given

the general decline in market demand,

appliance makers were generally willing

to negotiate bulk purchases at

discounted prices. Furthermore, this

program created a new market for

appliance makers.

EHFA provided long-term financing

of appliance purchases with installment

payments applied to the consumers’

monthly utility bills. Although not a

cooperative, the EHFA demonstrated

the advantages of centralized

negotiation for appliances that would

otherwise not have been supplied to the

same extent if individual households

had not been aggregated for bulk

purchasing. As will be discussed in the

next section, centralized negotiation

was also essential for the rural health

care cooperatives.

As electric cooperatives

demonstrated the economic feasibility

of rural markets for electricity, some

private companies began supplying

power to areas where demand was

relatively high. It is interesting to note

that the initial reluctance of private

power companies to work with the REA

resulted in the large-scale development

of rural electric cooperatives. As

observed by Joseph Knapp:

“By boycotting the REA, the private

utilities changed the character of the

organization. If they had cooperated

with it, they would probably have made

it into a lending agency largely

subservient to their interests. By

opposing it, they caused it to become a

major competitor in the field of rural

electrification.”

The REA and cooperatives

successfully supplied electricity to rural

communities that would not have

otherwise occurred until many years,

even decades, later for many remote

communities.

Cooperatives formed the National

Rural Electric Cooperative Association

(NRECA) in 1942 to accomplish shared

services and to secure congressional

reauthorization of REA in 1944. As

with FCA and other independent New

Deal agencies, REA was moved to

USDA in 1939. It was renamed the

Rural Utility Service in 1994 and

became a part of USDA’s Rural

Development Mission Area.

Health care cooperatives

From the late 19th century to the

beginning of the New Deal, various

mutual-aid societies were formed to

provide medical care. The idea of

cooperative medical care was articulated

by a famous surgeon, James Peter

Warbasse, who was a founder of the

Cooperative League of the United

States of America (CLUSA) in 1916.

CLUSA was renamed the National

Cooperative Business Association in

1985.

Warbasse welcomed the New Deal

response to the depression, but

advocated consumer cooperatives for

A doctor writes a prescription in the clinic operated by the Taos County Cooperative Health

Association in Questa, N.M., in January, 1943. Photo by John Collier
Rural Cooperatives / March/April 2014 25

providing quality health care with a

very limited role of government

involvement. In 1933, he accepted an

invitation to serve on the Consumer

Advisory Committee of the National

Relief Administration. In addition to

advocacy by Warbasse and CLUSA, the

New Deal officials were especially

influenced by the example of the

Farmers Union Cooperative Hospital in

Elk City, Okl., in 1929.

New Deal programs during

Roosevelt’s first term (1933-36)

included health care in some of the

subsidized spending for economic relief.

In 1937, a special Health Services

Branch was organized within USDA’s

Farm Security Administration (FSA).

Forming cooperatives, as in other New

Deal programs, was central to the FSA’s

strategy for delivering health care to

rural communities.

The majority of the rural population

had limited access to health care before

the onset of the Great Depression,

which only increased the incidence of

untreated illnesses and injuries. To

provide health care to rural

communities required bold and new

approaches to the traditional fee-forservice market. FSA adopted many of

the practices advocated by cooperative

leaders, such as centralized negotiating

of costs for specific medical services and

creating a prepayment pool for covering

expenses. Another cooperative medical

practice that was adopted and

effectively implemented by FSA was a

program for preventive care.

FSA negotiated agreements with

local and regional medical societies in

each state, but had relatively little

activity in some New England states. In

most states, the chapters of the

American Medical Association (AMA)

were willing to work with the FSA

cooperatives while some created

obstacles to work around.

Prior to the FSA programs, many

patients were unable to pay their doctor

bills. In the new system, doctors

received payments from the pooled

funds of health cooperatives. When

The New Deal is a popular and divisive topic in U.S. history. Most of the

published histories, whether pro or con, offer scant, if any, discussion of the

role played by cooperatives in carrying out economic relief. This neglect

reflects the focus of researchers on the long-running debate about the role

of government in the New Deal that has pushed aside other topics, such as

the turn to cooperatives. Some recent historians are focusing on

cooperatives, such as Michael R. Grey, but most of the histories were

written by individuals from the New Deal era, four of whom discussed below

are inductees to the Cooperative Hall of Fame

(http://heroes.coop/archives/).

Joseph G. Knapp (1900-1983) produced a two-volume history of U.S.

cooperatives that is still the most comprehensive study available. He was

one of the leading experts on cooperatives in FCA during the New Deal

years. When REA initially failed to interest the power companies in

partnering for rural electrification, he advised them about TVA’s experience

with forming electric cooperatives. Knapp went on to be the first

administrator of USDA’s Farmer Cooperative Service in 1953.

There was no detailed history, other than brief descriptions, of the FSA

health care cooperatives until the 1999 publication of New Deal Medicine by

physician/historian Michael R. Grey. He explored all the major archival

documents related to the FSA program and is an expert on alternative

methods of financing and administering health care. He briefly discusses

the Farmers Union Hospital Cooperative in Elk City, Okl., but does not cover

the impact of CLUSA’s public advocacy of cooperative health care on the

programs FSA adopted.

Florence E. Parker (1891-1974) describes several pioneering health

cooperatives and CLUSA’s efforts to reform various laws and government

policies that obstructed cooperative care. She was a cooperative specialist

with the U.S. Bureau of Labor Statistics, a CLUSA director and cooperative

historian.

James Peter Warbasse (1866-1957) had a major impact by articulating

the key concepts for cooperative care. His book, Cooperative Medicine,

was published in an expanded 5th edition in 1951, but the first edition had

been a CLUSA publication during the early 1930s. Although serving as an

advisor to the National Relief Administration, his influence on New Deal

programs may have waned due to his opposition to an expanded role of

government for providing health care.

Jerry Voorhis (1901-1984) was a U.S. Congressman from California from

1937 to 1946 and was a staunch supporter of cooperatives and of the New

Deal. After losing his seat in 1946 to Richard Nixon, Voorhis became

executive director of CLUSA from 1947 to 1965 and served two more years

as its president. He also served as a director of the Cooperative Health

Federation of America and was involved in the formation of the Group

Health Association of America. His book, American Cooperatives, covers

the history of rural electrification and the cooperative health care

movement. n

Finding the co-op links
26 March/April 2014 / Rural Cooperatives

charges exceeded funds available,

doctors received payments on a

prorated share basis. Some of the

prorated billing in the initial years was

covered in later years as the health of

the rural populations improved from

having had earlier access to care and

from the impact of preventive

programs.

FSA negotiated medical care rates

with doctors, who were paid a fixed perpatient amount by the cooperatives. Its

third-party payment system for medical

care was innovative at the time and has

become a common practice today. Since

the payment pools were limited, doctors

exercised their judgments in prioritizing

the most vital treatments to be given.

Although the FSA program limited the

discretion that doctors have in a fee-forservice system, it provided them with

stable income during the depression

years.

FSA initiated the start-up of

cooperatives on a community basis that

involved members choosing directors

and other officers to carry out the

recordkeeping of member dues and

payments to providers. Membership in

the health care cooperatives was

voluntary and required member dues,

usually $15-$30. Such dues were often

paid out of the FSA rehabilitation loans

that were distributed to the rural poor.

FSA engaged cooperative members

in preventive care programs and

implemented a variety of safety,

nutrition and sanitary projects. One of

the most successful was installation of

screens on windows and doors that is

credited with reducing the incidence of

malaria in the South. Its nutrition

education program, communicated

through the cooperatives, is credited

with eradicating the illness pellagra.

The highest participation in the FSA

health care system was in 1942, when

1,200 cooperatives in 41 states that

served more than 650,000 members.

With U.S. entry into World War II

(WWII) in 1941, many New Deal

programs received reduced funding

from the government. As other

countries began to establish national

health care programs during the 1940s,

which the AMA opposed for the U.S., it

then turned against government

support for the rural health care

cooperatives. Following AMA guidance,

rural doctors began to demand a return

to the traditional practice of fee-forservice. Lastly, the health insurance

industry was developing during this

period. Insurance companies began

reaching into rural communities with

plans that aimed at middle-income

families that may have otherwise

continued their membership in the FSA

health cooperatives. The FSA rural

cooperative health care program ended

in 1946.

Services for rural communities

The New Deal policy-makers

understood that cooperatives provide a

way to establish services for the underserved and provide a “democratic voice”

and local control. Under Roosevelt’s

leadership, several new agencies were

created that either worked with

cooperatives or sought to develop them

to carry out essential services and grow

the economy.

Farmer cooperatives had developed

in the United States during the course

of several decades before the New Deal.

With the agricultural depression of

1929 and the Great Depression of 1933,

programs such as FCA helped them

survive in a bleak economy. By 1953,

the Farm Credit System became an

independent and self-financed entity

that operates on cooperative principles.

It is a market leader in rural finance

today.

The most successful New Deal

cooperatives were those that developed

the rural electric industry and are today

helping to bring broadband and

business development financing to

underserved communities. The New

Deal health cooperatives did not survive

the post-WWII era, but during their 10

years in operation, they delivered care

to many who lacked access to it; they

also initiated preventive care and thirdparty payment.

Cooperatives are having an impact in

rural development today, as

documented in a report issued by the

University of Wisconsin Center for

Cooperatives in 2009: the Research on

the Economic Impact of Cooperatives

(http://reic.uwcc.wisc.edu/). More

opportunities remain for using

cooperatives to address many lingering

challenges, including climate change,

resource conservation and preserving

small businesses of retiring owners. In

looking back at the challenges of the

Great Depression, the New Deal

approach demonstrated how

democratically run cooperatives can

supply essential services to residents of

rural communities.

References • Grey, Michael G., New Deal Medicine: The Rural

Health Programs of the Farm Security

Administration (Baltimore: The Johns Hopkins

University Press, 1999).

• Knapp, Joseph G., The Advance of American

Cooperative Enterprise: 1920-1945 (Danville, Il:

Interstate Printers & Publishers, Inc., 1973).

• Parker, Florence E., The First 125 Years: A

History of Distributive and Service Cooperation in

the United States, 1829-1954 (Superior, WI: the

Cooperative League of the U.S.A., 1956).

• Voorhis, Jerry, American Cooperatives (New York:

Harpers & Brothers Publishers, 1961).

• Warbasse, James Peter, Cooperative Medicine: the

Cooperative Organization of Health Protection

(Chicago: the Cooperative League of the

U.S.A., 5th edition, 1951). n

The REA and cooperatives

successfully supplied

electricity to rural

communities that would

not have otherwise

occurred until many years,

even decades, later for

many remote

communities.”
Rural Cooperatives / March/April 2014 27

Dairy cooperative members in the United

States marketed more than 160 billion

pounds of milk in 2012, maintaining a

dominant, but slightly lower, market share

for co-ops during the five-year period

between 2007 and 2012. This and other findings are the

results of a survey of all dairy cooperatives conducted by the

Cooperative Programs of USDA Rural Development. The

survey is done every five years, with the most recent

questionnaire collecting information on the milk-marketing

operations of dairy cooperatives for fiscal 2012.

The 161.2 billion pounds of milk that dairy co-op

member-producers marketed in 2012 was 5.7 percent more

than in 2007. This volume represented 80.9 percent of the

total milk marketed by farmers nationally, a decrease in

market share from 82.6 percent recorded five years earlier.

Including milk received from non-members and noncooperative firms, total milk handled by cooperatives was

167.7 billion pounds, or 84.1 percent of milk marketed

nationally — a fraction (0.3 point) lower than in 2007. Three

billion pounds of the milk volume was organic milk,

marketed by 24 cooperatives.

The number of dairy cooperatives during this period

decreased from 155 to 132. There were 47 cooperatives that

Editor’s note: This article includes highlights from a forthcoming report, “Marketing Operations of Dairy Cooperatives, 2012,” USDA Cooperative Programs

Research Report 230. The full report will be posted later this spring on the USDA website at: http:// www.rurdev.usda.gov/BCP_Coop_LibraryOfPubs.htm .

West North Central

42 co-ops

8,165 producers

20.2 billion pounds

2.5 million lbs. per producer

East North Central

47 co-ops

17,323 producers

42.9 billion pounds

2.5 million lbs. per producer

North Atlantic

53 co-ops

10,693 producers

22.1 billion pounds

2.1 million lbs. per producer

South Atlantic

13 co-ops

1,709 producers

7.4 billion pounds

4.3 million lbs. per producer

Western

16 co-ops

2,480 producers

59.4 billion pounds

23.9 million lbs. per producer

Figure 1―Number of Cooperatives Operating in Each Region, Member-Producers, Member Milk, and Milk per Producer, 2012

South Central

12 co-ops

1,629 producers

9.3 billion pounds

5.7 million lbs. per producer

Dairy co-ops’milk volume up,but market share down slightly

By Charles Ling, Ag Economist

USDA Rural Development

Photo courtesy Dairylea Cooperative
28 March/April 2014 / Rural Cooperatives

operated milk plants or receiving facilities, 10 fewer than in

2007. The other 85 co-ops had no milk-handling facilities;

most of these co-ops performed bargaining functions and a

few others were “check-off” co-ops that provided milk testing

and other services.

Fewer farms, more milk

The 2012 survey shows that there has been no slowing of

the trend toward fewer farmers producing more milk.

In 2012, there were 41,999 co-op member‐producers who

marketed milk in the United States, 15 percent (7,676) fewer

than five years earlier. The greatest declines were in the East

North Central region (2,932 fewer member-producers),

followed by West North Central region (1,995 fewer) and

North Atlantic region (1,385 fewer).

The two North Central regions and the North Atlantic

region together accounted for 86 percent of all member‐

producers, but had only 53 percent of cooperative milk

volume. The South Central region had the fewest

cooperative producers, being home to 1,629 members — a

decline of 30 percent from 2007.

With the exception of the South Central, milk volume

marketed by cooperative members in all regions was greater

than five years earlier. The largest increase, up 5.2 billion

pounds, was in the East North Central region, followed by

the North Atlantic (1.7 billion pounds increase) and the

Western region (1.3 billion pounds increase). The Western

region remained the top source of cooperative milk, even

though the pace of expansion there slowed down.

Cooperatives in this region marketed 59.4 billion pounds of

member milk — 37 percent of total cooperative milk,

compared to 38 percent five years ago.

The East North Central region accounted for 27 percent

of total cooperative milk, an increase of two points from

2007. The North Atlantic and West North Central regions,

respectively, supplied 14 and 13 percent of the milk marketed

by cooperative members.

Milk deliveries per member-producer were up in all

regions during the five-year period. Nationally, it increased

25 percent, from 3.07 million pounds to 3.84 million pounds.

Per-member delivery was highest in the Western region, at

23.93 million pounds. Percentage-wise, this is a 13-percent

Table 1 — Size of dairy cooperatives in terms of milk marketed by members, 2007 and 2012

Milk marketed by members Cooperatives Member milk Share of co-op milk

2007 2012 2007 2012 2007 2012

—Number— —Million pounds— —Percent—

More than 6 billion pounds 4 4 75,075 77,090 49.2 47.8

3 to 6 billon pounds 8 10 34,899 45,609 22.9 28.3

2 to 3 billon pounds 5 3 12,504 8,193 8.2 5.1

1 to 2 billion pounds 11 9 15,439 14,098 10.1 8.7

0.5 to 1 billion pounds 8 11 5,176 8,053 3.4 5.0

100 to 500 million pounds 32 27 6,740 5,770 4.4 3.6

Less than 100 million pounds 87 68 2,681 2,410 1.8 1.5

Total 155 132 152,514 161,222 100.0 100.0

Complete financial data for fiscal 2012 submitted

by 89 dairy cooperatives to USDA show that:

• Total assets for fiscal 2012 were $13.9 billion

($10.90 per hundredweight (cwt));

• Total liabilities were $10.4 billion ($8.12 per cwt);

• Total equity was $3.6 billion ($2.78 per cwt), with

84 percent of the equity allocated to members.

• Net margin before taxes was $285 million (22

cents per cwt), a return on equity of 8 percent.

• Together, these 89 cooperatives (67 percent of

dairy cooperatives) marketed 79 percent of total

cooperative member milk volume. n

Dairy co-op

financial performance
Rural Cooperatives / March/April 2014 29

increase from 2007. Increases in other regions ranged from

22 percent to 35 percent.

There were three regions in which cooperative regional

share of milk decreased: South Central, Western and South

Atlantic. The declines, respectively, were from 83 to 71

percent, from 76 to 72 percent, and from 94 to 92 percent.

Slightly less dominant share of milk

As in 2007, four cooperatives each handled more than 6

billion pounds of member milk in 2012. These four co-ops

accounted for 47.8 percent of cooperative milk volume in

2012, 1.4 points lower share than reported for 2007.

The number of cooperatives in the next size group (3

billion to 6 billion pounds of milk) increased by two, to 10

co-ops, in 2012. The milk volume of this group accounted

for 28.3 percent of all cooperative milk, an increase of 5.4

points from 2007. This was the size group that showed the

most significant increase in the share of total cooperative

milk volume. Together, the 14 cooperatives that were in these

two top-sized groups (each cooperative marketed at least 3

billion pounds) had a 76.1-percent share of cooperative milk.

The only other size group that showed an increase in

cooperative number, milk volume, and share of cooperative

milk was the 0.5-billion-to-1-billion-pound group. This

group had 11 cooperatives in 2012, three more than in 2007,

and the group’s share of cooperative milk had a 1.6-point

increase. The remaining size groups all had fewer cooperatives and lower share of cooperative milk than five years ago.

In terms of milk volume, the relative position of dairy

cooperatives to the rest of the industry, though still

dominant, was a little bit less. The largest four dairy

cooperatives had a two-point lower share of the nation’s total

milk supply, moving down from 40.7 percent in 2007 to 38.7

percent in 2012. Broadening the focus to the largest eight

and the largest 20 dairy cooperatives, both groups also saw

slightly lower shares of the nation’s milk.

Co-op share of dairy products

Volumes of butter and nonfat and skim milk powders

increased significantly from 2007 to 2012. Cooperative share

of butter, at 1,396 million pounds (a 28-percent increase over

five years), was 75 percent of U.S. production, and co-op

share of nonfat and skim milk powders, at 1,967 million

pounds (a 36-percent increase), was 91 percent.

Cooperatives more than doubled dry whole milk

production and increased dry buttermilk by more than 80

percent in five years. They marketed 68 percent of the

nation’s dry whole milk, up from 51 percent in 2007. Their

share of dry buttermilk was 89 percent, increasing from 65

percent in 2007.

However, cheese made by cooperatives decreased by 5

percent from five years earlier, to 2,386 million pounds,

which accounted for 22 percent (vs. 26 percent in 2007) of

U.S. cheese production. American cheese made by

cooperatives was down 11 percent from 2007, while U.S.

production increased 12 percent, resulting in a lower

cooperative share, 35 percent vs. 44 percent in 2007. During

the same five years, cooperative Italian cheese marketing

decreased by 1 percent, and cooperative share of U.S. total

Italian cheese dipped two points, to 16 percent.

Cooperative production of dry whey products increased 10

percent, and their share of national production increased

slightly from 42 percent to 43 percent in 2012.

Plant operations and employees

Dairy cooperatives owned and operated 184 plants, 13 of

them for receiving and shipping milk only, 32 for

manufacturing American cheese, 17 for making Italian

cheese, 49 for packaging fluid milk products, 24 for churning

butter, 35 for drying milk products and 24 for drying whey

products. Many other plants made various other dairy

products or dairy-related products. (A plant may perform

more than one function.)

A total of 53 dairy cooperatives reported having 22,969

full-time and 804 part-time employees in 2012. These

cooperatives marketed 121 billion pounds of member milk,

or 75 percent of cooperative milk.

Six other cooperatives had only part-time employees.

Together, these bargaining cooperatives reported having 12

part-time employees. Twenty-one cooperatives reported

having no employees (though some out-sourced work to

other firms).

In total, these 80 cooperatives represented 61 percent of

all dairy cooperatives and marketed 79 percent of cooperative

milk. n

Table 2 — Share of milk marketed by members of dairy

cooperatives, 2007 and 2012

Category 2007 2012

—Percent—

Share of cooperative volume

4 largest cooperatives 49.2 47.8

8 largest cooperatives 62.3 61.5

20 largest cooperatives 83.7 84.5

All dairy cooperatives 100.0 100.0

Share of total U.S. volume

4 largest cooperatives 40.7 38.7

8 largest cooperatives 51.6 49.8

20 largest cooperatives 69.1 68.3

All dairy cooperatives 82.6 80.9
An ACDI/VOCA project in Egypt, funded by USAID, improved the capacity of smallholder producer associations to provide a large, consistent quantity of processing tomatoes. The effort surpassed nearly all of the

original program goals. Photos courtesy ACDI/VOCA

Farmers, processors work together

to boost Egypt’s tomato industry

By Kristin Witting, Senior Editor, Public Relations & Communications, ACDI/VOCA

Editor’s note: Since 1980, ACDI/VOCA has worked in Egypt to stimulate long-term growth by

improving agricultural technologies and market information, supporting microenterprises and

increasing access to credit and financial services.

A public-private collaboration of USAID, Heinz

International, ACDI/VOCA and 13 Egyptian tomatoprocessing companies has more than doubled Egypt’s

growing season for processing tomatoes. The effort has

made the country a net exporter of tomato paste and

established strong business relationships between processors and

smallholder producers’ associations.

30 March/April 2014 / Rural Cooperatives
The Agribusiness Linkages Global Development Alliance

— a USAID-funded public-private partnership designed to

strengthen process-tomato production and value-added

horticulture in Egypt — ended last July, having surpassed

nearly all of its original program goals. These

accomplishments were made even though there was a

program redesign, the invasion of a new and devastating

tomato pest and changes in the government.

Implemented by ACDI/VOCA, the project improved the

capacity of smallholder producers’ associations to provide a

large, consistent quantity of process tomatoes (tomatoes

grown for processing) to Heinz International and 13

domestic processors who became buyers and signatories to

forward contracts with tomato growers.

Better varieties and farming practices

The project, which ran for 51⁄2 years, aimed to boost

production of processing tomatoes, to introduce tomato

varieties that were better suited for processing, and to extend

Egypt’s growing season nationwide for tomatoes and other

high-value horticultural crops.

When the program began, the country had plenty of

production capacity. Tomatoes are grown on more than

200,000 hectares in Egypt. But most producers were growing

table tomatoes, which do not transport well and contain too

much water to be used for tomato paste and other processed

products.

ACDI/VOCA worked with producers’ associations to

introduce new high-yielding tomato varieties and other crops

Rural Cooperatives / March/April 2014 31

The tomato project helped farmers schedule their production cycles to take advantage of climatic variations between northern and southern Egypt,

thereby extending the growing season from 100 days to 250 days per year.
32 March/April 2014 / Rural Cooperatives

grown in rotation. It also helped

integrate technology into their

operations and to use better farming

practices, such as improved irrigation

methods and post-harvest handling.

The program also helped farmers

schedule their production cycles to take

advantage of climatic variations between

the northern and southern regions of

Egypt, thereby extending the growing

season from 100 days to 250 days per

year. The project operated in Luxor and

the governorates of Qena, Sohag and

Aswan in southern Egypt, and Nubaria

in northern Egypt.

As a result of this program, average

tomato yields doubled from 15 metric

tons per feddan (roughly equivalent to

an acre) to 30 metric tons. Many

farmers tripled, some even quadrupled,

their yields, producing from 40 to 70

metric tons per feddan.

“We turned Egypt into a net

exporter of tomato paste just by

introducing proper varieties,” says

Douglas Anderson, ACDI/VOCA’s

regional representative in the Middle

East and North Africa, who was the

initial leader of the program.

Trust created between

farmers, processors

To absorb the increased production

of tomatoes, the number of processors

in the country grew from nine

processors with a daily capacity of 2,460

metric tons to 19 processors with a

daily capacity of 8,690 metric tons.

ACDI/VOCA convinced the

processors to do business with

producers’ associations rather than

individual farmers. This reassured the

processors that they could get a

consistent and reliable supply. The

project built trust and educated

producers and processors alike on the

benefits of forward contracting. These

benefits include managing risk,

guaranteeing inputs for both sides, and

covering production costs by

contracting a percentage of the

expected yield.

“Domestic processors used to run

the other way because they thought

they had to deal with individual

farmers. We showed them how to work

with the associations,” says Anderson.

Under forward contracts, the

tomato-growers’ associations generally

committed to supplying the processors

with at least 30 percent of their total

production of process tomatoes. They

could then sell the rest of their crop in

local markets to take advantage of any

increase in the price of tomatoes, which

has been historically quite volatile in

Egypt.

The total net return per feddan of

tomatoes increased from $170 in 2007

to more than $3,000 during the winter

2011/2012 season. The return was

nearly $1,200 during the summer 2012

season (the large difference is a result of

the wide divergence in tomato prices

between the two seasons).

Alternate crops were also important

to the project's success. The program

selected rotational crops that could be

alternated with tomatoes but that still

offer a high return on investment.

While growing tomatoes under forward

contract enabled smallholder farmers to

stabilize their income, growing highvalue horticultural crops — such as

cauliflower, artichokes, sugar beets,

sesame and sweet corn for the

individually, quick-frozen export

markets and high-end local markets —

increased their marketing opportunities

and income potential.

Looking to the future

The Egyptian revolution of January

2011 and the invasion of the tuta

absoluta (tomato leafminer) pest

severely impacted yields and farmers’

ability to deliver their crops. Currently,

almost half of the country’s processing

companies are either not working or are

working at less than capacity.

Producers in Upper Egypt who

previously grew processing tomatoes

have switched to dual-purpose tomatoes

and are concentrating on sun drying the

crop. But in Lower Egypt, producers

continue to grow processing tomatoes

and those processors that had wellestablished trade channels are reporting

historically high export sales for the

coming season.

One thing is clear: Over the course

of the project, the associations and

processors came to recognize the

benefits of forward contracting to better

manage risk and to guarantee income

and inputs for both sides. Every season

that they returned to the negotiation

table, their relationships grew stronger.

Despite all the obstacles, commerce

goes on — farmers are growing and

processors are processing.

“We demonstrated that [Egypt] has

the longest pipeline of raw materials in

the world. That translates into

continuous processing capacity, which

mitigates [the need and expense of]

holding inventory,” says Anderson. “So

they can compete very well. I remain

convinced that Egypt has the potential

to be a major player in the global

tomato paste business.” n

After meeting contractual obligations to

processors, growers can sell the rest of their

crop in local markets.
Dairylea members

approve DFA merger

Members of Dairylea Cooperative

Inc., Syracuse, N.Y., in February

approved a merger with Dairy Farmers

of America (DFA). The merger

becomes official on April 1, 2014, and

combines Dairylea’s 1,200 members in

the Northeast with DFA’s 13,000 dairy

farmer members nationwide.

The cooperatives have enjoyed a

successful working relationship since

DFA was formed in 1998. Working

together, Dairylea and DFA have

created efficiencies in milk assembly,

transportation and marketing, as well as

joint management of Farm Services and

membership operations in the

Northeast.

“In many ways, it will just be

business as usual as we expand upon the

working relationship DFA and Dairylea

have established over the past 15 years,”

says Rick Smith, DFA president and

chief executive officer.

Greg Wickham, Dairylea’s CEO,

said the merger brings brands, plants

and end products back to Dairylea

members while maintaining the values,

strategic goals and vision of Dairylea.

“This merger makes sense, because

DFA and Dairylea share strategic goals,

our values align, our missions are

similar and our vision is the same,”

Wickham said. Although a national

cooperative, he noted that DFA’s

“grassroots structure” ensures the

cooperative’s Northeast Area Council

will maintain local governance familiar

to Dairylea members.

Dairylea’s nearly 300 employees will

become employees of DFA and

continue to provide service to

Northeast dairy farms out of the offices

currently shared by both cooperatives in

Syracuse.

In other news, family-owned

Oakhurst Dairy, in Portland, Maine, has

been acquired by DFA. The operation

will continue to source milk from the

70 Maine farmers who currently supply

Oakhurst Dairy. Milk products will still

be processed and bottled in Portland,

according to a report in the Press Herald

newspaper.

Officials say the existing 200

employees will keep their jobs.

Oakhurst has annual sales of about $110

million on a product line that includes

milk, sour cream, cottage cheese, juices,

egg nog, butter and buttermilk.

Organic Valley sales

hit $928 million

Even a fire that burned down half of

its headquarters in La Farge, Wis., last

Rural Cooperatives / March/April 2014 33

Newsline

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

Co-op developments, coast to coast

Organic Valley members saw their co-op’s sales climb 8 percent in 2013, aided by resourceful

employees who kept the business rolling despite a fire that destroyed much of its headquarters.

Photo courtesy Organic Valley
34 March/April 2014 / Rural Cooperatives

spring couldn’t halt the growth of

Organic Valley in 2013. The nation’s

largest cooperative of organic farmers

ended its 25th year with $928 million in

sales, up 8 percent from $857 million in

2012.

“2013 had its challenges,” says

George Siemon, CEO (or “C-E-I-E-IO,” as he refers to himself) and

founding farmer of Organic Valley.

“Our cooperative spirit is what has

always helped us overcome challenges.

In some ways, it was fitting that we

tapped into our cooperative spirit more

than ever in our 25th anniversary year.”

The fire last May displaced 600

employees, but no one was harmed.

“Thanks to an outpouring of support

from neighbors far and wide, Organic

Valley was back in business the next day

fulfilling orders,” Siemon noted. “We

are incredibly thankful to the

community members, volunteer

firefighters and emergency personnel

for their heroic efforts and on-going

support.”

The rebuild of the headquarters’

central section was more than 90

percent complete in February, and the

remaining west section was on schedule

to be completed by second quarter of

2014.

Organic Valley remains committed

to supporting key national causes, local

organizations, schools, farmers and

friends, making more than $2.6 million

in donations in 2013, up from $2.2

million in 2012. Organizations

benefitting include: Organic Seed

Alliance, Seed Matters, Rodale Institute

and the Environmental Working

Group.

The co-op will be adding 56 new

jobs this year, while membership grew

by 10 farmers in 2013.

After fruits and vegetables, dairy

products were the largest category of

the $29 billion organic food sector,

according to the Organic Trade

Association’s 2013 Organic Industry

Survey. Organic milk and cream sales

were worth $2.6 billion, the survey

found. Sales of whole, organic milk

were up 10 percent in 2013.

Co-op leaders hailed the results of a

related study, conducted by Washington

State University, which found that

organic milk contains significantly

higher concentrations of heart-healthy

fatty acids.

Organic Valley farmer-owners

installed seven on-farm renewable

energy projects in five states during

2013. These projects produce about

200,000 kWh of clean energy annually.

Organic Valley also installed a 5,000-

gallon biodiesel fueling station near its

headquarters for use of its local vehicle

fleet.

CHS earns $992.4 million

on record $44.5 billion sales

Strong earnings on energy sales

helped CHS Inc. earn $992.4 million

for 2013, its second-highest net income

on record, even though down from the

record-breaking $1.26 billion earnings

posted for 2012. The gains from energy

sales helped to offset an otherwise

“challenging year in global agriculture,”

the nation’s largest co-op said in

announcing its 2013 financial

performance.

CHS’ $44.5 billion in revenue for

fiscal 2013 was a record, and an increase

of 10 percent over $40.6 billion in

2012, the previous record. Fiscal 2013

was the co-op’s third consecutive year

of record revenues. The increase was

primarily attributed to higher sales

volumes within the company’s energy

and agriculture segments. Average

selling prices increased for grain and

oilseed products but declined overall in

the energy segment.

“Fiscal 2013 was a challenging year

for agriculture, but, once again, the

strength of our diverse business

portfolio, along with a strong domestic

and global footprint, combined to

deliver economic value for the U.S.

farmers, ranchers and cooperatives who

own us,” says Carl Casale, president and

CEO of CHS, a grain, energy and

foods cooperative. “Performance for

fiscal 2013, combined with several

consecutive years of strong earnings,

enabled CHS to invest in growing our

business, to maintain a strong balance

sheet and — most important — to

return direct economic value to our

owners.”

In fiscal 2013, based on record fiscal

2012 earnings, CHS returned “a

landmark $598.9 million in cash

patronage, equity redemptions and

dividends on preferred stock to its

owners.” Based on 2013 earnings, CHS

expects to return an estimated $433

million in cash to its owners in fiscal

Energy sales helped boost income for CHS Inc. during an otherwise “challenging year.” Photo

courtesy CHS
Rural Cooperatives / March/April 2014 35

“Strengthen Your Skills

in the Steel City” is the

theme for the Cooperative

Communicators Assoc.

annual institute at the

Wyndham Grand Hotel in

downtown Pittsburgh, Pa.,

May 31-June 3. Session

topics cover the full gamut

of skills, technologies and

issues that co-op

communicators need to

master in order to

effectively present their

co-ops to their members and the

public.

Owen Roberts, prize-winning

agricultural journalist and a faculty

member at the University of Guelph in

Canada, will open the conference with

his insight about the “communications

skills that can help you bridge the gap

of unknown waters of the current

communications environment.”

Understanding the perspective of

reporters, editors and others in the

media is essential for co-ops in getting

their messages out, and Roberts will

provide an insider’s view into how to

better understand and deal with media

“gatekeepers.”

Other sessions include: maximizing

your co-op’s Internet presence through

search engine optimization; taking

quality photos with I-phones; writing

effective columns; advertising

strategies; blogging tips; Photoshop

do’s and don’ts, and how to better

communicate “the co-op difference”

— those unique aspects of

cooperatives that make them so well

suited to meeting member needs —

among other sessions.

Back by popular demand will be the

roundtable discussion forums, during

which small groups of attendees shift

among various “topic tables” to share

their experiences (including successes

and failures) in a number of key areas.

Table topics will include: getting results

with press releases; using member

surveys and focus groups to identify

member needs; developing an annual

communications plan and budget;

dodging the perils and pitfalls of social

media, and how to tailor CCA programs

to better meet member needs.

Winners in CCA’s annual co-op

communications contest will be

recognized at the awards banquet,

during which valuable insight from

contest judges will be shared as

winning entries are projected. For more

details about the program and

conference, including registration and

hotel information, visit: www.

communicators.coop, or call conference co-chairs Raechel Sattazahn or

Alexa Stoner at (717) 796-9372.

For 61 years, CCA has been

dedicated to the concept

that strong

communications

programs are essential

for the continued success

of cooperatives; the

annual institute is at the

heart of the effort. The

conference not only

provides invaluable

training, but is a chance

to network with other coop communicators who

deal with similar

challenges. “We share knowledge with

each other so that we don’t all feel like

we must constantly reinvent the wheel

for every task we face,” says CCA

President K.D. Bryant-Graham. “We

practice the co-op ideal of cooperation

among cooperatives.”

In its early years, CCA members

were virtually all from farm or ag

financial co-ops. But today, the

members come from the entire

spectrum of co-ops in North America,

including utility, credit, food store,

housing and other consumer co-ops, in

addition to farm and ag financial coops.

“Many co-ops don’t have a

communications specialist on staff, so

they assign communications to a

management staff, or support staff,

member, who likely will have other

duties,” Graham says. “We are

sometimes asked if they too can attend

the institute. The answer is, yes! They

should reap a great deal of benefit

from attending, as will anyone involved

with a co-op.”

“There will be networking and

learning opportunities unlimited!” adds

Stoner. n

Co-op communicators to meet in Pittsburgh, May 31-June 3

“Networking and learning opportunities unlimited!”

The Steel City will host the Cooperative

Communicators Assoc. annual meeting

this spring, where participants will gain

skills and abilities that even the Man of

Steel (mascot of the event) would envy!
36 March/April 2014 / Rural Cooperatives

2014. That will bring cash returns

generated by earnings in fiscal years

2009 through 2013 to an estimated $1.9

billion.

The severe drought that affected

U.S. crops in 2012 resulted in reduced

export margins for CHS grain

marketing and contributed to an

earnings decline of 39 percent from

fiscal 2012 for the company’s ag

segment. The CHS wholesale crop

nutrients business also reported lower

earnings, primarily due to lower

product margins and costs associated

with a feasibility study under way on a

proposed nitrogen fertilizer

manufacturing plant.

The CHS Country Operations

business — primarily local retail

operations — also experienced

decreased grain margins in fiscal 2013.

But overall, it reported one of its best

years on record. CHS processing and

food ingredients business also reported

lower earnings.

Combined earnings for CHS’

insurance, risk-management and

financing businesses were flat in fiscal

2013, compared with 2012. Earnings

increased from the co-op’s 50-percent

ownership of Ventura Foods LLC, a

vegetable oil-based food manufacturing

business, and its 24 percent share of

Horizon Milling LLC, the nation’s

leading wheat miller. Both joint

ventures reported earnings increases in

fiscal 2013 vs. 2012.

Aurora Co-op, CHS building

shuttle loader in Nebraska

Aurora Cooperative and CHS Inc.

have announced a joint plan to build a

high-speed grain shuttle loader near

Superior, Neb. The two co-ops have

formed Superior East LLC to operate

the facility, which will take about 12

months to build. The facility will have a

1.25- million bushel storage capacity

and a 120-car capacity circle track on

the BNSF rail line.

The facility will move corn, soybeans

and hard red winter wheat to markets in

the West and South, including Mexico.

The location will also provide a grain

ground-piling system, as well as 10,000-

ton liquid fertilizer storage.

Superior East is a 50/50 joint

venture, with a governing board

comprised of representatives from both

CHS and the Aurora Cooperative. The

multiplex will be operated by the

Aurora Cooperative.

Superior East LLC was formed

under the recently introduced CHS

Partnered Equity Program. This firstof-its-kind program allows CHS owners

to unlock a portion of their equity in

CHS to provide capital for an

expansion project. Cooperatives

participating in the program can use a

portion of their CHS equity as a

contribution to a venture with CHS

focused on helping their cooperative

grow. Eligible projects include shuttle

loaders, fertilizer hub plants, energy

assets and other growth opportunities.

“By using a portion of our CHS

equity along with additional CHS

capital to build a next-generation ag

multiplex, we will be able to provide the

Aurora Cooperative farmer owners in

southern Nebraska and northern

Kansas additional access to world grain

and fertilizer markets via the BNSF rail

system,” says George Hohwieler,

Aurora Cooperative president and

CEO.

“The goal of the program is to help

our owners grow by providing strong

cooperatives like Aurora the

opportunity to unlock a portion of their

equity in CHS for projects that directly

serve their farmer-owners,” adds

Lynden Johnson, business solutions

executive vice president at CHS.

In other news, Aurora Cooperative

reported sales and other income of $1.1

billion for fiscal 2013. Total earnings

reached $29 million and farmer-owner

equity in the co-op grew to $159

million. All these numbers are records,

or near-records, the company

After a nationwide vote, a new

cartoon character helping to build

awareness of the advantages of real

dairy foods has a name: DairyUS.

The National Milk Producers

Federation (NMPF) announced the

winning entry in its name contest

during its annual meeting in

November.

The animated character, modeled

after the iconic REAL® Seal logo,

will help a new generation of

consumers identify genuine U.S.

dairy products. A video announcing

the name is on the REAL® Seal

website homepage.

NMPF, which represents

cooperatives that produce the

majority of the U.S. milk supply,

designed the cartoon character

after assuming management of the

REAL® Seal last year. The new

animated icon is part of an effort to

revitalize the seal, which was

created in the 1970s and is already

used on more than 10,000 food

products. n

And the Real Winner is: DairyUS!
Rural Cooperatives / March/April 2014 37

announced. Payments to farmer-owners

will exceed $2.5 million in patronage

and tax-free equity revolvement.

Just 11 years ago, the co-op’s sales

were only about $200 million, Board

Chairman Bill Schuster said at the coop’s annual meeting. That rapid growth

necessitated spending $11 million for a

new corporate headquarters. The

company employs 650 people at 72

facilities in Nebraska, Kansas, South

Dakota and across the country.

Fenner to succeed

Taylor at MFA Oil

Jerry Taylor, president and CEO of

MFA Oil, Columbia, Mo., will retire

Aug. 31, although he will remain with

the co-op to lead MFA Oil’s

investments in MFA Oil Biomass,

AgFuel Energy Systems and

WasteWater Logic. Mark Fenner,

currently the co-op’s chief operating

officer, will assume the role of president

and CEO on Sept. 1. The farmerowned cooperative, owned by more

than 40,000 member-producers, had

sales of $1.3 billion in 2013.

Taylor, who has been the company’s

president and CEO since 2003, started

working with MFA Oil in 1982 as a

consultant, having developed a chain of

convenience stores. In 1988, Taylor

became an employee when he was

named director of marketing. In 1991,

Taylor was named vice president of

sales and other vice president-level

posts followed.

Taylor serves on the boards of the

MFA and MFA Oil Foundations. He

also serves on the board of the National

Cooperative Refinery Association and

Mid America Biodiesel, in which MFA

Oil has an ownership stake.

Fenner was selected as the next

CEO, supported by Taylor’s strong

recommendation. Fenner joined MFA

Oil in 2012 as a chief operating officer

and has been responsible for overseeing

the day-to-day operations of the refined

fuel, propane, Petro-Card 24, American

Petroleum Marketers, Break Time and

Jiffy Lube operations.

Since Fenner joined MFA Oil, much

of his focus has been on the growth of

company operations. During the last 18

months, MFA Oil has added more than

$100 million in sales through

acquisitions and has expanded the coop’s “footprint” into Nebraska, North

Carolina, Wyoming and Virginia.

Prior to joining MFA Oil, Fenner

served as the national account director

for the south region for Cenex Harvest

States (CHS), which generated more

than $8 billion in revenue. Before that,

Fenner worked for Country Energy

LLC and Farmland Industries in

various leadership and sales capacities.

Fenner earned a BS in Agricultural

Economics from the University of

Missouri-Columbia in 1985.

“Mark has a long history of building

sales for cooperatives in the energy

field,” says Taylor. “His knowledge,

industry experience and leadership will

continue to be a great asset to MFA Oil.

His decisive leadership, personal style

and experience uniquely qualify him to

step into this role in September.”

NCB commits $379 million to

serve low-income communities

National Cooperative Bank (NCB), a

leading financial services company

dedicated to providing banking

products to cooperatives nationwide,

committed $379 million to initiatives

serving low- and moderate-income

communities during 2013. The

resources were deployed in the

following sectors:

• Housing — $258.7 million for

housing cooperatives, mortgages, coop share loans and affordable housing

initiatives nationwide.

• Business cooperatives — $37.3

million to support independent

business owners.

• Healthcare — $14.5 million to

preserve and expand affordable

healthcare.

• Community development and

expansion — $43.1 million to finance

community organizations focused on

economic development.

• Small business — $8 million to

support small businesses, including

participation in the U.S. Small

Business Administration loan

program.

• Investments and Grants — $1.8

million to support entities serving

low- to moderate- income

communities.

• Renewable Energy — $15.6 million

to fund solar energy system serving

low- to moderate-income

communities.

“In 2013, we set new records in

lending activity to low- and moderateincome communities and are proud to

have expanded our support of new

cooperative development by $17

million, a 64-percent increase from the

previous year,” says Charles E. Snyder,

NCB president and CEO. “As a

mission-focused institution, we have an

uncommon mandate to ensure our

efforts benefit those most in need, and

we’re committed to dedicating even

more resources to these communities

and cooperative expansion initiatives in

the coming year.”

Brenner new CEO of

Countryside Co-op

Frank Brenner has been named as

the new CEO of Countryside

Cooperative, Durand, Wis., effective

May 12. Brenner has been serving as

CEO/general manager of the Central

Wisconsin Cooperative in Stratford.

Fenner Taylor
38 March/April 2014 / Rural Cooperatives

That co-op’s products and services are

similar to those of Countryside

Cooperative, including: animal feed

production, grain marketing, agronomy,

bulk fuels and propane, convenience

store, tire center and country store.

Brenner graduated from the

University of Wisconsin-Stout with a

major in business administration and a

minor in marketing. In 1982, he

became a sales consultant for the

Stratford Farmers Cooperative,

focusing on feed, agronomy and

petroleum. In 1985, he became the

office, credit and operation manager,

which he held until becoming the

assistant manager in 1990, rising to

general manager in 1993.

“Frank is an industry leader, focused

on providing real value for our

members and promoting our excellent

team of employees,” says Countryside

Cooperative Vice President John

Creaser, who chaired the recruitment

process. Brenner was born in Durand,

graduated from the Mondovi High

School and says he is “extremely happy

to return to his roots.”

Land O’Lakes’ record year

yields 30 percent boost

in cash to members

Land O’Lakes Inc. had record

annual sales of $14.2 billion in 2013, up

4.4 percent from the prior year, as well

as record net earnings of almost $306

million, a 27-percent increase over the

prior year. The strong 2013 results

continue a trend of significant growth

during which the farmer-owned food

and agriculture cooperative has more

than doubled annual sales and grown

net earnings by more than 330 percent

over the last seven years.

“The record-setting year in Dairy

Foods combined with the continued

strong performance of WinField

exemplify our commitment to

delivering the products, programs and

services that provide the greatest value

for our customers and members alike,”

says co-op president and CEO Chris

Policinski.

A record return of $147 million to

members will be made to members,

representing a 30 percent increase in

patronage compared to 2012. This is

the fifth consecutive year that cash to

members has exceeded $100 million,

bringing the seven-year total to more

than $750 million.

A number of strong performances

across Land O’Lakes’ core businesses

drove the favorable year-end results

including:

• Dairy Foods — There was 101

percent growth in pretax earnings;

• Crop Inputs — Greater than $200

million in pretax earnings were

achieved for the second consecutive

year, and

• Feed — Sales increased 12 percent in

feed for “companion animals,” and

grew by $25 million for “lifestyle

feed,” compared to 2012.

“Our strategic direction is clear:

deliver strong financial performance

while continuing to enhance our

capabilities for future growth,”

Policinski says. “We will continue to

make strategic investments in our core

businesses — from agriculture to animal

nutrition to the dairy case.”

Polidoro succeeds

Leonard at ACDI/VOCA

Bill Polidoro was named in January

as the new president and CEO of

ACDI/VOCA, a nonprofit international

development organization that

currently has about 60 projects in 30

countries. He succeeds Carl Leonard.

Polidoro joined ACDI/VOCA in

2005 as senior vice president for special

projects, rising to chief operating officer

in 2006. Prior to that, he worked for

Pact Inc., an economic development

organization with projects in 30

countries, where he served as director

for the Africa region.

“Bill’s in-depth knowledge of our

organization, proven track record and

profound understanding of the

competitive environment will be of

tremendous value as ACDI/VOCA

builds upon its success in recent years,”

says ACDI/VOCA Board Chairman

Mortimer Neufville.

The ACDI/VOCA board of

directors expressed gratitude to

Leonard for his leadership the past 81⁄2

years. “Carl has been an outstanding

leader of ACDI/VOCA, seeing the

organization through challenging

transitions, but also through a

remarkable period of growth,” says

Neufville.

Polidoro earned his doctorate in

development anthropology at the

American University, in Washington,

D.C. He worked in Guinea for USAID

as a personal services contractor,

managing an integrated natural

resource management (NRM) program.

Subsequent assignments — with Pact,

Datex and Development Assistance

Corporation — included strengthening

public administration, agricultural

marketing, NRM and environment

programs, and livelihoods and civil

society development, including

community responses to HIV/AIDS.

ACDI/VOCA has also announced

the appointment of Drew Luten as

senior vice president for global risk

management. Luten spent more than 20

The Dairy Foods division of Land O’ Lakes

enjoyed a 101-percent jump in pretax

earnings in 2013.
years with the United States Agency for

International Development (USAID),

where he led the Bureau for

Management, which was responsible

for world-wide agency management,

information technology and

procurement systems, staff and

operations. He also led USAID’s

Bureau for Europe and Eurasia,

supporting economic, governance and

social transition in 23 countries in

Europe and the former Soviet Union.

Luten is a graduate of Harvard Law

School and William Jewell College. He

began his career in private practice with

a major U.S. law firm.

Frontier Cooperative,

Husker Co-op merge

Two Nebraska farmer cooperatives

— Frontier Cooperative Co. in

Brainard and Husker Co-op in

Columbus — have merged. They will

now operate as Frontier Cooperative

Co. Ballots were cast in September,

with 530 Husker members (44 percent

of the total membership) voting in

favor of the merger, while 120 voted

against it.

The merger was bolstered by desires

to “maintain pace with customers’

changing demands for quality products,

services, resources and facilities,” co-op

leaders say. The consolidation of the

co-ops will help improve and expand

services in order to meet the present

and future needs of producers. The coops had 1,300 patrons in common,

which made the merger “an even better

fit.”

The co-op is currently expanding its

grain elevator at Osceola, and there are

plans for further expansion and

upgrades, including an agronomy

expansion in North Bend and grain

expansion in Silver Creek. Following

the merger, Frontier Co-op will

operate in 22 locations serving eastcentral Nebraska.

Leslie Mead to lead CDF

The Cooperative Development

Foundation (CDF) has named Leslie S.

Mead as executive director. Mead has

Rural Cooperatives / March/April 2014 39

For his efforts to boost U.S. dairy

exports and his other work to promote

dairy products, Elwood Kirkpatrick,

former president of the Michigan Milk

Producers Assoc. (MMPA), has been

presented with the Richard E. Lyng

award by the National Dairy Promotion

and Research Board (NDB).

Kirkpatrick was a driving force

behind the creation of the U.S. Dairy

Export Council (USDEC), serving as its

first chairman. USDEC has been a vital

component in the growth of U.S. dairy

exports from 3 percent to 15 percent of

annual U.S. dairy sales. Kirkpatrick was also recognized for the major role

he played in the formation of Dairy Management Inc. (DMI) and

Cooperatives Working Together (CWT).

The Lyng Award honors dairy industry leaders who have made a

significant contribution to dairy promotion for the benefit of the entire

industry. The award is named for former U.S. Agriculture Secretary Richard

E. Lyng, who played a key role in implementing policies that led to the

establishment of the NDB 30 years ago.

“Elwood Kirkpatrick served the dairy industry for nearly 30 years, playing

an instrumental role in domestic and international dairy marketing,” says

Steve Maddox, California dairy producer and outgoing NDB chairman.

“Elwood’s contributions brought efficiencies to producer investments in

promotion and found new markets for our products that are still making a

difference today.”

Kirkpatrick was president of MMPA from 1981 to 2007 and served on the

executive committee of the National Milk Producers Federation (NMPF) for

23 years, including as vice president from 1983-2003.

In the late 1980s, he helped lead the charge to unify the promotion and

marketing efforts of the U.S. dairy industry, bringing together the activities of

the United Dairy Industry Association and the National Dairy Board through

the formation of Dairy Management Inc. This saved American dairy farmers

millions of dollars and created a more effective national dairy promotion

program. Through his leadership role at NMPF, Kirkpatrick helped build the

framework for the Cooperatives Working Together (CWT) program, which

also promotes dairy exports.

“It wasn’t always easy to convince people to join USDEC,” Kirkpatrick

says. “At the time, surplus products were going to the government so not

everyone believed we needed to build exports. It took a lot of meetings and

a lot of conversations, but we got it done.”

Since retiring as MMPA president in 2007, Kirkpatrick and his wife,

Michelle, moved back to their home farm in Kinde, Mich. As part of the Lyng

Award, NDB will contribute $2,500 to the Elwood Kirkpatrick Dairy Science

Research Fund at Michigan State University. n

Kirkpatrick saluted for dairy vision

Elwood Kirkpatrick
40 March/April 2014 / Rural Cooperatives

30 years of experience with cooperative

organizations, most recently serving as

president of The Cooperative

Foundation, a private foundation based

in St. Paul, Minn.

Through her leadership, The

Cooperative Foundation was an early

supporter in the emerging worker

cooperative field. The Cooperative

Foundation is also the primary funder

of the National Cooperative Education

Inventory and Needs Assessment being

conducted by Southern New

Hampshire University.

“Leslie’s experience with

foundations, nonprofit boards and the

cooperative community is a perfect

match for the needs of the Cooperative

Development Foundation,” says CDF

Board Chair Gap Kovach. “We are very

fortunate to have someone with her

experience and skill set to lead the work

of CDF.”

Mead began her career with the

National Council of Farmer

Cooperatives, rising from assistant

general counsel to the positions of vice

president for legal, tax and accounting

policy and vice president for

education. She also served as the

executive administrator of the

Association of Cooperative Educators,

an international organization of

cooperative educators and developers.

She holds a Bachelor of Arts degree

in journalism from Drake University in

Des Moines, Iowa, and law degree from

Indiana University School of LawBloomington.

CDF’s mission is to promote

community, economic and social

development through cooperative

enterprises. For more information, visit:

www.cdf.coop.

In other CDF news, the board has

approved a disaster grant of $5,000 to

help Co-op Natural Foods, Sioux Falls,

S.D., recover from fire damage.

CDI expands product portfolio

Building upon a successful powdered

milk and butter export business,

California Dairies Inc. (CDI) has

diversified its butterfat offerings with

the addition of anhydrous milkfat

(AMF) for export. CDI says this move

demonstrates the co-op’s progress in

achieving its vision to become the

leading source of dairy nutrition for a

healthy world.

AMF is 99.8 percent pure butter oil.

Packaged for commercial use as a food

ingredient, AMF has an extended shelf

life and is an excellent form for storage

and transportation of butterfat. CDI,

headquartered in Visalia, Calif., is the

second largest dairy processing

cooperative in the nation.

“Expanding CDI’s product portfolio

to include AMF is a natural fit and

increases our presence in the global

marketplace,” says CEO Andrei

Mikhalevsky.

In other CDI news:

• The co-op will increase its processing

capacity with the addition of a third

evaporator at its Visalia plant. The

largest capital project undertaken

since the Visalia plant was built in

2007, the new evaporator will increase

CDI’s ability to meet tight export

specifications on value-added milk

powders.

• David Camp has been named as

senior vice president and chief

financial officer (CFO). Camp, a

certified public accountant, joins CDI

with nearly 25 years of leadership

experience as a CFO and controller.

He was most recently with Roll

Global LLC, a globally integrated

private farming and consumerpackaged-goods enterprise, where he

was the vice president and group

controller. Camp has a BS in

accounting and finance from the

University of Cincinnati.

Record sales, patronage

for United Farmers

During its annual meeting in York,

Neb., United Farmers Cooperative

(UDC) announced that it had record

sales of $708.7 million in 2013. Board

Chairman Doug Moon reported that

the co-op had profits over $14 million

for the fiscal year that ended July 31.

CEO Carl Dickinson said the

cooperative’s continued focus on being

early adopters of emerging technologies

will deliver improved efficiencies and

greater profits to its producer owners in

the immediate future. “Your cooperative

has generated value creation of more

than $50 million over the past four

years in the form of cash returned to

members and increased net worth,”

Dickinson said. He noted that the coop had total patronage dividends of

$6.6 million in 2013, “of which $3.7

million (56 percent) is being distributed

to our members in cash. Total cash

returned to the members this year is a

record $6.2 million.”

The net worth of the co-op

increased to $83 million, “with more

than $33 million in working capital

available to assure efficient operations,

invest in equipment and facilities, plus

respond to new opportunities as they

arise in the marketplace.”

United Farmers Cooperative,

headquartered in York, currently

operates in 32 locations across central

Nebraska and northern Kansas. UFC

was established in 2001 and offers a full

range of services in agronomy, energy,

feed and grain. For more information,

visit: www.ufcoop. com. n

Barrels of anhydrous milkfat are prepared for

shipment at a California Dairies Inc. (CDI)

processing plant. Photo courtesy CDI
Rural Cooperatives / March/April 2014 41

in rural areas, the U.S. Census Bureau

currently does not capture information

on all types of cooperative businesses.

The Farm Bill provides support for

the collection of this information by

reauthorizing the cooperative research

program that is currently underway at

the University of Wisconsin Center for

Cooperatives, where researchers are

focused on the economic effects of

cooperatives. The continued efforts by

the center, combined with the role of

the interagency working group, will

certainly further the progress of

achieving this important research need.

While it took some time to get

passed, the cooperative sector should be

excited about the development

programs and opportunities that were

outlined in the Farm Bill. With

cooperation between the federal

government and the cooperative

community, and Congressional funding,

the future looks bright for the

advancement of cooperatives. n

Commentary

continued from page 2

technology inasmuch as the rates of

return on those investments are

correspondingly higher.

From the co-op’s perspective, the

one who holds the data and can use it to

produce valuable, effective crop plans

will own the customer relationship.

Many co-ops view these agronomic

recommendations as the most

important service that they can provide

to their member growers.

Looking forward

Precision agriculture is helping

producers to become better, more

efficient farmers. Going forward, as

agricultural markets transition to a

“new normal” with lower commodity

prices, growers will have to become

more efficient in order to protect their

margins. Precision agriculture will help

them to do so, and the new precision

technology and innovative agronomic

practices will be adopted by more and

more growers who already have the

supporting equipment on hand.

At the same time, the accelerating

pace and breadth of adoption of

precision agriculture have the potential

to transform the supply chains for the

full gamut of crop inputs, including

seed, fertilizer, chemicals, etc. The

supply chains connecting

manufacturing, distribution, retailing

and applications could realign

dramatically, both within and across the

input channels that currently operate.

And herein lies one of the biggest

potential uses and benefits of “big data”

within the agricultural sector.

Precision agriculture will also begin

to play an increasingly important role in

the assessment of sustainability and

traceability. Growing concerns about

the safety of the nation’s food supply

and the sustainability of its natural

resource base will be increasingly

interrelated with precision agriculture

and its ability to provide hard data to

address the issues of traceability and

sustainability. In the process, the related

issues of data ownership and access will

also grow in intensity. n

The Precision Decision

continued from page 10

He used his 5-percent-interest

Weatherization Loan to purchase

insulation for his walls and ceilings. By

the time it was installed, he says he

could already see a reduction in his next

electric bill. “Every little bit helps

during these times, doesn’t it?” he says.

The program also benefits members

as they make upgrades to their homes

with modern, more energy-efficient

equipment. Beyond that, members’

savings continue for the life of the

energy efficiency improvement, perhaps

10 to 20 years, or even more. A retired

airline pilot in Brunswick County

replaced his inefficient heat pump in his

2,450-square-foot home. He says the

energy savings he now sees on his bill

are often enough to cover the monthly

loan payment. Other project options he

had considered were duct repair or new

thermal windows and doors. “But the

next Weatherization Loan we take out

will likely be for a new solar water

heater,” he adds.

Justin Fulford, of Al Fulford Heating

& Cooling in Supply, N.C., says his

company has seen a steady stream of

improvement projects like these that

help keep his employees busy year

round. Projects such as new energyefficient heat pumps and electric or

solar water heaters are the most

popular. Fulford will routinely ask

customers if they are members of the

cooperative. “I tell them, if you’re a

member of BEMC, then you’ve got

access to a low-interest loan from the

co-op. It’s a win-win situation.”

Helping to improve the lives of those

they serve comes full circle at

Brunswick EMC. For the co-op, the

energy efficiency savings translate to

reduced load and ultimate savings for

all members. With both the

opportunity to make more loans to

members and to help create and keep

jobs in the community, the ripple effect

of the Weatherization Loan program

only adds to the value and benefit of

being a co-op member. n

Utility Co-op Connection

continued from page 11
42 January/February 2014 / Rural Cooperatives
Rural Cooperatives / January/February 2014 43
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