Rural

COOPERA COOPERATIVES

Livestock co-ops:

Meet the new

kids on the block

Livestock co-ops:

Meet the new

kids on the block

USDA / Rural Development May/June 2003
2 May/June 2003 / Rural Cooperatives

At times, it’s worth reflecting

upon what we in the cooperative

business are really all about. We

work hard in our daily lives—in

the fields, in the shops, in the

offices, en route to the next producer meeting—and may not

spend much time thinking about

what all this good effort is about.

We don’t take the time to ask

the basic question, “Why cooperatives?” But we should.

Cooperatives are all about

people—people doing good

work to benefit themselves. But

even more basic, it’s people

working with other people to

make themselves better off. It’s

people recognizing that together

they can do more than they can

do by themselves. Call it synergy; call it teamwork; call it selfhelp. However you describe it, it

is through the miracle of cooperation that people can make less

into more. It’s people recognizing that, for those willing to

share the pie, the pie just keeps

getting bigger. 

We cooperate. We work

together. We share common

goals and aspirations. And we

take matters into our own hands

to fulfill those aspirations. Part

of working together cooperatively is taking responsibility to

do the work. When we cooperate, we are making a statement

that says: “we want this done

and we are willing to do it.” In

cooperatives, we take the

responsibility and are accountable to ourselves. And in that

sense, cooperation equates to

freedom.

It’s also about democracy. I

clearly recall a statement made

by Dr.V. Kurien, chairman of

India’s National Development

Board, when he accepted the

Kellogg Food Prize for his leadership in building the ground-up

system of dairy cooperatives in

his native country. “If you want

to teach democracy,” he said,

“build cooperatives.” 

Whether we’re talking about a

group of large farmers investing

millions in a new bio-mass factory; or a group of small, rural

craftsmen and women banding

together to market their arts; or

small town hospitals seeking

ways to jointly purchase expensive supplies, the basics of cooperation remain the same. It’s

those basics that we celebrate,

when we take the time to even

give them thought.

The old cliché that the

“world is changing” is certainly

accurate. And the winds of

change keep blowing with

increasing velocity. Tomorrow

will not look like today and will

never look like yesterday. But

one thing will never change:

People can do great things, and

no problem is too big, when

they work together in the fundamental spirit of cooperation.

That’s why cooperatives.

James Haskell, Acting Deputy Administrator, USDA Rural Business-Cooperative

Service 

COMMENTARY

Why Cooperatives?

When we 

cooperate, we 

are making a

statement that

says: “we want this

done and we are

willing to do it.”

In cooperatives, 

we take the

responsibility and

are accountable to

ourselves.
Rural Cooperatives / May/June 2003 3

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provider and employer.

Ann Veneman, Secretary of Agriculture

Thomas C. Dorr, Under Secretary, USDA Rural

Development

John Rosso, Administrator, Rural BusinessCooperative Service

James Haskell, Acting Deputy Administrator,

USDA Rural Business-Cooperative Service

Dan Campbell, Editor

Vision Integrated Marketing/KOTA, Design

Have a cooperative-related question?

Call (202) 720-6483, or

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United States Department of Agriculture

Rural COOPERA .

COOPERATIVES

May/June 2003 Volume 70 Number 3

On the Cover:

These Iowa cattle may wind up heading for a newly retrofitted packing plant

in Tama, Iowa, owned by the Iowa Quality Beef Supply Cooperative. It’s one

of several new livestock co-ops profiled in this issue. Story on page 4. Photo

by Arthur C. Smith III, Grant Heilman Photography

FEATURES

4 New kids on the block

Iowa beef co-op sees strategic partnership as best way to break into

highly competitive retail beef market

By Dan Campbell

9 House calls

In-home care givers form cooperative to provide vital service for

elderly, disabled in rural Wisconsin

By Margaret Bau and Dianne Harrington

13 Trailblazers

Leadership development programs key to more women winning

seats on co-op boards

By Kristine Rose

19 Co-ops increase share of farm marketings; share

of farm supply sales dips slightly

By Charles A. Kraenzle and E. Eldon Eversull

22 No mountain too high

Rural broadband service helping to save lives of isolated patients

By Steve Thompson

26 Tune-up your meetings

Periodic analysis is necessary to ensure that cooperative board

meetings are efficient, effective and productive

By Jim Wadsworth

DEPARTMENTS

2 COMMENTARY

15 VALUE-ADDED CORNER

28 NEWSLINE
4 May/June 2003 / Rural Cooperatives

New kids on the block

Iowa beef co-op sees strategic partnership as best way 

to break into highly competitive retail beef market 

By Dan Campbell, editor

dan.campbell@usda.gov

hen you’re the new kid on the block—and it’s a

pretty rough neighborhood—you have to grow

up quickly. The Iowa Quality Beef Supply

Cooperative (Iowa Quality Beef) is attempting

to do just that in a business that co-op President and CEO Joel Brinkmeyer describes as “cut throat.” He

sees the co-op as the best vehicle for keeping a large number of

Iowa family farmers active in beef production during a time of

tremendous concentration in the meat industry. 

There is little room for error if the co-op is to succeed. But

so far the pieces seem to be falling together for the co-op of

875 beef producers, which is set to begin processing beef at a

newly retrofitted plant in Tama, Iowa, this summer.

“We want to provide our members with ongoing market

access that pays them a competitive price and rewards producers for high quality, consistency and for a safe product that

meets our customers’ needs, including the opportunity to

brand or private-label our products,” says Brinkmeyer.

Speaking at USDA’s Agricultural Outlook Conference in

February, Brinkmeyer thanked USDA Rural Development for

assisting the cooperative with a Value-Added Market Development Grant, saying that were it not for that help, “we would

not have gotten to the level we are at today.” The Iowa Cattlemen’s Association, of which Brinkmeyer has served as executive vice president for the past 17 years, got the ball rolling for

the co-op in 1999, leading to incorporation last August. 

Adding more value at home

Iowa was the nation’s sixth leading state for beef production

in 2002, with 2.3 million head marketed. But 70 percent of the

cattle are shipped to out-of-state packers and processors.

“We want to capture a larger share of the

packing industry for Iowa to help maintain the

state’s independent, family farm operations, to

the largest extent possible,” Brinkmeyer says.

Nearly 45 percent, or 34,000 Iowa family

farms, are in the beef business, be it with seedstock, cow-calf or cattle-feeding operations.

Family farms are raising beef in all 99 Iowa

counties, and the co-op has members in 96 of

them, as well as in Illinois, Minnesota and 9 other states. 

While co-op leaders have a strong vision of what they want

to accomplish, they could find no exact model to follow. However, Brinkmeyer said Iowa Quality Beef has tried to emulate

some of the strategies of the U.S. Premium Beef cooperative.

Like it, Iowa Quality Beef based its plan on finding a compatible partner with experience in processing and marketing beef.

The major differences between the two co-ops, he said, is that

Iowa Quality Beef owns 100 percent of its land, plant and

equipment and will own the brands it is developing.

The process of launching the co-op has been “a bit like

building an airplane in flight,” Brinkmeyer says. The flight of

this co-op, he adds, is “being watched very carefully by beef

producers and processors all over the United States.” 

Packer partner sought 

Because the expertise of the co-op’s members is in raising

beef, it was decided early on to forge a strategic partnership

with an experienced meat packer/marketer. 

“Our cattlemen can compete with the best cattle-production systems in the nation and world,” says Brinkmeyer, who

sits on the Iowa State University Animal Science Advisory

Committee. “But they are not experienced in managing the

W

Iowa Quality Beef’s new packing plant in

Tama is slated to begin processing 1,200 cattle per day this summer. At left, construction

work progresses on the shipping dock, part

of a two-story addition to the existing plant.

Photos courtesy Iowa Quality Beef 
By Dan Campbell, editor, and

Renee Hawkins, Kansas Sate University

Extension

A group of small family farms in eastern Kansas and

western Missouri—including the AllNatural Beef Producers Cooperative—have joined forces, embraced

technology and formed partnerships

to create a market niche for their

Good Natured Family Farms brand

line of food products. Their marketing effort also relies heavily on educating consumers about the health

and other quality attributes of their

products, which include natural and

certified-organic beef—the “anchor

product” of the line—plus natural

poultry, free-range eggs, naturalbeef hot dogs and glass-bottled milk, among others. 

Good Natured Family Farms (GNFF) marketing director Diana Endicott refers to the marketing strategy as

“horizontal product diversification,” which she said creates economies of scope rather than economies of size.

Her family’s Rainbow Organic Farm in Bronson, Kan., 

is also a member of the beef co-op and processes the

co-op’s cattle. 

GNFF has formed a marketing alliance with Balls

Food Stores, which is selling the co-op’s beef and other products through its 15 up-scale Hen House supermarkets and two Price Choppers supermarkets (the

number of Price Choppers outlets is set to increase)

in the metro Kansas City area. GNFF also recently

began selling through the Community Mercantile

health food co-op in Lawrence, Kan. The co-op has

successfully employed in-store product sampling in

these stores to broaden its reach to more consumers.

To further differentiate its products in the market,

GNFF has applied for process-verified label certification

through USDA’s Agricultural Marketing Service. This

quality system, based on ISO 9000

principles, allows groups to write their

own manuals for production, complete

with paper trails to provide source

and process verification. A program of

this sort benefits producers and

processors alike in that it helps them

monitor production and identify places

where improvements in efficiency can

be made. Retailers appreciate the 

program because the source of beef

can be linked back to the original production operation.

In order to help develop the manual and the process-verified program, Endicott decided

to take advantage of assistance available through the

Agricultural Marketing Research Center (AgMRC) (see

related article, page 15). Michael Boland, an agricultural economist at Kansas State University and a member of the AgMRC management team, was able to hire

an Extension assistant, Renee Hawkins, to help with

the effort. 

Hawkins’ primary responsibilities include helping to

develop the process-verified manual and training the

producers on their roles in the process-verification

system. She also studied the feasibility of small

groups, such as the Good Natured Family Farms All

Natural Beef program, becoming process verified.

Currently, the All Natural Beef Co-op supplies 20

head of beef per week, a number that is expected to rise

Natural beef anchors product line for co-op of Kansas family farms 

Rural Cooperatives / May/June 2003 5

The McKay family (Kelly, Jay,

Tricia and Elizabeth), members

of the All Natural Beef

Producers Cooperative, is

marketing its Kansas-raised

beef in Hen House and Price

Choppers supermarkets in the

metro Kansas City area. The

co-op’s “Good Natured Family

Farms” label is proudly displayed on a fresh-meat

counter at a Hen House market. Photos by Bob Cunningham

continued top of page 6
6 May/June 2003 / Rural Cooperatives

day-to-day operations of a packing plant, nor in marketing

beef to the retail trade. “We needed a professional to help us

in that business.” 

The initial vision called for the co-op to build a new, stateof-the-art processing plant from the ground up. That meant

finding a community that would welcome a new packing

plant and have an adequate labor force and the needed infrastructure in place. 

That is a very difficult combination to find these days,

Brinkmeyer says. During the search process, a packing facility in Tama, Iowa, became available (it had been closed in

1999 by IBP). Iowa Quality Beef leaders felt that the plant

could be retrofitted into a state-of-the-art facility, and proposed a possible partnership with meat-packing heavyweight

Excel Corp. to run the plant. While Excel eventually opted

not to pursue the project, the co-op still felt it was “too good

of an opportunity to pass up.” 

So it sought new partners, eventually selecting American

Foods Group, the nation’s ninth largest meat processor, with

a packing plant in Green Bay, Wis., and two case-ready

plants in Ohio and Wisconsin.

The co-op has found “tremendous community support”

for reopening the plant, Brinkmeyer says. By using an existing facility, the co-op was able to get its plant for between

$12 million and $15 million, a fraction of the $100 million it

estimated a brand new plant would have cost. 

“That’s a very small investment compared to other beef

businesses that have tried to start in the past couple of

in the near future. The cooperative was recently audited

for verification and is fine-tuning its program in some

areas to meet the USDA criteria. The

process-verified points the co-op is seeking confirmation on include the following:

■ Raised on local, family-sized farm

operations

■ No growth hormones used 

■ No sub-therapeutic antibiotics used

■ 100 percent vegetarian ration (no

animal by-products) used

■ No antibiotics used during finishing

phase

■ Source-of-origin verified, from producer through retail

■ Beef dry aged 10–14 days

“Through certification and consumer

education, we anticipate gaining a

stronger presence in the grocery stores

where we now market our products,”

says Endicott, “and we expect additional

marketing opportunities to present themselves in the future.” 

Some of the farms are also seeking

certification under USDA’s organic label

program.

The 24 producer-members of the All-Natural Beef

Producers Cooperative are committed to the concept

that “there is a way to raise food that is good for both

consumers and the environment, and that they can

make a living doing it,” Endicott said at a panel discussion of new meat-producer cooperative representatives

held during USDA’s Agricultural Outlook Forum. Partnerships that have supported the co-op in its efforts to date

include USDA Small Business Innovative Research program, Kansas State University and the Arthur Capper

Co-op Center, Kansas Agriculture Products Development Division and USDA Rural Development. 

Since the majority of the co-op members have no

off-farm income, the success of this business is critical to each producer, says co-op President Eugene Edelman, who farms in

Sabetha, Kan. 

Members of the beef co-op have seen a

dramatic increase in their ability to earn a

premium for their product in just the past

couple of years. In 2000, the average price

paid for a dressed beef carcass in Dodge

City, Kan., was $1.11 per pound, Endicott

says, while co-op members earned $1.12.

That equaled a premium of just $7.50 for a

750-pound carcass. 

But in 2002, co-op members averaged

$1.27 per pound vs. the Dodge City average of $1.07 a pound, equaling a premium

of $150 per head. (Conventional prices

used for comparison are based on live

steer and heifer prices from Dodge City,

Kan. A 63 percent yield was used to convert to dressed price. Reported live steer

and heifer prices were based on 1,100-

1,300 pound choice yield grade 2.)

Endicott credits much of that increase to

a pricing system based on the actual wholesale primal

cutout value of each carcass. That information, in turn,

helps them fine-tune their production systems. Using a

Kansas Sate University Office of Local Government-calculated multiplier factor of 1.8 on the extra profits generated by the co-op, Endicott estimates these premiums

have helped to pump an additional $350,000 annually back

into the rural communities where the producers live. 

“Limited product shelf space, slotting fees and advertising costs will continue to present obstacles for small

producers,” she says. “However, horizontal product

diversification and development of micro-brands can

help generate higher returns.” ■

Co-op members Carol and Ed

Lehman participate in an instore promotion of their natural

beef at a Hen House supermarket in Leawood, Kan. Consumer

education plays a major part in

the co-op’s marketing strategy.

Photo courtesy Good Natured

Family Farms 
Rural Cooperatives / May/June 2003 7

years,” Brinkmeyer said. “We think it will help keep us very

competitive.”

The plant includes 280 acres, including about 60 acres of

updated, environmentally sound lagoons and 120 acres of

prime real estate for future expansion. 

Shared vision

For its part, American Foods wanted to find a second

plant to help increase its efficiency and to expand from the

Holstein cow business into high-quality fed cattle (which

most of the co-op’s animals will be), says Brinkmeyer, who

worked for the Farm Credit System in Nebraska and Iowa

for 10 years earlier in his career. 

American Foods did not want to build a plant from the

ground up or to enter a location where it would have to come

in from scratch to compete with existing packers to procure

cattle. So the vision of both partners meshed nicely at Tama.

The plant purchase was finalized in April 2002, and the

letter of intent with American Foods was signed last July.

The co-op structure and business model were formalized on

Aug. 5, after several years of discussion. “All we needed was

the money, equity and financing to get the job done.”

The equity drive included the sale of Class A shares, costing $50 to $60 per head (depending on delivery date) committed to the co-op. This stock represents both a right and

an obligation to deliver cattle. Class B stock was sold for $7

per share, and provides a right (but not an obligation) to

deliver cattle to Excel in Nebraska, where they are to be paid

on a special Iowa Quality Beef Supply Co-op-dedicated, value-based marketing grid. Class C stock has also been sold,

accounting for about 10 percent of total equity. 

Quality to be rewarded

The new plant is scheduled to initially process 1,200 cattle

per day, but it can easily expand to 1,600 head per day. The

co-op is closely tied to the Iowa Cattlemen’s Association

(ICA). All co-op members are also members of ICA, and “for

the past three years, they have learned about selling cattle on

Dakota Lamb Growers Cooperative is seeking to earn

greater returns for its members by marketing high-quality,

natural lamb to up-scale retail grocery stores, natural food

stores and white-tablecloth restaurants. It’s primary marketing strategy is based on convenience, consistent highquality meat and safety through source-verified lambs. 

The only assets the co-op holds are its reputation and

brand name. It has no physical assets,

and has only two staff members, both

of whom work out of home offices. 

All lambs sold through the co-op

must be less than one year old and

must have been raised without growth

hormones and not fed any animal

byproducts. Each producer signs an

affidavit vowing to have met the coop’s standards, as does the processor,

who warrants that the co-op’s lambs

have not been co-mingled with others.

This constitutes a double-verification

safety system to ensure customers of

the highest product quality standards, according to coop CEO David Merwin. 

Dakota Lamb Growers is a closed co-op through

which only grower-investors can market their lambs.

The co-op was incorporated in 1999 and held its first

equity drive in the fall of 2000. This drive attracted 104

producers who invested a total of $160,000 and committed 8,000 lambs to the co-op. A second equity drive ended in March 2002, which generated an additional 12,000

head of lambs and $240,000 in additional equity. There

are currently 184 members (located in North and South

Dakota, Montana and Minnesota) who have committed

20,273 head to Dakota Lamb.

The co-op expects to attain “break-even” status this

spring while paying producers an over-market premium. 

Growers are responsible to deliver their lambs to a

combination feedlot/receiving station in Emery, S. D.

Lambs stay there from three days

to three weeks, until they meet the

co-op’s specifications. In addition

to being raised without antibiotics

and being less than one year old,

the lambs must weigh between 120

and 130 pounds, have been fed

grain for the final 60 days and have

no more than seven months of wool

growth when shipped for processing. Those animals which cannot

be brought up to the co-op specifications in a timely way are sold

into the commodity market. 

Because lambs are hauled only five miles from the

feedlot to the processing plant, they suffer low stress

levels, which helps to improve meat quality. Highest

sanitary conditions are maintained in the plant and

duplicate bar-codes allow each individual animal to be

identified at any time during processing or marketing. 

As a secondary market, the co-op can process

for the kosher market. This market uses only the front

half of the lamb, which tends to be the most difficult part

to sell in the traditional lamb market. ■

Low-overhead approach taken by Dakota Lamb Growers Co-op 

More than 20,000 lambs have been committed to the new Dakota Lamb Growers Coop. Photo courtesy American Sheep Producers

Association
ICA’s quality grid, which has helped them improve their

management expertise to produce the right kind of product

to earn quality bonuses,” Brinkmeyer says. 

“Our member cattle will be priced off an individualized

marketing system, based on week-of, or week-prior-to, delivery retail beef prices. That is quite different than what you

find in most of the cattle business today, where cattlemen

price their product based on live cattle prices and where

packers pay them as little as possible.” 

Members have currently made an annual commitment of

100,000 head of fed-beef cattle, 22,000 fed Holstein steers

(dairy beef), and a small number of dairy or beef cows. 

“Just 18 months ago, I didn’t believe it was possible, but we

intend to process all three types of cattle at this plant,”

Brinkmeyer says. “This mix of three species creates wonderful synergies” for the co-op’s customer base. 

A future for $10,000 per beef producer

The co-op’s equity drive has raised a little more than $8 million, or about $10,000 per member. “$10,000 is about half the

price of a good used pickup truck—not much for the opportunity to participate in a project this exciting that could potentially change the future of the cattle business,” Brinkmeyer says. 

While the co-op will own 100 percent of the land, plant

and equipment, it will lease these assets to a joint venture

8 May/June 2003 / Rural Cooperatives

One fish just slipped off the hook, but the Ohio-based

Great Lakes Pork Cooperatives is still fishing. The co-op,

which was formed last year by pork producers in three

states, recently bid to purchase a veal processing plant

in South Bend, Ind., out of bankruptcy. But the co-op

was unable to raise the approximate $7 million it needed

(about half the plant’s cost) from its members in the relatively short time frame required by the court. 

The funding effort was hampered by a generally bad

year for farmers in the eastern Cornbelt, where Ohio had

“an especially lousy crop year,” says co-op Vice President Brian Watkins. 

“So we’re basically going back to the drawing board

now, but are still actively searching for other opportunities,” says Watkins. This could involve finding a processing partner.

The co-op’s membership drive last year netted 108

members in Ohio, Michigan and Indiana. Each paid

$1,000 to join the co-op. “We got at least half of the commercial pork producers in the region, including almost all

of the ones we felt we really had to have,” Watkins says.

Great Lakes Pork then secured some grants to do a

feasibility study. This resulted in a plan for an operation

that would produce 600,000 hogs per year and sell primarily into the Chicago market.

This effort involves bringing about a change in the

mind set of the region’s pork producers. Watkins says too

many producers still see their future tied to a cost-control

strategy via greater production efficiency or control of

input costs. “This is not irrational—it is what has made

them money in the past,” Watkins says. “But now we are

really challenging them to do something different.” This

means re-focusing away from a production-driven, supply-push system (in which farmers produce first, then figure out a way to sell it) to a demand-pull system (in which

they find markets first, then produce for it). 

Many of the co-op’s large swine producers have production contracts with large packers. While these contracts limit some of their risk, they have posed an obstacle for the co-op because they reduce the availability of

hogs for Great Lakes Pork.

Watkins says these contracts may help producers

feel secure in the short term, but they need to be thinking about a much longer timeframe than most contracts

provide for. “You need to be thinking about the next contract, and the next contract beyond that.” With the coop, the outlook is for the long-term future of producers. 

“We are not against contracts—everyone of our members will still maintain relationships with other purchasers.

But we as producers will be better suppliers to our customers if we are also involved in a process where we are in

closer touch with the consumer. The more we understand

the supply chain—what we can do at farm level to differentiate our product—will make us better pork suppliers.” ■

Great Lakes Pork Co-op adjusts plan to 

seek alternative packing plant 

Sides of beef roll through the Rainbow Organic Farm plant in

Bronson, Kan. Photo courtesy Good Natured Family Farms 

continued on page 31
By Margaret Bau and

Dianne Harrington

Editor’s Note: Bau is a cooperative development specialist with USDA Rural

Development in Wisconsin; Harrington is

a Wautoma, Wis.-based elder care specialist who is coordinating efforts in Wisconsin

to address issues relating to long-term

retention of care givers. 

aren Taylor likes helping

people. Ever since she

was a little girl, it seems

Taylor has always been

there to help an elderly

neighbor with household chores, or to

help a relative recuperate from a hospital stay. Nearly 30 years ago, Taylor

decided to make this calling to help

others her life’s work by becoming a

certified nursing assistant (CNA), specializing in providing inhome care. 

Taylor swears that the

elderly and people with

disabilities feel healthier

and more alert when they

live in their own homes.

“When a person can come

home and sit in his favorite

chair, eat his favorite

home-cooked foods and

get up or go to bed when

he wants to, those little

things help make a person

happy,” Taylor says. 

Her observations are

supported by research. As

one study suggests that home care

maintains the recipient’s dignity and

independence, qualities that are all too

often lost even in the best care institutions. Through assistance with dressing, bathing, feeding, shopping, meal preparation and

housework, the elderly and

people with disabilities can,

and do, live independently in

their own homes.

In Waushara County, Wis.,

a new, worker-owned cooperative formed by in-home care

providers is helping more

elderly and disabled people

remain in their homes, providing them with a preferred

alternative to a nursing home

while also improving pay and

benefits for care providers. 

Demand growing 

for in-home care

Besides maintaining a

person’s dignity and independence, in-home care is much more

cost effective than institutional care.

Typical annual cost for home-care

services is just under $5,000, which

compares favorably to the $55,000

average annual cost for a nursing

home stay. 

Most people want to live in their

own homes as they age. In a 1998 survey conducted by the American Association of Retired Persons (AARP),

eight out of 10 people over age 65

said they want to stay in their own

home and never move. Most people

live according to their wishes. Only 4

percent of those over age 65 live in

nursing homes (though that number

increases to 20 percent for persons 85

and older).

Demand for home care will only

increase as the population ages, especially as the baby boom generation

nears retirement. By 2030, one in five

Americans will be over the age of 65.

In many rural areas, the elderly already

have reached this critical mass.

Rural Cooperatives / May/June 2003 9

House calls

In-home care givers form cooperative to provide 

vital service for elderly, disabled in rural Wisconsin

K

Cooperative Care member Pam Swendryzynski provides a

manicure for client Leona Renner. Swendryzynski earned a

Certified Nursing Assistant certificate through the co-op.

As a co-op worker-owner, she now earns $2 per hour

more than her prior wage. Photos courtesy Cooperative Care 

“Cooperative”

comes first

Wisconsin law requires all cooperatives incorporated under Chapter 185 state

statutes to use the term “cooperative” or “coop” in its legal name. In fact, any business

that misidentifies itself as a co-op may face a

$100-a-day fine. Usually, cooperatives place

the term “co-op” at the end of their name

(much like the use of other business terms

such as “Inc.” or “LLC”). The organizers of

this home care business chose to place the

word “cooperative” first in its name to

emphasize the primary importance of mutual

assistance and reliance upon one another. 
10 May/June 2003 / Rural Cooperatives

Critical shortage of 

in-home care workers

Despite the growing demand and cost

effectiveness of in-home care, there is a

serious shortage of home care workers

and CNAs. Low wages and lack of benefits provide a disincentive for people to

enter into this profession. Nationally, the

average in-home care employee works

29 hours per week at a median hourly

wage of $7.58. Workers often receive

few, if any, benefits. Turnover within the

industry is very high, between 40 and 60

percent annually. 

The nature of the work can lead to a

sense of isolation. Most caregivers

work one-on-one with elderly and disabled clients and rarely have contact

with fellow caregivers. They have only

occasional contact with supervisors,

other health professionals and the

client’s family. 

Providing care is a physically

demanding occupation. Care providers

must move clients for bathing, toileting

and positioning in and out of bed. Jobrelated injuries, especially to the back

and neck, are a constant threat. Elders

suffering from Alzheimer’s disease or

other cognitive impairments can sometimes physically strike out at a worker. 

The work can also be emotionally

draining. Some clients with Alzheimer’s

or those adjusting to a disability feel

anger, which they may direct at the

caregiver. Various cognitive impairments may cause paranoia, leading a

client to accuse a caregiver of stealing

or mistreatment. 

At times, workers are exposed to sexual comments or advances on the part

of a client or family member. Sometimes clients or their families treat caregivers as maids or domestic servants.

1) Concept: September 1999—Waushara County

received a grant from the Wisconsin Department of

Health and Family Services to creatively address

recruitment and retention of long-term care workers.

Agency Director Lucy Rowley contracted with Social

Worker Dianne Harrington to explore the idea of a worker-owned cooperative. Cooperative Development Specialist Margaret Bau of USDA Rural

Development agreed to provide education and technical assistance in co-op

development. 

2) Exploratory meeting: November 15,

1999—Project coordinators (Harrington

and Bau) met with workers of the

Waushara County In-Home Providers program. Coordinators introduced the cooperative concept, reported on other home

care worker co-ops across the country,

answered questions and gained approval

to proceed with exploring this project. 

Potential-member survey—Care

providers were surveyed to determine

desired wages, benefits, distance willing to travel, experience and skill levels. This information was key to the

direction of the co-op and the business plan. 

Steering committee—Interested care providers volunteered to serve on the steering committee. This

group met monthly for 15 months to provide guidance

and feedback to the coordinators as the initiative

evolved. 

3) Market analysis, feasibility study,

business plan: November 1999 to January

2000—With funding from the state grant, a

Co-op development stages & timeline

Cooperative care logo 

loaded with symbolism

The encircled twin pines emblem used in the co-op’s

logo is the international symbol of cooperatives. The pine

tree is an ancient symbol of life. Two pines are shown to

emphasize the mutual nature of cooperation. The trees are

dark green—the color of chlorophyll and a basic building block of life one earth.

Fittingly, Waushara County grows an abundance of evergreen trees in its sandy

soils for harvest at Christmas. In fact, Wautoma, the county seat of Waushara

County, calls itself the Christmas tree capital of America.

Usually, the twin pines symbol is enclosed in a circle to symbolize eternity.

Cooperative Care chose to encircle the twin pines with a heart, to symbolize its

commitment to caring. At the center of the heart and twin pines is a home, a

visual reminder that caring for people in their own homes is the focus of 

Cooperative Care’s existence. 

For more than 20 years, Dorothy Spaulding, who

recives services from Cooperative Care, has

been an effective advocate for people with disabilities. She was instrumental in starting the

Community Options Program, a Medicare waiver program that helps rural Wisconsin residents

needing care services to remain in their own

homes. 
Many caregivers also report feeling a

lack of respect—that society in general

does not appreciate their work. 

The nature of care giving requires a

special disposition and a sense of calling to serve the elderly and people

with disabilities. In a tight labor market, individuals can easily work in less

stressful retail or service industries for

similar wages. Given the low wages

and lack of benefits, the demands of

the job and the low status society

places upon care giving, is it any wonder that home care workers are in

short supply?

Meeting care needs

in Waushara County 

Waushara County, population

23,000, is a scenic area in east-central

Wisconsin. The landscape is dotted

with glacial lakes, sandy soils and evergreen forests. Few industries exist, so

people make a living growing Christmas

trees, working in tourism or traveling

40-50 minutes to urban areas for

employment. The largest city, Wautoma, boasts a population of 2,000 and

four of the county’s five stoplights. In

one important aspect, Waushara County

reflects the future of America: one out

of five residents are over the age of 65.

To serve the rural elderly, the

Waushara County Department of

Human Services (DHS) developed the

In-Home Providers Program. For

more than 20 years, DHS paired

homemaker and personal care (CNA)

providers with low-income, disabled

adults and frail elderly residents who

qualified for state-funded programs or

Medicare. In this arrangement, care

providers were not county employees,

but rather considered domestic workers

hired by the service recipient and paid

by a third party fiscal intermediary.

This arrangement stretched limited

public resources, but it left care

providers without workers compensation and benefits. Compounding the

situation, state and federal funding has

not kept pace with cost-of-living

expenses, resulting in lower than average wages. 

This arrangement posed a potential

liability to Waushara County. Another

rural Wisconsin county with a similar

arrangement was recently sued to cover

medical costs incurred by a caregiver’s

injury on the job. Despite the existence

of a third-party fiscal intermediary, the

IRS has ruled that counties in this

arrangement are the true employers

and therefore liable for workers compensation and payroll reporting. 

Could a co-op work?

Faced with these issues, a light

bulb clicked on in the mind of Lucy

Rowley, director of the Waushara

County DHS. For years, care

providers had asked the county for

higher wages and benefits, but tight

budgets had tied Rowley’s hands. She

was aware of a worker-owned, inhome care co-op in the south Bronx,

N.Y., called Cooperative Home Care

Associates. 

Rowley wondered if it would be possible for rural Waushara County caregivers to form a similar worker-owned

co-op. The county, she figured, could

sign a contract with the co-op to continue providing services to low-income

Rural Cooperatives / May/June 2003 11

private consultant was hired to write these studies.

After months of delays, the final product was flawed.

Project coordinators re-wrote the business plan with

the assistance of Amy Pietsch at CAP Services (a nonprofit community action agency in Waushara County).

4) Vote to incorporate: January 17, 2001—Project

coordinators presented an overview of the business

plan to care providers. At the meetings, care providers

voted to incorporate. 

Elected board of directors - Five-woman board

picked from a slate of eight candidates.

Adopted bylaws—Bylaws were drafted by Bau and

the steering committee.

Collected membership fee—Members paid a $40

membership fee. Due to tight finances, some paid in two

installments. Co-op starts with 63 original members.

5) Articles of incorporation filed: February 5, 2001—

Cooperative Care becomes a legal entity under Chapter

185 of the Wisconsin statutes.

6) Financing: March 2001—Cooperative Care

signed a contract worth $800,000 with Waushara

County to provide home and personal care services.

Locally owned Farmers State Bank of Waupaca loaned

the new business $125,000, based on confidence in the

county contract, local leadership, the business plan

and a modest $4,000 in member equity.

7) New business start-up activities: Spring 2001—

Board of directors rented office space, opened bank

accounts, acquired a tax identification number, explored

insurance options and hired the executive director Don

Grothe and other administrative staff. Fred Harasha, a

retired executive of the local Adams Columbia Rural Electric Cooperative, served as a key advisor in developing the

financial systems, hiring staff and supporting the newly

elected board. 

8) Begin operations: June 1, 2001—Commenced payroll for worker-owners.

9) Board training and guidance: February 2001 to present—Bau uses the LEADing Board video series (produced by the University of Wisconsin Center for Co-ops,

with funding from USDA Rural Development) for board

training workshops. 

10) Annual meetings: February 2002 and 2003—

Report on operations, bylaw revisions, board elections,

patronage refunds distributed, awards ceremonies and

social event. ■
12 May/June 2003 / Rural Cooperatives

elderly and disabled residents. 

As a private company, the co-op could

also serve counties beyond Waushara

and care for private clients. By combining public and private revenue sources,

would it be possible for a worker-owned

co-op to offer much needed benefits and

perhaps higher wages? 

Over three years, Rowley wrote

applications for $50,000 in grants from

the Community Links fund, administered by the State Department of

Health and Family Services, to

explore the worker-owned coop option and other workforce

enhancement projects (see

sidebar). 

Co-op exceeds expectations 

After a year-and-a-half of

steering committee meetings,

co-op education efforts, market

analysis, advice from collaborators and a myriad of related

business start-up tasks, Cooperative Care commenced operations on June 1, 2001. 

The co-op has proven successful beyond anyone’s

dreams. Initially, 61 workers in the InHome Providers program joined

Cooperative Care. Membership now

stands at 81. 

Current benefits for member-owners include increased pay, workers

compensation, time-and-a-half pay for

working holidays, 10 days of paid

vacation or sick leave, travel reimbursement and health insurance. The

co-op pays 75 percent of the health

insurance premium for individuals and

50 percent for family coverage. 

Care providers currently earn

between $7.50 and $9.75 per hour.

Benefits add the equivalent of $2 per

hour more and patronage refunds add

an extra 50 cents to a worker’s hourly

wage. Though no one will ever grow

rich earning the equivalent of $9.75 per

hour with benefits, a full-time CNA has

the potential to earn near Waushara

County’s per capita income of $18,144.

Financially, Cooperative Care has

exceeded fiscal projections. Year-end

profits for 2001 exceeded $41,000. After

prepaying part of the business loan and

setting aside funds for capital reserves,

cash patronage refunds were distributed

at the first annual meeting. Checks averaged $440, but were as high as $2,000,

based on the number of hours worked. 

At the end of the co-op’s second year

of operation, net earnings totaled more

than $65,000. Of this, $25,000 was set

aside in reserve and about $40,000 distributed in patronage refunds, again

according to hours worked. 

Patronage checks 

thrill worker-members 

Co-op Executive Director James

Gawne recalls the first time the member-owners learned about the power of

patronage refunds. “It was Feb. 12,

2002, at the first annual meeting. As

the business meeting drew to a close

and people were preparing for a meal,

more door prizes and music, Board

President Donna Tompkins called

every member forward to receive a

sealed envelope with her or his cash

patronage refund check. Soon, audible

gasps were heard around the room as

people opened the envelopes and realized they had received the equivalent of

a two-week paycheck. That day, it felt

like Christmas in Waushara County.” 

Turnover among co-op memberworkers is virtually nil; two members

were terminated for cause and one

resigned when her client died. This

stable workforce provides continuity of

care for the clients. In fact, the 125

county clients retained their original

workers, providing a seamless transition for care provider and recipient. 

Client and caregiver surveys conducted in 2002 by The Management

Group, an independent consulting

firm, demonstrated overall satisfaction

with co-op ownership.

A less tangible achievement is the

leadership and personal development

of workers who served on the steering

committee and the board of directors.

The board consists of five CNAs,

four of whom had never held a

position of power in any organization. These women have negotiated

contracts, rented office space, hired

administrative staff, developed policies and procedures and represented

the co-op at conferences and community events. 

As for the general membership, members report feeling less

isolated in their work thanks to

training, meetings, the co-op

newsletter, ice cream socials and

pay-day events. In fact, caregivers

have been known to bring their

clients to member social events. 

As Board President Donna Tompkins observes, “We still have a ways to

go in educating the membership on

what it means to be a co-owner of our

own business. But given that one out of

five workers is caring for a disabled

family member, we are pleased to see

the level of participation at annual

meetings and social events.” 

Cooperative Care has garnered public attention. The local Waushara

Argus newspaper has been particularly

attentive in running stories and photos

about co-op events. Policy makers

across the state and country are observing the progress of Cooperative Care

and wondering if the model could be

replicated in other rural areas.

Inquiries from Washington, Hawaii,

Montana, Kentucky, North Dakota and

Vermont have arrived, and co-op organizers, staff and members have shared

the Cooperative Care story at a variety

of conferences and with office visitors. 

Harvard’s John F. Kennedy School

Care giver Pat Weis prepares lunch for client Dorothy

Spaulding. The cooperative has proven successful beyond

even the highest hopes of the members and supporters

who launched it in 2001. Photo courtesy Cooperative Care

continued on page 32
Rural Cooperatives / May/June 2003 13

By Kristine Rose

Editor’s note: This article is based on thesis research conducted by

Rose at the College of St. Catherine in St. Paul, Minn. For more

information on the research findings, she can be reached at

tcspa_Kristine@yahoo.com. She hopes to continue her work with

cooperatives in the areas of leadership and diversity. 

any co-ops are looking for ways to increase

the number of young people and women on

their boards. While working for Land

O’Lakes and as a graduate student in organizational leadership, I led a roundtable discussion on leadership at a conference for women in agriculture.

When the women participants learned of my employment

and interest in women in leadership roles, they asked me for

advice regarding how they could become directors. 

This piqued my curiosity. It seemed to me that if women

co-op directors would share their knowledge and experiences, it might eliminate some of the mystery of how to

become a director. 

Six out of 236

To find some examples of women co-op directors, I looked

to National Cooperative Bank’s list of Top 100 Cooperatives,

focusing on the 11 that are located in Iowa, Minnesota, North

Dakota, South Dakota and Wisconsin. Of 236 directors serving those 11 cooperatives in 2001, just six were women. 

I spoke to each of the six about their experiences—of being

nominated and elected, as well as serving their cooperative.

Hopefully, their experiences will serve as a resource for other

cooperatives seeking the best possible leaders, and as an inspiration for other women. 

These six directors interviewed were: 

■ Pam Bolin, Swiss Valley Farms, Davenport, Iowa; Years

of board service: 1989—present.

■ Connie Cihak, Land O’Lakes Inc., Arden Hills, Minn.;

elected to district board in 1989; served on corporate

board 1994—2003.

■ Ardath DeWall, Foremost Farms USA, Baraboo, Wis.

1988—present.

■ Nancy Meulemans, Alto Dairy, Waupun, Wis.; 

1998—present.

■ Laura Stacy, Land O’Lakes Inc., Arden Hills, Minn.;

1986—2003.

■ Carolyn Verhulst, Foremost Farms USA, Baraboo, Wis.,

1995—2001.

Embarking upon the leadership pathway 

Each of these six female directors had previous involvement in organizations or programs such as Young Cooperators, Young Farmers and Ranchers and Farm Bureau, among

others. This experience was key to their leadership development and election to the board, all agreed. Their involvement

and attaining leadership roles in those organizations did not

go unnoticed, as five of the six were encouraged by men to

pursue a board nomination. These men included co-op directors, employees or members of the nominating committee. 

Bolin’s experience confirms the value of involvement in a

leadership development program, such as a Young Cooperators program. Her involvement in the program improved her

visibility in the cooperative. 

“The YC program is a good starting place because it gets

you involved and it exposes you to things on a national level,”

says Bolin, who got involved in the program in 1981. “It gets

you beyond your community. As a result of our YC involvement, we knew about Swiss Valley cooperative, the co-op system and co-op issues.” Bolin and her husband, Dave, were

both active in the YC program and its contests, winning Outstanding YC Couple honors one year.

As was the case with the other directors, Bolin found that

this leadership experience opened the door to a chance to run

for the board. 

“Following that, a director who was going to be retiring

approached us, wondering if one of us would be willing to

run. Since we were 30 and 32 years old at the time, he

thought we were maybe too young to actually get elected. But

he said, ‘Let’s get your names out now and maybe this is

something you could do in the future.’”

Bolin’s husband felt strongly that she had ability to lead.

Indeed, all six directors interviewed said their husbands supported

their running for the board. Her husband also thought her first

Trailblazers

Leadership development programs key to

more women winning seats on co-op boards

M

Dairy farmer Ardath DeWall, a member of the Foremost Farms USA

board of directors, says she felt well accepted by the male members

of the board when she joined. Five other female board members of

large co-ops in the Upper Midwest reported a similar, welcoming

experience. Photo courtesy Ardath DeWall
14 May/June 2003 / Rural Cooperatives

run for the board would just be to build

some name recognition for a future try.

“We won’t get it this time, but then they’re

aware that we’re interested in the co-op and

maybe it’s something we can do down the

road when we’re a little older,’ he said. So I

put my name up for the nomination.”

Farm Bureau experience whets

appetite for run 

Stacy’s nomination story differs in that

she was the only one of the six who was

approached by the nominating committee and asked to consider becoming a

director candidate.

“I was not seeking the director position,” Stacy says. “ I had been more active

in the Farm Bureau and was seeking an

office there, but was unsuccessful.” 

When the co-op nominating committee asked her to run,

Stacy said she was honored, but was worried about her lack

of governance knowledge. 

The committee assured her she could pick up those skills

quickly, and she was elected on her first try. After serving as

board secretary for several years, Stacy was elected president of

her district board in 1992 and went on to join the Land O’

Lakes corporate board in 1994.

Verhulst pursued the nomination independently, entering

the election process because she felt the membership in her

district was underrepresented. 

Overcoming initial self-doubt 

When initially encouraged to run for the board, each

woman had concerns about her ability to serve as a director. 

Although they were already recognized by others for their

leadership in Young Cooperators or other organizations, they

wondered if they had enough formal education, knew enough

about governance or were smart enough to lead and serve their

cooperative. 

Cihak describes her personal challenges: “I think there are

a lot of good women in agriculture, but we’re ingrained with

[feelings that] ‘You don’t know enough.’ I always felt like I

had to try harder, read more, be more prepared, always go

that extra mile just to be even. I always felt I had to try hard

just to be on baseline.” 

Male director reaction

Some of the women encountered individual board members who seemed uncomfortable with a woman in the boardroom. But each director said that, overall, she felt accepted

by her fellow directors.

“One thing I learned, as far as the co-op board, is they

didn’t have a problem with me being a female. They accepted

me,” says Bolin.

“Each director accepted me very well,” Stacy concurs. “I

think I was accepted readily because I was

known. You’re with your next-door

neighbor, so to speak, your county 

people. You’re familiar with them from

co-op annual meetings and the ag community—you just know those people. So

I was well received there.” 

Meulemans said entering the boardroom was also comfortable for her. “I can

honestly say I was always respected as a

woman and a director.” She considers

board work interesting and rewarding,

saying she wishes that “everybody could

be on the board at sometime in their life.”

Adds DeWall, “I felt very well accepted. Of course, I had been on the board

before, so I was kind of acquainted with

most directors.”

Most of her initial worries proved groundless, Stacy says.

“I have had a wonderful experience, was well received and a

lot better qualified than I gave myself credit for.”

Combined, their board service now totals 68 years (not

counting director experiences outside co-op board rooms).

As S.J. Freeman, author of Managing Lives: Corporate

women and social change wrote: “By the time she has proved

herself, a woman’s acceptance has slowly evolved.”

Further proving how well their male peers accepted them,

five of the six women directors were elected to co-op executive committee positions. 

Cihak’s feelings following her election to the executive

committee are an indicator that one barrier to women’s participation might be an internal barrier: “The vice chair

moved up to the chairman’s position on the dairy committee,

and they needed to elect a new vice chair. My peers elected

me to that position. I [then] realized they had confidence in

me and trusted me.” 

Conclusions

Director interviews with these six board members demonstrate that participation in Young Cooperator and Young

Farmer programs played a key role in each woman director

developing confidence in her leadership ability and increasing her visibility among other co-op members. This is one

more reason why co-ops should continue their support of

leadership development programs. 

Another key to election was the encouragement the women

received to pursue the directorship from men in their cooperatives. Since only one of the six directors was elected as a consequence of being nominated by a nominating committee, cooperatives should review nominating committee procedures and

see if a means can be made to seek more diverse candidates. 

Once in the boardroom, these six directors each spoke of

being well received by their male peers. Not only did they

speak of being accepted, their peers elected them to executive

committee roles. ■

Me and the Boys—Land O’ Lakes board

member Connie Cihak, second from right,

is flanked by male compatriots during a

dairy farm tour. “I think there are a lot of

good women in agriculture,” she says,

“but we’re ingrained with feelings that

‘you don’t know enough.’” Photo by David

Lundquist, courtesy Land O’ Lakes
Rural Cooperatives / May/June 2003 15

By Christa Hartsook

Editor’s note: Hartsook is communications specialist for AgMRC.

e Agricultural Marketing

Resource Center (AgMRC) is a newly formed

national electronic—or

virtual—resource center

for value-added agricultural groups.

The purpose and mission of the AgMRC is to provide producers and processors with critical information to build

successful value-added agricultural

enterprises.

The Center combines expertise at

Iowa State University, Kansas State

University and the University of California to help clients locate the

resources that can aid them in their

efforts to develop a value-added agricultural business. The center works

with other leading land-grant universities, such as Oklahoma State University

and Montana State University, as well as organizations, such as Sparks Companies and CoBank, on

value-added projects. Partial support is derived from

the Rural Business-Cooperative Service of USDA

Rural Development.

The Center’s Web site,

www.AgMRC.org, contains information on various commodities and

products, including many

market niches farmers can

pursue. There is also information on how to start a

business and selecting a

business structure. Other topics include

how to write feasibility, marketing and

business plans. 

This extensive collection of

resources and tools can help anyone

involved in agriculture develop and

improve any aspect of their business.

The site contains links and

AgMRC-developed pieces on

everything from networks of

ethanol cooperatives to organic

beef producers to a value-added

worm business. Directories list

value-added consultants, valueadded agriculture businesses

and applicable laws specific to

each state. 

The goals of the center

include the creation of a powerful, electronic Web-based

library with search capabilities

to make value-added market,

economic and business information available to producers;

to provide value-added business and economic analysis tools,

including information on business

principles, legal, financial and 

logistical issues; conduct research and

analysis on economic issues facing

producers involved in value-added

business ventures and to link producers with electronically available

information on major commodities.

Governing AgMRC

An advisory board, comprised of

individuals from across the nation

involved in value-added agriculture,

governs the center. 

Current members include Duane

Acker, Talycoed II, Atlantic, Iowa;

Mark Hanson, Lindquist & Vennum,

P.L.L.P., Minneapolis, Minn.; Elizabeth Hund, Rabobank, San Francisco,

Calif.; Steve Hunt, U.S. Premium Beef,

Kansas City, Mo.; Stanley R. Johnson,

Iowa State University, Ames, Iowa; Jeff

Kistner, CoBank, Omaha, Neb.; Barry

Kriebel, Sun-Maid Growers, KingsAg Marketing Resource Center helping

producers develop value-added strategies

T

V ALUE-ADDED CORNER

Ag Marketing Resource Center board members get an

inside look at a California citrus packinghouse. The board

features a number of co-op representatives. Photo by Patty

Hannapel, courtesy AgMRC

Agri-tourists get a behind-the-scenes look at the

Tammen Treeberry blueberry and Christmas tree

farm near Braidwood, Ill. For more on this operation

and many other informative articles, visit the

AgMRC Web site, www.agmrc.org . Photo by Malinda

Miller, courtesy AgMRC 
16 May/June 2003 / Rural Cooperatives

By Sandra Clarke

Editor’s note: Clarke is communications manager at

the Center for Agricultural & Rural Development (CARD),

Iowa State University.

Named for the central Iowa county where producers

have grown soybeans for generations, the Greene Bean Project is

introducing a new kind of bean for

its rural community: the edible

bean. The project was formulated

out of the desire of several Greene

County farmers to diversify their

crops and promote value-added

agriculture in their area.

Having witnessed failed attempts

by other producers to try alternative

crops, the group of 24 producers

took a more perceptive approach to

the challenge—one that led them to an attitude of cooperation and risk sharing. 

“We learned early on that a cooperative effort, sharing the learning curve and risks and rewards, far outpaced any one individual’s effort in all aspects of starting a new business,” says Chris Henning Cooklin,

project manager for the Greene Bean Project–Alternative Crop Enterprises. “No one person could have expertise in all areas, but by sharing freely of our individual

expertise, we could overcome obstacles more quickly.”

In their 2001 inaugural year, the group adopted a

mindset of experimentation and research to evaluate

the potential of the alternative crop

and to establish a baseline of production practices. First, they had to

determine if they could grow a

quality, edible bean with market

potential before they could seek

additional resources or capital

investment.

The Greene Bean Project

sought help from Iowa State University Extension and the Agricultural Marketing Resource Center

for information and access to

research. Production and management practices of

growers in other regions were collected, and regional

variations of weather, soils, pests, and other agronomic

variables were considered.

The Project steering committee used Internet

research, collaborated via e-mail and brought in experiThe Greene Bean Project:

Growers’ field of dreams is edible beans

A 2002 field day at the Henning Cooklin farm in

Greene County, Iowa, gave growers a chance to

compare 15 varieties of edible beans. Photos by

Carola Wicenti, courtesy Greene Bean Project 

burg, Calif.; Eugene Quast, Swiss Valley Farms, Dubuque, Iowa; Richard E.

Rominger, Rominger Farms, Winters,

Calif.; Kenneth Rutledge, West Liberty Foods, West Liberty, Iowa and Chris

Williams, 21st Century Alliance, Manhattan, Kan. 

A representative from the Rural

Business-Cooperative Service of

USDA Rural Development also sits on

the board.

Web site content

Initially, staff conferred with individuals from the USDA Ag Library to

develop the most efficient method for

categorizing information and to share

common resources, whenever possible.

Since the Web site became available to

the public in April 2002 it has received

more than 1.4 million hits. The content portion of the AgMRC Web site is

divided into four main sections:

1. Commodities and Products; 

2. Markets and Industries;

3. Business Development;

4. Directories and State Resources.

The Commodities and Products

section and the Markets and Industries

section are for producers to use to

explore the market potential of a valueadded idea. The Business Development

section is for producers to use to put

“wheels” under an idea after determining its feasibility.

The Commodities and Products

section provides information from the

perspective of adding value to the commodities and products traditionally

produced on the farm. Examples are

corn, beef, fruits, etc. Information is

provided along the supply chain, from

production, processing and marketing

for each commodity/product, focusing

on marketing. 

Specific information on the product

differentiation is presented. For 

example, organic, natural and direct

marketing aspects of each specific commodity are detailed in the individual

commodity sections. General food

industry information is presented

under Food Industry in the Markets

and Industries section. 

Only information specific to valueadded agriculture is provided in the

commodity section. 

The Markets and Industries section

provides information on the major

markets and industries (food, energy,

etc.) that producers may enter during

the process of adding value to their

commodities.
The Business Development section

focuses on information needed to create and operate a viable value-added

business. The information is provided

sequentially for use during the business

analysis, creation, development and

operation process.

The Directories & State Resources

section includes directories created for

the Web site by AgMRC staff. Staff

initially compiled a list of 300 service

providers and notified them of a new

directory for “Value-added Consultants

and Service Providers.” In the past

year, 200 service providers registered

on the directory, providing assistance

to groups with legal, commodity-specific, financial, marketing expertise and

more. A value-added business directory

was also created to give new valueadded businesses a resource to contact.

Currently, 90 successful and non-successful businesses are listed on the site.

A state resource directory was established to give producers at least one

contact name in value-added agriculture for each state. Additionally within

the directory, individual state laws have

been added pertaining to specific regulations within each state such as establishing a cooperative, sale of foods, etc.

A calendar of value-added events is

included. This allows producers interested in attending value-added events

to determine what is coming up within

their region.

Research focus

Several of the AgMRC partners are

focusing their efforts on research projects geared to assist producers

involved in value-added agriculture.

The Center for Agricultural and Rural

Development (CARD) at Iowa State

University finalized research on four

projects and submitted working papers

for the AgMRC Web site. These four

papers are now listed in the Business

Development and New Information

sections of the site. The four papers

are: “Farmer-Owned Brands”; “Information Sharing and Oligopoly in Agricultural Markets: The Role of Bargaining Associations”; “An Initial Analysis

of Adoption of Animal Welfare Guidelines on the U.S. Egg Industry”; and

“Can Spot and Contract Markets CoExist in Agriculture?”

Kansas State University started a

case research study on Ocean Spray

Cranberries to understand brand creation and valuation. Other studies have

recently been compiled on South

Rural Cooperatives / May/June 2003 17

enced producers for numerous

meetings before the first growing

season. “From organizational and

communication skills to agronomics

and marketing, the AgMRC and ISU

Extension staff brought their own

special skills and shared experiences with our growers,” says 

Henning Cooklin.

As the Greene Bean Project developed, so too did the Agricultural Marketing Resource Center. The AgMRC

added more and more resources to

its Web site, and offered outreach

opportunities to clients. Henning Cooklin took advantage of

the Center’s Grant Writing 101 and Marketing Your Business workshops. 

“Both were helpful in networking and with basic

skills training in writing press releases, talking with the

press, and in preparing budgets for grants,” she says.

Once the group had obtained the critical market

research and had formulated its production and riskmanagement plan, they were ready to embark on beginning their crop-diversification experiment. The other

crucial factor in launching the alternative crop was to

find a buyer for their untested crop. This is an area

where the cooperative nature of the enterprise really

helps. Several producers can grow quantities on a scale

that can attract the attention of the marketplace.

Two edible beans were selected for compatibility with

the producers’ existing cropping

practices: the adzuki and the chickpea. Producers were encouraged to

grow only the number of acres they

were willing to put at risk, to perform their own production tasks and

to absorb all personal production

costs. A common machine and

operator harvested the crop, and

sales revenues were divided equally among the growers, based on

acres in production.

In the group’s first growing season, it was able to raise enough

product to truly test the market and members were left

with a favorable impression. They continued the

endeavor into the 2002 growing season, and were excited by the results. “We have this year’s crop of adzuki

beans almost sold already,” says Henning Cooklin, “and

at a good price, too.” 

The group plans to adopt a quality management system in the future to further differentiate their product.

Greene Bean Project growers also are contemplating

the potential of other additional crops. Expansion of the

group base and acres is predicated on further research

and careful evaluation of new markets, a prime example

of what the Agricultural Marketing Resource Center aims

to provide. “There are so many good resources out there,”

says Henning Cooklin. “Do the research, share the knowledge and you’ll be able to share the benefits, too!” ■

Co-op members—including (clockwise from

top) Sheila Dotts Hebenstreit, Ivan Kenney, Glen

Carstensen and E.R. Henning—relax and compare notes following the field tour. 
18 May/June 2003 / Rural Cooperatives

Dakota Soybean Processors, Dakota

Growers Pasta and 21st Century

Alliance. KSU completed an ethanol

pre-feasibility model—which can be

accessed on the Internet at: www.agecon.ksu.edu/renewableenergy/—working with CoBank and Sparks Companies. They are now beginning a similar

project for bio-based diesel.

Kansas State visited with General

Mills on the feasibility of developing a

certification program for hard white

wheat varieties and tracking those

individually from producer to elevator,

to flour mill and baking lab. This

helped develop research for the hard

white wheat incentive program in the

Farm Bill.

The University of California has

begun studies designed to improve

practical understanding of how different industries have evolved in their

approaches to value-added marketing.

Studies include:

■ Investigating the effect of public

policy, especially milk marketing

orders, on marketing and processing cooperatives;

■ The role of pistachio industry

marketing orders in maintaining

quality and the industry’s reputation for food safety.

The University of California also

has launched a project to better understand the value-added relationships

between growers and processors in the

tomato industry, especially the effects

of vertical integration by growers on

the processing side of the industry. A

case study will focus on four large

growers who have joined together to

build a tomato processing plant. 

UC has also begun to apply an economic model to evaluate the payoff to

producers from innovations in the use

of whey proteins. This work represents

close collaboration among food scientists and economists. The costs and

potential market for the new uses of

whey have been analyzed. Now those

results are being applied in a model of

dairy supply and demand that includes

the complications of federal and state

policy such as price supports and milk

marketing orders. UC is also studying

several key aspects of the wine grape

industry and is compiling data on China’s production and demand for horticultural crops. This is the first time

such information has been available for

industry analysts to consider the role of

China in many of these commodities. 

Other projects

Recognizing that many farmers are

selling directly to consumers via farmers markets, Community Supported Ag

(CSA) programs and other avenues,

AgMRC teamed up with the Iowa

Farm Bureau Federation to pilot a project that gives farmers the opportunity

to sell their product via a Web site and

assists in the development to provide a

site for producers to list their goods at

an affordable price. This service is

being offered as a pilot project in Iowa

and will be expanded to other states in

the coming months. 

Another unique opportunity for the

AgMRC Web site is the development

of a Web site for a Pork Niche Market

Working Group. This group, comprised of individuals from commodity

groups, ISU Extension and other agribusinesses, works to develop new niche

market opportunities for small pork

producers. Because their activities

directly influence value-added pork

operations, AgMRC is hosting a Web

site within the AgMRC Web site for

the group. 

In addition to external links, staff

members write pieces for posting on

the Web site. Staff interviewed valueadded agriculture businesses and

wrote business profiles from those

interviews. Business profiles were

added for four enterprises, including

Cory’s Country Lamb, County Line

Orchard, Tammen Treeberry Farm

and Northern Vineyard Winery. Additional profiles have been started for

U.S. Premium Beef, Loess Hills

Aquaculture and West Liberty Foods.

Staff developed an ethanol pre-feasibility model that included an Iowa

emphasis with Co-Bank. The model is

adaptable to most corn-belt states. Staff

members also wrote several other

pieces within Business Development,

including “Introduction to Grant Writing,” “Farmer Alliances—A New Breed

is Emerging” and “Funding Sources.” 

AgMRC staff organized and planned

a workshop for producers titled

“Telling Your Story, Selling Your Idea.”

The two-day workshop focused on the

communication needs of value-added

agricultural groups.

Contact AgMRC

Producers, extension personnel and

rural development specialists contact

the resource center either via toll-free

phone at 866-277-5567, e-mail at agmrc@iastate.edu or the Web site,

www.agmrc.org.

AgMRC staff will speak at large, value-added agricultural gatherings or at

annual meetings to share with your

group what the Center can offer. Additionally, we would be happy to provide

promotional or other background

information for meetings and events. 

Please contact us through the above

channels with any questions or opportunities to share the message of the

Center. We look forward to hearing

from you. ■

AgMRC teamed

up with the Iowa

Farm Bureau

Federation to pilot

a project that gives

farmers the 

opportunity to sell

their product via a

Web site.
Rural Cooperatives / May/June 2003 19

Charles A. Kraenzle, Director

Statistics

E. Eldon Eversull, Agricultural

Economist

USDA Rural Development-RBS 

Editor’s Note: Mr. Kraenzle died last year

during the compilation of cooperative data

for this report. Assistance in developing

estimates of cooperatives’ share of farm

marketings and farm production expenditures was provided by the staff of the Rural

Business-Cooperative Service of USDA

Rural Development, including: Tony

Crooks, grains/oilseeds and rice; David

Chesnick, 100 largest cooperatives; Andy

Jermolowicz, fruits/vegetables and tobacco;

Bruce Reynolds, cotton/cottonseed and

Charles Ling, dairy.

armer cooperatives’ share

of total farm marketing—including crops,

livestock and poultry—

climbed to 28 percent in

2001, up from 27 percent in 2000. The

market share is based on cooperatives’

net marketing business volume of $75

billion in 2001. That’s $3 billion more

than in 2000, but down from the record

$79.4 billion collected in 1996, when

the market share of co-ops peaked at 31

percent (figure 1). 

Cooperatives’ gained market share

on a wide front, including milk/milk

products, fruits/vegetables, livestock,

dry beans/peas, rice, tobacco and sugar.

Most of these gains were modest, with

milk/milk products and fruits/vegetables each climbing 1 percent and rice

gaining 2 percent. Sales decreased for

grains/oilseeds, cotton, poultry/eggs

and nuts. 

Cooperatives also rang up $24.8 billion

in net sales of farm supplies in 2001,

about $700 million more than in 2000

and only $400 million less than the record

of $25.2 billion set in 1997. However,

their market share for major farm production supplies—including feed, seed, fertilizer, crop protectants and petroleum—

dropped 1 percent from 2000. 

Milk sales top $20.5 billion 

Farmer cooperatives paid producers

$20.5 billion for milk/milk products in

2001, up $3.5 billion from 2000. U.S.

farm cash receipts for milk/milk products also climbed nearly $4 billion from

2000. Cooperatives’ market share of

total U.S. farm cash receipts for

milk/milk products increased from 82

to 83 percent (table 1).

However, milk/milk products market

share estimates for both years have been

revised downward by 5 to 7 points,

based on recent studies by USDA Rural

F

Co-ops increase share of farm marketings;

share of farm supply sales dips slightly

Figure 1—Cooperatives’ shares of U.S. farm marketings and major

farm supply expenditures, 1992-2001

35

30

25

20

15

10

5

0

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Farm Marketings1

Major Farm Production Expenditures2

1 Based on U.S. farm cash receipts.

2 Based on U.S. cash expenditures for fertilizer, petroleum, crop protectants,

feed, and seed used for farm production.

Percent
20 May/June 2003 / Rural Cooperatives

Development economist Charles Ling.

His newest study covers 2002 marketings and will be released later this year.

The revision in milk/milk products

share lowered overall co-op market

share by 0.5 percent. 

Cooperatives’ market share of

grain/oilseed marketings at the farmgate decreased 6 percent, from 44 percent in 2000 to 38 percent in 2001.

During 2001, farmer cooperatives paid

producers about $15 billion for their

grains and oilseeds, about $300 million,

or 2 percent, less than in 2000. Total

marketings of all grains and oilseeds

produced in the United States increased

almost 12 percent from 2000 to 2001.

Cotton and cottonseed cooperatives’

share of cash receipts was 42 percent in

2001, 7 percent less than in 2000. Farm

cash receipts for cotton and cottonseed

continue to decline, down $300 million

from last year. 

Total U.S. average cash receipts for

fruits/vegetables were up almost $2 billion, or 10 percent. Cooperatives

accounted for 19 percent of the

nation’s fruit/vegetable sales in 2001, 1

percent more than in 2000. Cooperatives’ paid fruit/vegetable producers

about $5.6 billion in 2001, up from

$4.9 billion a year earlier.

Cooperatives’ share of livestock/

wool/mohair marketings was 13 percent

in 2001, 1 percent more than in 2000.

Cooperatives paid these producers $7.7

billion in 2001, almost 12 percent more

than the $6.9 billion paid in 2000. 

Cooperatives’ share of “all other”

marketings—including poultry/eggs,

dry edible beans and peas, tobacco,

nuts, rice, and sugar—was 12 percent,

down 1 percent from 2000. Cooperatives paid farmers $5.6 billion for “all

other” products marketed in 2001,

down 13 percent from $6.4 billion in

2000. Sharp drops in prices for sugar

and tobacco contributed to the decline. 

Figure 2 shows the most recent fiveyear market-share trends for selected

farm commodities marketed by farmer

cooperatives. Milk/milk products,

fruits/vegetables, and livestock/

wool/mohair shares have been fairly

level. Grains/oilseeds and cotton/cottonseed shares have varied, with both

trending downward in 2001. 

Farm supply share dips 1 percent 

Cooperatives’ share of major farm

production supply sales—feed, seed,

fertilizer, crop protectants and petroleum—was 26 percent in 2001, down 1

percent from 2000. Cooperatives’

share of fertilizer, petroleum and seed

all increased while sales of crop protectants and feed decreased (table 2,

figure 3). 

Total U.S. farm cash expenditures

Table 1—Cooperatives’ shares of U.S. farm marketings, by selected

commodity group, 1997-2001

Commodity group 2001 2000 1999 1998 1997

Percent of U.S. farm marketings1

Milk/milk products 83 82 83 83 83

Grains/oilseeds 38 44 34 39 43

Cotton/cottonseed 42 49 27 43 38

Fruits/vegetables 19 18 18 19 19

Livestock/wool/mohair 13 12 13 14 12

All other2 12 13 12 12 12

Total 3 28 27 26 29 28

1 Values rounded to the nearest whole percent. Some prior year values were 

revised.

2 Includes poultry/eggs, dry edible beans/peas, nuts, rice, tobacco, sugarcane, sugar

beets, honey, and all other marketings.

3 All farm commodities weighted by value.

Figure 2—Cooperatives’ shares of U.S. farm products marketed by

commodity group, 1997-2001

100

80

40

20

0

1997 1998 1999 2000 2001

Milk/milk producs Grains/oilseeds

Cotton/cottonseed Fruits/vegetables

Livestock/wool/mohair

Percent of U.S. cash recepts
Rural Cooperatives / May/June 2003 21

for the five major supply items

increased about 4 percent, to $60 billion, from 2000 to 2001, while cooperatives’ sales growth remained flat at

$15.8 billion in both years. Cooperatives’ fertilizer sales of $4.7 billion

were up from $4.3 billion in 2000, or

about 9 percent. Total fertilizer

expenditures for all of U.S. agriculture were up about a third of that

amount in 2001.

Cooperatives’ 46-percent share of

petroleum expenditures in 2001 was up

from 43 percent in 2000. Cooperative

sales increased by 5 percent while U.S.

petroleum sales for farm production, at

$ 7.2 billion, were unchanged.

Crop protectant sales for cooperatives declined 2 percent from 2000 to

2001, to about $2.9 billion, and their

share of this market dropped one percent, to 34 percent. Total expenditures

by all U.S. farmers for crop protectants

increased 1 percent, to $8.6 billion, during that time. 

Feed sales by cooperatives declined

about 14 percent, to $3.9 billion, while

total U.S. feed expenditures increased

1 percent, to $25 billion. Cooperatives’ share of feed expenditures

declined 3 points, to 15 percent. 

The lowest market share for co-ops

among the major farm supply items is

seed. Co-ops held 13 percent of the

seed market in 2001, unchanged from

2000. Cooperatives’ seed sales

increased by $100 million, or 15 percent, in 2001, while total U.S. cash

expenditures for seed increased 14 percent, to $8.3 billion. 

How co-op share is calculated 

Cooperative-share estimates for

selected commodities and farm 

supplies are based on data from several

sources. These include the annual survey of farmer cooperatives conducted

by the Cooperative Services program

of the Rural Business-Cooperative Service, other Cooperative Services studies, cash receipts from farm marketings

and farm production expenditures published by USDA’s Economic Research

Service (ERS), and from Cooperative

Services’ commodity specialists. 

Cooperatives’ shares of farm 

marketings represent estimates of

cooperative activity at the farm-gate,

or first-handler, level.

Cooperatives’ shares of farm marketings were estimated by first subtracting gross margins from net cooperative business volume. These

estimated “payments to farmers” were

then related to their respective total

U.S. cash receipts to calculate the 

percentage shares. 

Shares of the major farm supply items

were estimated by subtracting from

cooperatives’ net business volume: export

business volume, sales to other firms and

supplies sold for non-farm purposes.

These adjusted business volumes were

then related to their respective total U.S.

cash expenditures to calculate percentage

share estimates. ■

Table 2—Cooperatives’ shares of major U.S. farm supply 

expenditures, by production item, 1997-2001

Farm production item 2001 2000 1999 1998 1997

Percent of U.S. farm supply expenditures1

Fertilizer 45 43 45 45 45

Petroleum 46 43 45 50 45

Crop protectants 34 35 34 34 34

Feed 15 18 19 21 22

Seed 13 13 10 10 10

Total2 26 27 27 29 29

1 Values rounded to the nearest whole percent. Some prior year values were 

revised.

2 The five major farm supply items weighted by value. 

Figure 3—Cooperatives’ share of selected U.S. farm production

expenditures, 1997-2001

60

50

40

30

20

10

0

1997 1998 1999 2000 2001

Fertilizer Petroleum

Crop protectants Feed

Seed

Percent of U.S. cash expenditures
By Steve Thompson, 

Writer-Editor

USDA Rural Development

heva is a healthy, happy threeyear-old boy, a joy to his parents

and grandparents. But soon after birth he

was a very sick baby, with a potentially fatal

heart defect.

To make matters worse, he was born in a

rural hospital hours from the nearest

neonatal cardiologist, a specialist who

could treat his illness. He is alive today

because new technology made it possible

for the specialist to diagnose and treat the

child from over 90 miles away. 

Telemedicine, made possible by broadband

telecommunications, saved Dheva’s life.

D

No mountain too high

Rural broadband service helping to save lives of isolated patients

22 May/June 2003 / Rural Cooperatives

Winchester Medical Center, a small rural hospital, is more than 

90 miles from the medical specialists at the University of Virginia

Hospital (inset, opposite page). Photo courtesy of Winchester 

Medical Center; Background photo of Blue Ridge Mountains courtesy 

of University of Virginia Hospital

“Broadband technology is

going to be incredibly 

important for us to stay

on the cutting edge of 

innovation here in America.”

—President George W. Bush 
Heart murmur endangers infant

Dheva Muthuramalingam was born Dec. 29, 1999, at

Winchester Medical Center, in the town of the same name in

the northern tip of Virginia. His family lived across the state

line in West Virginia. It was soon apparent to his attending

physician, Dr. Edward Lee, a neonatologist, that all was not

right with the child. Examination revealed a heart murmur,

prompting Dr. Lee to call for an ultrasound scan. 

The scan was scrutinized by a specialist in adult cardiology,

who discovered a small hole in the infant’s heart. But it was

not clear that this defect was the cause of the baby’s distress.

And the expertise required to make a proper diagnosis was not

available. The Winchester area doesn’t have the population

necessary to support a cardiologist specializing in newborns—

a problem it shares with thousands of rural hospitals.

Says Dr. Teresa Clawson, Dr. Lee’s fellow neonatologist at

Winchester, “We’re considered a rural hospital. We do provide neonatal intensive care to critically ill and pre-term newborns. But Dr. Lee and I are the only pediatric sub-specialists

at this hospital, and we are geographically isolated by the

mountainous region around us.”

Dr. Lee decided to use the hospital’s telemedicine hookup

to consult with Dr. Karen Rheuban, a neonatal cardiologist at

the University of Virginia Hospital in Charlottesville, and

coincidentally a strong advocate of the use

of telemedicine.

Dr. Rheuban suggested that the scan be sent to her electronically, and within minutes was looking at a high-quality

rendering of the ultrasound picture, made possible by the

high-speed connection between the two hospitals. Dr.

Rheuban was quickly able to spot what the adult cardiologist

was not trained to see. Dheva’s descending aorta—the main

artery that carries blood from the heart to the lower part of

the body—was completely blocked. 

The only reason he was still alive was that newborns have

a blood vessel connecting the aorta and the pulmonary artery,

which takes blood to the lungs. Enough blood was getting

through to keep the baby alive, but the passage would soon

close. When that happened, his kidneys and other lower

organs would cease to function, and the child would die. 

Dr. Rheuban quickly prescribed a drug that would keep

the passage open and recommended that the baby be immediately transported to UVa for open-heart surgery. Getting

the baby to UVa Medical Center, including sending a van to

Winchester, took about seven hours. “If we hadn’t been able

to do the long-range diagnosis, the baby probably would

have been dead or on the verge of death by the time he

arrived,” Dr. Rheuban says. 

Rural Cooperatives / May/June 2003 23

Telemedicine makes UVa Hospital’s highly rated medical staff available to people in rural areas across Virginia. Photo courtesy of

University of Virginia Hospital

During a live teleconference, a video

image of Dheva Muthuramalingam, his

mother and Winchester Medical Center

physician Teresa Clawson is beamed into

USDA headquarters in Washington. They

discussed their “telemedicine experience” and how it saved Dheva’s life. 

USDA photo
Dr. Rheuban has been a strong advocate of telemedicine for more than 12

years. She is medical director of the UVa

telemedicine program and was instrumental in getting a telemedicine system

up and running in rural Virginia.

Conference sparks interest

in wider use of telemedicine

Rheuban says the idea for the system

was born when she and a number of

other UVa doctors attended a conference on continuing medical education.

One of the speakers was Dr. Jay H.

Sanders, a professor of medicine at

Johns Hopkins University Medical

School and, at the time, president of

the American Telemedicine Association. Rheuban and a number of other

UVa physicians were galvanized by

Sanders’ lecture detailing the advanUSDA Rural Development’s Broadband Pilot Program

has been expanded into a full-fledged program offering

more than $1.4 billion in loans and loan guarantees to rural

telecommunications utilities. The funding is available for

the construction, acquisition and improvement of broadband communications facilities and equipment in eligible

rural communities. Program rules define a broadband system as one that can transmit at least 200 kilobits per second both upstream and downstream from a customer.

Regulations for the new Broadband Loan program

were published in the Federal Register Jan. 30, 2003. 

Funding for fiscal year 2003 includes nearly $1.3 billion

for direct “cost-of-money” loans, in which the interest

rate is derived from a formula reflecting current interest

rates, $80 million in direct loans at 4 percent interest and

the authority to guarantee another $80 million in loans

from conventional lenders. Applications made under the

pilot program will be given priority for approval. 

Broadband communications open up a wide array of

possibilities to rural communities, from improved healthcare services and education opportunities, to accelerated economic development (see “Closing the Gap,” Rural

Cooperatives July/August 2002, and “Legg Sees Vital

Role for Utility Co-ops,” September/October 2002). The

Bush administration is emphasizing the promotion of

rural broadband in its domestic policy. President George

W. Bush recently said, “In order to make sure the economy grows, we must bring the promise of broadband

technology to millions of Americans . . . broadband technology is going to be incredibly important for us to stay

on the cutting edge of innovation here in America.” 

USDA Rural Development has been making loans for

broadband through its regular telecommunications

assistance as well as the Broadband Pilot Program.

With the new fully-funded Broadband Program, it is

hoped that many telecom cooperatives and others that

up to now have held back from adopting high-speed

transmission will move to bring the advantages of the

new technologies to their members.

Hilda Gay Legg, Administrator of the Rural Utilities

Service, which administers the new program, believes

that broadband will play a key role in rural economic

growth. “We’ve only scratched the surface of what this

technology can do,” she says “And we intend to be in

the forefront of developing it to bring its benefits and

advantages to rural America.” ■

USDA providing $1.4 billion to expand rural broadband 

24 May/June 2003 / Rural Cooperatives

UVa Hospital is the hub of a telemedicine network 

connecting 35 hospitals, clinics, schools, prisons and 

college campuses. USDA graphic by Steve Thompson
Rural Cooperatives / May/June 2003 25

USDA and the Bush Administration are proposing to

increase spending by $44 million to develop geographic

information systems (GIS). The technology is based on

the Global Positioning System (GPS), which uses signals

from special satellites to determine where a small

receiver is located (within yards) on the face of the

earth. GIS would provide both government and its customers with new tools to accomplish tasks as diverse as

determining eligibility for single-family housing loans, to

evaluating prospective project sites in regard to nearby

environmental hazards. 

The new technology will make it possible to do some

tasks in seconds which might otherwise take hours. It

brings together GPS, which can tell you where you are

at the push of a button, with the latest in computer software technology. Experts say that as the new technology matures, it will prove highly useful to cooperatives

and other rural businesses.

GIS combines GPS with computer databases and

other software to build specialized maps and develop

tables and graphs pertaining to a wide variety of issues.

One piece of software, called PIX, is a Web-based application developed specifically for USDA multi-family

housing programs. It enables USDA to immediately identify the location of a multi-family housing project when

the owner has decided to pay off a Rural Housing Service loan. This allows quick notification of nonprofits

and government agencies, as required by federal law.

Another GIS function spatially locates all data in a new

Rural Development data “warehouse,” making it possible to retrieve information based on selected geographic criteria, or through a map. ■

$44-million push for new geographic technology

tages telemedicine could bring to rural

physicians, clinics and hospitals in serving the needs of their far-flung

patients. Back home in Charlottesville,

they formed an ad-hoc group to promote a system that would tie the many

rural hospitals and clinics in Virginia. 

Their activities quickly led to a small

study group, which paved the way for

launching the program in 1995. The

system began formally seeing patients

in 1997. “We started slowly,” she says.

“We weren’t looking to compete in

areas that have

comprehensive

health services. 

We wanted to

reach patients that

didn’t have those

services.”

That meant

looking for independent rural hospitals and clinics

that needed the

advantages they

had to offer. It also

meant finding

financing: UVa

raised the funds to

build their central

telemedicine facilities, but coming up

with the money to hook up and equip

far-flung clinics and hospitals was the

responsibility of the participating institutions. The funds have come from a

wide variety of sources, including

USDA Rural Development’s Community Facilities and Rural Utilities programs. Through its Distance Learning

and Telemedicine Program, a Rural

Utilities Service program, Rural Development has made two grants totaling

over $300,000 to expand the UVa system, as well as a Community Facilities

loan of $324,500 to enlarge an existing

telemedicine facility. 

Currently, the UVa telemedicine

system has 35 participating facilities

across the Commonwealth of Virginia.

These sites include community clinics

and hospitals, schools, prisons and other campuses in the state’s university

system. This spring, UVa plans to add

another eight sites in remote and

mountainous western Virginia, where

the population density is less than 10

persons per square mile. 

Quality health care

Patients who take advantage of the

system have access to some of the best

care available. UVa Hospital is ranked

among the top 100 hospitals in the

country by one study, and 42 doctors at

the facility were ranked among America’s best in a survey of their peers.

They include the current president of

the American College of Cardiology

and a former president of the American

College of Surgeons.

According the Dr. Rheuban, the system has so far made possible more than

5,200 remote medical consultations.

And telemedicine is not used just for

diagnosis and treatment, but also for

providing continuing education for

continued on page 33

The control room of Winchester Medical Center’s telemedicine

facility. Telemedicine hook-ups are used not only for remote diagnosis and treatment, but also for continuing education of healthcare professionals. Photo courtesy of Winchester Medical Center
26 May/June 2003 / Rural Cooperatives

Jim Wadsworth, 

Program Leader

Education and Member Relations

USDA Rural Development

Editor’s note: For more on this and related topics, see Cooperative Information Report

58, “Assessing Performance and Needs of

Cooperative Boards of Directors,” on-line at:

www.rurdev.usda.gov/rd/pubs/#rbs , or email james.wadsworth@usda.gov to request a

hard copy or with questions. 

hallenging business times

always place boards of

directors under increased

pressure to perform well,

but the current operating

environment is especially tough. More

than ever, cooperative directors must

have a solid grasp on their fiduciary

and other major responsibilities. These

were outlined well by USDA’s James

Baarda in a recent series of articles in

this magazine (see July/August 2002

and subsequent issues), in which he

describes the circle of responsibilities

of directors, the high standards they

are held to and the unique challenges

they face given today’s circumstances. 

It is vitally important for members

and directors to read these kinds of

articles or attend workshops that cover

such material. Equally important is

how directors work together as a group

in board meetings. It is critical that

board meetings be conducted correctly.

To do so, directors need to take a collective look at how well the board

operates during its meetings—its efficiency, effectiveness and productivity. 

Well-planned and conducted meetings make the most efficient use of time

in accomplishing necessary tasks. Most

directors of cooperatives can ill afford

to waste time in board meetings when

they also have other important responsibilities on their own operations. 

Assessing board meeting productivity from time to time is an imperative.

One way to assess the productivity of

board meetings is through an assessment exercise. To do this correctly, each

director should complete a board meeting assessment by answering a number

of questions about the board’s meetings. 

The idea is to gain a consensus

about weak areas that need improvement. The manager may also participate in such an exercise. The manager

plays an active part during board meetings and may identify problem areas

overlooked by directors.

Areas to assess

A number of important areas should

be assessed, including: use of an agenda, procedural conduct, use of review

materials, committee reporting, use of

board meeting minutes and discussion

participation. To gain a clear picture on

how well the board performs in these

areas, directors (and possibly the manager) should examine a number of

functions. This article provides a list of

21 statements that could be included in

a review. A board may decide to

include other statements as well. 

Each item should be carefully considered by directors, who should make one

of three responses: 1) no improvement

is needed; 2) uncertain, could be better;

or 3) improvement is a must. Evaluating

the statements on an individual basis is

the first part of assessment. 

Following evaluation, directors

should discuss the statements that got a

response of “uncertain” or “improvement is a must” by one or more directors. The discussion should center on

ways to improve that area if it is

declared to be a significant problem.

Another option is for the board to use a

special committee to consolidate the

assessments and provide a report to the

full board prior to the discussion. Some

functions to assess:

1. The meeting agenda and

required review materials (management

reports, committee reports, financial

reports, other materials, etc.) are sent

to directors prior to the meeting to

provide ample time for review (at least

seven days ahead of the meeting).

2. Major topics, items for discussion and timing of such issues are organized and identified on the agenda.

3. Meeting conditions are adequate

(comfortable seating and room temperature and adequate lighting so all directors can make eye contact with each

other).

4. All directors are prepared for the

meeting (they review the required prepared materials ahead of time).

5. The chairperson opens and

adjourns the meeting promptly at the

scheduled times.

6. The chairperson keeps the meeting moving according to the agenda and

in accordance with correct parliamentary

procedure, given cooperative policies.

7. Agenda changes are discussed

and approved by the board.

8. Enough time is allowed for discussion and action of each agenda item.

9. The chairman guides the discussion, encourages comment 

from all directors and keeps the 

C

Tune-up your meetings

Periodic analysis is necessary to ensure that cooperative

board meetings are efficient, effective and productive 
Rural Cooperatives / May/June 2003 27

discussion focused on the topic.

10. Just before adjournment, a summary of the business conducted is

reviewed.

11. Clear and concise board meeting

minutes of each meeting are prepared,

presented and accepted or modified

according to board policy.

12. Cooperative employees and staff

are occasionally invited to the meeting

by the general manager to provide

technical support.

13. Committees report to the

board at appropriate times.

14. Chairperson allows for questions from committee members.

15. The board has an “open

door” policy for regular meetings.

Any member may attend (except

when the board is in executive

session).

16. Attendance is taken at

meetings (every director should

attend at least 90 percent of

scheduled board meetings).

17. Chairperson is informed in

advance when directors plan to be

absent from a regularly scheduled

meeting.

18. Each director participates and

contributes to discussions during board

meetings; a minority of directors does

not control most discussion.

19. Directors are courteous toward

each other, management and guests.

20. During long meetings, breaks are

used to avoid disruptions in procedure.

21. Time is scheduled for a board

executive session, if required.

For the most part, these statements

will provide a fairly good assessment

of how well the board operates as a

group and help to identify problem

areas needing improvement. Such an

assessment needs to be conducted on

a specific schedule because board

membership and officer makeup periodically changes. What worked well

with one board might not fit another.

Evaluation should be conducted at

least annually and results compared to

previous assessments to measure

progress.

This same process could be followed for board committees. 

Other important areas to examine 

Other aspects of board meetings can

be measured. At a time when membership in many cooperatives is decreasing

along with the drop in the number of

producers, cooperative boards must

take extreme care to ensure that their

member constituents are being adequately and properly represented at

board meetings. 

Directors, at times, tend to become

absorbed with the interrelationships of

the board itself and with day-to-day

management issues. If not checked, this

can result in a loss of member representation at board meetings. 

Directors need to take a step back

once in a while and ask themselves:

how well are they representing their

constituent members? Are they

wrestling with difficult issues and making tough decisions?

Some functions to assess include

making sure that: 

■ directors adequately voice the

concerns of their constituents on distinct issues or problems;

■ full and open discussions take

place about how constituents’ views may

differ from the board’s, or about how

the needs and views of one group of

members may vary from another group; 

■ constituents have trust in the way

the board is representing them and

properly conducts board meetings.

Some cooperative boards follow parliamentary procedures, such as Robert’s

Rules of Order. If so, the board should

assess how well the individual steps of the

procedures are carried out by the board

chair and followed by members. This

means going beyond the assessment of

function 6 and getting more into the

details of the procedural methodology. 

A board that attempts to follow a

standard procedure, but deviates from it

on a regular basis may be less productive

than it would be if it didn’t try to follow

the procedure. Boards following

specific procedures should periodically assess the steps of the method

it’s using to conduct its affairs.

Excessive debate over some

issues can bog down board meetings. Sometimes a director cannot

let an issue go even after it seems to

have been settled or, at least, tabled.

Such action can severely interfere

with conducting the rest of the

board meeting. If this happens on a

regular basis, the cooperative will

ultimately suffer from the board’s

slower decision-making on other

issues. If this occurs regularly, assess

why and take steps to alleviate the

adverse behavior.

Tailor topics to your co-op

The suggestions in this article will

not provide assessment tools needed by

each and every cooperative board. The

intent is to remind cooperative directors of the importance of having productive and effective meetings. 

Directors should devise a listing of

functions that address the specific

needs of their cooperative and their

board meeting practices. Then, periodically assess how well the board is operating as a unit. 

Not only must today’s cooperative

directors be well trained and extremely

knowledgeable about their cooperative’s industry and a multitude of business practices, but they must also be

able to meet and work together to

jointly conduct the cooperative’s business as efficiently as possible. In an

increasingly competitive operating

environment, correct and quick cooperative board decisions must be the

order of the day. ■

For an effective board meeting, the chairperson should

guide the discussion, encourage comment from all directors and strive to keep discussion focused on the topic. 

USDA Photo by Ken Hammond 
Organic co-op plans new 

HQ as sales soar

Despite growing success, the

nation’s largest organic farmers

cooperative will stick to its home

base at LaFarge, a community of 780

residents in western Wisconsin.

Organic Valley Family of Farms,

which now has more than 500 

members in 17 states, from Maine to

California, plans to build a $4 million headquarters at LaFarge this

year. “It’s proof of our dedication to

the rural community,” said CEO

George Simeon. “Part of our mission

is to be true to rural development

and rural towns.” The cooperative

was created 15 years ago by a half

dozen family farms. 

Sales for 2002 jumped more than

$25 million, to $125 million. By 2005,

sales are projected to hit $215 million.

Co-op leaders credit its success to its

ability to provide a stable, equitable

and sustainable level of pay for farmermembers. Organic Valley farmers produce more than 130 organic foods,

such as milk, butter, cheese, creams,

eggs, produce, juice and meats sold in

food cooperatives, natural food stores

and supermarkets.

“They’ve done a great job,” said

Bob Cropp, retired dairy economist

with the University of Wisconsin.

“It’s a great success story achieved

through unorthodox methods under

the leadership of an unorthodox 

executive.” 

NORPAC buying Simplot’s

vegetable processing plant 

Consolidation in the vegetable

packing industry has resulted in fewer and larger customers, prompting

NORPAC Foods, Oregon’s largest

fruit and vegetable processor to look

to expanding its production capacity

and marketing muscle.

This spring, the Stayton,

Ore.-based cooperative

expects to close on a purchase of a vegetable processing plant and several

brand names owned by

J.R. Simplot Co. at

Quincy, Wash. The 

Simplot plant packs

frozen vegetables that

are sold primarily to

food service and ingredient markets.

The plant, built in 1990, employs

450 full-time and 350 seasonal workers. In an alliance with Simplot,

NORPAC plans to buy the license to

market several vegetable brands that

would also be sold and distributed to

other customers through Simplot’s

marketing network. NORPAC’s last

expansion was in the 1980s, when it

built a plant at Hemiston, Ore. At its

four plants, NORPAC has a workforce of 1,000 year-round employees

and adds another 3,500 seasonal

workers at peak processing season.

DFA boosts net margins;

Camerlo succeeds Brubaker

Just as its dairy-farmer members

have cut production costs, so too has

their marketing arm, Dairy Farmers of

America (DFA), trimmed its operating

costs, resulting in

greater returns to

the membership

in 2002. Longterm, interestbearing debt was

cut $78 million,

and member

equity jumped $8

million, to $631

million. DFA paid

$49 million in patronage and equity

retirement, in 2002.

The nation’s largest dairy cooperative marketed a record 47.8 billion

pounds of milk, up nearly 5 percent.

Although declining milk prices cut

DFA’s revenues to $6.4 billion, it still

generated $85.9 million in earnings

from its joint ventures, $27.5 million

more than in 2001. The American

Dairy Brands division, which manufactures Borden brand cheese products,

exceeded budgeted earnings (before

interest and taxes) by 41 percent.

The recent annual meeting marked

a historic change of the 51-member

board, with the election of Tom

Camerlo, a veteran dairy cooperator

from Florence, Colo., as chairman. He

succeeds Herman Brubaker of West

Alexandria, Ohio, who had spent five

years at the helm. Brubaker commended DFA’s members and staff for their

“courage and dedication in unifying

the dairy industry though cooperative

principles. We have built a new co-op

28 May/June 2003 / Rural Cooperatives

NEWSLINE

Compiled by Patrick Duffey

Tom Camerlo 
model that is member driven and a

leading food company. The greatest

challenge ahead will be for us to keep

pace and take the risks required by a

demanding and competitive marketplace.” While many things have

changed, he said, “the right of farmers

to cooperatively market their milk is

the same as it was in 1922 when Capper-Volstead was enacted. ” He urged

members to never loose sight of their

“cooperative vision.” Brubaker had

earlier been chairman of Milk 

Marketing Inc. in Ohio, one of DFA’s

predecessor cooperatives. 

Meanwhile, a pair of efforts to

expand its markets in the Northeast are

coming under state and federal scrutiny. The proposed merger between H.P.

Hood, New England’s largest independent dairy, and National Dairy Holdings (half owned by DFA) would create

the nation’s second largest dairy

processor. DFA would become the

exclusive supplier to Hood under a

long-term contract. The merger would

create a new entity that would have

annual sales of about $3 billion, control

about 90 percent of New England’s

milk and market Hood’s popular

brand-name products.

In another regional development,

Vermont’s St.

Albans Cooperative Creamery has

become DFA’s

second member

cooperative following a similar

agreement with

Dairylea Cooperative of Syracuse.

St. Albans will

invest in DFA’s equity program and

gain one seat on the board of DFA,

two on its Northeast council and three

with Dairy Marketing Services (DMS).

DMS was formed two years ago by

DFA and Dairylea to handle daily

activities associated with milk assembly

and transportation for the cooperatives. St. Albans will retain its corporate identity and key customers. Last

year, it marketed more than 1.5 billion

pounds of milk for its 518 dairy farmer

members in Vermont, New York and

New Hampshire.

Chairman Brubaker said the agreement “strikes at the very heart of the

age-old concept of cooperation. Capper-Volstead allows dairy farmers to

work together for mutual benefit and

that’s exactly what this co-op to co-op

membership with St. Albans will do.”

GROWMARK, TruServ form

local retail pact in Ontario

In a cross-border alliance, TruServ

Canada Cooperative of Winnipeg,

which operates a chain of 600 member

hardware stores, will now provide consumer supplies to GROWMARK’s 29

FS member companies and their 150

stores, including the Country Depot

franchises in Ontario. Agricultural production supplies, such as fuel and fertilizer, for the local co-ops will still come

from GROWMARK. Jim Hoyt,

GROWMARK’s executive director for

Canadian operations, will join the

TruServ board. 

In the deal, TruServ also acquires the

Country Depot trademark associated

with GROWMARK’s retail business n

Ontario. Retail products range from

work wear and lawn and garden supplies

to hardware and pet foods. Hoyt said

the pact would “form a strong retail

presence in the Canadian marketplace.”

The pact is similar to GROWMARK’s

alliance with Land O’Lakes (LOL),

which gives the FS member companies

access to LOL livestock feeds.

Agway eyes sale 

of remaining assets

Efforts to emerge from Chapter

11 bankruptcy continue to challenge

Agway, New England’s regional farm

supply and food marketing cooperative based at Syracuse, N.Y. A

nationally known investment bank

has been hired to evaluate whether to

reorganize or sell Agway’s three

remaining divisions: Country Products, Feed and Nutrition and Agway

Energy. The energy division was not

part of the Chapter 11 filing. 

While Agway officials say they 

neither have plans to shut down the

businesses nor liquidate them under a

Chapter 7 bankruptcy, a controlled or

orderly liquidation may be in the offing. Jeff Love, an attorney for the

cooperative, said its goal was to derive

the most value from the businesses for

creditors. To strengthen that idea,

Agway has asked the court to approve a

complex plan of bonuses, capped at

$6.4 million, for 50 to 80 key employees so they won’t bolt the company

during this transition period. 

Donald Cardarelli, Agway’s retiring

chief executive officer, earlier received

$1.6 million in severance pay plus extra

compensation for his executive career

transition service under a plan

approved by the board, unsecured

creditors’ committee and the bankruptcy court. Seven Agway employees who

earlier shared bonuses totaling

$546,000 for helping the cooperative

prepare chapter 11 bankruptcy papers

last fall, will have to repay them from

future bonuses.

Alto Dairy trims 90 Jobs

Citing continued weak market conditions and shifting production from

the traditional American cheeses to

more Italian mozzarella to meet market demands, the 800-member Alto

Dairy Cooperative at Waupun, Wis., is

trimming about 16 percent, or 90 jobs,

from its workforce of 550. Dean Sommer, vice president of operations, said

prices paid to members have been

down since the fall of 2001 and the

cooperative is experiencing losses for

the first half of fiscal 2003. Sales for

fiscal 2002 reached $432 million. The

cooperative produces 550,000 pounds

of cheese a day and hopes the switch to

mozzarella will better prepare it for

the future.

Mtn. Lamb Co-op, 

Rosen forge pact

Lamb marketing in the United

States is being boosted through a

pact between Mountain State Lamb

Cooperative and B. Rosen & Sons

Inc., a major fabricator and lamb and

veal processor and distributor. The

new venture will operate as Mountain

Rural Cooperatives / May/June 2003 29

Herman Brubaker
States/Rosen LLC (MSR). The cooperative is owned by and serves producers in 11 western States. The venture will oversee all phases of the

supply chain, from farm to fabrication and on to the retailer and other

distribution channels, including

restaurants and cruise lines. The

management team will come from

both businesses. 

NMPF seeks voluntary plan

to balance supply, demand

The board of directors of National

Milk Producers Federation (NMPF)

has endorsed development of a threepart, voluntary program aimed at

bringing U.S. milk production more

in line with demand to stabilize and

strengthen producer prices. Details

are being developed by NMPF’s economic policy staff, subcommittees and

representatives of member cooperatives. The plan features an assistance

program to stimulate exports and clear

inventory from the U.S. marketplace,

a market reduction program with

incentives to producers to reduce their

milk marketings, and a herd/cow 

purchasing program aimed at reducing

the number of dairy cows nationally.

The plan is dubbed “Cooperatives

Working Together.” Jerry Kozak,

NMPF president and CEO, says “Our

task is to construct a producer-led

effort that pays dividends for many

years to come.”

ND co-op plans 

DC restaurant

The Ultimate Value-Added Cooperative, under the aegis of the North

Dakota Farmers Union, is planning to

open the “Agraria” restaurant in Washington, D.C., this summer. It will feature foods from family farms throughout the country, but mostly pasta, beef

and breads from North Dakota. Bison

will be featured as a specialty item. The

restaurant’s menu will be used to educate urbanites about family farm products and a different farm family will be

featured each month. Investors must be

members of both the Farmers Union

and the cooperative. 

NC growers 

market biodiesel

A grant from the Golden LEAF

Foundation has enabled the North Carolina Grain Growers Cooperative at

Rocky Mount, N.C., to launch a

biodiesel fuel business. Valeria Lee,

foundation president, said the opening

shipment of 20,000 gallons of soy oil

from West Central Soy Cooperative in

Iowa was enough to produce almost 1

million gallons of biodiesel fuel when

blended with petroleum. Sam Lee, the

cooperative’s CEO, said the supply

would allow the cooperative to test the

market and build a $40 million processing plant, which will include a soybean

extraction facility. The eastern North

Carolina plant will be similar to West

Central’s facility, which has a 15-million-gallon capacity. The foundation has

agreed to invest $10 million in the

cooperative’s $40 million facility.

Although slightly more costly than

diesel, proponents say biodiesel is a 

better lubricant, extends machinery life

and reduces maintenance costs. 

Olsen to lead

Tree-Top co-op

Dick Olsen has been elected chairman of Tree Top Inc., an apple-processing cooperative at Selah, Wash., owned

by 1,200 member-growers. He and his

brother operate Olsen Brothers Ranches Inc. near Processor. Fred Valentine

has been elected vice chairman and

Bruce Allen secretary-treasurer.

Mid-Missouri Energy 

raises $17 million

Producers have agreed to invest

nearly $17 million during the initial

equity drive by the Mid- Missouri

Energy (MME) ethanol cooperative.

“We are ecstatic over these results,”

said Ryland Utlaut, MME president.

“We are told that $15.3 million is the

most any ethanol project in the nation

has raised in its initial equity drive. For

us to have surpassed that record is

nothing short of amazing.” 

The co-op needed $12 million in

producer equity to be 51 percent

farmer-owned, a state requirement to

qualify for ethanol-production incentives. MME Treasurer Ron Linneman

said producer response “speaks to the

potential out there.” Utlaut said this

success has lead the board to believe

the ethanol project can be a 100 percent farmer-owned cooperative.

The initial equity drive, which ended

March 31, was extended for another 60

days to allow new investors to enlist, or

existing ones to increase their investment . “We must comply with the Blue

Sky Law in other states regarding the

sale of equity,” said Patty Kinder, secretary and project coordinator. “Extending the offer also allowed time to meet

requirements in various states from

which we received producer interest.” 

David Kolsrud, equity drive manager, said the effort “disproves the notion

that farmers don’t have the money to

invest. This says otherwise!”

Although several sites were under

consideration, Carrollton was the 

preferred site for the 40-million-gallon-per-year plant, said Vice President

Don Arth. The facility would tap the

abundant supply of corn grown in the

region. It would use nearly 15 million

bushels of the approximately 70-plusmillion bushels grown in the area. 

For more information on the

ethanol project planned for west-central Missouri, contact the MME Web

site at www.midmissouirenergy.com. 

Wilson heads

co-op foundation

The board of trustees for the Cooperative Foundation at St. Paul, Minn.,

has chosen Patricia Keough-Wilson,

director of communications for MinnDak Farmers Cooperative at Wahpeton, N.D., as its chair. Jean Jantzen,

retired from CHS Cooperatives and

former chair, continues as vice chair of

the board. The foundation supports

unique and innovative cooperative

development and education projects

throughout the Upper Midwest.

30 May/June 2003 / Rural Cooperatives
Farmland turns $29 million

profit for second quarter

Farmland Industries, seeking to

emerge from Chapter 11 bankruptcy,

reported $29 million in second quarter

earnings, which compares to a loss of

more than $49 million for the same

period a year ago. It also reported sales

of $1.6 billion for the first quarter, up 5

percent from a year earlier. Farmland

CEO Bob Terry says the reorganization

is on course, and that cash flow now

“significantly exceeds” what is required

in its borrowing agreement. Since filing

for reorganization under the bankruptcy court, Farmland has reduced debt by

$130 million, to $270 million. According to recent press reports, the co-op

will soon offer a plan to reorganize

Farmland around its pork processing

operation—Farmland Foods—which

earned $8.7 million in the second quarter. Farmland National Beef—which is

not part of the bankruptcy filing—

earned $5.8 million in the quarter. 

In other Farmland news, it has sold

the bulk of its fertilizer assets in a

court-approved auction to Wichitabased Koch Nitrogen Co., a subsidiary

of Koch Industries Inc., for $293 million. Farmland anticipates the sale will

be formalized later this spring. Farmland’s $1 billion fertilizer business once

made it one of the largest manufacturers in the United States.

The deal included assets in Kansas,

Iowa, Oklahoma and Nebraska. It also

covers a dozen Midwest terminals plus

Farmland’s half share in Farmland Miss

Chem Ltd., which owns an ammonia

plant in the Republic of Trinidad and

Tobago. Koch also has a one-year

option to buy Farmland’s fertilizer

operation at Lawrence, Kan.

AMPI sales top

$1 billion for ‘02

Despite dairy markets hovering at

25-year lows, Associated Milk Producers Inc.’s (AMPI) fiscal 2002 sales hit

the $1 billion mark, milk volume was

up 3 percent, to 5.2 billion pounds, and

the co-op returned $13.3 million in

equity payments to members in 2002.

The 4,600-member cooperative recorded $1 million in earnings from its 14

manufacturing plants in the Upper

Midwest. “Our members must succeed

in order for our business to succeed,”

said President Paul Toft from Rice

Lake, Wis. “Our strong commitment

indicates we are a solidly built farm-tomarket business that is here to stay.” 

New board, CEO make 

changes at Ocean Spray

Saddled with four years of belowcost industry returns and a glutted

cranberry market, major changes have

been made at Ocean Spray, the

nation’s major cranberry marketing

cooperative. First, a majority of growers voted to cut the board from 15 to

12 directors and to seat nine new

directors and 3 incumbents.

Then, the new board chose Randy

Papadellis, Ocean Spray’s President

and Chief Operating Officer, as interim

chief executive officer. He has begun a

restructuring of the management team

by laying off four of 14 vice presidents,

eight other executive level managers

and another 46 employees. Papadellis

replaces Barbara Thomas, who was

doubling as an outside director and

interim CEO until she lost her seat on

the board at the annual meeting. She

had replaced Robert Hawthorne, CEO

for three years before he resigned in

November. 

Due to the crop surplus, membership, which stands at 800 cranberry

and 125 grapefruit growers, has been

closed for the past two years. The

cooperative’s sales have slipped, from

$1.5 billion in 1997 to just over $1

billion in 2002, in part because Pepsi

ended its agreement to distribute the

cooperative’s single-serve bottles of

juice. The cooperative has since

implemented its own new distribution

system. Earlier, the former board

rejected an $800 million takeover bid

from a Wisconsin competitor. The

new board has announced it will

explore several options for the future

of the company. 

Dividend allocation

rule focus of legislation

Legislation to clarify the dividend

allocation rule is being supported by

several cooperative trade associations,

including the National Council of

Farmer Cooperatives (NCFC). Senators Charles Grassley (Iowa), chairman of the Senate Finance Committee, and Max Baucus (Mont.), ranking

minority member, are part of a bipartisan group of senators and conRural Cooperatives / May/June 2003 31

which is 75 percent owned by the co-op and 25 percent by

American Foods Group. 

The co-op will make sure cattle get to the plant and is

responsible for overall marketing and brand development. The

annual, ongoing capital need for the operation is $30 million.

The business should produce $350 million in annual sales. 

The business has been structured so that “if it does not

make money, the producers don’t make money, but neither

does American Foods Group,” says Brinkmeyer. “They have

made a commitment of equity and management expertise to

manage the plant and sell the product. If it does not work,

they aren’t rewarded. 

“On the flip side, the more money they make, the more

money the co-op makes. We think it is a sound business

arrangement that provides risk and reward to both parties.

Reward will go to 875 cattlemen who have put their money

on the line and to members of Iowa Cattlemen’s Association,” whose 10,000 members will benefit fro m a more balanced beef supply created by the co-op’s operation.

Further, the overall beef industry in and around Iowa will

have a more competitive edge thanks to the co-op. Most

important, he said, “consumers will benefit from a new

source of a high-quality, consistent product, backed by the

commitment and integrity of our co-op.” ■

New Kid continued from page 8
32 May/June 2003 / Rural Cooperatives

gressmen who favor eliminating the

"triple tax" now imposed on stock

dividends paid by cooperatives. This

tax treatment penalizes cooperatives

compared to other businesses and

limits the ability of cooperatives to

raise equity capital needed to 

modernize their operations, take

advantage of value-added market

opportunities and compete globally,

says NCFC President David Graves.

"Eliminating the tax would

strengthen the ability of farmers to

join in cooperative self-help efforts to

improve their income from the marketplace, better manage risk, take

advantage of potential new market

opportunities, maintain their independence and compete more effectively in a changing global economy,"

says Graves.

Foremost sales

reflect dairy ills

Low dairy commodity and milk

prices for its 4,300 dairy-farmer members was reflected in Foremost Farms’

sales for fiscal 2002, which declined

from $1.33 billion in 2001 to $1.16

billion for 2002. The Wisconsin cooperative, based at Baraboo, showed an

operating loss of $3.7 million, but that

was offset by tax credits, resulting in a

net income of $2.2 million vs. $10

million in 2001. The cooperative

operates 24 manufacturing facilities

and serves dairy farmers in seven

Upper Midwest states. 

Iowa hog co-op set to

open processing plants

A two-year-old value-added cooperative formed by 1,400 Iowa hog

producers hopes to begin operating

three processing plants and a trucking

business this summer. It is hoped

these businesses will help shore up

sliding prices members have been

receiving. Majestic Food Group LLC,

a wholly owned subsidiary of Iowa

Premium Pork, will purchase Pinnacle Food Group’s two Iowa Packing

Co. pork processing plants in Des

Moines, the Rosewood Farms proof Government named Waushara

County and Cooperative Care as one

of 99 semi-finalists (out of a pool of

800 applicants) in the prestigious 2002

Innovations in American Government

Awards. Recently, Wisconsin Rural

Partners named Cooperative Care as

Wisconsin’s Top Rural Development

Initiative for 2003.

Challenges on the road ahead

All this attention may seem rather

heady, but there is more work to be

done. As a new business, Cooperative

Care has experienced its fair share of

growing pains, including the resignation of its initial executive director to

run a family business and the removal

of a board member for work-related

performance issues. 

Cooperative Care’s contract with

the county enables its member-owners

to earn a living wage and receive benefits. Initially, this cost the county 40

percent more than the previous system. “This system is not for public

bodies looking to save on costs,” says

Lucy Rowley of DHS. However, if an

agency is interested in developing a

sustainable pool of committed care

providers, then this might be an

option. Not only should public agencies assure quality care for clients, we

must create a better standard of living

for low-income people.” 

Currently, the county contract comprises 90 percent of the co-op’s revenue

stream. Due to a state budget crisis and

a resulting budget crunch for Waushara

County, DHS has twice renegotiated

downward the reimbursement rates to

Cooperative Care. The board and executive director are keenly aware of the

need to increase the number of private

pay clients to sustain revenue and 

maintain member benefits and wages.

The rapidly rising cost of health

insurance is another major concern.

Prior to forming the co-op, 31 per cent

of care providers said they had no

health insurance. On the advice of a

local insurance agent, the business plan

allotted $2,000 per year, per person for

basic coverage. This quickly proved

inadequate, with a 25-percent rate

increase in 2001 and 16-percent rate

increase in 2002. Presently, only 14

members out of an anticipated 35 carry

insurance through the co-op due to a

high out-of-pocket expense. 

Board Treasurer Karen Taylor is

proud of the accomplishments of

Cooperative Care. “For so long, I have

worked hard to help people to stay at

home,” she says. “It is nice to finally

have health insurance and benefits like

a paid vacation and mileage reimbursement. But what I really like is that we

care providers are also taking care of

each other.” 

Board President Donna Tompkins

echoes Taylor’s sense of accomplishment. “When my brothers, who are in

business, heard that I was elected board

president, they couldn’t believe it.

They wanted to see the business plan

and the financial statement to make

sure this was for real. After all, I raised

seven children. What did I know about

business?”

“I have enjoyed getting to know my

fellow care providers over the past few

years as we worked together to develop

Cooperative Care,” Tompkin continues. “It has been an exciting experience

forming our home care business.” ■

House Calls continued from page 12

Cooperative Care

mission statement

The mission of Cooperative

Care: “To provide high-quality

home-based care to the elderly

and people with disabilities, while

providing fair wages and benefits

to the people caring for them.”
cessing facility at St. Joseph, Mo., and

the ForSure Transport trucking operation in Des Moines. Roger Coon,

cooperative president from Lohrville,

said the plants will suit the needs of

the members in their attempts to

bring their pork products closer to

consumers. The facilities can butcher

about 3,600 market hogs and 1,400

breeding hogs a day.

Calcot makes

progress payment

Calcot sent an encouraging early

spring message to its 1,700 California

and Arizona cotton growers in the

form of progress payments for the

2002 crop. The checks totaling $20.5

million were in sharp contrast to two

years ago, when the Bakersfield cooperative’s board had to ask members to

return season-opening advance payments. President David Farley said the

board unanimously approved the payment because of the cooperative’s

improved market.

MMPA members get

$1.9 million patronage

“The essence of our strong cooperative is reflected in the ability to make

cash payments and maintain a competitive pay price,” President Elwood

Kirkpatrick of Michigan Milk Producers Association told members in

announcing $1.9 million in cash

patronage refunds. This is the eighth

consecutive year for making patronage payments of at least $1.8 million.

The cash represents 28 percent of the

$6.8 million allocated taxable net

earnings generated by the cooperative

in fiscal 2002. The return represents

100 percent from farm supply earnings and 25 percent of milk marketing

earnings. 

SW Farm Credit

loans climb in ‘02

For the eighth consecutive year, fiscal

gross loan volume for the Tenth Farm

Credit District, based at Austin, Texas,

set a new record in 2002. The bank

serves 22 financing cooperatives in five

Southwestern states and loaned nearly

$6.8 billion, up 13 percent from 2001

and nearly 30 percent more than in fiscal 2000. All of the volume growth was

in the district’s mortgage portfolio and

triggered in part by low interest rates.

David Holm to lead

Iowa Institute for Co-ops 

The Iowa Institute for Cooperatives, the

statewide co-op

council at Ames,

has selected

David Holm as

its new executive

director. He

replaces Larry

Kallem, who

recently retired.

Holm has been

with the Institute

for the past eight years, having served

most recently as its cooperative development director. 

Correction

In production of the last issue of

“Rural Cooperatives,” a photo was

misplaced in a

Newsline item

about John Dilland

succeeding Walt

Wosje as the new

general manager of

Michigan Milk

producers Association. The correct

photo appears here. Dilland joined the

co-op in 1975 and had been the co-op’s

director of finance. 

Rural Cooperatives / May/June 2003 33

both physicians and patients. The UVa

system has broadcast thousands of

hours of education programming,

ensuring that rural physicians can be as

up-to-date about recent medical developments as their urban counterparts. 

Funding the infrastructure is not the

entire problem, however. There is the

issue of how clinical costs are billed and

paid when consulting physicians are

miles away, plus the problem of meeting

ongoing routine operating expenses in

remote rural locations. Some medical

insurance providers do not provide reimbursement for telemedicine expenses. 

Rheuban says that there are solutions, but that a “change in the culture”

is necessary before billing procedures

become routine. Meanwhile, Blue

Cross/Blue Shield has made a grant of

$250,000 to UVa over five years to pay

for telemedicine services to patients

who don’t have coverage.

Dheva’s experience is anything but

unique. In the past six years, hundreds

of patients in rural Virginia have benefited from the UVa system. Some, like

Marie Sanders, who lives in the southwestern part of the state, are saved the

bother and expense of being driven

several hours to a major city for a 

consultation, and staying overnight at

a hotel. There is also a man who came

to a rural clinic with fever and anemia.

He was seen by a blood specialist miles

away in Charlottesville, who found

that he had a dangerous infection in

the heart caused by an undiagnosed

heart defect.

Another patient in the southwest

part of the state was initially diagnosed

with shingles, a painful but not usually

life-threatening viral disease. A specialist, consulted through telemedicine,

found that the man was actually infected with flesh-eating streptococcus 

bacteria. Immediate treatment may

have saved his life.

The Bush administration and Congress have recognized the usefulness of

rural broadband telecommunications

networks, such as those that made

these stories possible. A new USDA

Rural Development Rural Broadband

program makes $1.4 billion available

this fiscal year alone for their building

and expansion (see sidebar). By the

time Dheva becomes an adult, the

technology that saved his life may be as

common as cable television. ■

Rural Broadband continued from page 25

John Dilland 

David Holm
34 May/June 2003 / Rural Cooperatives
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