R

u

ral COOPERATIVES

Investing

In Your Co-op’s Future

Page 10

January / February 2014
2 January/February 2014 / Rural Cooperatives

By Alan Guebert

Editor’s note: This guest commentary is reprinted courtesy The

Farm and Food File, Guebert’s column that is published weekly in

more than 70 newspapers in North America. Guebert can be

contacted at: agcomm@farmandfoodfile.com.

The weekly hometown newspaper recently

brought news of a family friend’s death. The

friend, a dairy farmer, had lived a long, good

life and was a respected member of his

church, community and profession.

My family’s connection, outside of cows and kids, was

business: he, my father and a few dozen farmers in

neighboring southern Illinois counties were members of a

small farm cooperative through which they purchased inputs

like feed and fertilizer.

Back then, 50 and more years ago, these very busy hog,

cattle, dairy and grain farmer-members did all the

cooperative lifting, light, heavy and in-between. They

gathered orders, kept accounts and, often as not, used their

own trucks, tractors and wagons to deliver their co-op

brothers’ purchases.

In fact, I saw our dairying family friend only three or four

times a year. Once was always at the annual co-op picnic

(think summer Sunday afternoon, grilled pork steaks, cream

soda); the other times were when he left his never-done farm

work to pick up and deliver soybean meal in his wheezing,

single-axle truck to our farm.

How did he have the time to leave his hay-to-bale, silageto-chop dairy to bring us our goods in his truck?

He didn’t. He made time because that’s what cooperative

members did back then to aid the success of their shared

enterprise and fellow farmers. It was — and is — the very

essence of small “c” cooperation.

Others recall similar selflessness in other, bigger

cooperatives. The Berry brothers, attorney John, Jr. and

writer and poet Wendell, of Henry County, Kentucky, are

eloquent, passionate explainers of the Burley Tobacco

Growers Cooperative Association, based in their home state.

Neither defends tobacco because, as Wendell noted in a

discussion of the Burley Association with his brother at a

public forum last spring, “It’s indefensible.”

Both, however, vigorously defend the principles their

father, John, Sr., an attorney and farmer, and other burley

growers employed to start, then manage, the cooperative. It

was an essential tool, they explain, used by hundreds of

thousands of farmers and generations of farm families in five

states to maintain competitive markets, successful farms and

vibrant rural communities.

The principles harnessed by Berry, Sr., my father, his

Illinois’ neighbors and many others continue to inspire

cooperation today. According to the U.S. Department of

Agriculture, 2,238 agriculture, ranching and fishery

cooperatives and their 2.1 million members employed

129,000 full-time and 56,000 part-time employees while

generating $235 billion in sales last year.

Moreover, notes USDA in a recent issue of its “Rural

Cooperatives” magazine, (http://www.rurdev.usda.gov/

SupportDocuments/rdRuralCoop_Sept_Oct13Vr_Web.pdf),

today’s farm cooperatives — like today’s farms — run the

gamut in size.

“While 31 cooperatives recorded more than $1 billion in

sales” in 2012, reports the magazine, “almost 34 percent of ag

cooperatives (749) had less than $5 million in sales.”

But the four biggest ag co-ops, CHS Inc., Land O’Lakes

Inc., Dairy Farmers of America and Growmark, are really

big; their combined 2012 sales, $76.7 billion, equaled onethird of all ag cooperative business last year.

Coincidentally, the number of cooperative members

nationwide, 2.1 million, nearly matches the number of farms

nationwide, 2.2 million, even after membership and co-op

numbers dropped in 2012. Overall membership sank by

200,000, or 7 percent, and co-op numbers fell (mostly

through of mergers) by 60.

But even as the number of traditional ag co-ops begins to

trend lower, the number of non-traditional ag co-ops is

beginning to bloom. In September, USDA’s “Rural

Cooperatives” magazine carried short, informative stories

about a new peony-selling co-op in Alaska, the founding of

two community “food hub” co-ops in Wisconsin and the

recent start-up of a “wellness and yoga” co-op in rural

Montana.

These newcomers are learning what the old-timers well

knew: working together works. Or, as some of the folks in

Hamilton, Montana, now say, “Namaste, partner.” (Editor’s

note: “Namaste” is a greeting used in India). ■

Commentary 

Ag co-ops remain strong 
Features

Rural Cooperatives / January/February 2014 3

Volume 81, Number 1

January/February 2014

Rural Cooperatives (1088-8845) is

published bimonthly by USDA Rural

Development, 1400 Independence Ave.

SW, Stop 0705, Washington, DC. 20250-

0705.

The Secretary of Agriculture has

determined that publication of this

periodical is necessary in the transaction

of public business required by law of the

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offices. Copies may be obtained from the

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Government Printing Office, Washington,

DC, 20402, at $23 per year. Postmaster:

send address change to: Rural

Cooperatives, USDA/RBS, Stop 3255,

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Unless otherwise stated, articles in this

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necessarily reflect those of USDA or its

employees.

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To file a complaint of discrimination, write

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USDA is an equal opportunity provider

and employer.

Tom Vilsack, Secretary of Agriculture

Doug O’Brien, Acting Under Secretary,

USDA Rural Development

Dan Campbell, Editor

Stephen A. Thompson, Assitant Editor

Stephen Hall / KOTA, Design

Have a cooperative-related question?

Call (202) 720-6483, or email:

coopinfo@wdc.usda.gov

This publication was printed with vegetable oil-based ink.

p. 4

04 Food hubs: an evolution of the co-op business model 

By James Matson, Jessica Shaw and Jeremiah Thayer

10 Investing in your co-op’s future 

Key finance, marketing issues examined during Farmer Co-ops Conference

By Lynn Pitman

18 Co-ops = Community Development 

Cooperative developers share ideas in Minneapolis

By Bruce J. Reynolds

20 What leads to satisfied co-op members?

Surveys of dairy farmers show management and pricing are key

By Carolyn B. Liebrand

24 Welcome to the Club!

Food buying club co-ops have potential to help increase food security for many

By Alfonso Morales and Ali Loker

29 Co-ops urged to observe Grain Bin Safety Week

Departments

02 COMMENTARY

08 UTILITY CONNECTION

15 IN THE SPOTLIGHT

16 CO-OPS & COMMUNITY

30 NEWSLINE 

p. 20

ON THE COVER: How cooperatives raise capital to

fund their operations was one of the major topics at

the Farmer Cooperatives Conference, sponsored by

the University of Wisconsin. See page 10. 

p. 40
4 January/February 2014 / Rural Cooperatives

Food hubs: an evolution of 

the co-op business model

Cooperatives, long a

mainstay of the agricultural

industry, have evolved and

adapted along with the everchanging farm industry and

overall economy. As the

influence of co-ops has grown,

the underlying principles of

cooperative enterprises have

proven vital to the success of

the nation’s food and

agricultural industry. 

In recent years, consumer

demand for local foods has

grown markedly, leading to a

rise in local food systems.

These include food hubs,

which typically operate using

cooperative principles

By James Matson, Jessica Shaw and Jeremiah Thayer
Rural Cooperatives / January/February 2014 5

and which often have an urban and

social/environmental mission focus. 

By unifying agricultural producers,

farmer co-ops can provide the scale,

coordination and improved marketing

system needed to help their members

succeed. There is no universally

accepted definition of a cooperative,

and the laws for cooperative

organization vary from state to state. So

perhaps a cooperative is most easily

recognized when it follows the three

core co-op principles developed by

USDA during a series of nationwide

panels in 1986 (see sidebar, page 7). 

Food hubs can be viewed as a natural

progression in the application of these

cooperative principles and ideals. They

do more than simply address the needs

of producers; food hubs incorporate a

“triple bottom line” focus to better

address the needs and demands

of consumers seeking local

foods. 

Food hubs, driven by the

cooperative spirit, expand the

traditional concept of

agricultural cooperatives to

include other stakeholder

groups in addition to

producers. Food hubs

represent a continued

evolution of the cooperative

ideal of producers working

together to provide outlets for

their products, while also

addressing the concerns of

workers, consumers and the

community. 

Increased profit for local

producers and increased

production can directly impact

a community through the local

retention of more food dollars.

However, community revitalization

extends beyond simple economics; it is

a result of an economic and social

revitalization that fosters the long-term

sustainability of a community-based

food system. 

Emergence of food hubs

USDA’s Agricultural Marketing

Service says a food hub offers “a

combination of production,

aggregation, distribution and marketing

services [to] make it possible for

producers to gain entry into new and

additional markets that would be

difficult or impossible to access on their

own” (“Farmers Markets,” 2013).

Although this definition focuses on the

physical movement of goods, a food

hub can also be defined by marketefficiency functions, in addition to more

abstract goals of building a diversified

food culture. 

Food hubs have blossomed in large

part due to the “surge in buying locally

produced foods and support for local

agriculture” (Matson et al., 2013).

Small-scale producers alone were

increasingly unable to meet the growing

surge of consumer demand for local

food. 

The growth in direct marketing

channels — and the increasing number

of farmers choosing to use them — is

evidence of the rapid growth of local

foods production and consumption.

Producers are banding together and

developing businesses to meet new

opportunities to supply food to midsized wholesale operations — including

institutions, restaurants and grocery

stores — as well as individual

customers. 

Even in their short history,

food hubs have proven highly

adaptable — in size, scope and

type of products offered — to

meet the vagaries of consumer

demand. Indeed, the term

“food hub” exists more as a

description of a number of

functions than as a defined

business structure. Thus, the

term “food hub” is often

applied to a continuously

changing business model,

transforming to satisfy the

ever-changing demands of

local consumers. This

continuous adaptation has

resulted in an increased focus

on the social-mission aspects

of many food hubs and their

community interactions, as

well as a movement to address

Editor’s note: The authors are all with Aiken, S.C.-based Matson Consulting, which for more than a decade has

assisted in the organization and infrastructure design of local food hubs. It is currently working in cooperation with

USDA and the Virginia Foundation for Agriculture, Innovation and Rural Sustainability to develop a U.S. Food

Hub Operations Guide. Matson is the lead consultant for the business with 25 years’ experience in agricultural

business development; Thayer is an associate who focuses on feasibility studies, business plans and marketing

documents; Shaw is an editor and consultant. 

The coordination services a food hub provides can extend the

season of products. Larger crop volume and coordination of

production can ensure a steady flow of product that helps to

stabilize prices. 
multiple stakeholder classes in a

community. 

Multi-farm CSA’s (community

supported agriculture), cooperatives and

farm-to-table initiatives are

just a few of the types of food

aggregation ventures taking

on the roles included in the

USDA definition of a food

hub. This flexibility allows

many food hub ventures to

meet their mission by

providing more than fresh

produce — such as locally

slaughtered meats, valueadded goods and locally

finished food products. 

How food hubs 

embody co-op

principles

Food hubs represent a

continuation of the three main

cooperative principles (as outlined in

sidebar, page 7). They not only address

the needs of producer-members, similar

to the way agricultural cooperatives do,

but they also address the needs and

concerns of consumers through their

inclusion as primary stakeholders.

Multi-stakeholder co-ops are able to

provide for user-ownership of the

business by all stakeholder classes.

Ownership leads to user-control, as

each member-owner stakeholder class is

integral to the overall direction of the

entity. User-benefits are ensured as

each stakeholder class has its needs met

through the services of the business. 

Sandhills Farm to Table Cooperative

in Southern Pines, N.C., is an example

of a multi-stakeholder co-op that allows

producers, workers and customers to

become owners in the organization.

This diverse ownership allows all

stakeholders to provide input into how

the organization operates and helps

ensure that it ultimately addresses the

needs of each owner-class. Producers,

workers and customers can work

together toward the success of the co-op.

Based on their status as owners, the

stakeholder classes can control the

various functions of the organization

and receive benefits. Individual farmers

and other producers are generally in the

position of being price-takers. Food

hubs can negotiate better prices for

their producers, keeping more farmers

in business and helping them expand

production into new crops. 

As with other types of cooperative,

the user-ownership and user-control

principles adhered to by food hubs

means that they will also pass along

other benefits to members. For

example, food hubs allow producermembers to benefit by aggregating

product and accessing larger volume

markets. This aggregation often leads

to greater control over pricing than

they could achieve individually. 

The coordination services a food hub

can provide often result in an ability to

extend the season of products, while

larger crop volume and coordination of

production can ensure a steady flow of

product that helps to stabilize prices.

Additional revenue can then be used to

invest in infrastructure, such as

greenhouses, which, in turn, can create

a longer growing season. As an

example, Fifth Season Cooperative in

Wisconsin has capitalized on season

extension opportunities by sourcing

dairy, meat, and meat products from

dairy-cooperative and meat-processing

members, as well as more stable items

from local producers that can be stored

for longer periods at the warehouse. 

In addition to negotiating prices,

food hubs often connect farmers with

other non-farm businesses to

meet a wide variety of mutual

needs. Local Food Hub,

located in Charlottesville,

Virginia, offers an example of

how food hubs can facilitate

this connection between

farmers and non-farm

businesses. Since this food

hub requires a clean water

test from its producers, the

food hub has partnered with

water testing companies to

provide reduced rates for

producers in need of water

testing. This is just one way

some food hubs are helping

reduce overhead costs for

producers and also lowering prices paid

by consumers. 

The aggregation function of food

hubs benefits consumers and businesses

by providing access to local foods that

would normally be hard, or impossible,

to acquire. The ability to provide access

to additional outlets helps to connect

local and regional growers with midscale buyers, including local grocery

chains, restaurants and institutions, such

as colleges, schools and government

institutions.

Food hubs often provide education

for producers on topics such as safe

growing and crop handling practices;

similarly, they help consumers learn

more about food safety in the home,

cooking and food preparation, as well as

the benefits of a sustainable food supply

and keeping more farmland in

production. 

How food hubs 

expand on co-op ideals

The emergence and evolution of

food hubs stems from an educational

and social mission to unite consumers

and producers in the marketplace.

Although the main function of the food

hub is to sell local foods to consumers,

6 January/February 2014 / Rural Cooperatives

Increased profit for local producers and increased production can

directly impact a community through the local retention of more food

dollars.
food hubs provide a wealth of benefits

for producers, consumers and the local

community that extend beyond simply

building a supply chain — benefits that

become a part of the milieu of

information extending beyond simple

self-interest (Zaichkowsky, 1985) that

affects an individual’s purchasing

decisions. 

Food hubs are often highly

committed to the co-op principle of

service to community. For example,

many studies have highlighted the

positive impact that a shorter food

supply chain has for local communities

and economies. Other studies have

shown that local food supply chains

create a web of interconnected

economic, community and

environmental benefits. 

The ability to earn a profit is not

always the primary underlying

motivation for establishing a food hub.

Food hubs that operate cooperatively

aim to provide benefits beyond (and in

some cases, instead of) simple economic

returns. In these cases, the focus shifts

from the producer to other social and

environmental benefits. Research has

shown that “an approach that allows

preferences to influence decisionmaking makes people better off and

proud to contribute to sustainability”

(Polemini et al.). 

Consumer demand for food

traceability is a growing issue for the

food industry. Food hubs — by

shortening the food supply chain — can

increase the ability to trace food to its

origin. This is just one way food hubs

enhance communication between

producers and consumers. 

Food hubs as a tool for

community revitalization

While the primary focus of farmers

is on attaining financial stability by

finding markets for their products, food

hubs address the concerns of mid-scale

producers while establishing valuesbased food value chains. These valuesbased food chains “encapsulate the dual

goals of creating economic value

through product differentiation and

advancing a particular set of social,

economic or environmental values

through collaborative supply chains that

exemplify the broader trend of social

entrepreneurship....” (Diamond and

Barham, 2011). These “collaborative

supply chains” imply a philosophy of

shared responsibility between producers

and consumers (Janssen 2010). 

One area where food hubs have the

potential to significantly impact

communities is by addressing the needs

These three “bedrock” cooperative principles were identified in 1986 by

USDA, working with co-op leaders and educators nationwide: 

The User-Owner Principle — The people who use a cooperative own it. As

owners, the members of a cooperative are responsible for directing activities

and driving the overall focus and mission of the cooperative towards its goal.

Because they own the business assets, the members have the obligation to

provide financing, in accordance with use, to keep the cooperative in business

and permit it to grow. 

The User-Control Principle — As owners, a cooperative’s members control

its activities. This control is exercised through voting at annual and other

membership meetings, and indirectly through those members elected to the

board of directors. Members, in most instances, have one vote regardless of

the amount of equity they own or how much they patronize the organization.

The User-Benefits Principle — Since the cooperative is owned by its

members, they have the opportunity to receive services otherwise not

available, get quality supplies at the right time, have access to markets, or for

other mutually beneficial reasons. ■

Food hubs can negotiate better prices for their producers, keeping more farmers in

business and helping them expand production into new crops.

Rural Cooperatives / January/February 2014 7

Cooperative Principles

continued on page 37
By Anne Mayberry, Public Affairs

USDA Rural Utilities Service 

America’s rural utilities

will soon have access to

$250 million in funding

from the U.S.

Department of

Agriculture’s Rural Utilities Service

(RUS) that can provide a financial boost

to their energy efficiency and renewable

energy programs. Agriculture Secretary

Tom Vilsack announced final

regulations for the new Energy

Efficiency and Conservation Loan

Program Dec. 4. “This program will

help build a cleaner and more

sustainable domestic energy sector for

future generations by reducing barriers

to investment in energy efficiency and

potentially cutting energy bills for

American families and businesses in the

process,” said Vilsack. 

The program (scheduled to become

final Feb. 3, 2014) will make loans

available to RUS borrowers to

implement various energy efficiency

and conservation measures, which can

reduce energy costs for consumers.

Typical funding uses include demandside management to more efficiently

control the use and cost of power,

energy efficiency/conservation

programs, and on- and off-grid

renewable energy systems. 

40 percent savings possible

Rural electric cooperatives have a

successful history of promoting energy

efficiency; many have collected data to

measure the success of a variety of

activities. “Energy efficiency retrofitting

can shrink home energy use by 40

percent, save money for consumers,

reduce emissions and strengthen rural

economies,” Vilsack said. 

Goals of the new Energy Efficiency

and Loan Conservation Program

include funding projects to increase

energy efficiency for consumers (saving

them money) and modifying electric

load to reduce system demand. Other

goals include the more efficient use of

existing distribution, generation and

transmission facilities; encouraging the

use of renewable fuel sources; attracting

new businesses and creating jobs. In

announcing the program, Vilsack said

“Ultimately, reducing energy use helps

pump capital back into rural

communities. This program is designed

to meet the unique needs of consumers

and businesses to encourage energy

efficiency retrofitting projects across

rural America.” 

USDA Rural Development Deputy

Under Secretary Doug O’Brien said

that the new program will make more

capital available to expand energy

efficiency programs. “While energy

efficiency measures can reduce home

energy use considerably, many

consumers and businesses do not invest

in them because they lack the capital or

financing to do so,” O’Brien said.

“Consistent with President Obama’s

Climate Action Plan, this program will

reduce barriers to these investments by

making financing more available.”

National Rural Electric Cooperative

Association (NRECA) CEO Jo Ann

Emerson said the new rule will provide

financial assistance for co-op energy

efficiency programs. “Electric

cooperatives welcome this new

financing tool that will allow co-ops to

help their members overcome the

biggest hurdle to energy efficiency

upgrades: cost,” said Emerson. She

added that 96 percent of memberowned, not-for-profit cooperatives offer

energy efficiency programs to help their

members save money. “Co-ops may

lend RUS funds to consumers to

undertake their own efficiency

upgrades. Consumers may have the

8 January/February 2014 / Rural Cooperatives

Electric co-ops play a major role in educating consumers about ways to lower their energy bills,

through means such as adding insulation and sealing air leaks. USDA’s Rural Utilities Service is

providing additional funding that will help co-ops make loans to members for energy efficiency

improvements to their homes and businesses. Photo courtesy National Rural Electric Cooperative

Association 

Utility Co-op Connection

USDA works with co-ops 

on $250 million energy-efficiency effort 
Rural Cooperatives / January/February 2014 9

ability to repay the loan through on-bill

financing.” 

Investments eligible for funding

include: 

• Building weatherization;

• Heating and cooling system upgrades;

• Ground-source heat pumps;

• Lighting;

• Small-scale renewable generation, and 

• Energy audits. 

Leveraging with other 

USDA programs

Utilities may relend funds to

consumers or finance their own

activities. These loans may be serviced

directly by RUS borrowers or financial

institutions. Under the program,

consumer loans are capped at 1.5

percent above the interest rate from

RUS to the borrower. Rural

Development’s Rural BusinessCooperative Service (RBS) and Rural

Housing Service (RHS) have programs

that can be leveraged with energy

efficiency funds. 

South Carolina Electric Cooperatives’ work on energy efficiency has

already leveraged another Rural

Development program, and achieved

significant results. In this case, the

“Help My House” pilot was launched

by Central Electric Power Cooperative,

a wholesale power provider in South

Carolina, in response to its board’s

adoption of a 10-percent target

reduction in residential energy use

within 10 years. This is coupled with

the goal of reducing average wholesale

power costs for residential customers,

while maintaining or improving

member satisfaction. 

Because many of the co-ops’

consumers across the state lacked funds

to invest in energy efficiency

improvements, Central Electric Power

Cooperative worked with several groups

and government agencies — including

USDA Rural Development — to

design, fund and administer the

program. USDA’s Rural Economic

Development Loan and Grant Program

(REDLG) provided loans to fund the

“Help My House” projects. 

The results of the South Carolina

program were impressive, with

reductions in electric use averaging 34

percent. U.S. Rep. James Clyburn, who

has been instrumental in promoting

energy efficiency, says energy efficiency

programs have delivered benefits to

rural areas in South Carolina. “This

announcement will mean jobs in rural

communities, significant utility savings

for rural homeowners, and environmental benefits for all Americans at

little cost to taxpayers. This is a loan,

not a grant, and enables working

families to finance energy-efficiency

investments in some of the nation’s

most persistent poverty areas.”

Expanding energy efficiency and

renewable energy programs in rural

areas not only helps residential and

commercial consumers reduce their use

of electricity, but can also help rural

electric cooperatives avoid the purchase

or construction of additional electric

generation. Steve Smith, president and

CEO of Hoosier Energy, a generation

and transmission cooperative that

supplies power to 18 rural electric

cooperatives that serve nearly 300,000

consumers in Indiana and southeastern

Illinois, said his co-op is among the

utilities that have developed metrics to

measure success.

“Using energy efficiently empowers

rural consumers to better manage their

energy bills as costs rise,” Smith said.

“At the same time, co-op members like

being part of a larger effort that

provides environmental benefits while

contributing to U.S. energy independence.” 

Hoosier’s program includes

distributing more than 1,400 compact

fluorescent lighting fixtures to replace

incandescent bulbs and increasing

efficiencies of heating, ventilation and

air conditioning (HVAC) systems, all by

using strategies to offset incremental

cost differences. Last year, the

cooperative increased incentives for

commercial and industrial customers to

reduce demand during Hoosier’s peak

load cycles, according to Tom Van

Paris, vice president of Hoosier

Member Services and Communications

and a speaker at USDA’s 2013 Ag

Outlook Forum. “We offer our

consumers tools to better manage their

electric bills in an era of rising rates,

and we work to help defer the need for

new capacity, which can be costly,” Van

Paris told the audience.

Study: $1 trillion 

savings over 10 years

Several studies have pointed to the

economic benefits of energy efficiency

programs — not just in the savings for

consumers, but also in the long-term

effects on energy use. A March 2012

Rockefeller Foundation report on

financing energy efficiency projects

found that a $279 billion investment

could return more than $1 trillion in

energy savings over 10 years. 

“Energy efficiency programs save

money, curb emissions and help boost

rural economies, based on the

experience of rural electric cooperatives

nationwide,” O’Brien noted in

discussing the new program. “Rural

communities may see an increase in

these programs to help fund affordable,

energy-efficient improvements for rural

business and residential consumers now

that this rule is final.”

Additional information on the

Energy Efficiency and Conservation

Loan program is available from the

RUS website: http://www.rurdev.

usda.gov/ UEP_HomePage.html. ■

“Electric cooperatives welcome this new financing tool

that will allow co-ops to help their members overcome

the biggest hurdle to energy efficiency upgrades: cost.”
10 January/February 2014 / Rural Cooperatives

By Lynn Pitman, Outreach Specialist

University of Wisconsin Center 

for Cooperatives 

Editor’s note: Many of the presentations

made during the Farmer Co-op Conference

are posted online at: www.uwcc.wisc.edu.

That website will also carry periodic updates

about the next conference, which will be

held Nov. 6-7, 2014, in Minneapolis.

How does an agribusiness cooperative

provide value to its

member-owners? The

more than 160 people

who attended the 16th annual Farmer

Cooperatives Conference in

Minneapolis in November were able to

explore that perennial question from a

variety of viewpoints. 

Investing for the long term

Capitalization presents unique

challenges for agribusiness cooperatives,

and a discussion of alternative

opportunities for finding capital

launched the conference this year.

Ronald McFall, a partner with the Stoel

Rives law firm, provided a review of

debt and equity instruments through

the lens of securities laws. Changes to

the safe harbor exemption for securities

registration may present an opportunity

for cooperatives to expand their

securities offerings, he noted. The

exemption’s ban on public solicitations

will not apply if sales are made only to

accredited investors and if reasonable

Investing

In Your Co-op’s Future

Key finance, marketing issues examined during Farmer Co-ops Conference
steps have been taken to verify

accredited investor status.

Carl Casale, president and CEO of

CHS Inc., provided insights into the

capitalization strategies for this Fortune

100 cooperative. Strong earnings

growth has supported the expansion of

CHS’ global reach. The co-op now is

seen as a “tier-one” supplier by its

customers. By becoming a strong

international player, CHS has made its

owners relevant to the global market. 

The challenge for CHS, he said, is to

continue to build the permanent capital

needed to invest in assets that are

beyond the reach of an individual

farmer. Casale, a veteran of the 90-day

cycle that drives a publicly traded

company, contrasted those investordriven demands to the “long view” that

cooperatives can take by virtue of their

“patient capital” equity structure. But

sourcing cooperative permanent capital

can be challenging.

Many cooperatives use earnings from

non-members as a source of permanent

equity to support growth. Casale noted

that cooperative businesses can run into

trouble if they stray from their core

business. Because CHS members are

responsible for 70 percent (and

trending upward) of the co-op’s

earnings, non-member business is not

seen as a source for equity growth. 

Debt, especially in these times of low

interest rates, presents another source

of capital for growth. However, market

volatility makes liquidity very

important. Allocated member equity is

an important part of a healthy balance

sheet, but it can’t be considered

permanent equity. While the co-op is

not obligated to return the equity, the

expectation among members is there.

CHS has chosen to use “no-call”

preferred stock offerings to build the

permanent equity portion of its balance

sheet.

Jeff Stroburg, president and CEO of

West Central Cooperative in Iowa,

described his co-op’s approach to

growth equity. West Central began

offering a dividend-bearing stock in

2005. It is one of four different types of

allocated stock that the co-op issues to

provide flexibility in both revolving

patron equity and maintaining equity

for growth.

Qualified allocated equity is retained

by issuing a class of revolving patronage

stock. It is redeemable into the

dividend-bearing stock after 7-10 years.

The dividend on that stock is currently

8 percent and is available for

redemption any time, subject to board

approval. It is only issued to revolve

patron equity and cannot be purchased. 

To provide an incentive to members

to keep their equity invested in the coop, West Central sets the rates based on

maturity date. Dividends are taxed at

the capital gains rates and are not

subject to self-employment taxes. The

dividends are sourced from nonmember business, which provide a way

in which members can also directly

benefit from this revenue source.

The program must be managed to

balance liquidity needs to meet

potential redemption activities against

the needs for working capital. Stroburg

mentioned the potential feasibility of a

public market for cooperative stock,

which would provide holders of the

stock liquidity independent of the

cooperative.

Changing 

ownership structure

Ireland’s Glanbia Cooperative

Society illustrates another approach to

balancing outside investment, growth

and the optimum deployment of owner

equity. Michael Boland, professor at the

University of Minnesota, provided

background on the co-op, which was

created through the merger in the

1990s of two dairy cooperatives. 

Each cooperative had owned a valueadded firm, and when the cooperatives

merged, so did these firms, creating

Glanbia plc (a public limited company,

which is equivalent to a publicly traded

company in the United States). Glanbia

Cooperative Society was the largest

shareholder in Glanbia plc, which is an

international marketer and

manufacturer of cheese and other

consumer dairy products, sports

nutrition products, protein and

micronutrient products, as well as farm

supplies. 

In 2008, when the European Union

announced that milk quotas would be

repealed in 2015, a large number of

dairy co-op members began to push for

expanded processing facilities to

accommodate an expected increase in

farm production. However, this

conflicted with Glanbia plc’s focus on

Rural Cooperatives / January/February 2014 11
12 January/February 2014 / Rural Cooperatives

value-added, high-margin production,

which did not require large amounts of

milk for its markets and which were

increasingly located outside of Ireland. 

The pressure to return earnings to

shareholders and for debt servicing

from earlier expansions, as well as the

demand for equity retirement payments

(for both retiring and current farmers)

also created competition for a share of

the earnings.

In 2010, members narrowly rejected

a proposal to acquire the Dairy Ireland

division of Glanbia plc, dilute its

membership stake in the plc to 10

percent and use the cash raised to build

dairy processing and agricultural assets.

Those opposed to the proposal did not

want to give up their control of the plc

and to lose the potential returns on

investments they had made in it.

The plc’s stock price continued to

rise, and in 2012 the co-op and plc

announced a new proposal. Glanbia plc

would form an LLC with the co-op for

a joint venture to build a dairy

processing plant in Ireland, controlled

by the Glanbia Cooperative Society. To

help finance the plant, the co-op would

sell a portion of its plc holdings, ending

its majority position. Proceeds would

also be used to pay off long-term debt

and retire equity. The plan was finally

ratified at the end of 2012.

Boland interviewed Glanbia Co-op

board chair, Liam Herlihy, about the

restructuring. Herlihy noted that the

challenge was the trade-off involving

control of the plc vs. value that could

benefit members. A major goal of the

restructuring was to increase processing

capacity in Ireland, benefitting Irish

farmers. While co-op member control

of the plc has been diluted from 55

percent to 41 percent, the vote was

ultimately successful because it gave

something to everyone. 

In situations this complex, the trust

between the CEO and the board chair

is critically important because it

encourages frank discussion and makes

sure there are no surprises. Herlihy also

noted that outside directors were an

important addition to a board, bringing

in skill sets that are needed for growth.

Policy landscape

Chuck Conner, president and CEO

of the National Council of Farmer

Cooperatives, said efforts to simplify

the tax code will continue to be

contentious. A preliminary plan floated

by the Senate finance committee called

for a repeal of Section 199 deductions,

but not Subchapter T (which describes

the tax treatment of cooperatives). 

The impacts of domestic policy on

agribusiness continued to be explored

with a panel discussion on ethanol,

moderated by Michael Weaver, a

partner at the law firm of Linquist &

Vennum. The panel included Jim

Miller, vice president at Growth

Energy, which represents ethanol

producers and supporters; Greg

Krissek, manager at Kennedy and Coe,

a consulting firm; and Rick Schwarck,

president of Absolute Energy, which

owns an ethanol plant in Iowa. The

panel members presented their views

about the positive effects of the ethanol

mandates on the agricultural economy.

What’s ahead for economy?

A look at the increasing impact of

China on U.S. agriculture and

agribusiness cooperatives was provided

by Dermot Hayes, professor at Iowa

State University. Historically, the

Chinese have compensated for their

“ In situations this complex, the trust between the CEO and the

board chair is critically important because it encourages frank

discussion and makes sure there are no surprises.”

Co-op capitalization strategies were discussed by a panel of (from left): Ronald McFall, of the

Stoel Rives law firm; Jeff Stroberg, president and CEO of West Central Cooperative; and Carl

Casale, president and CEO of CHS Inc. Photo Courtesy University of Wisconsin. Ireland’s Glanbia

Cooperative Society (GCS) was discussed to provide an example of another approach to

balancing outside investment, growth and the optimum deployment of owner equity. The co-op’s

cheese innovation center is seen on facing page. Photo courtesy GCS
geographical constraints — such the

relative scarcity of good farmland in the

eastern part of the country — through

intensive labor on marginal lands and a

diet that wastes very little. As the

country grows and becomes more

prosperous, this strategy has become

increasingly challenging. 

China’s current leadership has been

open to a more free-market approach to

agriculture. Continued increases of

imported of soybeans, corn and

livestock — the production of which is

considered an inefficient use on much

of its agriculture land — would allow

rural populations to move to urban

centers and bolster the workforce there.

China’s growth has already had a

substantial impact on Midwest U.S.

agriculture. Hayes said that due to this

demand, and for other reasons, the

economic outlook for Midwest

agriculture remains very strong.

Joseph Mahon, economic analyst

with the Federal Reserve Bank of

Minneapolis, said that the domestic

economic situation for agriculture

continues to be positive. Federal

Reserve District 9, which encompasses

By John Shutske, Associate Dean

College of Ag and Life Sciences, University of Wisconsin 

Last month, I had the opportunity to be in Minneapolis for a couple days

at the Farmer Cooperatives Conference hosted by the University of

Wisconsin Center for Cooperatives. I was particularly interested in an afterdinner presentation on the first night, which touched on the major

challenges that the world faces in feeding a growing global population. 

Steve Radelet, who recently joined the faculty of the School of Foreign

Service at Georgetown University following his service as chief economist

for USAID, discussed “The Great Era of Global Development.” Radelet talked

about the worldwide economic and human progress during the past 50

years, which has been unprecedented in human history. In just 20 years,

billions of people have been lifted out of poverty and hunger. 

But most inspiring was Radelet’s discussion of the role that democratic

ideas, leadership accountability and economic freedom have played in the

progress made by developing countries. 

Not all countries have equally participated in these past few decades of

progress. And this progress could face significant setbacks, or even be

derailed, by a major global conflict or environmental catastrophe. But ideals

of freedom, democracy, accountability and transparency do clearly work.

This discussion reminded me that we see many of these principles and

ideals embodied in the work of cooperatives. 

Radelet’s discussion has also inspired me to think about the role of landgrant universities, such as ours. President Abraham Lincoln signed the

Morrill Act of 1862, leading to the formation of our colleges that housed

agriculture programs and other educational, research, and eventually

extension programs. He and leaders before him clearly understood that

education was, and remains, an important pillar to freedom and democracy.

As our world continues to progress, we will need to adapt in entirely new

ways because of issues such as climate change, emerging human (and

animal) health concerns, and the continued forces and implications

connected to a more globalized economy. 

I am confident, however, that our science and educational programs will

keep pushing forward. It is also clear that the role of cooperatives and the

ideals that Radelet described as being so successful in improving the human

condition have only upside growth potential. ■

In just 20 years, billions of people

have been lifted out of poverty

and hunger. 

Rural Cooperatives / January/February 2014 13

The long view of a changing world
14 January/February 2014 / Rural Cooperatives

most of the Midwest, weathered the

recession better than other regions, in

part because of the strength of the

agricultural sector. 

Overall, the 2014 forecast for the 9th

District is similar to 2013, with the

economy likely to enjoy a moderate

recovery. Farm income has remained

steady, and while crop prices overall are

down, land values and rents are still

climbing, Mahon said.

Global and 

consumer-driven impacts

Molly Jahn, a professor at the

University of Wisconsin-Madison,

looked at future demand trends and the

likely impacts on production

agriculture. Farm output in 2008 was

158 percent above production in 1948,

and now food systems can meet the

needs for global per capita caloric

sufficiency. But evolving pests and

diseases constantly challenge these

gains, and continual research is needed

to keep up. Furthermore, the current

food system is causing critical resource

degradation in many areas.

Noting the historical correlation

between civil instability and food prices

during this time of increased

agricultural productivity, Jahn said that

maximizing productivity does not

always equate to food security. Jahn said

her work with the International

Commission on Sustainable Agriculture

and Climate Change has focused on

developing recommendations to help

balance agriculture-induced climate

change, food needs for a growing global

population and climate constraints on

food production. 

There are a variety of strategies to

deal with these challenges, including

agricultural innovations that increase

crop resiliency, productivity and

efficiency, as well as reduce greenhouse

gas emissions. Carefully matching crops

to environments, for instance, can

optimize nutrient and water use.

Cooperatives are uniquely positioned

to play a role in this shift. There is a

developing need for tools that allow

producers to manage more complex

sustainability trade-offs, Jahn said. By

aggregating and sharing producer data,

cooperatives can create knowledgebased assets that will support

sustainable outcomes for all.

Consumers putting 

more demands on industry

Christine Walsh, vice president with

Point Zero Retail, a research and

marketing agency, talked about

sustainability from a consumer-demand

perspective. Producer cooperatives have

focused on operational efficiencies

rather than the influence that

consumers play in the market place.

Consumers are more engaged than ever,

and the transparency that they expect

from producers of their food is no

different than the transparency that

they expect from other businesses or

government, Walsh said.

She reminded the audience that

agricultural producers are not being

“picked on.” Consumer demand for

information about issues they care

about spans many sectors and will likely

only grow. 

Walsh highlighted several new tools

now available to consumers that provide

comparative product information for

making purchasing decisions. These

include more information about

nutrition, production methods and

sourcing. Producers need a variety of

strategies to meet consumer demands

for information at the retail level. 

“Pretty big data”

Data, whether used to inform

consumers or to assess the trade-offs in

complex decision-making, represent a

critical asset for co-ops. Knowing where

data comes from, and how it is

captured, is important. George Olney,

chief operating officer of iRely, a

provider of enterprise software for

commodity management, described the

process of implementing new data

collection software systems. These new

systems are also the basis of potential

data-sharing arrangements that could

support metrics, risk management and

trend analysis. 

Larry Romuald, treasurer of

Cooperative Resources International

(CRI), a livestock breeding co-op,

described the implementation of one

such system. The co-op has been using

a patchwork of old software programs

that was not keeping pace with the coop’s growth or the increasing

complexity of its domestic and

international operations. 

CRI identified important strategic

capabilities that could only be met by

new enterprise software systems, and

that would justify the substantial time

and budget commitments required for

implementation. The three-year project

will be launched in the spring of 2014. ■

“By aggregating and sharing producer data, co-ops can create

knowledge-based assets that support sustainable outcomes for all.”
By Jerry Kozak

Editor’s note: Jerry Kozak stepped down Dec. 31 after 16

years a president and CEO of the National Milk Producers

Federation (NMPF). He shares his insight in this final column he

wrote for NMPF’s member newsletter. 

NMPF consists of 31 cooperatives that produce the majority of

the U.S. milk supply, making NMPF the voice of 40,000 dairy

producers on legislative issues. Since 1991, Kozak has also served as

executive director of the American Butter Institute and was the

first American to serve as president of the International Dairy

Federation, based in Brussels, Belgium, from 1996-2000. Kozak

was senior vice president of the International Dairy Foods

Association in Washington, D.C., from 1989 to 1997. Prior work

included service with the U.S. Food and Drug Administration,

where he was chief of the Milk Safety Branch from 1984 to 1988,

and then director of its Division of Cooperative Programs from

1988 to 1989.

Of all the decisions any of us make

professionally, the two most important are

whether to take a job, and then when to leave

it. Sixteen years after deciding to become

president and CEO of the National Milk

Producers Federation, I’ve chosen to retire at the end of the

year — which means this is my last column for NMPF’s CEO

Corner. So, all my big decisions have been made.

Rather than offer a recitation of memorable moments

(there have been many cherished ones with people in this

business) or a list of regrets (as that other singer from New

Jersey famously said, “I’ve had a few, but too few to

mention”), allow me to offer a few parting observations about

the lessons I learned at NMPF and how they shaped the past

16 years working for the organization’s members and the

dairy industry.

How you define consensus can give you everything, or

nothing. The tendency among most organizations,

particularly trade associations led by a board of directors, is

to define consensus as getting everyone to be in accord on a

particular position. But if it’s a tough issue, waiting for 100

percent alignment can paralyze the organization and

neutralize its effectiveness. 

That was the situation I found when I came to NMPF in

1997. One of the first things I said was that striving for

consensus is incredibly necessary, but defining it as a situation

where everyone has to be completely happy is a mistake.

Hard choices never lead to complete harmony, but as long as

people have input into the process and contribute their two

cents, an organization then needs to move forward in order

to be effective. 

This belief roiled the membership in my first few years at

NMPF, but made my job easier in the long run.

Credibility is your credit. NMPF doesn’t sell products;

rather, it offers ideas to our industry and to policymakers.

Nevertheless, any marketing effort involves getting people to

buy into the ideas you’re selling. In order to gain traction in

the world of ideas, they have to be credible. They must be

based on sound science, and the economics have to be clearly

understood. To the extent that we’ve had success in the past

16 years, it’s because we have not advocated positions that

weren’t defensible and credible. The legislators and

regulators we’ve worked with have appreciated that we have

grounded our ideas in the facts, not in ideology or

mythology. 

And we have gained greater traction over time, and gotten

more credit, because we could back up our ideas with the

facts. Making a convincing case — making the sale — the

second, third, or 100th time is only possible if you have a

reserve of credibility from delivering on your word the first

time.

Proactivity uses less energy than reactivity. While

there’s some value to the notion that if it ain’t broke, don’t fix

it, it’s also true that it’s far easier to change things before

they’re completely broken. One thing I did at NMPF is to

identify areas where we needed to make changes, to learn and

Rural Cooperatives / January/February 2014 15

In the Spotlight

Life Lessons

Jerry Kozak

continued on page 37
A normally quiet, country road in Boone

County was bustling with activity recently as

volunteers, electric cooperative crews,

arborists and others worked to give a centralMissouri landmark some much-needed care

and attention.

The overall condition of the more than 350-year-old

McBaine Bur Oak, simply known as “The Big Tree” to locals,

has been in decline lately, and sixth-generation property

owner John Sam Williamson, Jr. says the work was needed.

“The drought last year was hard on it,” says the Boone

Electric Cooperative member. “It’s genetically superior, or it

16 January/February 2014 / Rural Cooperatives

Co-ops & Community

Restoring a Living Landmark

By Paul Newton

pnewton@ruralmissouri.coop

Editor’s note: This article is reprinted courtesy Rural

Missouri (www.rural missouri.coop), the member

publication of the Missouri Association of Electric

Cooperatives. Newton is the magazine’s field editor. The

“Co-ops & Community” page spotlights co-op efforts that

fulfill the mission of commitment to community. If you

know of a co-op, a co-op member or co-op employee whose

efforts deserve to be recognized on this page, please contact:

dan.campbell@wdc.usda.gov.
wouldn’t have lived this long. But

it’s also been really lucky. It’s had

floods, droughts, lightning strikes

and a lot of things that could have

killed that tree, but didn’t.”

Arborist Bill Spradley of

Kirkwood served as the general

contractor for the care of the tree,

which sits between the Katy Trail

and the Missouri River southwest of

Columbia. On Oct. 22, crews from

Spradley’s company, Trees, Forests

and Landscapes Inc., Cuivre River

Electric Cooperative, Boone

Electric, the Missouri Cooperatives

Right of Way Management

Association and the city of Richmond

Heights spent the day pruning deadwood, installing lightning

protection and applying treatment to and around the tree to

enhance growth and inhibit future deterioration. 

“What we have found from the first time we were here

was there are more people connected to this tree than we

ever had imagined,” says Spradley, who first worked on the

tree five years ago. “Whether it’s high school kids gathering

here, wedding proposals, motorcycle riders that come back

year after year, we just thought it was important to keep this

going because of the connection people have with it.”

At first glance, the tree seems out of place. The branches

of the sprawling bur oak, which was already more than 150

years old when the Show-Me State was admitted to the

union, stretch well above anything else on the surrounding

farmland. The tree dwarfed the 70-foot-tall elevator lifts

brought in to work on it. Crews had to rely on secured ropes

and their best tree-climbing skills to get to the top.

In addition to Cuivre River and Boone Electric donating

their time and equipment for the day, the Missouri

Cooperatives Right of Way Management Association

purchased nearly $1,700 worth of hardware used for

lightning protection on the tree.

“The lightning protection is really important because we

can do all this work to prolong the life of the tree, but one

strike and it would be a quick kill,” Spradley says. “Lightning

could hit at any time.”

Scott Skopec, Cuivre River Electric’s supervisor of rightof-way maintenance, says the right-of-way association, which

donated money to plant trees in

Joplin last year, heard about the

needs of the tree and felt it was a

worthy cause. 

“We have to cut and clear a lot

of trees,” he says. “This is an

opportunity that we can give back

to the community for a tree that so

many people love and come to

admire and see.”

The Missouri state champion

and national co-champion bur oak

has been a destination for visitors

for some time, according to

Williamson, whose family has

owned and farmed the land the tree

occupies since 1835.

“There are a lot of stories about things that have

happened under the tree, some of them good, some of them

bad,” Williamson says. “Everybody tries to take care of the

tree. A lot more people take care of the tree than don’t.

That’s a good thing.”

This was only the second time the bur oak received

professional care. Spradley worked on the tree in 2008 with a

much smaller delegation of workers. His work to help the

tree wasn’t warmly — albeit mistakenly — accepted at first.

“We were setting up to cut some of the big deadwood, and

a few locals came out. They thought we were cutting the tree

down, and they were totally upset. I had to calm some of

them down,” says Spradley with a laugh. “So that shows you

how much it means to the community.”

As the Williamson family continues to farm the land that

straddles Burr Oak Road, the hope is that all the work done

to what John Sam calls the “oldest living thing in Boone

County” will help prolong its life for future generations.

“I think it will outlive me,” he says. “It’s definitely on a

decline. Big trees like this could take 50 years to die. It’ll be

really sad when it does, but it’s lived a long full life.” ■

The McBaine Bur Oak is located on Burr Oak Road 10.4 miles

from the intersection of Nifong Boulevard and South Providence

Road in Columbia. The road begins as South Providence and

changes to Route K, Perche Avenue and finally Burr Oak Road.

The tree will be on the right.

Rural Cooperatives / January/February 2014 17

A 350-year-old bur oak tree that rises up majestically in Boone County, Mo., has survived

centuries of floods, droughts and lightning strikes. Below and opposite page, arborists

and co-op staff take steps to help ensure that the tree continues to be enjoyed by future

generations of the “Show Me” state. Photos by Paul Newton, courtesy Rural Missouri
By Bruce J. Reynolds, Economist

Cooperative Programs

USDA Rural Development 

The significant role

cooperatives are playing

in community revival

and development was

the focus of a

conference in Minneapolis in

November, appropriately titled

“Cooperatives = Community

Development.” The meeting was

sponsored by CoMinnesota, a

“networking group” formed in 2011 to

share ideas among Minnesota’s

cooperatives and community

developers. 

It was one of three co-op

conferences held the same week in

Minneapolis. The others were the

annual Farmer Cooperatives

Conference (see page 10), sponsored by

the University of Wisconsin, and

NCERA-210, sponsored annually by

the Land Grant University Extension

system to present the findings of the

latest research on cooperatives

(http://ncera. aae.wisc.edu/).

The CoMinnesota conference, the

focus of this article, was held at the

headquarters of Thrivent Financial, a

fraternal group that originally

developed to meet insurance needs of

Lutherans. Participants came from a

cross-sector of cooperatives, USDA

Rural Development and staff from four

statewide or regional cooperative

development centers that participate in

USDA’s Rural Cooperative

Development Grant (RCDG) program. 

Understanding co-op heritage 

Chris Kopka, a law professor and

vice president of Thrivent Financial,

opened the conference by reminding

the audience of the importance of

understanding our nation’s cooperative

heritage, including the reasons why

numerous farmer cooperatives were

formed during the late 19th century, a

time when farmers were struggling to

gain the marketing power and

affordable supplies necessary to survive.

These early co-ops established the

traditions of education and self-help,

which would also be embraced by

future generations of cooperatives. 

In his keynote address, Mark Ritchie,

Minnesota secretary of state, provided

an overview of the importance of

cooperatives to the state’s economy, as

well as the benefits of additional

security (such as reliable markets, or the

availability of vital supplies) and unique

services that co-op members receive.

He also discussed the potential for

sustaining many of the family businesses

of retiring baby boomers through

transitioning businesses to worker

ownership. 

Cooperative “basics” were discussed

by Kevin Edberg of Cooperative

Development Services, and Margaret

Bau, co-op development specialist with

USDA-Rural Development’s Wisconsin

state office. Bau discussed the essentials

of cooperative ownership, including the

importance of local ownership by

members based on their use of co-op

services. This means that patronage

dividends and member equity are

distributed to local residents; hence,

this source of income stays in the

community. 

Roundtables discuss 

key co-op topics

The conference luncheon featured

roundtable discussions led by experts in

various co-op sectors. At the USDA

Rural Development table, the

discussion focused on USDA’s Rural

Economic Development Loan and

Grant (REDLG) program. Mike

Murtaugh from Freeborn-Mower Coop Services, a rural electric cooperative

headquartered in Albert Lea, Minn.,

explained its re-lending activity under

the program to promote local

businesses. The workings of the

REDLG program were further

elaborated on by Cheryl Seanoa and

Naomi Lenz from the Minnesota office

of USDA Rural Development. 

The afternoon sessions featured

seven workshops on various cooperative

topics. Warren Kramer of the

Northcountry Cooperative Foundation

(NCF), a participant in USDA’s RCDG

program, discussed the development of

manufactured home park cooperatives.

By helping home owners to establish

cooperative ownership and control of

their land, NCF is contributing to the

residents’ financial security and

community well-being. Some of these

Co-ops = Community Development

18 January/February 2014 / Rural Cooperatives

Cooperative developers share ideas in Minneapolis
Rural Cooperatives / January/February 2014 19

co-ops have been formed in response to

park owners announcing plans to sell

their land to developers, which would

have forced the eviction of residents. 

Janssen Hang, an organizer with the

Hmong American Farmers Association,

and John Flory, director with the

Latino Economic Development Center

(LEDC), discussed the challenges for

immigrant farmers in obtaining access

to land. Many of these farmers operate

with “insecure” or unfavorable landleasing arrangements, or find

themselves unable to transition from

farm workers to owners. 

The speakers cited progress in farm

ownership and access to farmer markets

in urban areas. During the past two

years, LEDC has participated in the

RCDG program to increase its level of

assistance to both Hmong and Latino

farmers. 

A workshop on how to finance

development projects looked at the

issues facing housing, business and

consumer cooperatives. Christina

Jennings, executive director of the

Northcountry Cooperative

Development Fund, described the nuts

and bolts of evaluating and

underwriting co-op projects. The

discussion also covered sources of

financing, including opportunities for

partnering with various lending

institutions, including USDA Rural

Development.

The conversion of businesses from

sole proprietorships to ownership by

employees is gaining increased

attention nationwide. Margaret Lund, a

Minnesota-based cooperative developer,

gave a presentation on Terra Firma

Building & Remodeling. Marty Ruddy,

who started the business, and another

co-op employee also participated in the

presentation. While most conversions

to co-ops are pursued to maintain the

business and distribute a share of its

value to retiring owners who had

previously operated as sole proprietors,

this case was unique. 

Ruddy built the business and

initiated the conversion to a worker coop, for which he plans to continue

working for many more years as a

worker-member. His motivation for

transitioning the business to a workerowned co-op, Ruddy explained, was

based on his experience of collaborating

with his employees in planning and

making decisions. While he prospered

as sole owner, he believes the best years

are ahead for Terra Firma Building &

Remodeling in operating as a worker

cooperative. 

The CoMinnesota web page includes

a video of the conference, at: http://

cominnesota.coop/home. ■

Efforts are being made to help immigrant farmworkers, including Hmong farmers from Southeast

Asia (seen here), become farm owners through the use of cooperatives. Janssen Hang, an

organizer with the Hmong American Farmers Association, and John Flory, director with the

Latino Economic Development Center (LEDC), discussed the challenges facing immigrant farmers

during a recent conference sponsored by CoMinnesota. USDA Photo by Bob Nichols 
20 January/February 2014 / Rural Cooperatives

By Carolyn B. Liebrand, Ag Economist

Cooperative Programs, USDA Rural Development

Editor’s note: This article is based on Research Report 229,

“Member Satisfaction with Their Cooperatives: Insights from

Dairy Farmers.” For more information, please contact the author

via: carolyn.liebrand@wdc.usda.gov.

Do you know how your farmer-members feel

about their co-op? Some proactive

cooperative leaders wondered just that... and

then took action to find out.

The key to running a successful cooperative

is no great secret: the co-op must perform functions and

provide services needed and desired by its members to their

satisfaction. A number of factors influence levels of overall

satisfaction with a co-op. 

One way for a cooperative to find out what members think

and feel about their cooperative is to ask them for direct

input. Several major dairy cooperatives have done that in

recent years by surveying their members by mail. 

USDA Cooperative Programs played a role in these

surveys, resulting in the collection of 1,736 cooperative

member opinions on 43 questions that were common to each

survey. The surveys were conducted independently from

January through March in various years between 1993 and

2012. About 40 percent of the members in these cooperatives

provided input on all of the questions that the surveys had in

common. 

The surveys included questions about the cooperatives’

internal management and operational issues, which fell into

six general topic areas:

• Milk pricing;

• Cooperative services; 

• Cooperative operations; 

• Cooperative principles; 

• Cooperative governance, and

• Member connections with their cooperatives.

The producer-members were asked to indicate their

opinion on various statements by selecting a number, ranging

from 1 to 5, to represent their intensity of feeling about a

given item. For example, on some questions, those surveyed

were asked if “strongly disagree,” “disagree,” “unsure,”

Surveys show that overall satisfaction with a

dairy cooperative is strongly linked to

members’ satisfaction with their co-op board of

directors. Members hold management and the

board responsible for the functions that affect

their farms’ financial bottom line. Photo

courtesy Dairylea

What leads

to satisfied

co-op members?

Surveys of dairy farmers

show management

and pricing are key
“agree” or “strongly agree” would best describe their

response to a question. Other questions asked the dairy

farmer members if they were “very dissatisfied,” “somewhat

dissatisfied,” “unsure,” “somewhat satisfied,” or “very

satisfied” with cooperative services and operations. 

To find out factors most closely linked with members’

overall satisfaction with their cooperative, correlations

between each of the survey items were calculated, assigning a

value to each pair of survey items. This value indicates the

strength of the relationship between the topics of the two

questions. 

For example, higher levels of satisfaction in one area may

be related to higher levels of satisfaction in another area.

Conversely, the value may indicate a relationship where

higher levels of satisfaction may be related to lower levels of

agreement with a particular principle or practice. 

The bottom line

Dairy farmers’ livelihood depends on their milk being

efficiently marketed and receiving the highest possible price

for it. Many studies show that dairy farmers greatly value an

assured market and high milk price. So, it is natural that their

satisfaction with their cooperative is tied closely to whether

the cooperative does a good job of marketing their milk at a

reasonable cost, then returns a competitive milk price to

members. 

Corporate-level issues that concern how well the

cooperative is run (board and management efficiency and/or

competency) and items that affect members’ pocketbooks

(pay prices and cooperative operational costs) are most

strongly associated with overall member satisfaction with

their cooperative (see figure 1). Members’ overall satisfaction

with their cooperative is very strongly correlated with

Rural Cooperatives / January/February 2014 21
member satisfaction with management and pricing policies. 

Similarly, member satisfaction is strongly related to their

perception of how well the co-op is managing operating and

marketing costs. 

Overall satisfaction with the cooperative is strongly linked

to feelings toward the board of directors. Members hold

management and the board of directors responsible for

cooperative activities and functions that affect their farms’

financial bottom line.

Communication key to satisfaction

Three communication (member relations) issues are

strongly correlated with members’ satisfaction with their coops (figure 2). Agreement that their cooperative keeps them

well informed about its operations was strongly linked to

overall feelings about the cooperative.

Similarly, members’ feelings that they can influence the

cooperative and have an impact on how it is run are strongly

related to overall satisfaction. It may be that feeling well

informed about their co-op contributes to members’ being

satisfied with the corporate level issues mentioned above. It

then seems possible that less satisfied members would show

greater satisfaction with the co-op if they were more aware of

how the cooperative operates and/or felt like they had more

of a role in how it is run.

Contributing factors

Many additional topics are moderately associated with

members’ overall satisfaction with the cooperative (figure 3).

Some are similar to those identified above that affect

members’ pocketbooks (agreement that cooperative pays all

members fairly for their milk) and communication

(agreement that members receive as much information as

they need about operations and programs). 

Member connection to co-op

Feelings of “being connected” to the co-op influence

member satisfaction. Member satisfaction was linked to a

view that “the cooperative is not more concerned about its

operations than about members.” Likewise, agreement that

the cooperative “is not just another place to do business” is

related to overall satisfaction with the cooperative. 

In addition, agreement that belonging to the cooperative is

an important part of the member’s identity as a farmer and

that the member feels that he or she is a part owner of the

cooperative also have a moderate impact on overall feelings

toward the cooperative. Together, the link between these

items and member satisfaction indicates that members’ view

of their cooperative as a unique organization may play a role

in their overall level of satisfaction.

Cooperative services

The surveys asked about five different co-op services.

(Individual surveys asked other additional questions about

specific services provided by the cooperative, but these five

were comparable across all surveys.) The level of satisfaction

with the cooperative’s provision of market information, with

its milk hauling policies, with the cooperative’s field

representative, and with the cooperative’s laboratory services

were each moderately correlated with member overall

satisfaction. However, satisfaction with milk hauling services

(operating or arranging routes) was only weakly linked to

satisfaction with the cooperative.

22 January/February 2014 / Rural Cooperatives

Figure 1 — Members’ overall satisfaction with their

cooperative is strongly correlated with corporate level issues

Item Strength of 

relationship

Satisfaction with...

Cooperative’s management Very strong

Cooperative’s pricing policies Very strong

Level of agreement that...

Cooperative does a good job of 

marketing members’ milk and returns 

a competitive price for their milk Strong

Satisfaction with...

Cooperative’s management of 

operating and marketing costs Strong

Cooperative’s board of directors Strong

Level of agreement that...

Member would not drop out if an 

alternative was available Strong

Figure 2 — Members’ satisfaction with their cooperative

overall is strongly correlated with communication issues

Item Strength of 

relationship

Level of agreement that...

Co-op keeps me well informed about 

its operations Strong

Members have a great amount of 

influence on how co-op is run Strong

Member is satisfied with amount of 

influence on how co-op is run Strong
The relatively weaker correlations between member

satisfaction with their cooperative and satisfaction with the

various services provided by, or through, the cooperative may

be because of the individualistic nature of the relationships

between service provider and member. Members may hold

service providers — such as field representatives and milk

haulers whom they have direct contact with — accountable

for the quality of the services provided, rather than the

cooperative itself. 

Members’ satisfaction with their cooperative may be more

heavily influenced by how the cooperative guides the

provision of these services. For example, members’ rating of

the cooperatives’ milk hauling policy is more strongly

correlated with satisfaction with the cooperative overall than

is members’ rating of the milk hauling service itself.

While member satisfaction with the cooperative was

moderately related to satisfaction with, or rating of, these

services, the fact that they were not more strongly correlated

does not necessarily mean that the provision of, or quality of,

services the cooperative supplies are not important to

member satisfaction. It may just mean that member

unhappiness with certain aspects of the services provided may

or may not translate into dissatisfaction with the cooperative

overall, depending upon the nature of the specific issue. 

Cooperative practices

Finally, agreement that the cooperative does not try to

cover too big a geographic area is moderately linked to the

level of overall satisfaction with the cooperative. In other

words, members who were satisfied with their cooperative

usually did not agree that it tried to cover too big an area.

The level of agreement with the statements that the

cooperative’s earnings were a return on the member’s

investment and that the cooperative paid patronage in

proportion to the member’s patronage are both moderately

associated with overall satisfaction. Likewise, agreement that

their cooperative works appropriately with other agricultural

cooperatives and that it supports cooperative education for

members and the public are also moderately correlated with

the level of overall satisfaction.

That these are not more strongly linked may indicate that

for some members, satisfaction with the cooperative does not

depend on whether or not their cooperative practices these

principles, or perhaps whether or not the members are aware

of their cooperative’s practices.

Cultivating member satisfaction

In summary, it is clear that the factors most strongly

linked to member satisfaction are a cooperative’s:

• Management, in general;

• Milk pricing policies;

• Management of operating and marketing costs;

• Board of directors, in general, and

• Communication with members.

Thus, the first priority for cultivating improved member

satisfaction appears to be having a competent board of

directors and a capable management team in place. To

achieve this, members should elect a board that is competent

in setting policies and in recruiting and supervising a capable

management team. Members look to management to do the

best possible job of marketing member milk, minimizing

operating costs and setting satisfactory milk pricing policies. 

A second key area for member satisfaction is sound

communication that keeps members well informed about

cooperative operations and provides feedback from members

regarding their wishes and concerns. Third, the cooperative

should have an education program to augment members’

understanding of the milk market and the nature of the

cooperative business model.

Last, but not the least, the cooperative should ensure that

service providers who are in direct personal contact with

Rural Cooperatives / January/February 2014 23

continued on page 38

Figure 3 — A range of topics are moderately associated

with member satisfaction with their cooperative overall 

Level of agreement with items concerning member connection

to the cooperative:

• Co-op is not more concerned about operations than its

members

• Belonging to the cooperative is an important part of the

member’s identity as a farmer

• Members feel they are part owner of the cooperative

• The cooperative is not just another place to do business

Satisfaction with cooperative services:

• Cooperative’s provision of market information

• Cooperative’s milk hauling policy

• Field representation (farm visits, interface between producers

and cooperative)

• Laboratory services (component and quality tests, and reports) 

Level of agreement with cooperative practices:

• Cooperative pays all members fairly for their milk

• Cooperative members receive as much information as they

need about operations and programs

• The cooperative does not try to cover too big an area as an

organization

• The cooperative’s year-end earnings are considered a return on

member’s investment

• The cooperative works appropriately with other agricultural

cooperatives

• The cooperative pays patronage refunds in proportion to

patronage

• The cooperative supports cooperative education for members

and the public
By Alfonso Morales and Ali Loker

Editor’s note: Morales is an associate

professor of urban and regional planning

at the University of Wisconsin-Madison.

Loker earned a bachelor’s degree in

Community & Environmental Sociology

in 2012 from the University of

Wisconsin-Madison and is currently a

volunteer with Americorps. Support for

this research was provided by USDA’s

National Institute of Food and

Agriculture. 

The World Food

Summit of 1996

defined food security

as existing “when all

people at all times

have access to sufficient, safe,

nutritious food to maintain a healthy

and active life.” While food

insecurity is a global issue, this article

will primarily focus on the situation

in the United States and the role of

food buying clubs in helping to

address it.

In 2010, about 85.5 percent of

households were food secure, 9.1

percent had low food security and 5.4

percent had very low food security,

according to the U.S. Department of

Agriculture (USDA). This equates to

48.8 million households that were

food insecure in 2010. 

Of these low food security

households, 40.2 percent were

classified as being below the poverty

line, 35.1 percent were single-parent

households headed by a female and

24 January/February 2014 / Rural Cooperatives

Welcome to the Club!

Many buying clubs initially focus on acquiring food staples and dry goods, since storage for such items is limited only by space,

without the need for refrigeration. Canned goods offer similar advantages, but margins on them tend to be much lower.

Food buying club co-ops have potential

to help increase food security for many 
Rural Cooperatives / January/February 2014 25

25.4 percent were single-parent

households headed by a male.

Households with children were about

twice as likely to be food insecure as

were households without children.

These statistics are only a small

snapshot of the issue of food insecurity

in the United States.

There are a wide variety of solutions

that have been used to fight food

insecurity. USDA has developed the

Community Food Security Initiative to

“forge partnerships between USDA and

local communities to build local food

systems, decrease need and improve

nutrition” (Kanto). 

This initiative includes a Food

Security Toolkit that helps communities

identify needs and that provides

possible solutions. These solutions

include farmers markets, communitysupported agriculture, farm-to-school

programs, community gardens and

community kitchens. All of these

“tools” are currently under-utilized by

low-income individuals. Through this

toolkit, USDA hopes to increase the use

of these programs by food insecure

individuals.

Food clubs are an additional solution

to food insecurity.

Linking consumers 

with wholesalers

Buying clubs are a form of

cooperative that involves a group of

people who collectively purchase food

directly from a wholesaler. This process

eliminates many steps of traditional

food distribution, allowing the members

to save money. 

The 1960s and ‘70s were a time of

growth in co-op popularity. Many

consumer co-ops were established

during this time, but there was

resistance in some communities to these

co-ops, which some people regarded as

“a hippie fad” that catered to people

with odd food preferences. However,

this image has changed considerably

with the increasing diversity of people

involved in co-ops and the rapidly

growing demand for local, organic

and/or natural foods. 

Many of the food co-ops that exist

today got their start as buying clubs.

Some of these smaller, less formal coops have developed into larger co-ops

with less member involvement. 

In Food Co-ops: An Alternative to

Shopping in Supermarkets, William

Ronco argues that “the relationship

between buying clubs and more visible

storefronts is not one of evolution, but

interplay...many storefronts help start

and support buying clubs” (pages 125-

126). This interaction between buying

clubs and cooperatives is very important

to keep in mind when examining their

histories. 

Why food buying clubs?

A dominant theme in articles on

food clubs is the ability of consumers to

alter the market through participating

in buying clubs. In a 1999 report on

food security in Canada, Jacinda

Fairholm frames the issue well: “By

changing our purchasing patterns as

consumers, we can help alter the market

so that it better reflects the needs and

wishes of all consumers, particularly

families and individuals with low

income.” 

Buying clubs empower consumers by

encouraging them to pool their

purchasing power and participate in an

alternative distribution system. Buying

clubs also allow consumers to have

greater control over the quality of the

food, the price and the source

(Fairholm, page 32). A buying club

“influences prices and quality in its area

because members are better informed

and have a larger choice.” Learning the

strength of consumer power is a benefit

mentioned by Fairholm, Sekerak and

Danforth, as well as in Moving Ahead

with Group Action.

This consumer power can be

especially effective for low-income

populations, where people are often

initially interested in a buying club

because of their ability to save money.

However, after participating in a buying

club for some time, the members begin

to witness firsthand the power of

cooperation and what can be

accomplished through group action. 

Many leaders of co-ops (not simply

food co-ops) got their start in buying

clubs (Sekerak, Danforth). The smaller

scale of buying clubs is an approachable

entry point for individuals who may not

otherwise be likely to join a

cooperative. The small scale also

provides a more manageable level of

responsibility than does being an

employee of a co-op store. 

A job at an established cooperative

may entail part- or full-time work. A

job at a buying club, however, might

simply be two or three hours per week,

or even per month. A buying club can

provide invaluable experience with tasks

such as working with wholesalers,

keeping records and running a small

business. 

These experiences and more are

provided by the buying club with the

support of other members and

volunteers. Participating in a leadership

position in a buying club can give an

individual the confidence to use these

skills in a more formal job setting, even

those that are not associated with coops.

Sekerak and Danforth say another

benefit is the relative ease of forming a

buying club, compared to other food

security solutions, such as forming

consumer cooperatives. There is no

need to secure a permanent space for a

food club; many are run out of

members’ homes or churches,

community centers or other public

locations where space is free or

available at a low cost. All jobs are

performed by volunteers, eliminating

the hassle associated with hiring

employees. 

The ability to reduce costs results in

lower priced food. By reducing or

completely eliminating the costs

associated with modern food

distribution, buying clubs are able to

make fresh, healthy foods more

accessible to low-income populations. 

The social benefits of a buying club
26 January/February 2014 / Rural Cooperatives

are also worth noting. Buying clubs are

a wonderful opportunity to build

community. Community members work

together towards a common, tangible

goal of providing better food to the

residents at a lower cost. The

relationships that are built through the

buying club extend beyond the

boundaries of the club and can be an

important jumping-off point for the

community to pursue social justice in

other forms (Moving Ahead). 

Starting and running 

a food buying club

A common first step in forming a

buying club is to familiarize oneself

with the community and any existing

infrastructure that might make the area

a good or bad fit.

Organization and Management of

Consumers’ Cooperatives and Buying Clubs

provides a helpful outline to survey a

community. It includes questions under

these categories: community

characteristics, local competition

(existing agencies), trading and

membership prospects, trading

facilities, financing, other cooperatives,

operation of the association and a

summary and recommendation portion

(page 54). This survey encourages

individuals to take into consideration

many factors that could affect the

establishment of a buying club. 

Although buying clubs are relatively

simple to establish, even a well-run club

in the wrong community could easily

fail. Careful selection of location,

combined with a well-run club, will

likely lead to success.

An optional, but recommended, next

step is to contact local service groups.

These groups can include committees

that provide technical assistance to

buying clubs and other cooperatives,

centers that provide resources to

cooperative groups, professional

organizers and existing cooperatives or

buying clubs in the area (Evans, page

6). Reaching out to these groups during

the planning stages can help a club

establish supportive relationships at a

crucial point in development. These

groups will be able to provide useful

insight and advice to newcomers. 

The next step in the process is to

hold a preliminary meeting with a

group of core volunteers who are

committed to establishing the buying

club. This meeting should begin with

discussing what a buying club is and

how it will address the needs of the

group. If it is decided that a buying club

will not address the group’s needs, the

community is not a good fit and other

solutions should be considered. At this

meeting, it is important to emphasize

communication and to receive input

about how to remain in contact

between meetings. 

Tasks will be distributed among the

volunteers, so it is imperative that

everyone remain connected and

updated about the progress being made.

Members of the group should consider

what they want to accomplish with the

buying club. What are the long- and

short-term goals? Put these in writing

so that the group can periodically assess

whether they are being met. 

The preliminary meeting (or the

second meeting) is also a good

opportunity to discuss and assign roles.

There are many tasks in setting up a

buying club: general coordinating,

creating and tallying order forms,

purchasing and dividing up the food,

cashiering, set-up and clean-up work on

distribution day, coordinating

volunteers and bookkeeping (Evans,

pages 9-10). It is crucial to divide the

work as evenly as possible to prevent

“burn out” of volunteers. 

Food offering choices 

The group must also determine what

types of food to offer through the

buying club. How to Form a Food Co-op

offers recommendations. Many buying

clubs decide to order staples and dry

goods. Storage for dry goods is limited

only by space, as they do not require

refrigeration. Canned goods may seem

appealing for similar reasons to dry

goods, however, the margin of savings

on canned goods is low — almost

negligible in some instances. 

Produce can be difficult for

beginning buying clubs to offer, due to

storage constraints. However, many

clubs carry produce because it provides

the largest savings for its members.

Meat and dairy come with storage

considerations that are similar to those

for produce, along with the additional

complication of grades. It is important

for the club to solicit input from its

members as to their preferences in

“Buying clubs allow consumers to have greater control over

the quality of the food, the price and the source.”

Food orders are distributed at the Cumberland

Food Buying Club in Crossville, Tenn. Photo

courtesy Cumberland Food Buying Club 
Rural Cooperatives / January/February 2014 27

grades for these products before

deciding to offer them.

Determining the types of food to

offer is a balancing act between savings,

storage consideration and member

preferences. This is an extremely

important decision and should be made

only with the input of as many

members as possible. Ann Evans

recommends that clubs begin by

offering staples and moving up to meat,

dairy and produce only after they’ve

been successful at the former.

Once the buying club has

determined what types of food it would

like to include in its offerings, it must

locate a wholesaler. Moving Ahead

suggests first searching for a wholesaler

that is owned by consumer co-ops in

the area (page 11). If this is not

possible, work with other wholesalers

serving the area. Co-op Stores and Buying

provides a list of important questions to

ask a potential wholesaler, including

questions about mark-ups, membership

requirements, prices, frequency of

orders and deliveries, policies on

damaged goods and minimum order

requirements. 

It is crucial to have a thorough

conversation with the wholesaler to

help the group avoid unexpected

complications. Try to interview several

wholesalers, taking notes and

performing calculations for

comparisons. Throughout this process,

the members should keep information

on other wholesalers confidential and

should not use this information in

discussion with competing wholesalers

(Lefever, page 2). 

Financing options

Finally, the buying club should

decide how it would like to handle its

finances. The primary decision that

must be made is when to collect

payment from members. There are two

options, both with advantages and

disadvantages. 

Prepayment requires more bookkeeping. However, it is a guarantee that

all food that is ordered will be paid for.

Prepayment also allows the club to have

enough money to pay the wholesaler

without needing to have an outside

source of capital. 

Payment at pickup eliminates much

of the bookkeeping, including tracking

prepayments and issuing credits or

refunds if there are damaged or lost

goods. However, payment at pick up

necessitates an outside source of

funding to pay the wholesaler upfront.

A buying club can do this through a

loan or initial deposits from its

members. A bank account should be set

up to handle the cash flow (Evans). 

The only way a buying club will

survive is if it has members recruited

from the community. The first objective

is to raise awareness of the buying club

and to recruit. Once the club is more

established, the focus shifts from

recruitment to education. 

Structure and processes

After the appropriate planning steps

have occurred, the buying club is ready

to begin its operation. A semiformalized structure is encouraged by

several sources, including Organization

and Management of Consumers’

Cooperatives and Buying Clubs, Form a

Buying Club in California and Moving

Ahead. These sources recommend

creating written bylaws and a

constitution or a policy sheet. 

These documents state the purpose

of the buying club, detail membership

There is not much literature on food buying clubs outside of the United

States. However, buying club initiatives in Canada were the focus of Jacinda

Fairholm’s article: Urban Agriculture and Food Security Initiatives in Canada: A

Survey of Canadian Non-Governmental Organizations.

The Ontario Natural Food Co-op (ONFC) is an organization that supports

more than 330 buying clubs. The clubs invest in ONFC, which provides the

inventory, equipment and space necessary for distribution. The ONFC plays a

critical role in sustaining these buying clubs. It provides education about

cooperatives and produces a quarterly newsletter that includes information on

“food security issues, recipes, cooperative model education, event/conference

information, permaculture, sustainable agriculture techniques and more.” 

The Field-to-Table program developed the Good Food Box project, which

has been an inspiration for many similar programs in Canada. The Good Food

Box is a large buying club that “combines the economies of scale involved in

bulk purchasing with extensive community involvement” (page 33). 

The Good Food Box differs from other buying clubs in that it offers a flat-fee

box of fruits and vegetables that changes each month. This is a similar idea to

community supported agriculture (CSA). In a CSA, individuals pay in advance

for a season’s worth of produce boxes that they pick up weekly. The Good

Food Box is much more accessible to low-income individuals because there is

no large upfront cost and members are not required to purchase the boxes for

an entire season, unless they choose to. 

Indeed, 56 percent of these boxes are sold to individuals below the poverty

line. The program tries to source from local farmers when possible. The Good

Food Box also provides its customers an information sheet about produce and

cooperatives. The Field-to-Table program has published a guide for

establishing Good Food Boxes in other locations. ■

Food buying clubs in Canada 
requirements, explain the use of any

committees (if applicable), and describe

how finances and amendments are

handled (Moving Ahead, pages 26-27).

These documents can be referenced if

any issues or questions arise, and can

help when orienting new members to

the club. 

Keeping these cooperative principles

in mind may be helpful when creating

these documents: 

• Open membership;

• Neutrality in religion and politics;

• Democratic control;

• Limited return (if any) on share

capital;

• Net earnings belong to the user-owners;

• Education;

• Cooperation among co-ops.

These principles are a good foundation

for a cooperative of any kind, including

buying clubs. 

Most buying clubs operate on a

committee system. Moving Ahead

recommends the following committees:

ordering, finance, packaging and

membership-education. These

committees are then responsible to the

officers, who also work with the overall

organization of the club, call and run

meetings and handle finances (beyond

the finance committee). Again, it is

important to share the labor and avoid

over-working the volunteers. 

For larger buying clubs Evans

suggests three different work systems: 

(1) The block system is effective for

clubs of up to 200 households. The

larger buying club is broken down into

smaller, pre-order co-ops of 5-10

households. Members of each of these

smaller co-ops place their orders as they

normally would in a buying club. Then

a coordinator from each of these

smaller co-ops compiles the orders into

a “block order.” The larger club then

compiles the block orders and places a

single order with the wholesaler. Each

smaller co-op takes a turn as the

“master block” to provide volunteers

for that week’s distribution. 

(2) In the team system, members

volunteer to be a part of a team

(bagging, transportation, secretarial,

treasurer, etc.). These teams perform

the same task each month. 

(3) The rotating job system is similar

to the team system; however, volunteers

rotate jobs at regular intervals. 

Financial management is key to the

economic viability of the club, which

means sound bookkeeping is needed to

track cash flow. This is a timeconsuming job and should be shared,

when possible (Evans, 30). The prices

charged for goods should be above

wholesale price, but less than retail

store price. This way, the club will

make a small profit and provide savings

for members. 

The buying club must also decide

how much of a service fee to charge

members. This fee will cover operating

costs, such as for bags, delivery, etc. In

setting the fee, consider all operating

costs. Typically, this will be 2-3 percent

of each order. However, most clubs

charge 5-10 percent to allow a

“cushion” (Evans, page 28). The

difference between the fee charged and

the operating costs will eventually add

up to a significant amount. 

It is up to the club to decide what to

do with this surplus. The club can give

this money (or a portion) back to its

members as a reward for their

patronage. Another option is to save the

money for future goals. 

The use of credit is strongly

discouraged (Organization and

Management, Dodge). Credit creates

many problems and its use is not

justified by the convenience for

consumers. 

It is very important to remain

connected to the members. They are

the driving force, and without them the

club would not exist. 

A good way of keeping members

updated about the club is through a

newsletter. This can be a monthly

publication that members pick up with

their food, or a quarterly newsletter

with more indepth organizational

updates. Regular meetings can also be

held to update members and to solicit

their input. Informed members will

usually have a greater sense of

ownership and be more committed to

the club.

Transitioning to a co-op store

Some successful buying clubs opt to

expand and form a co-op store, but if

28 January/February 2014 / Rural Cooperatives

“Determining the types of food to offer is a balancing act between savings,

storage consideration and member preferences.”

The Oklahoma Food Cooperative, seen here,

started out as a food buying club. Many

buying clubs have followed a similar growth

path, but such a step should be taken only

after a careful market study and planning. 

continued on page 38
During the past 50 years, more

than 900 cases of grain

engulfment of workers have

been reported in the United

States, with a 62-percent

fatality rate. In 2010, at least 26 U.S. workers

were killed in grain engulfments — the highest

number for one year on record. 

The most tragic fact of all: grain

engulfments are preventable

with proper safety training and

procedures. 

Nationwide Agribusiness

Insurance Co. is partnering

with the Farm Safety For Just

Kids, Heartland Co-op, Iowa

FFA Foundation, National

Education Center for

Agricultural Safety (NECAS)

and others to increase

awareness of the dangers of

flowing grain and bring

visibility to safety procedures

that can save lives through an annual Grain

Bin Safety Week, Feb. 23-March 1. 

The week is timed to bring safety awareness

of the dangers of grain bins prior to the

planting season in much of the country. The

week-long event will highlight a different

component on each of the seven days: 

• Sun. Feb. 23: Grain management; 

• Mon., Feb. 24: Bin hazard identification;

• Tues., Feb. 25: Bin and equipment design,

including safety equipment; 

• Wed., Feb. 26: Bin entry; 

• Thurs., Feb. 27: Working safely in a bin;

• Fri., Feb. 28: Extraction/rescue; 

• Sat., Mar. 1: Confined spaces beyond the bin.

A website, www.GrainBinSafety Week.com,

provides more information, tools for the media

and information to help people get the word

out as well as participate. 

On Feb. 26, Nationwide Agribusiness will

host a free, live webinar on grain bin safety

that’s open to everyone. Farmers and

commercial grain handlers will gain valuable

insight into the risks and hazards of grain bins,

safe-work procedures, Occupational Safety and

Health Administration (OSHA) standards and

more. Space is limited, so making an early

reservation is advised at: http://nwagcompany

events.fugent.com/home/events.asp. 

Nationwide Agribusiness, Farm Safety For

Just Kids and NECAS will host #AgChat on

Twitter from 7-9 p.m. (Central time) on Feb

25. This moderated, online conversation will

look at grain bin safety from

a number of angles. Anyone

with a Twitter account can

participate by going to

Twubs.com/agchat to tweet

during the chat. The site

automatically enters the

#agchat hashtag in every

tweet and allows users to

participate in real time. 

An example of an

ambitious Safety Week

program is “Staying Safe on

the Farm,” Feb. 24, an allday event at the FFA Enrichment Center

(adjoining Des Moines Area Community

College) in Ankeny, Iowa. On-site activities

include: Featured speaker Bill Chizek, safety

director at Heartland Co-op in West Des

Moines, and demonstrations with a grain bin

entrapment simulator and a manure pit

simulator. There will be farm implement and

driver safety tips, as well as demonstrations of

safe handling of Anhydrous Ammonia (NH3)

fertilizer. There will also be a grain dust

explosion demonstration and an auger safety

demonstration. 

Nationwide Agribusiness and NECAS have

partnered to provide grain entrapment rescue

training and a bin rescue tube (valued at

$2,600) to one fire department or emergency

rescue squad. Nominations are due by April 30

and should be e-mailed to: agcontest@nicc.edu

or mailed to: NECAS, Grain Bin Safety

Contest, 8342 NICC Dr., Peosta, IA 52068.

Official rules will be available online at:

www.GrainBin SafetyWeek.com. ■

Co-ops urged to observe

Grain Bin Safety Week 

Rural Cooperatives / January/February 2014 29

Training exercises such as

this can help co-op staff be

prepared for an emergency

— and to avoid the chances

of one occurring.
30 January/February 2014 / Rural Cooperatives

Ocean Spray sales 

top $1.6 billion 

Ocean Spray Cranberries Inc. had

net sales of $1.66 billion for fiscal 2013,

on par with the cooperative’s record

sales year in 2012. Proceeds to common

shareholders totaled $380 million, up

15.5 percent over the prior year. 

Ocean Spray’s Ingredient

Technology Group’s dried cranberry

business experienced particularly strong

growth in both domestic and

international markets, surpassing the

100-million-pound mark for the first

time. 

“This was a strong year for Ocean

Spray in terms of continuing to deliver

a premium to our grower-owners and

advancing a number of strategic

initiatives that will grow our business at

home and abroad,” says Randy

Papadellis, Ocean Spray’s president and

CEO. 

The co-op reported that it

completed a series of transactions with

CoBank, resulting in the increased

availability of $215 million in financing

that will allow Ocean Spray to

rebalance its capital position to create a

more conservative structure and support

plans for cooperative growth.

Other highlights for 2013 included:

the launch of Cran-Lemonade, now

distributed in 80 percent of grocery

accounts nationwide; the launch of

Craisins Dried Cranberries in two new

package forms, and the launch of the

eighth domestic dried cranberry line in

Middleboro, Mass. Significant progress

was also made in the construction of a

state-of-the-art beverage plant in

Pennsylvania’s Lehigh Valley.

USDA Ag Outlook 

Forum Feb. 20-21

“The Changing Face of Agriculture”

is the theme of USDA’s 2014

Agricultural Outlook Forum, Feb. 20-

21, at the Crystal Gateway Marriott in

the Washington, D.C., suburb of

Arlington, Va. The Outlook Forum

brings together the agricultural

community to discuss policy, trade,

science, rural development and the

economic outlook for the coming year. 

The Forum also focuses on forestry,

health and nutrition issues and the

changing dynamics and face of rural

America, among other topics. Farmer

co-ops will be involved in discussions

about the burgeoning local food

market. 

Agriculture Secretary Tom Vilsack

and USDA Chief Economist Joseph

Glauber will kick off the conference

with their views of the state of the

nation’s farm economy heading into

2014, including USDA’s latest crop and

market forecasts. They will be followed

by two plenary panel sessions

addressing: “The Future of Agriculture:

Building Markets Here and Abroad,”

and “The Future of Agriculture: Young

Farmers - Unlimited Opportunities.” 

There are dozens of breakout

sessions on key farm and rural issues,

including: the latest agricultural census;

how agriculture can support veterans;

food price and farm income outlooks;

international trade issues; news of

efforts to control invasive pests;

agroforestry trends; the Know Your

Farmer, Know Your Food effort; citrus

Ocean Spray’s net sales of $1.66 billion in 2013 nearly equaled the record set the previous year.

Photo courtesy Ocean Spray.

Newsline

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

Co-op developments, coast to coast
Rural Cooperatives / January/February 2014 31

The Cooperative Development

Foundation (CDF) has named four

outstanding cooperative leaders as

2014 inductees to the Cooperative Hall

of Fame. The Hall of Fame is

administered by CDF, a nonprofit

affiliate of the National Cooperative

Business Association CLUSA

International (NCBA CLUSA). Visit the

Hall of Fame at: www.heroes.coop.

The latest inductees are: 

■ Martin Lowery, executive vice

president of external affairs at the

National Rural Electric Cooperative

Association (NRECA). For more than

three decades, Lowery has been a

strong advocate for the cooperative

business model. He began working at

NRECA in 1982, where he has played a

leadership role on many projects,

including forming and promoting new

cooperatives, such as the Kauai Island

Utility Cooperative — Hawaii’s first

electric co-op. Lowery played a key

role in drawing together disparate

groups to create the Touchstone

Energy Cooperatives brand in 1998. He

currently oversees NRECA’s

Cooperative Research Network (CRN),

which brings co-ops together to

support large research projects, such

as a $33.9 million U.S. Department of

Energy grant for smart grid

technologies. 

■ Papa Sene, senior technical

advisor to NCBA CLUSA, where he has

served for three decades. Sene, who

grew up in Naikhar, Senegal, has

shared, taught, enhanced and helped

to spread co-op values globally. He

began spreading the co-op message in

the Boy Scouts, then led a

transformative co-op housing

movement in Dakar, Senegal, in the

1960s. He served as the head of

accounting for a regional cooperative

and studied cooperative businesses at

the National School for Applied

Economics. He led the development of

the “CLUSA Approach,” which has

been used across economic sectors

around the world, where it has been

applied for natural resource

management, community health and

co-op governance issues. He has

written several books and received

numerous awards.

■ Barry Silver, executive vice

president of National Cooperative Bank

(NCB), where he has served for more

than 33 years in various leadership

positions. Silver has helped thousands

of cooperatives obtain financing and

was a major force behind the creation

of NCBA CLUSA’s Annual Purchasing

Cooperatives Conference. It was

Silver’s passion for co-op education

that led to the creation of the annual

NCB Co-op 100 — a list of the nation’s

100 largest co-ops across all economic

sectors. This list sparked the

International Cooperative Alliance’s

Global 300 report. From 2005-2009,

Silver worked on a multi-billion dollar

project for the World Bank in China,

helping to create new ag co-ops by

educating leaders about cooperatives. 

■ Harriet May, former president

and CEO of the Government Employees

Credit Union (GECU), began her credit

union career as a teller nearly 40 years

ago, rising to become the leader of the

largest credit union (and financial

institution) in her hometown of El Paso,

Texas. May led the charge to make

home ownership available to lower

income, minority members of her west

Texas community by helping to

establish an Affordable Housing Credit

Union Service Organization. The

dramatic results include: sponsorship

of 732 credit workshops with 10,700

participants; more than 16,200 first-time

savings accounts opened; providing

credit counseling to 8,600 families, and

preparing (for free) 73,372 tax returns

under the Volunteer Income Tax

Assistance (VITA) program. She has

been an innovator in financial literacy

(even participating in a panel

discussion with the President of the

United States) and has worked across

the border with Mexican officials to

create a system of affordable

remittance services. ■

Four named to Co-op Hall of Fame

disease challenges; the 100th

anniversary of the Cooperative

Extension program, among many

others. To view the full schedule and

register, visit: www.usda.gov/oce/

forum/.

NCB financing autism, 

elder care organizations

National Cooperative Bank (NCB),

which provides banking products to

cooperatives and other socially

responsible organizations, recently

completed $6.5 million in financing for

two California healthcare organizations. 

NCB provided a $4 million loan to

Novata Behavioral Health, a subsidiary

of Mental Health Systems (MHS), to

acquire the Center for Autism

Research, Evaluation and Service

(CARES) in San Diego. CARES works

with children and adults diagnosed with

autism, providing evaluation, training,

education and a wide-range of other

services to participants. 

The bank also provided a $2.5

million loan to help the Center for

Elders’ Independence (CEI) refinance

existing debt from the purchase of its

four-story corporate headquarters in the
32 January/February 2014 / Rural Cooperatives

Oakland/Berkeley area. CEI was

founded 25 years ago to offer a

community-based system of

comprehensive health and related

services to low-income, frail elderly

residents of the East Bay region. CEI

serves more than 580 members through

four different sites. 

“NCB is proud to be a financial

resource for senior living and healthcare

providers throughout the United States

for over 30 years,” says Ann Fedorchak,

NCB senior vice president. “To date,

we have arranged over $530 million in

loans to serve the needs of this industry.

Our role in the healthcare sector,

whether as a sole lender or a partner

with other financial institutions, is

critical to NCB’s mission, and we look

forward to expanding our commitment

in 2014.”

$70 million to promote

economic growth in Africa 

The National Cooperative Business

Association CLUSA International

(NCBA CLUSA) has signed a five-year,

$70 million cooperative agreement with

the United States Agency for

International Development (USAID) to

help accelerate economic growth for

individuals and families in the Sahel

regions of Niger and Burkina Faso.

About 86 percent of Niger’s rural

population lives under the poverty level. 

The project — known as Resilience

and Economic Growth in Sahel — will

benefit more than 2 million vulnerable

people by addressing the structural

causes of chronic food insecurity and

nutritional vulnerability in the Sahel

region of West Africa.

NCBA CLUSA started working in

Niger in 1985 and Burkina Faso in

1993, establishing community-based

health services, developing effective

rural organizations, linking farmers to

input suppliers and buyers, promoting

strong and dynamic markets, and

improving household incomes. “This

fully integrated project will address

resilience at its core and build the

foundation for sustainable and scalable

economic growth for the people of the

Sahel,” says Mike Beall, president and

CEO of NCBA CLUSA. 

This new effort is based on the

premise that bolstering food security

requires a holistic approach, which must

simultaneously improve agricultural

production, manage and sustain the

natural resource base, increase farmers’

revenues and increase access to water

and basic public health services.

Texas Tractor Drive 

helps feed hungry

A diverse group of cooperatives in

West and Central Texas recently

banded together to help feed the

hungry. Avant Marketing Group of St.

Louis, Mo., got the ball rolling by

reaching out to U.S. Farm Credit

Associations. In Texas, Lubbock-based

AgTexas Farm Credit took up the

challenge, and a plan was drafted for

“Tractor Drive 2013: Driving Hunger

Out of Rural Texas.” 

The goal was three-fold: (1) to raise

awareness of hunger in rural Texas; (2)

to raise money to support food banks,

and (3) to achieve these two goals by

supporting FFA chapters and their

efforts to support local food pantries as

a part of FFA’s “Feeding the World —

Starting at Home” program.

The Texas Food Bank Network

provides support for all the food banks

in Texas. By joining forces with them,

all proceeds were ear-marked for the

county in which they were received.

Texas Food Bank Network turns every

dollar in donations into five dollars in

food. 

The food drive tractor traveled more

than 1,000 miles as it visited rural

communities in 23 counties in West and

Central Texas. The John Deere 5045

tractor was donated by B.E. Implement

in Brownfield and Bramlett Implement

in Stephenville as a prize for the FFA

chapter that raised the most money per

ag student (32 chapters competed). 

More than $105,000 was raised,

which became the equivalent of

$525,000 of food for those in need. The

Breckenridge FFA Chapter won the

tractor by raising $19,493, or $209 per

member. Breckenridge is in Comanche

Electric Cooperative’s (CECA) service

territory — a co-op that was a major

sponsor of the drive. 

Co-op leaders honored 

by Co-op Network 

The Cooperative Network recently

Breckenridge (Texas) FFA officers with the tractor their chapter won by raising the most money

to fight hunger in Texas. FFA chapters were supported by farm credit, electric and famer co-ops.
Rural Cooperatives / January/February 2014 33

presented its Cooperative Builder

Award — its highest statewide honor —

to three cooperative leaders: Steven

Krikava, retired director of government

relations for Land O’Lakes; Kenneth

Machtan, board president of Group

Health Cooperative of South Central

Wisconsin (GHC-SCW); and Larry

Swalheim, retired CEO of Landmark

Services Cooperative. The honor is

given to individuals who demonstrate

the utmost loyalty and service to the

cooperative movement at the local,

state, regional or national level. 

“Recipients of the Cooperative

Foremost Farms USA, Baraboo,

Wis., has been recognized as a Green

Professional business in the Green

Masters Program of the Wisconsin

Sustainable Business Council. The

designation recognizes the co-op’s

continued commitment to

sustainability.

“Foremost Farms has demonstrated

continued commitment to the triple

bottom line: people, planet and

profitability, and we look forward to

seeing more of their innovative

sustainability initiatives in the future,”

says Tom Eggert, executive director of

the Wisconsin Sustainable Business

Council. 

“We believe that acting in an

environmentally, socially and

financially responsible manner makes

good business sense,” says Michael

McDonald, Foremost’s vice president

for environment, health, safety and

sustainability. “To be recognized for

our efforts is the cheddar cheese on

our apple pie!”

Examples of Foremost Farms’ efforts

in sustainability include:

• Developing goals and strategies to

reduce greenhouse gas emissions;

• Finding efficient ways to transfer the

energy from dairy products that have

been cooled or preheated to reduce

energy consumption;

• Reducing overall energy use at its

dairy plants by 4 percent, even

though product processing volume

increased 4.8 percent;

• Replacing light bulbs, appliances and

manufacturing equipment with

modern, energy efficient models;

• Installing motion sensors, timers or

other lighting controls at plants and

offices;

• Constructing an industrial

wastewater treatment facility (with

another dairy processor) that

captures the methane produced in

anaerobic processes and fuels an

internal combustion engine-driven

electrical generator that creates

electricity, which is sold to a local

utility company;

• Working with customers to minimize

packaging materials and placing

finished dairy products in reusable

containers. ■

Foremost earns Green Professional designation 

This industrial wastewater treatment facility at Richland Center, Wis., captures methane produced in anaerobic processes. The methane

gas fuels an engine-driven electrical generator that creates electricity, which is sold to a local utility. Photo courtesy Foremost Farms 
34 January/February 2014 / Rural Cooperatives

Builder Award give above and beyond

to improve the lives of everyday people;

their achievements represent the

lifeblood of the cooperative

movement,” says Bill Oemichen,

president and CEO of Cooperative

Network, which provides government

relations, education, marketing and

technical services to a wide variety of

member-cooperatives in Minnesota and

Wisconsin. “Each year at our annual

meeting, we are proud to recognize the

admirable work of our fellow

‘cooperators,’ who consistently

challenge us to aspire even more for our

members.”

Krikava, from Edina, Minn., retired

this past year after a 39-year career with

Land O’Lakes. Machtan, from

McFarland, Wis., has served on GHCSCW’s board of directors since 1988

and as board president since 2001.

Swalheim, from Stoughton, Wis.,

retired from Landmark Services

Cooperative in 2011 after 20 years as

CEO. 

ACE conference 

slated for Austin in July 

The Association of Cooperative

Educators (ACE) will hold its annual

institute this July 13-16 at the

University of Texas in Austin. Austin is

a hotbed of co-op development and

education efforts, according to ACE

spokesperson Sarah Pike, making it a

fitting location for the conference. The

ACE institute is attended by co-op

educators and development specialists

from throughout the United States

(including Puerto Rico) and Canada. 

Among the organizations helping to

boost the city’s co-op sector is

Cooperation Texas, formed in Austin in

2009 as a nonprofit organization that is

committed to the creation of

sustainable jobs through the

development, education and support of

worker-owned cooperatives, Pike notes.

The Austin Cooperative Business

Association is another major force

helping to expand and strengthen the

co-op sector in Austin and the

surrounding region. Texas also has

strong statewide co-op associations,

notably the Texas Agricultural

Cooperative Council and Texas Rural

Cooperative Center, which are strong

proponents for co-ops and co-op

education. 

New and/or expanding co-ops in

Austin include: Wheatsville Food Coop, Black Star Co-op (a brewpub), Yo

Mamas Catering Co-op, Red Rabbit

Cooperative Bakery and College

Houses, among many others. Austin’s

thriving co-op sector has attracted

media coverage, including a recent PBS

television program, Fixing the Future,

and articles in the Austin Post. 

Accommodations will be available at

the Hampton Inn and at local student

housing co-ops. For more information,

contact Pike at: pike@ace.coop.

Four co-ops win 

dotCoop Awards 

Co-ops in Columbia, Puerto Rico,

Canada and Oregon have been

recognized with the 2013 dotCoop

Global Awards for Excellence,

recognizing their application of

cooperative values and principles as

driving forces in their success. The

awards were presented by Michael

Beall, president and CEO of the

National Cooperative Business

Association CLUSA International,

during the International Cooperative

Alliance (ICA) Global Conference and

General Assembly in Cape Town, South

Africa.

“The recognition of these

exceptional cooperative businesses is a

testament to the power of the

movement and how the model’s

differences can be harnessed and

utilized to positively impact

communities globally,” Beall said. 

Award winners (by category) are: 

• Large Cooperative: Coop Zeno

Gandí, a credit union headquartered in

Arecibo, Puerto Rico, with more than

35,000 members. It was cited for

providing cutting-edge technology that

allows members to use Internet and

mobile services for many functions and

connects the cooperative to the youth

of the community.

• Medium Cooperative: First

Alternative Cooperative, a retail food

cooperative in Corvallis, Ore., provides

natural and organic food in communityoriented stores to more than 7,000

members. It was saluted for being a

business that focuses on member and

community needs, including

maintaining a website that is rich with

information about buying local, classes,

recipes and wellness. 

• Small Cooperative: Cooperativa

Orientación y Securidad C.T.A., is a

worker cooperative that provides

monitoring, private security and

investigations for hospitals. The co-op,

based in Bogota, Colombia, was cited in

part for an outstanding website that

explains the cooperative business model

and how the co-op and its members are

connected to their communities and

other co-ops across Colombia.

• Cooperative Organization: The

Canadian Cooperative Association

(CCA), based in Ottawa, Ontario,

represents more than 9 million

cooperatives and credit union members

from more than 2,000 organizations

throughout Canada. CCA is itself a

federally incorporated cooperative,

owned by its member organizations,

and provides leadership to promote,

develop and unite cooperatives and

credit unions to benefit people in

Canada and around the world.

Florida’s Natural makes 

co-op’s third-highest payout 

Even though citrus sales volume

dipped 3 percent last year, Lake Wales,

Fla.-based Florida’s Natural Growers

was still able to provide growermembers the third-highest profit share

in the co-op’s history, according to The

Ledger newspaper. More than 1,000
Rural Cooperatives / January/February 2014 35

Florida’s Natural farmers received $1.75

per pound solids for their oranges and

$1.60 for their grapefruit during its

2012-13 fiscal year, William Hendry,

the co-op’s chief financial officer,

reported at the cooperative’s 80th

annual meeting

The meeting was attended by about

300 members and guests. The 2012-13

orange market was softer because of

high inventories. 

NOVEC distributes 

more green energy 

More Northern Virginia Electric

Cooperative (NOVEC) members are

lighting up their homes with “green

power” thanks to the co-op’s

participation in two renewable energy

projects. In November, NOVEC

dedicated a 49.9-megawatt biomass

plant in Halifax County, Va. The plant

burns wood waste left over from

logging and lumber operations in the

south/central region of the state.

NOVEC estimates that the plant will

supply enough electricity to power

16,000 homes. 

In December, NOVEC participated

in the dedication of three new

generators at the Prince William

County Landfill, about 45 minutes west

of Washington, D.C. The new

generators, along with two generators

that have been in service since 1998,

have more than doubled the electric

output at the landfill. The five

generators are now providing about 48

million kilowatt-hours annually for the

NOVEC system. 

These new green power projects,

combined with hydroelectric power

NOVEC buys from the Southeastern

Power Administration, is helping all coop customers illuminate their homes

and businesses and run their appliances

with more renewable energy. “We

realize our customers want sensible

alternative energy choices, and we’re

looking for opportunities to add more

competitively priced renewable energy

to NOVEC’s power supply,” says Stan

Feuerberg, NOVEC president and

CEO. 

The Prince William County Solid

Waste Division (SWD), Fortistar (a

New York-based company that owns

and operates the landfill gas-to-energy

facility) and NOVEC worked together

to develop the landfill gas-to-energy

project. “This is a great example of a

public/private partnership,” says SWD

Chief Tom Smith. Fortistar sells 100

percent of the facility’s electrical energy

output to NOVEC under a long-term

sales arrangement. A portion of the

proceeds received from the energy sales

is returned to Prince William County as

royalties. 

NOVEC, headquartered in

Manassas, Va., distributes electricity and

energy-related services to more than

150,000 customers in Northern

Virginia. 

Co-op merger 

creates Prairieland FS

Two Illinois farmer cooperatives —

Lincoln Land FS Inc. in Jacksonville

and Two Rivers FS Inc. in Rushville —

have merged to create Prairieland FS

Inc., with headquarters in

Jacksonville. The new co-op

will serve 13 counties in

west-central Illinois and

northeast Missouri.

Shareholders of both co-ops

approved the merger, which

became effective Dec. 1,

according to a report in the

Herald-Whig newspaper. 

“Customers should see little

or no change at the local

level,” Keith Hufendick,

Prairieland CEO, told the

newspaper. “What this does

is create efficiencies at the

corporate level. This will

help us sustain long-term

profitability.”

Prairieland FS is a fullservice cooperative that

provides agronomy, energy, facility

planning and logistics products and

services, as well as grain marketing, for

farmers and other customers.

Co-op educator

Ian MacPherson dies

Ian MacPherson, a leading co-op

historian, educator, author and frequent

speaker at co-op meetings, died Nov. 16

This biomass plant in Halifax County, Va., burns wood waste leftover from logging, generating

enough power to light up 16,000 homes. Photos courtesy Northern Virginia Electric Cooperative

(NOVEC).
36 January/February 2014 / Rural Cooperatives

at age 74. Dr. MacPherson was known

internationally for his role in the 1995

revision of cooperative principles. As

both a scholar and a cooperative

activist, MacPherson “personified the

relationship between Canadian

cooperative academics and co-op

practitioners,” according to a posting

on the Canadian Cooperative

Association website. 

MacPherson served as president of

both the Canadian Cooperative

Association (CCA) and Credit Union

Central of British Columbia (now part

of Central 1 Credit Union), as well as

on the boards of various consumer,

financial and health-care cooperatives.

MacPherson was the author of

dozens of books and articles about

cooperatives, including A Century of

Cooperation, a 2009 commemorative

book marking the 100th anniversary of

Canada’s organized cooperative

movement. In 1976, he joined the

faculty of the University of Victoria and

later served as chair of the history

department there. From 1992 to 1999,

he was the university’s dean of

humanities, stepping down from that

position to found and head the B.C.

Institute for Cooperative Studies (since

renamed the Centre for Cooperative

and Community-Based Economy).

He was also a founder of the

Canadian Association for Studies in

Cooperation (CASC), a multidisciplinary research organization which

brings together co-operative academics

and practitioners.

“There is no researcher in

cooperative studies in Canada who has

not benefited from Ian’s large presence

and path-breaking work,” says Sonja

Novkovic, professor of economics at

Saint Mary’s University and chair of the

ICA Committee on Cooperative

Research. “He was the founder of

CASC and a mentor to many students

and researchers whose lives have

changed because they were influenced

by Ian’s passion and deep understanding

of the cooperative movement. We will

miss him as a friend, a humanitarian

and an inspiration.”

To read more about McPherson,

visit: www.ianmacphersonmemorial.

blogspot.ca/.

Land O’Lakes Inc. 

acquires Geosys 

Land O’Lakes Inc. has acquired

Geosys, a global technology firm that

provides satellite imaging and insights

for agribusiness. The acquisition caps a

multi-year relationship between Geosys

and Land O’Lakes through the co-op’s

WinField division, which uses select

Geosys technologies in the United

States. 

“These industry-leading technologies

give farmers the tools to make critical

decisions to improve yields while

reducing their environmental

footprint,” says Land O’Lakes President

and CEO Chris Policinski. “These

technologies further help our member

cooperatives to leverage proven tools

that turn data into decision enablers

that drive productivity and sustainable

agricultural practices.” 

Geosys, which has more than 50

employees in multiple countries, had

been seeking a strategic partner to

accelerate growth, says Damien

Lepoutre, president of Geosys.

C-FARE launches national

co-op education project 

The Council on Food, Agricultural

and Resource Economics (C-FARE —

www.cfare.org) in 2013 began a twoyear project, “The Role of Cooperatives in

the Nation’s Economy: Educating Future

Cooperative Owners and Leaders” to

develop high school teaching modules

about the economics of cooperatives. 

The effort involves a panel of experts

experienced in working with

cooperatives, state councils of economic

education, agricultural education

experts and high school teachers. The

broad backgrounds represented on the

panel will help ensure that the modules

meet economic education standards

while also allowing for widespread

dissemination of the information once

the instructional module is complete

and field tested.

C-FARE received technical support

for the project from the Council for

Economic Education (CEE), which

aided in the coordination of peer and

teacher review of the modules. CEE

focuses on economic and financial

education for K-12 students. In 2012,

CEE trained more than 55,000 teachers

who, in turn, reached 5 million

students. The CHS Foundation

provided key initial support to help

launch the effort.

Project leaders are Barbara O’Neill,

distinguished professor and Extension

specialist in financial resource

management at Rutgers Cooperative

Extension (oneill@aesop.rutgers.edu),

and Sanjib Bhuyan, associate professor

and graduate program director of the

Department of Agricultural, Food and

Resource Economics at Rutgers

University (bhuyan@aesop.rutgers.edu).

“C-FARE is pleased to be a part of

educating the next generation of

owners, leaders and patrons about the

cooperative business model and

structure,” says Roger Coupal, associate

professor in the Department of

Agricultural and Applied Economics at

the University of Wyoming and current

C-FARE board chairman. “The

leadership and support of the project

from the cooperative community will

allow students in key states across the

nation to learn about the economics of

cooperatives as early as 2014, with the

goal for continued expansion in future

years.” 

Cooperative leaders interested in

learning more about this program

should contact C-FARE at: (202) 408-

8522 or info@cfare.org.

C-FARE is a Washington, D.C.-

based nonprofit that promotes the work

of applied economists and serves as a

catalyst for incorporating economic

thinking into the analysis of food,

agricultural and resource decisions. It

serves as a conduit between the

academic research/Extension

community and government

policymakers and agencies, helping to

match expertise to public needs. ■
Rural Cooperatives / January/February 2014 37

evolve, before we had our collective

backs up against the wall. 

The National Dairy Farmers

Assuring Responsible Management

(FARM) program is an example of this

dynamic. As consumer expectations

change, we need to be out in front in

developing a national industry standard

for dairy cow care. We couldn’t wait

until the consuming public thinks

there’s a problem, and only then try to

fix it. 

Yes, it’s been hard work, and that

work continues. But one look at the

challenges of other sectors of

agriculture tells us that building a

program like FARM will make our jobs

as dairy marketers easier in the future.

Doing the right thing is harder in

the short term but makes life easier

in the long run. As I’ve said so many

times in discussions with our members,

doing the right thing is often very hard.

It’s relatively easy to define the right

thing, but much more difficult to push

toward it. Again, with trade associations, it can be a chore in pulling the

members together to work on

controversial positions. 

But as I noted in my last column, the

one discussing our position opposing

the greater availability of raw milk,

easier paths are usually not the right

ones. And all of us, regardless of where

we are in our careers, end up regretting

the times when we chose the easy path

over the right one. ■

of “food deserts.” Food deserts are

defined as “communities, particularly

low-income areas, in which residents do

not live in close proximity to retailers

offering affordable and healthy food.

Healthy food options in these

communities are hard to find or are

unaffordable” (U.S. Department of

Health and Human Services 2011). 

Food hubs provide value to a

community through a different type of

sustainability that is achieved through

more than just economic profits for

producers and the food hub. Many food

hubs, due largely to their focus on

social mission, are formed as nonprofits

with the intent of promoting social and

environmental benefits as much, or

more, than economic profit. This

secondary approach to sustainability has

also proven to be successful, as

evidenced by the longevity of a number

of nonprofit food hubs. Local Food

Hub is a nonprofit organization, and a

majority of the finances of the hub are

supported by grants and donations from

the community. Supporters of the food

hub see their donations as a way to

invest in the community, since Local

Food Hub donates generously to

charities and local food banks. As an

example, around 25 percent of the

produce grown at Local Food Hub’s

farm is donated to such charitable

organizations. 

All food production systems have

their place and address a specific set of

stakeholder needs. The authors believe

that taking a collaborative view will

produce the best solution for both

consumers and producers for long-term

sustainability. Further, we believe that

additional research is necessary to fully

explore the exciting possibilities that

exist for local foods producers in today’s

food industry. ■

Selected References

• Diamond, Adam and James Barham. Money and

Mission: Moving Food with Value and Values.

Journal of Agriculture, Food Systems, and

Community Development no.4 (2011):

101–117. http://dx.doi.org/10.5304/jafscd.

2011.014.013 

• Matson, James, Martha Sullins and Chris Cook.

The Role of Food Hubs in Local Food Marketing.

Washington D.C.: U.S. Department of

Agriculture, Rural Development. 2013.

• Polimeni, John M., Raluca Iorgulescu Polimeni,

L. Shirey, Christina L. Trees, W. Scott Trees,

The Supply Of Community Supported Agriculture.

Journal of Business & Economics Research.

March 2006, Volume 4, Number 3.

• U.S. Department of Health and Human

Services. Healthy Food Financing Initiative. Office

of Community Services. 18 January 2011.

ww.acf.hhs.gov/programs/ocs/resource/ healthyfood-financing-initiative-0. (Accessed May 16,

2013.)

In the Spotlight

continued from page 15

Food hubs

continued from page 7

Even in their short history, food hubs have proven highly adaptable — in size, scope and type of

products offered — to meet the vagaries of consumer demand. 
38 January/February 2014 / Rural Cooperatives

there is any doubt about such a move,

the expansion should be delayed until

the concerns are addressed. 

Member input is critical to such a

decision. One important consideration

is whether there should be a limit on

membership to prevent uncontrolled

growth. A successful transition to a coop store will also require having a

reliable wholesaler and source of

capital. Pooling resources with other

buying clubs or co-ops when forming a

new co-op store may reduce the burden

on any one food buying club and result

in a better end product. 

There are conflicting opinions about

the advisability of creating a co-op store

from a buying club. The opinions of

whether to start a co-op store seem to

shift depending on the time period. For

example, Organization and Management

of Consumers’ Cooperatives and Buying

Clubs written in 1940, says that a buying

club’s ultimate objective is to develop a

store, with the buying club being a

temporary stage.

In Consumer Cooperation: the Heritage

and the Dream, written in 1974, Sekerak

and Danforth are against the idea,

saying: “The requirements for survival

and growth are much greater [with a

co-op store] — in terms of management

skills and capital and sales volume

[required].” They say buying clubs are a

great tool for small groups of people to

get fresher food at a reduced price, but

recommend against developing them

into a co-op store. Moving Ahead agrees

with this sentiment. 

However, the growing demand for

local and organic foods is creating a

market that is often conducive to

support for co-op food stores.

Ultimately, the decision to expand a

food club into to a co-op store should

be made carefully, on a case-by-case

basis. 

Opportunities for 

future research

Buying clubs represent only one way

to increase food access, choices and

affordability. As such, they emphasizes

some aspects of food access over others,

with varying implications. For instance,

minimizing costs by using volunteers

means there are fewer full- or part-time

jobs involved. Additionally, using

“scratched and dented” food items,

which may have similar nutritional

value, may also have implications for

how consumers feel about themselves

that may outweigh the lower costs. 

Buying clubs also represent

important food access opportunities

with important economic and social

consequences. These many reasons

should stimulate more research on

buying clubs. It would be useful to track

basic data on the number of buying

clubs, their business volume and how

many have become co-op stores,

although such data is difficult to

compile due to the informal nature of

the clubs. This data would help answer

the question of whether buying clubs

work best as an end product, or as a

means to the formation of a co-op. 

The issue of food buying clubs

outside of the United States also needs

to be researched. What are the effects

of different distribution systems on the

role of buying clubs in foreign

countries? How many of these buying

clubs evolve into new forms (besides coop stores)? 

The role of food buying clubs in the

United States has fluctuated over time.

Food buying clubs will likely continue

to be part of the solution to food

insecurity. However, much research is

still needed on their long-term effects. ■

References

• Black, Herbert. People and Plows Against Hunger:

Self-Help Experiment in a Rural Community.

Boston, Massachusetts: Noodles for America,

Inc., 1975.

• Dodge, Philip. How to Form a Food Co-op., 1980.

• Evans, Ann M. Form a Buying Club in California.

Division of Consumer Services, 1980.

• Fairholm, Jacinda. Urban Agriculture and Food

Security Initiatives in Canada: A Survey of

Canadian Non-Governmental Organizations.

LifeCycles: 32, 33, 34. 1999.

• Food Security in the United States: Key Statistics

and Graphics. Sept, 7, 2011. http://www.ers.usda.

gov/briefing/foodsecurity/stats_graphs.htm

• Kanto, Linda Scott. Community Food Security

Programs Improve Food Access. Food Review 24.1

(2011).

• Lefever, Don. Co-op Stores and Buying Clubs,

1972.

• Lewis, Bob, et al. Food Co-ops in New York City:

An Organizing Handbook and Resource Guide.

Community Food Resource Center, 1983.

• Moving Ahead with Group Action: A Buying Club

Manual. Ed. Cooperative League of the USA,

1975.

• Organization and Management of Consumers’

Cooperatives and Buying Clubs. Ed. Frances

Perkins, 1940.

• Ronco, William. Food Co-ops: An Alternative to

Shopping in Supermarkets. Beacon Press, 1974.

• Sekerak, Emil, and Art Danforth. Consumer

Cooperation: The Heritage and the Dream. Consumers Cooperative Publishing Association,

1974.

Welcome to the club

continued from page 28

members are well trained, with the

technical expertise members expect and

who are committed to delivering a high

level of customer service.

The information presented here is

gleaned from surveys designed for

specific needs of the cooperatives

involved; surveys were conducted in a

number of years and during varying

market conditions. Therefore, it is

possible there may be other important

factors that play a role in members’

satisfaction with their cooperatives that

are not identified by the analysis of

these member opinions. However, this

collection of member opinions reveals

important factors that can influence

member satisfaction and highlights

some of the areas that cooperatives may

want to focus attention on. ■

What leads to satisfied 

co-op members?

continued from page 23
Rural Cooperatives / January/February 2014 39
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