R ru la

COOPERATIVES ERATIVES

USDA / Rural Development / Rural Development July/August 2008

Page 20

USDA's Co-op Chronicle Turns

75

Rural Cooperatives
What came first, the chicken or the

egg? What is the meaning of life? Why,

after 75 years, is Rural Cooperatives

magazine still here? 

Of these three universal questions, I

can hazard a theory only regarding the

last. The short answer is, of course, that

the magazine is still here because you

are still there. 

To the surprise, and occasional

vexation, of those critics who have long

predicted the demise of the nation’s

cooperative business sector, co-ops are

not only still here, but still alive and

kicking; they are thriving and expanding

into both traditional and new market

niches. Co-ops are constantly changing

and rearranging themselves to meet the

challenges that walk hand-in-hand with

opportunity. 

Whether it’s a farmer-owned co-op

finding new ways to add value to its

members’ crops, a rural utility co-op

developing renewable energy sources or

a Farm Credit System co-op working

overtime to keep the financial lifeblood

flowing to its members, co-ops are still

getting the job done. 

If nothing else, it is our hope that

each issue of this journal helps to turn

the spotlight on just how innovative,

flexible and enduring the co-op business

model is. Whether the magazine has

had something to do with the continued

viability of the nation’s cooperatives, we

can only hope. We’ve certainly tried. By

“we,” I refer to all the past and present

editors, writers, ag economists and other

staff members at USDA who have

contributed to the magazine, as well as

all of those in co-op and academic

circles who have so graciously allowed

us to print their work. 

It is almost startling how these skinny

little journals have piled up over 75

years. The shelf space occupied by just

the past 50 years or so of bound

volumes of the magazine is about the

same expanse of board feet needed to

house a major encyclopedia.

Most of the issues from the first four

or five years of the publication in the

1930s have been lost, and those that

remain — pulled from dusty envelopes

in the basement at USDA’s headquarters

— are yellow and brittle. 

Resurrecting words and images from

so long ago, knowing that many of the

authors have long since passed away,

added a touch of melancholy to the task.

But it was also fun to give another

“ride” to Robert Amundson’s warning

from 1936 about not wasting members’

time with unnecessary meetings, and

scanning Tom Pritchard’s cover

illustration from 1952, then colorizing it

to grace our cover again a half century

later. 

Skimming through random samples

to compile the retrospective that begins

on page 20, one gets a keen sense of the

struggles, hopes and commitment

poured into cooperatives by generation

after generation of members. It was also

sobering to read an article from the

1930s talking about the desperate need

for improved cooperative education, and

realizing that the same article could be

run today. 

Which brings us to the moral of this

little history lesson. Rural Cooperatives

has always been geared as a “leadership”

publication, meaning it has been aimed

at a small, select target audience: the

movers and shakers of the co-op world,

rather than anything remotely

approaching a mass-circulation

audience. 

Much of this is due to simple

logistics: printing and mailing a copy of

the magazine to 2 million U.S. farmers

(not to mention tens of millions of rural

utility co-op members) would be cost

prohibitive. But with the advent of the

Internet, and the fact that the majority

of farmers and other rural people are

now Web savvy, there is no reason Rural

Cooperatives can’t reach a mass audience. 

So, we are marking our 75th birthday

with a new campaign, asking that co-ops

and co-op associations help us tell the

co-op story by posting on their Websites

this link to our magazine Website:

www.rurdev.usda.gov/rbs/pub/openmag.

htm. If you e-mail dan.campbell@wdc.

usda.gov, we’ll even send you a nifty

miniature of the magazine cover to use

as your link. 

In addition to the latest issue, you can

also read the past 10 years of magazines

on our Website. We also urge you to let

your members (especially board and

committee members) and key employees

know that it only takes one minute to

sign up for a free electronic subscription

by visiting: www.rdlist.sc. egov.usda.gov.

Again, special thanks on this

anniversary to all of you in the co-op

community — both in America and

around the world — who have

contributed your words and pictures

over the years, making Rural Cooperatives

a true cooperative effort. 

— By Dan Campbell, editor ■

C O M M E N T A R Y

A link to the past, present and future

2 July/August / Rural Cooperatives
75

Rural Cooperatives / July/August 2008 3

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 Department. Periodicals postage paid at

Washington, DC. and additional mailing offices.

Copies may be obtained from the Superintendent of

Documents, Government Printing Office,

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

send address change to: Rural Cooperatives,

USDA/RBS, Stop 3255, Wash., DC 20250-3255.

Mention in Rural Cooperatives of company and

brand names does not signify endorsement over

other companies’ products and services.

Unless otherwise stated, contents of this publication

are not copyrighted and may be reprinted freely. For

noncopyrighted articles, mention of source will be

appreciated but is not required.

The U.S. Department of Agriculture (USDA) prohibits

discrimination in all its programs and activities on

the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial

status, parental status, religion, sexual orientation,

genetic information, political beliefs, reprisal, or

because all or part of an individual’s income is

derived from any public assistance program. (Not 

all prohibited bases apply to all programs.) Persons

with disabilities who require alternative means for

communication of program information (Braille,

large print, audiotape, etc.) should contact USDA’s

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

To file a complaint of discrimination, write to USDA,

Director, Office of Civil Rights, 1400 Independence

Avenue, S.W., Washington, D.C. 20250-9410, or call

(800) 795-3272 (voice), or (202) 720-6382 (TDD). USDA

is an equal opportunity provider and employer.

Ed Schafer, Secretary of Agriculture

Thomas C. Dorr, Under Secretary,

USDA Rural Development

Dan Campbell, Editor

Vision Integrated Marketing/KOTA, Design

Have a cooperative-related question?

Call (202) 720-6483, or

Fax (202) 720-4641

This publication was printed with vegetable oil-based ink.

R ur la COOPERATIVES ERATIVES

July/August 2008 Volume 75 Number 4

p. 4

p. 10

p. 20

p. 31

O n t h e C o v e r :

For this month’s cover, Assistant Editor Stephen Thompson

updated an illustration by Tom Pritchard that originally

appeared on the cover of the January 1952 issue of News for

Farmer Cooperatives. See page 20 for a retrospective of the

first 36 years of the magazine’s history. 

F E A T U R E S 

4 Co-op Link to Sustainability

NCFC study shows ‘farmer-owned’ message resonates with consumers on environment 

8 Lassoing Wyoming’s Wind

Landowners band together to bargain for higher wind-power royalties 

By Bill Brockhouse

10 Aurora Co-op’s Centennial

As it turns 100, Nebraska co-op still growing with most ambitious endeavor in its history

16 Whatever It Takes

Land O’Lakes asks (and answers) some hard questions about its role in agribusiness

By Mark S. Johnson

20

f

co31 Sec. Schafer meets with NCFC leaders 

D E P A R T M E N T S

2 COMMENTARY

14 UTILITY CO-OP CONNECTION

18 CO-OP DEVELOPMENT ACTION

32 FOCUS ON...

34 NEWSLINE

op business 

By Dan Campbell

On ‘the street’ and in cyberspace, Rural Cooperatives still spreading word about power o

75 Years of Chronicling Co-ops 

Rural Cooperatives
Editor’s note: this article was contributed by

the National Council of Farmer

Cooperatives (NCFC), a national

organization that helps represent the

interests of farmer-owned cooperatives. For

more information about it, visit:

www.ncfc.org.

n Alice in Wonderland,

Alice chases the white

hare down the rabbit

hole and begins the

journey of a lifetime. In

today’s marketplace, the elusive rabbit is

sustainability and the “chase is on” for

consumer acceptance. 

More than ever, companies are

championing “greener” practices that

pledge to reduce pressure on natural

resources, cut waste and deliver energy

efficiencies. A growing number are also

beginning to aggressively market

initiatives that promote everything from

food to beauty products in a race to

gain a greater “green share” of the retail

dollar.

The trend is moving at a mindboggling rate. In just one recent 24-

hour period, “sustainability” was

mentioned in more than 600 print news

headlines and received 18,000 mentions

in news stories on the Internet, wire

services and blogs. 

The problem? Consumers are

confused. 

They understand that they should

care, but with all of the conflicting

definitions of “sustainability,” “green”

and similar terms, consumers aren’t sure

what the movement means, how to

engage it or even whom, and what, to

trust. 

The National Council of Farmer

Cooperatives (NCFC) believes that this

uncertainty provides cooperatives with

opportunities to shape the conversation

in a way that is both meaningful to

consumers and benefits farmers. And it

has research to prove it.

Study gauges public perception

Jean-Mari Peltier, NCFC chief

executive officer, says the organization

recently completed a study to

understand how average consumers

view sustainability and to verify those

elements that relate to cooperatives.

NCFC found that “farmer-owned” may

be the missing — but most relevant —

link in telling the future sustainability

story.

“Ultimately, the study pointed to the

fact that many of the sustainability

I

Co-op Link to Sustainability

NCFC study shows ‘farmer-owned’ message

resonates with consumers on environment 

4 July/August / Rural Cooperatives
projects underway are missing the

larger point of what consumers define

as sustainable,” says Peltier. “When

average consumers talk about

sustainability, they expect

environmental initiatives. But they are

also looking for social responsibility and

connecting to the fact that a real farmer

produced a real product. The

cooperative way of doing business

embodies those principles that

consumers define as sustainable.”

The study is part of NCFC’s broader

initiative to create a new value

proposition for members that includes

analyzing conservation and

environmental trends, regulations and

farm policy to help cooperatives gain

direct access to conservation dollars on

behalf of their farmers.

“That collided with the reality that

many individual companies — largely in

the food, retail and environmental

sectors — were quickly moving ahead

to define sustainability,” says Peltier.

“Some of them have begun to require

their suppliers, including many farmercooperatives, to conform to a set of

principles that emphasizes economic,

environmental and social responsibility.

We thought it was critically important

that cooperatives put their imprint on

the definition.” 

NCFC employed The Hartman

Group Inc., a Washington, D.C.-based

research firm, to conduct face-to-face

interviews with mid-level household

shoppers in Kansas City, Mo., and

Seattle, Wash. These results were added

to a more expansive 2007 Hartman

Group-sponsored study involving 1,600

consumers. 

NORPAC is celebrating its 50th year of offering a sustainable certification program to its 220 grower-owners. The co-op uses this commitment to help

market its whole green beans. Photo courtesy NORPAC. Opposite page: More than 50 percent of California winegrapes are grown using sustainable

farming methods. Photo courtesy California Winegrape Growers Association (CWGA). Far right: The sustainable winegrape growers’ logo.

Rural Cooperatives / July/August 2008 5

Nearly half of NORPAC member-farm

operations are certified sustainable

by The Food Alliance, a third-party

auditor. Photo courtesy NORPAC 
Perceptions of sustainability

The study focused on so-called midlevel consumers, who represent the

majority (65 percent) of U.S. shoppers.

In general, their attitudes and behaviors

about sustainability are still evolving.

Though “sustainability” is widely talked

about in the business community, only

about half (54 percent) of all consumers

are familiar with the word; 5 percent of

shoppers know companies that support

sustainable values; 12 percent know

where to buy products from those

companies. 

This consumer group — which

values price, convenience, personal

benefit, experience and knowledge —

discussed their buying habits and talked

about their thoughts regarding

sustainability, cooperatives and the

concept of farmer-owned. First, they

associated sustainability with food and

beverages that are healthier for families

and the planet. They wanted food

producers to show “value-added”

through sustainable practices, attention

to detail, extra care and passion. 

The research also revealed that this

consumer group endorses a “do-whatyou-can” philosophy by living more

simply, giving back, recycling, reducing

waste, education and being connected.

“‘Doing the right thing’ has to be

balanced by the family budget and how

their life runs,” says Laurie Demeritt,

president of The Hartman Group.

“They also believe in ‘doing what you

can,’ because there is no silver bullet.”

Cooperatives viewed favorably

Although mid-level consumers know

very little about the cooperative

business model, they generally view coops in a positive light. 

“Consumers believe that

cooperatives are more likely to be

sustainable, based upon their structure

and foundational elements,” says

Demeritt. “Cooperatives sustain a

treasured way of doing business, include

people (farmers) who want to maintain

their current lifestyle and sustain a

community, and maintain certain

environmental standards.” 

Co-ops support rural communities,

contribute to the economic growth of

other farmers, work together to build

customer relationships, pool resources,

share benefits, are equally vested in an

incentive to uphold standards, are

responsible to workers and customers,

and have ownership and family pride.

‘Farmer-owned’ rings true

The most compelling study result

shows that the term “farmer-owned”

resonates strongly with consumers and

implies sustainability and cooperation

without even saying it.

“Consumers have a limited attention

span,” says Demeritt. “They have busy

lives. Farmers and their cooperatives

need to focus on the simpler ideas. It’s

not that ‘cooperatives’ or ‘cooperation’

is negative, but ‘farmer-owned’ carries a

better, easier-to-understand image. So,

don’t spend time talking about what

makes your cooperative sustainable ...

leap frog to farmer-owned.”

Consumers indicated that “farmerowned” carries images and feelings of:

• Simplicity;

• Cooperative values;

• Connecting emotionally with

consumers;

• Farmers making the right

decisions;

• Commitment to farmer livelihoods,

rural communities and good land

stewardship;

• Sharing consumer values; 

• Authenticity and trust; 

• Hope for the future.

“Unlike some companies that are

running to catch up, co-ops can — and

need to — leverage their natural fit in

this category,” says Demeritt. “The

term ‘farmer-owned’ provides great

marketplace opportunities because

consumers seek ‘people-like-me’

connections behind the products they

buy.

Further, consumers want to know

where their food comes from, how it

was made and by whom.” 

To maintain consumer trust, those

stories must be authentic. “Farmerowned carries hope and promise hailing

to the comfort of the past and safety for

the future,” she adds.

Telling the story

NCFC members, who are pioneers

in developing sustainable co-op

programs, believe the term “farmerowned” brings value and understanding

in defining the cooperative’s role.

George Smith, chief executive officer of

NORPAC Foods Inc. — a

processing/marketing cooperative

owned by 220 vegetable growers in the

Pacific Northwest — says NCFC is on

the right track. 

“As the world grapples with the

issues of sustainability, the challenge is

to make sure the definitions and the

standard don’t get out of sync,” says

Smith. “This is the perfect time for

cooperatives to be involved in, and to

influence, the definition of

sustainability for growers and

producers, rather than have someone

establish it for us. There are efforts

afoot on the customer side to define it,

and, in some cases, we are involved with

defining it for customers.”

This year, NORPAC celebrates its

50th year of offering a sustainable

certification program to its 220 growerowners. Nearly half of its member

farms, representing nearly 60 percent of

NORPAC’s commercial output, are

certified by a third-party auditor: The

Food Alliance, a Portland, Ore.-based

organization that provides sustainability

certification standards. 

NORPAC’s sustainable business

practices also extend to its six plant

operations from processing to

transportation. The co-op recycles

water and packaging, buys wind credits

for energy efficiency and — starting just

six months ago — began selling green

beans bearing the Food Alliance

certified sustainable shield.

“We are still evolving and growing in

our sustainability efforts. We continue

to encourage our farmers to certify

because it’s the right thing to do,” says

Smith. “We believe down the road that

sustainable grower practices will be part

of the entry fee into the market. We’re

just trying to get ahead of that curve. 

“Consumers still want to trust the

farmer,” Smith continues. “They want

to identify with who is making the food

6 July/August / Rural Cooperatives
Rural Cooperatives / July/August 2008 7

and they want to save the planet. If you

combine ‘farmer-owned’ with those

powerful messages, it has exciting

possibilities.”

A case for the future

California winegrape growers and

vintners are world leaders in

establishing sustainability standards,

certifications and the science to back it,

says Karen Ross, president of the

California Association of Winegrape

Growers in Sacramento, Calif. As both

the leading farm state and the state with

the largest population, competition for

natural resources in California is

intense. More than 50 percent of all

commercial grapes, produced by 5,000

growers and vintners, participate in an

industry self-assessment program.

The process began in the early 1990s

with growers who wanted to set

standards for the first integrated pest

management initiative. Today, the selfassessment process includes other ecofriendly standards and helps producers

benchmark their operations, from

ground to glass.

“This was a visionary group of

growers and vintners who saw what was

happening in the region and were

determined to stay ahead of the curve,”

says Ross. “They wanted to define the

discussion and design their industry’s

standards for sustainability and

environment before it was regulated for

them. They also determined early on

that they needed the right production

tools and the science to back it.” 

Ross, who has helped growers

partner with companies and secure

federal conservation and wildlife grants

for additional projects, believes NCFC’s

recent consumer research is critically

important. 

“There is so much needed to tell the

story about family-owned and operated

businesses,” Ross says. “We want future

generations making wine in this state.

To do that, we have to tell the story in a

way consumers can understand.” 

Like NORPAC’s members,

California’s winegrape growers and

vintners know that sustainability isn’t an

endpoint, but a journey of continuous

change.

“The concept of sustainability is

rapidly becoming mainstream,” says

Ross. “The biggest blow up can happen

when the public perceives that a

farmer’s or grower’s story is not real. To

be sustainable, we need to make sure

The National Council of Farmer

Cooperative’s research on how

consumers perceive of cooperatives

on issues of sustainability and the

environment reveals two clearly

defined steps to take: 

• Do ensure that the social and

environmental practices of

members reflect mainstream

consumers’ understanding of

sustainability. 

• Do talk about the “farmer-owned”

aspects of co-ops to consumers

and customers...those are stories

they want to hear. 

Sustainability

‘do list’ for co-ops

“The concept of

sustainability is rapidly

becoming mainstream,” says

Karen Ross, president of the

California Association of

Winegrape Growers (CAWG).

Below: Growers such as

Gary Wilson – engaged in

some ag education – “were

determined to stay ahead of

the curve” on sustainability,

Ross adds. Photos courtesy

CAWG 

continued on page 42
By Bill Brockhouse

Co-op Development Specialist

USDA Rural Development 

Editor’s note: The author wishes to thank

Grant Stumbough, Southeastern Wyoming

RC&D Coordinator, for his assistance in

the preparation of this article.

yoming is a windy

place. According to

the American Wind

Energy Association,

Wyoming ranks

seventh in the nation for wind-energy

potential. Even more impressively,

southeastern Wyoming enjoys more

than 56 percent of all developable-class

wind in the western United States. No

wonder wind energy developers are so

inter-ested in putting in wind farms

there. 

In other states, wind-energy

developers have approached individual

landowners to negotiate contracts to

lease their land for placement of wind

turbines, often with a “gag rule” so

landowners weren’t free to discuss lease

terms with anyone. Therefore,

information about lease prices and

other terms weren’t available for

landowners to compare their offers. 

This arrangement was favorable for

developers, but landowners weren’t

really sure if they were getting a fair

price. Wyoming landowners didn’t

want this to happen to them.

Grant Stumbough, Southeastern

Wyoming RC&D Coordinator in

Wheatland, Wyo., has helped establish

four associations of landowners to

bargain with wind-energy developers.

Four more are in the formative stages.

In all, these wind energy associations

have 2,000 MW planned for

development. 

Stumbough was contacted by several

ranchers who had heard about the idea

of forming wind energy associations to

enhance the marketability of their

world-class wind resources. The

concept was to create blocks of land

and use collective bargaining strategies

to reach agreement with wind

developers. They knew they had to

W

8 July/August / Rural Cooperatives

Lassoing

Wyoming’s Wind

Landowners band together to bargain 

for higher wind-power royalties 
organize quickly to be ready for wind

developers who might otherwise choose

other states, or obtain leases from

individuals before group collaboration

could take place. 

These landowners didn’t have the

resources to invest in the wind projects

themselves by buying turbines of their

own. Even if they did, they felt the risk

might be too high for them, (although

there are examples of groups of rural

landowners doing so; see page 14,

November-December 2007 issue of

Rural Cooperatives). The payoff potential

of turbine ownership is far greater than

land leases, but leases are still a way for

landowners to significantly benefit from

wind energy development. 

Land blocks vary in size 

The associations, with names such as

“Windy Ranches,” range in size from

30,000 acres to 250,000 acres. Although

informational barriers were formidable,

landowners thought they had a lot to

gain by cooperating. The main benefits

are:

• Strength in numbers;

• Collective bargaining;

• Lands “blocked-up” to enhance their

ability to market wind resources;

• Opportunity to become informed

about wind energy;

• Everybody gets a “piece of the pie”;

• Avoids divided communities;

• Forces the wind developers to

compete for land leases;

• Determines what the wind resource is

worth;

• Landowners drive the process.

Royalty payments to landowners are

typically about $2,000 per turbine per

year for each landowner. But that didn’t

seem like much when taking into

account the revenues from energy

production being made. 

It is estimated that bargaining can

obtain 4.5 percent gross wind-power

revenue for the first 10 years, and up to

7.5 percent of gross revenue of the for

the following years. Other possible

advantages of collective bargaining

include: signing bonuses; land leases;

payments for road and transmission

easements; construction fee per MW of

nameplate capacity; and loss of forage

or crop production payments. 

Slater Wind

The first association to be formed

was the Slater Wind Energy Association

LLC, with 30,000 acres and 45

members. The initial meeting held to

talk about the idea was attended by five

landowners who expressed desire and

commitment to move forward with

forming an association. There were two

more meetings prior to actually forming

the association in March 2007. 

It isn’t easy, but when everyone

understands it can impact their

economic well-being, cooperation

makes sense.

“By working with our neighbors to

collectively market our world-class wind

resources, we were able to enhance our

ability to effectively negotiate with wind

developers to obtain a fair and equitable

price for everyone concerned,” says

Gregor Goertz, chairman of the Slater

Wind Energy Association. “In addition,

everybody in the community will

benefit in the short and long term as

wind energy royalty payments will be

distributed among all association

members, including those who do not

have turbines on their land.”

Landowners felt there was a need to

develop their associations rapidly.

Otherwise, events would have left them

behind. Competing developers were

beginning to contact individual

landowners to negotiate with them on

an individual basis. 

Therefore, Slater Wind Energy

developed and signed an operating

agreement to legally form the

association. It then developed a request

for proposals (RFP), which was mailed

to more than 40 premier wind

developers, resulting in proposals from

eight wind developers. Slater Wind is

currently in final negotiations with a

wind-energy developer who is

enthusiastic about building a sizable

wind farm. This all happened in less

than 18 months. 

Stumbough outlined the following

steps in forming a wind energy

bargaining association:

1. Determine interest in forming an

association;

2. Delineate potential boundaries;

3. Hold first meeting;

4. Evaluate wind energy development

potential;

5. Form the association;

6. Develop and sign an association

operating agreement;

7. Develop and send RFPs to windenergy developers;

8. Review and select the best proposals; 

9. Enter into final negotiations with

developer.

The biggest barriers to formation

were the newness of the concept and

lack of information on legal and

technical issues, including how to

structure such an organization to

maximize lease values for members.

There was also a feeling of being at a

disadvantage against powerful

developers. Therefore, experts from

TransElect, Wyoming Infrastructure

Authority, University of Wyoming,

USDA Rural Development and others

were invited to later meetings to clarify

technical details.

Similarities to ag

bargaining co-ops

Although the bargaining associations

are not formally incorporated as

cooperatives, but rather as LLCs, there

are some similarities to agricultural

bargaining cooperatives. In agricultural

bargaining cooperatives, producers of

farm commodities unite to negotiate

contracts with processors. 

Similarly, in the case of wind energy,

landowners negotiate with wind-energy

developers for the price of their wind. It

makes sense for them to cooperate in

this endeavor, to know the terms

received by all members and to attempt

to receive the best terms possible.

Group action can help counter-balance

the market power of developers and get

a better deal for landowners.

Although it’s a relatively new area,

there is legal expertise available for this

complex subject. After forming the

association, an attorney was approached

who guided the group through the legal

Rural Cooperatives / July/August 2008 9

continued on page 42
10 July/August / Rural Cooperatives

Editor’s note: This article provided

courtesy Aurora Cooperative.

t all began when

25 individuals

wanted to change

the price they were

paid for grain. It

didn’t seem right to them that

prices at the terminal market were

considerably better than the prices

paid to local farmers.

This group of 25 knew that if

they wanted to change the price

they received for grain, they would

have to change how it was

marketed. The best way to do that:

form a cooperative.

That is exactly what they did,

and on Feb. 15, 1908, the Aurora

Elevator Company, known today as

the Aurora Cooperative Elevator

Company, was incorporated in

Aurora, Neb. 

“Cooperatives were following a

new set of ideals in the early 1900s

and were rising in popularity,” says

George Hohwieler, Aurora

Cooperative’s current president and

CEO. “That by no means ensured

success. The cooperative’s pioneers

worked tirelessly and recognized

that they would have to

continuously adapt if they were to

succeed into the future.”

Within weeks of forming, the

company had raised $9,800 and, in

August 1908, a 31,000-bushel,

wood-cribbed elevator had changed

the Aurora skyline. By the end of

that first year, the company handled

128,721 bushels of grain — much

of which was wheat. Accounts

receivable stood at $3. It was a

good first year.

Co-op grows to 43 locations

“That early success brought

farmers from a nearby community

who wanted to join, giving the

company two locations by 1910,”

Hohwieler says. “The next growth

outside these communities didn’t

occur until 1969. Then, in the

1980s, mergers and acquisitions

came more frequently. 

“As we celebrate our 100th anniversary this year, we serve members

and patrons in 43 locations across

Nebraska and into Kansas.”

100

Aurora Co-op’s Centennial

As it turns

I
Rural Cooperatives / July/August 2008 11

In its 100th annual report, the

cooperative reports record 2007

sales and income of $475 million

and net earnings of $23.5 million.

It also approved $12 million in

patronage refunds, of which $5.6

million was in cash payments to

members — the largest patronage

payday in the history of the

cooperative. 

Grain storage capacity today

stands at 38.2 million bushels, and

the company employs 460 people.

“We had a good year in 2007,”

Hohwieler says, “but that was

possible because of the hard

questions the company’s

management and board asked

themselves over the past 100 years.”

These questions include: 

• Are we making the right decisions

in grain marketing? 

• Should we expand our marketing

area? 

• Can we better leverage our

purchasing power to give

members an edge on fertilizer

prices? 

• Are we taking advantage of new

knowledge to provide the best

possible feed rations? 

• Do we need to broaden our reach

to continue our success in

supporting the biofuels sector? 

• Are we nimble enough?

Flexibility key to success

That last question — on being

nimble — is one Hohwieler views

as critical. Without the ability to

move forward or quickly change

direction, opportunities can be

wasted.

To be successful, a cooperative

must be able and willing to change

as quickly as possible, with an eye

on helping members succeed,

Hohwieler says. In return,

members will be supportive and

loyal. 

“Aurora Cooperative continuously faces challenges — and

we’ve been fortunate over time to

see those as opportunities, respond

with a solid plan, and then have the

courage to act and follow through,”

he says.

That was the cooperative’s

approach through the turbulent

1930s, the expansion of grain

Nebraska co-op still growing with most ambitious endeavor in its history 

Clockwise from opposite page: The original

Aurora Cooperative office and flour mill; the

24,000-ton, dry-fertilizer complex at Aurora

West; an aerial view of Aurora West, a 142-

acre agribusiness campus; the co-op’s

premium livestock feeds help fuel the region’s

beef industry. Photos courtesy Aurora Co-op

(except where noted)

Prange Aerial Photography, Courtesy Aventine Renewable Fuels
12 July/August / Rural Cooperatives

storage during the ‘50s, the decision to

enter the petroleum business in the late

‘60s and the mergers and acquisitions in

the ‘80s and ‘90s.

More recently, Aurora Cooperative

saw the quickening pace of changes in

agriculture and began to examine what

it needed to do to ensure success in the

future. For example, the expanding

biofuels sector was changing where and

when the corn crop went. 

Larger corn crops were coming, and

with them the need for more efficient

methods of handling grain. Demand for

competitively priced crop inputs was

increasing. Storage space for grain was

tight. 

Aurora West co-op’s

largest endeavor

To respond to these challenges, a

number of conversations were held

between the company’s management,

board and patrons. From the fruits of

these efforts rose Aurora West — a

multifaceted, 142-acre agribusiness

campus that became the largest

endeavor in the cooperative’s history. A

public announcement was made in April

2006.

“It took a lot of effort by patrons,

employees and the board to get the

pieces of the puzzle together and make

Aurora West happen,” Hohwieler says.

“Today, Aurora West represents a classleading model of how North American

agribusiness will operate in the 21st

century and beyond.”

The campus includes a 226 milliongallon-per-year ethanol plant, which is

under construction; a state-of-the-art

grain-handling facility; a dry-fertilizer

complex, and a double-loop railroad

system serving the entire Aurora West

complex. A 75,000-square- foot

warehouse leased by a seed company

occupies a corner of Aurora West, while

in the opposite corner a 50 milliongallon ethanol plant has been operating

since 1994. There is also land available

for future development.

The cooperative built and operates

the grain and fertilizer terminals and is

the exclusive grain supplier to the

existing and new ethanol plants. Aurora

Cooperative will also market much of

the ethanol co-product distiller’s grains

to local livestock operations.

“The facilities planned and built by

Aurora Cooperative at the Aurora West

campus will allow us to better serve

patrons and customers – and provide

important efficiencies during these

1908

1934

organized, providing the cooperative with

an operating loan during the Great

— Aurora Cooperative is formed;

— Omaha Bank for Cooperatives

100

Depression and widespread drought;

1943 — The cooperative’s bylaws are

changed to allow patrons who could not

previously own stock to earn shares; this

significantly increases business;

1955 — The company’s first anhydrous

tank allows members to cut anhydrous

costs in half;

Aurora Cooperative Milestones

A tanker car trumpets the first shipment of

phosphate fertilizer from Wisconsin to

Aurora Co-op. 

An original stock share of the co-op,

issued May 20, 1908.
Rural Cooperatives / July/August 2008 13

exciting times in agriculture,”

Hohwieler says. “It is important to

continuously assess, make

improvements and move forward.

Aurora West helps Aurora Cooperative

do just that.”

Aurora West is the latest move the

farmers and agribusiness people who

make up the Aurora Cooperative made

to remain “steadfastly progressive,” he

adds. 

Hohwieler says members expect the

company to adapt as the marketplace

evolves, to drive change within the

cooperative and to work as hard as they

do — all while maintaining the values

and integrity the cooperative was

founded upon.

“As years turned into decades, this

business philosophy and determination

built a reputation that has served the

cooperative well,” he says. “Our name

stands for something and has 100 years

of history behind it.” ■

1959 — Aurora Cooperative becomes

the second-largest grain elevator

company in the state;

1962 — Sales reach $3 million; the

only debt is on a feed mill built the

prior year;

1975 — Sales surpass $33 million;

2001 — Online statement viewing

becomes available;

2006 — Groundbreaking takes place

for Aurora West, the largest project in

the company’s history;

2007 — Sales reach $475 million,

grain storage capacity stands at 38.2

million bushels and the company has

operations in 43 locations;

2008 — Aurora Cooperative

celebrates 100 years as a

cooperative. ■

Unloading a shipment of dry fertilizer

at Aurora West.

The grain terminal at Aurora West was open to

receive a record harvest in 2007, just 13 months after

groundbreaking. Below: A co-op truck delivers

livestock feed. 
14 July/August / Rural Cooperatives

Co-ops Get Serious About

Renewable Energy

Electric co-ops unite to form ‘Super REC’

U T I L I T Y C O - O P C O N N E C T I O N

By Lindsay Atwood

USDA Rural Development

lectric cooperatives across the nation are

banding together to do what co-ops do

best: pool resources and expertise for the

greater good of everyone involved. In this

case, they are joining to form the National

Renewables Cooperative Organization (NRCO), essentially a

“super cooperative” made up of many individual rural electric

cooperative utilities. 

Membership is open to generation and transmission

(G&T) co-ops, distribution co-ops unaffiliated with a G&T,

or partial requirements co-ops, which can purchase part of

their power from other sources.

This new organization will serve to identify viable

renewable energy projects and make them available to its

members to help co-ops diversify their portfolios. Though

their primary focus is on diversifying energy portfolios,

NRCO does provide the added benefit of helping co-ops in

certain states meet Renewable Portfolio Standards (RPS).

State RPS policies require utilities to produce a certain

megawatt quantity or percentage of their electricity from

renewable resources. More than half of the states already

have some form of RPS. 

Much more than simply staying on top of RPS

requirements, a general feeling of co-op camaraderie coupled

with the desire to help one another develop renewable energy

projects have motivated the startup of this organization.

“Our motives were pretty straightforward,” says Ron

Harper, the CEO of Basin Electric Power Cooperative and

chairman of the new organization’s transitional board. “We’re

a cooperative and we want to help cooperatives.”

Similarly, Earl Watkins, CEO of Sunflower Electric Power

Corporation, recognizes the expertise his co-op can bring to

the table regarding the challenges and advantages of wind

farms, because Sunflower already receives power from two of

them.

“As a G&T located in central and western Kansas, we

realized that we have substantial wind resources,” he says.

The question is: “How can we help other G&Ts who don’t

have the resources in their back yard that we have in our back

yard?”

The answer, he believes, is the National Renewables

Cooperative Organization.

‘Super co-op’ board energized

The idea for this “super cooperative” originated more than

a year ago with the Generation and Transmission Managers

Association which, along with the National Rural Electric

Cooperative Association (NRECA), decided to contribute

money to fund the development of the organization’s business

plan. Since then, a transitional board has been established to

get the organization up and running. 

“The board is very energized,” says Jay Morrison,

associate director of regulatory council for the NRECA’s

Energy Policy Sector. “They’re moving forward quickly.”

With 15 members on the transitional board representing 10

G&T co-ops and five unaffiliated distribution co-ops, NRCO

had its first official meeting on May 22, with hopes of

becoming fully operational as quickly as possible.

“In terms of a timeline, the transitional board has the

ability to function up to two years, but I think it was all of

our desires to try to get the full board governance structure

E
Rural Cooperatives / July/August 2008 15

and the business plan

fully put in place as

soon as possible,”

Harper says. “It would

be my hope that by the

end of this year—

certainly the first

quarter of next year—

we would be fully

operational.”

Well on their way to

operational status, the

board appointed several

committees at its May

meeting to work on

various aspects of

governance and policies,

such as a bylaws

committee and a

committee devoted to finding an energy

management company for the organization.

“It’s our goal right now to have the

committee activities accomplished by August

so that in September at our next meeting

we’ll be able to advance the project,” says

Watkins, who serves on the transitional

board’s bylaws committee.

Membership growing

Word has spread quickly about NRCO. By May 23, 24

member co-ops in more than half of the states — serving 22

million consumers — had joined the organization, Morrison

says.

Harper expects more co-ops to soon join NRCO. “I know

there are a number of individuals who have talked to me who

are going to wait and see,” he says. “Their boards want to

join, but it’s like anything new. People want to see how it’s

going to work.”

The benefits to members of pooling resources and efforts

are the same as those of any other cooperative, asserts

Morrison. “By working together they have the opportunity to

be more efficient,” he says. “They can together jointly fund

the expense of the experts and the expertise that’s required to

really find the best projects.”

NRCO offers a win-win situation for members both in

states with many renewable resources and in states with very

few renewable resources. Co-ops with excess renewable

energy can sell the energy into the market. Co-ops with

limited renewable energy can, by way of becoming partial

owners of renewable energy projects, claim those renewable

energy credits as their own and use them to meet their state’s

RPS, Watkins says.

How it works

Harper spells the process out clearly: “Let’s say that a

developer for wind has

a project in Iowa. That

developer brings the

project before the

energy management

company for review

and due diligence and,

if it passes the test, the

board would look at it.

It would then be

opened up to all

members of NRCO as

to whether they want to

participate. 

“Let’s say there are

10 members who all

want to participate,” he

continues. “That project

then would be formed

into a special purpose entity so it stands off

to the side of the NRCO. Those ten

members are responsible for the costs

associated with that project. If they sell the

energy into the market, there would be a

revenue stream.”

Although NRCO is not currently structured

to own any assets, the business plan was

developed in such a way that the

organization has the ability to do so at a later time, if it so

chooses, says Harper. The board, he adds “tried to look

forward and say there might be that opportunity in the

future.” 

Beyond working to develop new renewable energy projects

for its members, NRCO will also work to educate people

about renewable energy and provide clarification for

misunderstandings and fallacies.

“A lot of people will say wind is free, and wind clearly is

not free,” Watkins says of a common misconception. “They’ll

also say you don’t need coal plants—that you can do it with

wind—but the wind is only blowing 40 percent of the time.”

One of NRCO’s goals, he says, is to provide access to

expertise and positive publicity to educate people about why

electric co-ops are forming this organization, as well as to

help consumer owners of co-ops understand the complexity

of these issues.

According to Morrison, the public is looking to co-ops to

provide leadership in this area. By forming this pioneer

organization—this co-op of co-ops—they are taking that

lead.

“Co-ops have more often than not been on the leading

edge of making responsible decisions,” Watkins says, “and the

best way of doing that is to consolidate intelligence and

experience to help us each make the right decision at the

right time for the right reasons.” ■

Hydro and solar power are prime examples of renewable energy. Photos

courtesy National Renewable Energy Laboratory. Opposite page: Earl

Watkins (center) of Sunflower Electric says one goal of NRCO is to

provide expertise and education about renewable energy. Photo courtesy

Sunflower Electric 
16 July/August / Rural Cooperatives

By Mark S. Johnson

Editor’s note: Johnson is a former staff writer for Land O’

Lakes and is currently a freelance writer, based in

Minnesota. 

n 1921, cooperative leaders from 320

local creameries in Minnesota decided

they needed a middleman to help

them improve the marketing, quality

and price of their butter. To use a

fancier 21st century term, they were seeking

marketplace “intermediation.” 

With a $1,000 loan and $375 of their own seed

money, the farmers met in St. Paul and established the

Minnesota Cooperative Creameries Association —

today’s Land O’Lakes Inc. The new organization was

soon working to improve member profitability and

expanding its membership. Operations rapidly spread

into other states. As it grew, the company not only

grew its marketing power, but also put its cooperative

buying power to work, bringing producers better

I

Whatever

It Takes

Land O’Lakes asks (and answers) hard questions

about its role in today’s agribusiness world

A friend in need: co-ops stand by their members in good times and bad. Here, Scott Maier (left) discusses the impact of June

flooding on his farm with staff members from United Cooperative of Beaver Dam, Wis. Land O' Lakes has spent considerable time

and effort "out in the country" this year to find out how to better meet the needs of local co-ops, such as United, and their members.

Photo by Mark Johnson, courtesy Land O' Lakes
Rural Cooperatives / July/August 2008 17

pricing on feed, seed and agronomy inputs. 

For Jim Fife, Land O’Lakes senior vice president for

member and public affairs, it is important to remember this

early history, because of “disintermediation” — which

became an academic buzz word in the early 2000s for those

who were predicting the demise of large, wholesale

cooperative business organizations such as Land O’Lakes.

This process would be driven, they said, by the Internet,

farmer buying groups or small, independent distributors. 

However, Land O’Lakes, Fife says, was started by local

cooperatives, built on a commitment to serving local

cooperative needs and will continue to be viable as long as it

maintains and delivers on that commitment. 

“Disintermediation is a myth, but consolidation is a

reality,” says Fife. “The cooperative system is still delivering

value and actually growing its market share. By the

‘cooperative system,’ we mean the retail system Land

O’Lakes serves: local cooperatives and their member-owners,

as well as CHS Country Operations — all of which add scale

and mass to our wholesale business, which helps us be the

best provider for the system.”

Cooperative assessment

To make sure it was not just insiders at the Arden Hills,

Minn., office reassuring themselves that Land O’Lakes was

needed and relevant, the regional cooperative went in search

of more opinions, from both inside and outside the system.

“We are serious about this,” says Fife. “We looked at our

ag services businesses with an intense and objective focus. We

did draw on internal expertise, but we also hired a leading

global consulting firm with extensive experience in

agricultural sectors and went out in the country and talked

with a significant number of local co-ops to determine what

was expected of us and what their needs were.”

Working with Land O’Lakes and local cooperative leaders,

this consulting firm took an indepth and objective look at

Land O’Lakes Inc., its relevance to the cooperative system

and to the overall agricultural production environment.

“They came back and told us that some disintermediation

was occurring in the CN [crop nutrients] industry, where

there were margin streams for manufacturers and retailers

with application and consulting expertise,” Fife says. “But at

the distributor level, margins were getting very, very thin

because CN is a bulk commodity business and lends itself

more to a two-step rather than a three-step system.”

However, the study also showed that in other areas of

agribusiness in which Land O’Lakes was a player there was

an important difference.

“They saw an extremely high margin pool shift into seed

categories, driven by traits, and that the devaluation going on

in crop protection products was lessening and flattening,” he

says. “So think about what we did in September 2007, when

we broke up Agriliance: CPP [crop protection products]

moved into WinField SolutionsTM with our seed business,

which makes sense. And, with CHS being very much in the

commodity, logistics and grain business, it seemed logical for

them to handle CN distribution. 

“Ultimately, the system analysis helped drive our decision

— working with CHS — to take the wholesale pieces of

Agriliance and break them apart and put them into the

ownership where the skill sets were the strongest.”

Fife also notes that in the two years since the analysis was

done, the world supply and demand picture has undergone a

lifetime’s worth of change. This, in turn, makes

intermediation vital for local cooperatives.

“We’ve seen shrinking availability of particular CPP

products, so the brokers working out of pickup trucks have

been tremendously disadvantaged compared to the days when

we had an oversupply and devaluation situation. Now that it’s

more difficult to obtain active ingredients, generic

manufacturers are at a disadvantage as well, and that has

made us more valuable as a distributor for basic

manufacturers. Frankly, it has cleaned up the marketplace of

people who were able to go out with non-value-added,

unbranded and cheap generic product.”

Non-price variables

Land O’Lakes’ cooperative assessment also found that nonprice variables are playing a growing role with farmers, large

and small.

“The results indicated value in the system’s expertise and

ability with genetically modified seeds and CPP and seed

traits,” Fife says. “And given the current supply situation, the

availability and stability of supply ranks very high with

cooperatives and producers. We did a survey and found that

price wasn’t always at the top of the list with producers. So,

in the future, we will be going to the cooperative system with

a package that includes the things that our cooperative

assessment showed us are important to farmers.” 

When he speaks at local cooperative meetings or in oneon-one chats with members, Fife summarizes the Land

O’Lakes commitment to them by saying that the

organization wants to earn its position as the preferred

supplier to the cooperative system and will do whatever it

takes to help local cooperatives compete and win. This, he

says, will require a shared commitment.

“The formula for cooperative system success has two

critical parts,” he says. “First is a strong and successful local

retail cooperative system and second, an equally strong,

successful and supportive wholesale cooperative presence.”

A new focus

This strong wholesale presence seemed less than assured

when Land O’Lakes flipped over its corporate calendar and

started the new century. A hard-eyed look at its balance sheet

and businesses convinced the board and executives that some

major changes were needed. 

In addition to an obvious need to improve the balance

sheet, they saw that the company portfolio was too broad,

continued on page 42
18 July/August / Rural Cooperatives

By Jane Livingston

CooperationWorks!

itting in a classroom in Lewiston, Maine, 20

or so people are watching a bank of four TV

monitors showing three similar classrooms

located all across Maine, as well as their own.

Even though located up to hundreds of miles

apart, everyone in each of the four classrooms sees, hears and

interacts with all the others as they discuss the “Maine Feeds

Maine” project, an effort to accelerate the growth of local

food networks in the state. 

In addition to Lewiston in southern Maine, the other

teleconference participants gathered in Ellsworth on the

northern “Down East” coast, in Dover-Foxcroft in the state’s

forested interior, and in Fort Kent on the Canadian border,

350 miles north of Lewiston. Such teleconferences are made

possible by the Maine Distance Learning Project, with

equipment in more than 90 secondary schools around the

state and the ability to interactively link four sites at once. 

The multi-site, audiovisual-linked format meant that

producers could sit at “virtual roundtables” with retailers,

officials, educators and allies without investing the time and

expense of a long trip. In all, more than 150 people were

involved in the teleconference, with many attending more

than one session. In written evaluations, most participants

said they benefited from the exchange of ideas. 

Participants in Lewiston included senior managers from

the Good Shepherd Food Bank, which provided 10 million

pounds of food to more than 600 Maine charities in 2007,

and Lewiston Mayor John Jenkins. Also included were a few

producers and a dozen organizers, advocates, educators and

activists who focus on nutrition and health, sustainable

agriculture, local food infrastructure, farm policy and related

topics. In Ellsworth, a similar broad base of stakeholders met,

while in Dover-Foxcroft Cooperative Extension educators

joined in. In Fort Kent, most of the participants were

producers. 

Focus on local food

John Harker, marketing specialist with Maine Department

of Agriculture, directed the distance learning system for all

four Maine Feeds Maine discussions. He says the project

should have a profound effect on the future of local food

networks, and that having producers participate in discussions

was a key to the success of the effort. 

The project grew from stakeholder discussions with

members of Cooperative Maine, a newly formed statewide

group of people committed to growing the state’s co-op

economy, and the Cooperative Development Institute (CDI),

a member of the national service co-op CooperationWorks! 

Since Cooperative Maine is not yet incorporated, CDI served

as administrator for the project grants from Northeast Farm

Credit, Farm Credit of Maine and the Maine Community

Foundation. CDI staff also played key roles as project

advisors and in helping to manage the database, registration

and participant communications for a demanding lineup of

four multiple-site events.

Cooperative spirit reigns

“Maine Feeds Maine has given people ideas and resources

to follow up on and tips on where to find funding,” says CDI

Executive Director Jen Gutshall. “It has put them in touch

with folks who are a few steps further along a path similar to

the one they intend to go down. Not surprisingly, because of

the generosity of people sharing all this information,

knowledge, expertise, insight and hard-won wisdom, a lot of

cooperative activity has sprung from these four sessions.” 

Gutshall says this activity includes both “small ‘c’

cooperatives” (those not formally organized as a cooperative,

but operating much like one), and “big ‘C’ cooperatives”

(businesses that are formally incorporated as cooperatives).

“In short, the project accomplished exactly what we hoped it

would — probably far more than many people thought it

would,” Gutshall says. 

For example, a group of young farmers in Washington

County in Down East Maine (where unemployment hit 10.9

percent in March 2008) who had drifted apart began meeting

again. Carly DelSignore and her husband, Aaron Bell, of

Edmunds, live on Tide Mill Organic Farm, which has been

in the Bell family for nine generations. DelSignore credits

their participation in a Maine Feeds Maine session for

sparking new energy to explore cooperative ventures. She

says she values co-ops not only for the economic benefits

members derive from them, but as a means to build

community with neighboring farm families. (For more

Maine Feeds Maine 

Teleconference aims to promote growth of state’s local food networks

C O - O P D E V E L O P M E N T A C T I O N

S
information about the farm, visit: www.tidemillorganicfarm

.com.)

Producer-oriented distribution

Maine Feeds Maine also brought Tide Mill Farm — which

produces organic chicken, pork and grass-fed beef, produce,

milk (sold under the Stonyfield brand), fruit and other

products — together with Crown O’Maine Organic

Cooperative (COMOC), a statewide distributor of local food

supplied by more than 35 Maine producers. COMOC is

based in the far north of the state, operating

from the Grand Isle farmhouse of Jim Cook. 

The Cook family operated a thriving

organic potato farm before starting a

successful local food distribution company.

COMOC travels five routes across the state

year around, picking up and delivering local

food to local people. “Doing a route like the

[Down East] one is very resource-intensive,”

Cook points out. “We need more stops along

the way.”

Now COMOC has established a new

route that links Tide Mill Farm and

Washington County with existing runs further south. New

buyers have come on board all around the state, in the form

of restaurants, retails stores, schools and local buying clubs.

The COMOC Website was recently overhauled by Tom

Roberts, co-owner of Snakeroot Organic Farm, who met Jim

Cook through their participation in Maine Feeds Maine.

Roberts also authored a primer on “How to Start a Buying

Club,” which COMOC hopes will spur growth of these

small-scale buying groups.

“The story of how the Crown O’Maine hooked up with

Washington County and Tom Roberts is one example of how

the Maine Feeds Maine discussions moved all this activity

forward by connecting people who might not have found out

about each other for years, or ever!” says CDI’s Gutshall. 

CDI is now working to promote additional Maine Feeds

Maine efforts in the Down East region and elsewhere. A

lively program about the project aired Jan. 25, 2008, on

WERU-FM community radio’s “Talk of the Towns” hosted

by Ron Beard, a Cooperative Extension educator who

facilitated three of the Maine Feeds Maine sessions. It is

archived at: http://shows.weru.org/archives/talk-of-thetowns/tott-20080125. ■

Rural Cooperatives / July/August 2008 19

The Indiana Cooperative Development Center (ICDC) is planning

another Co-op Summit Conference in October. Last year’s summit

“really spotlighted how cooperatives empower people to improve the

quality of their lives,” says Debbie Trocha, ICDC’s executive director.

“This type of forum helps cooperatives create new business-tobusiness opportunities for themselves, and focuses attention on making

the cooperative business realm as solid as it can possibly be. This year

we plan to use all local speakers from Indiana cooperatives.” 

The summit will include interviews of co-op officers and members

by a local radio host and a panel showcasing the diversity of the

cooperative business model. A “best practices” session will be

followed by a session in which co-op challenges and solutions will be

discussed. The summit will conclude with local wine-and-cheese

tasting.

The one out-of-state “import” on the slate is Brent Hueth from

University of Wisconsin Center for Cooperatives, who will talk about the

results of research on the economic impact of cooperatives in the

United States and, in particular, in Indiana. Although cooperatives

contribute more than $210 billion to the nation’s economy, employ more

than half a million people and serve nearly 130 million members, the

cooperative business model is still not widely understood – even by the

millions of people who purchase goods and services from co-ops. 

The Indiana Cooperative Development Center provides innovative,

results-oriented and cost-effective services to cooperatives and

related organizations. Visit their Website: www.icdc.coop.

Co-op Summit slated for Indiana 

Making hay on the Tide Mill Organic Farm

near Edmunds, Maine. Carly and Aaron

DelSignoire Bell represent the eighth

generation of the family to run the farm,

which raises organic meats, vegetables, milk

and balsam products. Below: Paige Bell tries

her hand at swine herding. Photos courtesy

Tide Mill Farm 
20 July/August / Rural Cooperatives

By Dan Campbell, editor 

t was 1934 when E.B. Reid, director of

information for the Farm Credit

Administration (FCA), asked editor Bill

Maddox to develop a new publication to

communicate information about the nation’s

farmer-owned cooperatives.

“Initially, the aim was to make the most up-to-date

cooperative information we could get available to the FCA

staff, with a particular interest in marketing and purchasing

cooperatives,” Maddox wrote in an article in 1956 that

celebrated the publication’s 25th anniversary. “However,

along with several others, I nurtured the hope that we would

soon reach out to a wider audience.”

Called News for Farmer Cooperatives, the 8-page,

mimeographed monthly initially carried no photos or

artwork. It was primarily intended for an internal audience at

USDA and the Farm Credit Administration (which was then

a part of USDA). “No copies were ‘on the street,’” Maddox

recalled.

But the publication quickly grew in page count and scope

while adding photos and charts. Maddox also soon got his

wish to begin circulating it to cooperative leaders and many

others who worked with cooperatives, such as farm lenders,

cooperative extension staff, ag educators and others. The

mission of the new periodical was to carry articles designed

to help producers improve their co-ops and increase

understanding of the co-op business model.

Today, 75 years after its launch, the magazine is not only

“on the street” among the nation’s cooperative leaders, it is

also in cyberspace, circulating around the globe via the

Internet, where it is drawing an increasing number of readers

eager to learn more about cooperative business. 

1926 Act launched effort

USDA first formed a special office to assist cooperatives

following passage of the Cooperative Marketing Act of 1926.

According to a 1952 article commemorating the 25th

anniversary of the Act: 

“The idea was for USDA to broaden its research and

education services for farmers to include more work on their

marketing, purchasing and business service problems...a job

they felt could be done only by working together in

cooperatives. They wanted the Department to study

cooperative theory and how farmers actually practiced it.”

This would be done “in order to point out pitfalls, practices to

follow and to set out guideposts for these farmer groups to

follow...marks blazed by the paths successful co-ops had

already taken, and ‘danger’ signs posted by unsuccessful

ones.”

The new periodical, it was decided, would be a key tool to

accomplish this goal.

The Farm Credit Administration, the original home of

USDA’s cooperative agency, became an independent

government office in 1953, but the Cooperative Research and

Service Division remained at USDA, although its name was

changed to the Farmer Cooperative Service (FCS). In 1994,

FCS (called the Agricultural Cooperative Service by that

time) was one of several agencies transferred into USDA

Rural Development.

Over the years, the editorial mix of the publication has

stayed fairly consistent, although the look, content and even

the title (it became Rural Cooperatives in 1996) have certainly

changed with the passing decades. 

On its 75th birthday, the basic goal of Rural Cooperatives

remains the same: to help make the nation’s famer-owned and

other rural cooperatives stronger. The more people

understand democratically governed cooperatives, the more

I

On ‘the street’ and in cyberspace, Rural Cooperatives still spre

75Rural Cooperatives
these member-owned,

member-benefited businesses

will be used. Cooperatives

are, after all, the ultimate selfhelp business tool. 

While the magazine’s focus

remains farmer cooperatives,

it now also carries articles on

rural utility cooperatives and

some other types of rural coops. It still carries highlights

of USDA research on farmer

co-ops and co-op statistics

compiled by USDA, as well as

profiles on successful or

innovative cooperatives. Some

articles also examine co-op failures and the reasons for them. 

The content naturally reflects the trends and business

cycles of agriculture and cooperatives. For example, in recent

years, many articles have reflected the soaring interest in

renewable energy and the role of farmers and other rural

people in this rapidly evolving industry. Whatever endeavors

cooperatives pursue will be reflected in the magazine. 

On the following pages, excerpts from past articles will

remind us of how much some things have changed for coops, while others indicate how much things have stayed the

same. The goal is not to focus on the biggest co-op news

stories of the day, but rather to give the flavor of a typical

magazine of the time. Hence, article excerpts were pulled

from random samples of the magazine. 

The following excerpts are from the 1930s through the

1960s. In the next issue, we will take a trip from the

1970s through the present.

Hold member meetings

only when needed

Robert Amundson of the

University of Wisconsin Co-op

Extension must have sat through

one too many boring co-op

membership meetings, so he took

them to task in this 1936 article:

“Co-ops live by savings, yet in most cases

their methods of conducting [member] meetings

are wasteful. The time and patience of the people

are dissipated with a recklessness unbecoming an

otherwise well-managed business. In a meeting,

you are on exhibit and by inference the business

methods of the organization are displayed before

your members. An organization cannot afford slipshod

methods.

“If we ask people to give up some of their leisure time, of

which they have little, we should have regard for the

Rural Cooperatives / July/August 2008 21

1930s
22 July/August / Rural Cooperatives

sacrifices they make and use that time to the best advantage.

An evening meeting with 100 people costs somebody $100.

How often can we honestly say that we imparted $100 worth

of information?

“A farmer hasn’t much leisure. And it is not right to

dissipate what little time he has for reading, visiting or

listening to the radio...by corralling him into a hall to waste

his evening over some trivial matter, bombard him with

oratory, or fritter away an evening on a matter that could —

if organized and handled properly — be settled in a few minutes.”

Avoid temptation to over-pay members

S.D. Sanders, Cooperative Bank Commissioner, writing in

1936, addresses a basic co-op business tenant that has caused

many a co-op to stumble:

“Most cooperative failures result from lack of a thorough

understanding that a co-op is a business institution and

should be regarded as such. The very best business polices

available should be adopted to direct the destinies of a

cooperative marketing agency, linked up with good,

conservative cooperative principles. 

“There should be a marketing agreement from each

producer, and each producer should contribute his pro rata

part toward building up a sound financial structure for the

association. Then you’ve got something. 

“Oftentimes, farmers...are so concerned with their own

personal need of financial aid that they are prone to overlook

the fact the cooperative has its limitations. They would

unconsciously pull the financial structure from under their

own institution. Their demands for cash many times force

management to pay too much for the product. Many

associations have gone under for just this reason.”

Pruning the ‘deadwood’ 

J.W. Jones, principal ag economist for the Cooperative

Division of the Farm Credit Administration (FCA), in 1936

urges co-ops to maintain accurate membership roles:

“Many cooperatives have a high percentage of inactive

members. In fact, some associations using a certain type of

membership agreement have had two or three times as many

‘members’ as used the association’s marketing service in a

single year. 

“Some associations have made no provision for the

withdrawal of members, except by means of a formal

withdrawal provided in the contract, or by exclusion from the

association by the board of directors. This has resulted in

some associations having so many inactive and indifferent

‘members’ that they have been unable to secure a quorum....

“If the cooperative is to be really ‘farmer-owned’ and

‘farmer controlled,’ some means must be developed to purge

the membership rolls annually and to develop a closer

relationship between the member and his organization.” 

Revolving capital co-ops grow in popularity

In the cover story from the July 1939 issue, E. A. Stokdyk,

FCA deputy governor, focuses on a growing trend among coops:

“Revolving capital co-ops are becoming increasingly

popular because they are providing greater and more

equitable benefits to thousands of American farmers. In

California, more than 200 associations operate on the

revolving plan. In Iowa, nearly 100 farmers’ elevators are

being freed from debt and restored to producer ownership by

means of revolving capital. 

“Because revolving capital has provided money to build so

many successful associations and has rescued so many others

from almost helpless indebtedness, the plan is regarded by

many primarily as a method of financing. However, it affects

nearly every phase of activity. These plans have meant not

only a more equitable distribution of financing the co-op, but

also a more equitable distribution of cooperative benefits. 

“The objective of revolving capital is that every farmer

should benefit from his cooperative exactly in proportion to

the use he makes of it. The principal of ‘benefits according to

patronage’ is as old as cooperation itself.

“Some 100 years of cooperative experience proves that

75Rural Cooperatives
Rural Cooperatives / July/August 2008 23

without continuous

membership interest

and responsibility, a

co-op inevitably drifts

into private hands.

Thousands of farmer

co-ops have failed

because their stock accumulated in the hands of outsiders and

non-producers who were more interested in stock dividends

than in effective marketing and purchasing.” 

Use of penalty provisions in

marketing agreements

“Problems Facing Your Co-op,” a question and answer

column, addresses a wide variety of co-op issues. This

example is from July 1939:

Q. “What are the desirable and undesirable features of a

penalty clause in a marketing agreement?” 

A. “If the co-op is not going to bring any lawsuits for

enforcing marketing agreements, I do not see any reason at

all for having a penalty provision in the contract. On the

other hand, if they do believe they are going to bring suits

for the enforcement of contracts, then the advantages of a

penalty provision is that it gives a rule for ascertaining the

amount of damages suffered. 

“If you do not have such a provision, you may have a hard

time proving the amount of damage done to the association.”

The author goes on to say that these penalty provisions

should be based on a clear formula, citing the example of a

cotton grower who violates his contract to market 10 bales of

cotton outside the co-op, thus inflicting a loss to the

association of $10 per bale, or $100. 

The judge says...

By November 1939, the Q & A column had a new name:

“The Judge says...”

“Q. Have farmers gained anything more than permission

to organize cooperatively under the Capper Volstead Act? 

A. It has resolved all

doubt of the right of

farmers, at least so far as

federal statues are

concerned, to come

together and organize [in cooperatives].

Q. Have they gained anything?

A. Yes. Before the enactment of Capper-Volstead, there

were a number of instances in which the officers of

cooperative associations were arrested and put in jail.”

War and co-ops

During the World War II years, the

magazine naturally had many articles

devoted to the critical role farmers and

their co-ops were playing in the war effort.

From the February 1942 issue, FCA

Governor A.G. Black had this to say of the challenge:

“As we get further into the war and extend our efforts to

feed the nation and supply certain foods to our allies, we will

realize more and more what it means to produce under war

conditions. War has not only upset our calculations as to

what we need to produce, but it has made it impossible, or

impractical, to import certain products upon which we have

come to depend in whole or in part. 

“Before Pearl Harbor, the Philippines and Hawaii shipped

many tons of sugar to us. We shall not get any sugar from the

Philippines, and the Hawaii supply will be curtailed because

of the necessity for the Islands to become more selfsupporting through diversification. Cuban output will be

available to us, but it, plus our normal production of cane and

beet sugar, will be inadequate.” 

Black goes on to urge a strategy of increasing domestic

production and extracting more sugar from molasses, as well

as encouraging more sugar production in America’s other

“Western Hemisphere island possessions.” 

1940s
Grain co-ops switching to regional marketing 

Harold Hedges, FCA principal ag economist, 1942:

“Doing nicely, thank you! In four words, that sums up the

operating results of the regional grain marketing cooperatives

for the 1940-41 crop year. Furthermore, that has been the

story since 1938, a year which marked the transition from

terminal marketing on a national scale to marketing on a

regional basis. Hence, 1940-41 adds one more year of

successful experience as proof that the decision of cooperative

leaders in 1938 was a sound one. 

“Cooperatives have been, and continue to be, a major

cost-reducing factor in grain marketing. Growing numbers of

farmers’ elevators in local markets over the past half century

have been mainly accountable for the material cut in local

grain-handling charges and the elimination of more than one

questionable practice. There remain close to 2,500 of them

— not as many as in the days of the ‘long margins’ — to

police the field at the local grain-shipping points and ensure

the continuance of low-cost, efficient handling.” 

War’s impact on preparing for co-op labor peak

Henry Hensley and Anne Gessner, FCA Co-op Research and

Service Division, from May 1943:

“Food processing co-ops will do their full share of wartime production this year only by dint of the most careful

planning. The importance of this planning to the war itself is

evidenced by the fact that most of the food that reaches

frontline fighters must be processed, canned, dehydrated or

concentrated, and co-ops play an important role in producing

these processed foods. 

“The most serious problem in meeting 1943 foodproduction goals is manpower. Plants located in or near the

labor-shortage areas obviously have the greatest problems.

These plants are losing their experienced workers to other

war industries paying higher wages. All plants are losing

workers to the armed forces.”

The authors go on to recommend a number of steps to

deal with the situation, including seeking draft deferments for

key employees, making temporary transfers from farms to

plants, making better use of existing labor through training

programs, recruiting of new labor and paying adequate

wages.

Co-op rewards battle bravery 

A news brief from the August 1945 issue: 

“Six

survivors of the

famous battle of

Bastogne, who

yelled ‘Nuts!’ to

the German

demand for their

surrender, were

24 July/August / Rural Cooperatives

75Rural Cooperatives
Rural Cooperatives / July/August 2008 25

each presented with a five-pound bag of the same – Diamond

walnuts from the California Walnut Growers Association.

The presentation was made by the Los Angles Chamber of

Commerce when the servicemen visited the city.” 

Institute promotes understanding of co-ops

The American Institute of Cooperation (AIC) was founded

in 1925 to promote better understanding of cooperative

business, but it ceased holding its annual institute during

the war. At war’s end, AIC was ready to jump-start the

meeting. AIC President Raymond Miller discusses the task

in the August 1945 cover story:

“The Institute has a particularly large and difficult field to

cover in bringing the desired understanding of cooperatives

to the general public. Much of this effort will be directed at

working with leaders of other groups to make sure that they

understand cooperative principles so that they in turn may

carry this understanding to their individual members.

“The Institute will also work with cooperatives to help

them develop methods for promoting a greater

understanding of their organization and general cooperative

principles among their employees, members and nonmember farmers and others in their localities. AIC is

functioning chiefly as a contact with the general public and as

a clearing house for ideas and information. If individual coops are to get the greatest good out of the Institute’s

program, they will find it necessary to continue to step up

their programs of member education, employee training and

public relations.” 

MFA markets high-grade seeds

From April 1946:

“One-third of Missouri farmers will be buying high-grade

seed from Missouri Farmers’ Association (MFA) through the

local exchanges within the next few years, if present plans pan

out. Co-op spokesman H. E. Klinefelter [Editor’s note:

namesake for today’s outstanding co-op communicator

award] says the association is launching an extensive hybrid

corn production program, and within five years expects to be

able to provide annually 100,000 bushels of low-cost,

excellent quality, certified seed. Klinefelter says the seed may

sell for as little as $3.50 a bushel, about half what is being

paid now.” 

Patronage checks bring smiles in Minnesota

From April 1946:

“Cooperation does pay,” say members of the Farmers

Union Central Exchange in St. Paul, Minn. Proving it were

checks for $125,000 issued earlier this year, which retired at

par all stock issued by the exchange in 1935 and 1936. This

payment retires all stock issued in the years 1931 to 1936,

inclusive, amounting to about $225,000.” 

Why advertising is important for co-ops

From March 1948: 

“Sooner of later, in all discussion relating to the use of

advertising by co-ops, this statement is heard: ‘Our members

know that they can get certain goods or services at our co-op.

Why spend their money to tell them about it?’

“In theory, this position is logical. But actually, it is neither

logical or true. It is based on the false assumption that

members know what goods or services their co-op offers. It

also rests on the assumption that all members are completely

sold on the quality of all co-op goods and services. Investigation soon discloses the weakness of both assumptions.”
26 July/August / Rural Cooperatives

Large end up! From farm

to frying pan

From December 1950:

“One way for poultry cooperatives

to help members increase their returns is by

getting them to pack their eggs with the big end up, or small

end down – whichever way you prefer to say it. This is an

educational job that can use the

combined efforts of everyone in

the organization who has

anything to do with eggs. 

“Surprisingly enough, after

years of driving this point

home, many members still pack

eggs without watching to see if

the little end or big end is

down. This is especially true in

the Middle West, where it is

perhaps as important a factor as

dirty shells for downgrading a

producer’s eggs.”

Challenge to dairy breeding co-ops

From December 1950, Donald Hirsch, FCA Co-op Research

and Service Division (CRSD):

“Cooperatives providing artificial insemination service for

dairy cattle have a real challenge to meet. During the first 10

years of growth, 1938-1948, the co-ops were concerned

primarily with internal problems of organization and

operation. During the latter part of that period, and in years

following, the situation changed materially.

“Competition now exists between organizations owning

bull studs. Such competition is keen between co-ops whose

service territories have overlapped. But it is the competition

between co-ops and non-cooperatives that has become

significant. Co-ops did most of the pioneering in artificial

insemination service for dairy. Now their leadership is being

challenged.” 

Rockingham Poultry builds

broiler turkey business

From Dec. 1951, Henry Bradford, FCA:

“Rockingham Poultry Marketing Cooperative, Broadway,

Va., has met the merchandising challenge for consumers who

now want lightweight turkeys. As early as 1943, Rockingham

saw the promise of this market. Its plans, hampered under

price ceilings during the war, have made tremendous strides

during the past two years. 

“In 1950, the co-op marketed about 450,000 Beltsville

White turkeys, and a substantial percentage of these were

moved as broilers. Since many growers now raise three flocks

of broiler turkeys per year, they need to be pretty well

assured the consumers will buy their type of bird before

going ahead with such an intensive, specialized, productionline job. Here is where the merchandising experience of

Rockingham was able to help [by studying consumer

preferences regarding size of bird, etc.].”

Milk in a jug popular

From “Co-ops in Action” Dec. 1951:

“Now it’s: little white jug, Chicago loves thee — at least if

you look inside the jug. Jugged milk sold in stores has helped

replace all but 10 percent of the

quart-bottle home deliveries in

this city. According to a

spokesman for 12,000 Pure

Milk Association members,

this milk is also giving the

farmers a larger share of the

milk dollar.”

Quality Vital for Fruit & Vegetable Co-ops 

From Jan. 1955, J. Kenneth Samuels, FCS, Fruit and

Vegetable Branch:

“Fruit and vegetable cooperatives today market more than

$1 billion worth of products for farmers. That is indeed a

75

1950s

Rural Cooperatives
Rural Cooperatives / July/August 2008 27

large figure, even at today’s prices. But what does it actually

represent? Not the business of one, or even a few

organizations, but rather the combined efforts of almost

140,000 producers who own and control nearly 800

marketing associations. They account for about 10 percent of

the marketing volume of all cooperatives, with only 3 percent

of the memberships. 

Fruit and vegetable cooperatives must strive for quality

improvement. They have been in the forefront in paying

producers on the basis of grade for raw products and have set

up pools on the basis of quality and size differences. This has

made producers quality-conscious and encouraged them to

follow production and harvesting practices that enable them

to deliver top quality to their co-op. 

Should co-ops rotate directors?

Irwin Rust, FCA, April 1956:

“Important decisions every farmer co-op must make are:

how to select directors and for how long a term. One

suggestion is that co-op boards should rotate membership at

regular intervals. Periodic rotation, it has been argued, will

inject new enthusiasm, new ideas, and new perspectives on

old problems. Some proponents of rotation advocate specific

bylaw provision that a director may not succeed himself for

more than the specified number of terms in office. 

“But others feel that arbitrary termination of board

membership may cost the co-op dearly. It is one

thing to be able to eliminate unwanted board

members, but quite another to force a good man out

of office. Automatic rotation runs this risk, since the

criterion becomes length, rather than quality, of

service.”

Co-ops process and market cottonseed

Daniel McVey and Jane Scearce, FCS, August

1956:

“Cottonseed — processed and marketed by

cooperative mills — finds its way into such diverse

products as food shortening and cattle feed, mops and

surgical dressings, paints, meat casings, soap, printing inks,

twine and explosives. During the 1955-56 season, 14

cooperative cottonseed oil mills will probably process about

10 percent of the total cottonseed crushed. In 1954-55, they

crushed about 550,000 tons. The resulting products — oil,

meal, linters and hulls — went into more than 30 products

that fill many needs in our everyday lives.”

Ceremonies honor 30th anniversary

of Co-op Marketing Act

Beryle Stanton, FCS, Sept. 1956:

“More than 400 people paused an hour in Washington,

D.C., on July 11 to commemorate one of the most important

landmarks in farmer cooperative history: the passage of the

Cooperative Marketing Act in July 1926. During a ceremony

at USDA headquarters, Assistant Agriculture Secretary Earl

Butz said: ‘Cooperatives are the best training ground I know

of for democracy.’ 

“Then a number of people who had helped breathe life

into the Act 30 years before reminisced briefly on how the

Act was born. Charles Holman, retried secretary of the

National Milk Producers Federation, recalled attending the

drafting conference for the bill. ‘Out of my 35 years

experience on the Hill, I would say it was one of the easiest

bills to get through Congress. Leaders there recognized the
real need for setting up an educational service organization

[for co-ops].’ A new FCS-produced movie, “Farmer

Cooperatives Today,” had its first public showing during the

program.”

Proper use of credit pays at Garden

City Co-op in Kansas 

Arthur Pursell, FCS, Sept. 1957:

“Credit can be properly used by farmer cooperatives, as is

being demonstrated at the Garden City Cooperative Equity

Exchange, a farm supply co-op. In 1954, directors and

management, with full approval of the membership, decided

to go on a pay-as-you-go basis — with a 30-day extension of

credit where adequate guarantees for prompt payment were

established. Accounts receivable stood at $51,000 at the time.

In December 1955 — 18 months later — farmer accounts

receivable were under $5,000, and this favorable record was

accomplished at a time when Kansas farmers were fighting

severe drought conditions.

“Reasons for this turn for the better were basically three:

First, there was a united support for the program —

members, management and directors all approved. Second,

the co-op did sufficient educational work to sell the program

to the farmers. Third, they kept the mechanics of the

program sufficiently versatile to meet the situational needs of

different farmers.”

Co-op editorial association takes

the clinical approach

The April 1958 issue was dominated by articles about how

co-ops can improve their communications programs,

including an article from Philip Dodge, corresponding

secretary of the Cooperative Editors Association (forerunner

of the Cooperative Communicators Association), with

highlights from the group’s latest conference:

“Each spring since 1952, editors of a wide variety of co-op

papers, from mimeographed newsletters to slick journals,

have gathered on a university campus for a two-day, deepdigging look at whys, wherefores and how-to’s of their

‘sheets.’ Not only do the editors hear presentations by

journalism experts, but most all of the co-op editors at the

CEA conference seem to benefit from the free and frank

criticism from people qualified to judge their papers, and

from each other. 

“These critics have literally torn the co-op papers apart,

item by item in many cases, studying headlines, layout, use of

pictures — all elements.”

Citing the merits of merger

Milton Manuel, Kansas State University,

December 1960:

“Why do many businesses find it

economically desirable to operate larger

units? The significant reasons probably are

to reduce per-unit cost, improve bargaining power, and to

compete more effectively with other firms. 

“Mergers can also contribute to more effective

management [since a higher skilled manager can be afforded]

and make it possible for the co-op to have a more effective

member-relations program (such as producing a co-op

publication), and have improved accounting, such as machine

accounting.” 

28 July/August / Rural Cooperatives

75

1960s

Rural Cooperatives
Rural Cooperatives / July/August 2008 29

New uses for milk

In an article highlighting the important role of co-ops in

doing market research and development, Jack Hackelthorn

of Missouri Farmers Association wrote this in July 1961:

“New and better uses for milk. That is the byword for the

farmer-owned Producers Creamery Co. of Springfield, Mo.,

a part of the Missouri Farmers Association. The PCC

sponsors a continuous research program to find new ways of

using milk and to improve old ways. The co-op’s research

efforts were recently consolidated in its own building. 

“One researcher may be working on a dietary food for

weight watchers while another is developing baby food. To

reduce the cost of shipping milk in cans to markets in the

East — and paying freight costs to return the cans — the

research staff got busy and developed a collapsible cardboard

box with a plastic liner. This cut freight costs and improved

storage-life of the product.”

First co-op to produce atomic power

From “Co-op Flashes” column, July 1961:

Mid-June was the date for the first atomic power reactor

to begin producing electricity. The Rural

Cooperative Power Association, Elk River, Minn.,

has 22,000 kilowatts of generating equipment to use

steam from the reactor. With a loan of more than

$15 million from the Rural Electrification

Administration, the co-op also added another 50,000

kilowatts of conventional power-generating

equipment. 

Much work and some play at SSC’s

annual meeting

How to make annual meetings both informative

and fun to draw members is always a challenge for

co-ops. In Feb. 1962, Mildred Haun of FCS

reported on a novel approach taken by Southern

States Cooperative.

“A little fun made work more enjoyable for

Southern States Cooperative’s 38th annual meeting

at Richmond. Group singing of such songs as ‘Carry Me

Back to Old Virginny,’ and ‘Take Me Out to the Ballgame’

first thing Thursday morning put the audience in a receptive

mood for the business that followed. The meeting also

featured a Farm Talent Roundup contest, hosted by Ted

Mack of the Original Amateur Hour television show.”

Call for vigorous action issued at conference

Beryle Stanton, FCS, July 1963:

“Cooperatives and the Future — a national conference

being called a milestone in co-op history — drew 500 top coop managers to Washington, D.C., to chart a more vigorous

cooperative action program. One of the highlights of the trip

was a meeting with President John F. Kennedy in the White

House Rose Garden. Kennedy spoke of ‘the great need to

uplift rural income,’ and said he ‘was hopeful this cooperative

group will develop an effective program for the 1960s.’

President Kennedy also said he hoped co-ops would expand

their already generous efforts to help people in the

underdeveloped areas of the world and strengthen their
economies through cooperatives.” 

Will you be in business tomorrow?

Joseph Knapp, FCS Administrator, June

1965:

“I have watched farmer co-ops grow,

decline, fall and rise again for some 40 years. It

has been a period of tremendous changes

[during which] cooperatives have done fully as

well as other forms of business enterprise

serving farmers. There have been adaptations,

reorganizations, expansions and many failures.

But the central cooperative root has continued

to grow.

“I have often pondered why some co-ops

have grown with the times, while others have

fallen by the wayside. Here are key factors: 1. Good

management — this is vital; 2. Build bargaining power — this

requires having organizations that are big enough to count. 3.

Plan wisely — most co-ops do not do enough forward

thinking, but this is changing; 4. Mold understanding

through strong communications; 5. Fit organization to

function — organization must perform function and should

provide flexibility to change. 6. Keep up with the news —

[meaning evolving technology and science]. For example: ‘A

co-op with a computer is in the agricultural near future,’

according to an article in the ‘Washington Evening

Star.’”

Grain co-ops ‘Must step out together’

Daniel H. McVey, FCS, July 1969:

“Co-op spokesmen for 1 million grain farmers whose

cooperatives handle some 40 percent of the marketable grain

in this country heard warnings of tests to come in the year

ahead. This took place at the annual spring meeting of the

National Federation of Grain Cooperatives in

Washington, D.C. 

“Federation President J.H. Dean (who is a

vice president and general manager of Far-M

Hutchinson, Kan.), spoke of unrest among gr

this country. He said it was time cooperatives 

jointly develop a program that would help far

their returns from wheat and feed grain prod

“FCS Administrator David Angevine said: 

cooperatives face especially great difficulties. 

that widespread consolidation is the next big 

gaunanteeing their continued usefulness to gr

Among your regional co-ops, we hope you w

more swiftly into processing than you have in 

He suggested that the Federation can do a g

stimulate consolidation of local grain marketi

cooperatives.”

Editor’s note: to be continued in the Sept.-Oct. iss

30 July/August / Rural Cooperatives

75Preside

Kenned

leaders 

1963 Na

Confere

Cooper

Future i

House R

Rural Cooperatives
griculture Secretary Ed

Schafer met with leaders

of the National Council

of Farmer Cooperatives

in June during NCFC’s

third annual Co-op Country Barbecue at

USDA headquarters in Washington, D.C.

The lunch meeting on USDA’s patio

courtyard was the concluding event of the

2008 NCFC Washington Conference,

which brought about 150 farmer

cooperative directors, CEOs and staff to

the nation’s capital to hear from key

policymakers and Washington insiders.

Topics discussed during conference

sessions included the effect of rising

commodity prices on cooperative risk

management, legislation to

institute a cap-and-trade

system for carbon

emissions, and what needs

to be done to ensure that

transportation

infrastructure allows

American agriculture to

remain competitive

globally.

“One measure of strength

in farm cooperatives is their durability,”

Secretary Schafer said. “Like the land

itself, the organizations are built to last,

with many celebrating major milestones.

For example, West Central in Ralston,

Iowa, is celebrating its 75th anniversary

this month. CHS just notched its 75th

anniversary last year, and Aurora

Cooperative in Nebraska is turning 100

this year, just to name a few. So

congratulations to you all.”

Attendees went to Capitol Hill, making

nearly 100 visits to congressional offices.

While there, they helped to put a farmer’s

face on their cooperatives and emphasized

NCFC priority issues on Farm Bill

implementation, appropriations,

agricultural labor needs and international

trade.

Rural Cooperatives / July/August 2008 31

Agriculture Secretary Ed Schafer is flanked by NCFC Chairman Bill

Davisson of GROWMARK, and NCFC President Jean-Mari Peltier

(who is leaving the position at the end of August). Above: NCFC

members concluded several days of Congressional

visits with a barbecue lunch and co-op product

displays at USDA headquarters. USDA Photos by

Ken Hammond 

Sec. Schafer meets with NCFC leaders 

A
32 July/August / Rural Cooperatives

Burnett Dairy Co-op 

Alpha, Wisconsin

F O C U S O N . . .

Editor’s note: Burnett Dairy cooperative is

a diversified dairy, grain and farm

supply/services cooperative with roots that

extend back more than a century. Rural

Cooperatives writer Anne Todd recently

poised these questions to Controller/Administrative Manager Paul Bauer.

: What is the Burnett

Dairy Cooperative?

The Burnett Dairy

Cooperative (BDC) has

its roots in two

creameries, the Wood River

Cooperative Creamery (established in

1896) and Branstad Cooperative

(established in 1897), with a long

tradition of serving dairy producers.

BDC was created when the two smaller

co-ops realized that only a larger

cooperative could remain viable as a

place to sell milk. The two cooperatives

merged in 1966 and became the

Burnett Dairy Cooperative.

Today, the Burnett Dairy

Cooperative’s main facility in Alpha,

Wis., is a rural complex handling milk,

whey, a retail cheese store, bulk and

retail petroleum, hardware, propane, a

feed mill, grain storage, tires, small

engines, agronomy services and a rental

shop. The Alpha site includes the

cheese factory, corporate offices, the

cheese store, the feed mill and grain

storage facility, and a feed, fuel,

fertilizer and hardware store. BDC also

has two sub-locations for propane tanks

and a fuel tank depot. BDC is owned by

the people that use its services and it

exists to serve its members.

A few years after the Burnett Dairy

Cooperative was formed, BDC started

making Italian cheese. BDC was one of

the first cooperatives in the United

States to enter into this venture and

make this “new” type of cheese. Today,

Burnett is recognized as a world

champion cheese maker.

The mill side of the business has

grown, too. Both founding cooperatives

had their own mills. Slowly, over time,

the mills were consolidated into one

mill located at Alpha.

At present Burnett Dairy is the last

remaining dairy plant in the county.

Q: How many members does the co-op

have?

BDC has both active and voting

members. There are about 3,500 active

members of the cooperative. Voting

members must have at least $5,000 in

qualified agricultural sales. Burnett has

about 350 to 400 voting members.

Q: Although the co-op’s primary

income-producing commodity is cheese,

you also sell fuel, fertilizer, feed, tires

and other items. How did the co-op get

into this level of diversification?

While it is true that BDC makes a

“commodity cheese,” our cheese makers

have crafted the product so that its

attributes meet our customers’ needs.

That limits our exposure related to

selling in a commodity market.

The cooperative has mostly

undertaken internal growth. BDC has

taken small steps to make sure the

production needs of members are met

and, with that in mind, diversification

has grown to include propane, small

engines, tire and light automotive

repairs, fuel, a custom spraying

application, lime spreading, fertilizer,

nutrient consulting and all the hardware

items needed to keep our members’

farms or other small businesses going.

BDC is here to serve its members, and

with that comes the need to provide

diverse services.

BDC is located in a great spot, at the

northern edge of a commercial

agriculture region, next to prime lake

and recreational lands and near vast

forests.

Q: Burnett reached a milestone in

2007 with more than $100 million in

sales. Can you share some of the major

strategic decisions the co-op has made

that has led to this growth and success?

The strategy is very basic: provide

good service, good value and make

money so that the cooperative will be

here in the future to serve its

customers.

Q: Tell us about some of your major

awards for your cheeses. Do these

influence sales?

BDC began Italian cheese-making at

the start of the cheese’s popularity —

just as pizza was becoming a major part

of the American diet. To our cheese

makers’ credit, we entered a world

cheese contest and took not only first

place, but also grand master cheese and

cheesemaker. We are one of the few, if

not the only, U.S. cheesemakers to win

Q
Dale Olson (center), Burnett cheese plant manager, is the last U.S. cheese maker to win the

World's Master Cheese Maker award. He is flanked by the plant's other main cheese makers.

Photo courtesy Burnett Dairy Co-op

Rural Cooperatives / July/August 2008 33

that honor. 

The real winner is the customer,

because the cheese that we enter in the

contest is the same cheese we make

every day. When we win a ‘best in class’

— as we did this year in ‘Aged

Provolone’ (also taking second place) —

it’s an award for the great milk supply

from our farmer-owners and the cheese

makers who crafted the cheese. 

The awards are a great way to get

recognition in the marketplace, but to

keep customers, we need to deliver the

product the way they expect it, every

time. 

Q: Other than having an online retail

store, what other options is Burnett

considering to increase marketing of

your products?

BDC is starting to look at more

interactive ways to meet new customers

both for the dairy and agricultural

supply areas of operation. The company

is starting to focus more on marketing

events. We work the shows as either a

participant (for example, through the

Wisconsin Milk Marketing Board) or

create our own trade shows or

educational programs. Both

opportunities give BDC a chance to

develop long-term relationships that

should result in better sales

opportunities.

Q: You recently closed the Webster Coop due to operating losses. What

happened with Webster, and what steps

did the board and management take to

address that situation?

There were mixed feelings about the

Webster Co-op merger. Webster did

bring to BDC the benefit of

recreational accounts for propane and

other services. However, the Webster

co-op was not located on the main

highway so it did not have a good

exposure to non-local customers.

Additionally, several other convenience

stores were built in the area, and the

feed mill section of the Webster plant

did not have sufficient volume to justify

a stand-alone location. In the end, it

was more economical to close the plant.

There just wasn’t enough customer

traffic to justify the second location.

We are, in turn, wholesaling

products to local merchants in the area

and still meeting the needs of local

propane and feed customers through

the Alpha site. 

Q: What are you doing to ensure

future profitability of the co-op?

In the past year, the board has added

a controller/administrative manager to

assist in protecting and improving

company assets. The board is focusing

on department profitability and helping

management improve each department.

The goal is to manage the resources for

the long-term commitment to the

community.

The board has been reviewing and

implementing items in its strategic plan

to continue its success.

Q: What has been the biggest challenge

facing the co-op? Biggest obstacle

overcome?

In the past, the biggest obstacle was

to make good cheese. No one outside of

the traditional Italian families made

Italian cheese, and for the early

operators to take that on was truly a

challenge. They improved to the point

that they make it look easy today.

The new challenge that BDC faces is

the rapid change of business. Changes

in everything from commodity prices of

grains, fuel, milk, propane and fertilizer,

to the speed at which information is

exchanged. A few years ago, one could

plan in yearly or semi-yearly blocks, but

now one needs to adapt daily to the

changing market conditions. 

Q: What are the expected results of

putting more of Burnett’s profits into

the general reserve?

Putting more funds in the general

reserve is a good thing. Part of being a

viable, strong cooperative is being able

to retire equities in a timely manner

and, thankfully, BDC has been able to

establish that tradition. We look

forward to continuing that tradition,

and by putting more funds into reserve

it can help achieve that goal. ■
34 July/August / Rural Cooperatives

Agriculture Under Secretary for

Rural Development Thomas Dorr

announced in June that funding is

available to individuals and organizations hit by natural disasters in several

Midwest states. The funds will go to

areas that have been designated as

Presidentially-declared disaster areas

due to the impact of floods and

tornadoes. 

“USDA is encouraging residents

and business owners to immediately

apply for funding to help them to

begin their recovery from these

devastating storms,” Dorr said on

June 16. “Rural Development has a

number of programs that citizens can

use to help them get back on their

feet. These programs can literally

assist in building a community from

the ground up and we stand ready to

help our fellow citizens in the affected

states rebuild their communities and

their lives.”

USDA Rural Development has

grant and loan funds available to rural

communities to provide housing,

public safety, health care and

community facilities and business

recovery assistance. Communities that

have been declared by President Bush

as federal disaster areas will receive

priority consideration during the

application process. Under Secretary

Dorr has directed USDA Rural

Development staff in the affected

states to work with citizens and state,

local and other federal officials to

explain the type of Rural

Development aid that is available. 

• Housing Assistance — For the

Rural Single Family Housing (SFH)

Guaranteed Loan program, Rural

Development will expedite lender

approval in the disaster areas and

also expedite approval for access to

the Guaranteed Underwriting

Services, or GUS program. For the

Direct Housing Loan program,

USDA Rural Development will

offer streamlined loan processing to

ensure timely loan decisions for

families hit by the disasters. Existing

Direct SFH program borrowers can

contact the Centralized Servicing

Center (CSC) at 1-800-414-1226 to

discuss their loans. Agency real

estate-owned properties that are

vacant and habitable can be made

available for lease through FEMA

or directly to disaster victims. 

• Business Assistance — Under the

Rural Business Enterprise Grant

(RBEG) program, grants are

available for rural projects that

finance and facilitate development

of small and emerging rural

businesses, and help fund distance

learning networks and adult

education and employment

programs. Rural public entities

(towns, communities, state agencies

USDA Rural Development funds

available for disaster relief efforts 

Swiss Valley Farms’ cultured products plant

in Cedar Rapids was inundated by the Iowa

River on June 12. Some of its members’

farms and homes were also hit by the

flooding and by tornadoes. Photo courtesy

Swiss Valley

Rescue workers survey tornado damage May 12 at the First State

Bank in Parkersburg, Iowa. Photo by Robin Wagner, courtesy Butler

County REC
a

r

c

f

• 

p

r

D

R

v

w

C
(ACG) in Littlefield, Texas. A new

Internet store has been created for

manufacturers of apparel, home

furnishings, crafts and fabric retailers

that need small volumes of fabrics.

Known as SAFEDenim (Sustainable,

American and Friendly to the

Environment), the fabrics are

manufactured by ACG, the world’s only

farmer-owned denim mill, and can be

purchased online, the company

announced.

“The denim mill and its farmerowners are focused on producing highquality denim fabrics with minimal

impact on the environment,” says Plains

Cotton Cooperative Association

(PCCA) President and CEO Wallace L.

Darneille. PCCA is the parent company

of ACG. 

“We can produce an average of 37

million yards of denim annually, every

yard of which is spun, dyed and woven

from the cotton our farmer-owners

produce,” Darneille says. “It is

American-made denim literally created

from field to fabric. 

“Until now, ACG denim was

available only to manufacturers who

could meet our minimum volume

requirements,” Darneille adds. “Today,

our fabrics featuring the same quality

and reliability are available via the

Internet with virtually no minimum

requirements.”

Established in 1975, ACG is focused

on the development and production of

value-added fashion-denim fabrics for

its customers. ACG also meets or

exceeds all regulations administered by

the Environmental Protection Agency. 

Growers Cooperative, based in Grand

Forks, N.D., has been formed by 27

growers representing 10,000 acres. It is

estimated that the co-op represents

about 50 percent of the fresh potato

acreage in the valley, the nation’s largest

red potato growing region. 

The co-op is affiliated United Potato

Growers of America, a relatively new

national marketing co-op that has

grown rapidly in recent years as

growers have attempted to bring better

balance to the market and avoid the

gluts that forced many growers

nationally to the edge of bankruptcy. 

Dave Moquist, co-owner of O.C.

Shultz & Sons, Crystal, N.D., is

chairman of the new cooperative.

The Genesee Union and Whitman

County Growers in Idaho have merged

to form the Pacific Northwest Farmers’

Cooperative. The merger is expected to

increase revenue for both co-ops, in

addition to giving the newly formed

company increased storage capacity and

more selling power, according to a

report in the Moscow-Pullman (Idaho)

Daily News.

Manager Bob Holmes told the Daily

News the merger was more about

creating extra income than slashing

costs and lowering overhead. The new

co-op’s added size will increase its

selling leverage with exporters, he

added. PNFC headquarters will be in

Genesee, with a branch office in Colfax. 

PNFC assistant manager Sam White

said both co-ops had been working

closely with each other the six months

prior to the merger “to hit the ground

running.”

USDA Rural Development led a

seminar about cooperatives for the

United Nations’ Commission on

Sustainable Development in May in

New York City. The session, titled

“Business Models for Farmer

Marketing, Supply and Credit

Cooperatives,” covered a wide range of

topics, including cooperative principles

and benefits, how co-ops are formed

and governed and legal and taxation

issues. How co-ops are financed, the

Farm Credit System and international

efforts to promote cooperatives were

also discussed. 

Baarda emphasized that a

cooperative’s main purpose is to provide

and distribute benefits to members. For

a cooperative to be effective, he said,

decisions — including investment

decisions — need to be made

collectively in a participatory manner.

Besides purely economic benefits of

American Cotton Growers is using the Internet to market its American-grown,

American-made denim. It will accept smaller volume orders via the Web. Photo by

Lynette Cockerell, courtesy Plains Cotton Cooperative Association 

36 July/August / Rural Cooperatives

New potato co-op formed 

The Red River Valley Fresh Potato

Pacific Northwest 

Farmers Co-op formed 

USDA staff lead co-op seminar

for United Nations’ panel 

James Baarda and John Wells of
Rural Cooperatives / July/August 2008 37

cooperatives, Baarda said they can

create significant social and

environmental benefits.

He also focused on the role of

facilitators and government assistance at

different stages of cooperative

development. Such assistance can

include not only financial, but also

technical assistance, education and

research support. 

A detailed PowerPoint presentation

used for the session has been posted on

the United Nations’ Website at:

http://www.un.org/esa/sustdev/csd/csd1

6/LC/presentations/baarda.pdf.

Baarda also recently conducted an

introduction to cooperatives for the

University of Arkansas Law School. A

two-hour video of the lecture has been

posted on the university’s Website:

http://www.uacted.uark.edu/

legalesource. 

Southeast Milk to buy

Winn-Dixie dairies 

Winn-Dixie Stores Inc. has

announced plans to sell the two dairies

it operates — in Plant City, Fla. and

Hammond, La. — to Southeast Milk

Inc. (SMI). Both facilities will remain in

full production with current employees. 

Southeast Milk is a Florida-based

cooperative of more than 300 familyowned dairy farms, mainly in Florida,

but also in Georgia, South Carolina,

Tennessee and Alabama. As the largest

operating co-op of dairy farmers in

Florida, Southeast Milk supplies milk to

most of the southeastern United States. 

“Our purchase of these dairies from

Winn-Dixie provides a wonderful

opportunity for our family-owned dairy

farms to better serve consumers

throughout the southeastern United

States,” said Calvin Covington, CEO of

SMI. “Southeast Milk remains

committed to providing fresh, locally

produced milk to consumers.”

“We have concluded that the sale of

our dairies is in the company’s best

interest as we continue to sharpen our

focus on the retail operation of our

business,” said Winn-Dixie President,

CEO and Chairman Peter Lynch.

Winn-Dixie operates 521 retail locations.

NCBA: Cooperatives get

a boost in Farm Bill 

Provisions in the new Farm Bill will

benefit cooperatives nationwide and

help stimulate job creation in rural

America through the formation and

expansion of cooperative businesses,

according to a statement issued by the

National Cooperative Business

Association (NCBA). The legislation

also directs USDA to continue

groundbreaking research on

cooperatives, and makes it easier to

invest in cooperatives, while keeping

them member-owned. 

“This action has the potential to

reinvigorate cooperative enterprise and

rural areas desperate for economic

opportunities,” says NCBA President

and CEO Paul Hazen, stressing that coops help keep the profits they generate

close to home. 

One challenge cooperatives face is

gaining access to new sources of capital.

Most of the capital available for co-ops

comes from their members or from

lenders. There is no widely available

mechanism for the more than 150

million co-op members and others to

invest in the co-ops in their

communities. 

The provisions adopted by Congress

allow loan guarantees for purchases of

equity shares in cooperatives and in

equity funds that invest in co-ops.

These loan guarantees are part of the

Business and Industry (B&I) Loan

Guarantee program, a USDA Rural

Development program. This opens the

way for more capital investment in

cooperatives while maintaining member

control, Hazen says. 

The Rural Cooperative

Development Grant (RCDG) program

provides funding for cooperative

development centers that provide

technical assistance to start or expand

cooperative businesses. According to

CooperationWorks!, a network of

development centers, the centers have

helped start or expand more than 400

co-ops, creating more than 5,800 jobs

in more than 40 states. NCBA, which

represents cooperatives of all types, led

the effort to create the small, but

effective, RCDG program in the 1980s

and works annually to increase its

funding. 

The Farm Bill includes these

changes to the program:

• Directs USDA to award multi-year

RCDGs to centers that have proven

track records in cooperative

development; 

• Sets aside 20 percent of all RCDG

money for centers that serve minority

communities if total funding exceeds

$7.5 million annually; 

• Allows USDA to extend grants for a

year if all the money has not been

spent. 

The research language included in

the RCDG provisions will help fill a

substantial gap in government data on

cooperative business. It orders USDA

to direct research gauging the size of

the cooperative business community

and its impact on the national economy.

Congress voted $1.5 million for this

purpose over the last three years and

research under those appropriations is

underway at the University of

Wisconsin at Madison. The language

directs USDA to continue this type of

research on a more permanent basis.

“Lack of data on cooperative

business has been a major problem in

recent years,” says Mary Griffin, senior

policy advisor for NCBA. “It makes coops vulnerable to attack by competitors

and makes it difficult to get more

government support.” The research will

also help policymakers determine how

co-ops can best tackle national

problems like health care and senior

housing. 

Masterfeeds to purchase

Land O’Lakes Canada’s

Ontario feed business

Masterfeeds Inc., Land O’Lakes

Canada Ltd. (LOLC), and

GROWMARK Inc. announced an

agreement in May under which

Masterfeeds will purchase LOLC’s

Ontario feed business. Masterfeeds Inc.

is wholly owned by Ag Processing Inc.;

LOLC is owned by Land O’Lakes Inc.;

Agronomy Co. of Canada Ltd. is a

Land O’Lakes/CHS Inc. joint venture. 
Agronomy Co. of Canada Ltd. is a

Land O’Lakes/CHS Inc. joint venture. 

As part of the transaction,

Masterfeeds also will acquire two feed

mills in Wingham and Peterborough,

Ontario, which are currently leased by

LOLC from GROWMARK Inc.

Licensing agreements that will provide

Masterfeeds continued use of certain

Land O’Lakes feed brands, as well as

access to certain future brands and

animal nutrition technologies developed

by Land O’Lakes Purina Feeds LLC (a

wholly owned subsidiary of Land

O’Lakes Inc.). 

Masterfeeds President & CEO Rob

Flack said the acquisition is “a positive

strategic move that enhances our ability

to support livestock and poultry

producers in the markets we serve.

Masterfeeds is committed to

strengthening our Canadian feed

business through solid acquisitions like

Land O’Lakes Canada Ltd. We are very

excited about our alliance with Land

O’Lakes’ renowned animal nutrition

research and development capabilities

that will support our operations

throughout Canada.” 

and CEO of Accelerated Genetics in

Baraboo, Wis. He has been working

closely with Roger Ripley, the current

president and CEO, to ensure a

seamless transition prior to Ripley’s

scheduled retirement Aug. 1, 2008. 

Groskreutz will continue to drive the

co-op’s genetic-improvement programs

for the benefit of cooperative members

and all producers around the world. He

comes to Accelerated Genetics with a

vast amount of experience within the

agricultural industry, particularly in

sales, marketing, product development,

budget administration and personnel

management.

For the past 14 years, Groskreutz has

been employed at Ecolab Inc., a

Fortune 500 company based in St. Paul,

Minn., where he served as vice

president of Midwest and Western U.S.

agriculture sales. Groskreutz also

worked at Accelerated Genetics early in

his career, serving the co-op first as a

field representative, then district sales

manager, regional sales manager and

domestic marketing specialist. 

Agriculture Under Secretary for

Rural Development Thomas Dorr in

May announced that nine rural electric

utilities were selected to receive $266.6

million in loans to help them make

system improvements. The funding is

being provided through USDA Rural

Development’s Utilities Program to

finance the construction and/or repair

of nearly 3,700 miles of transmission

and distribution lines. The work will

benefit more than 46,000 consumers in

nine states.

“The funds provided through these

loans will enable cooperatives to

upgrade and modernize their

distribution systems, guaranteeing

dependable service for years to come,”

Dorr said. Since 2001, USDA Rural

Development has awarded about $28

billion in electric loans to utilities across

the nation. 

The funds will be used for a variety

of upgrades, including:

• Lumbee River Electric Membership

Corp. in Red Springs, N.C., will

receive $35 million to build more

Joel Groskeutzx started his career at

Accelerated Genetics and has now

returned as its president and CEO. 

38 July/August / Rural Cooperatives

Night call: a Jackson Electric Membership Corp. crew makes a nighttime repair to keep

the lights on for some of its members. The co-op recently received a $166-million loan

from USDA Rural Development to provide 2,100 miles of new lines and make system

improvements. Photo courtesy Jackson Electric

USDA loans $266 million

to nine rural electric co-ops 

Accelerated Genetics 

New CEO at

Joel Groskreutz is the new president
than 560 miles of new distribution lines

and improve 70 miles of existing lines

serving approximately 7,400 consumers

in a four-county area.

• The Jackson Electric Membership

Corp. in Jefferson, Ga., will receive

$166 million to provide 2,100 miles of

new distribution lines and make

improvements to existing lines in 10

counties, providing upgraded service

to more than 30,000 consumers

throughout the northeast part of the

state.

• In New Mexico, the Otero County

Electric Cooperative has been

selected to receive almost $23 million

to build more than 280 miles of

distribution lines and make other

system improvements benefiting more

than 2,100 consumers in four

counties.

Other co-ops receiving the loans

include: Chariton Valley Electric

Cooperative, Iowa, $4 million;

Cumberland Valley Electric,

Kentucky/Indiana, $15.84 million;

Federated Rural Electric Assoc.,

Minn./Iowa, $3.95 million; Springer

Electric Cooperative, N.M., $6.71

million; Adams Rural Electric

Cooperative, Ohio, $5.64 million;

Prince George Electric Cooperative,

Va., $6.38 million. 

For more information about USDA

Rural Development, visit:

www.rurdev.usda.gov.

Capacity boosted

at CHS refinery 

CHS Inc. in May marked the

completion of a two-year, $400-million

project that will increase fuel

production at its Laurel, Mont.,

refinery by more than 20 percent. “At

this time of concern over energy supply,

we are proud of this investment — the

biggest in CHS history — which means

more gasoline and diesel fuel to the

agricultural producers and consumers

who count on us,” Leon Westbrock,

CHS executive vice president and chief

operating officer for energy, said at an

event making the completion of the

effort.

The “Bottoms Upgrade Project”

Rural Cooperatives / July/August 2008 39

Nash Huber, of Nash’s Organic Produce in Sequim, Wash., has been

selected by the American Farmland Trust (AFT) for its annual Steward of

the Land Award. Nash and his team grow more than 100 types of

produce, pasture-raised pork and seed crops on 400 sustainably

managed acres in the Dungeness River Valley. Farm products are sold

directly to the public through Nash’s Farm Store, a community-supported

agriculture program, local restaurants and five area farmers’ markets. 

He will receive the $10,000 AFT prize for his environmental

stewardship and farmland protection efforts. Nash and his wife, Patty

McManus, have helped save hundreds of acres of local farmland and

important wildlife habitat. Nash is a founding member of the PCC

Farmland Trust and Friends of the Fields. 

Washington organic farmer wins AFT top award
made throughout the refinery to

incorporate new production units into

the existing refinery. While the

refinery’s overall throughput remains

rated at 60,000 barrels-per-day, the

addition of the coker will increase the

volume of gasoline and diesel it

produces by more than 400,000 gallons

per day. In addition, the refinery will

produce about 300,000 tons of coke

annually. 

The refinery project also creates 35

new jobs, bringing the facility’s total

workforce to more than 300. 

Growers sue Diamond

in pay dispute

Dozens of walnut growers, organized

as The Walnut Growers of California,

have filed a class-action lawsuit against

Stockton-based nut processor Diamond.

They claim that they and others were

severely underpaid by Diamond Foods

Inc. — perhaps by as much as $52

million — for their 2005 and 2006

crops. According to a report in the

Stockton Record, the lawsuit, filed in

March in San Joaquin County Superior

Court, claims “Diamond grossly

underpaid its 1,600 growers” under

long-term contracts issued shortly after

the former Diamond of California

growers cooperative converted to a

public company in July 2005. 

Falcone to lead National

Grape Co-op, Welch’s 

Joseph Falcone has been named to

replace Randy Graham as president of

National Grape Co-op and will also act

as chairman of the board of Welch

Foods Inc., the world’s leading marketer

of Concord and Niagara grape-based

products. He is one of five new board

members. 

“In the next three to five years,

Welch’s is going to move from being a

good company to a great company.

That means we’ll be growing in terms

of global reach, sales volume, profit and

in value of the enterprise,” says David

Lukiewski, president and CEO of

Welch’s. “With the experience these

new members bring to the board, we’re

confident they can help guide us in

achieving our goals.” 

Falcone, of Silver Creek, N.Y. , has

held a family membership in National

Grape for 54 years. He operates a farm

that includes both Concord and

Niagara grapes and 1,800 acres of

processing vegetables. He is the

president of Falcone Farms Inc. and is a

standing member of Pro-Fac

Cooperative Commodity Committee

and the Cornell Cooperative Extension,

among many other memberships in ag

and food industry organizations. 

FFA essay contest winners

focus on co-ops

For essays on the theme of

“Understanding Cooperatives,” Sadie

Geiger of Alhambra, Ill., Ashley Julka,

of Rosendale, Wis., and Clint Hansen

of Prairie City, Iowa, have been named

winners of a 2008 essay contest for FFA

members, sponsored by GROWMARK

Inc. 

In his contest entry, Hansen said:

“Characteristics of the modern co-op

are very similar to those of the original

Rochdale co-op. They are memberowned and controlled; they are

nonprofit; they offer reduced risk; the

members receive patronage dividends;

and the board is elected by the

members.” Hansen is a student at

Prairie City-Monroe High School and a

member of the Diamond Trail FFA

Chapter. 

Julka, a student at Laconia High

School and a member of the Laconia

FFA Chapter, wrote: “Cooperatives

have been, and will continue to be,

huge role-players in America’s economy.

These businesses give farmers the

strength to influence others, therefore

promoting local products. Cooperatives

help farmers become more productive,

thus increasing efficiency and boosting

the prices they receive for their

products.” 

In her entry, Geiger wrote: “The

combined efforts of committed

employees and loyal farmer-owners,

coupled with the leadership of an

elected board of directors, leads to a

financially viable cooperative that will

be able to meet new challenges and

opportunities held by the future.”

Geiger is a student at Highland High

School and a member of the Highland

FFA Chapter. 

The winners each received a $500

scholarship from GROWMARK and

their FFA chapters will also receive

$300 awards to help future students.

Four runners-up in each received $125

scholarships. 

This is the 15th year for the

program, sponsored by the

GROWMARK System and FS member

cooperatives, in conjunction with state

FFA leaders. 

DFA uncovers ‘improper’ 

payment to former chairman 

Dairy Farmers of America (DFA)

reported to its members in May that an

audit had uncovered “an improper”

payment of $1 million made to former

board Chairman Herman Brubaker,

who retired from the board five years

ago. The payment was authorized by

former CEO Gary Hanman. The

payment was not authorized by the

board, President & CEO Richard

Smith stressed. Smith succeeded

Hanman in 2006. 

Once discovered, Smith said the coop moved quickly to secure repayment

of the money, plus interest. “However,

the return of the funds is not an end to

the matter,” Smith wrote in a letter to

members, in which he said the co-op

was “saddened and disappointed about

an improper transaction involving two

former senior representatives” of DFA,

the nation’s largest dairy farmer-owned

cooperative.

“DFA’s past and present boards of

directors were not involved in this

wrongdoing, and the current board and

management only recently became

aware of it,” Smith said. A special

committee of the board was formed and

is looking into the co-op’s financial

records to ensure that no similar

transactions have taken place. This

committee will determine whether any

additional standards should be put into

place to enhance internal controls. ■

40 July/August / Rural Cooperatives
The 2008 Howard Bowers Awards, recognizing

excellence in the consumer co-op sector, were

presented June 13 during the Consumer

Cooperative Management Association conference

in Portland, Ore. Honorees included: 

• The Cooperative Service Award went to

Margaret Lund, former executive director of the

Northcountry Cooperative Development Fund

(NCDF) in Minneapolis, Minn. Lund was

recognized for being the driving force behind

the NCDF, creating access to capital for

cooperatives that otherwise might not have

secured capital, and for building NCDF into a

premier cooperative development loan fund,

with assets of more than $11 million. 

• The Cooperative Board Service Award was

presented to Martha Whitman, board

president at La Montanita Co-op in

Albuquerque, N.M. Whitman was honored

for using her extensive board and management

experience to oversee the expansion of a local

co-op into a regional business, with

underlying infrastructure improvements to assist local

suppliers to the co-op.

• The Cooperative Innovation and Achievement Award

was presented to Sacramento Natural Foods Co-op

(SNFC) in

Sacramento,

Calif. The

ninth largest

cooperative

grocer in the

country,

SNFC

survived an

ambitious

expansion that

did not work out as expected. The co-op was honored

because of the way the management, board and

community pulled together to save the co-op with

increased efficiency at its core store location, by

growing sales 10 percent and by retiring debt while

maintaining a positive cash flow.

• The Cooperative Excellence Award was presented to

Onion River Co-op/City Market, in Burlington, Vt.,

for its innovative agreements with the city of

Burlington, as well as for being a pioneer in

community involvement and social responsibility,

making it a model for community involvement and

service.

“Consumer cooperatives across the country are

dynamic and thriving businesses, and much of the credit

goes to individuals, like these award winners, who

provide daily leadership and make extraordinary

commitments to the consumer cooperative community,”

said Dr. Ann Hoyt of the University of Wisconsin, the

coordinator of the CCMA conference.

Community service efforts, such as the seniors’ lunch

program it sponsors, helped Burlington’s City Market win

the Co-op Excellence Award. 

Rural Cooperatives / July/August 2008 41

Consumer cooperator achievements recognized

Employees of Onion River Co-op/City Market in Burlington, Vt., show

off the Cooperative Excellence Award the co-op won. Below (left): The

Sacramento Natural Foods Co-op won the Innovation and

Achievement Award.
42 July/August / Rural Cooperatives

people see that our business practices

are verifiable, measurable and

authentic. Sustainability is not about

putting a mark on a label, but rather

about being transparent in our

operations and ensuring that our

practices are real.”

Next steps

There is plenty of work ahead,

according to Peltier.

“Consumers are looking right now

for ways to connect with farmers,” she

says. “They are looking for assurances

that farmers are working with their

cooperatives in a process of continuous

improvement. That’s really what we are

trying to foster.”

The first step for co-ops is to

embrace the definition of sustainability

as laid out by NCFC’s work:

stewardship of natural resources,

economic viability of farmers and their

cooperatives, and commitment to rural

communities. 

The second step is to use the

research to better connect consumers to

farmers through cooperatives in a real

and authentic way and, in the process,

improve cooperative returns.

“Ultimately, we are doing this

because we are committed to farmerownership, rural community,

stewardship and to the farmers’

profitability,” says Peltier. 

“Can we add to the bottom line

because of an ability to connect farmers

to consumers?” she continues. “Will it

result in a better way to document

stewardship practices that allow

cooperatives access to federal

government dollars? Can we help

farmers ring excess costs from their

operations through energy savings,

identify inefficiencies — benchmark

against each other — or operate in a

more sustainable manner? Can we build

more value through the marketplace or

government programs? Those are the

challenges.” ■

Co-op Link to Sustainability

continued from page 7

that financial performance was mixed and that they were

unable to adequately invest in existing businesses. 

That finding led to four very specific strategic imperatives

that focused Land O’Lakes on: “Best Cost, Best People,

Superior Insight and Superior Portfolio.”

In pursuing those imperatives, the company repositioned

several of its assets. For example, in 2006, the MoArk

subsidiary sold its liquid egg business to Golden Oval Eggs of

Renville, Minn. In 2005, Land O’Lakes joined the other

eight cooperative owners in accepting a buy-back plan from

CF Industries, a nitrogen and phosphate fertilizer

manufacturer and distributor. In 2007 Agriliance was

repositioned so that its crop nutrient (CN) assets and people

were aligned with CHS Inc., and that company’s commodity

handling assets and expertise. Agriliance CPP was brought to

Land O’Lakes and became part of WinField SolutionsTM

LLC, where products and expertise complement seed and

traits sold by CROPLAN GENETICS®. 

We’re No. 1 (2 and 4)

The result says Fife, is a Land O’Lakes that holds No. 1

market positions in butter, deli cheese, branded dairy-based

foodservice, livestock and lifestyle feed and wholesale crop

protection products. The company also holds a strong No. 2

position in shell eggs nationally and has built the Land

O’Lakes Seed Division into the fourth-largest farm seed

company in the country.

As it has grown into the leader in forage genetics and seed

traits, CROPLAN GENETICS, the Land O’Lakes seed

brand, has established a value-added reputation for its expert

sellers and its more than 100 Answer Plots, where customers

and cooperative employees can come and see first-hand the

importance and performance of genetic families and various

CN and CPP products.

Land O’Lakes Purina Feed provides cutting-edge research

and products that continue a tradition that began with the

industry’s first calf milk replacer in 1951. Fife says today’s

products, such as Cow’s Match® Calf Growth Formula and

Synchronized® Nutrition, are improving milk production

and milk checks for dairy farmers across Land O’Lakes trade

territory.

“Land O’Lakes was chartered as a member-owned

organization focused on improving productivity and

profitability for the cooperative system and farmers,” says

Fife. “That hasn’t changed. Our commitment to the

cooperative system is unwavering. We’ll remain member

focused and member friendly and fully engaged in system

success, and we will earn our position as the preferred

supplier for the system.” ■

Whatever It Takes

continued from page 17

technicalities and who told them what

to watch out for. 

Lease terms can be very detailed.

Some issues which are covered in

typical leases include the type of

payment the landowner will receive, so

it’s very important to get this right. 

What lies ahead

What happens in the future will

ultimately depend on transmission. In

wind energy and other electricitygenerating projects, transmission is an

essential component for the projects to

be implemented. 

This is because electricity is cheap

and plentiful in Wyoming, so electricity

from wind-energy projects will need to

be exported. Transmission projects such

as the Wyoming-Colorado Intertie are

in the works. The eight wind-energy

bargaining associations will be positioned to benefit from their completion. ■

Lassoing Wyoming’s Wind

continued from page 9

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