Rural

COOPERA COOPERATIVES

USDA / Rural Development November/December 2002 USDA / Rural Development November/December 2002

Coming Up

Short

Co-ops coping 

with drought

Coming Up

Short

Co-ops coping 

with drought
2 November/December 2002 / Rural Cooperatives

Corporate scandals have recently

rocked the business world, shocked

shareholders and the public at large,

and led to the downfall of several

large-scale firms. Congress responded

to abuses with the Sarbanes-Oxley Act

of 2002 which requires sign-offs from

company officers when reporting

financial results and greater attention

to the auditing process. 

This action is designed to help stem

reporting abuses and to provide more

accurate information to owners about

the true financial health of companies.

It was also designed to make officials

more accountable to shareholders of

publicly held companies.

Technically, cooperatives are not

covered by this new legislation,

unless they have issued securities to

the public. These securities are most

often in the form of debt instruments,

such as bonds, debentures or preferred trusts. As user-owned businesses, cooperatives rarely have outside

equity holders. The very few that do

hold them as preferred stock investments rather than trading them on

public markets.

So are cooperatives required to

have officers vouch for the integrity of

the numbers they are reporting to

members? Technically no, but in a

practical sense that is precisely what

they should do.

As reported in several articles and

Newsline items in this issue, the operating climate for cooperatives, like that

for other businesses, is very challenging. This is heightened by low commodity prices and the drought, both of

which have plagued the agricultural

sector in many parts of the country for

over 3 years. 

In addition, there have been situations where hired management has

been fraudulent and has been discharged or prosecuted. Despite the

isolated instances of ethical failures,

cooperatives can generally be pleased

with the integrity of boards and 

management. 

In these times though, extra diligence is required and some provisions

of the new law should be considered

by cooperatives’ management, boards

and auditors. The requirements for

effective board policies for hiring

management officials with a reputable

record of maintaining accurate financial records, use of auditing committees, limits on speculative trading and

hiring reputable outside auditors are

important to achieving performance

and maintaining a record of reporting

reliable financial results. 

One of the underlying strengths of

cooperatives is the practice of keeping

members informed. Knowledgeable

members can deal with both good and

bad economic news, but keeping them

in the dark can lead to an atmosphere

of mistrust and skepticism that undermines the internal strength and cohesiveness of the organization. The first

step is board action to ensure that its

own directors understand the financial

condition of the cooperative and that

it obtains accurate and timely information from accountants, management

and auditors.

Randall Torgerson, Deputy Administrator

Rural Business-Cooperative Service 

COMMENTARY

Integrity essential in reporting financial results

Knowledgeable members can deal

with both good and bad economic

news, but keeping them in the dark

can lead to an atmosphere of 

mistrust and skepticism that undermines the internal strength and

cohesiveness of the organization. 
Rural Cooperatives / November/December 2002 3

Rural COOPERATIVES (1088-8845) is published

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The United States Department of Agriculture (USDA)

prohibits discrimination in all its programs and 

activities on the basis of race, color, national origin,

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Washington, D.C. 20250-9410, or call (202) 720-5964

(voice or TDD). USDA is an equal opportunity

provider and employer.

Ann Veneman, Secretary of Agriculture

Thomas C. Dorr, Under Secretary, USDA Rural

Development

John Rosso, Administrator, Rural BusinessCooperative Service

Randall Torgerson, Deputy Administrator, USDA

Rural Business-Cooperative Service

Dan Campbell, Editor

Vision 2000/KOTA, Design

Have a cooperative-related question?

Call (202) 720-6483, or

Fax (202) 720-4641, Information Director,

This publication was printed with vegetable oil-based ink.

United States Department of Agriculture

Rural COOPERA . TIVES

November/December 2002 Volume 69 Number 6

On the Cover:

Severe drought stunted crops and destroyed pasture across broad

swathes of the United States this summer. The impact on cooperatives

and their members is examined in this month’s cover story, beginning on

page 4. Grant Heilman Photo. 

FEATURES

4 Squeezed Dry

Cattle, crops suffer in drought’s grip; co-ops fear even bigger

impact next year

By Nancy Jorgenson

14 Building brand recognition 

How to run a champagne ad campaign on a beer budget

By Teri Ditisch

16 Bringing it home

Dakota Prairie Beef Co-op adding value to home-grown cattle,

grains

By Raylene F. Nickel

19 Co-ops must capitalize on new opportunities

21 Major changes in agriculture raise big questions

for nation’s cooperatives

By James Baarda

24 Business failures underscore need for dose of

preventive medicine

By Dan Campbell

37 Veneman announces $75 million in grants; 

co-ops get $18 million for value-added projects

DEPARTMENTS

2 COMMENTARY

10 MANAGEMENT TIP

27 NEWSLINE

39 ANNUAL INDEX OF ARTICLES
By Nancy Jorgenson

Editor’s Note: Nancy Jorgensen worked for CoBank in Denver

for 13 years before establishing her own communications and marketing consulting business in Pomerene, Ariz., which specializes in

cooperatives. 

ob Kelly insists that the farmers he works with

are a hardy bunch. But when the drought of

2002 and its trademark dust clouds rolled

across the plains this summer, neither he nor

the 1,600 members of the cooperative he manages in Sidney, Neb., had ever seen anything like it. 

Crossroads Cooperative rests in the epicenter of the

drought that is plaguing much of the nation this year, and

has been especially acute in many Great Plains and Rocky

Mountain states. 

“Sunflowers that people planted this spring looked like

they’d been sprayed with herbicide,” Kelly reports. “Wheat

production was half to a third below the normal crop. And

with little or no pasture we’ve seen a lot of cattle herd movement and reduction.”

What does the drought mean for the co-op? 

Kelly expects to handle a lower volume of grain this fall,

which will lead to lower co-op income unless he’s able to

make up for it through other sources. And, like other co- op

managers across the drought belt, he’s concerned that

accounts receivable may grow over the coming year. 

“But my staff watches them closely to keep them to a

minimum,” he’s careful to add. 

Kelly’s concern is

shared by grain marketing and farm supply

cooperative leaders

across the drought belt

(see map, page 5). Randall Torgerson, deputy administrator for cooperative services at

USDA’s Rural Business-Cooperative Service, says the drought

has contributed to the financial woes s of several of the nation’s

major farm supply co-ops by taking acreage out of production

and cutting into supply sales.

Crossroads at a crossroads

Crossroads Cooperative members grow sunflowers, wheat,

corn and millet. The fortunate ones rely on center pivot irrigation— although most irrigation canals dried up this summer. It

didn’t rain from about February until August in the co-op’s territory, and still hadn’t rained much by mid-October. Production of

winter wheat, harvested in July, was down by up to 50 percent.

The new wheat crop sprang up after the August rains, but as of

this writing in October, needed more moisture soon to survive. 

“Our farming practices are going to change for a time,”

Kelly says. “I’ve seen more wheat put in this year, since it

requires less water.” Normally, ranchers here place cattle on

corn stalks for fall grazing. But with few stalks available, many

ranchers may have to relocate cattle. Weeks ago, local cattle

feedlots began trucking in corn from 150 to 200 miles away. 

“Water is our source of life,” Kelly says. “But the innovative nature of the American farmer is really stepping out.”

The dry spell won’t continue forever, but it may mean that the

cooperative will have to look into other revenue-producing

activity, such as supplementing its grain business with farm

supply sales and services. 

This fall, Crossroads Cooperative added one new source of

income when it began processing livestock feed for a U.S.

Department of Agriculture disaster relief program. Last year,

the co-op’s 30 employees worked hard to generate sales of $35

million at 14 locations. They will have to work even harder to

match that in the coming year.

Hoping for a miracle 

Taking a break from harvesting millet, a grain used for bird

feeds, Crossroads Cooperative President Gale Raddatz says

4 November/December 2002 / Rural Cooperatives

B

Squeezed Dry

Cattle, crops suffer in drought’s grip; 

co-ops fear even bigger impact next year

At Crossroads Co-op in Sidney, Neb., co-op President Gale

Raddatz and Manager Bob Kelly examine a sample of the

co-op’s diminished grain crop, which was down by as much

as 50 percent for many of the co-op’s 1,600 members. 

Photo for USDA by Rob Sterkel
Rural Cooperatives / November/December 2002 5

his wheat harvest in July was only about

two- thirds of a normal crop. His millet,

which he finished harvesting in late October, came in at one-third of normal. “It

puts stress on a person,” he says. “You just

try not to let it affect your family.” 

The drought of 2002 comes as a triple

whammy for Raddatz and other Crossroads members, after two previous years

of poor production in the area. But “the

majority of farmers here will be covered

by crop insurance, since most were required to purchase it

when they accepted government disaster relief programs in

previous years,” Raddatz says. 

His local Farm Credit Services office offered seminars on

assistance programs available to cattlemen, and plans a

future session for crop producers if more programs become

available. “We’re tired of relying on government programs,”

Raddatz admits, but says under current conditions he has little choice. “I’m keeping my eyes and ears open for one.” 

Weather experts predict another below-normal year for

moisture, which worries dryland farmers such as Raddatz. “We

have no subsoil moisture,” he says. “Nothing to fall back on.” 

MFA grain volume

drops 20 percent 

Bill Streeter, senior

vice president of retail

services for MFA Inc.,

says that cooperatives

are just beginning to

feel the drought’s

pinch. MFA Inc., a

Missouri-based farm

supply and grain marketing cooperative

with sales of almost $1

billion, completed its

fiscal year in August

with more good than

bad on its balance

sheet. But Streeter

expects to feel the

drought’s effect more strongly in the coming year. 

“As a cooperative, we’ll handle 20 percent less grain than

we’ve averaged over the past 3 years,” he says. “For farmers

who were able to raise some grain, the effect will be partially

offset by higher grain prices.”

The drought affected farmers on a hit-and-miss basis

throughout MFA’s territory, which includes Missouri and surrounding states where producers raise cattle, corn and soybeans. 

“We’re most concerned about the livestock sector,” Streeter

says, adding that feed prices grew by 20 percent in recent

months. While MFA might benefit initially from higher prices

for the feed it sells to farmers, if farmers don’t make money, it

may be difficult to collect credit payments. Streeter estimates a

feed bill might increase by $120 per dairy cow annually for an

average producer. 

As time goes on, he predicts, farmers will have less money

to purchase fertilizer and chemicals. “They’ll usually skimp

on next year’s inputs,” Streeter says, expressing concern for

MFA’s system of 130 local elevators and retail stores. “It’s a

pretty good hit when grain volume declines by 20 percent,”

he says. “The elevators still have to pay workers. That makes

for hard times.” 

During the next year, farmer-members may find it difficult

to pay their bills, says Gerald Wheeler, manager of an MFA

store in Maysville, Mo. “Our feed grinding business is down

by 15 to 20 percent,” he says. “It’s probably the slowest

grinding season I’ve seen.” 

And farmers picked corn three weeks earlier than normal

due to dry conditions. Soybean production just started, but

farmers are talking about production levels of 18 to 25

bushels per acre, compared to 35 to 40 in a normal year. 

Annual rainfall dropped by 10 to 12 inches, Wheeler

Hopes of a profitable year evaporated

with the water supply in many parts of

the U.S. this year. Here, MFA Inc. member John Redman checks on the dwindling water level in one of his ponds.

Photo by Steve Fairchild, Courtesy MFA Inc.

Drought conditions were most severe in the northern Great Plains, Rocky Mountain states

and parts of the southeast, as shown by this drought monitor map from early August, when

conditions peaked in many areas. 

USDA Graphic 

D0 Abnormally Dry

D1 Drought-Moderate

D2 Drought-Severe

D3 Drought-Extreme.

D4 Drought-Exceptional

Drought Impact Types:

A = Agriculture

W = Water (Hydrological)

F = Fire danger (Wildfires)

Delineates dominant impacts

(No type = All 3 impacts)

The Drought Monitor focuses on broad-scale conditions.

Local conditions may vary. See accompanying text summary

for forecast statements.

USDA Photo 
estimates. “There are cracks all over the ground,” he says.

“Cattle pond levels are real low and some people have to

haul water to pastures.” But, he admits, his area is a garden

spot compared to places further west. 

MFA member sees drop in production

“It’s about as dry as I ever saw it,” says John Redman, a

grain farmer and cattleman who belongs to MFA and

trades at Wheeler’s store and elevator. His corn harvest

dropped to half of normal production, and he projects his

soybean harvest at just 18 to 20 bushels an acre. 

Redman received some help when USDA allowed him to

harvest hay on his Conservation Reserve Program land, producing feed for his feeder cattle. He ran out of grass and

began feeding cattle hay and other nutrients in August, a

month earlier than usual.

“The biggest effect on me is that feed costs have increased by

about 50 percent,” Redman says. “At the same time, my silage,

corn and hay crop yield is 60 percent of what it was a year ago. 

“The drought’s had a sobering effect on my operation,”

Redman adds. “It’s not much fun when you don’t make much

money. I’m looking at a tough 10-to-12 months.” 

By Nancy Jorgenson 

Like most ranchers stricken by drought, Ron Maifeld

changed the way he did business this year. It hasn’t

been easy, but he does have one thing to be thankful for:

he’s a member of U.S. Premium Beef. This Kansasbased cooperative pays premiums for

high-quality beef, and his share in co-op

margins allows him to profit across the

food chain, from calf to retail beef sales

(see sidebar, page 7). 

Two years ago, Maifeld gave up his veterinary practice in Greeley, Colo., to pursue ranching with his family near Burlington, Colo., close to the Kansas border.

“Now I practice veterinary medicine parttime, to support my cattle,” he says. 

The drought hit Maifeld where it hurts,

despite the co-op’s help. He’s culled and

moved parts of his herd, and scrounged to

find whatever forage he can for the rest.

Maifeld isn’t alone—many ranchers

across the Great Plains and the West face

the same fate. 

Beef industry struggles to hold on 

Bryan Dierlam, director of legislative

affairs for National Cattlemen’s Beef

Association in Washington, D.C., confirms that beef

growers are hurting. “Congress provided one-and-ahalf times more in disaster relief to agricultural producers this year than they have since 1998, and most of

that relief has gone to cattlemen,” he says. His organization helped lead the battle to win disaster relief.

Dierlam reports that Maifeld’s actions are representative of ranchers across the drought areas. Most have

moved tremendous numbers of cattle from one ranch to

another rather than selling off herds for slaughter. 

“Even though they’re facing higher feed expenses,

ranchers don’t want to hurt their long-term factory

base and drain their equity by buying replacement

cows later,” he says. They also want to avoid the

increased capital gains taxes they’d face if they sold

their herds, he adds. 

“Certainly some individuals may leave

the industry out of frustration,” Dierlam

concludes. “But we haven’t seen increased

cow slaughter numbers yet, except for a 6-

to 8-percent rise in the past quarter, which

would probably include the worst of it.”

Since additional cattle haven’t glutted the

market, cattle prices remain stable. 

“Most ranchers are hoping for snow

and trying to hang on until spring,” he says.

Meanwhile, back at the ranch...

Maifeld normally runs a herd of more

than 400 mother cows. In June, he culled

his older cows and sold them in pairs with

their calves. In June and July, he moved

half of his remaining herd to eastern Oklahoma, where he pays another rancher for

feed and management. 

In the meantime, he scrounged what

feed he could for the cattle remaining at

home. He raised some oat hay under a center pivot irrigation system. He cut green wheat for hay when he

realized the crop wouldn’t produce grain. And he grazed

his Conservation Reserve Program land, which was

freed up by USDA as part of a drought-relief program. 

Maifeld also took part in another USDA program to

assist cattle producers. The Livestock Compensation

Program provided $752 million in assistance cash to

eligible ranchers in designated counties, based on $18

per cow and $13.50 per calf.

Parched range forces many ranchers to the edge 

6 November/December 2002 / Rural Cooperatives

Drought-damaged pasture

forced many livestock producers to feed silage or hay at

times when their herds would

normally have been on grass,

cutting into already thin margins. Photo by Steve Fairchild,

courtesy MFA Inc. 
In an effort to increase profits, Redman is backgrounding

calves instead of raising cow-calf pairs, which makes for

more work feeding, but produces more income. “Raising

cattle has turned into a volume deal, and I think I need to

get even bigger,” he says. Currently, Redman keeps an

inventory of 650 calves, and he and an employee spend three

hours a day feeding, not including time spent grinding and

preparing feed. 

Mixed picture for Aurora Co-op 

Although his co-op’s fiscal year also ended profitably in

August, with sales of $180 million, Todd Gerdes has serious concerns about the coming year. Gerdes is specialty grains manager

at Aurora Cooperative Elevator Co., in south-central Nebraska.

“I signed up the first day it was available, and I just

got my check,” Maifeld says. “It really helps; I need to

make a hay payment.” 

Unlike earlier USDA drought-relief programs this

year, Maifeld says sign-up was easy and a number of

local producers benefited. Another USDA program, the

Cattle Feed Assistance Program, provided $24 per cow

in feed certificates, based on ranchers using surplus

dry milk proteins. But Maifeld couldn’t participate in

that program because he moved much of his herd to

Oklahoma. 

Co-op premiums help ranchers survive

Maifeld joined U.S. Premium Beef because he likes

the idea of receiving a premium price for raising quality

beef. Plus, he says, “To survive in today’s industry, you

have to get to the retail market.” That co-op competitive

edge is helping him survive the drought. 

Like most ranchers who’ve built up positive genetic

qualities in their cattle, he’d rather not sell replacement

heifers, although pasture shortages forced him to part

with a number of them this summer.

“If I were forced to sell everything I’ve got, it might

set me back 5 years genetically,” Maifeld says. “It was

hard to give up this group, because I felt like they were

the best I’ve ever had. But sometimes you gotta do what

you gotta do.” 

Still, he knows he’s luckier than others. When he puts

on his veterinarian hat at the local sale barn, he notes

that some older ranchers have sold their entire herds.

“They say ‘That’s it, I’m done,’” Maifeld notes. “I’d say at

least half the cows in this part of the country have been

sold or moved.” 

Reeves Brown, another U.S. Premium Beef member

from Colorado, agrees that the benefits of the co-op

make the drought a little easier to take. “We share in

the profits because we own the company,” Brown

says. “That’s meant an additional $25 to $30 per head

profit per year.” 

Rural Cooperatives / November/December 2002 7

continued on page 31

Cowboy capitalism 

helps co-op members 

deal with drought

Steve Hunt, CEO of U.S. Premium Beef of Kansas City,

Mo., says that the drought may impact a number of the

co-op’s 1,800 members in 37 states. But so far, it hasn’t

affected his cooperative’s financial health. “Certainly,

devastating conditions covered a wide area of the United

States—including part of the heart of cattle country,” he

says. But, he adds, cattle prices don’t seem to be affected

by the drought as people are moving cattle to greener

pastures more than they’re liquidating herds. 

Members of the beef cooperative purchase shares—

now priced at $130 per share. Each share gives them the

right to deliver one finished animal per year to one of the

co- op’s two plants in Kansas. 

U.S. Premium Beef partnered with Farmland Industries, another cooperative, to create Farmland National

Beef, the fourth largest beef processor in the U.S., where

the beef is processed and packaged for retail markets. 

U.S. Premium Beef offers a bonus to growers that

meet quality requirements—over the past year, it provided premium payments of $18.5 million to members, an

average $22.39 per animal. That’s on top of an average

U.S. sale price over the past year of about $800 to $900

per finished animal.

Each member also earns annual dividends based on

the cooperative’s profits. With sales of $560 million last

year, U.S. Premium Beef handled 700,000 head of cattle—

the most ever in the co-op’s 5-year history. 

“USDA disaster

relief programs will

help to some degree,”

Hunt says. “But cows

can’t eat cash—you

still have to move cattle to the feed. However, our members benefit from a financial

cushion as part of a

value-added cooperative. We like to call it

cowboy capitalism.” ■

Steve Hunt

Photo courtesy U.S. Premium Beef
8 November/December 2002 / Rural Cooperatives

Some of the 3,500 farmer-members of the co-op raise dryland corn, while others depend on irrigation. While many

irrigators use electricity to power pumps, others use natural

gas, propane or diesel. 

“Our propane and diesel fuel sales are up tremendously

with the drought,” Gerdes says. “But we won’t see much grain

drying income this year. The drought’s affected us negatively

in some areas, and positively in others.” 

Gerdes expects a 10- to 15-percent drop in crops handled, as corn yields dropped from 220 bushels an acre last

year to 170 bushels in some areas. Lower production leads

to increased prices, so farmers might get a better price for

the corn they were able to raise. However, price volatility

hurt most farmers who signed contracts this spring to sell

their fall crop. 

“A lot of guys contracted for $2 per bushel—that looked

pretty good this spring,” Gerdes says. 

Then farmers faced lower production and higher irrigation costs when the drought hit this summer. If they forward

contracted with the co-op to sell corn for $2 per bushel, they

may end up buying out of the contract at a loss, since corn

has been selling for more than $2.50.

Jimmie Steidinger needs more water for his orange

trees in south Texas. But it’s not just the drought that’s

causing his problem. He blames most of his water

woes on Mexico’s refusal to deliver irrigation water

as part of a 1944 agreement with the United States. 

Steidinger and 180 other members of

Edinburg Citrus Association in Edinburg,

Texas, grow oranges and grapefruit along

the lower Rio Grande Valley near

Brownsville. He has spent considerable

time and effort during the past 3 years urging the U.S. government to force Mexico to

stand by the treaty. 

“We’re in a crisis,” Steidinger says. “We

normally get 27 inches of rain a year, but

we’ve had just six or seven inches since

last November.” At the same time, two of

three irrigation districts that serve his farm

have had their water supply run dry.

Drought conditions started more than 3

years ago. Steidinger estimates that he lost

$60,000 in the last harvest, from October

2001 to June 2002. About 20 percent of the

co-op’s grower-members didn’t get enough

water to make a crop this year. 

Mexico stopped delivering water to the valley 10

years ago, despite the treaty that calls for delivery of

350,000 acre-feet of water annually from reservoirs in

the state of Chihuahua. Local irrigation system leaders

trekked recently to Washington to urge government

leaders to pressure Mexico to comply. The State

Department issued several strongly worded statements

in October calling on Mexico to release more of the 114

billion gallons of Rio Grande water the 58-year-old treaty

entitles the United States to. 

Mexico claims that the drought has left it high and

dry, without enough water to share. However, Texas

Agriculture Commissioner Susan Combs points to

satellite photos showing that Mexico has plenty of

water to comply with the treaty, and some have said

that Mexico appears to be hoarding water in its

reservoirs. 

Citrus trees must be watered 10-to-12 times per year.

Steidinger claims that irrigators in the valley do all they

can to conserve water, including leveling

land with the aid of lasers to streamline

water flow to the trees, and surrounding

water with pipe rather than ditches where

possible to avoid evaporation. “We don’t

waste water,” he says. “It’s like money in

the bank.” 

When trees die, it takes 5 to 6 years to

bring new plantings into production, he

adds—and costs farmers about $3,000 per

acre. Growers raise more than 35,000 acres

of citrus in the valley, on top of many more

thousands of acres of sugar and cotton also

under irrigation. 

The water shortage hurts the local economy as well as growers. The co-op employs

400 people, many of them seasonal pickers.

When land moves from “irrigated” to less

valuable “dryland” status on property-tax

rolls, the loss of revenue “throws cold water

on local governments,” Steidinger says. Loss estimates

for the region since 1992 range up to $2 billion.

Despite the gloomy situation, Steidinger can still

squeeze out a laugh, and he retains hope that October

rains would foreshadow more moisture to come. “The

trees can’t get oxygen with all that dirt on them,” he

says. “The rain washed them off.” 

By Nancy Jorgenson, with additional information

reprinted from an article by John Johnson, communications director for Plains Cotton Cooperative Association, from the co-op’s summer 2002 “Commentator”

magazine. ■

Rio Grande growers battle Mexico for water 

Texas citrus grower Jimmi

Steidinger is angry at

Mexico for not meeting its

commitment to release

water needed by U.S. growers into the Rio Grande. 
Rural Cooperatives / November/December 2002 9

Chris Schirber takes a personal interest in the financial health of ag co-ops facing the drought. As senior vice

president and regional manager for CoBank, the nation’s

largest bank serving agricultural cooperatives, she leads

a team of loan officers who finance grain and farm supply

cooperatives in Texas, Oklahoma and Kansas. 

“Grain production in western Kansas and Oklahoma

was impacted by as much as 50 percent,” she reports.

“Most of our customers generate about 60 percent of

their sales from grain and 40 percent from farm supply

products. Storage income will be relatively unchanged

for 2002. However, in 2003, it may be significantly

reduced because many farmers who were holding multiple years of production in storage sold the grain when

wheat prices moved dramatically upward starting in late

July 2002.” 

Schirber, who has worked with agricultural cooperatives for 11 years, says the drought may play a role in

the consolidation trend among cooperatives in western

Oklahoma and Kansas. 

“One year of drought will not necessarily force consolidation or restructuring, although it will heighten

everyone’s awareness of the pending need,” she says.

Texas cooperatives are not moving as rapidly toward

consolidation, she adds. 

Will farmers’ forward grain contracts impact cooperatives? “We always advise customers that they should

not forward contract any more than approximately onethird of a producer’s average production,” she says. 

To help co-ops find solutions, Schirber recently held

a meeting for co-op managers in western Kansas.

“Issues discussed included ways to save benefits costs

for personnel, how to reduce insurance costs through

risk management and how to consolidate facilities to

improve efficiency and cut operating costs,” she says. 

Her advice to co-ops on how to prepare for future

problems? “Build a strong balance sheet to tide the company through adversity,” she suggests. “Constantly

assess your business and look for ways to increase efficiency, save costs and eliminate non- performing assets.”

With assets of $25 billion, CoBank is a cooperative bank,

owned by its 2,600 customers across the United States. ■

Co-ops urged to prepare for adversity

Grower burned by forward contracts

Victoria Lipovsky farms with her husband and family near

Fairfield, Neb., and belongs to Aurora Cooperative. She raises alfalfa, corn, soybeans and a few cattle, on both dryland

and irrigated acreage. 

“Forward contracting is usually a good way to market

corn,” she says. “Not this year.” 

Last spring she estimated her production of dryland corn

at 25,000 bushels for 2002, but the dryland acreage actually

produced just 1,000 bushels. She’s caught with less corn from

dryland acres than she contracted to deliver, and since she

agreed to sell it at $2.10 a bushel, she’ll lose out if forced to

buy corn at a higher price to fulfill the agreement. 

Lipovsky explains how she and her husband share duties:

“I drive the desk and he drives the tractor,” she says. “We

work with the elevator in Aurora to do a lot of contracting.

When my husband told me in July that he suspected we

would be severely impacted by the drought, we stopped forward contracting.”

In times like these, she appreciates Aurora Cooperative’s

willingness to work with her. “With their help, we’ve increased

the value of contracts in the past by as much as 10 cents per

bushel,” she says. “They go the extra step, and I assured them

that we intend to honor our price-to-arrive contracts.” 

Fortunately, the Lipovskys’ irrigated crops and crop revenue insurance should cover much of their losses— even

losses from forward contracts—but she won’t know for sure

until late October. 

Beginning this summer, dust clouds rolled across Lipovsky’s

farm for the first time since the 1930s. With lower production,

higher feed and irrigation fuel costs and unfavorable grain contracts, the drought has taken an emotional toll on area families. 

Lipovsky belongs to a local group of female grain marketers. “We’re as much of a support group for each other as

anything,” she says. “Men are more competitive and women

are more cooperative. We realize you don’t have to be superman. We can all be stronger together.” 

Many of her women friends already have a job in town to

help support the farm operation, and are looking for a second job. For her part, Lipovsky runs a special-interest tour

company she started with another farm woman, offering

trips featuring local color, history and wildlife. 

Co-ops wait for other shoe to drop 

Farmers and ranchers already feel the drought’s effect.

Their cooperatives, including Farmers Cooperative of Aurora, MFA and Crossroads Cooperative—expect to feel the bite

more in coming months. 

Through it all, co-op members can be grateful that their

cooperatives express hope for the future, and a strong commitment to continuing service to members, through good

times and bad.

“As we sit around the board room, we understand that our

co-op depends on the well-being of our members,” explains

Bob Kelly of Crossroads Cooperative. “We need to do everything we can to get them through this situation.” ■
10 November/December 2002 / Rural Cooperatives

By James Baarda, USDA/RBS

Economist

james.baarda@usda.gov

Editor’s Note: This is the third of

three articles dealing with issues facing

cooperative directors. The first installment

appeared on page 30 of the July-August

2002 issue while part two was on page 15

of the September-October 2002 issue.

These and other past issues of this magazine can be assessed via the Internet at:

http://www.rurdev.usda.gov/rbs/pub/

openmag.htm

ooperative directors regularly face problems that

directors of even the

largest and most complex

corporations need not

even think about. The tough issues don’t

depend entirely on cooperative size

either. Directors of small

cooperatives face many

decisions as difficult as

any confronted by the

largest cooperatives.

Special cooperative

director challenges require personal

wisdom and good collective decisionmaking abilities. In some ways, cooperative directors need to know

more—and think about issues more

carefully—than directors of other

kinds of businesses. Cooperative

boards certainly demand more time

and work. In addition, the dual role of

a director in a cooperative—as both a

director and a member—puts every

director in a sensitive position.

This article, the last in a series about

cooperative directors, identifies some

unique issues that cooperative directors

must consider on a regular basis. It

focuses on issues that are “in addition

to” the responsibilities expected of

directors of all businesses.

The character of the cooperative

Cooperatives are unique kinds of

businesses. Members justifiably expect

their cooperative to operate on a cooperative basis with the appropriate mix

of rights and obligations for everyone.

Members trust the board to fully support those expectations.

Sometimes cooperative characteristics are defined by law. In other situations they are just an inherent part of

the cooperative that members’ understand and expect. In any case, directors

have the ultimate responsibility to preserve the cooperative character of the

organization.

This responsibility presents some

hard questions for the board. Is the

organization truly operating on a cooperative basis? How do directors know it

is? What observable criteria can be

established to guarantee the integrity

of a cooperative’s implied promise to be

a cooperative? Are measures taken—

either on a periodic basis or in preparation for significant business changes—

to be sure that basic cooperative

principles are preserved? Has the board

established policies, operating procedures and internal controls to guarantee operation as a cooperative? Does

the cooperative have danger points in

its operations that require special monitoring and attention?

Although difficult, the directors’

role in maintaining the ability of the

cooperative to serve members in a

uniquely beneficial manner can be a

rewarding professional and personal

experience for directors. Each director

is a gatekeeper of the principles and

practices that empower members to

cooperate to create true value for

themselves and others.

Cooperative-based decisions

Cooperative boards of directors

make decisions not made by boards of

any other kinds of business. These

decisions are, for the most part, unusually difficult. They require directors to

have a clear understanding of financial

documents, performance measures and

the short- and long-term consequences

Cooperative directors face 

unique challenges

MANAGEMENT TIP

C

The Circle of Seven

Responsibilities

(As described in the previous article

in this series, see September-October

2002 issue, page 15.)

Directors:

1. Represent members

2. Establish cooperative policies

3. Hire and supervise management

4. Oversee acquisition and preservation of cooperative assets

5. Preserve the cooperative character

of the organization

6. Assess the cooperative’s performance

7. Inform members

Cooperative directors are responsible for

maintaining the cooperative character of the

organization.
of decisions made and actions taken.

Situations may make the board a conflict-resolution body that balances

divergent and often deeply held interests among members. Some of these

involve business and financial issues,

while others are emotional in nature. 

Operating within proper authority was

mentioned in a previous article. The

cooperative’s authority and limitations

on that authority may be found in several places. The board’s authority may

be defined by the cooperative’s charter,

including the applicable incorporation

statute. The board of a cooperative

considers incorporation statutes, the

articles of incorporation and bylaws to

determine the obligations and limitations of the cooperative.

Laws that apply generally to all

businesses apply to cooperatives as

well, but sometimes in a different manner. Such laws mean that cooperative

boards must make decisions for the

cooperative based not only on generally applicable laws, but laws that are

especially applicable to cooperatives.

Examples include special tax laws that

apply to cooperatives, cooperative

antitrust laws that mandate or prohibit

certain business structures and behavior, and state cooperative incorporation

statutes that contain special requirements for cooperatives. 

A cooperative’s charter, its bylaws, its

contracts, membership agreements and

other binding agreements are all subject

to review by directors as they establish

policies and procedures to guarantee

that the cooperative adheres to laws and

other legal obligations. Directors may,

of course, rely on counsel and accountants to identify the rules, but directors

themselves make the decisions and bear

the responsibility for decisions made.

Determining and allocating patronage

refunds is one of a cooperative board’s

major concerns. Of course, the board

does not make decisions about refunds

on the spur of the moment each year.

The system used to determine and calculate refunds should have been established in the bylaws and in written

policies, all of

which are subjects

of careful director

study and periodic

review. Decisions

about allocations

and distributions

are complicated by

short-term and

long- term implications as well as balances among those

who use the cooperative for different

purposes. All this

leads to possible

conflicts among cooperative members. 

The cooperative may also face circumstances that weren’t contemplated

when the policies were established.

The board must decide what modifications can be made in response to special circumstances to recognize the

cooperative’s purposes.

Any patronage refund system has

many implications for the cooperative

and its members. These include fairness,

operation on a true cooperative basis, tax

implications, rules in state laws, interpretations of bylaws, members’ expectations

and desires, and the very health and survival of the cooperative. Successful solutions to sensitive issues ultimately rest in

the hands of an informed, deliberative

board of directors.

Member qualification is important to a

cooperative, whether the qualifications

of applicants for new membership are at

issue or continued qualification of existing members is in question. Directors

should recognize the importance of

keeping good membership roles and

purging those who no longer deal with

the cooperative. The behavior of some

members may harm the cooperative

and therefore other members. Directors have the unenviable task of taking

appropriate action to protect the cooperative. Predetermined, neutral rules

that avoid ad hoc decisions about individual members will help avoid confusion and hard feelings.

Decisions with federal income tax consequences are pervasive. Directors are not

expected to be tax experts, but they do

need to appreciate the implications of

all of their decisions. Examples of decisions with direct tax implications

include use of qualified or nonqualified

notices of allocation, per-unit retains,

allocation of margins and losses and

most issues regarding calculating margins and distributions. 

Patron or non-patronage business

and the allocations and payment of

related net margins have direct income

tax implications. Added to the direct

effect on the cooperative is the impact

that any such decisions have on members or other patrons. A seemingly simple business decision by cooperative

directors becomes one of balancing

many interests. 

Conflict of interest

Like other members, directors use

the services of the cooperative. This

means that directors deal personally

with the cooperative. They have their

own obligations toward the cooperative

and their own expectations of benefits

from it. Decisions that directors make

about the cooperative will affect them

as member-users just as they affect the

cooperative and other members.

The previous discussion of “duty of

loyalty” pointed out that the single action

most likely to impose personal liability

on a director is a conflict of interest. The

personal dealings that a director has with

the cooperative places the director in a

precarious position. What appears to be

innocent when done may in hindsight

look very bad for the director.

Many examples exist of directors’

dealings with the cooperative that will

Rural Cooperatives / November/December 2002 11

Cooperative principles should be

familiar to every cooperative

director.

1. The User-Owner Principle: The people who own and

finance the cooperative are those who use the cooperative.

2. The User-Control Principle: The people who control

the cooperative are those who use the cooperative.

3. The User-Benefits Principle: The cooperative’s sole

purpose is to provide the distribute benefits to its users

on the basis of their use.
12 November/December 2002 / Rural Cooperatives

affect both the director and the cooperative and pose possible conflicts of

interest. These include: 

• Price differentials or special concessions for large producers and

patrons.

• Directorship in both a local cooperative and the federated cooperative.

• Extension of credit to memberpatrons.

• Methods of obtaining capital.

• Allocation of patronage refunds,

especially when the cooperative is a

multi-functional cooperative and the

functions are not totally separated.

• Cash or non-cash patronage

refunds related to patron tax

brackets.

• Equity redemption decisions,

including when to redeem, financing methods and equity- building

programs.

Directors must make these and all

other decisions regardless of the shared

interests of directors and the cooperative. Cooperative incorporation statutes

recognize the problem, at least with

respect to the patronage relationship. A

typical provision says that “no director,

during his term of office, shall be party

to a contract for profit with the association differing in any way from the business relations accorded regular members or holders of common stock of the

association or others, or differing from

terms generally current in that district.” 

Directors should not have problems

if the conflict is clearly recognized,

decisions are made solely with the

interests of the cooperative foremost

and all questions are addressed openly

and honestly.

Financial matters

Directors must give careful attention

to the effective financial structure and

strong financial condition of the cooperative. Directors are entrusted with the

ultimate responsibility for the care of

the funds and property of the cooperative and its members. Although similar

general rules apply to non-cooperative

corporations, a cooperative’s directors

handle unusual issues because cooperatives have special techniques to finance

the organization. Because cooperatives

operate for the mutual benefit of the

members and not as purely profit-seeking organizations, they

have financial needs,

opportunities and limitations not found in other

businesses. Ultimately,

the most difficult financial decisions are in the

directors’ hands.

Patronage refund distributions are closely related

to equity allocations in

most cooperatives.

Directors are involved in

the balance between current monetary returns to

members and additions

to the cooperative’s equity structure. For example, patronage refunds

may be paid in a combination of cash and written notices of allocations.

The choice carries major implications

for the long-term financial health of the

cooperative. At the same time, members

may expect high cash payout as a return

for their involvement in the cooperative

and their own tax considerations. Allocations and choices of the income to

allocate, equity vs. debt financing and

patronage-based vs. non-patronagebased sources of financing, are all part

of plans and strategies that boards of

directors establish.

Equity redemption is an integral part

of a cooperative financing system. It

can also be a source of dispute. Decisions about equity redemption are

often assigned specifically to the

board’s discretion. How is the board of

directors to exercise that discretion?

Do short revolving periods jeopardize

the cooperative’s financial health and

robustness? Do long revolving periods

show poor planning, do cooperatives

use former members’ money to generate benefits for the current users, and

does slow revolvement present fairness

issues? Courts usually support director

decisions on equity redemption in a

legal dispute, but the major challenge

for a board is to meet obligations of

past, present and future members with

fairness and forthrightness to avoid

unresolvable problems.

Special events

Directors bear added responsibilities

when the cooperative considers a major

change in its organization or in its relationships with other businesses. Mergers or establishing long-term, significant joint-venture arrangements with

other businesses are examples of events

where directors have a major responsibility for decisions that are of critical

importance to the cooperative. Such

events affect members’ interests in the

short run and in the long run. 

Decisions affect benefits that all parties involved will receive, including

financial obligations (past and future),

differential impacts among members

and planning horizons for all parties.

Directors not only assess overall costs

and benefits of such actions, they will

be required to address conflicts among

members about the action. 

A decision to dissolve a cooperative

is, of course, among the most difficult

the board will make. The process not

only occurs under typically unpleasant

circumstances; it challenges the abilities

and dedication of all involved.

Directors will be well served by

Standards of conduct 

applicable to cooperative

directors include:

1. Duty of Obedience. Directors must ensure that they

or the cooperative do not engage in illegal or

improper actions.

2. Duty of Care. Directors are expected to act in

good faith at all times, exercise prudence, and

apply their best judgments for the benefit of the

cooperative.

3. Duty of Loyalty. Directors have a position of

highest trust and must avoid conflicts of interest,

self-dealing, actin in any other than the best interests of the cooperative or divulging confidential

information.
Rural Cooperatives / November/December 2002 13

making every effort to recognize how

standards of conduct discussed in previous articles in this series can guide

them. Adequate information about the

implications of the action, the mechanics of the process, impacts on members

and the future of the cooperative are all

critically important. Balancing member

interests and measuring the financial

and other needs of the cooperative will

guide directors’ decisions.

Assessing the cooperative’s success

Important decisions about the performance of management, success or

failure of strategic plans or specific

programs, and designing plans for the

future are all based on an accurate

and realistic assessment of the cooperative’s current performance. Such

an assessment is not necessarily easy

under any circumstances. 

As with any business, the “bottom

line” is critical. But unlike other businesses, for cooperatives the bottom

line is only the beginning of an assessment of its true success. Every director

needs to understand financial statements, organizational growth, project

plans, overall strategies and levels of service offered. But more is required.

Difficult questions require additional

board consideration. What was the net

benefit of an action to members, including their share of savings and margins?

What was the tradeoff between benefits

distributed to members and the net

income of the cooperative? What is the

financial condition of the cooperative

and what are the trends and expectations for future capital needs? 

Were all members treated equitably

in distributions and financing obligations? Did the cooperative serve some

members at the expense of greater

returns to others? If so, is that practice

part of the cooperative’s greater purpose? What was the trade-off between

short-run and long-run needs, obligations and benefits? Are successes or

failures attributable to management,

board decisions, the economic environment or member actions? What can or

cannot be corrected about the cooperative’s performance?

Directors balance members’ interests

The cooperative’s fortunes are those

of its members, and if the cooperative

is not responsive to members’ needs,

the basic principles of member control

and user benefit are weakened. The

cooperative will simply cease to exist

and serve.

The membership of most cooperatives is not homogeneous. Each member has an interest in the cooperative.

These interests differ to some degree,

sometimes dramatically from other

members. Members may have differing

planning horizons, as would be the case

between someone just starting in the

farming business and someone contemplating imminent retirement. These

two members could have markedly different interests in financing, revolving

periods for patronage payments and

cash vs. non-cash payments. Members

may be in different tax brackets, which

has implications for the amount and

form of patronage refunds. 

Some members may be more concerned with price while others may find

certainty of supply or a market more

important. Producers of different products may have distinctly different needs

from the same cooperative. Disparity of

business volume among members may

lead to calls for differential pricing.

These and other variables make the

directors responsibility to represent

members quite different from decisions

for non-cooperative businesses.

Members, or prospective members,

may want more from the cooperative

than the organization can provide and

still maintain its financial and operational integrity. Directors may actually

be put in a position of balancing some

members’ needs against the interests of

the cooperative itself. Diplomacy and

good communication are valuable, but

no easy resolution may be possible.

Board-management relations

A good working relationship

between the board of directors and

management is very important for

cooperatives. At the same time, the

relative responsibilities of the board

and management create natural tensions about roles and responsibilities. The cooperative board has a

distinct role and make-up that places

obligations of independence and

leadership on the cooperative board

of directors that are not necessarily

found in other boards.

Does the board defer excessively to

a forceful manager? If so, what might

the consequences be? Does the board

interfere inappropriately in the cooperative’s management and day-to-day

operations? If so, what are the consequences? How does the board assess

management and what corrective measures are in place in case of difficulties?

Is there an effective chain of communication and command between the

board and management? What does

management think of the board of

directors? If necessary for the good of

the cooperative, is the board of directors capable of making and executing a

decision to replace management?

The rewards

With all of the responsibilities

placed on boards of directors outlined

in the first article in this series, the

high standards of conduct required of

individual directors discussed in the

second article and the many difficult

decisions directors make as noted in

this article, why would anyone agree to

be a cooperative director? Individuals

can point to at least five reasons to

serve as a cooperative director.

The rules that apply to responsibilities, liabilities, duties and requirements

continued on page 29

To be effective, board members must have a solid

grasp on co-op financial statements. Request to

meet with the co-op manager or accountant if you

need more background on how to read them.

USDA Photo by Ken Hammond 
By Teri Ditisch

Editor’s Note: Ditisch is communications specialist for Cooperative Solutions,

a federated cooperative in Arizona that

provides management services to its

member/owner cooperatives: AMAROK

(a drywall distributor co-op), NEMEON

( a roofing distributor co-op), and YaYa!

Bike (a specialty bicycle retailer co-op).

This article is reprinted from the October

2002 issue of CCA News.

sk me.”

How could this phrase

help your co-op get

noticed? Sending members out into the world

wearing “Ask Me” t-shirts is one way

Cabot Creamery of Vermont started

building name recognition for the

dairy co-op.

The t-shirt campaign was the brainchild of Roberta MacDonald, vice president of marketing for Agri-Mark, a

dairy co-op owned by 1,400 New England and New York dairy farmers who

own Cabot cheese. Her award-winning, “out-of-the-box” promotional

campaigns have helped turn Cabot into

a nationally known brand.

Cabot has been dairy farmer-owned

since 1919. It began developing its signature brand of dairy products in 1984.

When MacDonald arrived in 1989, the

co-op had an annual marketing budget of

$100,000. Today, Cabot products can be

found in grocery stores around the nation

and the marketing budget has grown to

$10 million, which is still a small amount

compared to its national competitors. 

During the Cooperative Communicators Association 2002 Institute in

A

Building brand recognition 

How to run a champagne ad campaign on a beer budget

Maintaining an effective communications program is

essential for cooperatives—even more so than for other

types of businesses. Some of the nation’s most successful practitioners of this essential art were saluted by the

Cooperative Communicators Association (CCA)

during its annual institute in Burlington, Vt., last

summer. 

Leta Mach, director of cooperative education

for the National Cooperative Business Association

(NCBA) in Washington, D.C., won the Klinefelter

Award, CCA’s highest honor, recognizing individuals who have substantially advanced the cooperative system and state of cooperative communications. A CCA board member from 1998 to 2001,

Mach develops cooperative educational programs and

conferences for NCBA and oversees Co-op U, its on-line

cooperative learning center. 

She was cited for her “broad background in cooperatives, her commitment to effective communications and

her insight into 21st century cooperative education methods.” Mach was editor of “Cooperative Business Journal,” NCBA’s member newspaper, from 1988 until 2000. 

More recently, she developed NCBA’s Co-op 101 Educational Training Program, a multi-media training program for members and employees that won the top “special projects” award from CCA in 2001. She also has produced “The Spirit of Cooperation” video, which traces

the history of cooperatives, among many other

career accomplishments. 

The award is named for H.E. Kilinefelter, who

became editor of “Missouri Farmer” magazine

(now MFA’s “Today’s Farmer” magazine) in 1939,

and was well known for his passionate writing in

support of cooperatives.

Don Gales, who at the time was CEO of South

Dakota Wheat Growers (SDWG) in Aberdeen,

S.D., was selected as CEO Communicator of the

Year. He was cited for his “unique ability to see the whole

picture and think beyond the box.” What sets him apart,

the presenters said, “is his ability to communicate that

vision to diverse audiences in a way they can relate to

and find that same vision.”

He was praised by staff members for delivering “a

message of total unity that is bringing a better work

environment of our employees and providing a better

return for our membership through a more efficient and

CCA honors top co-op communicators

Leta Mach

14 November/December 2002 / Rural Cooperatives
Vermont, MacDonald shared her

secrets about how to “make a modest

marketing budget look like a million.”

1. Invest in modest research to

know as much as you can about your customers. Who are they? Who are their

families? Find out what they like and dislike about you. What gets them excited?

Do not spend money on public relations

or advertising without research. “We

know everything we can about a community before we spend one dollar of dairy

farmer money,” MacDonald said.

2. Take your goods or services to

where “like” people are, such as tourist

attractions, historic sites, parks or large

community events. Cabot has “lobbed

cheese hunks at tourists on ski slopes, at

golf courses and in state parks” for 5

years, and they still do.

3. Take advantage of the success

of others or borrow liberally from the

better-known brand, team and personality. Use what consumers know to

your advantage. What are the major

players doing? Start doing it.

4. Take advantage of any competition and WIN! Cabot has won every

major award for taste. If there isn’t a

contest in your field, make one up and

win it. Example contests might include

customer satisfaction, cutest couple for

Valentine’s Day, best energy savings idea

or smartest college savings strategy. “Use

the win. Get it out there,” MacDonald

said. “Make sure it is known you are a

winner. The public loves a winner.”

5. Take advantage of public relations. Use the media. Slow news days

happen, so have your story ready but

don’t include a date. Make any event fun

and any event can become news. “Use

PR; it’s cheap compared to advertising,”

says MacDonald, who spends 20 percent

of her budget on public relations. She

spends very little media money. Make

connections with other cooperatives.

Give free or discount coupons. Make

outrageous connections. Cabot made

alliances with museums. 

6. Use your members to illustrate

who you are. Cabot put the faces and

farms of its members on center stage in

its ad campaigns. But beware, some

doubting consumers wanted to see if the

faces were real. The skeptics actually visited the farms and, to their surprise, were

greeted by the same farmers they saw in

the ads. Be sure that anyone who participates in a campaign is someone who

could serve as a brand ambassador. ■

profitable community.” Gales, who has 20 years of cooperative management experience, had been with SDWG

since 1999; he left the co-op a few months ago to take a

position with another agribusiness.

Chellie Phillips, director of communications and

member services for South Alabama Electric Cooperative in Troy, Ala., was presented the Graznak Award,

which goes to an outstanding co-op communicator

under the age of 36. 

Phillips has been with her cooperative since 1996,

where she designs and places advertising, produces

print publications, plans and implements community programs and develops and maintains the co-op Web site. 

Phillips developed a multi-faceted communications

effort called the Total Public Relations program, which won

the Star Award from the Montgomery Chapter of the Public

Relations Council of Alabama. Her work has also been honored by CCA and the National Rural Electric Cooperative

Association, among others. She is a 1992 graduate of Troy

State University with a major in journalism and advertising.

Other top awards presented included:

• Writer of the Year—won by Allison Morgan of Tennessee Farmers Cooperative;

• Photographer of the Year—won by Robin Conover

of Tennessee Electric Cooperative;

• Publication of the Year—awarded for the 2000 annual

report of the National Rural Telecommunications Cooperative, edited by Kelli Laski and designed by Sherilyn Holmes.

•Best of Class for Special Programs and Projects—

won by Sheryl Meshke of AMPI dairy cooperative for a

portfolio of communications materials.

USDA’s “Rural Cooperatives” magazine won several

awards, including: second place for best editorials, won

by Randall Torgerson, deputy administrator of the Rural

Business- Cooperative Service, for three commentary

pieces; second place for best feature, won by USDA editor Patrick Duffey for an article describing the way Foremost Farms responded to an airplane crash into one of

its dairy plants in Wisconsin; and third place for best feature, won by frequent contributor Catherine Merlo of

Bakersfield, Calif., for an article describing turmoil in the

California raisin industry. 

USDA’s Duffey and Jim Tucker, who recently retired

as field editor for Farmland Industries, were both awarded lifetime honorary CCA memberships for their many

contributions to cooperative communications during

their long careers. A special Outstanding Leader award

was presented to Brian Delgado, formerly communications manager of Farm Credit Leasing and now with

Land O’ Lakes. ■

Using producers in Cabbot cheese ads and

promotions has hit a receptive note with

consumers. 

Graphic courtesy AgriMark Inc.

Rural Cooperatives / November/December 2002 15
By Raylene F. Nickel

Editor’s Note: Nickel is a freelance ag journalist based in Kief,

North Dakota. 

orth Dakota’s rolling grasslands grow nearly a

million beef calves each year. In the fall and

early winter, soon after the calves are weaned

and possibly fed for a while on farms, semitruck

after semitruck carry the calves far out of state,

typically to feedlots in Kansas and Nebraska. About 95 percent of those North Dakota calves leave the state, in spite of

the fact that North Dakota’s fields raise bumper crops of feed

grains. Much of that grain also is shipped out of state, often to

the very feedlots where the North Dakota-bred calves end up.

This tradition of feeding North Dakota grain to North Dakota calves in feedlots in states to the south got its start because

farmers and ranchers believed North Dakota’s cold winters would

cause poor gains in cattle on feed. But research and experience

are refuting this perception, leading producers to look for ways to

plant the seeds of a feeding industry in North Dakota.

In the arid southwestern corner of the state, this desire for

an in-state feeding industry has resulted in a network of new

feedlot pens built to hold 6,500

head of cattle. Surrounded by

open prairie, the feedlot facility

is owned by Dakota Prairie Beef,

a cooperative of 145 members,

most of them farmers and ranchers, each of them owners of cattle

being custom fed in their cooperatively owned lot.

Long time coming

“The idea behind this feedlot

cooperative was a long time in

coming,” says former board chairman Lance Larsen. Larsen, who

ranches in western North Dakota,

is one of the founding members.

“We’re the first ones to get

such a concept off the ground,”

Larsen adds. “We didn’t form the

feedlot cooperative in order to create an investment opportunity simply for the sake of earning eventual dividends. The

members are the customers. We retain ownership of our cattle

all the way to processing and pay the cooperative to feed them. 

“The feedlot is really only an extension of a member’s own

farming or ranching operation. The purpose in forming a

cooperative to build a custom-finishing lot was to maximize

the economies of scale that a larger feedlot affords.” This

provides cheaper gain than a producer might obtain by feeding small numbers of cattle at his or her home feedlot.

Larsen was among a handful of western North Dakota

ranchers who began talking together 6 years ago about the

possibility of forming a cooperative to build a custom feedlot

in the region. It was during the time that a regional cattle

producers’ cooperative, Northern Plains Premium Beef, had

organized with the intent of establishing a producer-owned

packing plant. Larsen’s group believed that the formation of a

producer-owned custom feedlot could be a source of fed cattle for the NPPB packing plant.

Though the cooperatively owned packing plant never

came to fruition, the ranchers plowed ahead with their vision

of building a producer-owned feedlot in the state. For a year,

the steering committee staged community meetings in North

16 November/December 2002 / Rural Cooperatives

N

Bringing it home

Dakota Prairie Beef Co-op adding 

value to home-grown cattle, grains
and South Dakota as well as in Montana. The goal of the

meetings was to raise enough equity for the group to build a

new feeding facility on purchased land near the small town of

Gascoyne in southwestern North Dakota.

Two share types offered

Two types of shares were offered to producers: “B” shares

cost $60 each and bought the buyer bunk space each year for

one spring-born calf delivered to the feedlot between Oct. 1

and March 30; “C” shares cost $55 each and bought the buyer bunk space each year for one yearling delivered to the

feedlot between April 1 and Sept. 30.

“We offered 6,500 calf shares and sold all of those shares,”

says feedlot manager Mark Vachal. “We offered the same

amount of yearling shares and sold 2,400 of those. So yearling shares continue to be available, as well as some calf

shares from individuals who have decided, for one reason or

another, to sell their shares.” Sales of preferred stock to local

businesses also contributed to the final capital pool, which

amounted to $500,000.

This sum provided equity for a start-up loan of $900,000

from Farm Credit Services. Local businesses, such as Slope

Electric Cooperative, a preferred stockholder, also helped initial funding by providing smaller loans to the feedlot cooperative, says Vachal.

The 145 members purchasing feeding shares in the cooperative are from North and South Dakota and Montana. The

first cattle arrived at the feedlot in the summer of 2000.

Vachal expects the lot to be filled to capacity, with 6,500 head

of cattle, by early 2003. 

Members pay for the feeding services they receive at the

feedlot just as they would pay for the services provided at any

other custom feedlot. Twice a month, members who have cattle on feed receive an invoice from the cooperative. They’re

charged for the amount of feed their cattle have eaten in two

weeks. They’re also charged a yardage fee of 25 cents per head

per day. The yardage fee covers the member’s share of the cost

for the use of the facility and equipment. The fee also covers

the member-customer’s share of the cost of labor and utilities.

The cooperative employs eight full-time individuals.

Besides managing the actual feeding of and caring for the

cattle, Vachal’s responsibilities also include marketing the

finished cattle to packing plants.

Co-op provides grading, conversion data to members

Member-customers of Dakota Prairie Beef have the

opportunity to get detailed information back about individual

animals fed at the feedlot. The information tells them how

their cattle performed in the feedlot in terms of feed conversion. It also tells them how their animals’ carcasses graded

and, in some cases, even the characteristics of each individual

animal’s carcass, such as the size of the ribeye.

“The ribeye is one of the highest-value cuts in the carcass,” says Vachal. “The larger the ribeye, the more valuable

the carcass.” When producers sell their finished animals to

packers on a grid basis, they earn premiums for such highquality traits as large ribeyes.

Tracking the performance of individual animals and their

carcasses is possible because of an electronic button implanted in the ears of cattle at the time owners deliver them to the

feedlot. The button’s number, along with the number on the

animal’s visual eartag, permanently identifies the animal and

its carcass. Scanners at the packing plants “read” the number

on the button at the time the animal is harvested and its carcass measurements recorded.

Western North Dakota rancher Wes Andrews, chairman of

Dakota Prairie Beef, views this local opportunity to get feeding

and carcass information back on his cattle to be a key benefit to

feeding cattle at the cooperatively owned feedlot. “Learning

the carcass quality of my cattle and how they perform in the

feedlot helps me to make genetic improvements in my herd,”

he says. Breeding cattle for higher carcass quality, for instance,

could increase Andrews’ income in the long term.

Rural Cooperatives / November/December 2002 17

Facing page: Mark Vachal, left, feedlot manager for Dakota Prairie

Beef, and co-op Chairman Wes Andrews say the new cooperative is

providing a local alternative for cattle formerly fattened out of state.

Above: Eartags identify animals and carcasses to ensure that grading data gets back to producers, who then use it to improve their

herd genetics. Photos for USDA by Raylene Nickel
18 November/December 2002 / Rural Cooperatives

Hawthorne resigns as Ocean Spray CEO 

Robert Hawthorne resigned in late October after 3 years as CEO of Ocean Spray Cranberries Inc. Barbara S. Thomas,

a board member and former president of Warner Lambert’s consumer healthcare division, is acting as interim CEO while a

search is launched for a new CEO.

“The Board will use this opportunity to search out a fresh skill set to take the Ocean Spray cooperative to the next

level,” said Benjamin A. Gilmore II, Ocean Spray board chairman. 

Gilmore noted that Hawthorne’s nearly 3 years at Ocean Spray saw the co-op’s balance sheet and customer service

improve. Since Hawthorne’s arrival in 2000, Ocean Spray’s net earnings increased from $59 million to $158 million in 2002. He

also oversaw the most successful product introduction in the juice category in the past 10 years: Ocean Spray White

Cranberry juice drinks. 

Thomas’ career spans more than 25 years in the consumer goods industry, including the 3 years at Warner Lambert,

where she headed the company’s $1.7 billion over-the-counter pharmaceutical business. She held previous top leadership

positions at Procter & Gamble, Nabisco, and Pillsbury. She currently sits on the Board of the Dial Corporation and Rayovac,

as well as Ocean Spray.

Ocean Spray is the No. 1 brand of canned and bottled juice drinks in the United States, with fiscal 2002 net sales of

$1.06 billion. Formed in 1930, the cooperative is made up of 804 cranberry growers from Massachusetts, Wisconsin, New

Jersey, Oregon, Washington, British Columbia and other parts of Canada, as well as 126 Florida grapefruit growers. ■

Andrews will begin making genetic changes after a couple

more years of data give him a broader picture of the feeding

and carcass-quality genetics in his cow herd. Andrews, who

runs a cow herd of 350 head, partners each year with his father

to feed 150 head of calves at the Dakota Prairie Beef feedlot.

When the cooperative was being organized, Andrews

joined a steering committee. Along with other early members, he envisioned Dakota Prairie Beef as an opportunity to

add value to cattle and feed grown in the region.

Indeed, the feedlot provides a local market for hay, corn

and silage. This year, Dakota Prairie Beef purchased 3,000

tons of corn silage from farmers within a four-mile radius of

the feedlot. In addition, the co-op purchased upwards of

1,000 ton of hay from growers within 100 miles of the lot.

First dividends expected soon

The financial performance of the cooperative is on schedule, says Vachal, with debt repayments being drawn from the

feed and yardage charges paid by member-customers.

Indeed, payment of dividends could begin as early as next

year, with holders of preferred stock receiving the first dividend payments. If there is sufficient net income after dividends are paid to preferred stockholders, customer-shareholders will be paid dividends as well.

Despite good rates of gain of cattle fed at Dakota Prairie Beef

feedlot, profits earned by individual member-feeders have, however, been poor, due to reduced prices packers have paid for finished cattle during the past 2 years, says Vachal. He expects

market conditions to improve in the coming year. The slim

profit earnings in feeding cattle are industry wide, he notes, and

do not result from the northern location of the feedlot.

Concerning location, former co-op chairman Lance

Larsen adds: “We can feed cattle here cheaper than they can

in southern feedlots. We know we’re not too far north to

feed cattle successfully because there are Canadian feedlots

several hundred miles north of us that do very well.”

Critics of feeding cattle in North Dakota often point to

North Dakota’s distance from packing plants to the south, saying that it’s too costly to transport finished cattle from the state

to processing facilities typically located farther south. But Vern

Anderson, an animal scientist at the Carrington (N.D.)

Research Extension Center, says the criticism is unfounded.

“Feed is more expensive to haul than feeder cattle,” says

Anderson. “Cattle should be fed as close as possible to

where the feed is grown. The Canadians have proved this

rule of thumb to be true. The potential is great for feeding

cattle in North Dakota. We’ve got plenty of feed because

we’re a grain-producing state. In addition, there’s an

increasing amount of ag processing going on, making coproduct feeds available. Typically, we can meet a feedlot animal’s nutritional needs with combinations of grains, coproducts and forages for substantially less cost for feed than

they can in Kansas feedlots.”

Indeed, such information fuels the vision held by Bill Patrie,

economic development director for the North Dakota Association of Rural Electric Cooperatives. Patrie, who helped organize Dakota Prairie Beef as well as a number of other farmerowned cooperatives in the state, sees great potential for farmers

and ranchers to own a larger share of the beef-production

chain, rendering the industry more efficient in the process.

“Under a farmer-owned system,” says Patrie, “the beef

feedlot would be a cooperative owned by the same people that

own the calf; the same people that own the processing plant,

the fabrication plant, the rendering plant and the distribution

company. In such a system the feedlots would be placed where

they made the most sense geographically. Ownership of the

production chain would extend from prairie to plate, from the

calf all the way through to the end consumer.” ■
Rural Cooperatives / November/December 2002 19

Editor’s Note: The following speech was delivered in October by

Thomas C. Dorr, USDA under secretary for rural development, at

the 8th annual Cooperative Development Forum. The event was

sponsored by the National Cooperative Business Association in

Minneapolis, Minn. 

bring you best wishes from President Bush and

Secretary of Agriculture Ann Veneman, whom

I have the honor of working with to strengthen

the economy by creating jobs and improving

the quality of life—both urban and rural. 

A couple of months ago, President Bush held an economic

forum in Waco, Texas, to talk about the fundamentals of the American economy and his vision

for economic growth. At that forum, the president said, “The fundamentals of the American

economy are strong. Yet, the only purpose of a

strong foundation is to build on it.”

A very critical part of that vision is our rural

economy. And, as undersecretary of agriculture

for rural development, it’s my job to help realize

that goal for rural America. 

I’m a farmer who has spent nearly my entire life

in rural America—Cherokee County in northwest

Iowa. I’ve seen first-hand the challenges facing our rural areas—

and the amazing opportunities that we have there as well. 

Those of you who live, work or grew up in a small town or

on a farm know well that our country’s rural communities

have faced significant challenges over the last century. From

shifting populations to the “brain drain” to the farm crisis of

the 1980s, we’ve faced some tough times.

But I believe we’re on the verge of a new era for rural

America. The outstanding quality of life combined with new

information technology, advancements in agriculture and

new business opportunities open the door for an unparalleled

period of growth.

Farming and agriculture will always be a major and important

part of the rural landscape in America. But traditional agriculture

alone will not be the driving force of future development.

There are a couple of significant factors impacting our rural

economy today. The past several decades have seen major

changes in U.S. and world production agriculture and rural

structures. These shifts have shown us that although our farm

commodity programs have been critical in keeping U.S. agriculture competitive in the global economy, they aren’t geared

toward rural development and don’t have the impact that our

communities need. 

Consider these facts for a moment. There are 65 million

Americans living in rural areas. Of these, only about 2 million are engaged in farming. That leaves 63 million Americans who have needs for basic services, homes, jobs, education and healthcare. 

Focusing solely on agriculture will not develop rural areas.

We need to look to other markets—technology, manufacturing, and recreation to name a few.

To be successful, we must have a clear understanding of where we want to go. To me, the vision

of rural development—and the goals that drive our

efforts at USDA—focus around two components:

increased economic opportunities and improved

quality of life. 

• First—we must increase economic opportunities throughout rural America by improving the

flow of capital, hastening the use of technology,

furthering the rapidly growing links between agriculture and energy and strengthening the infrastructure, which will increase opportunities of all

types in rural America.

• Second—we need to improve the quality of life by improving the basic needs of adequate food, water and housing, the

essential needs of education and health care, and addressing the

necessary needs of cultural and recreational experiences.

I’m sure some of you remember the movie “Field of

Dreams.” Those of us from Iowa enjoyed it because it popularized the saying, “Is this Heaven? No, it’s Iowa.” But it also had a

larger message: “If you build it, they will come.” That simple

sentence describes much of what we’re trying to do at USDA

Rural Development—and most of what we must do.

Diversification—both economically and culturally—will

enable our rural communities to attract new jobs, families,

investment and growth. 

At USDA, we do a great deal of work that focuses on three

main areas:

• Homeownership assistance that helps low and middle

income Americans build equity and gain the security and

pride of owning their own home; 

I

Co-ops must capitalize 

on new opportunities

Thomas C. Dorr
20 November/December 2002 / Rural Cooperatives

• Infrastructure development, such as expanding bandwidth

capacity and technology for communities to grow; and

• Financing rural entrepreneurial and innovative rural

activities such as value-added industries. 

Cooperatives can be, and will be, a vital part of seizing these

new opportunities. As a farmer, I’ve had a lot of experience

with cooperatives. I have sold to them, bought from them and

competed with them. My experiences have been both good

and bad, and those experiences have taught me a great deal

about the cooperative concept.

Like all of you, I know that cooperatives can work very,

very well—and I firmly believe that they are a valuable tool in

rural development and many other

areas. But as we all know—and

many have experienced—they are

not always the answer. And it is

important for those of us in the

business of cooperative development to know the difference.

Cooperatives need to be businesses first. They must be soundly financed and built upon

business plans that are well thought out and make sense.

Cooperative members and boards of directors need to be

knowledgeable and able to make wise business decisions.

Education and equity are key.

Let me spend a moment on farmer cooperatives. We hear of

several farmer cooperatives that are troubled. There’s the bankruptcy of Farmland and Agway, the failure of Tri Valley Growers, and reports of troubles with several other large cooperatives. They are struggling—challenged to compete with the

scale, technology and sophistication the market demands. 

And importantly, at the center of the struggle is the lack of

sufficient capital. Our typical farmer cooperative today is

built upon a model that uses debt to finance itself. Some may

call this an overstatement, but I don’t think it is. When we

look at the balance sheets of many local cooperatives, we see

capital structures largely composed of equity. 

Yet when we look underneath the numbers, we see that a lot

of that equity is owed to members, many of whom have retired

or are about to. Thus, the numbers mask a serious condition. 

Recent failures are not failures of the cooperative model

any more than the bankruptcies of WorldCom, Enron or U.S.

Airways is a failure of the corporate model. It’s how we apply

the models that determine success or failure. 

Many suggest that farmer cooperatives don’t have enough

capital because farmers don’t have the capital to put into them.

On the farm, we call that “bunk.” The equity is there.

Farmers have not used their asset base—their land—to its

maximum return. Instead of just rolling that capital into the

relatively low returns from farming, they can move their

capital to other areas. This will raise farm incomes—and

enable more farmers to stay on the farm. Our farmers probably can’t get much better at farming. They should, however, get much better at investing. 

So when I hear people say farmers don’t have the money to

make major investments in cooperatives, I say that’s wrong.

The money is there. If the business plan is sound and convincing—and if farmers understand the untapped potential of their

capital, they will invest.

The theories of Clayton Christian, in his book Creative

Deconstructionism, suggest that institutions must be completely, rather than incrementally, reconstructed if they are to

remain vibrant and relevant. This kind of reconstruction may

just be what our farmer cooperative system needs.

We need to look beyond the conventional mold to build

and support cooperatives that increase economic opportunities in our rural economy.

Rural communities can band

together to increase returns to their

taxpayers by providing basic services

such as healthcare and education. 

Rural small businesses can band

together to make bulk purchases or

provide better business services to

remain competitive and to use the

technology necessary in a retail world dominated by Wal-Mart. 

The cooperative is a flexible concept that makes all these

things possible. 

We don’t support cooperatives because of what they are—

but because of what they can do. We support them because

they are a method for local people, businesses and communities to take charge of solving their own problems—and opening their own doors of economic opportunity. 

I recently had the opportunity to talk with NCBA CEO

Paul Hazen and Communcations Director Jennine Kenney to

discuss cooperatives and the role they can play in making our

rural communities stronger, more vibrant places to live. We

talked about rural healthcare, housing and community services. We talked about keeping the small business on Main

Street alive—and thriving.

Cooperatives mean empowerment in accomplishing all of

these things. We need to work together to make sure this

important tool is used to its full potential.

We are challenged today to develop strategies for rural

America that are effective and programs that make sense.

We, in the public sector, simply have to do a better job. We

have bound ourselves up with procedures, regulations and

approaches that reflect a rural America of the 1950s, using

definitions from the 1930s. 

That has got to change. Rural America of the 21st century

will look nothing like the rural America of the early 20th

century. Our programs must stop looking back and start

looking forward. 

We have to work with our farmers to encourage them to

use that untapped equity in their land to make serious investments in their local communities. This doesn’t mean encouraging them to leave farming or to take senseless risks. It’s just

the opposite. By increasing their return on investment—the

value of their land—their ability to stay in farming will be

continued on page 34

Farmers have not used their

asset base—their land—to

its maximum return. 
By James Baarda, USDA/RBS Economist

James.Baarda@usda.gov

Editor’s Note: The following article is based on a presentation the

author made during the Cooperative Communicators Association

annual institute in Burlington, Vt., this past summer. 

embers look to their cooperatives for services

and support in both difficult and good times.

But cooperatives also look to their members

for necessary support, patronage and direction.

This reciprocal relationship between members

and cooperatives means that whatever affects farming also

affects cooperatives. And it means that whatever affects the

business and economic environment in which cooperatives

operate also affects farmer members. Restructuring by large

and small cooperatives, several bankruptcy filings by wellknown cooperatives, and significant transformation of the

entire agricultural sector can lead to confusion and uncertainty

among producers. This, in turn, may cause cooperative members and leadership to lose a clear sense of direction and purpose. But cooperative leadership cannot afford to succumb to

these forces, regardless of the size of the problem.

The first step in facilitating positive, realistic responses

to dramatic changes in agriculture is to identify the forces

causing the changes that affect cooperative members. This

identification process will, at the very least, reduce largescale, invisible trends and concepts into a workable “short

list” of factors that are hitting home on your co-op and

your members’ farms and ranches. Your task is to establish

reasonable expectations of success, based on these forces.

Then develop short- and long-term strategies, depending

on how accurately the “big picture” is perceived. The 12

forces described in the first part of this article offer a basis

for further discussion.

The next step is to assess the implications of these forces

for farmers and their cooperative. The dozen questions in the

second part of this article shift focus from the broad forces to

address cooperative issues directly. 

The remaining task for cooperatives, directors, management and members is to then establish—for each cooperative—meaningful connections between the forces and

issues, then devise strategic plans that will lead to the cooperative’s successful

response and effective

service to members.

12 forces changing the

face of farming and

farmer cooperatives

The following list

summarizes major forces

affecting U.S. farming

and, consequently, farmer

cooperatives and their

members.

1. Globalization

The impacts of globalization are felt in three

major ways: 

• On markets—World market forces are reflected directly

back to all levels of agribusiness and to U.S. farmers.

Demand, supply, pricing and all other economic forces

that determine farm income and affect farming decisions

are now world issues, not local, regional, national or

hemispheric issues.

• On production—Individual U.S. farmers do not produce for limited or well-defined markets. Every farmer

is part of a competitive world system in production

choices and costs, governmental support programs,

market delivery systems, sources and pricing of inputs.

Production trends may be inexorable on a world scale,

leaving individual farmers unable to make meaningful

production decisions.

• Non-agricultural environments—Farmers are now

exposed to world financial markets where the economic

systems are far different from the U.S. system. They also

face international and transnational political forces, fluctuating exchange rates and new communications systems

and technologies, all of which can change rapidly. These

environments are ever-more important to agriculture,

and, at the same time, are less and less sensitive to agriculture. Almost any production activity in any sector is

expendable if “economics demands it.”

2. New forces drive farming

• Economic forces—Broad micro- and macro-economic

Rural Cooperatives / November/December 2002 21

M

Major changes in agriculture raise big

questions for nation’s cooperatives

James Baarda addresses the CCA

conference in Burlington, Vt.
forces impinge on every aspect of the farming process.

The forces are not only more pervasive but, in some

regards, they are more volatile that ever before. Stability

and predictability are rare commodities.

• Sources—More and more of the forces driving agriculture and affecting farming lie outside the control

of farmers or the general agricultural sector—even

outside the control or influence of the nation. The

agenda is being set by others, not necessarily by

design, but more by economic forces that are neutral

in some sense, but not at all neutral toward those who

cannot exert power.

• Social forces—Concerns about the environment, food

safety, animal health and treatment, conservation, odor

and pest nuisance, land use, food costs and labor conditions are among forces finding their way into laws and

regulations that impose general social interests on farmers. An increasingly constrictive network of prohibitions

and directives are part of every farming plan, decision

and cost calculation.

3. Risk

• Levels of risk—Agriculture has always been a risky business, but the nature of risk is changing substantially.

Some types of risk seem to be decreasing while others

are increasing, and the impact of these risks is becoming

more severe. Predictability and planning become ever

more important as farming becomes a more sophisticated science. But risk can undermine the predictability

required for planning, investment and efficiency.

• Sources of risk—As with the market and social forces, an

increasing amount of risk seems to be coming from outside of agriculture and outside of the national economy.

As a result, farmers and others in the agricultural sector

are less able to take effective action to reduce risk.

• Allocation—The generally declining economic power of

farmers and the increasing power of buyers and suppliers

has led to an increased risk for farmers, while other

agribusinesses strive to reduce or shift risk to others,

including farmers.

4. Concentration and industry structure

• Bargaining power—Bargaining power, or lack thereof,

has almost always been of concern to farmers. But it is

an ever-increasing problem because of the increasing

concentration of buyers and suppliers.

• Pricing systems—An increasing number of pricing systems are “closing” due to the decline in both the number

of participants and a reduction in number of farms.

Reduction in transparency and open price discovery

methods arises from the increase in private agreements

between producer and buyer.

• Retail concentration—Concentration at the retail level

has not only added to problems of bargaining-power balance, it has also reduced opportunities for farmers to participate at all. The national scope of retailing concentration—with giant food chains charging for shelf-space and

continued concentration of an already concentrated number of players in many international markets—places U.S.

farmers at a distinct disadvantage.

5. Industrialization of agriculture

• Contracting and integration—Significant increases in

contracting and industry integration have totally changed

some industries. This trend appears to be making its way

into nearly all agricultural sectors. The tradeoffs between

rights and obligations inherent in any contracting system

often leave the real producer at the bottom when it comes

to decision making, influence and profitability. 

• Production fragmentation—This process has resulted in

each producer playing a meaningful role in an everdecreasing part of the production process. Decisions are

removed from the producer to the point that the term

“employee” may best describe many producers. 

• The agenda—Perhaps one of the most profound

changes brought about by “industrialization” is that the

agenda for agriculture is being set outside the

farmer/producer system, not by farmers. The driving

forces are profitability, returns on equity, growth, market

dominance, reduction of risk and direct dependence on

financial markets by powerful companies far removed

from the production process.

6. Biotechnology and intellectual property

• New commodities—Biotechnology and production technology advances are resulting in new genetic commodities and methods of production. This trend is also

impacting new production and processing technologies.

In many circumstances, farmers cannot afford to be left

behind by not adopting the new technologies. At the

same time, however, they cannot afford to make the

investments to adopt new technology. Farmers bear the

risk of uncertainty about genetically modified organisms

(GMOs) and a possible negative public reaction in case

of a real, or imagined, danger to the food supply. 

• Ownership—Production is increasingly dependent on

technology that is owned by proprietary firms. The

agenda for development is set by agribusiness firms

based largely on profitability considerations. Profit is

captured by requiring compensation at some level in the

production system, typically at the producer level. In

many cases, the “producer” either never owns, or has

limited rights in the product itself.

7. Scale of production

• Size—Increased size and scale of operation is not limited

to marketing and processing firms. Farm production

itself is increasing in size, along with requirements for

larger investment, added financing burdens, planning

needs and management skills. Dramatic increases in

farm sizes creates new demands for supplies, financial

services, land and labor.

• Size distribution—Agriculture is facing disparity between

large commercial farmers and smaller operators, ranging

from part-timers to full-time family farms. This disparity

22 November/December 2002 / Rural Cooperatives
is carried over into farmer needs for supplies and financing, the choice of commodity produced and their ability

to efficiently produce a quality, uniform product. 

8. Sophistication and complexity

• Business methods—All but the simplest of farming operations must consider the complexities of modern business and apply sophisticated business practices. This

ranges from the form of business used to financial and

technological computer programs, from expensive and

complex machinery to arcane hedging methods.

• Multiple requirements—Law, accounting, financing and

regulations at the local, state and federal level are an integral part of every farming operation and are playing an

increasingly intrusive role in the business of farming.

9. Technology

• Information technology—Production and distribution of

agricultural products has been greatly influenced, as have

most other sectors in the developed world, by information technology. Computing capabilities affect all businesses of every size to increase record- keeping capacity,

enhance decision-making support and offer data-bases

not previously accessible to producers. Communication

technology has revolutionized the way information is

exchanged and, through the Internet, the amount of

information available on a multitude of subjects.

• Production and distribution technology—Technology

supporting production agriculture has increased in

sophistication and in the capacity to enhance production

efficiency. Co- op members are operating in a dynamic

environment that includes complex, high- performance

machinery, global positioning systems, advances in food

chemistry and technology, processing and packaging

innovations, and distribution system mechanization. 

10. Consumers and consumption

• Changing tastes—Consumer tastes for food are changing, due largely to advertising and marketing. For the

most part, advertising and marketing are designed to

increase product profitability for processors and retailers. The demand is generated at the retail level and

passed back to producers, who have little or no input to

the process. Farmers are asked to produce what is

demanded when the buyer demands it.

• Uniformity—The enormous size of the fast food industry

and grocery retailers is in many ways reducing the variety

of foods demanded and offered. In other ways, however, it

is increasing variety. More products are becoming homogeneous commodities for which uniformity of size, quality

and taste is absolutely essential. This, in turn, often eliminates the smaller producer from meaningful participation

in the supply chain.

• Service demands—As consumers move further away

from a realistic understanding of the farming process,

they become more demanding and less forgiving of variety in quality, taste or appearance. 

11. Lifestyles and attitudes

• Farmer expectations—Perhaps the most important

forces to consider are those that come from farmers

themselves. Farm families have expectations about a

desired lifestyle and standard of living, income level and

stability, and a decent working environment. Among

many other things, this may well influence what farmers

want from their cooperative, the kind of operations the

farmer endeavors to establish, and their willingness to

remain in agriculture.

• Rural residents—Farmers and other rural residents have

observed substantial changes in rural communities, many of

which are based on declining income and population. Institutions and amenities are nevertheless required for those

remaining, and rural residents have reason to expect that

their community will be stable and a rewarding place to live.

This, in turn, influences attitudes toward business, the

importance of local firms and the impacts of local cooperative facilities on employment and community income.

12. General economic pressures

• Profitability—Prices, costs, risks, variability and other

problems inherent in agriculture combine with similar

pressures from other parts of the economy to place

severe pressure on farm profitability and stability. Many

of the factors just discussed contribute to the problem.

There is every reason to believe that such pressures will

continue long into the future.

• Value of agriculture—A problem broader than farm

profitability and stability is that of the value of agriculture and agricultural production. Unacceptable returns

and stability undermine the sense of value in producing

agricultural products, as does the decline of farmers’

overall position in the industry. The public, including

policymakers, may also place less value on agricultural

production and the traditions of independent farming.

• Financial markets and performance—Cooperatives and

farmers have vested interests in financial and equity markets. As those markets change, so too, do the fortunes of

cooperatives and members. For the most part, performance

of the markets is entirely beyond the control of cooperatives or farmers. Yet, market behavior dictates financial

resources available for cooperatives and members, levels of

investment in cooperatives, savings and spending patterns,

and financial flows into and out of the agricultural sector.

A dozen issues for co-ops

The 12 forces discussed above suggest numerous questions that can be asked about cooperatives and their future

in American agribusiness. Some affect cooperatives directly

as businesses, other issues impinge on cooperatives because

of the impact on farmer-members.

The following list of 12 issues summarizes challenges

faced by cooperatives in the changing economy and agriculture sector. They are presented in the form of questions

to emphasize that specific answers are needed. The

response to such questions can be positive; the questions

do not suggest in any way that cooperatives cannot respond

Rural Cooperatives / November/December 2002 23
24 November/December 2002 / Rural Cooperatives

By Dan Campbell, editor

How should cooperatives respond to the recent bankruptcy filings by several of the nation’s largest farmerowned co-ops and the collapse of some of America’s corporate heavyweights? More effective director training

programs and communications efforts geared to better

educate members about how their co-ops function would

help, according to panelists who tackled

this thorny issue during the annual institute of the Cooperative Communicators

Association (CCA) in Burlington, Vt. 

“Fortune” magazine blames lack of

vigilance by boards of directors for the

financial and ethical lapses that have

contributed to the collapse of some of

America’s corporate giants, said Catherine Merlo, a communications consultant

from Bakersfield, Calif. Quoting from the

article, she said, “Nothing will change

until directors realize ultimately that

they must reform themselves. They have

to go beyond the rules, ask tougher

questions, be more skeptical and critical

of management and never forget that

their No. 1 job is to watch out for shareholders, not the CEO.” The same doubtless holds true among many co-op boards, she noted. 

In recent conversations with co-op representatives,

Merlo was told that some are convinced that their directors “don’t have a true grasp of the nitty-gritty details”

of the co-op financial statements they review. She said

this strongly suggests that more time and effort be spent

on director training.

The need for more effective education extends

beyond co-op directors and “goes to the heart of member communications efforts,” said Pamela Karg, a Wisconsin-based co-op communications consultant. “How

many of your members really understand those beautiful

annual reports we put out? How many of you really

understand the numbers the finance office gives you?” 

As another example of the need for more basic member education, Karg said she was approached by a dairy

co-op to produce an article explaining how milk is

priced and how this determines the bottom line on a

producer’s milk check. If something this

basic to the livelihood of farmers isn’t

always well understood, think how

much tougher it is for producers to move

from the farm to the board room, where

they must deal with complex financial

statements and global marketing issues. 

Chuck Lay, communications director

for MFA Inc., said he feels most co-ops

“have access to talent” in their ranks.

Farmers who are still in the business

have survived this long only if they are

astute businessmen, he said, adding

that MFA’s board represents deep

knowledge of a wide range of commodities, including hogs, soybeans, corn,

beef cattle and dairy. 

Lay said some co-ops struggle with

“large board syndrome.” Several years

ago, MFA reduced its board from 30 to 14, and most

believe it was a good move. A “smaller board composed

of sharp producers can make quick, intelligent decisions,” Lay said. 

Lani Jordan, communications director for CHS, said an

article in “The Economist” magazine also addressed the

meltdown of some of the nation’s major corporations. It

printed a list of recommendations for corporate boards to

consider as preventive medicine. These recommendations range from the need for more aggressive audit comBusiness failures underscore need 

for dose of preventive medicine

effectively to the changing forces faced by members.

1. Do the forces mentioned and the resulting changes in

the industry affect cooperatives in a particular way?

Is there something about cooperatives that makes them

susceptible to the forces mentioned above that differs, either

qualitatively or quantitatively, from other kinds of businesses?

Do the impacts on farmers extend to the cooperative in a significantly different way than for other types of agribusiness?

These questions can be addressed for each of the forces

because some will most certainly have different impacts on

cooperatives than others.

How do cooperatives respond? On the one hand, the

cooperative may have a response comparable to that of noncooperatives. In addition, each force and the response by

farmers may be reflected back to cooperatives differently

than from non-cooperatives. The latter possibility leads to a

general inquiry about cooperatives: of the forces acting on

farmers, are some more amenable to solution by cooperatives

than any other form of business? Can cooperatives solve

farmers’ problems as no other form of business can?

2. Do agriculture cooperatives exist in a dying sector?

As economies globalize, does U.S. agriculture face perCatherine Merlo refers to an article

in Fortune magazine, which lays

much of the blame on board members for the ethical and financial

problems that have driven some

corporate heavyweights into oblivion. USDA Photo by Dan Campbell
Rural Cooperatives / November/December 2002 25

mittees to conducting thorough annual performance

reviews for CEOs. As she worked her way down the list,

Jordan put checks by all the items that CHS is already

doing. She wound up checking most of the items on the

list. Thus, the co-op governance structure was, in effect,

being held up to corporate America as an example of the

way it should be doing business. 

“Yes, co-ops do sometimes end up with unqualified

directors on their boards,” Jordan said. But most are

selected by their fellow producers based on their business acumen and they know well that their duty is to

their fellow producers, rather than being “handpicked

choices of the CEO” based on their willingness to support his or her agenda. 

Merlo said she is increasingly hearing that members

are only concerned with the bottom line, particularly

younger members. One staff member of Tri Valley Growers, a now-bankrupt and defunct California fruit processor, told her the co-op’s members always wanted the

best possible price from the co-op for their crops, but

also wanted the co-op to be competitive in the marketplace. A major challenge of the co-op was to balance

those two divergent demands. 

The response of some co-ops is to admit that they

cannot guarantee they will pay the top price to producers every year, but will be competitive over the long

term and provide a reliable home for their crops. “This is

a constant member-education challenge,” she said. 

“The bottom line is crucial, but we have to do a better job telling the rest of the story about the value of coops,” said Jim Rodenburg, communications director at

AGP. He noted that AGP member meetings used to

always start with the financial report, but now begin

with a management report that focuses on marketing

efforts. He said that in no way downplays the financial

statement, but puts new emphasis on marketing as the

key to the co-op’s future success.

It was noted that one farm columnist laid some of the

blame on the rise in co-op bankruptcies on the nation’s

farm press, which he said traditionally gives co-ops “a

free ride” and is rarely critical of them for fear of being

perceived as anti-farmer.

Lay disagreed, saying he has usually found the

farm press to be “skeptical and even hostile toward

cooperatives.” Most ag journalists, Lay continued,

“have to be dragged kicking and screaming to cover a

co-op event.” 

Jordan said the media “generally ignores co-ops

unless they file for bankruptcy.” She acknowledged

efforts of those in the room who strive to get the coop story out to mainstream press, but said it is hard

when the press is so geared toward covering crisis

and conflict.

Patrick Duffey of USDA Rural Development said the

situation can best be addressed if farm, electric and

consumer co-ops continue to work together—as they

do under the umbrella of CCA—to promote greater public understanding of cooperatives. Well-planned media

events can still attract positive press coverage, he said. 

It is vital to remember that these co-ops “did not

get into financial trouble because they are co-ops—

they got into trouble because of some bad business

decisions,” Jordan said. Most co-ops form as a

response to failure in the marketplace, she noted.

“When no longer needed for defensive purposes, 

co-ops must adopt an offensive business strategy to

survive,” she said. In the case of CHS, the strategy is

to continue to move to position itself as a producer of

value-added products. 

“Co-ops will survive,” Jordan said, “but this is a time

of transition,” and the co-ops of tomorrow will look different than those of today. Our members are telling us

we have to earn their business every day. A co-op is not

a social club; you can’t count on loyalty. You must earn it

through solid business performance.” 

“We don’t run the board or management, but we can

make suggestions about director training and help members understand how their co-op works,” Karg said, 

urging those present to “communicate about the difficult issues before questions arise among members.” ■

manent disadvantages because of high costs, regulations,

etc.? To what extent, if any, is agriculture facing contraction, major modification, or extinction? If U.S. agriculture’s

existence is challenged, are the cooperatives that serve agriculture also doomed? The issues raised in a recent book

that questions the long- term future of U.S. agriculture are

timely and are being considered by a surprisingly wide

range of individuals.

One question for cooperatives is their role in these large

trends, if such trends do indeed even exist. Do cooperatives

have a special role to play in helping farmers and the U.S.

economy avoid the “death” of agriculture as we now know it?

Do cooperatives demonstrate weaknesses, as well as strengths,

in response to sector declines and possible replacement with

other commodities or types of economic activities?

A profound question is what role cooperatives will play in

the future of agriculture. Can cooperatives play a unique role,

either individually or collectively, in maintaining the strength

of the agricultural industry by effectively supporting farmers?

3. Are cooperative decision-making processes adequate?

Timing and deliberation—Are cooperatives inherently

slow in making decisions in a rapidly-changing environment
26 November/December 2002 / Rural Cooperatives

because of their reliance on member approval? Are decisions

made in the right place in the cooperative by the right people? Are these questions, stated as fact by some, real issues, or

only unsupported observations?

Directors—Are boards of directors capable of making

timely, correct and forceful decisions? Have co-op boards

gathered the expertise needed for modern agriculture, and

are boards capable of using this expertise?

4. Are cooperatives and their leaders capable of playing in

the world arena?

Sophistication—Are cooperative members and their leaders not sophisticated enough to participate in the dynamic,

worldwide agricultural and agribusiness arenas? While we

know this is not the case, others do not. As a consequence,

the fundamental member-control issue can be undermined

and potential cooperative participation in the world markets

dismissed as inherently impossible.

Complexity—Is the business so complex and large that

success can only be expected from professional management

and planners, regardless of how good at farming members

and directors are? Should the field be left to the professionals, or should a new balance of power be explored?

Both of these queries come to the fore frequently when

farmers form new-generation cooperatives that have both a

highly complex processing system beyond the board’s technical expertise and a marketing system they are not familiar

with. One consequence is that the board of directors, and

therefore the members, may rely too heavily on management,

may not provide the necessary oversight of management and

cooperative performance and may not participate effectively

in strategic planning and major cooperative decisions.

5. Is cooperative business too limited to be successful?

Diversity—Cooperatives serve farmer-members. This statement defines the breadth of their activities. Many other businesses are successful because they can diversify to reduce risks

and take advantage of synergies, something cooperatives cannot

do effectively, if at all. How detrimental are the diversification

limitations to the long-term survivability and flexibility of cooperatives? Exactly how do these limitations inhibit the cooperative? For example, does limitation on type of product marketed

or supplied place the cooperative at a disadvantage with respect

to a competitor who can engage in product lines required for

the market? An important question to be answered is how

cooperatives can respond without losing their character and

their close association with farmers’ production processes.

Service mandate—If prices and costs do not generate

profits for a period, cooperatives may not be able to temporarily abandon a line of business, as can other business.

Does this place them at a disadvantage? This also raises the

question of profitability requirements for co-ops. Given the

purpose of cooperatives and the complexity of accurately

determining benefits to members, are there situations where

a cooperative can operate without “profits” and still be considered a successful business organization? Have cooperatives

established suitable alternatives to pure “profit” motive?

6. Similarly, does service devoted only to members doom

cooperatives in times of change?

In business limited to service to members, and with limited

flexibility to expand business, what is the cost to cooperatives of

serving only members? How is this cost balanced against the

benefits of such service? Who ultimately bears the burdens of

the cooperative?

7. Do member demands and behavior weaken cooperatives?

Economic demands—Farmer-members bear the burden of

financing the cooperative. When farmers demand not only

good prices, but high returns and a quick equity revolvement,

do they set the stage for cooperative failure? This differs

from the relationship between a non- cooperative business

and its customers. But is it a weakness?

Loyalty—Are cooperatives placed at a disadvantage with

respect to non-cooperative businesses when members shop

for prices rather than maintaining a long-term relationship

with their cooperatives? Is there any way to tie a cooperative’s loyalty to its members on one hand, and loyalty to the

cooperative on the other? These are perennial issues faced by

federated and direct-membership cooperatives. Some

observers attribute the failure of both centralized and federated cooperatives to member behavior—individual farmers in

the case of centralized cooperatives and the local members of

a federated cooperative.

8. Is there a fatal size limit on “true” cooperatives?

Size concerns—Is there a maximum size to which a cooperative can grow and still maintain its true cooperative relationship with members? Member control, member relations,

and response to individual member needs may diminish with

increasing size. What roles can cooperative education and

good member relations play in this evolving process?

Critical size—The ultimate issue is whether the maximum

size at which a cooperative can continue to be effective as a

cooperative is smaller than the minimum size needed to be

effective in today’s agricultural sector. If so, cooperatives may

be relegated to a secondary role in the sector. However, some

cooperatives are very large and very effective, so the question

of critical and maximum size has for some purposes been

answered. In other situations it has not.

What kinds of arrangements can cooperatives make with

other companies to get the benefits of necessary size without

losing cooperative character. Joint ventures, shared subsidiaries

and strategic alliances are regularly developed by cooperatives

of almost any size. Concern for maintaining cooperative principles is paramount in any arrangement, but cooperatives

should have no difficulty engaging with other businesses to

participate in emerging and changing markets and production

processes. More inquiry is needed into this area.

9. Do cooperatives have fatal limits on capital sources?

Overall size—If there is a minimum size at which cooperatives can be effective, are limitations on capital severe enough to

prevent growth to that size? Many, if not most, cooperatives feel

hampered by capital requirements, restricted as they are to the

continued on page 36
Rural Cooperatives / November/December 2002 27

Utah Co-op Alliance formed

With members that includes such

well-established ag cooperatives as

turkey marketer Norbest and the

Moroni Feed co-op, the new Utah

Cooperative Alliance was formed this

fall. It will share information, help

member co-ops network and generally

promote cooperatives operating in

Utah. The alliance represents: 77 agricultural cooperatives, 10 rural electric

co-ops, 4 telecommunications co-ops,

134 consumer cooperatives and 21 coops affiliated with Associated Foods. 

Chris Falco, alliance president, said

the fact that cooperatives operate

under a “user-benefit” principle means

that the customers have more input

and control over the business or organization’s operations. At the same time,

he said, the cooperative’s design

NEWSLINE

Compiled by Patrick Duffey

By Melissa Sandfort, DFA

Mail carriers are much heralded for delivering mail

through all kinds of adverse weather, but the real unsung

heroes along the Louisiana coast this fall were the local

milk haulers for Dairy Farmers of America (DFA) during

tropical storm Lili. “The milkman cometh” meant that milk

reached the market in Lafayette, La., even as tropical

storm Lili spun out of Louisiana on Oct. 4, leaving behind

a trail of mud and misery and

wind and flood damage for residents. Some areas spent days

without power. 

But Lili was no match for the

determination of milk hauler 

Bobby Berry and six dairy farmer

families who market their milk

through DFA’s Southeast area

based in Knoxville, Tenn. 

Sammy Royer, DFA’s field representative at Cankton, La.,

recalled, “The eye of the storm

passed 20 miles from my house

on Oct. 3. Six area dairy farmers asked for our help. Power was out for four days. One farmer missed four milkings

because of the outage. They faced horrible winds and

five inches of rain. They had been using portable generators to run the necessary equipment to produce electricity to keep the milk cold.” Worse yet, area electrical outages had forced DFA’s Borden dairy processing plant in

Lafayette to close its doors. 

“Our job was to get that milk to consumers on behalf of

our dairy farm families, said Berry, who was hauling for

DFA contractor H & J Burford out of Shreveport, La. “Cows

don’t stop milking just because of a storm. If we don’t deliver, farmers don’t get paid and consumers don’t get milk. We

refused to let Lili prevent us from bottling and delivering

63,000 gallons of milk. The power lines were playing skip

rope as I headed out in 60-mile-per-hour winds. We had to

move fast.”

Power company crews worked

overtime and restored service to the

plant by 3 a.m. Manger Jim Williams

credited the teamwork of employees,

the hauler and DFA members for completing half the plant’s normal deliveries that day and local routes resumed

the next day. 

“In a storm, the community is

focused on immediate losses and forgets our cows have to be milked. We not

only lose money but also our livelihood,”

said Dan Lyons, DFA member and delegate who farms 90 miles from the Gulf. He milks 100 cows

and has been a dairyman for 32 years. “It’s nice to know we

belong to a co-op that has had the foresight to put programs

in place to help the dairy farmers through disaster.”

For the DFA employees and members, it was another

reminder of the cooperative’s motto, “where a single

drop of milk affects the entire organization.” ■

Just call him Bobby “Hurricane” Berry from now

on; 60-mile-per-hour winds couldn’t stop this DFA

milk hauler. Photo by Mike Silva, courtesy DFA 

Hurricane Lili no match for undaunted DFA milk haulers
ensures more attention to the needs of

members. “They’re formed for a specific purpose, either to market or provide services to its members.”

For Leonard Blackman and his

sons, that means a five-decade history

of raising turkeys in Moroni, thanks to

a pair of cooperatives represented by

the new alliance. Utah’s Moroni Feed

Co. allows about 100 farmers in Sanpete County and Nebraska to benefit

from group purchases of feed, veterinary services, processing and gasoline.

Norbest Inc., of Midvale, affords

farmer-members the benefits of marketing turkeys and developing new

products.

“The only reason we all survive is

because of co-ops,” Blackman said of

his 100,000-turkey operation and

dozens of others scattered around the

county. “They enable us to join forces

and compete with the big companies.”

Associated Foods, another Utah cooperative, serves independent grocery

stores and helps them compete with

larger grocery chains. Desert Power

serves six rural electric power cooperatives which, in turn, serve residents of

rural areas. 

Scribner CEO at Southern States;

SSC, Perdue forge new grain pact 

In the midst of spinning off chunks

of its Mid-Atlantic operations to stabilize its financial situation, the board of

directors of Southern States Cooperative (SSC) at Richmond, Va., has unanimously appointed Tom Scribner as president and chief executive officer (CEO).

Scribner has been the co-op’s chief merchandiser. He succeeds Wayne Boutwell

who resigned after 5 years at the helm.

Boutwell had earlier been CEO of the

National Council of Farmer Cooperatives in Washington, D.C. 

Scribner joined SSC in 1988 and

earlier had worked for Countrymark

Inc., in Indianapolis, Ind. In late

October, Scribner announced the

cutback of about 120 staffers, mostly

at Richmond, including 23 positions

recently vacated or planned under

the budget. Some were offered jobs

elsewhere in the cooperative. He

advised employees that the combination of drought, lower sales and the

troubled agricultural economy made

it “essential that we concentrate on

our core business activities and in

making those operations as efficient

as possible.” 

SSC sells farm production supplies

and services and lawn and garden products through a chain of 1,300 retail

stores stretching from Maine to Florida. Last year, the cooperative hired an

Arkansas consulting firm to guide a

restructuring program and deal with

changes in

agriculture.

Most recently,

SSC eliminated

its truck fleet,

which covered

8 million miles

per year but

operated only

three-fifths

full. The cooperative contracted with a Richmond firm to provide its needed transportation services.

To further tighten operations, changes

were made in the assortment of products, services were improved and sales

people trained with better product

knowledge. Scribner said SSC was

using its buying power to negotiate

better prices with venders. In the

future, SSC plans to organize its stores

around crop centers in a hub-andspoke arrangement that will require

every store in a region to carry a full

line of products. 

Meanwhile, faced with drought conditions in the East this season and a

general agricultural malaise among

many of its farmer customers, SSC

agreed to a long-term lease of its 13

grain elevators in seven states to Perdue Farms, a major poultry producer

and marketer based in Salisbury, Md.

SSC also plans to sell its Wetsel seed

subsidiary at Harrisonburg, Va., to a

subsidiary of The Anderson Group, an

investment firm at Bloomfield Hills,

Mich. Wetsel was a leading distributor

of turf, horticultural and lawn and garden products in the East.

Debt-laden Agway files for

Chapter 11, reorganizing

The national agricultural malaise has

caught up with the Northeast. Saddled

with heavy debts of $478 million and

short on cash, Agway Inc., of DeWitt,

N.Y., filed for Chapter 11 reorganization Oct. 1. It is seeking protection of

the U.S. Bankruptcy Court for the

Northern District of New York at Utica

while it attempts to continue operations

while reorganizing the business. Agway

serves 69,000 farmer-members.

Agway’s creditors will meet Dec. 11

to review the cooperative’s assets, liabilities and related matters. The largest

creditor, the company’s 401 (k) securities fund, which contains retirees’

retirement investments, is owed about

$35 million. Creditors won’t know how

much they’ll recoup until the bankruptcy court and creditors approve a

reorganization plan. 

Agway reported losses of $98.2 million for fiscal 2002, which ended June

30, with $85.4 million directly related

to the sale of discontinued operations.

Revenue was $899 million, down 21

percent from 2001, due partly to a

mild winter and lower petroleum commodity prices.

Agway had net losses of $8.9 million

in fiscal 2001 and a $9.4 million loss in

2000. The regional cooperative has

already sold some operations and two

others should be completed by the end

of the year. The 550 independent

Agway dealer stores throughout the

Northeast were not included in the

bankruptcy filing. 

The court has approved the cooperative’s request to pay its 3,600 employees

and maintain their medical and other

benefits after Agway gained access to

$125 million debtor-in-possession

financing. Also covered were vendors

and suppliers of services received since

the Oct. 1 bankruptcy action. 

Wholly owned subsidiaries exempt

from the bankruptcy action include:

Agway Energy Products LLC, Agway

Energy Services Inc., Agway Energy

Services-PA Inc. and Cooperative

Milling, a feed mill at Gettysburg, Pa.,

run as a joint venture with Southern

28 November/December 2002 / Rural Cooperatives

Southern States CEO

Tom Scribner
Rural Cooperatives / November/December 2002 29

States Cooperative, Richmond, Va.

Subsidiaries covered in the bankruptcy

are: Agway Feed and Nutrition,

Agway Agronomy, Seedway, Feed

Commodities International, Country

Best Produce, CPG Nutrients, Agway

CPG Technologies and Agway General Agency. Earlier this year Indiana

Farm Bureau purchased Agway’s

insurance business. 

NCUA, USDA in rural pact

An agreement has been signed

between the National Credit Union

Association and USDA to make rural

economic development funds available

through the nation’s 3,300 state-chartered credit unions for business, home

and community projects. Thomas C.

Dorr, USDA under secretary for rural

development, said the opening of new

markets “will bring credit unions more

flexibility in developing lending strategies and stimulating further economic

Management Tip continued from page 13

are pretty clear. With diligence and care,

a cooperative director has guidance to

avoid the many pitfalls suggested by a

cautious view of a director’s job. Though

a director may face unpleasant, and

sometimes unexpected circumstances,

adherence to high personal standards of

conduct is excellent insurance against

personal problems.

Directors are part of a team. This

team is not only a source of support, it

is a reward in itself. Difficult issues are

discussed within the board before decisions are made; information is generated and shared, and decisions are made

as a board. Responsibilities are shared

with others in a similar position. The

team concept includes not only the

board of directors, but management

and, most importantly, the cooperative’s members. The opportunity to

take an active role in multiple constituencies is unusually valuable for a

cooperative director.

The sheer challenge of being a

cooperative director can be added as a

third source of reward. Directors see a

problem from its discovery. They

define the issues it raises for the cooperative and members, identify the

range of possible solutions, gather and

study the information needed to assess

the solutions, determine what the consequences of various courses of action

might be, make a decision, create the

policies and directives needed to

implement the chosen solution, and

assess the consequences of the board’s

decisions. The more difficult the

problem, the greater the rewards of

finding an answer. The more critical

the issue is to the success of the cooperative, the more satisfying is the

problem-solving process.

Directorship presents an opportunity to serve others in direct and

important ways. Beneficiaries of a

successfully guided cooperative

include members and patrons, the

cooperative’s management and

employees, the individuals and businesses that deal with the cooperative,

the communities in which the cooperative and its members and employees are located, and the marketing

and supply systems in which the

cooperative operates. Individuals

considering being a director should

consider the significant impacts they

can have beyond the boardroom and

even on the cooperative.

Finally, board membership carries

personal prestige despite the many

duties and difficulties. Serving on a

cooperative’s board of directors is a

worthy personal and professional goal.

Directorship should be a source of

great personal pride and satisfaction. ■

Implementing exercise

As a board, review the character of your cooperative:

• What is the stated purpose of the cooperative?

• What does this mean when balancing interests?

• Identify the “stakeholders”—those who have an interest in what the cooperative does and how the cooperative performs.

• Identify the principle things that make the organization a cooperative and

distinguish it from other kinds of businesses.

Revisit the cooperative’s vision statement, mission statement and objectives.

• Are they adequate, realistic and up-to-date?

• Did they come form the membership or were they devised as a boardmanagement exercise?

• Are members familiar with their cooperative’s vision, mission and purposes?

• What do the members think of them?

Set aside some time at a board meeting (after preparation) to discuss what measure of success the board should use to assess the cooperative’s performance, its

management, and the board of directors.

• Start with the broadest list and set priorities.

• Are some measures incompatible with others?

• If trade-offs are required, what decision rules can be devised?

• What would members think of the trade-offs and decision rules?

Make it personal—it already is!

• Identify the issues that you personally find to be the most uncomfortable,

those you’d really rather not have to make decisions about.

• Make a plan to share the burdens of the decision.

• List the factors you will consider in addressing the problem.

• Do you think others share your discomfort?
development in historically underserved areas. USDA and NCUA will

promote accessibility of resources

through USDA to assist the lowincome population in communities

served by credit unions,” Dorr said.

Reeves elected Gold Kist chairman

Douglas Reeves Sr., a poultry producer from Reevesville, S.C., is the new

chairman of Atlanta-based Gold Kist

Inc., a farmer-owned co-op that is the

nation’s second largest processor of

poultry products. Reeves, first appointed

to the board in 2000, is also chairman of

the Edisto Electric Cooperative, vice

chairman of the Central Electric Cooperative and chairman of the South Carolina Bank and Trust. 

Three new directors have been elected to the board, including Christopher

Fannon, a cattle and broiler producer

from Geraldine, Ala., who defeated Dan

Smalley, chairman of the board and a

director for 16 years. The other new

directors are Frederick W. Gretsch Jr. of

Crawford, Ga., and Billy G. Meeks of

Cullman, Ala. 

“Successful Farming” magazine

reports that five of nine directors have

now been replaced on the board in the

past 3 years, which it attribute to growers being “fed up with low returns and

demands to upgrade buildings.” In

what it says may have been the largest

write-in campaign in the regional

cooperative’s 69-year history, members

voted 169-161 for Fannon.

AGP stretching its scope to

West Coast, Texas Panhandle 

From the West Coast to the Texas

Panhandle, Ag Processing Inc. (AGP),

of Omaha, the nation’s leading cooperative soybean processor is expanding its

scope. Construction has started on a

new deep-water-vessel loading facility

at the Port of Grays Harbor at

Aberdeen, Wash., to facilitate trade

with Pacific Rim markets. It should be

ready for shipping by the end of next

summer. It will be supplied by grain

rail cars originating at Midwest local

cooperatives affiliated with AGP. The

facility will be served not only by the

Puget Sound and Pacific Railroad but

also have customized access to the

Burlington Northern Santa Fe and

Union Pacific Railroads. 

Meanwhile, at 10 locations across the

Texas Panhandle, AGP Grain Cooperative is increasing its presence and outlets

for Midwest grain by purchasing grain

elevators from Sherley-Anderson Grain

Co. The elevators represent a combined

storage capacity of 24 million bushels.

All have access to major highways and

are served by the Burlington Northern

Santa Fe Railroad. Mike Knobbe, group

vice president for grain, cited the

growth of livestock feeding and dairy

production in the area. “The Texas Panhandle is a key domestic designation

market and fits our strategic growth

plan to serve our members,” he said.

Marty Reagan, AGP’s CEO, said the

link between the facilities and customers

they serve with AGP members, as

“enhancing our ability to add value to

Midwest grain production.”

Major upgrades and expansions also

were underway this summer at AGP

facilities in Sheldon and Mason City,

Iowa, and Hastings, Neb., with the aim

of making AGP the least-cost producer

in the industry.

Farmland tops Co-op 100 list 

Farmland Industries, with revenue of

$11.8 billion, was the

nation’s largest cooperative in 2001, according

the annual Co-op 100

report issued by the

National Cooperative

Bank (NCB), Washington, D.C. Farmland,

which is currently seeking

to restructure its business

under a Chapter 11 Bankruptcy Court

filing, was one of 40 agricultural cooperatives to make the Co-op 100 list. Those

40 ag co-ops had aggregate 2001 revenue of $60 billion, or just under 60 percent of the nation’s total ag co-op business volume (see related item, page 32). 

The list also includes 20 grocery coops with a total of $28.9 billion in 2001

revenue, 13 finance co-ops with $11.6

billion in revenue, 6 hardware and

lumber co-ops with $8.8 billion of 

revenue, 14 energy and telecommunications co-ops with $8.1 billion of 

revenue and seven miscellaneous 

co-ops with $5.9 billion in revenue. 

Three other agricultural cooperatives—Dairy Farmers of America, CHS

Cooperatives and Land O’Lakes—are

included in the top 10. For the second

consecutive year, cooperatives in the

list earned more than $130 billion in

combined revenue, demonstrating the

important role cooperatives play in the

nation’s economy. 

“When I look at the revenues

reflected in this year’s NCB Co-op 100,

I can’t help but be impressed by the

growth of U.S. cooperatives,” said

Charles Snyder, NCB president. “From

their beginnings more than 100 years

ago, American cooperatives have not

only survived, but also flourished. They

have prevailed through adversity and

economic downturns and have brought

economic stability and prosperity to

millions of people,” Snyder said.

The entire list and related information is available on the Internet at

www.co-op100.coop , or via e-mail at

marcom@ncb.coop, or fax at 202-

336-7730. 

Thiara new Sunsweet chairman 

Gary Thiara, a member since 1980

of Sunsweet Growers at Yuba City,

Calif., has been elected its new

chairman. Before returning to

the farm, he served 5 years as an

agricultural banker and now

manages a fruit orchard with his

brother. He also grows almonds.

Sunsweet is the nation’s leading

marketer of dried plums. 

Swiss Valley to relocate

to new Davenport site

The Iowa-based dairy cooperative

Swiss Valley plans to move its headquarters from Mount Joy to a new facility on a three-acre site at north Davenport. The cooperative will spend about

$5 million to build a two-story, 37,000-

square-foot office. Financial and training incentives are pending from city,

state and community college sources.

30 November/December 2002 / Rural Cooperatives
Rural Cooperatives / November/December 2002 31

Construction could begin this year with

completion expected by next fall. 

Eugene Quast, the cooperative’s

chief executive officer, said it plans to

add 30 employees to tie in with anticipated growth of 15 percent annually

during the next 5 years. The cooperative is owned by 3,600 dairy farmers in

Iowa, Illinois, Wisconsin and Minnesota. It employs 800 people in the

making of cheese, dips, milk and other

dairy products. Annual sales are about

$500 million. 

Quast said future growth was expected partly from increased sales of its

award-winning cheeses to a large retail

store chain. The cooperative recently

paid members $1.1 million in 1993

deferred allocated earnings. Adding this

to earlier payments this year brings the

total to $4.1 million. It marked the 38th

year of continuous patronage revolvement payments to members.

In another futuristic move looking

at the teenage market, Swiss Valley

Farms is participating in a national

pilot test by installing and using vending machines to promote milk, cheese

Parched range continued from page 7

He also works toward earning the co-op’s premium for

high-quality beef. U.S. Premium Beef provides data on each

animal once it’s slaughtered, allowing members to track and

improve on future breeding lines. 

Brown and his wife, Betsy, normally run 850 head of cattle

near Beaulah, Colo., in the foothills of the Rockies. Beginning

in April, following a winter without much snow, they realized

their grass wasn’t responding to warmer weather. Like

Maifeld, the Browns moved about 70 percent of their herd to

another ranch in eastern Oklahoma. 

By the first of July, the Browns’ irrigation stream dried

up, further reducing available pasture. This winter, they’ll

feed his remaining Colorado herd what hay they were able

to raise from irrigation: about 20 percent of the normal crop. 

Opportunity in adversity 

Brown remains positive about the changes his family’s

been forced to make. “Oklahoma may open up new opportunities for us,” he says. “We may be able to leave those cattle there. Since we calve here in the spring, and milder Oklahoma winters allow us to calve there in the fall, it may allow

us to hit the market twice a year and spread our risk.” 

An independent sort, Brown refuses to take part in USDA’s

disaster relief program. “We acted soon enough to manage

our costs,” he says. “Drought is part of the cost of doing business. When you make choices, you need to be responsible.”

He admits that he’s lucky to not owe debt on his land. “Those

that are just starting out just don’t have a cushion.” 

Even though he sells all the cattle he can through the coop, Brown occasionally visits local cattle sales. 

“This July and August, it was sad to go to the sale barns,”

he says. Because of the drought and lack of pasture, “People

were selling weak cattle; sometimes they had trouble getting

off the truck. But the sale barns have done an excellent job

of hustling in buyers to keep the prices up; a lot of cattle

found new homes with buyers from points further east.”

How has the drought affected rural America? Brown and

Maifeld agree that its effects will be long term. Brown worries about farmers and ranchers selling off land to developers of 40-acre parcels, and selling more water rights to

cities. Maifeld, who trades in nearby St. Francis, Kan.,

reports that the drought takes a spiritual toll as well. One

night a month this summer, area residents gathered in the

St. Francis town square...to pray for rain. ■

Walnuts greet Giant fans

The aroma of roasted

nuts from Diamond of California has been wafting

through the stands at the

San Francisco Giants’

Pacific Bell Park this season, thanks to an agreement between the team and

its cooperative neighbor.

Fresh from its success at

the winter Olympic Games,

Diamond has carts of roasted nuts at strategic locations throughout the ballpark and is creating other

new walnut marketing

channels and sampling

opportunities. The carts sell

freshly roasted, cinnamonglazed walnuts and almonds while snack packages of Diamond glazed nut

products are sold at concession stands. The agreement puts the Diamond logo

all over the ballpark including Diamond brand stickers on all the 33,900 president seat cupholders in the stadium. ■

Diamond of California also sponsors the Barry

Bonds home run “meter” in Pacific Bell Park.

Photo courtesy Diamond of California
32 November/December 2002 / Rural Cooperatives

The U.S. Department of Agriculture announced in

October that net business volume for the nation’s 3,229

farmer-owned cooperatives topped $100 billion in 2001,

the first time since 1998 co-op receipts have hit triple

digits. Net income for cooperatives climbed to $1.36 billion, up 6.3 percent from 2000 and the highest income

level since $1.74 billion was recorded in 1998.

“Despite these increases, the farm cooperative sector continues to face challenges associated with the

downturn in the agricultural economy,” said Randall

Torgerson, USDA deputy administrator for cooperative

services. “Low commodity prices, adverse weather in

many areas and changes caused by urbanization and

farm structure requires that cooperative managers and

boards of directors be alert to needed adjustments in

their operations.” 

Total net business volume for farmer cooperatives

increased to $103.3 billion in 2001, up from $99.7 billion in

2000, according to USDA’s annual co-op survey. Net

business volume includes receipts from the sale of

crops, livestock and value-added products marketed by

cooperatives, as well as farm production supplies sold

and services provided by cooperatives. It does not

include sales between cooperatives. 

On the marketing side, livestock and poultry products

notched the biggest sales gain, up 15.7 percent from

2000. Milk and milk products followed closely behind,

with sales jumping 15.3 percent in 2001. These sectors

boosted overall co-op marketing dollar volume by 4.1

percent. However, sales by co-ops of almost all other ag

commodities fell, with fruits and vegetables showing the

most significant decrease, off $700 million from 2000. 

Farm production supply sales climbed 2.8 percent,

due mainly to higher petroleum prices. Petroleum sales

increased nearly $1 billion, or 8.2 percent. Fertilizer sales

climbed 8.6 percent and seed sales 14.8 percent.

Receipts for crop protectants, feed and other farm supplies were all down.

Farm supply cooperatives saw net income increase

by $118 million, or 37.9 percent. Higher margins on petroleum sales helped drive the increase. Income for related

services (such as cotton ginning, trucking and livestock

breeding) increased by $21 million, or 21.3 percent.

Crop and livestock marketing co-ops saw net

income slide by $60 million. The co-op livestock and

poultry, rice and sugar sectors all saw net income dip

in 2001. Dairy and fruit and vegetable marketing cooperatives enjoyed higher net income in 2001.

Combined assets of farmer-owned cooperatives

reached $48.5 billion in 2001, down 2.5 percent from

2000. Net worth of $20.1 billion was down 0.6 percent,

which means cooperatives financed more assets with

debt capital rather than equity. 

The number of cooperatives dropped to 3,229, down

from 3,346 in 2000, a result of mergers, consolidations,

acquisitions and dissolutions. 

Farmer co-op sales, income climb in 2001

Table 1–Farmer Cooperatives’ Net

Business Volume, 2000 and 20011

Commodity or function Net business volume2

2000 2001

Million dollars

Products marketed

Cotton 2,731 2,400 

Dairy 22,721 26,187

Fruits and vegetables 9,570 8,822

Grains and oilseeds3 18,370 18,055

Livestock and poultry 10,176 11,776

Rice 815 756

Sugar 2,681 2,648

Other products4 5,002 4,398

Total products marketed 72,065 75,042

Supplies sold

Crop protectants 3,028 2,957

Feed 4,691 3,998

Fertilizer 4,574 4,966

Petroleum 7,457 8,446

Seed 916 1,051

Other supplies5 3,419 3,338

Total supplies sold 24,085 24,756

Related-services and

other income6 3,510 3,471

Total 99,659 103,269

1 Preliminary. Totals may not add due to rounding.

2 Excludes inter-cooperative business. Volume includes value of products

associated with cooperatives that operate on a commission basis or bargain for members’ products.

3 Excludes cottonseed.

4 Includes dry edible beans and peas, fish, nuts, tobacco, wool and other miscellaneous products.

5 Includes building materials, containers, hardware, tires-batteries-auto

accessories (TBA), farm machinery and equipment, food and other

supplies.

6 Includes receipts from trucking, ginning, storage, artificial insemination, rice drying, and other activities as well as other income.
Rural Cooperatives / November/December 2002 33

and yogurt in 19 Iowa and Illinois

middle and high schools in the Quad

Cities area (where the two states

meet). The cooperative is participating

with Midwest Dairy Association and

Dairy Management Inc. 

This is the first test using dairy

products other than milk in the vending machines. During the school year,

data will be collected to measure the

effectiveness of the campaign with an

eye toward expanding the program

nationwide. A five-month, milk-only

vending test completed last year indicated a strong interest from students.

The biggest obstacle Swiss Valley

encountered was in obtaining enough

vending machines, which have been in

high demand nationwide.

“We’re excited to be involved in this

pioneering test that provides a healthy

vending alternative in schools,” said

Quant. “We hope healthy, dairy vending will become a way of life at these

and other schools across the nation.”

Like other dairy cooperatives nationwide, Swiss Valley has been a longtime

provider of milk for school districts in

its trade territory. 

California Dairies joins NMPF

The newest cooperative to join

National Milk Producers Federation

(NMPF) is California Dairies Inc.,

headquartered at Artesia, Calif. The

cooperative, with nearly 700 member

dairy producers, ranks second in the

nation for milk volume. It is also a

major processor of butter and nonfat

dry milk. The cooperative also is a

member of the Alliance of Western

Milk Producers, a trade association

headed by Jim Tillison, who will now

become vice president for special projects and will report to Jerry Kozak,

NMPF president. 

Five dairy co-ops form 

Southeast Marketing agency 

The new Southeast Marketing

Agency (SMA) has been formed by

five dairy cooperatives serving the

Southeast. Members include Dairy

Farmers of America (DFA), Maryland

Memberships in farmer cooperatives totaled 3.03 million in 2001, down 1.7 percent from 2000. The number of

memberships is larger than the number of farmers in the

United States because many farmers belong to more

than one cooperative. ■

Table 2–Farmer Cooperatives’ Net

Income, 2000 and 20011

Total net income2

Cooperative type 

2000 2001

Million dollars

Marketing Co-ops

Cotton 65.7 33.4

Dairy 340.8 364.2

Fruit and vegetable 66.7 76.6

Grain and oilseed 274.5 248.8

Livestock and poultry -56.1 -67.3

Rice 10.5 0.1

Sugar -5.9 -23.2

Other marketing3 171.2 176.8

Total marketing 867.4 809.5

Total farm supply 311.2 429.0

Total related-service4 97.6 118.4

Total 1,276.2 1,356.9

1 Preliminary. Totals may not add due to rounding.

2 Net income less losses and before income taxes.

3 Includes dry edible bean and pea, nut, tobacco, wool, fish and miscellaneous marketing cooperatives.

4 Includes trucking, ginning, storage, artificial insemination and other.

Table 3–Farmer Cooperative Numbers

and Memberships, 20011

Cooperative type Cooperatives2 Memberships

Number Thousand

Marketing Co-ops:

Cotton3 14 46

Dairy 204 91

Fruit and vegetable 220 38

Grain and oilseed 789 582

Livestock and poultry 89 124

Rice 15 14

Sugar 48 16

Other marketing4 227 249

Total marketing co-ops 1,606 1,160

Total farm supply co-ops 1,234 1,746

Total related-service5 co-ops 389 128

Total 3,229 3,034

1 Preliminary. Totals may not add due to rounding.

2 Operations of many cooperatives are multi-product and multi-functional. They are classified in most cases according to predominant commodity or function as indicated by business volume.

3 Cooperative cotton gins are included with related-service 

cooperatives.

4 Includes dry edible bean and pea, nut, tobacco, wool, fish, and 

miscellaneous marketing cooperatives.

5 Includes cooperatives that primarily provide trucking, ginning, storage,

artificial insemination and other.
34 November/December 2002 / Rural Cooperatives

and Virginia Milk Producers, Lone

Star Milk Producers, Southeast Milk

Inc. and Arkansas Dairy Cooperative

Association. 

SMA is marketing 8.9 billion

pounds of milk annually for 6,500

dairy producers. It is one of 11 marketing agencies-in-common operating in the United States. Administrator Jeff Sims said after its first

quarter of operation, SMA had

“already witnessed cost savings from

driving efficiencies into the marketing process and working together to 

supply common customers.”

Calcot’s Tom Smith departs

In his swan song annual meeting,

marking the cooperative’s 75th

anniversary, Calcot President Tom

Smith said the co-op returned nearly

$450 million to its cotton growers

despite a difficult year. Smith retired

Oct. 1 after 25 years at the helm and 45

years with Calcot, Bakersfield, Calif.

David Farley, Australian cotton executive who has succeeded Smith, praised

him for his integrity on selling premium cotton and the fairness by which he

treated the cooperative’s members. 

Chairman Bruce Heiden, a grower

from Buckeye, Ariz., described the

cooperative as “good and getting better.” He said a thorny issue facing the

cooperative was repayment of $25.3

million in advances to growers. He said

it was time for a different look and different structure. Officials said the new

season would be improved in part by

the financial support to growers contained in the new farm bill. 

Marketing Resource Center

Website eyes value-added ag

The Agricultural Marketing

Resource Center, a three-state university effort to enhance value-added agriculture, has launched a new website to

provide education and research to producers about related business development and marketing. The site,

www.AgMRC.org, contains contacts

and directories, as well as new business

development and commodity-specific

information designed to help build successful value-added agricultural enterprises. The center works with leading

agricultural economists and business

professionals across the United States

to provide applicable research and

analysis on marketing and economic

issues facing value-added business ventures. Co-directors are Mary HolzClause and Don Hofstrand. 

“Beginning a new farming venture

was overwhelming for our 24-member

farmer cooperative,” said Chris Henning-Cooke of the Greene Bean project at Jefferson, Iowa. “We wanted to

grow specialty beans and needed product and market and production information. This value-added site was

invaluable to us in our information

search. They also provided training

and outreach to producer groups like

ours in communicating information

about marketing our products and honing our communication skills,” she

said. The center is funded through a

grant to Iowa State University, Kansas

State University and the University of

California from USDA’s Rural Business-Cooperative Service. The center

also may be a contacted toll free at

866-277-5567 or by email at

agmrc@iastate.edu. 

Court gives Farmland brief

breather on reorganization 

The deadline for a bankruptcy reorganization plan due from Farmland

Industries in September has been

extended to late November by U.S.

Bankruptcy Judge Jerry Venters. Meanwhile, the cooperative in trying to

restructure its fertilizer assets, the primary component of its crops production division, which lost $57.6 million

in fiscal 2001 on sales of $745 million.

The division represented 6.3 percent of

Farmland’s total sales of $11.8 billion.

CEO Robert Terry said selling or

repositioning the fertilizer business

would allow Farmland to significantly

reduce its debt “and reduce or eliminate the cyclical business risk inherent

in the fertilizer industry” so that the

cooperative could concentrate more

resources on its successful processed

food business. Farmland owns 7 nitrogen fertilizer manufacturing plants

and 19 fertilizer distribution terminals

and has 531 employees in its crops

sector. Additionally, the cooperative is

a partner in phosphate manufacturing

ventures in Wyoming and Utah. It is

also joint owner (with Mississippi

Chemical Corp.) of a nitrogen fertilizer manufacturing plant in Trinidad

and Tobago.

The court has approved Farmland’s

request to sell its half interest in Farmland Hydro LP to Cargill Fertilizer

Inc. in Florida.

Co-ops must capitalize continued from page 20

enhanced, not lessened. That age-old question of how to

protect the family farm comes in diversification.

But, in order to do this, we also need to improve business

knowledge and skills in rural America. Serious education on

business strategies, finance, marketing and decision making

will enable farmers, business and community leaders to lead

dynamic, creative cooperative businesses that can succeed.

Most of all, we need to work together. Partnerships and

collaborative approaches are how we make this vision of rural

America a reality. 

At all levels, we need to think differently and in ways that capture the spirit and values of rural America. We must act boldly. 

Rural America is no longer just about getting grain from

the farm onto railcars and shipping it away. It is about capitalizing on—and creating—opportunities that create jobs and

grow communities. 

We must allow ourselves to think creatively and differently. And that different thinking starts with how we think of

rural development at the national level. We do not develop

rural America—rural Americans develop rural America. 

The foundation is there. Now, it is our challenge to 

build on it. ■
Rural Cooperatives / November/December 2002 35

Farmland’s financial plight and the

drought were on the minds of more than

330 cooperative managers, directors,

their tax lawyers and accountants attending a recent symposium on “Strategies

for Handling Losses,” sponsored by the

Arthur Capper Cooperative Center of

Kansas State University at Hutchinson.

The conference was considered the

largest cooperative educational meeting

in the state in at least 25 years. Local

cooperatives in Kansas are said to hold

$572 million in Farmland equity and

represent the largest group of nonsecured creditors in the bankruptcy. 

Due to many variables, such as fiscal

year ending dates, taxes and equity

redemption policies, it’s difficult to

measure the impact of Farmland’s condition on local cooperatives. “This is

the worst year for local or operational

earnings in the past 20 years,” said

Dave Barton, director of the Capper

Center. His survey of local co-ops

seems to confirm that half the cooperatives in Kansas would lose money this

year. Kansas Farmers Service Association encouraged local cooperatives to

be prepared for the worst-case scenario, namely total write down of

Farmland equities. 

Official notice of the tax loss, however, won’t come until next year. Some

cooperatives have suspended equity

redemption payments to retirees and

are pondering how to handle estates.

The heaviest burden may fall on local

cooperative boards of directors facing

unpopular decisions, said Barton.

“Whatever you do or however you

handle the situation, it won’t be popular with some members.” 

Former Countrymark CEO

faces $4 million fines, prison

David Swanson, 60, former chief

executive officer of the former Countrymark Cooperative in Indianapolis,

was convicted Oct. 11 of 19 counts of

wire fraud, theft, money laundering

and tax evasion. Swanson was charged

with bilking Countrymark of $2.7 million through a series of transactions

during the 20 months he headed the

cooperative from 1995-97. He was

accused of diverting money from

Countrymark’s 1996 purchase of Buckeye Feed Company of Dalton, Ohio,

and Mexico-based Malta Clayton feed

company. He later repaid the cooperative $450,000 of the $2.6 million it

wanted in a settlement over allegedly

improper expenses. At the time, Countrymark served farmers in Indiana,

Ohio and Michigan. 

Tree Top notches decade of profits 

Despite a reduced apple crop, Tree

Top Inc., the apple processing cooperative based at Selah, Wash., distributed $10 million as the final payment

to members for the 2001-2 crop. The

payment marked the 10th consecutive

year of profitable operations. Tree

Top processed 452,000 tons of fruit in

fiscal 2002 vs. 533,000 tons in 2001.

Sales were essentially flat at $295.7

million, compared with $297.5 million the previous year. Net proceeds

were $28 million on apple and pear

processing. 

American Crystal Co-op pays 

$34 million for sugar plants

Three sugar processing plants in

Torrington, Wyo., Sidney, Mont. and

Hereford, Texas, have been purchased

by American Crystal Sugar Co. of

Moorehead, Minn., for $34 million

from Imperial Sugar Co. The Torrington plant will be leased to Western Sugar Cooperative of Denver.

American Crystal will operate the Sidney plant, while the Hereford factory,

idled since 1998, will not be immediately reopened. Jim Horvath, American Crystal president, said the additional acreage and processing capacity

at Sidney “will add value to our cooperative’s customers, shareholders and

the Sidney community alike.” About

11,800 acres are being harvested for

the Torrington plant this year vs.

30,000 acres 2 years ago. American

Crystal has two plants in North 

Dakota and three in Minnesota.

Montgomery to FC Leasing 

Steven Montgomery, executive

vice president and head of Co-Bank’s

agribusiness banking group, has been

named chief executive officer of Farm

Credit Leasing Services Corporation

(FCL) based in Minneapolis. The

firm provides leasing services to agriculture and rural America and last

year had more than $12 billion in

leases outstanding. AgFirst Farm

Credit Bank and CoBank own FCL

and all three are part of the $101 billion Farm Credit System. Montgomery has 30 years experience in

the system and served on the FCL

board for 15 years, including several

years as chairman.

Paige honored at Co-op Month event

Ralph Paige, center, president of

the Federation of Southern Cooperatives, receives the Economic Freedom Award during the National Coop Month reception in Washington,

D.C. The award recognizes Paige’s

career promoting cooperatives as a

way to improve life in communities

across the South and in raising public awareness of cooperatives. Presenting the award are Daniel Mica

(left), president of Credit Union National Association, and Paul Hazen, NCBA

president. Receiving Statesperson Awards were Representative Bob Ney of

Ohio and Senator Tom Daschle of South Dakota, honored for their efforts to support the role of cooperatives in the U.S. economy. Photo by Robert L. Knudsen ■
36 November/December 2002 / Rural Cooperatives

capital contributed by members. Limits on capital sources are

frequently mentioned by co-op leaders and those who work with

them as a major restriction on the cooperative form of business.

Capital needs—Cooperatives may need to participate in

capital-intensive, value-added activities. Are cooperatives so

limited in their sources of capital that they may be precluded,

by upstream or downstream business, from serving members?

Are farmer members able and willing to contribute the capital needed for projects that offer significant returns? What

must cooperatives return to members in exchange for higher

levels of equity investment?

User-financing, and, more importantly, non-user or outside financing is a major issue in cooperatives and deserves

careful attention. The issues must be addressed from the perspective of both the cooperative and the individual members.

10. Do cooperatives have structural defects?

This issues shows two sides of the same coin. 

Too Complicated?—Cooperatives have developed federated

systems, centralized systems with complex voting methods,

numerous financing techniques (based on the patronage relationship) and complex systems of returning benefits to

patrons. Are these complications necessary? Do they serve a

needed purpose and have they undermined the cooperative’s

relationship with members?

Too Simple?—Have cooperatives attempted to remain

uncomplicated and dependent on member financing,

patronage and loyalty to the extent that they cannot respond

effectively to changes in the agricultural sector and the

economy generally? Have they placed their financial health

in the hands of members who may damage the cooperative

by self-serving behavior?

11. Are cooperative benefits identified and recognized?

Questions about cooperatives and their performance cannot be analyzed or answered without fully understanding the

benefits cooperatives offer. When benefits are not identified

and explained, cooperatives are at a disadvantage because their

benefits are more subtle and more difficult to explain than the

benefits derived from other forms of business. Yet these benefits are the foundation for loyalty, continued use and survival.

Are cooperatives positioned to alleviate pressures on

farms, particularly family farms? Are they more capable

than other agribusinesses of increasing returns to farmer

members, of establishing better prices and pricing systems, of representing farmers’ interests in the market

place and of capturing benefits of the marketing and supply chain for farmers themselves?

Does the cooperative make its benefits clear to members?

Are all benefits presented in a form recognized by members

as benefits? Are members uncertain why they belong to the

cooperative? Does the cooperative have a system in place to

communicate its benefits to members?

12. Have cooperatives lost sight of cooperative 

fundamentals?

Response to challenges—In responding to the massive

changes in agriculture, have cooperatives given up fundamentals to become more like non-cooperative businesses in size,

type of business, financing, control or in other ways? What

kinds of balances are needed to respond effectively and preserve

the cooperative? What are the fundamentals worth keeping?

Strengths—While couched in terms of questions challenging cooperatives, the list of 12 is also an affirmation of the

many strengths of cooperatives. When cooperatives attempt to

make fundamental changes to meet challenges, they may

weaken themselves by giving up their strengths. How can

cooperatives make wise decisions in the face of immediate lifeor-death conditions?

Responsibilities—Who in the cooperative is responsible

for keeping co-op fundamentals alive? What kind of management training, board training and member relations are

needed to instill solid, yet dynamic, adherence to cooperative principles?

Searching for answers

Members, boards of directors, management, lenders and

advisors would like to understand the implications of the

forces discussed and would like answers to the questions

raised. How can cooperatives address the 12 forces and 12

questions outlined?

First, consider the validity and relevance of each of the

big picture forces relative to your cooperative. Then rank

the forces according to immediate or long-term impact,

whether primarily affecting farmers or the cooperative. Also

consider the influence, if any, that the cooperative can exert

to modify the problems or divert detrimental consequences.

Consider whether the changes are good, bad or neutral for

the cooperative.

Similarly for questions about cooperatives—assess each

one with your cooperative and its members in mind. How

applicable is the question for the cooperative? Has the cooperative (its board of directors, management, members or others) recognized the question as a problem? Should they have? 

If questions exist, has the cooperative responded effectively? If not, what steps can be taken to correct problems? What

questions might be the most likely to face the cooperative in

the future? What is the best mechanism to begin to address

problems before they become critical?

It is important to re-emphasize that the 12 questions in no

way represent a broad criticism of contemporary cooperatives.

They are designed to focus attention on specific problems so

that they can be recognized and dealt with in a timely fashion.

In fact, each of the questions can be seen in one way or another to be a uniquely cooperative strength or opportunity.

The cooperative’s final task is to understand the multiple

environments in which the cooperative and its members

operate, consider challenges and opportunities all participants face, and use the unique structure and problem-solving

methods of cooperatives to turn challenges into successful

responses. ■

Major Changes continued from page 26
griculture Secretary Ann M. Veneman in 

October announced more than $75 million in

USDA grants for rural economic development,

energy and rural infrastructure projects to help

spur investment and create new jobs in rural

communities throughout the United States.

“These grants will bring new economic opportunities and

job creation for rural America,” Veneman said in announcing

the grants in October. “The Bush administration continues

to increase investment in health care, education, value-added

processing and rural infrastructure which is providing

renewed growth to these important sectors of our economy.”

The Rural Business-Cooperative Service Value-Added

Agricultural Product Market Development grants support

two pillars of President Bush’s rural policy initiative: economic growth and energy development. These 231 grants in

43 states total over $37 million and will fund a variety of

agricultural ventures, such as renewable energy, agri-marketing and developing high-value products made from major

crops and commodities.

Thirty five projects totaling more than $7.2 million will

foster development of alternative energy sources.

Among the value-added grant recipients, 81 are cooperatives, which account for $18.6 million of the grant money—

almost exactly half the dollars available under the program,

now in its second year. USDA received grant applications

totaling more than $120 million. Grant applications are evaluated and scored by an impartial panel of reviewers.

Recipients are required to obtain matching funds, which

will double the impact of the USDA grants. Funding of individual recipients is contingent upon meeting the conditions

of the grant agreement. For information on applying for

2003 value-added grants visit:

http://www.rurdev.usda.gov/rbs/coops/vadg.htm.

The Rural Utilities Service Distance Learning and

Telemedicine grants will fund 71 recipients totaling more

than $27 million for education and medical service in 33

states. The award of these grants will bring to rural communities access to better, faster and more modern health care,

and students in rural areas will receive better equipment and

learning tools and access to courses that would otherwise be

unavailable. 

These grants help invest in infrastructure projects that

assist rural communities with communications and medical

services. A complete list of 2002 recipients can be found at:

http://www.usda.gov/rus/telcom/dlt/awards.htm. 

The Rural Housing Service Community Facilities Program’s Rural Community Development Initiative will fund

41 proposals in 22 states and the District of Columbia totaling nearly $12 million. Grants will help private and nonprofit

community-based development organizations and lowincome communities improve their ability to develop rural

housing and community facilities.

These projects will help create jobs and economic investment in rural areas through direct investment and housing

availability. Recipients are required to obtain matching funds

which will double the impact of the USDA grants. Funding

of individual recipients will be contingent upon meeting the

conditions of the grant agreement. For information on 2003

funding availability and applications please visit:

http://www.rurdev.usda.gov/rhs/rcdi/index.htm.

“These grant programs are important to helping America’s

rural communities thrive and prosper,” said Under Secretary

for Rural Development Thomas Dorr. “Investing in our hospitals and schools, as well as providing housing development

for low income communities, helps families, creates new jobs

and provides real investments in these rural areas.” A complete list of 2002 recipients can be found at: http://www.rurdev.usda.gov/rd/newsroom/news.htm.

The cooperatives listed below represent about 50 percent

of VADG grant funds allocated. For a complete list of 

recipients and brief descriptions of projects funded, go to:

http://www.rurdev.usda.gov/rd/newsroom/2000/value_ad.htm. 

State Recipient Amount Requested

Alaska

United Salmon Association, Kodiak Chapter $18,896

Arizona

Desert Wheat Growers $56,600

California

California Dairies Inc. $80,579

California Wild Rice Growers Assoc $130,000

Diamond Walnut Growers $345,000

Farmer’s Rice Cooperative Inc. $350,000

Golden State Grain Growers Cooperative $39,900

Rural Cooperatives / November/December 2002 37

A

Veneman announces $75 million in USDA grants; 

co-ops get $18 million for value-added projects
38 November/December 2002 / Rural Cooperatives

Pacific Coast Producers $450,000

Producer’s Choice $271,136

Sunsweet Growers Inc. $500,000

Colorado

Fruita Consumers Cooperative $48,000

Mountain View Harvest Cooperative $342,310

Olathe Patato Growers Cooperative Assoc. $41,300

Delaware

Ocean Spray Cranberries Inc. $200,000

Georgia

Farmers Oilseed Cooperative Inc. $149,000

Illinois

LincolnLand Agri-Energy $500,000

Meadowbrook Farms Cooperative $500,000

Shawnee Winery Cooperative Inc. $52,000

Iowa

Ag Ventures Alliance Cooperative $149,000

Big River Resources Cooperative (BRRC) $500,000

Iowa Cooperative $195,000

Iowa Quality Beef Supply Cooperative $500,000

North Central Cooperative $32,300

Power Plus Technologies $500,000

Quad County Corn Processors $450,000

Quality Organic Producers Cooperative $500,000

Kansas

21st Century Grain Processing Cooperative $500,000

American White Wheat Producers Assn. $218,710

Cooperative Agricultural Services Inc. $500,000

Kentucky

Cumberland Farm Products Assn. Inc. $38,250

Kentucky West Nursery Cooperative $349,872

Massachusetts

National Grape Cooperative Association $450,000

Pioneer Valley Milk Marketing Cooperative $50,000

United Cooperative Farmers Inc $50,000

United Cooperative Farmers Inc. $200,000

Michigan

Great Lakes Organic Processors Cooperative $86,400

Thumb Oilseed Producers Cooperative $150,000

Minnesota

Blue Mound Soy $150,000

Cenex Harvest States $94,000

Harvest Land Cooperative $148,000

SoyMor $500,000

Mississippi

Cook Swine Farm $65,429

K & G Farms $48,032

Mississippi Association of Cooperatives $150,000

Syrisia’s Food/Karl Hampton $66,050

Missouri

AgraMarke Quality Grains, Inc. $458,850

Dairy Farmers of America $115,500

Missouri Food and Fiber, Inc. $249,500

U. S. Premium Beef, Ltd. $500,000

Montana

Amazing Grains Cooperative $323,837

Nebraska

Ag Processing Inc. $346,950

Dorchester Farmers Cooperative $500,000

Farmers Coop Oil Company $22,300

KAAPA $154,950

Small Farms Cooperative $250,000

New Jersey

Jersey Fruit Cooperative Association Inc $25,100

New York

Catskill Family Farms Cooperative Inc. $30,000

New York Natural Beef Cooperative $248,258

North Dakota

Dakota Pride Cooperative $94,260

Fessenden Cooperative Association $500,000

Heartland Durum Growers Cooperative $500,000

Iso-Straw Cooperative Inc. $378,040

Ohio

Farm Fresh Growers Marketing Association, $150,000

United Producers, Inc. $500,000

Oregon

Oregon Trail Beef Cooperative $25,000

RainSweet, Inc. $250,000

Pennsylvania

Eastern States Bison Cooperative $109,141

Pennsylvania Cooperative Potato Growers $450,000

Tennessee

Appalachian Spring Cooperative $39,800

Texas

Farmers Cooperative Elevator Association of $249,658

Texas-New Mexico Sugar Beet Growers $23,500

Vermont

Agri-Mark Inc. $300,000

Vermont Quality Meats Cooperative $75,469

Washington

Darigold Inc. d/b/a WestFarm Foods $450,000

Pro-Mar Select Wheat of Idaho Inc. $47,500

Wisconsin

Alto Dairy Cooperative $150,000

Organic Choice Coop $50,000

Partners In Forestry $69,700

Rainbow Farmers Cooperative $150,000

Sustainable Woods Cooperative $57,512

Western Wisconsin Renewable Energy Coop $65,000

Total VADGs awarded to co-ops: $18,625,589
Rural Cooperatives / November/December 2002 39

Information appearing in Rural Cooperatives magazine during calendar year

2002 has been indexed to help you find past articles. Articles are indexed by

month and page. Past issues can be found on-line at www.rurdev.usda.gov

TITLE FEATURES Issue—Page

Adapting to change

Educating members helps smooth transitions May/June 23

Ask the right questions

Members should probe reasons for co-op conversions, other

major changes May/June 20

Battening Down the Hatches:

Co-op security measures intensified in 

post-September 11 world May/June 4

Benefits often key to keeping best employees March/April 22

Bio-based, renewable energy products

featured at USDA Earth Day event July/Aug. 35

Bringing it home

Dakota Prairie Beef Co-op adding

value to home-grown cattle, grains Nov./Dec. 16

Building brand recognition

How to run a champagne ad campaign on a beer budget Nov./Dec. 14

Building commitment

Sharpening your co-op communications can build member commitment

and better reach select groups March/April 24

Bulking up

Co-ops continue trade recovery, paced by bulk goods July/Aug. 4

Business failures underscore need for dose of 

preventive medicine Nov./Dec. 21

Catch the wind

Co-op’s giant windmills work with Mother Nature to provide

power March/April 4

CCA honors top co-op communicators Nov./Dec. 14

Closing the gap

Utility co-ops see broadband service as way to preserve rural

communities July/Aug. 12

A commitment to members Sept./Oct. 22

Co-op development: a tool to promote democracy, 

self-reliance March/April 17

Co-op finds success in gourmet coffee market March/April 19

Co-op issues in spotlight at USDA’s Ag Outlook Forum Jan./Feb. 17

Co-op working to help growers hit by devastating crop losses July/Aug. 24

Cooperative Marketing Association Program:

Another way grain co-ops can serve their members Jan./Feb. 24

Co-op’s grain marketer strives to reduce

producer risk exposure Sept./Oct. 8

Co-ops must capitalize on new opportunities Nov./Dec. 25

Co-ops urged to prepare for adversity Nov./Dec. 9

Cowboy capitalism helps co-op members deal with drought Nov./Dec. 7

Delivering value to members

Welch’s CEO says National Grape members reap benefits from

efforts to expand markets, develop new products July/Aug. 22

Dorr to lead USDA Rural Development Sept./Oct. 31

Ethiopian co-ops help farmers transition from 

ox-power to tractor-power March/April 18

Farmer co-op sales, income climb in 2001 Nov./Dec. 32

Federal tax credits boost biogas and methane energy Jan./Feb. 5

Food business opportunities theme of NICE keynoter July/Aug. 16

Gas Turbines: coming into their own Jan./Feb. 6

Getting the green light

CoBank business development officer discusses essential planning 

needed to finance an added-value cooperative May/June 17

GROWMARK “Shares the Spirit” to mark 75 years 

of co-op service May/June 29

Hard times breed new livestock co-ops Jan./Feb. 18

Heavy debt pulls Farmland into Chapter 11; new CEO 

Terry leads reorganization effort July/Aug. 11

High Society

Sioux Center Farmers Co-op Society ties future to 

NW Iowa livestock industry Sept./Oct. 4

Homeland security: a defining issue for co-ops May/June 6

How landfills generate electricity Jan./Feb. 7

Hurricane Lili no match for undaunted DFA milk haulers Nov./Dec. 27

Implementing exercise Sept./Oct. 17

Isolated Navajos tap solar power March/April 6

Legg sees vital role for utility co-ops in rural America’s future Sept./Oct. 24

Locals gain by diversifying 

From funeral homes to pizza parlors, Southwest co-ops find ways to 

boost earnings Jan./Feb. 19

Major changes in agriculture raise big questions for 

nation’s cooperatives Nov./Dec. 19

Making a case for grass-fed animals July/Aug. 10

Making the grade

Will co-ops succeed or fail in the new century? The answer lies with

co-op education efforts Jan./Feb. 8

MFA Inc. hosts President Bush May/June 26

Midwest Farmers Co-op members benefiting from 

new rail terminal Sept./Oct. 10

‘New Cooperative Horizons’ NICE theme for Chicago May/June 30

Parched range forces many ranchers to the edge Nov./Dec. 6

Pennsylvania co-op targets upscale restaurant trade July/Aug. 18

Revenue up, net margins down

Ag cooperatives struggle with lower prices, higher costs Jan./Feb. 12

Rio Grande growers battle Mexico for water Nov./Dec. 8

Rising to the top

Small Wisconsin specialty dairy co-ops finding 

new niche markets July/Aug. 6

Rural survivors

Can value-added agriculture save struggling rural communities?

Congress hopes USDA grant program will provide 

needed stimulus July/Aug. 17

South Dakota turnaround

Farmers who once couldn’t give away their co-op find success

through service and slow, steady growth May/June 12

Squeezed Dry

Cattle, crops suffer in drought’s grip; Co-ops fear even bigger 

impact next year Nov./Dec. 4

Start-up stages for added-value ventures May/June 18

Still raising cane

George Wedgworth is a 40-year veteran of 

Florida’s sugar wars Sept./Oct. 26

Storm shelter

Utility co-ops, USDA working to spread Weather Radio 

coverage July/Aug. 20

Article Index 2002
40 November/December 2002 / Rural Cooperatives

Taking it to the next level

Success of small Florida vegetable co-op leads to a network 

of similar cooperatives Sept./Oct. 18

Tapping into the Internet July/Aug. 14

The Big Apple

New products, added plant capacity play major role in 

Tree Top’s sales strategy March/April 8

The long haul

Is your co-op’s farm-to-plant milk hauling optimal? This case

study shows factors that can impact efficiency March/April 12

The Right Stuff: Ag-based, but diverse economy helps 

Sioux County thrive Sept./Oct. 6

The road up

Free-market reforms fuel growth of Ethiopia’s co-ops March/April 15

Three new plants boost production March/April 11

Trouble ahead?

Low commodity prices, ag economy are major problems 

facing co-op management May/June 8

Unstable farm markets prompt more growers to look to 

bargaining co-ops July/Aug. 27

U.S. wind power resources March/April 5

USDA-backed ethanol plant paying off for members May/June 14

USDA lends co-op support with Rural Business Enterprise Grant Sept./Oct. 21

USDA provides $5 million in grants to foster co-op 

development in 19 states Sept./Oct. 38

USDA providing funding for rural broadband service July/Aug. 15

USDA responds to security needs May/June 5

Veneman announced $75 million in grants; co-ops get $18 million

for value-added projects Nov./Dec. 36

Vermont electric co-op looks to landfill for methane recovery Jan./Feb. 4

Welch’s roots extend to 1869 July/Aug. 26

What a co-op needs to be a player in capital markets May/June 19

Wool co-op,mill in pact; Olympic blankets to follow Jan./Feb. 23

Wisconsin co-op camp focus of TV documentary March/April 30

Wisconsin dairy industry has marketing options July/Aug. 8

MAGAZINE DEPARTMENTS

Commentary/Editorial

Attention to member, market needs is key to cooperative success Sept./Oct. 2

Co-op growth through acquisition March/April 2

Cooperative education: whose responsibility is it? Jan./Feb. 2

Integrity essential in reporting financial results Nov./Dec. 2

More than one way for local co-ops to grow May/June 2

States need to carefully consider new “cooperative” laws July/Aug. 2

Management Tip

Co-op boards’ circle of responsibilities July/Aug. 30

Co-op directors held to high standards Sept./Oct. 15

Co-op history books should target both members and public March/April 21

Cooperative directors face unique challenges Nov./Dec. 10

How does your local farm supply cooperative rate? Jan./Feb. 22

Newsline

AMPI advances checks Nov./Dec. 27

American Crystal Co-op pays $34 million for sugar plants

Utah Co-op Alliance formed

Scribner CEO at Southern States; SSC, Purdue forge new grain pact

Debt laden Agway files for Chapter 11, reorganizing

NCUA, USDA in rural pact

Fannon elected Gold Kist chairman

AGP stretching its scope to West Coast, Texas Panhandle

Farmland tops Co-op 100 list

Swiss Valley to relocate

California Dairies joins NMPF

Five dairy co-ops form Southeast Marketing agency

Calcot’s Tom Smith departs

Marketing Resource Center Website eyes value added ag

Court gives Farmland brief breather on reorganization

Former Countrymark CEO faces $4 million fines, prison

Tree Top notches decade of profits

Walnuts greet Giant fans

Pacific Coast Producers moves tomato operation Sept./Oct. 29

WestFarm Foods expands

USDA co-op statistician Charles Kraenzle dies

Iowans form beef co-op

Pro Fac sells majority interest in AgriLink

LOL expands marketings in Mitsui, Dean ventures

Deegan, Solberg, other co-op leaders win honors

Riceland buys Missouri mill

Farmland suit nets $17 million; reorganization plan shaping up

West Central opens Iowa’s largest soydiesel plant

Adami heads livestock co-op

North Carolina craft cooperative thriving

Bison co-op buys Denver food firm

Agway selling insurance unit to Indiana Farm Bureau

Tillamook marketing effort targets Latino population

Farmland preservation honor comes with $10,000

Bushel Pasta co-op tries retail brand

DFA, Dairylea solidify pact; Black Hills Milk to merge

Gail Kring new cotton co-op CEO

Co-op increases security for anhydrous tanks

CHS adds Fairmont crusher, expands grain businesses

Co-op seminar set for Spokane

Calcot makes cotton payment

Bothast heads ethanol center

Kansas gets first cotton gin

Debts force closure of Heritage Tomato Co-op

NMPF monitors dairy imports

Changing Faces, focus of Mid-Atlantic Cooperators

Western Sugar Co-op pays $85 million for six plants July/Aug. 33

Dakota Pasta co-op converts to corporation

Raymond Crouch, DFA editor, killed in Texas airplane crash

Canadian dairy co-ops buys Indiana cheese plant

Resource library for co-ops dedicated at DC University

Australian Farley to lead Calcot

Davisson heads CF Industries

Moser joins LOL board

SV buys Rochester Cheese

Montana elevator, long trains boost farmer wheat prices

Fla. timber co-op formed; poplars focus of Minn. co-op

NCB income hits $12.5 million; Snyder to head NCBA board

Kansas fetes Gwin, Williams

Extended courting pays off

Illinois sheep co-op launched

Foremost sales top $1.3 billion; income at $10 million May/June 26

2001 revenue & income climb for Minn-Dak

National Grape says Welch’s not for sale

Sales record set by Diamond Walnut

CHS opens stock offering

Agway to sell four divisions

Farmer co-ops registering .coop Internet names

DFA grows in bold moves

Wilson succeeds Lyon at CRI

CF Industries honors four watershed groups

Ocean Spray, Nestle in bottling venture

Co-op buys Michigan Sugar

Farmers Union turns 100 “still fighting for producers”

Mandan co-op gets new lease on life

Kansas co-op leader honored for service

Co-op Hall of Fame inducts three

Gold Kist fetes egg farmers

Farmland to sell Tradigrain; joins in wheat sale to Cuba

Dakota Growers Pasts eyes conversion to C-corp.

Crestland co-op assets sold

Trying, positive year for Tenn. Farmers

Earnings double for AGP March/April 28

Nebraska perch co-op helping meet demand

Dairy industry aids victims of terrorist attacks

Koligian resigns from raisin association

Sen. Grassley launches ag marketing center

Lamb processor partners with Wyo. producer co-op
Rural Cooperatives / November/December 2002 41

Golden Growers shows profit

West Liberty Foods expands

Oregon farm supply cooperative to close

Pro-Fac co-ops pays dividend

LOL, DFA shifting milk to Kraft plant

Welch’s shifts staff from Westfield

DFA gains plants from Suiza/Dean merger

New directory shows Wis. co-op diversity

Soybean cooperatives on rise

Swiss Valley Farms wins NMPF honors

New grain venture named Horizon Milling

Kansas cotton co-op thrives Jan./Feb. 28

Riceland Foods shipping rice to hurricane-hit Cuba

Florida’s Natural opens new visitor center

Financial picture improving for Farmland Industries

Petroleum operations fuel doubling of CHS’ income

USDA offers paid summer intern jobs

Illinois pork processor co-op picks Rantoul for plant site

NMPF, dairy experts eye new market opportunities

Southern States restructures to build future business

.coop Internet domain to launch Jan. 30

SUBJECTS:

Bargaining

Unstable farm markets prompt more growers to 

look to bargaining co-ops July/Aug. 27

Communication/Education

Building commitment

Sharpening your co-op communications can build member 

commitment and better reach select groups March/April 24

Business failure underscores need for dose of 

preventive medicine Nov./Dec. 21

CCA honors top co-op communicators Nov./Dec. 14

Co-op history books should target both members and public March/April 21

Co-op Development

Co-op development: a tool to promote democracy, 

self-reliance March/April 17

Co-op finds success in gourmet coffee market March/April 19

Ethiopian co-ops help farmers transition from ox-power to 

tractor-power March/April 18

Getting the green light

CoBank business development officer discusses essential

planning needed to finance an added-value cooperative May/June 17

Rural survivors

Can value-added agriculture save struggling rural communities?

Congress hopes USDA grant program will provide 

needed stimulus July/Aug. 17

Start-up stages for added-value ventures May/June 18

Taking it to the next level

Success of small Florida vegetable co-op leads to a network 

of similar cooperatives Sept./Oct. 18

The road up

Free-market reforms fuel growth of Ethiopia’s co-ops March/April 15

USDA provides $5 million in grants to foster co-op development 

in 19 states Sept./Oct. 38

Dairy

Building brand recognition

How to run a champagne ad campaign on a beer budget Nov./Dec. 14

Making a case for grass-fed animals July/Aug. 10

Rising to the top

Small Wisconsin specialty dairy co-ops finding new 

niche markets July/Aug. 6

The long haul

Is your co-op’s farm-to-plant milk hauling optimal? This case

study shows factors that can impact efficiency March/April 12

Wisconsin dairy industry has marketing options July/Aug. 8

Director Training

Business failures underscore need for preventive medicine Nov./Dec. 21

Cooperative directors face unique challenges Nov./Dec. 10

Education

Adapting to change

Educating members helps smooth transitions May/June 23

Ask the right questions

Members should probe reasons for co-op conversions, other 

major changes May/June 20

Co-op history books should target both members and public March/April 21

Co-op issues in spotlight at USDA’s Ag Outlook Forum Jan./Feb. 17

Ethiopian co-ops help farmers transition from ox-power to 

tractor-power March/April 18

Making the grade

Will co-ops succeed or fail in the new century? The answer lies 

with co-op education efforts Jan./Feb. 8

Energy

Catch the wind

Co-ops giant windmills work with Mother Nature to 

provide power March/April 4

Federal tax credits boost biogas and methane energy Jan./Feb. 5

Gas Turbines: coming into their own Jan./Feb. 6

How landfills generate electricity Jan./Feb. 7

Isolated Navajos tap solar power March/April 6

U.S. wind power resources March/April 5

USDA-backed ethanol plant paying off for members May/June 14

Vermont electric co-op looks to landfill for methane recovery Jan./Feb. 4

Environment

Bio-based, renewable energy products featured at 

USDA Earth Day event July/Aug. 35

Catch the wind

Co-op’s giant windmills work with Mother Nature to 

provide power March/April 4

Federal tax credits boost biogas and methane energy Jan./Feb. 5

How landfills generate electricity Jan./Feb. 7

Isolated Navajos tap solar power March/April 6

Making a case for grass-fed animals July/Aug. 10

Midwest Farmers Co-op members benefiting from new 

rail terminal Sept./Oct. 10

Parched range forces many ranchers to the edge Nov./Dec. 6

Rio Grande growers battle Mexico for water Nov./Dec. 8

Rising to the top

Small Wisconsin specialty dairy co-ops finding new 

niche markets July/Aug. 6

Still raising cane

George Wedgworth is a 40-year veteran of Florida’s 

sugar wars Sept./Oct. 26

Squeezed Dry

Cattle, crops suffer in drought’s grip; co-ops fear even bigger 

impact next year Nov./Dec. 4

U.S. wind power resources March/April 5

Vermont electric co-op looks to landfill for methane recovery Jan./Feb. 4

Farm Supply & Agronomy Services

Farmer co-op sales, income climb in 2001 Nov./Dec. 32

Heavy debt pulls Farmland into Chapter 11; new CEO Terry leads 

reorganization effort July/Aug. 11

High Society

Sioux Center Farmers Co-op Society ties future to NW Iowa 

livestock industry Sept./Oct. 3

How does your local farm supply cooperative rate? Jan./Feb. 22

Locals gain by diversifying 

From funeral homes to pizza parlors, Southwest co-ops find 

ways to boost earnings Jan./Feb. 19

Revenue up, net margins down

Ag cooperatives struggle with lower prices, higher costs Jan./Feb. 12

South Dakota turnaround

Farmers who once couldn’t give away their co-op find success 

through service and slow, steady growth May/June 12

Finance

Co-ops urged to prepare for adversity Nov./Dec. 9

Getting the green light
42 November/December 2002 / Rural Cooperatives

CoBank business development officer discusses essential

planning needed to finance an added-value cooperative May/June 17

Heavy debt pulls Farmland into Chapter 11;

new CEO Terry leads reorganization effort July/Aug. 11

Major changes in agriculture raise big questions for nation’s 

cooperatives Nov./Dec. 19

Revenue up, net margins down

Ag cooperatives struggle with lower prices, higher costs Jan./Feb. 12

What a co-op needs to be a player in capital markets: May/June 19

Fruits, Nuts

Co-op working to help growers hit by devastating crop losses July/Aug. 24

Delivering value to members

Welch’s CEO says National Grape members reap benefits from

efforts to expand markets, develop new products July/Aug. 22

Rio Grande growers battle Mexico for water Nov./Dec. 8

Taking it to the next level

Success of small Florida vegetable co-op leads to a network 

of similar cooperatives Sept./Oct. 18

The Big Apple

New products, added plant capacity play major role in Tree Top’s 

sales strategy March/April 8

Unstable farm markets prompt more growers to look to 

bargaining co-ops July/Aug. 27

USDA lends co-op support with Rural Business 

Enterprise Grant Sept./Oct. 21

Welch’s roots extend to 1869 July/Aug. 26

Grains & Oil Seed

Co-op’s grain marketer strives to reduce producer risk 

exposure Sept./Oct. 8

Co-ops urged to prepare for adversity Nov./Dec. 9

Cooperative Marketing Association Program:

Another way grain co-ops can serve their members Jan./Feb. 24

Midwest Farmers Co-op members benefiting from new rail 

terminal Sept./Oct. 10

South Dakota turnaround

Farmers who once couldn’t give away their co-op find success 

through service and slow, steady growth May/June 12

Squeezed Dry

Cattle, crops suffer in drought’s grip; Co-ops fear even bigger 

impact next year Nov./Dec. 4

Legislative and Legal

Co-op boards’ circle of responsibilities July/Aug. 30

Co-op directors held to high standards Sept./Oct. 15

Co-op working to help growers hit by devastating crop losses July/Aug. 24

Cooperative directors face unique challenges Nov./Dec. 10

Cooperative Marketing Association Program:

Another way grain co-ops can serve their members Jan./Feb. 24

Federal tax credits boost biogas and methane energy Jan./Feb. 5

Homeland security: a defining issue for co-ops May/June 6

Livestock 

Bringing it home

Dakota Prairie Beef Co-op adding value to home-grown 

cattle, grains Nov./Dec. 16

Cowboy capitalism helps co-op members deal with droughtNov./Dec. 7

Hard times breed new livestock co-ops Jan./Feb. 18

High Society

Sioux Center Farmers Co-op Society ties future to NW Iowa 

livestock industry Sept./Oct. 3

Midwest Farmers Co-op members benefiting from new rail 

terminal Sept./Oct. 10

Parched range forces many ranchers to the edge Nov./Dec. 6

Squeezed Dry

Cattle, crops suffer in drought’s grip; Co-ops fear even bigger 

impact next year Nov./Dec. 4

Unstable farm markets prompt more growers to look to 

bargaining co-ops July/Aug. 27

Wool co-op, mill in pact; Olympic blankets to follow Jan./Feb. 23

Management

Battening Down the Hatches:

Co-op security measures intensified in post-September 11 

world May/June 4

Benefits often key to keeping best employees March/April 22

Co-op boards’ circle of responsibilities July/Aug. 30

Co-op directors held to high standards Sept./Oct. 15

Co-ops must capitalize on new opportunities Nov./Dec. 25

Getting the green light

CoBank business development officer discusses essential

planning needed to finance an added-value cooperative May/June 17

Homeland security: a defining issue for co-ops May/June 6

How does your local farm supply cooperative rate? Jan./Feb. 22

Major changes in agriculture raise big questions for nation’s 

cooperatives Nov./Dec. 19

Trouble ahead?

Low commodity prices, ag economy are major problems 

facing co-op management May/June 8

Marketing

Building brand recognition

How to run a champagne ad campaign on a beer budget Nov./Dec. 14

Cooperative Marketing Association Program:

Another way grain co-ops can serve their members Jan./Feb. 24

Co-op’s grain marketer strives to reduce producer risk 

exposure Sept./Oct. 8

Delivering value to members

Welch’s CEO says National Grape members reap benefits from

efforts to expand markets, develop new products July/Aug. 22

High Society

Sioux Center Farmers Co-op Society ties future to NW Iowa 

livestock industry Sept./Oct. 3

Locals gain by diversifying 

From funeral homes to pizza parlors, Southwest co-ops find ways to 

boost earnings Jan./Feb. 19

Midwest Farmers Co-op members benefiting from new rail

terminal Sept./Oct. 10

Pennsylvania co-op targets upscale restaurant trade July/Aug. 18

Revenue up, net margins down

Ag cooperatives struggle with lower prices, higher costs Jan./Feb. 12

Rising to the top

Small Wisconsin specialty dairy co-ops finding new niche 

markets July/Aug. 6

South Dakota turnaround

Farmers who once couldn’t give away their co-op find success

through service and slow, steady growth May/June 12

Still raising cane

George Wedgworth is a 40-year veteran of Florida’s 

sugar wars Sept./Oct. 26

Taking it to the next level

Success of small Florida vegetable co-op leads to a network of 

similar cooperatives Sept./Oct. 18

The Big Apple

New products, added plant capacity play major role in Tree Top’s 

sales strategy March/April 8

Three new plants boost production March/April 11

Welch’s roots extend to 1869 July/Aug. 26

Member Relations

Adapting to change

Educating members helps smooth transitions May/June 23

Ask the right questions

Members should probe reasons for co-op conversions, other 

major changes May/June 20

Building commitment

Sharpening your co-op communications can build member 

commitment and better reach select groups March/April 24

Delivering value to members

Welch’s CEO says National Grape members reap benefits from

efforts to expand markets, develop new products July/Aug. 22

Rural Development

Co-ops must capitalize on new opportunities Nov./Dec. 25

Closing the gap

Utility co-ops see broadband service as way to preserve 
Rural Cooperatives / November/December 2002 43

rural communities July/Aug. 12

Legg sees vital role for utility co-ops in rural America’s future Sept./Oct. 24

Rural survivors

Can value-added agriculture save struggling rural communities?

Congress hopes USDA grant program will provide needed 

stimulus July/Aug. 17

Storm shelter

Utility co-ops, USDA working to spread Weather Radio 

coverage July/Aug. 20

The Right Stuff: Ag-based, but diverse economy helps Sioux 

County thrive Sept./Oct. 6

USDA lends co-op support with Rural Business Enterprise 

Grant Sept./Oct. 21

USDA provides $5 million in grants to foster co-op development 

in 19 states Sept./Oct. 38

Security

Battening Down the Hatches:

Co-op security measures intensified in post-September 11 

world May/June 4

Homeland security: a defining issue for co-ops May/June 6

USDA responds to security needs May/June 5

Statistics

Bulking up

Co-ops continue trade recovery, paced by bulk goods July/Aug. 4

Farmer co-op sales, income climb in 2001 Nov./Dec. 32

Revenue up, net margins down

Ag cooperatives struggle with lower prices, higher costs Jan./Feb. 12

How does your local farm supply cooperative rate? Jan./Feb. 22

Sugar

Still raising cane

George Wedgworth is a 40-year veteran of Florida’s sugar 

wars Sept./Oct. 26

Technology

Catch the wind

Co-op’s giant windmills work with Mother Nature to provide 

power March/April 4

Closing the gap

Utility co-ops see broadband service as way to preserve 

rural communities July/Aug. 12

Gas Turbines: coming into their own Jan./Feb. 6

Isolated Navajos tap solar power March/April 6

Legg sees vital role for utility co-ops in rural America’s future Sept./Oct. 24

Tapping into the Internet July/Aug. 14

USDA providing funding for rural broadband service July/Aug. 15

Vermont electric co-op looks to landfill for methane recovery Jan./Feb. 4

Trade

Bulking up

Co-ops continue trade recovery, paced by bulk goods July/Aug. 4

The Big Apple

New products, added plant capacity play major role in Tree Top’s 

sales strategy March/April 8

Value Added

Bringing it home

Dakota Prairie Beef Co-op adding value to home-grown cattle, 

grains Nov./Dec. 16

Co-ops must capitalize on new opportunities Nov./Dec. 25

Cowboy capitalism helps co-op members deal with drought Nov./Dec. 7

Delivering value to members

Welch’s CEO says National Grape members reap benefits from

efforts to expand markets, develop new products July/Aug. 22

Getting the green light

CoBank business development officer discusses essential

planning needed to finance an added-value cooperative May/June 17

Hard times breed new livestock co-ops Jan./Feb. 18

High Society

Sioux Center Farmers Co-op Society ties future to NW Iowa 

livestock industry Sept./Oct. 3

Pennsylvania co-op targets upscale restaurant trade July/Aug. 18

Rising to the top

Small Wisconsin specialty dairy co-ops finding new niche 

markets July/Aug. 6

Rural survivors

Can value-added agriculture save struggling rural communities?

Congress hopes USDA grant program will provide needed 

stimulus July/Aug. 17

Start-up stages for added-value ventures May/June 18

Taking it to the next level

Success of small Florida vegetable co-op leads to a network 

of similar cooperatives Sept./Oct. 18

The Big Apple

New products, added plant capacity play major role in Tree Top’s 

sales strategy March/April 8

Three new plants boost production March/April 11

Veneman announces $75 million in grants; co-ops get $18 million 

for value-added projects Nov./Dec. 36

USDA-backed ethanol plant paying off for members May/June 14

USDA lends co-op support with Rural Business Enterprise 

Grant Sept./Oct. 21

Wisconsin dairy industry has marketing options July/Aug. 8

AUTHORS

Baarda, James

Ask the right questions

Members should probe reasons for co-op conversions, other 

major changes May/June 20

Co-op boards’ circle of responsibilities July/Aug. 30

Co-op directors held to high standards Sept./Oct. 15

Cooperative directors face unique challenges Nov./Dec. 10

Major changes in agriculture raise big questions for nation’s 

cooperatives Nov./Dec. 19

Buccola, Steve; Durham, Cathy; Lyon, Carmi

The Big Apple

New products, added plant capacity play major role in Tree Top’s 

sales strategy March/April 8

Borst, Alan

Cooperative Marketing Association Program:

Another way grain co-ops can serve their members Jan./Feb. 24

Campbell, Dan

Business failures underscore need for dose of preventive 

medicine Nov./Dec. 21

Co-op’s grain marketer strives to reduce producer risk 

exposure May/June 8

Hard times breed new livestock co-ops Jan./Feb. 18

High Society

Sioux Center Farmers Co-op Society ties future to NW Iowa 

livestock industry Sept./Oct. 4

Rural survivors

Can value-added agriculture save struggling rural communities?

Congress hopes USDA grant program will provide needed 

stimulus July/Aug. 17

Midwest Farmers Co-op members benefiting from new rail 

terminal May/June 10

South Dakota turnaround

Farmers who once couldn’t give away their co-op find success

through service and slow, steady growth May/June 12

The Right Stuff: Ag-based, but diverse economy helps Sioux 

County thrive Sept./Oct. 6

Unstable farm markets prompt more growers to look to 

bargaining co-ops July/Aug. 27

Chesnick, David S.

Revenue up, net margins down

Ag cooperatives struggle with lower prices, higher costs Jan./Feb. 12

Cockerell, Lynette

Locals gain by diversifying 

From funeral homes to pizza parlors, Southwest co-ops find 

ways to boost earnings Jan./Feb. 19

Dillion, Dan

Delivering value to members

Welch’s CEO says National Grape members reap benefits from

efforts to expand markets, develop new products July/Aug. 22
44 November/December 2002 / Rural Cooperatives

United States

Department of Agriculture

Washington, DC 20250

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Periodicals Postage Paid

U.S. Department of Agriculture

Ditisch, Teri

Building brand recognition

How to run a champagne ad campaign on a beer budget Nov./Dec. 14

Duffey, Patrick

Heavy debt pulls Farmland into Chapter 11;

new CEO Terry leads reorganization effort July/Aug. 11

Fairbairn, Brett

Making the grade

Will co-ops succeed or fail in the new century? The answer lies 

with co-op education efforts Jan./Feb. 8

Gray, Thomas W.

Trouble ahead?

Low commodity prices, ag economy are major problems facing 

co-op management May/June 8

Haskell, James

African village banks project shows renewed emphasis on 

international co-op development July/Aug. 21

Jorgenson, Nancy

Parched range forces many ranchers to the edge Nov./Dec. 6

Squeezed Dry

Cattle, crops suffer in drought’s grip; Co-ops fear even bigger 

impact next year Nov./Dec. 4

Karg, Pamela J.

Rising to the top

Small Wisconsin specialty dairy co-ops finding new niche 

markets July/Aug. 6

Kennedy, Tracey L.

Bulking up

Co-ops continue trade recovery, paced by bulk goods July/Aug. 4

Kilmer, Richard L.; Prasertsri, Peerapon;

The long haul

Is your co-op’s farm-to-plant milk hauling optimal? This case

study shows factors that can impact efficiency March/April 12

Kistner, Jeff

Getting the green light

CoBank business development officer discusses essential

planning needed to finance an added-value cooperative May/June 17

Kraenzle, Charles

Trouble ahead?

Low commodity prices, ag economy are major problems facing 

co-op management May/June 8

Kyer, Chris

Cooperative Marketing Association Program:

Another way grain co-ops can serve their members Jan./Feb. 24

Letson, Perry

The road up

Free-market reforms fuel growth of Ethiopia’s co-ops March/April 15

Merlo, Catherine

Getting the green light

CoBank business development officer discusses essential

planning needed to finance an added-value cooperative May/June 17

Nickel, Raylene

Bringing it home

Dakota Prairie Beef Co-op adding value to home-grown cattle, 

grains Nov./Dec. 16

Rotan, Beverly L.

Benefits often key to keeping best employees March/April 22

How does your local farm supply cooperative rate? Jan./Feb. 22

Salisbury, Susan

Still raising cane

George Wedgworth is a 40-year veteran of Florida’s 

sugar wars Sept./Oct. 26

Schofer, Dan; Richardson, Vonda; Holmes, Glyen

Taking it to the next level

Success of small Florida vegetable co-op leads to a network of 

similar cooperatives Sept./Oct. 18

Thompson, Steve

Catch the wind

Co-op’s giant windmills work with Mother Nature to provide 

power March/April 4

Closing the gap

Utility co-ops see broadband service as way to preserve rural 

communities July/Aug. 12

Legg sees vital role for utility co-ops in rural America’s future Sept./Oct. 24

Storm shelter

Utility co-ops, USDA working to spread Weather Radio 

coverage July/Aug. 20

Vermont electric co-op looks to landfill for methane recovery Jan./Feb. 4

Thuner, Gail; Schmidt, Sarah; Dewey, John

Battening Down the Hatches:

Co-op security measures intensified in post-September 11 

world May/June 4

Torgerson, Randall

Ask the right questions

Members should probe reasons for co-op conversions, 

other major changes May/June 20

Attention to member, market needs is key to cooperative 

success Sept./Oct. 2

Co-op growth through acquisition March/April 2

Cooperative education: whose responsibility is it? Jan./Feb. 2

Integrity essential in reporting financial results Nov./Dec. 2

More than one way for local co-ops to grow May/June 2

States need to carefully consider new “cooperative” laws July/Aug. 2

Trechter, David; King, Robert P.

Building commitment

Sharpening your co-op communications can build member 

commitment and better reach select groups March/April 24

Wadsworth, James J.

Adapting to change

Educating members helps smooth transitions May/June 23

Warman, Marc

Cooperative Marketing Association Program:

Another way grain co-ops can serve their members Jan./Feb. 24