Rural

COOPERA COOPERATIVES

How co-ops cope

with sprawl

How co-ops cope

with sprawl

USDA / Rural Development July/August 2003
2 July/August 2003 / Rural Cooperatives

The need for cooperative education

today is greater than at any time in

memory. The decade-long interest in

the creation of new-generation, valueadded cooperatives aimed at capturing

more income for members clearly

points toward the need to reshape the

delivery system for cooperative educational efforts. The increasing number

of problems (and outright failures) of

“traditional” U.S. cooperatives also

provides evidence of this need. 

In meeting the challenge to educate,

it is critical that the cooperative form

of business—as well as variations of

it—be completely understood. It is also

important that cooperative education

initiatives adequately deal with today’s

complex business, marketing and financial issues. 

We in the cooperative education

business need to know why these issues

are so critical to the future successes of

cooperatives. We must effectively communicate alternative solutions to the

challenges facing cooperatives. Appropriate audiences must be identified and

challenged to learn. All involved must

be committed. 

The recent USDA report, “Agricultural Cooperatives in the 21st Century”

(discussed in the January/February

2003 edition of this magazine) points

to the need for stronger education

efforts for cooperative directors. These

efforts must also extend to youth,

young farmers, members, employees

and the general public. 

The report waives a flag of caution,

warning that resources needed for

educational endeavors have been

reduced all across the spectrum. This

includes cooperatives and related state

and national co-op associations, educational institutions and federal programs. The report recommends the

need for renewed investment in education and making it a top-level concern

once again.

What is the real level of commitment and investment in cooperative

education? What does the future hold

for it? 

There are problems we must

address. A number of regional cooperative leaders indicate that a continuing

lack of financial and human resources

(and, in some cases, lack of interest) is

pressuring them to reduce or end educational efforts. The most striking

example of this, at the national level, is

the demise of the long-running

National Institute of Cooperative Education (NICE). Its last program took

place in Chicago in 2002.

However, there are positive signs for

the future of cooperative education. A

concerted effort is being made to continue a NICE conference for youth.

This new program is taking place in

July at Virginia Polytechnic Institute

and State University in Blacksburg, Va.

The new Political Awareness and

Leadership (PAL) program that the

National Council of Farmer Cooperatives (NCFC) hosted in Washington,

D.C., in June is another attempt to

rebuild an educational program for

young cooperators, directors and cooperative employees. 

Other national conferences and

workshops are ongoing. In some areas,

the upper Midwest for example,

regional efforts carried out by state

cooperative councils, universities and

cooperative centers remain strong.

(Technology has proffered a number of

co-op educational computer programs

and Web sites.) 

Efforts such as these should continue to be advanced and built upon. In

moving forward with these and other

initiatives, it is imperative that cooperative education not be forced into a

mold that may have been appropriate

yesterday, but not today. Fresh ideas,

new resources, programs developed

around the current and future complex

issues and coordinated efforts of the

cooperative community are crucial to

develop and carry out sound educational programs. It is up to the entire

cooperative community, through

investment of time and resources, 

collaboration and dedication, to

reverse recent trends and commit

anew to cooperative education.

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

Service

COMMENTARY

Cooperative education can help renew and revitalize co-ops 

The report waives 

a flag of caution,

warning that

resources needed 

for educational

endeavors have been

reduced all across 

the spectrum.
Rural Cooperatives / July/August 2003 3

Rural COOPERATIVES (1088-8845) is published

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Ann Veneman, Secretary of Agriculture

Thomas C. Dorr, Under Secretary, USDA Rural

Development

John Rosso, Administrator, Rural BusinessCooperative Service

James Haskell, Acting Deputy Administrator,

USDA Rural Business-Cooperative Service

Dan Campbell, Editor

Vision Integrated Marketing/KOTA, Design

Have a cooperative-related question?

Call (202) 720-6483, or

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This publication was printed with vegetable oil-based ink.

United States Department of Agriculture

Rural COOPERA .

COOPERATIVES

July/August 2003 Volume 70 Number 4

On the Cover:

On the cover: Urban sprawl is posing major challenges for cooperatives in

many parts of the nation. While some co-ops have had to fold when farm

fields were replaced by subdivisions and strip malls, others have survived by

adjusting their marketing strategy. Story on page 4. USDA photo by Bob Nichols

FEATURES

4 Living with Sprawl

As farms give way to subdivisions and traffic lights, America’s

rural cooperatives struggle to adjust

By Catherine Merlo

9 USDA plays active role in farmland protection

10 Merrills first Northeast dairy family to win

national land conservation prize

12 U.S. Premium Beef offers to buy Farmland

share in processing business

13 Waving the red flag

Survey examines correlation between ethical environment 

and fraud in co-ops

By Tommie Singleton, Frank Messina and Richard Turpen

15 More than a power source

Brunswick Electric typifies commitment of cooperatives 

to support rural communities

By Steve Thompson

22 Talking with pictures

Photo experts offer tips on how to better tell your co-op story 

with strong photos

By Dan Campbell

28 NMPF scales back CWT milk supply-balancing

plan

By Patrick Duffey

DEPARTMENTS

2 COMMENTARY

20 VALUE-ADDED CORNER

30 NEWSLINE
4 July/August 2003 / Rural Cooperatives

Living with Sprawl

As farms give way to subdivisions and traffic lights, 

America’s rural cooperatives struggle to adjust

By Catherine Merlo

Editor’s Note: Merlo is a freelance writer based in Bakersfield,

Calif., with extensive experience working for, and writing about,

cooperatives. 

im Roskam used to head out each morning

along the Rivertown Parkway to his job as general manager of Farmers Co-op Elevator Co.

in Hudsonville, Mich. Along the way, he passed

a dozen flourishing corn and bean farms—and

not a single traffic light. 

That was 15 years ago. Today, that same route would take

Roskam past new subdivisions, one of

Michigan’s largest shopping malls, 12 traffic lights—and not a single farm.

Roskam is not alone in his transformed

commute. Across the United States,

increasing suburban development of farmland is not only altering the rural landscape, it is forcing many rural cooperatives

to take a hard look at their future operations and customer base. 

Between 1992 and 1997, the United

States paved over more than 6 million acres

of farmland, an area roughly equal in size to

Maryland, according to American Farmland

Trust (AFT), a private, nonprofit farmland

conservation organization. AFT recently

released a study, “Farming on the Edge:

Sprawling Development Threatens America’s Best Farmland.” 

“The problem is getting worse,” says Ralph Grossi, AFT

president. “America developed twice as much farmland in the

1990s as it did in the 1980s.”

While business and community leaders, futurists and professors debate the pros and cons of urban sprawl—the loss of

prime farmland, the apparent random, unplanned nature of

urban expansion—rural cooperatives are on the frontline

coping with the challenges caused by sprawl. 

Some co-ops have found their membership and customer

base so affected by suburban development, they have been

forced to close whole divisions. Others have merged with

neighboring co-ops in an effort to survive. Others have

refocused their efforts on new services targeted at a more

suburban customer base. Still other co-ops, especially rural

utilities, are thriving as a result of the increased population

that suburban development is bringing to their once-rural

territories.

New customers, new services

In Roskam’s case, more urbanization has compelled the

Michigan co-op he manages to expand its services in at least

three areas. Farmers Co-op Elevator, a traditional grain marketing and farm supply cooperative formed in 1917, serves a

2,500-square-mile territory between Holland and Grand

Rapids. In recent years, the co-op has branched out beyond

its shrinking base of traditional farmermembers.

“Rather than complain about increased

development in our area, we’ve diversified to make things happen,” says

Roskam.

In addition to providing farm supplies

and services for farmers, Farmers Co-op

Elevator now targets homeowners, greenhouse growers and nurseries. It also focuses on the turf and ornamental business,

such as lawn and garden care, golf courses

and city municipalities.

“At 640, our membership is the largest

it has ever been,” says Roskam. “Our gross

sales grew from about $6.5 million in 1989

to $19 million in 2002—by diversifying.”

Only 30-40 percent of Farmers Co-op Elevator’s membership now is represented by traditional farmers. The

rest, says Roskam, are suburban customers and retired or

part-time farmers.

The shift from its old ways hasn’t been without some pain.

Between 1998 and 2000, Farmers Co-op Elevator closed a

full-service agronomy and feed service facility that once

catered to traditional farmers. It curtailed the operations of

several service stations that pumped gas for customers. And it

closed a portable feed-grinding division that delivered onfarm services.

“As a co-op, we have to shift and change gears to continue

to roll with the urban growth,” Roskam says.

J

Co-op Manager Bill Rohrbaugh says

that until two years ago, this housing

development in Medina County, Ohio,

was a 150-acre field farmed by one of

the members of Town & Country Co-op.

Photo courtesy Town & Country Co-op 
Customer shift in Minnesota

At Federated Co-ops in central Minnesota, a similar transition is taking place. Built by local growers in 1914, Federated Co-ops serves 14 counties in Minnesota and six in Wisconsin. Subdivisions and hobby farms are sprouting up

across the land, where property values now range from

$3,000 to $24,000 per acre. Today, Federated Co-ops counts more than 35,000 customer-members, only 2,000 of whom are conventional growers.

“This was once a traditional dairy area with between 2,500

and 3,000 dairy farms,” says Tim Kavanaugh, general manager

of Federated Co-ops, based in Princeton, Minn. “That number is declining at the rate of about 200 dairy farms per year.”

Replacing them are cash-crop operations, mostly with a

corn-soybean rotation, and part-time farmers.

“Our traditional feed business is disappearing,”

Kavanaugh says. “We’re seeing more growth in the hobby

farms with small animals, horses and pets.”

As a result, Federated Co-ops has shifted its product line

to more bag feeds. It’s opened two Country Stores in the past

year, and expects to open two more within the next two years.

These retail stores offer feed, animal health products, pet

supplies, lawn/garden supplies and equipment.

As further proof of how suburban its customer base has

become, Federated Co-ops’ propane home-heating business

has become its fastest-growing and most profitable operation, with 25,000 accounts. 

Kavanaugh doesn’t downplay the challenges of refocusing

the co-op’s efforts on a new customer base. In particular,

marketing to reach consumer business is different from traditional farm customers, and is often more difficult.

“We’re reacting to this shift, but we don’t have all the

answers,” says Kavanaugh. “Some ventures are successful,

some are not. We honestly don’t know where this will all go

from here. But with land values increasing and more people

coming in, we have to figure out a way to capture more business from more people. The future is bright if we can do that.”

He adds, “Local cooperatives must become more entrepreneurial. Those that do will adapt; those that don’t will 

disappear.”

An old-time Ohio co-op disappears

Perhaps few co-ops have felt the impact of urbanization as

profoundly as Ohio’s Medina Landmark Cooperative.

Formed in 1934, the co-op no longer exists in its original

form. In January 2003, it merged with three other Ohio farm

co-ops, becoming part of Town & Country Co-op Inc., based

in Ashland, Ohio, about 65 miles southwest of Cleveland.

Medina Landmark had been located in northern Ohio’s

Medina County, one of the state’s fastest-growing counties.

About 20 years ago, Interstate 71 was built through Medina

County, connecting Cleveland and Columbus. About 12

years ago, houses began popping up almost overnight as the

area became a bedroom community for Cleveland. Oldtimers pinpoint the arrival of Interstate 71 as the beginning

Rural Cooperatives / July/August 20035

USDA photo by Bob Nichols
6 July/August 2003 / Rural Cooperatives

of Medina County’s urbanization—and the end of Medina

Landmark Co-op.

“Medina Landmark’s market had become extremely

urbanized, which made the merger with Town & Country

very attractive to us,” says Bill Rohrbaugh, former general

manager of Medina Landmark and now vice president of feed

and energy for Town & Country Co-op. “Our territory had

become so inundated by urbanization that we had trouble

taking care of our farmers.”

The co-op could not justify the costs of handling fertilizers, crop protectants and other products for its 250 members,

a number down sharply from the 1,000 members the co-op

counted in its heyday. “It was starting to negatively impact

our bottom line,” says Rorhbaugh.

The merger was an attempt by the four co-ops to stay

afloat in a market with diminishing numbers of farmers. In

fact, Town & Country’s name was retained from one of the

four merging co-ops to reflect its urbanized market. Now

one of Ohio’s biggest co-op’s, Town & Country expects its

sales to reach $75 million this year. But its achievements have

not come without difficult decisions.

Closing traditional business

In February 2003, Town & Country closed the grain sorting,

crushing and milling operations that once had been bread-andbutter services for Medina Landmark Co-op. While members

can still take their grain crops to other mills nearby, the closure

marks the end of an era for the area, Rohrbaugh says.

Like Roskam at Michigan’s Farmers Co-op Elevator,

Rohrbaugh has seen prime farmland turn into shopping centers and housing tracts. While Town & Country Co-op still

has enough farm base to support its farm supply business, it

too is looking for ways to adapt to and survive the suburban

development Rorhbaugh says is “inevitable.”

“To survive, we need to look at other business areas,” he

says. “We recently bought a convenience store and have

started to expand our petroleum business.”

Town & Country’s 14 retail farm stores now target suburban shoppers. The largest feed seller is no longer dairy feed

but horse feed, followed by dog and cat food. Alpaca feed is

No. 3. Town & Country’s agronomy division has also begun

focusing on Medina County’s 28 golf courses, which use

plenty of fertilizers and other products.

“Farmland values have skyrocketed to as much as $10,000

an acre in Medina County,” Rohrbaugh says.

“You can’t blame farmers who want to sell; it’s

hard not to sell.”

But with low commodity prices and high

production costs, farmers often find land at

$10,000 an acre just too expensive to buy.

“They just can’t make the numbers work,”

Rohrbaugh says.

As a result, many farmers will sell a 200-

acre farm to a developer, “hitting the jackpot,” says Rohrbaugh. Then they pull up

stakes and move their farming operations to

southern Ohio or nearby Indiana or Iowa,

“where they can buy a farm three times that

size at $2,000 an acre,” he says.

Adds Rohrbaugh, “At the present growth

rate in Medina County, there will come a

time, maybe 25 years from now, when every

available piece of property will be taken and

there’ll be no more vacant land.”

Still, rising land values aren’t all bad news

for farmers.

“Rising real estate prices create greater

farmer equity,” says James Miller, vice presiThis map was produced by American Farmland Trust (AFT) to show where high-quality

farmland is facing the greatest threat from development. Graphic courtesy AFT 

High Quality Farmland & High Development

High Quality Farmland & Low Development

Federal & Indian Lands

Urban Areas

Other

Co-op employees such as Kathy Belmore and Tom Jackson, at one

of Federated Co-ops’ Country Stores in Minnesota, are dealing with

increasing numbers of non-farm members in the co-op’s 20-county

trade territory. Of 35,000 members, only 2,000 are conventional

growers. Photo courtesy VistaComm. 
Rural Cooperatives / July/August 2003 7

“Farming with 8.5 million neighbors is not easy,” says

John Rigolizzo, Jr., a fifth generation farmer in Berlin,

N.J.

Rigolizzo, who farms 400 acres in Camden County in

southern New Jersey, should know. He has seen and

felt the impact of suburban development firsthand. 

“New Jersey is the nation’s most densely populated

state, with more people per square mile than any other

state,” says this former state Farm Bureau president. 

Rigolizzo says 8.5 million residents live on 25 percent

of New Jersey soil, while 9,000 growers farm just 1 million acres—or 20 percent—of the state’s landscape. It’s

getting harder and harder to operate

with suburban neighbors, who

complain

about the

dust, smells

and pesticides associated with

farming. He has worked, sometimes successfully, to

help bring about farmland preservation programs, but

his patience has worn thin.

A brand new housing tract sits just 100 yards behind

Rigolizzo’s farmhouse. Since the tract—85 houses on 50

acres—was built, Rigolizzo has encountered problems

with vandalism, theft, kids and dogs. 

“I never know what batteries are going to be stolen

from my equipment, what gasoline siphoned from my

tractors,” he says. “I have 17 tractors; more than once,

I’ve found them all out of gas.”

Many of his new neighbors give no thought to another person’s privacy, says Rigolizzo. “The kids ride their

recreational vehicles over my fields and rows of

pipeline,” he says. “It costs me thousands of dollars for

their trespassing and

vandalism.

For them to

have their 10

minutes of

fun in the

afternoon is

aggravating

and costly for

me.”

Rigolizzo

scoffs at New

Jersey’s designation as

“The Garden

State.”

“We’re losing

that moniker quickly,” he says. “New Jersey is an

expensive state to live in, let alone farm in. Our higher

production costs are a disincentive to stay in farming.”

A member of nearby Vineland Cooperative Produce

Auction and Landisville Cooperative, which buys and

sells produce, Rigolizzo says area co-ops have suffered

from the impact of urban sprawl. “In the last 10 years or

so, we’ve lost 10 to 12 co-ops in a 40-mile radius of

where I live,” he says.

The future for farmers may not be so different. “It’s

just a matter of time for farmers in New Jersey,” Rigolizzo says. ■

—Catherine Merlo

Farming with 8.5 million neighbors

dent of finance with First Pioneer Farm Credit, which provides financing services to 10,000 customers in six New

England states.

“That can give a farmer a stronger balance sheet and create the opportunity to borrow and expand his operations or

invest in new ones,” Miller says. “The urban area offers a

huge consumers’ market for farmers, especially in retail and

horticultural products.”

Rural utilities find opportunity

New housing tracts, giant shopping malls and more

schools can be good news for some rural cooperatives.

Numerous rural utilities have found opportunity in the

shift from farmland to suburban development. Many have

pursued diversification of operations, while others have

refocused their efforts on a new customer base. 

For example, when upscale suburban developments began

spreading out from Indianapolis in the 1990s, several electric

distribution cooperatives that served the once-rural area took a

fresh look at their new residents. What they saw was not the

traditional co-op customer but rather a new group with dual

professional incomes, high performance expectations and experiences with competitive Investor-Owned Utilities (IOUs).

In 1996, five electric distribution co-ops that circled

Indianapolis formed Circle City Group (CCG), a limited

liability company formed to respond to their growing and

changing customer base. CCG is helping its five co-ops

obtain economic advantages by consolidating services and

John Rigolizzo Jr. tends to some of his greenhouse tomatoes in southern New Jersey, where

development is making it increasingly hard for

farmers. At left, a new subdivision abuts one of

Rigolizzo’s orchards. USDA photos by Bob Nichols
sharing costs. The alliance is composed of Boone REMC,

Hendricks Power Cooperative, South Central Indiana

REMC, Johnson County REMC and Central Indiana 

Power. Together, they represent almost 90,000 electric 

customers and 7,800 miles of line.

Working together through CCG, the co-ops have

achieved numerous benefits that not only allow them to serve

their customers, but significantly reduce operating costs.

They have implemented automated meter reading (AMR)

equipment, remittance processing, a meter lease program and

an underground location service—new operations the co-ops

might not have been able to afford on their own. 

“Along with improved customer service, our meter reading

costs have been reduced by 30 to 40 percent,” says Dale Geiselman, president and CEO of Boone REMC. “Remittance processing costs have dropped 30 percent. We also achieved a 30-

50 percent reduction in AMR meter conversion costs.”

CCG’s efforts in advertising and communications also

have contributed to a more positive image for the co-ops. 

“We have definitely seen an increased awareness and an

improved image of the CCG systems,” Geiselman says.

A sense of urgency—and loss

As farmland gives way to housing tracts, shopping centers

and busy streets, some effort is taking place to slow the development, or at least to plan it better. A sense of urgency compels farmland conservation groups—as they work at local,

regional and national levels—to develop and implement

farmland protection programs. AFT is working to increase

funding for ag conservation easements at all government levels. It targets conservation funds to threatened ag areas and

supports effective planning and smart growth to steer development away from the nation’s best farmland.

But, for now, rural cooperatives are largely on their own in

dealing with the challenges of suburban development. The

stakes remain significant for them and the eroding farm base

on which they stand. While most co-ops in the path of development realize they must adapt to and change with the marketplace, some are nostalgic for the days before the city

moved in. 

“I’ve been in the traditional agriculture business for 25

years,” Town & Country’s Rohrbaugh says wistfully. “It’s not

what it used to be. I miss it.” ■

8 July/August 2003 / Rural Cooperatives

Urban sprawl has been a fact of life for Southern 

California growers and their cooperatives since the

1950s. The Los Angeles area—once called the Orange

Empire but now known as the Inland Empire—has been

called the worst stretch of sprawl in America. It was

once the center of U.S. citrus production in the West—

and the birthplace of Sunkist Growers—but that

changed long ago. 

In the years after World War II, a population explosion in Southern California led growers in Los Angeles

County and Orange County to bulldoze out their citrus

groves to make way for new houses, factories, schools

and freeways.

After selling their farms in Southern California at

profitable prices, many citrus growers began looking for

new lands to farm. They found them in California’s San

Joaquin Valley, and further south in the desert areas of

the Coachella Valley. They also found new opportunity in

Arizona. Many Sunkist farmer-members, as well as their

packinghouses, picked up stakes and moved to largeracreage operations on the abundant new land. 

Packinghouses took the hardest hit from urban

sprawl. The local, member-owned associations once

numbered in the hundreds throughout California. Due to

the urban shift, as well as modernization, those numbers

have dropped dramatically. In Orange County alone,

where 20 packinghouses once operated, only one

remains today. Sunkist Growers, the nation’s largest citrus marketing co-op, has seen its packinghouse members drop from 115 in 1968 to just 52 today.

Yet, for Sunkist, the shift in its production areas

proved positive. The opening of new lands for its members boosted its supply channels. The San Joaquin Valley is now one of California’s major citrus-producing

regions. In 1981, Sunkist Growers built a new processing

plant near Tipton, in the heart of the valley. Not far away,

in Visalia, Sunkist now operates a centralized sales

office. 

While consolidation to fewer but larger-acreage

growers resulted in a membership drop from about

12,000 in the 1950s to about 6,000 in California and Arizona today, Sunkist Growers has adapted to the change.

“Due to our members’ geographical shift and more

concentrated plantings, the total numbers of citrus

acres under cultivation actually remained the same, and

our volume increased,” says Mike Wootton, vice president of corporate affairs for Sunkist Growers, based in

the urban setting of Sherman Oaks, Calif.

The geographical shift also has provided Sunkist with

three major citrus-producing districts with harvests that

occur at different times. Having members in the Central

Valley, California’s coastal areas and the desert areas of

southeastern California and Arizona gives Sunkist, a

leading international citrus supplier, a steadier stream of

citrus –- and an edge in the market. ■

—Catherine Merlo 

Orange Empire bows to urban sprawl in Southern California
he U.S. Department of

agriculture, through its

Natural Resources 

Conservation Service

(NRCS), is an active

partner with America’s farmers and

ranchers in helping to protect agricultural land. One way it accomplishes

this is with the Farm and Ranch Lands

Protection Program (FRPP), a voluntary land conservation program.

The program provides matching

funds to state, tribal or local governments and non-governmental organizations with existing farm and ranch

land protection programs to purchase

conservation easements. The program

was first authorized in 1985 as the

Farmland Protection Program. The

Farm Security and Rural Investment

Act of 2002 (2002 Farm Bill) added

ranch land to the program and reauthorized it as the Farm and Ranch

Lands Protection Program (FRPP). 

Under this program (through

2002), more than 170,000 acres have

been protected in 35 states.

How FRPP Works 

Eligible entities acquire conservation easements from landowners. Participating landowners agree not to

convert their land to non-agricultural

uses and to develop and implement a

conservation plan for any highly

erodible land. All highly erodible

lands enrolled must have a conservation plan developed based on the standards in the NRCS Field Office Technical Guide and approved by the local

conservation district. Landowners

retain all rights to use the property for

agriculture. 

To participate, a landowner submits

an application to an entity—a state,

tribal, or local government or a nongovernmental organization—that has

an existing farm or ranch land protection program. The NRCS state conservationist, with advice from the

State Technical Committee, awards

funds to qualified entities to purchase

perpetual conservation easements.

Eligibility 

To qualify for FRPP, the land

offered must be part or all of a farm or

ranch and must:

■ Contain prime, unique or other

productive soil or historical or archaeological resources; 

■ Be included in a pending offer

from a state, tribal or local government or non-governmental organization’s farmland protection program; 

■ Be privately owned; 

■ Be covered by a conservation

plan for any highly erodible land; 

■ Be large enough to sustain agricultural production; 

■ Be accessible to markets for what

the land produces; 

■ Be surrounded by parcels of land

that can support long-term agricultural production; and

■ Be owned by an individual or

entity that does not exceed the Adjusted Gross Income (AGI) limitation.

The AGI provision of the 2002

Farm Bill impacts eligibility for

FRPP and several other 2002 Farm

Bill programs. Individuals or entities

that have an average AGI exceeding

$2.5 million for the three tax years

immediately preceding the year the

contract is approved are not eligible

to receive program benefits or payments. However, an exemption is

provided in cases where 75 percent of

the AGI is derived from farming,

ranching, or forestry operations. The

final rule for this provision has not

yet been published.

If the land cannot be converted to

non-agricultural uses because of

existing deed restrictions or other

legal constraints, it is ineligible for

FRPP.

Funding 

FRPP is funded through the Commodity Credit Corporation. The

FRPP share of the easement cost

must not exceed 50 percent of the

appraised fair market value of the

conservation easement. As part of its

share of the cost of purchasing a conservation easement, a state, tribal, or

local government or non-governmental organization may include a charitable donation by the landowner of

up to 25 percent of the appraised fair

market value of the conservation

easement. A cooperating entity must

provide, in cash, 25 percent of the

appraised fair market value of the

conservation easement or 50 percent

of the purchase price.

For more information 

If you need more information

about FRPP, please contact your local

USDA Service Center, listed in the

telephone book under U.S. Department of Agriculture, or your local

conservation district. Information also

is available on the World Wide Web

at: http:// www.nrcs.usda.gov/

programs/farmbill/2002/. ■

Rural Cooperatives / July/August 2003 9

T

USDA plays active role in

farmland protection
10 July/August 2003 / Rural Cooperatives

Editor’s Note: This article is reprinted

courtesy AgriMark News. 

griMark dairy cooperative members John and

Lorraine Merrill of

Stratham, N.H., have

been awarded with

American Farmland Trust’s (AFT)

2003 Steward of the Land Award, the

largest nationwide award for land

stewardship. The Merrills were chosen out of 117 applications from 41

states to win the $10,000 prize, which

was presented to them for their lifelong commitment to environmental

stewardship, public education, policy

activism and farmland protection.

“For decades, the Merrills have

been devoted to protecting not just

their farmland, but water, wildlife

habitat and natural resources on the

farm,” says AFT President Ralph

Grossi. “They truly are stewards of

our land and a great inspiration to farmers across

the nation.”

Stuart Farm is situated

in the Great Bay Estuary

region, a coastal habitat

that encompasses more

than 10,000 acres of tidal

Merrills first Northeast dairy family to

win national land conservation prize

A

For their leadership in protecting farmland from development

and their commitment to sound

environmental stewardship,

John and Lorraine Merrill and

family of Stratham, N.H., are

the winners of American

Farmland Trust’s Steward of

the Land Award for 2003. At left

is their son Nathan and his

wife Judy with daughters

Samantha, 3, and Hannah, 6.

Lorraine and John Merrill are

on the right. Photo by Jim

Newton, courtesy AFT

Farmers often say, “The best way to protect my land

is to farm it.” This is true, but where will you and your

farm be 10 or 15 years from now? Too often, family

members who inherit farmland unexpectedly are left

with little choice but to sell out. 

Fortunately, good estate planning can help landowners achieve financial stability without cashing in on their

land. “Your Land is Your Legacy: A Guide to Planning for

the Future of Your Farm” offers practical estate planning

advice for today’s landowners and their financial advisors. American Farmland Trust’s (AFT) revised and

updated guidebook illustrates strategies for transferring

land to the next generation while addressing your personal financial goals. 

“You can’t take your farm with you when you die, said

Jeremiah Cosgrove, an attorney with AFT who coauthored the guide. “But proactively planning for the

future of your land before you retire gives you a stake in

its outcome.” 

The third edition of AFT’s bestseller incorporates

recent tax changes, serving as a reminder that estate

planning, not estate taxes, is the critical issue for farm

AFT guide helps farmers and ranchers 

transfer land to the next generation
Rural Cooperatives / July/August 2003 11

waters and is considered one of the

most important estuarine systems on

the East Coast. The Merrills have

gone to great lengths to ensure that

this fragile ecosystem remains intact:

they constructed a freshwater wetland to treat waste runoff, and cooperated with Partners for Fish and

Wildlife to restore a salt marsh on

their farm.

“The restored salt marsh on the

Stuart Farm is one of the most thoroughly researched on the East Coast

and has become a model for similar

efforts,” said Bruce Marriott, retired

agriculture program leader at University of New Hampshire Cooperative

Extension, who nominated the Merrills

for AFT’s award.

The Merrills’ operation, Stuart

Farm, is a 200-cow dairy farm run by

John and Lorraine, in partnership with

their son, Nathan, and daughterin-law, Judy. They were early pioneers in rotational grazing and

other conservation practices, and

their family was among the first in

the state to permanently protect

their farm with an agricultural

conservation easement in 1981.

“It was wall-to-wall dairy

farms when we first moved here,”

said Lorraine, who noted that

there used to be more cows than

people in the town. The farm

moved to its current location in

1961 after construction of an

Interstate highway forced her

family out of northern Massachusetts. Today, Stuart Farm is the

only dairy farm remaining in

Stratham.

The family’s environmental

achievements were accomplished

with the help of state and federal

conservation programs that

encourage stewardship on private

lands. They have also partnered with

numerous local and state conservation

organizations. Whether it’s hosting a

national Environmental Protection

Agency tour or being featured in a

nationally distributed video by the

U.S. Fish and Wildlife Service, the

Merrills know that to truly champion

conservation activities, education

must play a central role. ■

families. While estate tax laws change, “Your Land is

Your Legacy” presents a general planning framework

that will stay relevant for years to come. Although the

guide isn’t intended as a replacement for professional

advice, it has been lauded as an excellent foundation

for both landowners and financial planners. 

This guide “is the best resource I’ve seen for educating rural landowners about their estate planning

options,” said Lynne H. Hardey, vice president and

trust officer for Comerica Bank & Trust. “Since many

rural landowners are land-rich and cash-poor, figuring

out how to pass down your land to the next generation

is one of the most important financial decisions you’ll

ever make.”

“Your Land is Your Legacy” guides readers through

the maze of estate planning options and pitfalls using

real-life examples and worksheets. One unique aspect

of the guide is its emphasis on land conservation at a

time when 1.2 million acres of farmland get consumed

by development every year. 

“Land is most vulnerable when it passes from one

generation to the next,” explained co-author Julia

Freedgood, director of AFT’s Technical Assistance Services. “With millions of acres of land changing hands

over the next 10 years, the power to protect our nation’s

agricultural resources lies with those who currently

own and manage them.” 

For details on ordering “Your Land is Your Legacy, ”

which costs $13.95, call 800-370-4879. An order form is

also available on American Farmland Trust’s Web site at

www.farmland.org. For information about AFT, contact

Jill Schwartz at 202-331-7300, ext. 3011. ■

The Merrill’s Stuart Farm is located in an environmentally sensitive estuarine ecosystem on the

tidal Squamscott River, near Great Bay. Photo by Sarah Thorne, courtesy AFT
or a while, it looked like

Farmland Industries Inc.,

the nation’s largest agricultural cooperative,

might survive by selling

off all of its farm production supply

assets and concentrating on its successful beef and pork processing enterprises. 

Moving in that direction, it recently sold its fertilizer operations to

Koch Nitrogen of Wichita, Kan., a

subsidiary of Koch Industries, in a

deal valued at $293 million. Farmland

is still seeking buyers for its petroleum assets, including a refinery at Coffeyville, Kan. The fertilizer deal

includes plants in four states plus terminals in Minnesota, Iowa, Illinois,

Kansas and Texas. Also sold was its

half interest in Farmland MissChem

Ltd., which owns an ammonia plant

in the Republic of Trinidad and Tobago. Completion of that sale and others has enabled Farmland to cut its

bank debt from $330 million in May

2002 to less than $30 million, and it

posted a $29 million profit in its last

quarter. 

Now U.S. Premium Beef, minority

cooperative partner in Farmland

National Beef, has offered to buy the

entire beef business from its partner for

$232 million in cash. When Farmland

National Beef (FNB) was formed in

1997, U.S. Premium Beef became its

minority cooperative partner, with a

29-percent interest held by its 1,850

cattle-producer owners from 37 states.

At the moment, it only has 10 employees. But that could change if it becomes

sole owner. Farmland National Beef

has 6,200 employees.

“We are excited about the potential

purchase of Farmland Industries ’

interest in Farmland National Beef,”

U.S. Premium Beef CEO Steve Hunt

said in a press release, jointly issued

with Farmland. “While the beef processing industry faces many challenges,

FNB has established a reputation for

successfully delivering consistently

high-quality beef products to consumers in both domestic and international markets.”

Farmland President and CEO Bob

Terry said the agreement to sell FNB

to its co-op partner “is fully supported

by Farmland’s Creditors’ Committees,

as we continue to maximize value for

the benefit of our creditors.” He called

FNB “a company with a strong balance

sheet and a history of success.” 

The door was left ajar for others to

outbid the beef co-op’s offer by July 7.

If that occurs, a July 9 auction would

decide who is to be the future owner.

Larry Franzen, Farmland’s lead bankruptcy attorney, indicated procedures

approved by the bankruptcy court

judge would require a minimum bid of

$239.5 million. If Farmland accepted

the larger bid, U.S. Premium Beef

would receive a breakup fee of $5 million to $7 million. If that minorityowner cooperative is unable to finance

its bid by the time the deal is ready to

close, it will forfeit its $5 million

deposit. 

Franzen said 25 companies had

shown an interest in buying the beef

enterprise, but only three examined

its financial information. Court documents are pending which will indicate how much Farmland believes it

will be able to repay its unsecured

creditors.

Farmland National Beef processes

3.2 million head of cattle per year at its

five packing plants which supply packaged beef for grocery meat cases.

Farmland’s part of the beef business

earned $5.8 million in the quarter ending Feb. 28, down from $10.2 million a

year ago. 

Farmland also is seeking buyers for

its separate pork processing operation.

Neither of the meat operations were

involved in the original bankruptcy

proceedings, although money from the

sale of them could help repay the unsecured creditors. 

And that line was just extended to

include former chief executives whose

golden retirement parachutes were

curtailed. The bankruptcy court

agreed with the cooperative’s new

administration and ruled their

promised exit premiums did not merit

separate consideration and they should

join the growing line of unsecured

creditors. Farmland’s report to the

bankruptcy court will show how much

it believes it will be able to repay its

unsecured creditors.

Judge Jerry Venters also told a company that leased 100 barges to Farmland in 1997 to take its $18 million

claim and join the other unsecured

creditors. The dispute centers around

Farmland’s half interest in Pinacle, a

partnership with River Barge and its

lender, CIT Group/Equipment

Financing, that leased the boats. Farmland had agreed to take Pinacle’s place

in the deal if it failed to make a quarterly payment. That occurred in July

2002 after Farmland had already

declared bankruptcy in May and 

discontinued using the barges. ■

12 July/August 2003 / Rural Cooperatives

U.S. Premium Beef offers to buy

Farmland share in processing business

F
Rural Cooperatives / July/August 2003 13

By Tommie Singleton, Frank

Messina and Richard Turpen

Editor’s note: Singleton is an assistant

professor, Messina and Turpen are associate

professors at the Department of Accounting

and Information Systems at the University

of Alabama at Birmingham. They can be

reached at (205) 934-8820, or by e-mail

at: fmessino@uab.edu . 

raud and ethics are subjects of great concern to

everyone involved in

business. Conservative

estimates place the cost

of fraud to American businesses in the

billions of dollars. 

Several techniques, guidelines and

tools have been created and promoted

to help businesses better detect fraud.

Yet all of these advances and high-tech

tools cannot compensate for the oldest

accounting technique of all for fraud: a

sound ethical environment for the

cooperative. This article examines the

correlation between ethics and actual

instances of fraud, based on a survey of

cooperatives, identifying the “red

flags” that precede fraudulent

activities.

Fraud & ethics

Over the past 40 years, the

accounting community has

increased its efforts to detect

fraud. Recent accounting

scandals have caused Congress

and other regulatory boards to

expand the responsibility

related to the detection of fraud.

Researchers have produced a wealth of

empirical research related to ethics and

fraud. Some of this research provides

insights into the role ethics play in

fraud and fraud detection.

A new report, “Landmark Study on

Fraud in Financial Reporting,” provides many insights into 200 randomly

selected cases of alleged financial fraud

investigated by the Securities and

Exchange Commission (SEC) from

1987 to 1997.1 Published by the Committee on Sponsoring Organizations, a

research group of accounting associations, the study results indicate that:

■ companies that experience fraud

are generally smaller in size;

■ board members lack independence and/or experience; 

■ 83 percent of the cases

involved the CEO, the CFO

or both. Thus, the ethical

standards of executives are

critical to the occurrence of

fraud.

A previous fraud study on

cooperative fraud funded by

the Rural Business-Cooperative Service of USDA Rural

Development, KPMG and the

National Society of Accountants of Cooperatives (NSAC) revealed

that weakening societal values and weak

ethics policies were causes of concern

for cooperatives.2

Focusing the board and management’s attention on fraud and developing or revising ethics policies or codes

of conduct is essential to a solid foundation for internal controls and fraud

prevention or detection. Data from the

U.S. Sentencing Commission shows

that an effective ethics program can

prevent an organization from being

prosecuted and help reduce fines in

federal cases involving employee

wrongdoing.3

Fraud & ethics research study

A recent survey funded by USDA

was conducted to gather empirical evidence related to ethics and actual

instances of fraud. The study reveals

that an appropriate ethical environment

in cooperatives can provide a foundation for preventing fraud and for building effective internal control systems. 

The survey instrument asked cooperatives various questions about ethics

and actual instances of fraud. A total of

484 cooperatives participated in the

study, of which 209 reported having

experienced actual or suspected occurWaving the red flag

Survey examines correlation between 

ethical environment and fraud in co-ops 

F

Table 1—Reasons for reported fraud

Insufficient internal controls: 20%

Collusion, management override of controls, 

and lack of active director control over 

management: 17%

Weak ethics policy or code of conduct: 14%

Lack of segregation of duties: 12%

Figure 1—Does your cooperative have

a code of ethics? Unsure 

3%

Yes

49%

No

48%
14 July/August 2003 / Rural Cooperatives

rences of fraud. Loss estimates for a

single incidence of fraud ranged from

less than $50 to $2.5 million. The

largest accumulated loss disclosed by a

single cooperative for all types and

occurrence of fraud totaled approximately $5 million. 

Data analysis

When asked if their cooperative had

a code of ethics, 49 percent said “yes,”

48 percent said “no” and 3 percent were

not sure (see figure 1). Interestingly,

when asked if the cooperative provided

ethics training, 80 percent of the

respondents said “no” (see figure 2). 

In addition, 95 percent of the cooperatives stated that they had no person

in charge of monitoring ethical matters. 

Internal controls & environments

The survey results also indicate that

most cooperatives believe that they have

relatively strong internal controls and

control environments. Using a scale of 1

(highly ineffective) to 5 (highly effective), the cooperatives were asked to rate

their own internal controls and control

environments. The results for the ratings of internal controls (average rating

of 3.99) and the control environments

(average rating of 3.90) indicate that

most cooperatives view themselves as

having effective controls to help prevent

fraud. The cooperatives also rated their

degree of vulnerability of fraud as being

very low, with an average rating of 1.35

(using a scale in which 1 equals “very

low,” to 5, being “very high”).

The reasons given for occurrences of

fraud are quite interesting, given

the cooperatives’ view that most

are not vulnerable to fraud.

“Insufficient internal controls”

was the top reason given for

fraud (table 1). Ranking second

was “collusion, management

override of internal controls and

lack of active director control

over management.” Ranking third was

“weak ethics policy or code of conduct.”

These findings are consistent with other

fraud and ethics studies. Thus, the ethical

environment appears to hold up as the

foundation for sound internal controls and

prevention of fraud. Likewise, a weak ethical environment, such as lack of training

or not even having an ethics policy, has

the potential to weaken internal control

systems and lead to fraud.

Red flags & instances of fraud

Another objective of this study was

to find out what cooperatives would

identify as “red flags” that indicated

fraud was present (see table 2). The top

four red flags reported were: unusual

activity, unexplained losses, poor internal controls and changes in the lifestyle

or behavior of an employee or management. Unusual activity and unexplained

losses hint at the possibility that the

fraud could have been prevented. 

The next two indicators (poor internal controls and change in lifestyle or

behavior of the perpetrator) are no surprise, in that they have been found to be

red flags in many prior research studies

on fraud. Poor internal controls lead to

fraudulent activities. Remember, the

same cooperatives rated their

internal controls as being effective. Apparently, this is a manifestation of “the other person”

syndrome, where cooperatives

always think their internal controls are adequate while the

other cooperative is the one

with problems. This view of

fraud and ethics must change.

Cooperatives also need to

make a concerted effort to use

professional skepticism and

something more than a paper

inquiry to ascertain the

lifestyle and behaviors of key employees and managers in cooperatives. 

Personal financial pressure, vices

(drugs/alcohol), being disgruntled,

work pressures, unexplained working

hours, extravagant lifestyles, severe

depression and employees living

beyond their means can all signal

fraudulent activity.

Conclusions 

Fraud and ethics continue to be

important business issues. Personal

ethics and the ethical environment of

the cooperative both play a fundamental role in preventing fraud and

strengthening internal controls. Cooperatives need to stress ethics. 

This study found that cooperatives

have problems similar to those found

in all types of businesses, no matter the

type of entity. The results also lead to

a set of red flags that should be identified and appropriately addressed by

cooperatives. 

This research provides evidence that

developing a corporate culture that

stresses honesty and scrupulous behavior is not only the right thing to do, but

produces real savings to the cooperative as well. Additional guidance to

help prevent fraud can be found in the

report “Management Antifraud Programs and Controls,” available at:

www.aicpa.org/download/antifraud/SA

S-99-exhibit.pdf. ■

References 1 AICPA. COSO Releases Landmark Study on

Fraud in Financial Reporting, March 26, 1999. 

2 Messina and Turpen “Fraud Prevention and

the Management Accountant: Back to Basics.

Management Accounting, 1997, February. 34-

37. Reprinted in Cooperative Accountant, 1997,

Fall. 72-78.

3 Ponemon, L. ‘Effective’ Ethics Programs.

Management Accounting, 1995, December, 22.

Table 2—Red flags

Unusual activity: 19.1%

Unexplained losses: 12.9%

Poor internal controls: 12.5%

Change in lifestyle or behavior of person: 11.3%

Figure 2—Does your cooperative provide formal ethics training?

Unsure 

2%

Yes

18%

No

80%
Rural Cooperatives / July/August 2003 15

By Steve Thompson

Writer-Editor

USDA Rural Development

stephenA.thompson@usda.gov

Editor’s Note: This is the first in a

series of 3 articles examining electrical coops that are heavily involved in community

development.

here’s an 84-year-old

woman in Winnabow,

N.C., who knows what

community involvement

by utility co-ops means.

The woman, whom we’ll call Mrs. P.,

was living on a small, fixed income and

having trouble paying her bills. So she

wrote to the President of the United

States to ask for help. 

Her letter wound up on the desk of

Hilda Gay Legg, the administrator of USDA Rural

Development’s Rural Utilities Service. Legg got in

touch with Mrs. P.’s electric

cooperative, the Brunswick

Electric Membership Corporation (BEMC).

Robert W. “Chip”

Leavitt Jr., the CEO of

BEMC, sent someone

around to look in on Mrs.

P., who was a life-long

member of the co-op.

What he found was an

elderly lady confined to a

wheelchair, living in an old

house with heat only in

one room and few

resources to improve her

home.

This started a chain of events that

shows that the rural tradition of taking

care of neighbors is alive and well. The

co-op employee brought Mrs. P. some

food treats and a small Christmas tree.

He got in touch with a relative at the

sheriff’s department, whose employees

got together a package of food, supplies

and clothing. Meanwhile, employees of

the co-op took up a collection for her,

and contacted the appropriate local

Judy Gore (at left), BEMC vice president for

customer service, presents high school faculty

members and students a “Bright Ideas” grant

to purchase personal heart monitors for the

school’s P.E. program. The monitors have

helped students achieve substantial gains in fitness, while one student discovered an abnormal heartbeat, leading to early treatment for a

serious heart condition. Photos courtesy BEMC 

BEMC’s Judy Gore visits with “Mrs. P,” a co-op member who was given assistance by the coop and its employees after she was discovered living in a house with only one heated room.

More than a power source

Brunswick Electric typifies commitment 

of cooperatives to support rural communities 

T
16 July/August 2003 / Rural Cooperatives

officials to make sure she was getting

all the government help to which she

was entitled. Leavitt even got help to

pay Mrs. P.’s gas bill.

Electric co-ops’ have vital

stake in community welfare 

Helping out Mrs. P. is only one

example of the ways Brunswick Electric

participates in the life of the communities it serves. BEMC, like utility cooperatives around the country, has a policy of using its resources to improve the

economic and social conditions of the

areas it serves. Besides helping out

indigent members, Brunswick takes an

active role in improving educational

opportunities for students, encouraging

the development of small businesses

and providing funding for causes as

diverse as obtaining and training police

dogs, cultural programs, transportation

for disabled veterans, raising funds for

hospitals and sponsoring a local baseball tournament.

BEMC’s activities are part of a long

tradition in rural America, where electric co-ops have played important roles

in community life since the first were

founded in the 1930s. As the only nongovernmental organization that serves

all families living in a service area, an

electric co-op is a true grassroots organization with a unique position in rural

communities.

Annual membership meetings are

important social events that bring people together from miles around. Politicians running for office have traditionally found an electric cooperative’s

annual meeting or picnic an ideal venue

for pressing the flesh and kissing babies.

After the immense job of electrifying

rural America was accomplished, electric co-ops remained engaged in their

members’ lives in many other ways.

Many have used their resources to

encourage economic development, by setting up revolving loan

funds for business ventures and

other uses. Business incubators

are operated by some utility coops to help launch new business. 

Building hospitals and community centers and purchasing

emergency equipment are other

common activities of power

cooperatives. Power co-ops use

their positions as community

institutions to encourage other

entities to participate in partnership efforts, and their fiscal

expertise to raise and administer

funds. USDA Rural Development’s Rural Economic Development Loan and Grant program is

one source of funds for these

purposes (see sidebar).

BEMC working to 

stimulate economy

BEMC’s service area is in southeastern North Carolina, a region that has

suffered economically in recent years

due to shutdowns in local manufacturing and declining farm incomes. The

co-op has responded to the situation in

a number of ways, including providing

facilities to encourage the development

of small businesses, a tactic used by

utility cooperatives around the country. 

BEMC tackled the project by setting

up a spin-off corporation, the Rural

Consumer Services Corporation

(RCSC), in 1989. The co-op financed

RCSC through partnerships with a

number of local and national entities,

including the Rural Electrification

Administration (now USDA Rural

Development’s Rural Utilities Service),

the Farmers Home Administration

(whose business, community and housing programs are now part of Rural

Development), and the North Carolina

Technological Development Authority.

Further funding and other support

came from local community colleges,

local development organizations and

local businesses and individuals.

The first funds were used as seed

money to open a Business DevelopThe Bright Ideas program gives grants to

local schools for special projects to

enhance education. Begun in 1994 by

BEMC, it has since been adopted by all

electric distribution co-ops in North

Carolina.

Though the main business of BEMC and other distribution cooperatives remains providing reliable

electric power to their members, electric co-ops

also regard participation in community life as an

important part of their activities.
ment Center in Whiteville, N.C., in

1991. Two more centers were later

opened, using additional funding, in

nearby Winnebow and Tabor City.

The facilities offer inexpensive commercial space, including office space,

for new and expanding small businesses. The rental fees include high-speed

Internet hook-ups, access to light

office equipment (including fax

machines and copiers), secretarial support, conference rooms and training

facilities. Each Business Development

Center can accommodate professional

offices, service businesses and even

light manufacturing.

“We have really enjoyed our partnership with Brunswick Electric and

the business development center,” says

Sandra Gore, president and owner of

Coastal Temporary Services, which

“graduated” from a BEMC incubator.

“They encouraged us, they gave us the

opportunity to open our own business

and it has been a great success story.

Without the opportunity to be in this

building [the BEMC incubator], we

would not be in business today.”

Leavitt notes that the co-op minimized expenditures of members’ funds.

“The basic approach was

for BEMC to serve as a

catalyst for the project,” he

says. “Our investment was

not in membership dollars,

but primarily in staff and

management resources to

develop partnerships, pursue other financing sources

and garner community

support for the project.”

BEMC did provide a loan

of $128,000 to help finance

the building in Winnabow.

(see sidebar).

RCSC is now self-supporting from rental

income. Annual expenditures for the business centers total $160,000, including management and

technical support, maintenance, utilities, etc. Since

the first center opened in

1991, the program has

housed 32 businesses and helped create

almost 800 new jobs. In a struggling

rural area, this is no small contribution

to economic health.

Bright Ideas

Another co-op program seeks to

improve education for students in its

service area. The Bright Ideas program, which began in 1994, offers

grants to local teachers for educational

projects in kindergarten through high

school that otherwise would not be

funded. Since the program’s founding,

all of the 27 electric distribution co-ops

in the state have joined. Together, they

have distributed over $3 million. 

Three years ago, BEMC joined the

Touchstone association of power cooperatives, which provides marketing

resources and assistance to members.

Bright Ideas and other community programs are now presented under Touchstone’s auspices as well as BEMC’s.

This year’s lineup of BEMC Bright

Ideas awards emphasizes reading skills.

One school got a grant to build a “litRural Cooperatives / July/August 2003 17

The Rural Economic Development Loan and Grant (REDLG) program,

administered by the Rural Business-Cooperative Service of USDA Rural

Development, provides zero-interest loans and grants to Rural Utilities Service-financed electric and telephone utilities. The funds are to be used to

promote sustainable rural economic development and job creation projects. 

The utility is required to re-lend the funds, at zero-percent interest, to an

eligible third party. These third-party recipients may be private or public

organizations having corporate and legal authority to incur debt. They can

include businesses, nonprofits, municipalities and other entities. Eligible

purposes include: 

■ Business expansions and business start-ups, including cost of buildings; equipment, machinery, land, site development and working capital; 

■ Community infrastructure necessary for economic development and

job creation purposes; 

■ Community facilities and services necessary for economic development and job creation purposes; 

■ Medical facilities and equipment to provide medical care to rural residents; 

■ Educational facilities and equipment to provide training and job

enhancement skills to rural residents to facilitate economic development; 

■ Business incubator projects to assist in developing emerging enterprises.

Priority is given to financing third-party recipient projects that are physically located in rural areas having a population of less than 2,500 people. ■

USDA’s REDLG program

Teacher Alisa Duncan reads to students in the Literacy

Room at Jessie Mae Monroe Elementary School. Designed

as a “cozy reading place” where students feel encouraged

to delve into books, the room was funded through Bright

Ideas after Duncan submitted a grant proposal. 
18 July/August 2003 / Rural Cooperatives

Brunswick Electric Membership Corporation

(BEMC) development affiliate, the Rural Consumer Services Corporation (RCSC), was selected by the National

Rural Electric Cooperative Association (NRECA) to participate in developing a video presentation and “toolkit” for utility co-ops on promoting economic development. The following is an overview of the Business

Development Center project, excerpted from material

provided to NRECA:

Leveraged Funds/Source 

North Carolina Electric Membership Corporation

zero-percent economic development loans, to RCSC,

guaranteed by BEMC, for the construction of the

Winnabowand Tabor City buildings. . . . . . . . . . . . $950,000

BEMC 5-percent economic development loan 

to RCSC for the construction of the Winnabow 

building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $128,326

For the construction of the Whiteville building and

access road (which are owned by BEMC and leased to

RCSC):

USDA Rural Economic Development Loan 

(repaid) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000

North Carolina Technological Development 

Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $185,000

North Carolina Rural Economic Development Center

Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,000

USDA Industrial Development Grant . . . . . . . . $ 32,000

Columbus County, N.C., provision of in-kind services

to build the road to the facility . . . . . . . . . . . . . . $ 32,000

Other Partners

The ongoing management of RCSC Business Development Centers is made possible by the continuing partnership between BEMC, RCSC and the Small Business

Development Centers at two local community colleges.

Southeastern Community College provides on-site management for the Whiteville and Tabor City facilities, and

Brunswick Community College in Supply provides the

management for the Winnabow center. Both community

colleges also provide business counseling services and

entrepreneurial training programs.

Lessons learned

• It takes time to develop and doesn’t happen

overnight.

• It takes a variety of partnerships to make it happen.

• It is critical to develop support from the community.

• The reward is for the community, not a direct return

to the cooperative. It is not a profit-making endeavor. The purpose is to create jobs and stimulate the

economy.

• It takes a lot of promotional effort both initially and

to continually remind the public that the BDCs are

available. 

What might have been done differently

• Recommend more allocation for promotional budget;

• Develop a more formal marketing plan, with annual

review;

• Keep more complete documentation on the project

and each BDC tenant right from the beginning;

• Allocate budget for annual maintenance. ■

Funding Business Development Centers

This Business Development Center in Whiteville, N.C., is one of

three operated by the Rural Consumer Services Corporation, an

affiliate of BEMC.

eracy room” to supplement the library.

The literacy room, designed to be cozy

and inviting, is staffed by volunteers

who coach children in reading. Part of

the grant was used to buy books tailored to different reading levels to

allow teaching each student at his or

her level of ability.

Another grant bought portable

bookshelves that are brought into classrooms and the books to stock them. All

of the projects are the brainchildren of

individual teachers, who apply for

grants independently of their school

administrations.

The funds for this and other community efforts come from an auction of surplus co-op equipment and vehicles, held

every year at the co-op’s annual meeting. 

“The annual amount from this auction varies, but as a non-operating

source of funds, it doesn’t impact the

members’ electric rates in any way,” says

Leavitt. “Someday we’d like to move

into a full “Operation Roundup” giving

program, that would involve the entire

membership.” (Operation Roundup has

been adopted by a number of utility

cooperatives. Under it, utility bills of

participating customers are rounded up
Rural Cooperatives / July/August 2003 19

to the nearest dollar, with the

excess going to fund various community and charitable initiatives.)

Even without utility bill checkoffs, however, the co-op has been

able to start up a new community

effort with auction funds. The

Community Grants program is

designed to help family services,

cultural and arts programs and

emergency services and economic

development projects. 

Judy Gore, BEMC’s vice president for customer services, says

“the Bright Ideas program shows

that with a relatively small annual

investment in our community, we

can make a big difference. We wanted

to expand that investment to include

worthwhile programs that provide

important social, cultural, educational,

and economic services to all citizens in

our service area.”

The first awards under the new

program include help for a sheriff’s

department in setting up two canine

teams, funds to buy a van to transport

disabled veterans to medical care, a

grant for a science exhibit at a local

museum and a lighted marquee for an

elementary school.

A reliable partner

Formal programs are important,

but, as Mrs. P. found out, they are only

one aspect of the co-op’s participation

in community life. “Our communities

know that they can count on BEMC

for support,” says co-op spokeswoman

Linda Thomas. “We really try hard to

maintain that close connection.” 

One example of this is sponsorship

of a youth baseball tournament. For

the past two years BEMC and Touchstone have helped host the Beach Diamond Invitational Baseball and Softball Tournament, held for three days

during spring break. This year, 16

teams participated in the tournament

in the town of Shallotte, some coming

from as far as Virginia, Kentucky and

Maryland. The co-op commissioned a professionally-designed

logo for the tournament and 

provided T-shirts for all the participating team members.

Another example is a Southport

charity golf tournament to raise

funds for the National Shriners

Children’s Hospital in Greensville,

S.C. For two years Brunswick and

Touchstone have been the major

sponsors of the event, which is

organized by the Brunswick County Shrine Club. More than 125

businesses and individuals joined in

sponsoring the event last August,

which raised $35,000.

Other contributions to community

life include providing space for community groups to meet at co-op headquarters, encouraging employees to participate in community activities,

participating in local parades, sponsoring breakfasts for volunteers, and providing raffle items for fundraisers. 

The BEMC leadership sees nothing

remarkable about such activities,

regarding them simply as part of the

co-op’s natural role. “While our core

business is providing safe, reliable and

affordable power, we are also committed to helping our community,” says

Leavitt. “That’s part of the tradition of

electric cooperatives.” ■

BEMC Director Calvin Duncan checks out a display erected by the co-op at the 2002 Columbus, N.C., County Fair.

“Tough bargaining” helps almond growers

Look who’s bucking the trend of low prices usually following overabundant harvests. Doug Youngdahl, chief

executive of Blue Diamond Growers at Sacramento, Calif., credits tough bargaining for his cooperative’s success in bringing higher prices for 4,000 almond growers, even in the face of a record harvest of 1.1 billion

pounds last fall. Growers have increased productivity, new markets have opened, ad campaigns promote the

nut as a healthy snack and almond consumption in the United States has grown by 57 percent since 1996. Much

of this due to successful bargaining—with no help from federal crop subsidies. Last spring, Youngdahl negotiated a 15- to 20-percent price increase by arguing that lower prices would force some growers out of the business and that would lead to higher prices in coming years. He also said if buyers didn’t agree to higher prices,

the cooperative and others would withhold product from the market. The state supplies 80 percent of the

world’s almonds, up from 60 percent a decade ago. Conversely, California’s more perishable fruit crops, such as

grapes, apricots and raisins, have suffered from the usual pattern of lower prices following abundant crops in

addition to foreign competition. ■
20 July/August 2003 / Rural Cooperatives

By Michael Doherty

Editor’s note: Doherty is a cooperative business specialist with

USDA Rural Development’s state office for Illinois. He acted as

USDA’s consultant for the project described below. 

good feasibility study that accurately gauges the

odds of success is essential for any co-ops considering a value-added project. Two central Illinois grain cooperatives recently contracted for

an independent feasibility study, which ultimately determined that there was little chance for success for

their proposal to process specialty tortillas for the Hispanic

market in Chicago, despite growth of that market and

increasing demand. 

While there was undoubtedly some disappointment about

that outcome, those feelings would pale compared to what

co-op members would have felt had they pursued the project,

only to have it end in

failure. Sometimes

the best feasibility

study is the one that

urges a “no go,” as

this case shows. 

Co-ops form 

joint venture

The Morrisonville

Farmers Cooperative

and Assumption Coop Grain Co. formed

ILLI MEX Alliance

LLC in June 2001 as a joint venture to explore new, valueadded markets and new sources of income for their 2,000

members. The goal of the alliance was two-fold: 1) to develop a premium-based contract market for white corn that

would add income to the members’ farming operations, and

2) to eventually own a piece of the tortilla manufacturing

business in Chicago. 

The cooperatives have export market access through St.

Louis and sell into the domestic processor market in

Decatur, Ill., through ADM. They are experienced in grain

handling, identify preservation of grain and in merchandising

high-oil corn, non-GMO corn and food-grade corn. 

Tom Bressner, general manager of Assumption Co-op,

became interested in the tortilla market while seeking new

markets and customers on trade missions to Mexico in 1997,

1999 and 2000.

To help pay for a feasibility study, the alliance applied for

a USDA Value-Added Producer Grant (VAPG) of $40,000

during the summer of 2001, which was matched by ILLIMEX (with funds contributed by the two cooperatives).

USDA awarded the grant in October 2001.

Focus on Chicago market

The immediate objective was to determine the feasibility

of developing a fresh masa tortilla manufacturing business in

the heavily Hispanic areas of Chicago. 

Masa is flour, or dough, made of ground corn and used for

tortillas. This fresh masa tortilla business would use white

food-grade corn, which would be produced through premium-based contracts with the Assumption and Morrisonville co-ops. 

According to the 2000 census, 1

million residents of Cook County are

Hispanic, of whom 72 percent are of

Mexican heritage. They, along with

490 Mexican restaurants in the Chicago area, were the primary consumer

targets of the proposal. 

“No go” can be a good show

Feasibility study advises co-ops not to pursue tortilla project

A

V ALUE-ADDED CORNER

Tom Bressner (left) manager of the Assumption Grain

Cooperative Co., and Dan

Litteken of Morrisonville

Farmers Cooperative,

accept a check from USDA

Rural Development that

helped pay for a corn-tortilla plant feasibility study.

Photo courtesy The Grain

Journal. At left, the

Assumption Grain Co-op

elevator. USDA photo by

Michael Doherty
Rural Cooperatives / July/August 2003 21

Impetus for the co-op alliance resulted from discussions

with representatives of the Independent Tortilla Manufacturers (ITM) Association, an industry group that controls more

than 50 percent of the tortilla market in Mexico. Meetings

took place in May 2001 with Burt Swanson, a University of

Illinois extension specialist, and the potential Mexican partners, which were to be offered a chance to buy an interest in

the venture. 

Swanson had studied the tortilla market in Mexico extensively and felt there was potential to increase the tortilla market with

Chicago Hispanics. Swanson contacted USDA Rural Development in Illinois to assess the possibility of the cooperatives

applying for a VADG grant. He held discussions in May 2001

with a USDA Rural Development cooperative specialist regarding the structure of the proposed venture, ownership by farmers

of a tortilla business and location of manufacturing facilities. 

Letters of support for the USDA assistance were written

by the Illinois Corn Growers Association, Illinois Department of Agriculture, Senator Dick Durbin, Governor

George Ryan and several local congressmen.

Most tortillas manufactured and sold in Chicago are prepared from rehydrated corn flour mixed with food preservatives to increase shelf life. The ITM group believed that Hispanic consumers and restaurants in Chicago would

prefer—and be willing to pay a higher price for—tortillas that

were made on-site daily from whole grain masa and produced

without the use of preservatives. 

This process would allow the tortillas to be made with

more traditional Mexican flavors and textures than the

“American version” of tortillas, which would be more appealing to Hispanic consumers. Tortillas made “in-store” from

fresh masa dough would cost more than competing tortilla

products, but initial discussion indicated that designing a new

and efficient system for delivering the masa to stores could

offer a significant market advantage over the existing systems.

If the results of the feasibility study were positive, it was

envisioned that eventually ILLI-MEX LLC would own a

small production plant in the Chicago area.

The Alliance hired SJH and Co. of Danvers, Mass., to conduct the feasibility study for the project. Information from the

Mexican ITM group was also considered, along with agricultural research results from the University of Illinois.

Phase I of the feasibility study was to run from Nov. 1,

2001 to Jan. 31, 2002, and was to focus on market dynamics

in Chicago, pricing, marketing and industry structure. If

those results were positive, the study would advance to a

more in-depth technical assessment and financial analysis, to

be conducted in May of 2002.

Study recommendation: “No Go” 

The findings and recommendations of SJH and Co. were

submitted to the ILLI-MEX Alliance on March 13, 2002.

The overall outlook was negative, showing inadequate

growth in market demand for fresh vs. pre-packaged corn

tortillas. The study found that there was a dwindling reliance

on small-scale local shops, excessive costs for making and

selling tortillas in stores, dwindling demand for fresh masa

dough and a maturing market headed toward overcapacity. 

The feasibility study results were clear, comprehensible and

offered ILLI-MEX a valuable education about a topical market.

It also saved the two cooperatives from investing further effort

and money toward a project that carried high risk of failure. 

Assumption Co-op Grain’s Bressner says the outcome may

not have been what the co-ops were hoping for, but it gave

them the information they had to have to make an informed

decision. 

“You have a big idea and a dream, and some people want

to go out and spend big bucks to make it happen,” Bressner

says. But that dream could turn into a nightmare without a

good study. “That’s why you do a feasibility study—to find

out if the dream is likely to become reality. 

“The study gave us the answers we were looking for,”

Bressner continues. “We look at the whole process very

favorably. And it opened up a dialog between us and Morrisonville that is ongoing. We’ve kept the joint venture intact

and are now looking at other possible projects. So even

though the decision was made not to pursue this project, it

has been of great benefit to both of our co-ops.” ■

Port OK’S Texas co-op lease

Gulf Compress, a Texas-based cotton marketing cooperative, has become the first tenant in Corpus Christi’s

La Quinta Trade Gateway, in what could be a $15.5-million investment in the project. The cooperative’s entry

was approved by Port of Corpus Christi commissioners for the Gateway, a planned container terminal on a

1,114-acre tract purchased by the port in 1998. Gulf Compress currently owns land planned for a baseball stadium. The cooperative would lease a site of almost 30 acres from the port for $1,918 a month for 30 years. The port

will provide access roads to the site from a major highway, rail access and while the cooperative will add warehouses, roads and a rail spur. Gulf Compress will act as a catalyst for further economic development. Bob

Weatherford, co-op president, said the venture would bring jobs to the community. Once the cooperative

becomes operational in 2004, it plans to apply for certification in the New York Cotton Exchange . ■
By Dan Campbell, Editor 

good photograph not only communicates visually, it can also attract readers to an article they

might otherwise pass by, in much the same way

an effective sign or window display beckons to

customers and draws them inside a business. A

strong communications program is essential for a cooperative

to keep its members informed and committed to their co-op,

and good photography can play an essential role in improving the quality of co-op publications—be they newsletters,

newspapers, magazines or Web sites. 

But what makes a strong photograph? 

This question 

was recently

addressed by a panel

of three photography experts who

evaluated nearly 200 

co-op photos and

publications as part

of an annual communications competition sponsored by the Cooperative Communicators Association (CCA). CCA is an organization of some 350

communications specialists who work for cooperatives in the

A

Talking with pictures

Photo experts offer tips on how to better 

tell your co-op story with strong photos

22 July/August 2003 / Rural Cooperatives

1st Place, Portraits—“Kenny Davis, Row Crop Farmer”—By Glen

Liford, Tennessee Farmers Cooperative. Judges’ comments:

“The farmer comes off very sculptural, like an amber statue in the field. He rises up in the field

like strong presence in his environment. I don’t usually like the subject looking into the camera, but

sometimes it is the strongest portrait, rather than trying to get the subject to do some action that

doesn’t look natural. You feel his pride and the fun he is having as a farmer.”

2nd Place, Portraits—“Warm Season Grass

Rancher” by James Fashing, MFA Inc. Judges’

comments:

“Nice perspective, has good sense of scale of landscape and

movement that draws your eye through the landscape. Nice dynamic

quality and great depth to it. An environmental portrait like this usually

stronger than straight on shot.”

Portraits—

Earl Dotter, Bonnie Stutski (center) and Susan

Moeller examine some of the 175 photo entries

they judged during the 2003 photo contest sponsored by the Cooperative Communicators

Association (CCA). CCA also sponsors annual

competitions to recognize the best in co-op publications, writing and special projects. USDA

Photo by Bob Nichols 
United States and some foreign nations. The photo judges

included Earl Dotter, a prize-winning photo journalist based

in Maryland, Bonnie Stutski, photo editor for Smithsonian

magazine, and Susan Moeller, a photojournalism professor

at the University of Maryland. 

Asked for their overall impressions of the photos they

judged in an all-day session at USDA headquarters in Washington, D.C., the judges said they were impressed—even surprised—at the overall high quality of the work. But they also

saw room for improvement and offered a number of constructive criticisms and “photo philosophy” that can help

refine the approach to the way we talk to our members

through pictures.

Portraying your “human capital” 

“I would stress that the strong suite of the co-op is the

human capital—the people who are the members,” says Dotter. “Next in importance is the product they create that provides for their well-being and supports their communities

and lifestyle. I would really encourage the photographers to

explain to their subjects that we want you to live out your

life, rather than act it out, in front of the camera. We want to

Rural Cooperatives / July/August 2003 23

3rd Place—“Mr. Simmons” Robin Conover,

Tennessee Association of Electric Co-ops.

Judges’ comments:

“A charming picture that gives you a feeling of his joy in

playing violin. Composition works—everything is going

towards his face; you follow the violin strings to the man’s

face. Eyes really do resonate behind his spectacles, and that’s

not an easy accomplishment.”

Honorable Mention—“The New

Face of West Texas Agriculture” by

Lynette Cockerell, Plains Cotton Coop Association. Judges’ comments:

“I like the perspective, looking up at her.You see

that she’s a real farmer—there’s dirt on her shoes.

The back-lit quality gives a feeling that she’s almost

ethereal. I like her looking into the distance like that

instead of into camera. She breaks the mold of the

stereotypical female farmer. She’s mud-spattered and

obviously a hands-on farmer. Photo projects that she

makes a real contribution to the farm.”

Honorable Mention, Portraits—“Responsibility” by Sheryl Meshke,

AMPI. Judges comments:

“Handles difficult lighting situation effectively. Good depth of field. A bit more fill light might have

calmed down the background more. Natural action, even if it was a set up shot.”
photograph you with the dirt under your fingernails, because

that’s how you make your living. We want to photograph you

in a way that projects the honest labor that you perform.” 

A photo assignment, Dotter continues, is a collaborative

effort between the photographer and their subjects. So take a

little time to get to know the subject before beginning to

photograph them. 

“The rules of common courtesy apply in rural America,”

Dotter says. “I let you know who I am and, if I’m lucky, the

favor will be returned. Give your subjects a basic understanding of why you are there to take their picture: to show the

accomplishments and hard work that create the food on the

table and the sustenance for America. That’s what you really

want to capture. To a large degree, you see a surface view of

life rather than the inside, intimate story. It’s the photographer’s challenge to get behind the closed door or inside the farmgate in a way that really projects a sense of the life and work

and rewards of that experience.

A good photographer, Dotter says, engenders a sense of

collaboration, so the subject knows what you are looking for.

“I have to let you know who I am, and you need to have a

sense of trust in who I am. Sometimes that involves just sitting down with a cup of coffee at the kitchen table with the

camera still in the car before you take the first shot.”

This process need not necessarily be a long one. “Sometimes you can get to know your subject fairly quickly,” adds

Stutski. This might help you show subjects from a perspective we wouldn’t normally see. 

“Think about how you can make something more interesting than a straight-on snapshot, either by virtue of lighting or

background,” Stutski says. “You want photos that people will

say—‘How did they do that, or catch that moment?’”

24 July/August 2003 / Rural Cooperatives

2nd Place, News—“Bustin’ Broncs” by Bob McEowen, Missouri Association of Electric Co-ops. 

Judges’ comments:

“Captures decisive moment in a contest; strong expression on rider and horse, as well as body language. Background supports the foreground interest; captured the apex of the action and gesture, angle

of the light at time of day highlights the main subjects. I like the dirt flying around horses hooves. Also,

the background is nice with repetition of the cowboy hats, one guy in upper right corner has hand up to

head, as if going ‘Oh my gosh.’”

1st Place, News—“Lost Harvest” by Sheryl

Meshke, AMPI. Judges’ comments:

“A provocative image. Nice use of a close up and a high impact

photo that makes the point about drought’s impact. Close composition

allows image to project well on printed page. Depth of field makes

the main area of interest live. Camera’s point of view is a bit different

than you might expect. Comes from long tradition of using close-up

on elements to stand for a larger whole. Hands stand for all farmers

facing drought, and one ear of corn represents fields of corn.”

News—
Rural Cooperatives / July/August 2003 25

Wearing two hats poses big challenge

For many co-op publications, the reporter/writer is also

acting as the photographer, which greatly increases the challenge of getting good photos. “You finish your interview, you

put down your notepad and say, ‘OK, now I’ll take a few pictures. Why don’t you stand there, hold this and smile,” says

Moeller. “It’s very difficult to do both. It’s a big problem. But

when you have a small budget and small staff, you may not

be able to get around it.”

A combination reporter/photographer may have to come

into an assignment with a different mind-set. “Maybe it

means coming back twice,” Moeller says. “Or thinking

through the photos in a way that many of these photos (that

we saw today) were not thought through.”

Too often, she said, the thinking is ‘I am going to go out

and report on this, and I’ll take what photos arise.” Instead,

try to think like a photojournalist who thinks in advance

about the images wanted, she advises.

The way photo or story assignments are made can also

impact success or failure, Dotter says. One way to transcend that difficulty of serving as photographer and

reporter is for the photographer’s boss to give them

enough discretionary time to work on some ongoing

assignments where they can take pictures on a member’s

farm—for example—throughout the year to develop a

strong photo essay. “You may catch him in the midst of

some crisis that reveals the life of a working farmer in a

way that is a little bit unexpected. In this way, you are not

starting from point zero, and you will have time to 

get inside a story. This can work well for a publication

where you may “cross paths” with the subject with some

regularity in your travels.

Honorable Mention, Feature—“Dentist’s

Office” By Bob McEowen, Missouri Association of Electric Co-ops. Judges’ comments:

“Strong composition that has everything going toward the boy’s

face. Black and white photography is still a very effective media—it

should be used more often.”

1st Place, Feature—“Twilight at the Picture Show”By Bob

McEowen, Missouri Association of Electric Co-ops. Judges’

comments:

“Strong shot with a lot going on. Neon colors are great—we love it!”

Feature—

3rd Place, Feature—”Down, and Give Me 10” By

Bob McEowen, 

Missouri Association of Electric Co-ops. Judges’

comments:

"Good color qulaity—we like the monochomatic background against

the stark color of the troops' uniform. A strong panorma shot.”
26 July/August 2003 / Rural Cooperatives

Avoid “grip and grins”

“We saw two types of photographers here—some with a

tremendous amount of talent, who seem to have a facility

to take a wide range of photos of different subjects,”

Moeller says. But too many “are taking grip and grins

(where the subject poses, smiling into the camera, perhaps

holding some object central to the story).” These, she says,

tend to be very static photos that do not do justice to the

subjects.

The judges saw a tendency in the publications to be dominated by these snapshot-style photos of “smiley-face individuals looking right down the lens barrel.” A much more truthful attitude would be conveyed if the photographer took time

to photograph people in real working situations—capturing

them on film as they go about their daily routine, or whatever activity is the focus of the story. 

As a rule, this will create a much stronger photo than

will subjects standing and looking happy in front of the

camera, they said. Of course, time and other restrictions

often mean that this won’t be possible, and a set-up shot

will be required. With care and a little imagination, this

can often be accomplished in a way that they don’t look too

forced or staged. 

Dottter urges photographers to capture the best light

whenever possible by shooting very early in the morning, as

the sun is rising, or in the evening as it is setting. Whenever

possible, he stresses, avoid shooting photos in mid-day, when

the sun is directly overhead and the sky is hazy or cloudy. 

In many instances, the judges felt the layout of the publications they reviewed (for the photo essay and best use of

photos in a publication categories) did not live up to the standard of the photography. Moeller said the layouts were often

Scenic—

2nd Place, Scenic “Little Pigeon River” By Robin Conover, Tennessee Association of Electric Co-ops. Judges’ comments:

“This is kind of standard shot but very pretty—handled well. Has that little something

extra that makes it evocative and gives it some mystery. Slow shutter speed gives movement, but not overdone. Plays well with mist or fog lifting up in back.”

3rd Place, Scenic —“Sugar Coated” By David Lundquist,

CHS/Land O’ Lakes. 

Judges’ Comments:

“Triangular composition is strong. Caption is perfect.”
Rural Cooperatives / July/August 2003 27

“very busy”—meaning there are too many graphic elements

competing for the reader’s attention. 

“I also saw periodicals that don’t know what to do with

good photographs when they have them— that don’t use

them well,” Moeller said. “We’ve all worked in newsprint,

and know the limitations of low budgets—there are constraints. But you can still get more creative than we are seeing here in terms of playing what you’ve got.” 

“Overall, I was surprised at seeing so much good work,”

Stutski says. “Some of these photographers work with light

very well and have a great eye for composition, good feeling

for different perspectives. Not always the straight on shot of

someone looking at camera and grinning.” 

Benefitting from risk

Sometimes the best photos arise from taking chances—

trying for something unusual. “I’d be hard pressed to name

any image we saw today that struck me as a risky image—

where the photographer really was pushing themself and the

subject,” Moeller said. “I’d also be hard pressed to come up

with more than a couple of emotions that I saw depicted. For

the most part, these are upbeat magazines, speaking to the

converted and they may not want to show the dark side or

something extreme. But you can still get beyond the

PollyAnna-ish images of people.

“Every photo contest judge always says this, but it is worth

repeating: editors need to be looking at other periodicals and

photos. Get in their heads and see what they do. And sometimes it might mean taking photo spreads that they loved in

other periodicals and mimicking them. Learn why something

works. Why was this a great spread in Vanity Fair, or in

Smithsonian or National Geographic? What doesn’t work? ■

2nd Place, Best Cover, “Cardinals in Winter”

Robin Conover, Tennessee Association of Electric Cooperatives.

Judges’ comments:

“Would have like to see the cover headline in a script font, because the photo is so 

lyrical. Could all be much more sophisticated. Photographer must have shivered to get this

shot. A dialogue in red. Might have placed cardinals in winter first on basis of just photo, but

when look at all elements, it gets knocked down a notch. “Life’s Simple Pleasure” is a cleaner

cover, more striking.”

Best Cover—

1st Place, Best Cover—“Life’s Simple Pleasures”

David Lundquist (photog.), Steve Richter, (editor)

CHS/ Land O’ Lakes. Judges’ comments:

“Would have like to see the cover headline in a hand script,

because photo is lyrical. On all three of these (finalists), the drop-in

headlines die. Could all be much more sophisticated. A very striking

photo and clean layout.”
By Patrick Duffey, WriterEditor

USDA Rural Development

patrick.duffey@usda.gov

ressed against the barn

wall by some of the lowest

milk prices in a quarter

century, the nation’s dairy

industry has approved a

scaled-back version of the Cooperatives

Working Together (CWT) program, an

attempt to boost milk prices by reducing

production to better meet demand. The

first CWT proposal, drafted by the

National Milk Producers Federation,

failed to garner the needed 80 percent

support level, so NMPF scaled back the

program, lowering the level of support

needed to 70 percent, which it got.

“We’re thrilled to be able to move

forward with CWT,” said NMPF President and CEO Jerry Kozak. “This

groundbreaking program is tremendously important for the dairy-producer

community.” 

The original CWT proposal called

for producers to pay an 18-cent-per-hundredweight assessment to fund the program. The revised CWT program would

reduce the assessment to five-cents per

hundredweight for participating dairy

producers. The goal would be to reduce

milk supplies by 1.2 billion pounds during the next year. The money raised

would be used to pay some farmers to

“retire” their herds, cut back production

and for an export assistance program. 

“The revised CWT program will still

offer a 400-percent return on investment,” NMPF President and CEO Jerry Kozak said. The five-cent-per-hundredweight CWT assessment would

raise all milk prices an average of

23 cents per hundredweight,

even when factoring in the cost

of the CWT assessment and

lower government program payments, Kozak said. Some dairy

co-ops not affiliated with

NMPF, as well as many producers who do not belong to a coop, are still supporting CWT, he noted. 

NMPF, which represents more than

30 of the major dairy marketing cooperatives and 60,000 dairy farmers who produce 70 percent of the nation’s milk, also

proposed the original CWT program as

a three-pronged effort to boost depressed on-farm prices by better balancing supply with demand. To succeed,

NMPF needed to get individual producers to collectively commit 80 percent of

the nation’s milk supply to the original

CWT program by June 30, but it failed

to do so. According to press reports, the

plan faced considerable opposition

among small farmers in the Upper Midwest, particularly in Wisconsin. 

In its May newsletter, Prairie Farms

Dairy Inc., a co-op based in Carlinville,

Ill., said the original CWT was a bold

and well-intentioned proposal, but said

it could not urge a “yes” vote for a number of reasons. These included the concern that the 70 percent of producers

who belong to NMPF would have to

carry the burden for the other 30 percent. It also noted that the program

“does not sell one more quart of milk or

slice of cheese” and the co-op questioned whether the export incentives

would work more than briefly, as the

rest of the world would most likely

“soon adjust to lower prices in order to

maintain market share.” 

The three major components of the

original CWT program included: 

■ A $60 million export assistance 

program (aimed at Central and South

America and Asian countries) to stimulate exports and clear inventory from

the U.S. market place by paying manufacturers and exporters a bonus, on a

bid basis, for cheese and butterfats destined for foreign commercial markets.

The target was to remove 1.6 billion

pounds of milk.

■ An $18 million reduced milk marketing program that would have provided incentives for producers to

decrease the amount of milk they ship

by at least 10 percent. Producers would

submit bids stating how much they

would accept for selling their entire

herd for slaughter. The goal was to

eliminate 460 million pounds of milk a

year from the market, or about 3 percent of the national supply. 

■ The $112 million herd-reduction

plan would have removed 125,300 milk

cows (less than 4 percent from the

nation’s herd of 9.2 million cows) or the

annual equivalent of 2.07 billion pounds.

The herd reduction plan was aimed at

retiring farmers, who would be induced

to sell their herds into slaughter rather

than sell to another producer. But farmers could also sell their entire herd and

turn around and start new ones. ■

28 July/August 2003 / Rural Cooperatives

P

NMPF scales back CWT milk

supply-balancing plan
Rural Cooperatives / July/August 2003 29
AGP sets volume record; 

Reagan sees member support

“Our future success lies in the

strength of our members and the ability to meet the ever-changing needs of

customers,” Ag Processing (AGP)

CEO Marty Reagan told members

attending the Omaha-based cooperative’s 19th annual meeting. As a result,

the soybean-processing cooperative

“continues to be profitable, paying

patronage and revolving equity to

members,” he said. 

For fiscal 2002, AGP produced a

record volume of refined oil and had

sales that topped $1.8 billion;

returned $16.5 million in cash in

patronage, equity redemption and

component premiums; expanded destination markets for members’ grain,

including beginning construction on a

new West Coast vessel-loading facility, and exported 20 percent of its soybean meal production, mostly to

Canada and the Pacific Rim. Members’ equity in AGP stands at nearly

$403 million.

“Every business unit we operated last

year had capital dollars invested in them,

with most of the money earmarked for

30 July/August 2003 / Rural Cooperatives

NEWSLINE

Compiled by Patrick Duffey

By Leslie Shuler 

Editor’s note: Shuler is a marketing communications

intern at CHS Cooperatives.

Nearly 25 years ago, William Nelson, then a professor at the University of Minnesota-Waseca, had an idea

to create a valuable cooperative educational experience for his students. He wanted to organize a tour of

agricultural cooperatives in the Minneapolis-St. Paul

area. However, like many educators, he had little money

in his department budget.

He worked with the Minnesota Farmers Union (MFU)

to see if it would support this venture. With a history of

providing cooperative education to both its members

and the public, MFU proved to be the “right fit” to help

Nelson create the cooperative learning experience. 

“Over time, MFU, various college professors and

other cooperative education leaders recognized the

value of providing students with a structured opportunity to learn more about cooperatives and related

careers,” said Cathy Statz, conference co-coordinator and Wisconsin Farmers Union (WFU) education

director.

By the late-1990s, the program evolved into a threeday conference, closely resembling what it is today: the

College Conference on Cooperatives.

“Participants had an opportunity not only to observe

cooperatives on location, but to hear from those participating in all levels of the cooperative movement, from

employees, management, boards and members, as well

as from those involved in cooperative support,” Statz

said. “Today, the conference features cooperative

speakers, panels and tours from across the cooperative

spectrum.”

This year session panelists discussed local cooperative management, co-op careers, consumer cooperatives and challenges facing rural areas. More than 90

students and educators gathered in Minneapolis for the

Professor’s idea blossoms into major 

co-op conference for college students 

An AGP tanker truck loads up with refined 

soyoil. Photo courtesy AGP Inc. 
improved efficiencies, increased capacity

and marketing opportunities,” Reagan

said. Mike Knobbe, group vice president

for grain, said the future for AGP Grain

will be enhanced by a pair of developments in fiscal 2002: creation of a new

partnership with Farmers Cooperative

Co. at Hinton, Iowa, and expanded destination markets made possible by the

purchase of 14 grain elevators in the

Texas panhandle.

SSC, Farm Plan forge credit pact

A credit alliance has been formed by

Southern States Cooperative (SSC) of

Richmond, Va., and Farm Plan, a division of John Deere Credit. The pact

will allow SSC to concentrate on its

core farm supply businesses. Responding to a poll, members said they wanted a credit plan that offered more flexibility, better rates and more simplicity

than was available from SSC. After a

pilot test in several stores, the program

was so well received that SSC converted nearly 200 company-owned and

independent retailers to the new plan,

affecting 170,000 customers. The

cooperative, marking its 80th anniversary, operates a network of 1,200 farm

production supply retail stores stretching from Maine to the Gulf Coast.

Wool Growers pick Etcheverry

The Idaho Wool Growers Association has chosen Henry Etcheverry, a

range sheep herder from southern Idaho, as its new president. Etcheverry, of

Rupert, markets his lambs through the

new Mountain States Lamb Cooperative. He says he hopes entities such as

this co-op will “stabilize the lamb market and make us more competitive in

the marketplace.”

PCP sells canning operation

to focus on food processing 

In a move to reduce its overall debt,

California’s Pacific Coast Producers

(PCP) will concentrate its attention on

food processing now that it has sold its

can-making operation for $15 million

to Silgan Holdings Inc., a major North

American can manufacturer. The 140

employees at the cooperative’s Lodi,

Calif., can plant will be retained by the

new owner. PCP, with annual sales of

$350 million, will buy about $35 million in cans a year from Silgan under a

10-year contract. 

The cooperative is California’s No.

2 fruit processor, primarily handling

peaches, fruit cocktail and tomatoes

and has $100 million invested in facilities, including the 1 million squarefoot distribution center at Lodi. PCP

employs 4,000 workers during the peak

summer season and maintains 750 year

round. The sale of the can plant fits

into the cooperative’s long-term strategy, said Dick Ehrler, vice president of

human resources. 

Wyoming Sugar enters

alliance with Cargill

Wyoming Sugar Co., of Worland,

has formed a marketing alliance, effective this summer, with Cargill Sweeteners North America to sell and distribute products to food and beverage

manufacturers. Cargill reached a similar agreement last fall with Southern

Minnesota Beet Sugar Cooperative.

Wyoming Sugar, which manufacturers

Rural Cooperatives / July/August 2003 31

2003 conference, which

was coordinated by MFU

and WFU, in mid-February.

Delegates represented 13

colleges and universities

in Colorado, Iowa, Minnesota, Nebraska, South

Dakota and Wisconsin. 

“It made me more

aware of intern opportunities and careers with

cooperatives,” said Nick

Einc, a sophomore from

Ridgewater College in

Willmar, Minn., who plans

to transfer to South Dakota State University to

major in agronomy. Delegates toured a variety of cooperatives in the Minneapolis-St. Paul area.

“As a cooperative educator and program planner,

the conference provided information, contacts and curriculum that is essential in planning the programs I

oversee,” said Amy Meyer, Rocky Mountain Farmers

Union education director,

Aurora, Colo.

William Nelson, now

president of the CHS Cooperatives Foundation, continues to work with and

support cooperative education in this role and

embraces the opportunity

to assist with the conference. A second conference was added in 2003

for students from North

Dakota and Montana,

which is led by Jill Inabnit

of Montana Farmers 

Union and Amber Hill of

North Dakota Farmers Union.

Next year’s Midwest conference will be Feb. 20-

22, 2004, in Minneapolis. For more information, contact

Statz, WFU education director, (715) 723-5561,

cstatz@yahoo.com; or Jim Tunheim, MFU education

director, (651) 639-1223, education.director@mfu.org. ■

Mike Alme, Agriliance recruiter, was one of several presenters

who discussed career opportunities within the cooperative system. Photo courtesy CHS 
32 July/August 2003 / Rural Cooperatives

products for fruit juices and other beverages, was formed last June when producers ands investors from Wyoming’s

Big Horn Basin and Fremont County

bought Holly Sugar’s Worland factory.

Dakota Hay Co-op finds

success in horse market

South Dakota Ag Producer Ventures

(SDAPV), near Meckling, S.D., a value-added cooperative formed by South

Dakota farmers and ranchers two years

ago, is showing early signs of success.

South Dakota is the largest forage-producing state in the nation, so the cooperative is working to expand markets

for its hay. The cooperative’s upper

plains production territory is well suited to growing Dakota Premium Hay,

which it is selling as feed for horses in

areas of Texas, Florida, Missouri and

Colorado. Small bales of alfalfa and

other grasses are sold for $5 each and

are proving popular with horse nutritionists who want an orchard- or timothy-grass mixture. Both grasses are

plentiful in the eastern part of the state.

Major horse breeders are expressing

interest. SDAPV is eyeing a national

market of 7 million horses.

Kentucky’s catfish co-op

reels in supermarket order

When it comes to fishing, Purchase

Area Aquaculture Cooperative in

Graves County, Ky., has reeled in a big

one. It started last fall when marketing

specialists from the Kentucky Department of Agriculture introduced representatives of the co-op, which sells

farm-raised catfish, to buyers for grocery store giant Kroger Co. Kroger

ordered 84,000 pounds in the form of

fillets, nuggets and whole fish for its

stores in Kentucky, Tennessee and

southern Illinois. State Agriculture

Commissioner Billy Ray Smith said the

cooperative’s success was attributable to

growers “working together to help

themselves and each other,” as well as

their “hard work, persistence and

financial commitment.”

The co-op has 43 employees who

processes 15,000 pounds of live weight

fish per day, 40 percent of which is

actual product, said Manager Bob

Zumwalt. It has the capacity to process

25,000 pounds a day, with room for

future expansion. The 7,200-squarefoot processing plant and adjacent

ponds were built in part with grants

from the state.

Montana educator develops

co-op business lesson plans

A set of cooperative business lesson

plans have been developed by, and are

available from, Martin Frick, a University of Montana educator. The topics

are based on a cooperative director’s

needs assessment that was conducted in

North Dakota and Minnesota.

Lesson plans cover a wide range

of subjects, including: Preparing

a Vision and Mission Statement

for Your Cooperative; The Economic Justification of Cooperatives; What the Director Does; Legal

Foundations of a Cooperative; Cooperative Mergers and Consolidations; Servicing Cooperative Debt; Working

Capital Needs of a Cooperative, and

Assessing the Effectiveness of the

Cooperative Director. 

A PowerPoint presentation is available for each lesson plan from which

educators can make transparencies.

“Lessons have been pilot tested on a

regional basis,” Frick says. The plans

are available on the Internet at no cost:

http://aginterrnational.msu.montana.e

du. Then click on the “Co-op Lessons”

link.

Meadow Farms Hog Co-op

opens modern Illinois plant

After five years on the project, Jim

Burke, president and chief executive

officer of Meadow Farms Cooperative,

is smiling this summer. Construction

on the cooperative’s new, $25 million

hog processing plant at Rantoul, Ill.,

has been completed and it is now operating. Although the bulk of the 200

farmer members are from Illinois, the

community’s close proximity to interstate highways draws others from Indiana, Wisconsin and Iowa. For now, the

plant will operate on a single shift

with a staff of about 200, including

administrators and plant workers.

Burke, an attorney, became involved

when his farmer-clients started going

out of business because of falling hog

prices. So, partly to salvage his client

base, he began looking at the situation

from a marketing approach. Initially,

separate groups in northern and southern Illinois were looking to form cooperatives, but financial considerations

brought them together. Planning began

in 1998, and University of Illinois animal sciences professor Floyd McKeith

and other faculty members became

involved. The choice of Rantoul over

34 other communities was welcomed by

City Manager Gary Adams for bringing

jobs to the community and expanding

the local tax base. 

The state’s Capital Development

Board granted the village $1.7 million

to construct a pretreatment facility to

serve the cooperative’s new plant,

which will slaughter 3,000 hogs per

day. The facility will treat wastewater

at the site before it enters Rantoul’s

municipal sewage system. Either the

village or the cooperative will operate

the facility. The Rantoul operation is

considered the first mid-sized, producer-owned packing and processing

plant in the nation. The cooperative

will sell meat under its Meadow Brook

label and also serve hotels, restaurants,

institutions and grocery stores. The

corporate headquarters will be in

Belleville, Ill.

Texas catfish co-op opens 

Fresher fish will be the selling point

for the new Texas Aquaculture Cooperative (TAC) in Clemville. It will

process fish in the morning and have

them on dinner plates in Houston,

Austin or San Antonia later that day.

Manager Jeff Boswell said the nearly

$17-million plant being constructed

will provide 35 new jobs and process

up to 150,000 pounds of catfish per
week. The 31 members raise fish on

about 2,000 acres in a six-county area.

Future plans call for adding another

10,000 acres in 10 years. 

Boswell credited the co-op’s rapid

progress to the tenacity, ingenuity and

hard work of the original members

who began the project just over a year

ago. All had marketed their fish individually and are achieving “extremely

successful” results as a group, Boswell

says. The Matagorda County Economic Development Corporation provided

a $25,000 grant to the cooperative for

construction and equipment. Technical

assistance was provided by the Lower

Colorado River Authority’s economic

development department, the Texas

Cooperative Extension Service, Wharton County Electric Co-op and the

Texas Department of Agriculture.

NMPF adds three associates

The National Milk Producers Federation (NMPF) has gained two associate members from California and a

third from Missouri. The not-for-profit California Dairy Research Foundation at Davis was formed in 1988 to

promote research and development

activities that benefit the state’s dairy

producers in the consumer marketplace. Also joining was California Milk

Producers Council at Chino. It advocates the interests of its member dairy

producers to enhance the state’s dairy

industry. The third newcomer is Dairymen’s Marketing Cooperative of

Mountain Grove, Mo. Managed by

Don Allen, it has 65 producer-members and markets 81 million pounds of

milk annually. NMPF’s membership

now stands at 33.

Farmers sue chairman, others

who promoted co-op sale to ADM

A group of farmer-investors of the

former Minnesota Corn Processors

(MCP) have filed a lawsuit against eight

former cooperative executives and the

former chairman of the board who led

the sale of MCP last year to Archer

Daniels Midland (ADM), the nation’s

leading ethanol producer from Decatur,

Ill., for $175 million. The former shareholders allege members were told of

dismal profit expectations and not

informed of how those executives would

benefit from the sale at the time of the

landslide proxy vote last September.

The group is seeking class-action status

on behalf of the 5,500 shareholders. 

The cooperative was formed in

1980 and originally produced corn

syrup and later ethanol. It owned

plants at Marshall and Columbus,

Neb., and 17 regional storage, blending and distribution stations. In 2000,

it became a Colorado limited liability

corporation. The conflict of interest

suit alleges the executives received

substantial payments and bonuses

after the sale was completed. In 1997,

ADM invested $120 million in MCP

when it was on the verge of bankruptcy and gained a 30- percent non-voting interest in the company.

Sidney Sugars in supply deal

The first contract to supply sugar to

Sidney Sugars Inc., the Montana subsidiary of American Crystal Sugar Co.,

has been signed with Montana-Dakota

Beet Growers Association for 43,000

acres. The two-year contract involves

175 growers. The acreage is similar to

the 46,000 acres contracted last year by

former owner Imperial Sugar. American Crystal Sugar of Moorhead, Minn.,

bought the Sidney plant last fall and

made it a subsidiary. That deal also

included a plant at Torrington, Wyo.,

which is being leased to Coloradobased Great Western Sugar Co. 

Nebraska North Star Neighbors 

direct market co-op’s meat 

It took a neighborhood of frustrated family farms west of Fullerton,

Neb., to find an answer to their collective desire to stay on the land

despite depressed prices for their grain

and livestock. They found the answer

about four years ago, forming the

North Star Neighbors Naturally

Raised Meats cooperative. By direct

marketing their beef, pork, lamb and

poultry products, they not only added

value but also put profits in their

pockets. They were featured on a rural

economic development workshop program sponsored by the Nebraska

Farmers Union.

By turning to chickens rather than

losing money raising corn, they again

found profits from their farm operations. Their initial investment was low.

They raised 4,000 chicks the first year,

followed up with 6,000 the next and

then cut back to 3,500 last year. But

now the focus is on beef and hogs,

their real specialty. During the growing

season, members sold meat at weekend

farmers’ markets in Omaha, Grand

Island and Lincoln and have since

expanded marketing year-round with

door-to-door deliveries. 

They retained existing customers

and gained new ones. To meet customer demand, the co-op offered onepound packages of meat, specialty

boxes with a combination of meat cuts

and a family package plan. Looking

ahead, North Star plans to begin 

marketing beef abroad and expand its

membership base to meet customer

demands while maintaining its quality

reputation.

Foremost restructures in face

of declining Midwest supply

Caught in the midst of declining

milk supply volumes in the Upper

Midwest and drooping milk prices for

dairy farmers, Foremost Farms, the

dairy cooperative based at Baraboo,

Wis., plans to restructure operations

by closing five outlying facilities and 

centralizing purchasing and transportation functions at Baraboo. Four

manufacturing facilities in Iowa and

Wisconsin will be closed by the end of

the year and operations consolidated

elsewhere within the cooperative’s 

system. A dry-products warehouse will

be closed in 2004. 

President David Fuhrman said the

closings affects 187 salaried and hourly

employees. Severance and other transition assistance were developed for

them. “The decision,” Fuhrman said,

“was driven by economics. While

national milk production increased last

year, milk volumes in Wisconsin, Minnesota and Iowa declined causing

Rural Cooperatives / July/August 2003 33
34 July/August 2003 / Rural Cooperatives

excess plant capacity in the region as

well as our production network.” Weak

demand and large supplies of cheese,

butter and whey ingredients have kept

product levels at unprofitable levels for

the past 20 months. He said Upper

Midwest processors were increasingly

pressured to reduce costs and operations to remain competitive with the

rapidly growing dairy industry in the

western United States. Up to this

point, Foremost had operated 24 manufacturing facilities and two milk transfer stations in serving its 4,300 dairyfarmer members.

Ozark Mountain Pork Co-op

source of Missouri Farm Pride

It’s small, localized and relatively

new, but a source of pride nonetheless

to the 34 Missouri pork farmers who

organized and own it. The Ozark

Mountain Pork Cooperative raised

$790,000 to buy the Mountain View

processing plant. Earlier this year, it

introduced the new label, “Heritage

Acres,” and began supplying Polish

sausage, bacon and bratwurst to independent grocers in southern Missouri.

The cooperative, the first of its kind in

the state, inspired the Missouri Grocers Association to introduce a new

marketing stamp called “Missouri

Pride” and tested the notification of

quality standards on the “Heritage

Acres” products. The cooperative was

formed under the auspices of the Missouri Farmers Union.

Zwald AMPI’s treasurer 

The board of AMPI has selected

Greg Zwald, a dairy producer from

Hammond, Wis., as its new treasurer

replacing Bob Dysthe of Slayton,

Minn., who retired from the board.

Dave Vander Kooi, Worthington,

Minn., has been elected as a new director to serve a 3-year term.

LOL closes research facility

After an extensive study of its seed

system, Land O’Lakes (LOL) decided to

close its seed research facility at St.

Joseph, Minn., which processed , packaged and distributed forages, turfs and

alfalfa. The plant closing sidelined 27

employees who were offered relocation

within the LOL system or severance

packages and outplacement assistance.

Customers previously served from St.

Joseph will be served by LOL operations

in Madison, Wis., Hastings, Minn., and

Denver, Colo. In another seed development, LOL and Novartis Seeds, Golden

Valley, Minn., have formed a joint venture to develop and market specialty

corn products for animal feed and consumer-food markets. Novartis purchased

a half interest in Wilson Seeds Inc. of

Harlan, Iowa. It had been a wholly

owned subsidiary of LOL.

NCBA fetes Kaptur, Oxley 

A pair of U.S. representatives from

Ohio have been honored with cooperator awards from the National Cooperative Business Association (NCBA) for

their efforts in supporting cooperatives

in Congress and in their state. Rep.

Marcy Kaptur was cited for her ongoing support for funding 17 cooperative

development centers across the nation.

The center developers have been leaders in finding innovative cooperative

solutions to the challenges facing farmers and others in rural America. Kaptur

serves on the House Agricultural

Appropriations Subcommittee which

has increased funding for the centers

from $700,000 10 years ago to $6.5

million for fiscal 2003. Rep. Mike

Oxley was recognized for supporting

credit unions both state and nationwide

and promoting a bill which provided

regulatory relief and enabled credit

unions to better serve their members.

Oxley is chairman of the House Financial Services Committee. Chuck Snyder, chairman of NCBA’s board, also is

president of the National Cooperative

Bank which provides financial services

to rural and urban member-ownedand-governed credit unions. During

NCBA’s business session, all officers

were renamed and two new and three

incumbent directors were seated. Initially joining the board were Wilson

Beebe, president of Thanexus, a New

Jersey-based management cooperative

for independent funeral homes, and

Sherman Hardesty, director of the

Center for Cooperatives at the University of California. All the elected directors serve three-year terms.

Meanwhile, People’s Food Cooperative at Ann Arbor, Mich., has been

honored with NCBA’s Best.Coop Web

Site award. The small cooperative

developed a volunteer-designed Web

site that is attractive and easy to navigate and educates visitors about cooperatives (www.peoplesfood.coop). The

co-op prominently features information about its values, vision, commitment to community as well as frequently asked questions and answers on

cooperatives and co-op ownership. 

GROWMARK creates seed,

agronomy subsidiaries in NE

A pair of wholly owned subsidiaries

have been created to serve farm supply

assets in the Northeast recently

acquired by GROWMARK Inc. from

Agway Inc. The retail agronomy and

seed operations in six Northeast states

represent $150 million in sales to about

20,000 customers. GROWMARK FS

Inc. serves about 40 retail agronomy

operations in Delaware, Maryland,

New Jersey, New York, Pennsylvania

and Virginia. The Seedway subsidiary

is headquartered at Hall, N.Y. It markets an extensive and diverse commercial vegetable seed product line along

with forage, turf and farm seeds. 

Ed Rodenburg, vice president of

eastern retail operations, conducted a

series of winter introductory meetings
with nearly 500 new employees. Bob

Weller, one of four regional managers,

compared GROWMARK’s Midwest

operations with those in the Northeast.

“Having metropolitan neighbors can

apply pressure on farming operations,

but the upside is access to a huge consumer market. We have the same challenges that Midwest agriculture does: 

a tough economy and the impact of

consolidation.” 

NFU fetes cooperator Swenson 

Leland Swenson, president of the

National Farmers Union (NFU) from

1988 to 2002, has been recognized with

its cooperative service award for leadership and service to agricultural cooperatives and rural economic development.

The honor was bestowed at NFU’s

recent 101st annual meeting. Swenson

was instrumental in helping Farmers

Union develop a new economic learning

center for farmer cooperatives. President Dave Frederickson cited Swenson

for his “service to family farmers and

ranchers by assisting in the development

and advancement of farmer-owned

cooperatives and helping Farmers

Union members develop innovative

strategies for processing and marketing

the specialty crops of cooperatives.”

Co-op community fetes heroes

as four join Hall of Fame 

In was dubbed as “the entire co-op

community coming together to honor

our heroes,” by Pete Creer, executive

vice president of the Credit Union

National Association. The occasion

was the induction of four honorees

including a congressman into the

Cooperative Hall of Fame in Washington, D.C. Cited were Rep. Doug

Bereuter of Nebraska, Rod Nilsestuen,

J.K. Smith and Herb Wegner. 

Bereuter has supported domestic

and international cooperative activities

over the years, including help in

launching the Farmer-to-Farmer program in 1985 and sponsoring the Overseas Cooperative Development Act.

Nilsestuen was honored for his steadfast dedication to cooperatives in 24

years of leading the Wisconsin Federation of Cooperatives. Smith, a rural

electric cooperative pioneer of 41

years, was the founder and first governor of the National Rural Utilities

Cooperative Finance Co. The late

Herb Wegner was acknowledged as a

credit union pioneer whose efforts help

shape the finance industry today. The

award was accepted by his son, Steve,

who thanked the many people who

worked alongside his father in the

credit union community.

Rhode Island dairy co-op

launches own milk brand

The Rhode Island Dairy Farms

cooperative, formed two

years ago, is introducing

its own brand of

homegrown branded milk “Proud

Cow of Rhode

Island” on grocery

shelves this summer. Its initial production of 3,000

pounds of milk has

now more than doubled.

Local dairies will buy back

their milk from a processor after it

has been pasteurized and homogenized. The cooperative will handle

marketing and distribution. 

The state has only 22 dairy farms

left, including some large ones that

have formed in recent years, so the

bulk of the state’s supply comes from

neighboring states. Like many dairy

farmers across the nation, the Rhode

Islanders are faced with the lowest

prices in 25 years, a frenzied rate of

development, much higher production

costs and intense competition further

aggravated by better herds producing

more milk. The cooperative hopes to

sell its milk to schools, parades, fairs

and farmers markets.

UW offers co-op educational

site for youth, young members

The University of Wisconsin Center for Cooperatives has launched an

interactive Web site on cooperatives

for high school students and young

adult co-op members. Cooperatives

have consistently identified improved

understanding of cooperative basics,

particularly among young people and

young adults as a critical need, said

Anne Reynolds, assistant director of

the center. The Web site addresses

that need. It can be found at: http://

www.wis.edu/coops . This one-of-akind site offers learning modules on a

number of cooperative issues as well

as resources on scholarships for

young cooperators. Adding to this

repository of information are links to

games and other co-op Web sites,

Reynolds says. 

The program was made possible

through funding from CHS

Cooperatives Foundation.

The site is part of a

larger campaign to

increase understanding of fundamental

principles of cooperatives. “Targeted

primarily toward

high school students

and young adults, the

site has three learning

modules exploring issues of

corporate governance, member relations and types of cooperatives that exist

today. These learning modules use simple, easy-to-understand language and

contain a wealth of information gleaned

from various sources. Making the learning experience all the more fun are tidbits of knowledge, scenarios and

quizzes,” Reynolds explained.

“For a long time now, we had been

thinking of a site catering to a younger

audience,” says Reynolds, the architect

behind the Web site. “Our aim was to

provide information in an accessible

format, and the Web seemed to be the

most logical place to start.” Further

additions to the site will include more

learning modules, case studies, short

articles and additional games. Printed

copies of the learning modules, activities and other resources will also be

developed and distributed to schools,

state councils and cooperative organizations. “These materials should 

benefit the cooperative education 

field tremendously,” she says. 

Rural Cooperatives / July/August 2003 35
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