Rural

COOPERA COOPERATIVES

USDA / Rural Development July/August 2007

Rising

from the

Rubble
Editor’s note: the following remarks are excerpted from a talk

Agriculture Secretary Mike Johanns gave during a reception hosted

by the National Council of Farmer Cooperatives at USDA

headquarters in Washington, D.C., in June. 

The public’s appetite for renewable energy and the

President's renewable energy goal are both pulling us to a

new era. Today, the market is driving more of the decisions

that farmers make about what crops they plant. It’s shaping

the choices that your cooperatives are making about how to

organize your businesses and where to invest your equity. 

Cooperatives are a vital part of the economic well-being of

rural America. For more than 80 years, you've been delivering

collective purchasing and marketing power to our farmers,

and you have often been the first to see and act on new

opportunities, such as renewable energy and the opportunity

that it presents today. 

I want to urge you to continue to work aggressively to

make sure your members’ equity is invested wisely and that it

remains transparent and that it benefits the future generations

as you have benefited in the past. 

We are fortunate today that we have a very strong

economy. Except for cotton, prices for major commodity

crops are relatively high and in some areas historically high.

We are showing great strength in agricultural exports as well.

We expect them to top $77 billion this year. This is shaping

up to be our fourth record year in a row and the eighth

straight year of growth. 

What all this means is that more farmers are working for

themselves, and that’s a good thing. Farmers tell me that’s a

good thing. In March, U.S. farmers reported to us that they

have planted 90.5 million acres of corn this year, 15 percent

more than last year, and the most corn we have seen in the

ground since 1944. That means we hope for a record crop of

12.5 billion bushels in 2007, 2 billion more than last year. So

farmers are responding to the marketplace, and then some. 

But we know that to break our dependence on foreign oil, we

can’t solely rely on ethanol from corn. We must also support

the market as it seeks out alternative feedstocks to meet our

present energy needs and the energy needs of the future.

That’s why we propose $1.6 billion in new spending for this

year's Farm Bill to speed up the development and the

production of renewable fuels. 

The focus of our research effort will be relative to

cellulosic ethanol, a practical and cost-effective alternative

fuel. But we also want to see progress in other areas, including

making more use of methane to generate electric power. 

I know many dairy cooperatives are already working in this

area, and I applaud them for their efforts. Part of our

renewable energy proposal calls for an additional $500 million

in funding for a grant program that funds energy efficiency

and alternative energy projects. This program has already

helped fund more than 90 methane-to-energy projects around

this country. 

In fact, since 2002, USDA Rural Development has

provided a total of $37 million to support methane-to-energy

projects. That investment has leveraged more than $122

million in other funds. 

These types of investments made by USDA, and the type

many of your co-ops are making, will help reduce our

dependence on foreign oil. 

We appreciate the great work you do out there for

American agriculture. We appreciate all you do, and I look

forward to working with you as your Secretary of Agriculture. 

— Mike Johanns, U.S. Secretary of Agriculture ■

COMMENTARY

Co-ops’ role in renewable energy economy

2 July/August 2007 / Rural Cooperatives

Agriculture Secretary Mike Johanns (left) greets NCFC

Chairman and CHS Inc. CEO John Johnson and NCFC President

Jean-Mari Peltier during a co-op reception at USDA

headquarters in Washington, D.C. USDA photo by Alice Welch 
Rural Cooperatives / July/August 2007 3

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Mike Johanns, Secretary of Agriculture

Thomas C. Dorr, Under Secretary,

USDA Rural Development

Dan Campbell, Editor

Vision Integrated Marketing/KOTA, Design

Have a cooperative-related question?

Call (202) 720-6483, or

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This publication was printed with vegetable oil-based ink.

Rural COOPERA COOPERATIVES

July/August 2007 Volume 74 Number 4

p. 4

p. 12

p. 18

p. 30

On the Cover:

The Southern Plains Cooperative elevator in Greensburg, Kan., was

one of the few structures still standing after the town was hit by a

1.7-mile-wide tornado on May 4. See page 4 for a look at how the coop and town are striving to recover from the tragedy. USDA photo by

Stephen Thompson 

FEATURES 

4 Co-op salvages hope amid ruins 

Southern Plains takes a licking, but keeps on ticking 

By Stephen Thompson

12 Upstate Niagara Goes Uptown 

Team effort provides financing for modern, $35 million dairy plant

18 Wired for Success

Broadband co-op helping southern Virginia attract new information technology jobs

By Dan Campbell

29 Mica, Abernathy, Ditsch named top co-op

communicators

30 Evolving technology may generate profit from

biodiesel glycerin glut

By Anthony Crooks

DEPARTMENTS

2 COMMENTARY

15 IN THE SPOTLIGHT

17 FOCUS ON...

22 CO-OP DEVELOPMENT ACTION

24 UTILITY CO-OP CONNECTION

26 VALUE-ADDED CORNER 

33 NEWSLINE

38 PAGE FROM THE PAST
Greensburg, Kansas, was a thriving farming town of 1,500 souls prior to May 4. It had a

co-op grain elevator, a successful farm equipment dealership, grocery and hardware stores, and just about

everything else a rural community needs to be a good place to live. But after
that day, the town resembled nothing so much as the aftermath of a nuclear blast. 

A monster of a tornado raged through Greensburg’s pleasant tree-lined streets at 10 p.m., killing

14 people. The tornado’s funnel was 1.7 miles wide, with winds exceeding 200 miles per hour. It

smashed most of the town to matchsticks, crumpled cars and trucks like soda cans and ripped the

leaves, branches and even bark from hundreds of trees. “Rural Cooperatives” visited Greensburg six

weeks after the disaster to see how the recovery was progressing.

“The house shook,

the earth shook,

and we could hear

Greensburg

disappearing...”
6 July/August 2007 / Rural Cooperatives

By Stephen Thompson,

Assistant editor

stephenA.thompson@wdc.usda.gov

e’re still here!” says

Danny McLarty,

manager of Southern

Plains Co-op’s

Greensburg operation,

when asked how things are going.

“We’re serving our customers,” he adds,

with pride in his voice.

The May 4 Greensburg megatornado did its best to put Southern

Plains, a local grain and farm

supply/service cooperative, out of

business. The co-op lost ten vehicles,

including two expensive fertilizer

applicators and its dry fertilizer facility.

The twister also destroyed the co-op’s

feed mill and a 60’ x 100’ steel

maintenance shed. Its office building

was destroyed, its grain drier shredded

and a retail outlet flattened. One of its

steel buildings was picked up and

wrapped around a grove of trees. Only

the concrete elevator, the truck scale

and the liquid fertilizer facility could be

salvaged. 

Still, says McLarty, “We were up and

running in a week.”

That was good news for co-op

members who were preparing for the

wheat harvest when Rural Cooperatives

visited. “In an agricultural community,

we’ve got to take care of the growers,”

says McLarty. “Because the rest of the

community depends on their revenue.” 

The cooperative is one of the largest

and most important business in the

small agricultural town of Greensburg.

With most of the town having to start

again from scratch, the co-op’s

continued operation may make the

difference between the community’s

“W

Co-op

Salvages

Hope Amid

Ruins

Southern Plains takes a licking, but keeps on ticking
Rural Cooperatives / July/August 2007 7

future prosperity or a painful decline.

Employees rise to occasion

The co-op’s resurrection was due in

large part to the efforts of cooperative

employees, some of whom had lost

their own homes in the storm. 

Alan Allison, who runs the elevator,

saw his own house and his parents’

home destroyed. But soon after the

storm was over, he was at the co-op site,

working to contain the damage. Three

other co-op employees also lost their

houses. Workers from the co-op’s other

facility, in nearby Lewis, hurried over to

help without any prompting. They

worked from 11 p.m. until about 6:30

the next morning, and then returned

after only an hour of rest. 

Of immediate concern were leaks

from anhydrous ammonia and propane

gas tanks, which had valves knocked off

by flying debris. The propane leak was

dealt with fairly quickly, but the

ammonia leak was another story:

workers were unable to get close

enough to effect repairs. 

Luckily, the wind was blowing the

dangerous gas away from the town.

Before they could seal the leak, says

McLarty, “We just had to wait until the

pressure drop froze the ammonia in the

tank.” 

Co-op workers spent the weekend

picking through the ruins of the office.

The roof of the small, one-story

building was gone and its walls

collapsed, but the crew was able to

recover vital records and some

equipment. A portable building was

ordered to serve as a temporary

replacement, and plans to replace the

destroyed facilities were set in motion.

By Wednesday (five days after the

storm), the temporary office building

had been installed and the vital truck

scale was back in operation. The

salvaged customer records are now

neatly filed in cardboard boxes. It took

another day to obtain and set up a

portable generator to power the

elevator machinery. In the interim, the

elevator’s windows and doors — blown

out in the storm — had to be replaced,

as well as some of its heavy steel

inspection hatches that had been sucked

away by the twister. One of the legs, or

chutes, of the elevator also needed to be

replaced, having been mangled when an

airborne car apparently hit it 120 feet

above the ground.

Once the power was on, the contents

of the bins were turned over to ensure

against moisture damage. The liquid

fertilizer facility, consisting mostly of

wind-resistant steel tanks and pipes, was

quickly restored to working order, as

well.

Merger brought critical resources

Luck played a part in the facility’s

revival. With the Kansas wheat harvest

only weeks away, the survival of the

elevator and the truck scale meant that

they would be ready to handle

members’ grain on schedule. And

member farmers need access to supplies

of liquid fertilizer to avoid damage to

the irrigated corn prevalent in the area.

The other facilities aren’t as critical.

Another stroke of good fortune, it

turned out, was the decision two years

before to merge the Greensburg

cooperative, then called Farmers Grain

and Supply Inc., with the larger Lewis

Cooperative, 25 miles away. Board

member Scott Brown believes the

resources made available by the merger

may well make the difference between

failure and recovery. “If the merger

hadn’t gone through, it could have been

the last nail in our coffin,” he declares.

Brown says that the cooperative

spirit governs the relationship between

the members of the two branches of the

co-op. “The merged co-op was run as a

single family from the beginning,” he

says, which removed a potentially

serious source of conflict. With such

extensive damage and a majority of the

directors from the other location, they

could have chosen to cut their losses

and shut the damaged facility down. 

Co-op Manager Danny McLarty, far right, discusses plans for repairs with employees

in the co-op’s temporary office in Greensburg. Opposite page: Denuded tree trunks are

all that remain of what was once a residential neighborhood. USDA photos by Stephen

Thompson 
8 July/August 2007 / Rural Cooperatives

“It would have been easy to just take

the insurance check and move

everything to Lewis,” says Brown. “But

the board voted unanimously to replace

and upgrade. There wasn’t any

hesitation.” 

Workers from the Lewis branch of

the co-op have also been a great help in

getting things back together, says

McLarty. “Whenever things are a little

slow over there, they come over here to

see if there’s anything they can do.” 

Co-op president Ron Gruber joins

McLarty in having nothing but praise

for the efforts of the co-op’s employees.

“They really went all out, day and

night, to put us back in business,” he

says. He also praises their suppliers.

“They’ve all been excellent. They

deserve a lot of credit for helping us get

back on our feet. The company

providing the replacement chemical

building, for example, usually takes

eight to ten weeks to deliver an order.

But for us they moved it up to six.”

Gruber is especially complimentary

of the Julian Lumber Co. of Antlers,

Okla., which, he says, besides their

responsiveness to the co-op’s needs,

sent up truckloads of fence posts and

made them available free of charge to

anyone who needed them. Even some

neighboring cooperatives, normally

competitors, sent help, which Gruber

said is also greatly appreciated.

Long way to go

The work won’t be finished for quite

a while. The office building is already

framed and roofed, but it won’t be

ready for use until about Sept. 1. The

chemical warehouse was scheduled for

completion July 15, and the dry

fertilizer building was scheduled for

completion by the end of August. The

co-op’s “Crop Shop,” a retail outlet, will

not be completed until sometime next

winter. The feed mill will not be rebuilt

due to high costs imposed by new

building codes. 

Some debris still needed to be

removed or salvaged when Rural

Cooperatives visited the town six weeks

after the storm. Facilities and

equipment such as the elevator’s grain

drier, destroyed vehicles and dozens of

smaller, less critical items still needed to

The night the tornado came to Greensburg, Tom Doherty

and his wife took refuge in their basement minutes before it

hit. As the wind built up to a deafening shriek, the basement

windows blew open, letting in a blast of rain. “I tried to close

them, but they blew back in my face,” he remembers. 

That may have saved their lives, because if the windows

had been closed, the twister’s terrific suction might have

ripped away the floor above their heads. As it was, the drop in

air pressure was so strong, he says, “It felt like your head

was just going to split!”

When the terrifying roar of the storm tapered off, Doherty,

a long-time employee of Farmers Cooperative Co. in nearby

Haviland, looked up to find that the outside entrance to his

basement had been ripped away. He stuck his head outside to

find most of his house destroyed as well. But he had little time

to think about it: this tornado was so huge — later determined

to be 1.7 miles wide — that it had a calm center, like the eye

of a hurricane. So it wasn’t long before the wind began to

blow again as the leeward side of the storm slammed through

town.

When it was finally over, almost everything Tom Doherty

owned — house, vehicles, and the personal mementos and

possessions accumulated in 62 years of life — had been

destroyed or simply vanished.

Hard rain, wall of black

A few miles west of Greensburg, Southern Plains Cooperative board member Scott Brown was driving toward town

when he heard the tornado warning on the radio. He pulled

over about three-quarters of a mile out of town and peered

through the rain and hail hammering his windshield, looking

for the telltale funnel cloud. 

“Everything was just black,” he recalls. “But every now

and then there was a flash of lightning.” The flashes illuminated what looked like a broad

wall of rain passing in front of

him. Brown thought he was

witnessing only a rather

heavy thunderstorm. In fact,

he was looking at the tornado

itself.

After the rain and hail had

ended, Brown drove into

town, completely unprepared

for the devastation he found.

“It was the worst ‘rain’ I’d

ever seen,” he says wryly. 

With all electric power

gone and a thick layer of

cloud cover, the night was

pitch black. An eerie silence

hung over the town, as people began to emerge from

their basements and storm

Co-op people weather the storm

Haviland Co-op member

Kenny Keen lost his home to

the storm. 
Rural Cooperatives / July/August 2007 9

shelters. Most were in a state of shock. Says another witness:

“It was like one of those zombie movies. People were just

stumbling around with this blank look on their faces.”

Doherty tells of one victim who ran up to people pleading for

help to get his family out of their basement. When rescuers

hurried to the scene, they found the door to the shelter opened

easily, the interior was intact, and those inside were safe and

sound. 

Other people sobbed quietly or picked listlessly through the

rubble. Southern Plains employee Alan Allison remembers that

the emergency flashers of many of the smashed and crumpled

cars were blinking silently, adding to the creepy atmosphere.

Brown picked his way through the rubble to the house of his

friend Norman Voltz, to find that Voltz and his wife, Bev, had

been injured when their house collapsed. Bev was seriously

hurt; they used duct tape to strap her to a door, put her in the

back of a pickup and went looking for one of the ambulances

they were told was waiting in the center of town. 

On the way, they picked up two young men, who helped hold

the injured woman and cleared rubble for the vehicle’s passage. The ambulance took Mrs. Voltz to a hospital in Dodge

City, 50 miles away. Unfortunately, her injuries were too severe,

and she died soon afterward.

Along its 22-mile path of destruction, the tornado took 14

lives. But its toll could have been much worse. It hit at about 10

p.m. on a Friday night, and most people were home watching

television when the warning sirens sounded, thus receiving

plenty of notice that the storm was about to hit and giving them

time to seek shelter. If the tornado had hit earlier in the day,

with people out and about, or, especially, later at night, with

everybody sleeping, deaths might have numbered in the hundreds. 

Heeding the alarm

In his farmhouse several miles north of town, 70-year-old

Kenny Keen, a member of Haviland’s Farmers Cooperative Co.,

heard the tornado warnings on TV. He sought refuge with his

wife in the basement at 10:15, after predictions that the tornado

would pass nearby at 10:34. “By 10:34 it wasn’t here,” he

remembers. “And every time another minute went by, I’d say

‘It’s gonna miss us.’”

After a while, Keen decided it was a false alarm. “I’m gonna

go to bed!” he told his wife. But she was more cautious. “She

said, ‘Don’t you go up there ‘til 11... wait a minute. My ears are

popping!” He shakes his head. “Then, boom! The roof came off.”

The twister destroyed the house, a horse stable and uprootAmid piles of building rubble, traffic again flows through the main road intersection in Greensburg. 

continued on page 10

The drop in air pressure

was so severe that it “felt

like your head was just

going to split!”
10 July/August 2007 / Rural Cooperatives

be replaced or repaired. Luckily, says

McLarty, the grain received by the coop usually has a low moisture content

and doesn’t need drying. Alan Allison

says salvaging equipment can be

discouraging. “You look at something

and think, ‘Maybe we can save this.’ But

you look at it again and, nope, it’s bent.”

Meanwhile, income is down due to

lost feed and fuel sales, and grain

revenue has been affected by the

inconvenience of making deliveries by

truck through streets often blocked by

cleanup efforts. Gruber has been

discussing the shortfalls with the co-op’s

insurance provider.

Some problems are more frustrating

than others, Gruber says. “The

infrastructure here is just a wreck,” he

says. Water service was finally restored

to the co-op a month and a half after

the storm, and electrical service was still

pending. Gruber notes that the

municipal power company required the

co-op to purchase its own transformer.

The electric cooperatives it deals with

at other locations supply transformers

as part of their service. The co-op

wants municipal power so it can reopen

its service station, now being rebuilt,

ed or destroyed a number of trees. Keen’s two horses, however, survived unscathed. Three weeks later, as he was saddling

one of the horses, he looked down and spotted a brand-new,

$100 bill he had put under his wife’s jewelry box, intended as a

gift for his grandson’s high-school graduation. “If the horse

hadn’t backed up, I’d never have seen it,” he chuckles.

A little closer to town, Southern Plains member Ki Gamble,

his wife Kim and their two small children had a stroke of luck.

“The house shook, the earth shook and we could hear

Greensburg disappearing,” he says. However, their 100-yearold farm house — built with extra reinforcement against high

winds — survived the storm almost intact. 

The rest of their durable assets didn’t do so well. Their

grain bins, outbuildings — including a large barn — two pickups, two semi-tractors, two trailers and a bull wagon were all

totaled. Ironically, their combine, which was being serviced in

town, survived the devastation. “It’s ugly, but it still runs,”

says Gamble.

“This was shaping up to be a good year,” muses Gamble.

Corn prices were high, and the wheat crop was looking good.

Then came the storm, which not only damaged buildings and

equipment, but was part of a weather pattern bringing too

much rain. The excess moisture has made it difficult cultivate

corn and delayed the wheat harvest, in some cases leading to

degradation of the crop. 

The tornado also knocked over or destroyed 420 irrigation

pivots, each costing about $50,000. Gamble says the one good

thing about the wet weather was that it has kept corn from

suffering from lack of water, giving farmers time to get their

irrigation systems repaired.

Gamble is grateful that he didn’t lose more. “I don’t want to

seem like I’m complaining,” he’s quick to say, “especially

when some people lost everything.” He also praises the help

he has received from the Kansas Farm Bureau, with which he

was insured.

Helping each other

Around the area, people quickly and generously came to

each other’s aid. 

About 10 miles east of Greensburg in Haviland, employees

Ki and Kim Gamble lost their barn, outbuildings and

equipment, but their 100-year-old house survived the storm.

Co-op people

continued from page 9

Southern Plains President Ron Gruber

says neighboring co-ops have been

generous with their support. 
Rural Cooperatives / July/August 2007 11

providing a much-needed fuel source to

the community.

Ironically, one of the biggest

potential problems facing the

cooperative stems from the rebuilding

effort. Government officials want to use

the opportunity to improve the traffic

pattern through the town.

Unfortunately, the proposed traffic plan

would cause serious difficulties for

trucks using the elevator and truck

scales, forcing them to make long

detours and making it difficult for them

to make turns entering and exiting the

facility. Gruber has been conferring

with state and local government

officials, and is working to make sure

the co-op’s needs are accommodated.

The co-op difference

The decision to rebuild and improve

the Greensburg facility illustrates an

important difference between the rural

cooperative culture and that of many

other businesses. A business run solely

for the profit of investors, faced with

the same circumstances, might well

have decided to cut costs by shutting

down its damaged facility and

consolidating its operations. 

Southern Plains instead chose to

renew its commitment to a community

that will need many years to recover

from a crippling disaster, because its

directors see serving that community as

part of its mission. 

That commitment will mean

spending about $1 million over and

above the insurance payout, leaving the

co-op with a substantial debt. “But the

farmers are still going to be here,” says

Brown. “We knew we’d be serving the

same number of acres we always served.

That made the decision easier.”

■

of Farmers Cooperative Co. jumped into

action. Some immediately drove to the site

of the disaster to help

any way they could.

The manager of the

co-op’s newly

acquired service station opened the facility at midnight, ready

to serve any vehicles

that might need fuel.

The co-op also loaded

and sent a tanker

trunk to Greensburg to

provide fuel for vehicles involved in the rescue effort.

A friend of the Keens offered them an empty furnished

house, saying they could stay there as long as they liked.

Many others in the area have taken storm victims into their

homes, in many cases people they’d never met. Local church

groups have organized much of the aid, offering shelter and

food to whoever needs it, and the Kansas Cooperative Council set up an emergency aid fund. 

Scott Brown owns a real estate and auction business on

the eastern edge of town, in a narrow strip that was

untouched by the tornado. He’s put in 20 new telephone lines

and offered free space to any local business that needs it.

Two young children play in his office. They belong to one of

his employees, who has nowhere else to keep them during

working hours. 

Brown was preparing to move into his “dream house” in

Greensburg, bought only days before the storm. “I lost it,” he

says, “but at least I had my other house to go home to.” That

house, in a nearby village, is also temporarily sheltering two

families put out by the storm.

People in Greensburg are especially complimentary of

organizations such as the Red Cross and Salvation Army,

both of which were quickly on the scene and are still providing vital services. And a number of smaller groups have

showed up to help with the gargantuan cleanup effort, which

will take many months. Many of their members stand out

because of the brightly colored tee shirts they wear.

Some doubt that the town can make a full recovery from

the damage. Brown points out that most of the low-income

housing won’t be available even after rebuilding, although a

USDA Rural Development-funded multi-family housing facility

survived the storm and was repaired with agency funds. “We

might lose half our population because of that,” he says.

“And then, would the grocery store come back?”

Doherty now stays with his son in Bucklin, about 20 miles

to the west. He says the co-op he works for “has been wonderful,” with financial and other help. But, he says, “the

worst thing is not knowing what I’m going to do.” His wife

worked at the local ALCO variety store, which was destroyed

by the storm, and it’s not known if it will be rebuilt. 

Worst of all, he says, his house insurance covered only

what he owed on the mortgage, and plans to put in a traffic

bypass call for his property to be condemned. “I guess I’ll

just have to take whatever they’ll give me for it,” he says ruefully. “I’m starting all over again with nothing. I’m back at 18

years old, only I’m 62.

■

Alan Allison recalls the eerie sight of

emergency flashers still blinking on

crumpled cars. 
12 July/August 2007 / Rural Cooperatives

hen Upstate Niagara Cooperative Inc.

decided in 2004 to build a new dairy

processing plant to replace its century-old

facility in Buffalo, N.Y., hundreds of member

dairy farmers and the local community

welcomed the news. 

Building a larger, more modern dairy plant in West

Seneca, N.Y., about 20 minutes outside of Buffalo, promised

to position the prominent Northeast co-op for greater

production and market growth. It would keep one of the coop’s processing operations in the area, giving local dairies a

home — and added value — for their milk. And it would

boost the employment base. 

But the plant’s estimated $35 million cost meant

significant capital expansion in costly New York State, posing

a “big risk” for the cooperative, says Ed Luongo, Upstate

Niagara’s chief financial officer. While the co-op’s 430 dairy

producer-members do a stellar job of producing milk — to

the tune of 1.6 billion pounds annually — they weren’t in a

position to write checks to cover the multi-million-dollar

price tag for the new plant’s construction. 

“We needed financial partners who could either lend us

the money or reduce our costs,” Luongo remembers. “And

we found both.” 

Financing partners

Chief among Upstate Niagara’s financing partners were

three Farm Credit System institutions: CoBank, which served

as the lead bank, and two Farm Credit associations, Farm

Credit of Western New York and First Pioneer Farm Credit.

In addition, much of the new plant’s equipment is leased

through Farm Credit Leasing, a CoBank subsidiary. 

CoBank specializes in financing U.S. agribusinesses

(particularly cooperatives), as well as rural communications

and energy systems and agricultural exports. Although it’s

based in Denver, Colo., CoBank has other offices around the

country, including the Springfield, Mass., banking center that

worked with Upstate Niagara. 

“CoBank really stepped up to the plate and was willing to

take the risk with us,” Luongo says.

To help fund the $30 million that Upstate Niagara sought

to borrow, CoBank turned to the two Farm Credit affiliates

W

Upstate Niagara Goes Uptown

Team effort provides financing for modern, $35 million dairy plant
Rural Cooperatives / July/August 2007 13

with New York branches and decades of experience in

capitalizing agricultural businesses. Farm Credit of Western

New York is based in Batavia, N.Y., about an hour’s drive east

of Buffalo. First Pioneer Farm Credit has nine branch offices

in New York State. 

The funding partnership among the three reflects a

growing trend in the nationwide, federally chartered Farm

Credit System, which has been around since 1916.

Increasingly, System members like CoBank are partnering

with other Farm Credit institutions, and even with

commercial banks, to provide the sizable funding that today’s

agribusinesses need. 

“Some might say that combining three lending institutions

on a single transaction might have been easier not to do,”

says Tom Cosgrove, the CoBank relationship manager who

worked closely on the Upstate Niagara deal. “But we all

worked hard to make it happen.”

To meet Upstate Niagara’s funding need, CoBank lent $20

million, with the two Farm Credit affiliates each adding $5

million. The resulting $30 million meant Upstate Niagara was on

its way to building its new plant. But the co-op didn’t stop there.

Adding tax breaks to the deal

Besides borrowing money outright, Upstate Niagara

looked for ways to reduce the costs of its new capital

expansion. Community support for the plant investment

seemed feasible. After all, not many $35 million projects pop

up in Western New York. In West Seneca (population about

45,000), the Upstate Niagara plant would bolster the

employment base and generate additional property taxes to

help pay for schools and other public services. 

As hoped, Upstate Niagara soon found a cost-saving

opportunity through the Erie County Industrial

Development Agency (ECIDA). 

ECIDA is the economic development corporation for Erie

County. The New York State Legislature created the agency

in 1970 to provide economic incentives, such as tax

abatements and grants, to private-sector companies

undertaking capital expansion in Erie County. The agency is

self-funded; 90 percent of its budget comes from fees. 

“Upstate Niagara was considering other sites for its new

plant, and we wanted to make Erie County as attractive as

possible,” says ECIDA’s Dave Kerchoff. 

“By creating a more efficient facility, we’re a tougher competitor,” says Upstate Niagara’s CFO Ed Luongo (above, right) with Dan Dunn, the

plant manager (center) and Lawrence Webster, the co-op's chief operating officer. Opposite page: Dave Tillotson is one of the co-op’s 430

dairy producer-members who generate 1.6 billion pounds of milk annually. About 665 million pounds of member milk is processed by Upstate

Niagara annually. Photos by Larry Laszlo
14 July/August 2007 / Rural Cooperatives

Because of Upstate Niagara’s

“significant capital investment in

West Seneca,” Kerchoff says,

ECIDA provided the co-op with

a package of tax incentives and

abatements that will save the coop $6 million over 15 years.

The package included a salestax reduction on building

materials and non-processing

equipment, such as forklifts and

computers. A property tax

abatement, worth $3.5 million,

was also part of the overall

package. 

Upstate Niagara found

another financing partner in the

New York State Energy Research

and Development Authority. The

agency provided a subsidized

loan to the co-op for installing

energy-saving equipment in the

plant. 

As promised, Upstate

Niagara’s manufacturing

investment empowered the West

Seneca community, using local

vendors and companies to build the plant. The co-op’s old

plant even took on a new life when it was sold as a local car

museum.

Delivering the goods

Since the new plant produced its first container of yogurt

in May 2006, it has more than met Upstate Niagara’s

expectations. The facility processes 110 million pounds of

raw milk annually, twice the old plant’s capacity. As a result,

the co-op has nearly doubled the capacity of its cultured

products line, jumping from 50 million pounds to 90 million

pounds a year. Sales rose to almost $500 million last year, up

by about 9 percent. 

“By creating a more efficient facility, we’re a tougher

competitor,” says Luongo.

A post-plant merger with neighboring Niagara Milk

Cooperative also helped Upstate Farms strengthen its market

position. Upstate Niagara now ranks among the top 20 U.S.

dairy cooperatives.

At 205,000 square feet, the new plant is twice the size of

the old facility, which stood three stories tall. The new

facility stands only one story tall, but its high ceiling allows

for “better utilization of space,” Luongo says. In the plant’s

modern cooler warehouse, workers can stack five pallets of

finished products atop each other to reach 35 feet high.

A computerized inventory system helps with stocking and

distribution of the plant’s 275 products. Trucks can unload

330 gallons of milk per minute at two bays. Two robots can

stack 50 cases per minute for

shipping. New technology in the

plant has allowed the co-op to

extend the shelf life of its yogurt

products from 45 days to 90 days. 

The plant’s efficiencies and

newly increased product lines

“will pay for the plant over the

next eight years,” says Luongo. 

Sold on the plant

That’s good news to co-op

members such as Dan Wolf,

chairman of the board of Upstate

Niagara. His 300-cow Holstein

dairy near Lyons, N.Y., has

produced milk for the co-op for

decades. 

“We decided to move

forward with the new plant

because we saw an exciting,

bright future for our products,”

says Wolf. “We also knew that if

you’re going to grow, you can

expect an increase in debt. You

just have to concentrate on

making the business work.”

What sold the project, Wolf says, was a series of meetings

with members to explain the process of building the $35

million plant and marketing its new products. “Not one

member voiced opposition to the plan,” he recalls.

The new plant “is performing beyond expectations,” both

financially and with the products it creates, says Wolf. 

Today, the plant’s 142 employees produce the quality

yogurt, cottage cheese, sour cream and dips that have earned

the co-op strong brand recognition in the market. 

At its three other plants in Niagara Falls, Buffalo and

Rochester, the co-op processes fluid milk and produces juice,

iced tea, lemonade and eggnog. The co-op also owns 86

percent of the O-AT-KA processing plant in nearby Batavia.

In all, Upstate Niagara markets its dairy products and

beverages to all 50 states under its Upstate Farms, Bison and

Intense brands. 

As Wolf and Luongo see it, Upstate Niagara’s major plant

undertaking proved to be a win-win situation for the co-op

and the region it calls home. “By strengthening our

competitive position, we’ve helped ensure that jobs stay in

western New York,” Luongo says. Moreover, he adds, “the

new plant will allow us to capture our next generation of

customers.” 

■

Editor’s note: This article is an expanded version of one which

originally appeared in CoBank’s 2006 annual report. Learn more

about Upstate Niagara at: www.upstatefarms.com.

Upstate Niagara processes

and packages 275 products

and markets its branded

foods in all 50 states.
Rural Cooperatives / July/August 2007 15

im Erickson is director

of corporate

communications,

member relations and

public affairs at

Southern States Cooperative, a regional

farm supply and services operation

based in Richmond, Va. Erickson

recently announced plans to retire,

ending a nearly four-decade career

working with a number of co-ops

involved in activities ranging from grain

and milk marketing to food processing

and farm credit. He’s a recipient of the

Cooperative Communicators

Association’s Klinefelter Award for

career achievement.

After his Aug. 31 retirement,

Erickson plans to return to the Midwest

and will live in the St. Louis, Mo., area.

He plans to remain active in the

cooperative and agribusiness arenas

because, as he puts it, “After all these

years, I can’t imagine walking away

from co-ops cold turkey.”

.

Q. How did you first become aware of

cooperatives and start working with

them?

A. A friend from my days of working at

a daily newspaper in Illinois called me

one day in 1969 to ask if I was

interested in taking his place as director

of information at Michigan Milk

Producers Association (MMPA), a milk

marketing co-op based in the Detroit

area. He was planning to leave, and the

people there had asked him for

recommendations on a successor. My

response was I knew very little about

dairy farming and nothing about milk

marketing and cooperatives. He said if I

were interested and willing to learn,

MMPA had great people who would

teach me whatever I needed and wanted

to know. I ultimately took that job and

learned he was absolutely right. Jack

Barnes and Glenn Lake, then the

general manager and board president,

respectively, were the best teachers and

mentors anyone could ever hope to

have. 

Q. What positions have you held

during your co-op career?

A. In addition to member and corporate

communications, I’ve worked in

governmental affairs and member

relations. I’ve had those responsibilities

at several different types of co-ops –

including MMPA, the Farm Credit

System, what is now CHS, Inc., and

Southern States. As a result, I’ve

learned a lot more about co-ops and

agriculture than I ever would have

imagined growing up as a city kid.

Although never part of my formal

responsibilities, the workshops in

board-management relations I’ve

conducted for co-op directors, business

writing classes for co-op employees, and

manager seminars on workplace

communications have been equally

enjoyable. 

Q. Why did you choose to devote so

much of your life to working with coops?

A. That’s easy: the people. First,

farmers are absolutely great people to

work with. In addition, people who

work with cooperatives and enjoy

working with farmers have a lot in

common. I’ve also enjoyed the mental

challenge. Agriculture is technologydriven and changes occur regularly.

Staying current with all that, along with

all the complexities of business

operations in general, keeps you on

your toes. 

J

IN THE SPOTLIGHT

Jim Erickson

Southern States Cooperative, Richmond, Va.

“An organization earns credibility and the support of stakeholders by how it

communicates when the times are bad, not when they’re good,” says Jim Erickson

(right), checking the inventory at a Southern States co-op store. Photo courtesy

Southern States
16 July/August 2007 / Rural Cooperatives

Q. How have co-ops changed during

your career and how has the

communicator’s job adjusted to those

changes?

A. As with most businesses, co-op

operations have become much more

complex. The pace of those operations

also has increased considerably, and

there’s much more riding on every

decision made. Those general trends

have affected everyone in cooperatives

to a greater or lesser extent. But I can’t

think of anyone whose job has changed

more than the communicator’s.

Consider the impact of the personal

computer on the communicator’s daily

work activities, for example. My

primary tools for getting the job done

more than 38 years ago were a phone

and an electric typewriter.

The phone still is important but my

phone today is linked to my computer.

That computer also has software for email, word processing, graphic design

and publication layout, photo editing,

producing and using visual aids, making

and keeping track of my departmental

budget, keeping a data base of names

and addresses, and on and on. In short,

today’s communicator is much more

productive because of the technology

available. That’s good news when you

consider the greater contributions a

communicator can make to any

organization. But, depending on the

communicator’s career goals, it can be a

mixed blessing. If communicators have

the interest and abilities to take on

other management roles, they may find

such opportunities limited if they’re

viewed primarily as “techies.” 

Q. What’s your most memorable

experience working for co-ops?

A. It’s hard to limit a response to one.

Let me list several: 

Most stressful — Dealing with

communications, member relations and

public policy issues associated with the

dairy feed contamination disaster that

hit the Michigan dairy industry in the

1970s. 

Funniest — The dark, cold December

evening in southern Kansas when my

colleague Jim Brownlee and I were

getting what we hoped would be

dramatic nighttime farm photos for an

introduction to an audiovisual

presentation. Trying to get the best

angle for a shot of new dairy facilities at

the farm, I jumped from a large

concrete pad (where cattle were held

before milking) into what I thought was

a grassy area. The lights from the new

building didn’t enable me to see the

ground, but I knew it wasn’t more than

two or three feet down.

I was right about that...but instead

of landing in a grassy area, I went up to

my knees in manure. One of my shoes

came off as I struggled to get out and I

opted not to go digging for it. When I

finally climbed out, Jim and the farm

owner took me into the milk house and

hosed me off, which wasn’t easy,

because they were laughing hysterically

at the time.

The hosing down did a decent job

but couldn’t remove all the remnants

(read, odor) of my plight. In selfdefense, Jim had his head out the car

window in the frigid air during much of

the 90-mile trip home.

Most rewarding – The success

Southern States had last year in getting

the Kentucky legislature to exempt

cooperatives from a new alternative

minimum tax, a levy that eliminated the

long-held principle of taxing co-op

earnings only at the member level. That

impact on co-ops was an unintended

consequence of a major tax/budget

package, and we were lucky even to

spot it in what was a lengthy bill. Had

we not been successful, the tax would

have affected the bottom line and

patronage returns of all co-ops doing

business in Kentucky. More important

was the fact the tax concept easily could

have spread to other states and affected

many other co-ops.

Most thought-provoking — Meeting

and getting well acquainted with the

late Jerry Litton, the U.S. representative from northwest Missouri, who

convinced me early in my career of the

benefits the FFA organization provides

to young people. He was an

extraordinary example of those benefits.

Had he and his family not been killed in

a plane crash the night he won his

party’s primary election to run for the

U.S. Senate in 1976, I’m convinced he

one day would have been a presidential

candidate. 

Most challenging — Those involving

member, employee and news media

communications when the co-op is

facing a major issue, especially financial

problems. My personal philosophy is

that an organization earns credibility,

and ultimately the support of its

stakeholders, by how it communicates

when times are bad, not when they’re

good. 

Q. What is the greatest opportunity coops are missing when it comes to

communications?

A. As I just mentioned, any

organization, including a co-op, can

react in different ways when facing a

tough problem or issue. One is to

batten down the communications

hatches in the belief that what we don’t

say can’t hurt us. If the problem is

financial and costs must be cut, another

reaction is to consider communications

expendable. I would argue that

communications take on added

importance and value when the co-op

has problems. Failure to communicate

when the issue or problem is difficult

leaves a vacuum that something

inevitably will fill. If the organization

directly involved — co-op or otherwise

— isn’t proactive in its communications,

it’s a safe bet that rumors, innuendo and

other negative information will fill the

vacuum. That’s not only harmful in the

short term, it also chips away at the

organization’s credibility. Longer term,

loss of credibility is even more serious. 

Q. Any advice for co-op communicators

that would help them do their job

better?

A. Build your own credibility not only

by communicating in a professional

manner, but also by learning the ins and

outs of the co-op and its members.

Communicators are in a unique

position to be a “go-to” person in a coop if they prepare properly for that

role. ■
Rural Cooperatives / July/August 2007 17

FOCUS ON...

High Desert Milk Inc.

Burley, Idaho 

hat is High Desert

Milk Inc.?

High Desert Milk is a

producer-owned

cooperative formed in

2001 by six progressive dairymen who

had a desire to increase the return on

their milk and create a more stable milk

market. The co-op owners milk 22,000

cows and farm 30,000 acres in Cassia

and Twin Falls counties in southern

Idaho. Burley is close to the Snake

River, about 150 miles from Boise.

Another goal of the co-op owners is to

make Burley a better community in

which to raise their children and

grandchildren, says co-op President

Dan Ward, who farms with his father,

Glenn Ward. 

Profile of a typical member:

All co-op members are secondgeneration farmers and dairyman. All

graduated from a local high school and

returned to the Burley area to dairy

farm and raise their families. The

largest co-op owner milks 10,000 cows

and farms 10,000 acres. The smallest

owner milks 700 cows and farms 1,000

acres.

Major project now before the co-op:

Simplot closed a potato processing

plant here in 2003, costing the area

about 700 jobs, and a Kraft plant also

closed earlier this year (although

another company has since opened a

smaller operation in that plant). “But

this has been making all farmers

nervous about their future markets,”

says High Desert Milk General

Manager Karl Nelson. So the co-op is

building a new milk plant to help create

a reliable, local market for members’

milk. Ground breaking was held June 4

for the multi-million-dollar milk

processing plant at 1033 Idaho Street in

Burley. The plant should be completed

by April 2008, and will process 2

million pounds of milk daily, with an

annual output of 65 million pounds of

dried milk. The product will be sold

under the co-op’s own High Desert

Milk label. The plant will hire 30

workers in its first phase, with more to

be hired as two subsequent phases of

plant expansion are completed on the

co-op’s vertically integrated business. 

“Because this was considered a

historic day for the dairy industry in

southern Idaho, and even the entire

state, the event was turned into a

community celebration,” says President

Dan Ward. Attendees included Idaho

Gov. C.L. “Butch” Otter, among many

other state and community leaders.

Afterwards, United Dairymen of Idaho

sponsored an old-fashioned ice cream

social for the entire community. 

How is the plant being financed?

Owners of High Desert Milk are using

their own money for a 20 percent down

payment, with the balance being

financed by Northwest Farm Credit.

The co-op has also received grants from

the state of Idaho. 

Overview of co-op operations and

marketing:

About 80 percent of High Desert milk

will be marketed domestically, while the

other 20 percent will be sold on foreign

markets. High Desert Milk will operate

with four separate divisions:

• Pharmaceutical and Supplies —

will sell supplies needed for dairy

and livestock operations.

• Milk Marketing — the co-op

markets milk to various processing

plants in the area.

• Plant Manufacturing and Milk

Processing — the co-op will

process milk at its own plant, now

under construction. 

• Organic Milk Production and

Marketing — Currently, one

member is producing organic milk

in one barn, with two more organic

barns under construction.

Thousands of acres have been

certified for raising organic feed.

What has been the biggest challenge

facing the co-op?

“The biggest challenge was deciding to

build a plant on our own without the

help of outside investors,” says Ward.

“The second main challenge is

developing a management team to make

our dreams come true.”

Contact: Karl Nelson, General

Manager, at: (208) 878-6455, or

knelson@yahoo.com ■

W

Plant manager Karl Nelson (left) is

congratulated by Roger Madsen, Idaho’s

director of labor, at the groundbreaking. 
18 July/August 2007 / Rural Cooperatives

By Dan Campbell, Editor 

s David Hudgins looked at the 22 other faces

gathered around the conference table,

someone said: “Anyone who has a better idea,

put it on the table.” The response was dead

silence. 

None of the federal, state and local government

representatives or economic development officers who had

gathered that day seven years ago in Chatham, Va., could

think of anything more important than building a broadband

network to bring new jobs to southern Virginia. New jobs

were desperately needed to help offset a wave of layoffs that

had swept over the largely rural region of Virginia along the

North Carolina border (often referred to as Southside

Virginia).

Any doubt that the region was being battered by the

economic tsunami of globalization had been laid to rest

during the three months before the meeting, says Hudgins,

director of economic development for Old Dominion

Electric Cooperative (ODEC). A rash of textile and furniture

manufacturing plant closures had thrown at least 10,000

southern Virginians out on the street. And the region’s other

mainstay industries — tobacco and coal — were following

textiles and furniture manufacturing down the slippery slope. 

“The whole underpinning of the natural resources-based

economy of Southern Virginia was collapsing,” says Hudgins.

“Every one of those industries had been dramatically

impacted by government action, whether it was anti-tobacco

legislation or trade agreements that hastened the loss of our

textile and furniture industries. These were the pillars of our

economy; without them, our whole way of life in southern

Virginia was changing.”

Building a backbone

The conclusion reached that day was that the lost

industries were not coming back. The challenge, then, was to

speed the evolution of the region from a resource-based

economy to a knowledge-based economy. 

“The question was: how could we help Southside Virginia

become part of the new economy?” says Tad Deriso, now the

general manager of the Mid-Atlantic Broadband Cooperative

but at the time a consultant to ODEC. “We needed to show

that we were open and ready for new, technologically

advanced business.”

To attract these new industries, it was agreed that the

region must have access to fiber-optic broadband service

(although at the time, the talk was of “high-speed

connectivity,” rather than “broadband,” Hudgins recalls).

The Regional Backbone Initiative for Southside Virginia

was launched as a marketing effort to “re-brand” southern

Virginia to the business community.

But as is often the case in rural America, the big telecoms

weren’t interested in the high overhead cost and relatively

small profits that would be generated from building a

broadband network to serve a low-density rural region. They

were not of a mind to “build it and see if they would come.” 

So Old Dominion Electric Cooperative, a generating and

transmission co-op headquartered in Glen Allen, Va., took

the lead role in the effort, first pursuing it as a for-profit

subsidiary of the co-op. “But then the telecom market fell

apart,” says Hudgins. So the effort shifted to Richmond and a

proposal to create a Rural Broadband Authority. But that

drew protest from the telecom industry, and the effort failed

in the state’s General Assembly. 

It was then that Hudgins started thinking co-op, and he

soon got the support of ODEC’s CEO Jack Reasor and the

A

Wired for Success

Broadband co-op helping southern Virginia

attract new information technology jobs
Rural Cooperatives / July/August 2007 19

senior management team to pursue creation of a broadband

cooperative. “It seemed that a bottom-up, grassroots co-op

would be the only way to cut across the rivalries of working

with all of these local political jurisdictions: 20 counties, four

cities and two towns,” he says. 

ODEC gave Hudgins approval to have its attorneys start

working up the legal papers needed to set up an independent

broadband co-op. In November 2003, the Mid-Atlantic

Broadband Cooperative (MBC) was born, with offices in

Danville and Richmond. Hudgins now serves as vice

chairman. 

“ODEC got the various partners involved and convinced

them of the feasibility and necessity for it,” says Deriso.

“They said ‘you must put aside your petty political

differences and work together in this co-op if you want to get

it done.’ They got everyone looking at the big picture,

realizing that now was the time to get it built. Otherwise, we

would all still be squabbling for the next 10 years and would

never be able to dig ourselves out of this economic hole.”

Co-op builds 700-mile network

The goal for the new co-op was to build 700 miles of

broadband cable through southern Virginia, providing service

to businesses that need a large amount of bandwidth and

which create a lot of jobs. “With Tad Deriso’s guidance and

commitment, we installed a 144-fiber, world-class fiber-optic

cable,” says Hudgins. “The core is OC-192 capable, with

redundancy and self-healing rings and with all Nortel carriergrade electronics.” 

As a broadband wholesaler, MBC’s membership is

primarily made up of telecom and Internet service providers

and phone co-ops. These members, in turn, serve the retail

broadband business market. 

“The users are the type of companies that often hire

hundreds of people and are willing to spend $800 to $1,000

per month for service,” Hudgins says. The network was not

designed for residential or very small businesses. 

“As a co-op, our telecom members will share in our

success in the form of capital credits,” Deriso says. But the

concept of a co-op drew funny looks at first from some of the

larger businesses approached about becoming members. 

“New York attorneys would say, ‘what the heck is a co-op?’

Deriso recalls. “So we talked about becoming a member and

how you paid a one-time, $500 membership fee [for a Class A

membership; there are four other classes of membership

requiring higher fees] and about capital credits. ‘What’s the

catch?’ they asked. We told them there was no catch, and

explained how a co-op has a different mindset than a forprofit company — how we’re not trying to make millions of

dollars for stockholders, but rather to serve our members,

create jobs and boost the region’s economy.” 

Today, MBC has more than 30 private-sector telecom

providers as members and has been adding an average of two

members per month since the network went into operation

last October. These members range from large, international

businesses, such as Hibernia Atlantic (a Dublin, Ireland-based

firm that provides European and U.S. customers with direct,

trans-Atlantic connectivity and support services) to relatively

small, local Internet service providers. 

Financing the co-op

Raising the money to launch the network proved

challenging, although ultimately MBC got the spark it

needed via a $6 million grant from the U.S. Department of

Commerce’s Economic Development Administration (EDA).

Hudgins felt he was getting nowhere at first with EDA, but

one of its directors eventually handed him three or four pages

of questions about the project, telling Hudgins to “go do

your homework, then come back and see me.” 

Hudgins soon answered every question, describing both

the need and the practicality of the proposed broadband coop. That was the turning point, and EDA awarded the co-op

the $6 million grant, which was soon matched by the Virginia

Tobacco Commission (VTC). The Commission, which

awards funds received from tobacco litigation for economic

stimulus projects, eventually invested $34 million in the coop. Hudgins says leadership came from State Senator and

VTC Chairman Charles Hawkins and State Delegate Clark

Hogan, chairman of the VTC technology committee. 

The network was built on time and under budget, using a

contractor (the co-op itself operates with only three

employees). Hudgins says the co-op is on track to begin

breaking even in the spring of 2008, and is expanding the

network with new laterals. “It’s a mile here, three miles there

– like a spider web that just keeps growing incrementally,”

says Hudgins. 

Long-haul cable routes are also being built, connecting

southern Virginia to Atlanta, D.C. and the Hampton

Roads/Norfolk area. “Those aren’t rural markets. But from
an economic development perspective, it allows us to

provision circuits from major research and development hubs

and connect them with Southside Virginia,” says Hudgins. 

“Our customers can now open an office in Southside

Virginia — with its lower taxes, affordable housing and a

motivated workforce — and still connect to a broadband

network as good or better as they would get in metro-D.C.

or most other metro areas, and using Infiniria” says Deriso.

New businesses opening

There are signs that the strategy is working. In Russell

County, two new data centers have opened, representing

investment in excess of $23 million and 300 jobs. Northrop

Grumman Corp. is building a backup data center in the

Russell County community of Lebanon, a $30 million project

that will create about 433 jobs. “Overall, that’s a combined

investment of more than $50 million and more than 700 jobs

created,” notes Hudgins. 

Larry Carr, executive director with Cumberland Plateau

Co., a nonprofit dedicated to business and economic

development in southwest Virginia, says broadband

availability was essential to attracting Northrop Grumman

and CGI, a software engineering firm with 375 jobs. “There

would have been no way to attract businesses like that

without broadband,” he says. 

Lebanon has traditionally been dependent on the coal

industry and manufacturing jobs associated with coal. And

while the coal industry has made something of a comeback

there in recent years, it still creates far fewer jobs than in the

past. Carr says five Fortune 500 companies will now have

facilities in the town, and the new, Southwest Technological

Development Center is also being established in a

refurbished strip mall, where it will be used by several higher

education institutions to help train software engineers.

The furniture industry has even bounced back a bit, with a

new 2-million-square-foot Ikea furniture manufacturing plant

being built in Danville, the first such plant built in the

United States for the giant Swedish furniture maker/retailer. 

In South Boston, Va., Lindstrand Industries has opened a

plant that makes helium dirigibles and military surveillance

equipment under contract to the Department of Defense. 

Before the development of a broadband backbone in

southern Virginia, “we weren’t even getting a second look

from business,” says Neal Noyes, an EDA director who not

only helped secure the initial grant for MBC, but also helped

direct a previous $1.5 million grant to develop broadband in

southwest Virginia and who has supported many other

investments for industrial parks and utilities in the region.

Promoting distance learning

The new broadband backbone also links to educational

institutions, making distance learning more readily available

to support both higher education endeavors and the needs of

industry. Even doctoral and masters degrees can now be

pursued via distance learning without leaving southern

Virginia, Noyes says. 

“There is nothing more important than workforce

initiatives that build the skills and knowledge workers need to

compete on a level field with metro areas,” he says. Noyes

credits Virginia Tech for providing research on the

importance of broadband for economic diversification of the

region, and for technical guidance in how to get it done.

“Connectivity is an essential part of the long-term

strategy for the economic revitalization of southern Virginia,”

says Noyes, a member of the Virginia Tobacco Commission.

The new jobs coming to the region “would not have been

possible absent very-high capacity, redundant broadband,” he

says, citing the example of Holston Medical Group, which

performs record management for hospitals and clinics, and is

building a facility in Duffield in Scott County.

While the network was not built to serve the residential

market, some large new residential developments are tapping

into it. Just outside South Boston, the first 18 units of a

planned, 100-unit, “smart-wired” town home development

have been built by general contractor John Cannon. Each

home has state-of-the-art broadband service that will

especially appeal to anyone who wants to work out of a home

office, Cannon says. 

With gasoline prices soaring and the roads in many major

cities facing rush-hour gridlock, Cannon believes the “home

sourcing” movement is going to grow rapidly in the years

ahead. For example, he points to a major U.S. airline that

now allows all of its reservation clerks to work out of their

homes. 

Cannon worked with MBC and his local Internet service

provider, Gamewood in Danville, to bring high-speed

connectivity to his Edgewood Town Homes development.

The work paid off, and each of his town homes boasts CAT5E telephone cable (going in and out), as well as RG-6

coaxial cable to each outlet, all of which are connected to a

smart-wire panel, and from there to the MBC fiber-optic

cable. 

The monthly homeowner’s association dues include 1

megabit of service, which Cannon says is more than enough

for most people. But for an extra fee they can increase their

capacity as much as they want.

20 July/August 2007 / Rural Cooperatives
“MBC is the type of partner rural Virginia needs to

compete in the 21st century.” Cannon says. 

Fast train to Clarksville

Hopes were also high as of this writing (in late June) that

Clarksville, Va., will be selected this summer for a $600

million data center to be operated by Electronic Data

Systems (EDS), of Plano, Texas, which provides data services

to the federal government. The facility would create 125 jobs

in the next two years. 

“The EDS guys from Northern Virginia didn’t even know

where Clarksville was, but when they saw the plant site, they

loved it,” Hudgins says. However, EDS said it had to have a

fiber-optic connection, and made plans for a formal site

inspection two months later. 

So the race was on to get it connected. One major telecom

firm was contacted, but it required a two-year service

contract and wanted money up front to extend fiber into the

Clarksville facility, Hudgins recalls. “So the contractor came

to us, and 37 days later we had a mile and half of fiber built

from our closest access point to the plant,” Hudgins says.

“That included getting railroad crossing permits, which alone

can normally take six months. We got them 10 megabits of

Ethernet access in 37 days. We blew their socks off!”

The broadband connection is just one of many reasons

Clarksville is being considered by EDS, Hudgins stresses.

The Commonwealth of Virginia, Virginia Tobacco

Commission, Mecklenburg County and the Town of

Clarksville have gone all out to offer a plethora of incentives,

and Mecklenburg Electric Co-op, with the cooperation of

Dominion Virginia Power, will provide a direct feed from a

power station. This is needed so that in the event of a

catastrophic, total power grid failure, the EDS facility is

guaranteed to have power.

Concept spreading

The broadband concept is spreading to Maryland, where

another broadband co-op is being formed. MBC was recently

contacted by a group in southern Ohio interested in forming

a broadband co-op. 

No surprise then that Deriso says he is more convinced

than ever that the co-op business model is ideal for bringing

broadband to rural America. “At the end of the day, the coop model fit us best because of the co-op principles of local

ownership and having concern for your community. It is all

about bringing a metro pricing structure to rural areas to

level the playing field between metro and rural.” 

“I don’t see any other way for rural America to survive in a

global economy,” adds Hudgins.

Looking back over the seven years of work to make the

broadband co-op a reality, Deriso says he is glad he jumped

when offered the chance to manage the co-op. “To take an

idea from the concept stage to a business plan, and then get it

built and to make it work – and to be held accountable if it

doesn’t work – that’s fun,” Deriso says, crediting Hudgins as

the “guy who made it all happen.” 

The biggest frustration has been “dealing with the

politics – local, state and federal,” Hudgins says. And there

have been many headaches over who gets to claim credit for

what. “As they say, failure is an orphan, but success has many

mothers.” 

His experiences working to make southern Virginia more

economically viable have also brought home to Hudgins the

need for a clearer national broadband policy and strategy, and

a commitment to invest more in it. 

“Korea is the most wired country in the world. We rank

18th in the world for broadband penetration, and we are

dropping another spot or two every year,” Hudgins says with

a note of chagrin in his voice. 

“To make this project happen took a combined effort at

every level of government, the private sector and educational

institutions. Fiber is the way to get your economy moving

forward. But too many old-style politicians still just don’t get

that globalization is here and it is very real. There is no going

back to the good old days of doing business with the same

tools and strategies and hope it all works out. Failure is

simply not an option.” ■

Rural Cooperatives / July/August 2007 21

“We got them 10

megabits of Ethernet

access in 37 days. We

blew their socks off!”

The availability of broadband service helped Clarksville, Va.,

become a finalist for a $600 million data center. Seen here at the

facility in Clarksville are MBC General Manager Tad Deriso (left)

and David Hudgins of Old Dominion Electric Cooperative. Photo

by Valerie Garrison
22 July/August 2007 / Rural Cooperatives

By Jane Livingston,

CooperationWorks!

he last supermarket moved out of the city of

Chester, Pa., 16 years ago, after industrial

flight led to a decline in the town’s

prosperity. That means residents have had to

travel, often by public transportation, to find

the food they want. Even then, the best quality, locally

produced food is often out of their price range. 

In 2006, a group of Chester residents who had lived,

worked, worshipped and volunteered alongside one another

for many years decided to

address the situation by

forming a steering

committee to create

Chester's Community

Grocery Co-op. 

From the outset, this

group was dedicated to

providing food at fair prices,

with a strong focus on

linking food to health and

catering to the needs and

tastes of community

members, four-fifths of

whom are African

American. In addition to

opening a grocery store,

plans include establishing a

business incubatordemonstration kitchen and

space for other community-support endeavors.

The project was already under way when Chester native

Tina Johnson attended a Sustainable Business Network

meeting, where she met Kate Smith, executive director of the

Keystone Development Center (KDC). 

"Meeting Kate was like finding a goldmine because she

provided us with insights into the co-op development process

that were essential for us to set the tone and pace we wanted

to move our efforts in," Johnson says. 

KDC's Smith elaborates: "Our work with the Chester coop is part of an overall market development effort to

aggregate the 'local eaters' for the local farmers and food

processors." Cooperative specialists helped the Chester

steering committee learn how to develop a successful

consumer-owned cooperative enterprise, assisting them with

strategic planning, marketing and feasibility studies, business

plan development and obtaining funding.

Co-op expanding inventory

The co-op incorporated and has 170 members, who have

each paid $250 to join ($200 is refundable if they leave the

co-op). Local produce is

being sold twice a week at a

mid-city, outdoor market

site. The co-op plans to

expand its inventory this

summer to include other

locally produced items,

such as bakery products. 

Under the direction of a

newly elected board, the

co-op is negotiating for a

store site and organizing an

equity drive. The goal is to

open a full-service, 8,000-

10,000 square-foot

supermarket by the end of

the year. 

Johnson

emphasizes that the co-op

offers area producers what

they most need to move

away from selling primarily to the wealthiest consumers at

the highest prices they can get: the security of numbers.

"They have to pull in the needs of the urban communities to

create a sustainable system," she says, but admits this is a

difficult conversation to have. "We want to support our

family farmers, they are the linchpin in the sustainable food

network model." 

Johnson, who spoke at last year's Farm Aid gathering,

acknowledges that family farmers are faced with enormous

challenges as commercial agricultural operations continue to

Future of Local Food

T

CO-OP DEVELOPMENT ACTION

The Chester Community Grocery Co-op is holding twiceweekly outdoor markets while its board works to establish the

first full-service grocery store in Chester in 16 years.
Rural Cooperatives / July/August 2007 23

Street Sense wasn't the only winner at the 133rd Kentucky Derby this year. When Chef Gil Logan, official caterer

to Churchill Downs, was asked what he would be serving

Queen Elizabeth when she attended the nation's most

famous horse race, he replied, "The Queen has requested

an authentic Derby menu, which means she will enjoy many

of the same foods as everyone else... The beef will be from

the Green River Cattle Co. [along with] all the other great

local and organic Kentucky Proud products that are farm

raised."

Despite this majestic

moment, Green River Cattle Co. (GRCC) co-owner

David Givens marks 2006,

not 2007, as the turning

point in the life of this

small LLC which operates

on cooperative principles.

That's the year GRCC

started working with the

Kentucky Center for Agricultural and Rural Development (KCARD).

"Working with KCARD

has been a wonderful

experience," Givens

says. The six-year-old

company, owned by a

small group of beef and

tobacco farmers looking

for alternatives to tobacco production, was floundering when Givens had a chance

encounter with KCARD's Larry Snell. 

Going the distance

A couple of years prior to this, GRCC had undertaken a

marketing study that indicated they should develop a brand

around locally grown and finished beef products. But as

they moved toward this goal, they found themselves hampered by a lack of staff as well as other resources. The

pressures of — and changes within —their industry were

enormous. Tensions within the group, and constant challenges from without, threatened its future. 

By the summer of 2005, "The train was coming into the

station and it was time for the people who wanted to get off

to take the opportunity,” Givens says. “So they did, and we

had new members come on board." This transition infused

the group with new energy and optimism. Shortly after that,

Givens and Snell met.

As a result of their meeting, KCARD conducted a business management and

operations audit for the

producers. Brent Lackey recalls, "We worked

with the owners and

management for two

weeks and made several recommendations,

most of them centered

on the co-op's need for

more planning, especially with respect to

marketing." 

In addition, KCARD

helped GRCC's managers create three

teams to address cost

reductions, marketing

improvements and

pricing strategy. Lackey says the new marketing strategy will increase the value of their co-op’s beef

by 20 percent. 

Followthrough has included helping GRCC forge relationships with the likes of Foothills Country Meats and Allied

Food Marketer. The latter is a connection that led them all

the way to the winner's circle at Churchill Downs. (For

more on this story see Kara Keeton's article in The Farmer’s

Pride, May 16, 2007.) ■

Kentucky co-op feeds the Queen

grow ever larger. Yet, as the demand for natural and organic

foods keeps racing up the charts, so does the price for the

food itself. 

That is not the way to develop and maintain sustainable

food systems. It's not the way supply and demand is supposed

to work, she gently points out. 

"The farmers need to know we think their commodity is

valuable, but it can't be out of reach or they'll never create a

sustainable food network," she says. "I may buy an heirloom

tomato once for nine dollars, but I won't go back to that

vendor." 

But by forming a consumers' cooperative, Johnson

explains, "We can create the market. We can create the lines

of distribution. We can even come to pick up the food from

the farm. I know that farmers' time is so expensive. But the

farmers also need to integrate our efforts – to bring local

food into the city at fair prices – into their farm operations."

■

When Britain’s Queen Elizabeth II attended the Kentucky Derby this

year, she was served beef supplied by Green River Cattle Co., a

producer-owned LLC. Flanked by the famous steeples of Churchill

Downs, Chef Gil Logan (right) meets with the beef producers. 
By Anne Mayberry

USDA Rural Development

Utilities Programs 

anne.mayberry@wdc.usda.gov

ombine four parts

leftover wood scraps

with one part chicken

litter, add equipment

and chemistry, and you

have one of the most innovative sources

of alternative energy in the nation. 

That’s the idea behind Plant Carl,

which will convert poultry litter and

wood waste into electricity.

Construction on Plant Carl is scheduled

to begin this summer, with the help of a

$28 million loan from USDA Rural

Development’s Utilities Program office

to Earth Resources Inc., located near

Carnesville, Ga. Designed to generate

clean energy by converting poultry

litter and woody biomass into

electricity, the plant is viewed as a

potential state-of-the art model that can

be duplicated in other areas.

Plant Carl is named in memory of

Carl Dinsmore of Dinsmore Grading, a

site development company that has

worked with Georgia Power and

Atlanta Gas Light on projects in North

and South Carolina and Alabama.

“We want to be part of Plant Carl’s

exciting and unique concept,” says Jim

Andrew, administrator of USDA’s Rural

Development Utilities Programs,

which is providing the loan for the new

facility. 

Andrew says funding more

renewable energy projects is a major

goal of USDA. “The impact of climate

change, the price of oil and the cost of

building new plants to meet the

growing demands for electricity mean

that alternative sources of energy show

great promise. If these new sources of

power can help meet our power needs

while making contributions to clean up

the environment, we want to see these

24 July/August 2007 / Rural Cooperatives

C

UTILITY CO-OP CONNECTION

Georgia alternative energy plant

to be fueled by wood & poultry waste

“There is plenty of fuel for this plant, with more than 3,600 poultry houses within

a 20-mile radius of the site. Plant Carl will require litter from only one-half of

those,” says Michael Whiteside, president of Green Power EMC and CEO of

Cowetta-Fayette EMC. Photo courtesy Cowetta Fayette EMC 
Rural Cooperatives / July/August 2007 25

operations expand to other places.”

The fact that Plant Carl is

generating interest is in part because it

deviates from traditional sources of

power generation. It supports President

George W. Bush’s renewable energy

initiatives, meeting new policies of

finding alternatives to fossil fuels. 

Georgia EMCs support project

The support of Georgia’s rural

electric cooperatives and the growth of

its poultry industry have also been key

factors that have helped Plant Carl

move from a pilot project five years ago

to where it is today.

Michael Whiteside is president of

Georgia’s first renewable energy

program, Green Power Electric

Membership Corporation (EMC), and

president and CEO of Cowetta-Fayette

EMC, an electric cooperative utility

that has been serving members since

1945, and one of the participants in

Green Power. Georgia’s rural electric

cooperative utilities are interested in

Plant Carl. 

“Green Power EMC supports

development of renewables,” Whiteside

says. “Because forecasts anticipate that

our energy requirements will double

over the next 12 years, renewables are

expected to play a small part in our

energy portfolio. The good news is that

there is plenty of fuel for this plant,

with over 3,600 poultry houses within a

20-mile radius of the site. Plant Carl

will require litter from only one-half of

those. Hopefully, we will be a partner in

replicating similar plants across

Georgia.” 

Besides supplying 20 megawatts of

electrical power, Plant Carl will

mitigate the impact of poultry farms on

the environment. “Plant Carl is a good

addition to Green Power,” Whiteside

says. 

Billy Jones, operations manager for

Plant Carl, emphasized that extensive

environmental review was among the

requirements he and plant owner

Charles “Sonny” Dinsmore (Carl’s son)

had to meet to qualify for the loan from

USDA. Other requirements included

private equity capital to support the

operations, use of commercial

technologies and a viable business

model to support the servicing of the

loan. 

Meeting growing demand

Georgia EMCs became aware of the

pilot project and liked what it saw,

according to Jones. “They knew energy

was there, and they knew they would

need to act to meet growing demands.

More homes are being built in Georgia.

Rural electric cooperatives wanted to

entertain the use of renewables, so they

will purchase power for 20 years.” Not

only did the rural electric cooperative

utilities show strong interest in

renewable energy, but recommended

federal financing, Jones notes. 

“It was through the EMCs that we

learned about USDA Rural

Development’s long-term financing

process,” says Jones. “Have you ever

tried to get a loan for nearly $30

million? It’s breathtaking.” Jones credits

Rural Development Utilities Programs

expertise with “guiding us through the

detailed process.” 

Plant operations will benefit the

poultry industry. “This year, Georgia is

experiencing the longest drought ever

recorded,” Jones says. “Under these

conditions, chicken litter will burn land.

Several years ago we had too much rain,

and the runoff from the rain presents

other environmental challenges.” Use

of woody biomass will keep additional

debris from moving to Georgia’s

landfills. 

Chicken production is a $17

billion industry, currently growing at 3

percent. This growth explains the

reaction from the community to Plant

Carl. “We have the support of the

community — this is chicken country,”

Jones says. “About 90 percent of the

people in this area are in the chicken

business. They’re looking at the long

term. Plant Carl is an advantage.”

■

Electrical plants in Georgia (above)

and Kansas are being disassembled

and moved to Carnesville, Ga., where

the parts will be used to build Plant

Carl. Photo by Billy Jones 

Poultry wastes will be one of the primary fuels used in Plant Carl. USDA Photo
26 July/August 2007 / Rural Cooperatives

V ALUE-ADDED CORNER

Olive Oil Council expanding markets

with help of VAPG 

By Anne Todd,

USDA Rural Development

anne.todd@wdc.usda.gov

Editor’s note: For more information about

the Value-Added Producer Grant program,

visit the USDA Rural Development Web

site: http://www.rurdev.usda.gov/.

he olive first arrived in

California in the late

1700s when Spanish

missionaries settled in

21 areas between San Diego and

Sonoma, planting olive trees at each

location. By the mid 1800s, the olive oil

industry in California was thriving.

The industry stalled, however, and

struggled to right itself throughout

most of the 20th century. It was only

recently that a new generation of

health-conscious Americans

rediscovered the flavor and benefits of

olive oil. Many older olive orchards

have been rejuvenated and new

orchards are again being planted,

signaling a rebirth of the California

olive oil industry.

Today, the California industry is

again a vital part of the global olive oil

arena. California oils are produced from

a large number of olive varieties, using

a wide range of methods: from

traditional, labor-intensive handharvesting to new methods that rely on

highly mechanized harvesting. 

Olive producers in Central

California are using new techniques

that help control production costs,

improving their ability to compete in

the global marketplace. Some growers

are planting “super high-density”

orchards, in which trees are planted

closer to one another and heavily

pruned. Mechanized harvesting cuts the

costs of labor. Because more trees are

planted on less acreage than was

traditionally required, the land costs are

also reduced.

VAPG helps expand demand 

The California Olive Oil Council

(COOC) is using a $241,000 ValueAdded Producer Grant for marketing

activities that will increase demand for

this healthy food. Value-Added

Producer Grants (or VAPG) are

awarded annually by USDA Rural

Development to eligible cooperatives

and other agricultural organizations and

individual producers for use in planning

activities and for working capital to help

market value-added products made

from crops or livestock they raise.

“The funds we received from USDA

Rural Development have been great for

our growers,” says COOC Executive

Director Patricia Darragh. “We have

been able to put forth a comprehensive

marketing campaign, something we

would not have been able to accomplish

without the VAPG.”

The mission of COOC, a nonprofit

trade and marketing association

founded in 1992, is to promote growing

olives and the production of olive oil in

California. It provides education to

growers, producers and consumers. 

The Council takes part in meetings

and trade events that focus on

everything from marketing olive oil to

managing orchards. Membership is

extended to all olive oil producers who

agree to abide by COOC’s quality and

labeling standards, regardless of the size

of their operation or amount of sales.

Web site key to marketing effort 

Thanks to the grant and matching

funds provided by COOC, the Council

has been able to completely redesign its

Web site to better meet the needs of its

members, consumers and retailers. For

consumers, the site contains all-new

information about the health benefits of

olive oil in their diet, recipes and lists

T

California olive trees are producing fruit for olive oil that now equals the quality of European olive oils. Photos courtesy Gail Della Nina
retail outlets that sell olive oil. It also

provides locations where groups can

taste different varieties and tour olive

groves and mills. 

For producers, the site has contact

information for California growers,

comprehensive resources to help them

as they cultivate their crop, information

about COOC’s certification standards

and a secure site for members that

provides access to exclusive marketing

opportunities and other members-only

information. The redesigned site now

draws 5,000 to 6,000 visitors each

month.

COOC also has produced new

promotional materials, including an

educational DVD (it comes in 10-

minute and three-minute versions),

which members can use at trade shows

or while meeting with retailers.

The grant has also allowed COOC

to take part in more trade events to

showcase the California industry and its

members’ products. These include the

National Association for the Specialty

Food Trade (NASFT) Specialty Food

Show in Chicago and the South Beach

Wine and Food Festival in Miami. The

most recent Miami trade show marked

the first time the Council staff had been

able to tap into the southeastern

market. As a result, COOC had an

opportunity to market California olive

oils to major industry leaders. During

the three-day Miami event, COOC had

about 3,000 visitors to its booth.

On par with Europe’s finest

COOC supports certified olive oil

standards and administers a certified

quality control program that exceeds

the strict international standards for

extra virgin olive oil. Under COOC’s

seal-certification requirements, olive oils

must:

• Be mechanically extracted without

chemicals or excessive heat; 

• Contain less than one-half percent

free eleic acid; 

• Contain positive taste elements and

no taste defects, as determined during

a blind tasting. 

Through the seal-certification

program, Darragh says COOC helps

everyone, from home cooks to

professional chefs, find guaranteed

extra virgin olive oils for their kitchens. 

U.S. olive industry expanding

Ninety-nine percent of the olive oil

produced in the United States comes

from California, and 10,000 acres of

California farmland is dedicated to olive

groves. Currently, less than half of that

acreage is in production, the main

reason being that trees require about

three years to mature and bear viable

fruit. However, over the next couple of

years, more and more acreage is

expected to go into production. By

2008, it is estimated that U.S. olive oil

production will outpace that of France. 

Domestic sales of olive oil have

increased well over 20 percent each year

for the last five years. In addition to the

guaranteed quality of olive oil produced

by COOC members/growers and the

varieties available, another key benefit

for consumers is its freshness. COOC

growers can bring olive oils to U.S.

customers immediately after harvest, at

the peak of freshness. For these reasons,

the popularity of California olive oil

and growth in sales is expected to

continue.

This fall, COOC will be

participating in many more events to

promote the benefits of California olive
28 July/August 2007 / Rural Cooperatives

oil. For instance, in September COOC

will take part in a tasting seminar in

Sacramento. In October COOC

representatives will attend the San

Diego Chefs Association conference. 

Although COOC is a small

organization in terms of the size of its

support staff, its mission is large.

COOC represents more than 200

growers/producers and, including

supporting members, has more than

350 members, and membership is

growing. 

The Council plans to pursue a

second VAPG in hope of further

boosting the industry through

marketing.

To learn more about the Council’s

mission and activities, visit:

http://www.cooc.com, or e-mail:

oliveoil@cooc.com. The Council can

also be contacted at: (888) 718-9830.

■

Gail Della Nina and her husband Don wanted to get

away from the stresses of urban life and live in a rural area.

So, in 1984, they bought a small farm and relocated to

Byron, Calif., known for its famous hot springs and resort.

Although Don’s family is involved in agricultural production,

neither he nor Gail had any direct farming experience when

they started out. 

Working with a local crop advisor and staff at the University of California at Davis, their farm began

to take shape. Because their soil had high levels of boron, they were encouraged to grow alfalfa to help

replenish the soil with needed nutrients. They produced

alfalfa for their first five years on the farm.

In 2003, because of low yields, it was clear that the alfalfa’s development cycle had waned, and it was time to start

a new crop. Gail and Don knew that olive trees fared well in

the region and were suited to their farm’s boron-rich soil.

Don’s Italian-American heritage also influenced their decision to grow olives. 

Support and guidance from then-COOC Board President

Bruce Golino helped the Della Ninas kick-start their operation. Golino, owner of the Santa Cruz Olive Tree nursery in

Watsonville, introduced them to olive production techniques and helped them acquire starter trees. Gail and Don

opted for young Mediterranean varietals (two- to threeyear-old trees) that were shipped from a nursery in Tuscany, Italy.

The Della Ninas planted the trees in September 2003

and, although the trees were young, they produced olives

that same October. The Della Ninas harvested and pressed

10 gallons of olives that season. The “Olio Bello d’Olivo”

(which translates as “beautiful oil from the olive”) brand

was born.

Gail and Don have been members of the California Olive

Oil Council (COOC) since they started their orchard and say

they have reaped many benefits from that association.

“Anyone who’s a serious olive oil producer would be a fool

not to use them [COOC],” says Gail. 

COOC alerts the Della Ninas about every upcoming

event where they can market their olive oil. Additionally, when Council staff attend

a marketing event, they

bring samples of Olio Bello

d’Olivo for people to taste.

Gail reports that membership in COOC has brought

them many new customers

from all over the country.

Olives from their

orchard, the only one in

Byron, are hand picked and cold pressed into both filtered

and unfiltered extra virgin olive oil. In 2006, their orchard

produced 500 gallons of oil, which carries the COOC seal.

Olio Bello d’Olivo has won many awards. In 2006 alone, it

won five awards, including two silver medals and a bronze

medal at the International Olive Oils of the World competition. It won two gold medals at the San Diego Wine and

Food Festival.

— By Anne Todd ■

California growers champion Tuscan olives

Olives are harvested at the Della Nina orchard.

Olive oil tasting in gourmet food shops (right) is

one marketing tool being used to expand

demand. Photos courtesy Gail Della Nina 
Rural Cooperatives / July/August 2007 29

hree of the nation’s

top practitioners in

the art of cooperative

communications —

including the leader

of the nation’s credit union sector, a

veteran co-op editor and a dynamic

young communicator — were

presented in June with the top awards

of the Cooperative Communicators

Association (CCA). 

For his dedication to co-op

communications, Daniel A. Mica,

president since 1996 of Credit Union

National Association (CUNA), which

serves nearly one third of the nation’s

consumers, was named CEO

Communicator of the Year at the

CCA Communications Institute in

Williamsburg, Va. 

CCA News editor Donna Foster

Abernathy’s more than two decades of

excellence in cooperative

communications earned her the 49th

annual H.E. Klinefelter Award, which

recognizes career achievement and

“dedication to improving the

standards of cooperative communication.” Teri Ditsch, communications

director for AMAROK, an Arizonabased building supply purchasing

cooperative, took home the Graznak

Award, recognizing her as one of the

nation’s outstanding young (under the

age of 36) co-op communicators. 

Mica, a former Florida

congressman, was saluted for being “a

visible and effective voice for credit

unions and cooperatives in the

national media.” Under his

leadership, CUNA has launched a

strategic communications plan to

“change the conversation” on

Capitol Hill about credit unions.

The campaign emphasizes how

credit unions “look out for the little

guy.” It involves innovative

messaging, “guerilla-marketing”

techniques, social media (such as

YouTube), traditional advertising

and direct communication with

lawmakers.

Mica has supported CUNA’s

full-day national advocacy training

program for credit union leaders,

half of which focuses on working

with the media to deliver key

messages about cooperatives and

credit unions. CUNA is the nation’s

largest credit union trade group,

representing more than 90 percent

of the country’s 8,300 state and

federally chartered credit unions

which together serve some 90

million Americans.

Media savvy winner 

Abernathy began her

cooperative career with Tennessee

Farmers Cooperative, moved into

advertising and later started her

own freelance marketing

communications business, DLF

Communication Services, from her

home in Murfreesboro, Tenn.

Abernathy became CCA News editor

in 2000, moving the publication to

a Web- and e-mail-based

distribution. 

She was described as “highly

creative, professional and savvy in

co-op and media realities – an

exceptional communicator who

employs only the best writing,

photography, graphic and editing

skills.” As editor of CCA News,

Abernathy has made the newsletter

a must read for those seeking to be

on the cutting edge of cooperative

communications practices. 

Ditsch was praised for her

Mica, Abernathy, Ditsch named

top co-op communicators

T

CUNA’s Daniel A. Mica was named CEO

Communicator of the Year; Donna Foster

Abernathy (bottom photo, left) won the

Klinefelter Award for career achievement, and

Teri Ditsch won the Graznak Award, recognizing

her as one of the nation’s outstanding young coop communicators. Photos courtesy CCA

continued on page 37
30 July/August 2007 / Rural Cooperatives

By Anthony Crooks, Ag Economist

USDA Rural Development

lycerin (glycerin,

glycerol) is the main

co-product resulting

from biodiesel

production. The name

comes from the Greek word glykys,

meaning sweet. It is a colorless,

odorless, viscous and nontoxic liquid

with a sweet taste and literally

thousands of uses – at least for pure

glycerin. The biodiesel glycerin coproduct is in crude form. Once

separated from the soaps, lye and other

byproducts, however, this glycerin has

significant market value.

Every gallon of biodiesel produced

generates 1.05 pounds of glycerin. So a

30-million-gallon-per-year plant will

generate about 12,700 tons annually of

99.9 percent pure glycerin. Along with

the 600 million gallons of biodiesel

soon to be added to the nation’s

production capacity will come about

315,000 tons of glycerin. With an

expected U.S. production of 1.4 billion

pounds of glycerin between 2006 and

2015, North American glycerin markets

G

Evolving technology

may generate profit

from biodiesel

glycerin

glut 
Rural Cooperatives / July/August 2007 31

will be significantly affected by industry

growth. 

A glutted glycerin market is more

than a concern for the farmer-owned

co-ops and limited liability corporations

(LLC) and other producers of biodiesel.

The European glycerin supply is

already in over supply. When combined

with fatty acid production from palm

kernel oil and coconut oil in Southeast

Asia, all are adding to the world's

glycerin surplus. Biodiesel production is

now the most important determinate in

the supply of glycerin. 

The nation’s synthetic glycerin

market has also felt the effects. Dow

Chemical, once the only synthetic

producer of glycerin in the United

States, recently closed its Freeport,

Texas, plant, saying that the flood of

glycerin from U.S. biodiesel plants was

at least partially responsible. 

Like biodiesel itself, glycerin quality

is a concern for refiners. Crude glycerin

quality may be as varied as the process

technology used to produce biodiesel.

Typically, the large, professionally

engineered plants have a more

consistent glycerin because more

attention is paid to refining the coproduct. Smaller, self-designed facilities

are more often just trying to get

biodiesel produced and pay less

attention to glycerin quality. 

Useful molecule

While some community-based

biodiesel producers tout soap-making

or aerobic composting as potential

solutions, that’s hardly sufficient for

commercial-scale operations. The most

likely use for glycerin will be to replace

petroleum-based chemicals. Within five

years, glycerin is expected to become a

developmental platform from which an

array of chemical applications will

spring as a replacement of a

petrochemical equivalent. 

An often discussed idea is to convert

glycerin to antifreeze. Researchers at

the University of Missouri and the

Columbia, Mo.-based Renewable

Alternatives LLC have completed the

first phase of a project using

hydrogenation to convert glycerin to

propylene glycol. The process turns

glycerin and hydrogen into equal parts

propylene glycol and water. Plans are

underway to scale-up the process for

commercialization. 

Researchers at Washington State

University's Biological Systems

Engineering Department are studying

how to develop omega-3 fatty acids,

succinic acid and succinate salts from

glycerol. The U.S. Department of

Energy recently identified succinic acid

as one of the top 12 biorefinery

chemicals to be derived from biomass. 

The USDA Agricultural Research

Service's Environmental Quality

Laboratory in Beltsville, Md.,

discovered that glycerin from biodiesel

production and citric acid can be

chemically combined to produce

biodegradable polymers, which could be

used to produce packaging and other

products. An important feature of the

process is the use of unrefined glycerol

specifically from biodiesel production. 

Citric acid is reacted with various

alcohols, or hydroxyl-containing

materials such as glycerol, to obtain a

polyester polymer that is biodegradable,

edible, biocompatible and useful in the

making of films, sheets, plastics and gellike coatings. Because it is

biodegradable, the material holds

significant promise for use in packaging

materials.

Soy Oil-glycerin products explored 

The Ohio Soybean Council and the

Battelle Memorial Institute are working

together to pioneer new uses for

soybean oil and glycerin in the

development of polyols, which are used

to make polyurethane foams, polyester,

adhesives and other goods. Glycerin

and soybean oil can be chemically

modified (using ozone treatment and/or

selective oxidation) to make soyapolyols that are competitive with the

petroleum-based products. 

The U.S. polyol market is nearly 1

billion pounds and represents a

significant value-added opportunity for

the biodiesel co-ops and other

producers to pursue. Because of what is

called “low reactivity,” however, soybased polyols need to be blended with

petroleum counterparts, just as

biodiesel is blended with petroleum

diesel, to make specialty products. 

Battelle’s business strategy is to

license technology to interested

companies. Ideally, the new technology

will alter a biodiesel plant into a multifaceted biorefinery with multiple

product streams, just as with a

USDA photo illustration by Stephen Thompson
32 July/August 2007 / Rural Cooperatives

petroleum refinery. A 100-milliongallon biodiesel refinery generates from

60 to 75 million pounds of glycerin, or

about 200 million pounds of polyols per

year. At the current price of about $1

per pound, polyols can add another

$200 million in revenue to a biodiesel

plant’s bottom line.

Battelle’s vision is for these refineries

to produce biodiesel for transportation

fuel, and to invest in the process to

manufacture polyols for the plastics and

polymers industries as a springboard to

multiple processes, products and

revenue streams. Ultimately, every

product stream from the plant will

become a value-added revenue source. 

Battelle isn’t alone in the

development of polyols. Cargill Inc.

recently announced that it had won a

technology award from the Alliance for

the Polyurethanes Industry for its

BiOH bio-based brand of polyols.

ADM plans to produce propylene

glycol and other “large-volume”

chemicals from glycerin. Many people

are aware that propylene glycol is used

for antifreeze/deicer, but it is also used

for fiberglass resins, personal care

products and cosmetics. 

Alternative energy source

The “floor value” of any material,

including glycerin, can be determined

by the point at which it can be used as

an energy source. For example,

distillers grains produced as a byproduct

of the ethanol industry can be used as a

supplemental energy source. Of course,

burning distillers grains and glycerin is

a last resort and is best avoided, because

glycerin typically doesn't burn well, and

crude glycerin gives off toxic fumes

when burned, limiting its energy

potential. 

However, Virent Energy Systems

and the University of WisconsinMadison Department of Chemical and

Biological Engineering believe that

glycerol can be an energy source

through aqueous phase reforming

(APR). APR generates hydrogen from

aqueous solutions of oxygenated

compounds in a single-step reactor

process. 

Low-grade crude glycerin is

especially favored because it is cheaper

and readily converts to hydrogen. Its

sodium hydroxide, methanol and the

high pH levels actually help the process.

About 10 pounds of glycerin can be

converted to 1.5 pounds of hydrogen in

Virent's process for less than $2 per

kilogram. 

Electricity

Researchers at eTEC Business

Development Ltd., a biofuels research

company based in Vienna, Austria, have

devised mobile facilities that

successfully convert the biodiesel byproduct glycerin into electricity. The

facilities, according to researchers, will

provide substantial economic growth

for biodiesel plants while turning

glycerin into productive renewable

energy. 

The glycerin is burned in specially

adapted engines to produce electricity.

Stable and virtually maintenance-free,

eTEC’s units consist of a glycerin

processing module, a combustion

engine with a generator and a control

unit that is compatible with any

biodiesel plant. With the unit’s low

malfunction rate and compact design, it

can be integrated into a transfer

encasement, making it easy to be

transported, assembled and moved from

one biodiesel plant to another, if

desired.

Because electricity is expensive in

Europe, biodiesel producers will be able

to create their own electrical energy

using eTEC’s technology to help offset

feedstock cost. In addition, heat is

simultaneously released during the

electricity conversion process, which

can be used for heating the plant’s tank

facilities. eTEC also has plans to

reconvert heat back into electricity.

Unused electricity can also be fed into

the main supply grid for use at the

European sponsored eco-electricity

rates. Having this kind of ‘green’

electricity is supported by the local

states in the EU, so it is quite profitable

for biodiesel projects. 

Biogas, methane digester

A Belgian biogas firm, Organic

Waste Systems (OWS), is building a

methane digester system that uses crude

glycerin and resulting biogas from a

commercial-scale biodiesel facility to

power the plant itself. Such an

integrated, closed-loop system has

many benefits and makes the biodiesel

production process “greener.” Glycerin

is reported to increase biogas yields

considerably, provided the right

microbial populations are used.

The Agricultural Utilization

Research Institute (AURI) in Marshall,

Researchers at Battelle in Columbus, Ohio, are working to find new uses for soybean 

byproducts. Such work is funded in part by Soybean Checkoff dollars, contributed by

producers. Photo courtesy Ohio Soybean Council

continued on page 37
CountryMark expanding

refinery; rebranding Midwest

fuel stations

CountryMark Cooperative is

investing $20 million to upgrade and

expand its refinery in Mt. Vernon, Ind.

The project, announced at the co-op’s

most recent annual meeting, is expected

to be completed in 2008 and will boost

refining capacity by 45 million gallons

per year, or roughly 12 percent of

current production.

The additional production at its

Indiana refinery comes at a time when a

national gas shortage, combined with a

2-percent increase in U.S. fuel demand,

has forced energy prices upward, says

CountryMark CEO Charlie Smith. In

addition to increasing refinery yields,

CountryMark also has announced plans

to invest in the reliability of the refinery

and fuel distribution facilities.

The co-op has also announced that

its EnergyPlus 24 retail fuel stations are

being rebranded with the CountryMark

name and image. The look has been

updated to reflect the stations’ identity

as CountryMark fuel stations. The 90

fuel stations across Indiana, Ohio and

Michigan will continue to have fuel

available 24 hours, and many also offer

convenience store products and

services. The stations are operated by

21 independent local cooperatives, all of

which are based in Indiana.

Nearly half of the profits made by

CountryMark in 2006 were returned to

member cooperatives through

patronage refunds. In the past two

years, CountryMark has sent $43.3

million back to its member

cooperatives.

Some 5 million gallons of soy

biodiesel and 6 million gallons of cornbased ethanol were purchased by the

co-op in 2006 and blended into

CountryMark's premium diesel and

gasoline products. Nearly 80 percent of

the diesel CountryMark distributes

through local cooperatives is a blend of

soy biodiesel. 

In 2006, the co-op completed work

on a $44 million advanced diesel fuel

processing unit, which enables it to

produce premium, ultra-low sulfur

diesel fuel that is more environmentally

friendly and meets new EPA clean air

mandates. Known throughout the years

as an agricultural co-op, CountryMark

is now focused exclusively on energy.

Two familiar premium Northwest

pear shippers have combined

operational and marketing relations to

become one of the largest premium

pear shippers in North America. Stemilt

Growers Inc. will market 100 percent of

Peshastin Hi-Up Growers pears

starting in August. Under a previous

agreement, Stemilt marketed a large

percentage of Peshastin’s crop.

"Stemilt’s marketing channels for

premium fruit are a perfect fit with our

operations,” says Peshastin Hi-Up

general manager Ken Hemberry. The

collaboration makes the two

organizations the largest Washington

supplier of Concorde, Taylor's Gold

and organic pears. 

Peshastin Hi-Up is a grower-owned

cooperative that has a long history of

growing premium pears in the upper

Wenatchee River Valley. The co-op,

which only ships pears, grew and

packed about 750,000 cases of pears in

2006. The majority are d'Anjou and

Bartlett pears, while other pear varieties

round out the program.

“Stemilt and Hi-Up will gain

efficiencies through collaboration in not

only marketing but also in packing,

storage, packaging, ripening programs,

transportation and logistics. This will

be a complete go-to-market strategy,"

says Stemilt vice president of sales and

marketing Mike Taylor. Stemilt is

privately owned by the Mathison family,

which has farmed in Central

Washington since the early 1900s.

Stemilt shipped approximately 1 million

boxes of pears in 2006.

GROWMARK to acquire energy

firm; teams with FB on risk

management

GROWMARK Inc. is seeking to

acquire 100 percent of STAR Energy

LLC (STAR), Manson, Iowa. STAR is a

retail energy company serving

northwest Iowa with $60 million in

sales last year.

STAR, currently owned by

GROWMARK, West Central

Cooperative and NEW Cooperative

Inc., primarily serves rural markets. It

delivers gasoline, distillates, propane,

and lubricants and operates unattended

fueling locations. 

West Central Cooperative CEO Jeff

Stroburg says the transaction will allow

West Central to focus more on its

strategic businesses. STAR Energy and

West Central have many common

customers and plan to continue to

NEWSLINE

Send items to: dan.campbell@wdc.USDA.gov

Rural Cooperatives / July/August 2007 33

NW pear shippers

to combine

marketing 
support each other in the marketplace,

he notes.

In other GROWMARK news, the

co-op is forming a joint venture with

Illinois Farm Bureau called AgriVisor

LLC. The venture brings together the

organizations’ grain and livestock

marketing analysis and contract

execution functions in an effort to offer

farmers the best marketing tools

available.

“Uniting our efforts to provide

farmers with risk management

alternatives that maximize their

profitability is a logical step for two

organizations committed to serving the

best interests of our farmer-members

and owners,” says Larry Keene,

GROWMARK director of grain risk

management and value-enhanced products.

Co-op development class 

Applications are being accepted for

Session II of The Art & Science of

Cooperative Development, a training

program for new and established co-op

development practitioners. The

program is produced by

CooperationWorks!, a nationwide

service co-op for cooperative

development centers and individual

practitioners. This five-day, intensive

training takes place in Madison, Wis.,

Sept. 10-14. Session I is not a

prerequisite for Session II. For more

information, contact Audrey Malan,

(307) 655-9162 or cw@vcn.com.

AMPI acquires Cass-Clay 

Associated Milk Producers Inc.

(AMPI), New Ulm, Minn., has

completed the acquisition of Cass-Clay

Creamery Inc. The North Dakotabased cooperative is now operating as a

division of AMPI. 

The Cass-Clay division includes a

fluid milk bottling plant in Fargo, N.D.,

and a specialty cheese plant in Hoven,

S.D. Products manufactured at the

Fargo facility will continue to be

marketed under the Cass-Clay® brand,

recognized in the upper Midwest for

quality fluid milk, ice cream and

cultured products such as yogurt and

sour cream.

“The dairy farmers of Cass-Clay are

proud to be the newest AMPI owners,”

says David Glawe, chairman of the

Cass-Clay and a Detroit Lakes, Minn.,

dairy farmer. He is one of nearly 200

cooperative owners who unanimously

voted to authorize the transfer of CassClay Creamery assets to AMPI. 

The Cass-Clay brand and product

line complements products

manufactured at AMPI plants across the

Midwest. AMPI is a private-label

manufacturer of consumer-packaged

cheese, butter, instant milk and shelfstable dairy products. With the

acquisition, the 4,000 dairy farmerowners of AMPI now operate 15 plants

and annually market more than $1

billion of dairy products regionally and

nationally.

“This acquisition reflects the

cooperative’s long-term commitment to

Midwest dairy farmers,” says Paul Toft,

AMPI board chairman and a dairy

farmer from Rice Lake, Wis. “It allows

us to optimize our farmer-owned milk

manufacturing facilities.”

Study: ethanol not main 

factor in higher food costs

A new study by agricultural

economist John Urbanchuk of LECG

throws a bucket of cold water on the

popular argument that the rising cost of

corn – prompted by the increasing

production of ethanol – is the cause of

increased food prices and other

consumer-related inflation. Instead,

Urbanchuk's new statistical research

shows that escalating energy costs are

the real culprit behind the recent runup in retail food and beverage prices.

The study arrives amidst a growing

debate over the expansion of the U.S.

ethanol industry. Many critics blame

ethanol and corn producers for

everything from shortages of Mexican

tortillas to higher prices for corn flakes

and soft drinks. 

Urbanchuk's study – The Relative

Impact of Corn and Energy Prices in the

Grocery Aisle – was commissioned by the

Renewable Fuels Association. The full

report and corresponding tables can be

found at: http://www.rippmedia.com/

LECG-JU-Ethanol.doc.

According to the Urbanchuk report,

rising energy prices have had twice the

impact on the Consumer Price Index

for food as has the price of corn. He

examines CPI data from 2002 through

May of this year to make his point.

"While it may be more sensational to

lay the blame for rising food costs on

corn prices, the facts don’t support that

conclusion,” says Urbanchuk. “By a

factor of two-to-one, energy prices are

the chief factor determining what

American families pay at the grocery

store.” 

Moreover, he notes, "Retail food

prices are not likely to accelerate

significantly in 2008 and beyond, even

as ethanol production continues to

expand. In fact, consumers will be more

severely affected by rising gasoline and

energy prices than by increases in corn

prices." 

A&N Electric Co-op to 

acquire Delmarva Power

A&N Electric Cooperative’s (ANEC)

board has voted to acquire the electric

distribution service territory of

Delmarva Power in Accomack and

Northampton counties on Virginia’s

Eastern Shore. The purchase

agreement, which is subject to approval

by the Virginia State Corporation

Commission (SCC), will mean that

ANEC will become the electricity

This processing plant in Fargo, N.D., will

now be part of AMPI, but will continue

to produce foods under the Cass-Clay

brand.

34 July/August 2007 / Rural Cooperatives
provider for the approximately 22,000

customers of Delmarva Power located

in Virginia.

ANEC currently serves more than

11,000 consumers in portions of

Accomack and Northampton Counties

in Virginia and Somerset County, Md.

With the addition of consumers now

served by Delmarva Power, ANEC will

be the distributor of electric service for

all residents of Virginia’s Eastern Shore.

Terms of the purchase agreement

will be released to the public once a

formal application has been filed with

the SCC. 

A&N Electric Cooperative’s

wholesale power supplier, Old Dominion Electric Cooperative, will purchase

and operate the majority of Delmarva

Power’s 69 kV transmission facilities in

Virginia, a transaction that will

complement the distribution system

purchased by A&N. Old Dominion

Electric Cooperative, based in Glen

Allen, Va., is a wholesale power supply

cooperative that provides electricity to

12 member distribution cooperatives

across Virginia, Maryland and Delaware.

CHS building three

pipeline terminals

CHS Inc. is constructing two new

Montana petroleum terminals and

Rural Cooperatives / July/August 2007 35

The Farm Credit System (FCS, or System) is increasing its

financing of young, beginning and small (YBS) farmers and

ranchers, according to a recent report. The overall trend for

lending to each of the three YBS borrower categories

continues to be positive, with solid gains in 2006 loan volume

from 2005 levels, according to the report prepared for the Farm

Credit Administration, which oversees the nation’s producerowned FCS. 

The number of new loans was up for beginning and young

farmers and was flat for small farmers in 2006. However, the

growth rate in the YBS categories as a percentage of the

System’s total new-loan dollars was down slightly for 2006.

Small farmers continued to receive the largest share — 54

percent — of the System’s new loans during the year.

The report, prepared by Office of Regulatory Policy, is part

of the FCA’s continuing effort to ensure that the FCS responds

to the credit needs of these

farmers and ranchers. In

March 2004, the FCA board

approved a regulation

strengthening YBS programs

and policies at System banks

and associations. Congress

established the YBS mission

in the 1980 amendments to

the Farm Credit Act. 

In 2006, the System held

140,209 loans worth $15.4

billion made to young

farmers, age 35 or younger,

up 11 percent from 2005.

During 2006, 46,459 new

loans worth $5.5 billion were made to young farmers, or 17

percent of all new loans made during the year and 10.5

percent of the new-loan dollar volume.

FCS holds 189,223 loans, worth $25.4 billion, made to

beginning farmers — those with 10 or fewer years of farming

experience. During 2006, 57,838 new loans worth $9.3 billion

were made to beginning farmers, representing 21.2 percent of

all new loans and 17.8 percent of new-loan dollar volume.

FCS institutions had 465,951 loans outstanding worth $36.3

billion to small farmers — those with gross annual sales of

less than $250,000 — at the end of 2006. During 2006, 148,025

new loans worth $11.6 billion were made to small farmers.

New loans to small farmers represented 54.3 percent of all

new loans and 22.2 percent of new loan volume. Although the

number of new loans made during 2006 was essentially

unchanged from 2005, the volume of new loans increased 6

percent. 

Economic and

demographic factors have

led to a decline in the

number of small and young

farmers in the farming

population. As a result, the

System’s potential YBS

lending market has declined.

To encourage lending to

these farmers, many

associations are using

special underwriting

standards, lower interest

rates or other programs

aimed at YBS borrowers. ■

The Farm Credit System is striving to provide financing to more

young and beginning producers, such as Matt and Stacy

Stevenson of Maryland. Photo courtesy Mid Atlantic Farm Credit 

FCS boosts lending to young, beginning and small producers
planning a third for eastern Washington

to maximize supply efficiency for

customers of its Cenex® brand refined

fuels products. The terminals under

construction are located at Logan and

Missoula, Mont., along the Yellowstone

Pipeline. A location is being sought for

a planned terminal in the Moses Lake,

Wash., area. 

The three terminals will supply CHS

customers with a wide range of

products for bulk distribution from the

company's refinery at Laurel, Mont.,

including gasolines, diesel fuels and

ethanol-blended gasolines. The

terminals are designed to accommodate

biodiesel blends in the future.

Conference to gauge true

value of co-op businesses 

Cooperatives are facing many

strategic dilemmas as they continue to

adapt to a changing business landscape.

Understanding the true value of the

cooperative business is critical to

meeting these challenges. 

“Valuing the Cooperative Business

in the 21st Century” is the theme of

this year’s annual farmer Cooperative

Conference, which will help address

these issues.

The conference, now in its 10th year,

will be held Nov. 5-6 in St. Paul, Minn.,

at the Crowne Plaza Hotel. The event

is sponsored by the University of

Wisconsin Center for Cooperatives. 

Topics will include:

• measuring the value of cooperatives;

• the economic impact of cooperatives

on the U.S. economy;

• financial benchmarks for cooperatives;

• business structure strategies and

choices: the cooperative versus the

investor owned firm. 

Updates on the conference and

registration information will be posted

on the University of Wisconsin Center

for Cooperatives Web site:

www.uwcc.wisc.edu. Or contact: Lynn

Pitman at (608) 261-1355, or

pitman@wisc.edu.

South Dakota co-ops merging

Two South Dakota co-ops — Fremar

Farmers Cooperative, based in Marion,

and Central Farmers Cooperative,

based in Salem — have voted to merge,

effective Aug. 1. The new cooperative

will be called Central Farmers

Cooperative and will be based in

Marion. About 78 percent of Central

Farmers’ patrons and 89 percent of

Fremar patrons approved the merger,

according to the Associated Press. 

Central Farmers has operations in

Montrose, Canova and Rumpus Ridge.

Its services include fuel, propane, tires,

oil, feed, lumber, agronomy and grain

services to customers in a 35-mile

radius of Salem. Fremar is based in

Small farmers learn ways

at conference to add value

The 20th annual California Farm Conference in Monterey, Calif., in

March, was attended by 375 farmers, ranchers, ag students, educators,

farmers’ market managers and other professionals. They learned marketing

practices that will help them increase their profits and grow their

businesses.

The conference theme was “The Time Is Ripe,” and workshops were

designed to meet the mission of the conference: to address timely topics

relevant to family farming, direct marketing and agricultural sustainability.

Conference topic tracks included: “Growing Your Business,” “Making

Your Market Successful,” New Frontiers in Specialty Crops,” “After the

Harvest: Value-Added Strategies,” “Hot Topics in California,” “Marketing: If

I Grow it; Will They Come?” and “New Ideas in Production.” 

At a session titled “Financing Value-Added Projects,” speaker Rhonda

Motil of the Monterey County Vintners and Growers Assoc., spoke about

the success the organization has had using Value-Added Producer Grants

(VAPG) from USDA Rural Development. Karen Firestein, cooperative

specialist for USDA Rural Development in California, provided detailed

information about applying for a VAPG. 

In attendance were scholarship recipients as part of a program funded

by USDA. They included small-scale farm operators with limited means as

well as agriculture students and farmers’ market managers. In the past five

conferences, the California Farm Conference has targeted its outreach and

successfully increased the diversity of attendees.

In 2007, with the assistance of USDA, scholarships went to 90 smallscale farmers, of whom 38 percent were Hispanic, 6 percent AfricanAmerican and 28 percent Asian or Pacific Islanders. About 38 percent were

women, 4 percent Native American and 4 percent were persons with

disabilities. In addition, 15 farmers’ market managers and 15 students were

awarded scholarships.

USDA Rural Development provided a $72,000 Rural Business Enterprise

Grant to help cover the costs. For more information about the conference,

visit: http://www.californiafarmconference. The 2008 California Farm

Conference will be held Feb. 24-26 in Visalia, Calif. ■

36 July/August 2007 / Rural Cooperatives
success in raising the communications

program at her co-op to a new level

since joining it in 2001. She serves as

editor of her co-op’s magazine and

newsletter, is responsible for special

event planning, advertising, media

relations, Web site maintenance,

photography and a variety of other

marketing and communication projects.

Ditsch, who just assumed the CCA

presidency, was called “one of the

nation’s most creative, talented and

detailed communicators.” She

“consistently demonstrates the seven

principles of cooperatives in all that she

does. Because her work always displays

a high level of professionalism, many

other purchasing co-ops borrow her

talent and follow her lead.”

H.E. Klinefelter, who died in 1957,

was one of CCA’s founders and an

employee of what today is MFA Inc.

Michael Graznak was a talented

communicator with Farmland

Industries. He died at age 51 of a heart

attack while on an assignment for the

co-op. 

Other top awards

CCA awarded its other top honors

to:

• Photographer of the Year — David

Lundquist of CHS Inc./Land

O’Lakes;

• Publication of the Year — Sara

Dorman of West Central

Cooperative;

• Special Projects/Programs, Best of

Class — Morriah Morris of the

Wisconsin Milk Marketing Board;

• Writer of the Year— Dan Campbell,

editor of USDA’s Rural Cooperatives

magazine.

Other awards won by Rural

Cooperatives staff or contributors

included: Anne Todd, first place

featurette for an article about a co-op

for housecleaners; Catherine Merlo,

first place serious/investigative feature

for “Left Behind,” about grain co-ops

that have lost business due to biofuels

development; Dan Campbell, second

place for serious/investigative features

for “The Natural,” about a natural beef

cooperative, and third place in the

cooperative education category for an

article on the 80th anniversary of the

Cooperative Marketing Act; Assistant

Editor Stephen Thompson, third place

in the news category for coverage of a

renewable energy conference. The

magazine was awarded third place for

best overall use of photos in a

publication.

■

Top Co-op Communicators 

continued from page 29

Minn., has studied the possibility of using glycerin as a fuel

or fuel supplement. One study tested glycerin in wood pellets

fueling a wood-burning stove. But analysis show no real

significant improvement with the glycerin mixture. 

Animal feed

AURI also works with Minnesota biodiesel producer

FUMPA Biofuels to combine feather meal and glycerin for

use in beef and dairy diets. Because glycerin produced at the

plant is about 85 percent pure, pH neutral and free of soaps

and methanol, FUMPA has a unique product opportunity

and is able to capitalize on the synergy between its biodiesel

and animal feed divisions.

FUMPA has developed an animal feed consisting of a

blend of Central Bi Products' hydrolyzed feather meal with

glycerin. Gro Mor Hi-Torque, as the product is branded, was

developed in part through the Agricultural Utilization

Research Institute's (AURI) co-product utilization lab in

Waseca, Minn., where AURI developed a method for making

pellets from the mixture. 

Various blends of glycerin and feather meal were tested to

develop a high-density feed with pellet durability greater than

95 percent, making it ideal for high-volume transportation

and extending the product’s shelf life.

Poultry feed

A more recent animal feed trial using glycerin has received

national attention. Researchers at the University of Arkansas’

Center of Excellence for Poultry Science recently studied

glycerin as a dietary supplement in growing broiler chickens.

Although strictly preliminary, the study showed that as much

as 10 percent glycerin could be fed to chicks up to 16 days of

age in battery brooders. Battery brooders are brooding boxes

with wire floors stacked on top of each other to conserve

space. 

A 5-percent glycerin inclusion in pelleted feed showed no

adverse effect on bodyweight, feed intake, feed conversion or

mortality. However, 10-percent glycerin inclusion reduced

body weight due to reduced feed-flow rate. 

A second study will determine the effects of a 2- to 2.5-

percent glycerin inclusion to more accurately represent realworld market conditions. The typical poultry operation mixes

4,000 tons of feed per week and would require a commercialscale biodiesel plant to have enough glycerin for even a 1-

percent inclusion. ■

Biodiesel Glycerin Glut

continued from page 32

Rural Cooperatives / July/August 2007 37

Marion and has additional facilities in

Freeman and Dimock. Its services

include agronomy, grain and feed. 

Fremar has developed one of the

largest producer-owned ethanol projects

in South Dakota. Construction on

Millennium Ethanol, a 100-milliongallon ethanol plant, is expected to be

completed by the end of 2007. US

BioEnergy has announced a plan to

acquire the plant.

■
38 July/August 2007 / Rural Cooperatives

50 Years Ago...

From the July & August 1957 issues of News for Farmer Cooperatives

Concentrated fresh milk stirs far-flung markets

Fresh concentrated milk in one-third quarts has aroused

interest from coast to coast, and as far away as Central and

South America. The Pure Milk Association (PMA), Chicago,

Ill., began selling the milk in February. Almost as soon as the

milk hit the market, newspapers began carrying stories about

it. Altogether, 18 weekly and nine daily newspapers, including

the Wall Street Journal, featured coverage about the milk.

Radio and television stations also broadcast the event.

In six weeks, PMA’s wholesale distribution of the milk

increased about 30 percent over

the first two weeks’ average. About

100 retail food stores in Southeast

Wisconsin are on the list to buy

the concentrate. Later the co-op

will expand into new areas in

southern Wisconsin and in Illinois,

and may look into export markets. 

PMA’s Kansasville, Wis.,

plant makes, packages and stores

the concentrated fresh milk. The

plant also makes 93-score butter,

skim milk powder and ice cream

mix. It receives both can and bulk farm milk. The plant is

adding processing equipment to ensure uniform milk product

quality. To satisfy requests of many grocers and consumers,

the co-op may increase the size of the milk container to a

one-quart paper carton.

Women’s co-op market celebrates 25th year (cover article)

The silver anniversary of the Montgomery Farm Women’s

Cooperative Market, Bethesda, Md., drew about 2,000 visitors

from Washington, D.C., and nearby areas in late May. Among

those present were some of the pioneers whose hard work and

clear vision in the early days helped get the market started.

This women’s market, set in the heart of suburban

Bethesda, has long given its farm women ready cash for their

products: home baked bread, beans, hams, fresh eggs and

poultry, home canned fruits and vegetables, and crafts. The

market, open Wednesdays and Saturdays, typically sells about

$3,000 of farm-produced food on a Saturday. 

“From tent to tent in 25

years,” smiled one co-op member,

thinking of the day the market first

started with women selling

products from their own farm

kitchens in a tent. Now, with their

own building on a valuable piece

of land, they again put up a tent

on the same site – but this time to

serve punch, coffee and cookies to

visitors who came to help them

celebrate their birthday.

The market now has 60

active sellers, many of them selling on the same spot for many

years. Nellie C. Hargett, one of the earliest members, joined

in 1933 and has since missed fewer than 10 market days, and

only then because of illness in the family.

30 Years Ago...

From the July & August 1977 issues of Farmer Cooperatives

Oregon co-op using shrimp, crab shells as fertilizer

Twenty farmers have formed the first cooperative in

Oregon to use shrimp and crab shells as fertilizer. At the same

time, the cooperative is resolving an ecological problem for

the Newport seafood processing industry.

The cooperative, Coastal Farmers Cooperative, has

contracted to remove shells from two of the half-dozen

seafood processors in Yaquina Bay.

The co-op expects to use 1,500 to

3,000 tons of shells annually from

the two contracts.

The co-op pays a refuse

collector to haul and dump the

shells onto farms. The member

farmers then spread the shells over

their pastures and fields and plow

them into the ground to

decompose. Preliminary testing

P A GE FROM THE PAST

From the archives of Rural Cooperatives

and its predecessor magazines
Rural Cooperatives / July/August 2007 39

indicates a ton of shells provides 28 pounds of nitrogen, 10

pounds of phosphorous and 160 pounds of calcium.

Paul Keady, a cattle producer and president of the

cooperative, says he would rather use the shells than a

commercial fertilizer. He said the cost is slightly less and the

shells have the added benefit of promoting soil bacteria that

release nitrogen and other nutrients from sterile coastal soils.

Seafood processors have been placed under orders by the

state’s Department of Environmental Quality to stop dumping

shells into water. Keady explains, “The processors pay us $6 a

ton to haul away their shells and we sell the shells for the

same amount.” The cooperative then pays the hauling costs.

Global co-op collaboration needed 

More experiments in international collaboration between

cooperatives are needed, according to a committee of the

International Federation of

Agricultural Producers (IFAP).

The Standing Committee on

Agricultural Cooperation of IFAP

took this position after voicing

concern for farmers’ interests in

the face of growing multinational

agrifood companies.

“Since 1960, there has been a

substantial acceleration in the

multinational character of

companies both upstream and

downstream,” the committee wrote. “Upstream concentration

is particularly strong and cooperatives are very weak in the

fertilizer industry, in farm machinery and in feeds at the

production stage. Downstream it would seem that

multinational companies currently supply 40 percent of

processed food products at the world level.”

IFAP is a federation of agricultural cooperative

organizations that are representative of the primary producers

within a country.

10 Years Ago...

From the July/August 1997 issue of Rural Cooperatives

Co-op involvement in ethanol industry grows despite

uncertainty

Over the past decade, the production of energy from

renewable resources has commanded considerable discussion

and excitement. Various programs at the state and federal level

have provided subsidies to start businesses in this industry.

Simultaneously, technological advances have lowered

production costs and the promise of economically viable

production continues to be “just around the corner.”

Since the early 1970s, many farm groups, including farmer

cooperatives, have been studying the economic possibilities of

producing ethanol, methane and

oil/fat-based fuels. A number of

representative organizations have

been formed to encourage the use

of “renewable fuels” and to

promote policies that would

provide an economic climate

suitable for the industry’s growth.

Currently, a number of new

ethanol refining facilities are in

operation, under construction or in

the planning stage. They offer great

potential to add economic value to corn and other feedstocks

through the production and marketing of fuel ethanol.

Despite the general enthusiasm for renewable energy from

the heartland, loan analysts from several banks for

cooperatives remain cautious. For example, the St. Paul Bank

for Cooperatives, which has been assessing the viability of

ethanol projects for more than 15 years, has chosen to finance

very few. Government tax credits and exhaust emission

regulations, among others, are major areas of concern to the

emerging ethanol industry.

The sunsetting of the federal excise tax reimbursement in

the year 2000 creates an aura of uncertainty around the

industry and especially any new fuel ethanol production

venture. Even though it is a subsidized industry still in its

infancy, ethanol has passed some significant milestones in the

U.S. fuel marketplace. Recent recognition of ethanol and

ethyl-tertiary butyl ether (ETBE) as high quality fuel additives

capable of delivering significant environmental, economic and

energy benefits to the consumer has spurred industry

production to record levels.

Co-ops are major players in providing energy products for

farm production, having a 41-percent market share in 1993.

That year, more than 2,500 cooperatives sold $5.2 billion of

energy products to rural America. Around 29 percent of the

gasoline sold by cooperatives contained ethanol.

To date, 11 farmer-owned ethanol production facilities are

in operation, and 14 are in the planning stages. When

completed, these plants are expected to comprise 38 percent

of the ethanol production capacity in the United States.

Thousands of farmers have collectively invested more than $1

billion to build ethanol facilities. Many thousands more co-op

members already produce feedstocks that can be used for

ethanol production.

Although the economic landscape of this industry is fraught

with uncertainty, profit opportunities may still exist given the

right set of circumstances of low corn prices and higher

ethanol and distillers dried grain prices.

■
40 July/August 2007 / Rural Cooperatives

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