R

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ral COOPERATIVES COOPERATIVES

USDA / Rural Development March/April 2007

Cotton Comes

to Kansas

page 4
Editor’s note: This guest commentary was

contributed by Jean-Mari Peltier, president

and CEO of the National Council of Farmer

Cooperatives, a national association

representing America’s farmer cooperatives. 

All cooperatives should be applauding

the U.S. Senate’s recent passage of a

resolution (S. Con. Res. 119) supporting

the right of America’s 2 million farmers

and ranchers to join together to form

cooperatives which ensure farmer

ownership in the food and agriculture

distribution chain. This Senate action is a

strong vote for farmers controlling their

financial futures. It should be especially

noted that the Senate resolution also emphasizes the role of

farmers and cooperatives in helping to meet the nation’s

energy needs. 

As consolidation occurs elsewhere in the U.S. economy,

anti-farmer interests may seek to weaken the structure of

agricultural cooperatives through administrative or legislative

means. Senate passage of this measure is a strong message in

opposition to any such action. 

Deserving special appreciation for introducing this

resolution and ensuring that it received strong, bipartisan

support are the co-chairs of the Congressional Farmer

Cooperative Caucus: Senator Blanche Lincoln of Arkansas

and Senator Larry Craig of Idaho. In the Senate Agriculture

Committee, Senators Saxby Chambliss of Georgia and Tom

Harkin of Iowa also provided strong support. 

Farmer cooperatives offer the best opportunity for America

to realize the farmer-focused ideal of an enduring, competitive

agricultural policy. 

Farmer cooperatives help farmers and ranchers improve

their income from the marketplace; meet our nation’s food,

fiber, feed and fuel needs; and spur economic growth across

rural America. In passing this resolution, the United States

Senate has reaffirmed that cooperatives are more important

than ever in today’s agricultural economy. Even so, farmers

must continue in their efforts to educate key policy makers on

the history and importance of farmer cooperatives. 

I’ll use my remaining space to allow the Senate Resolution

to speak for itself with the following excerpt. You can read the

complete resolution at:

www.http://tinyurl.com/2qruxj. I urge coops to consider reprinting it in their

publications or posting it on their Web

sites. 

“...Whereas farmer- and rancherowned cooperatives play an important role in

helping farmers and ranchers improve their

income from the marketplace, manage their

risk, meet their credit and other input needs

and compete more effectively in a rapidly

changing global economy; 

Whereas farmer- and rancher-owned

cooperatives also play an important role in

providing consumers in the United States and

abroad with a dependable supply of safe, affordable, high-quality

food, fiber and related products; 

Whereas farmer- and rancher-owned cooperatives also help meet

the energy needs of the United States, including through the

production and marketing of renewable fuels such as ethanol and

biodiesel; 

Whereas there are nearly 3,000 farmer- and rancher-owned

cooperatives located throughout the United States with a combined

membership representing a majority of the nearly 2 million farmers

and ranchers; and 

Whereas farmer- and rancher-owned cooperatives also contribute

significantly to the economic well-being of rural America, as well as

the overall economy, including accounting for as many as 250,000

jobs; 

Now, therefore, be it Resolved by the Senate (the House of

Representatives concurring), that it is the Sense of the Congress that

public policy should continue to protect and strengthen the ability of

farmers and ranchers to join together in cooperative self-help efforts:

(1) to improve their income from the marketplace and their

economic well-being;

(2) to capitalize on new market opportunities; and

(3) to help meet the food and fiber needs of consumers, provide for

increased energy production, promote rural development, maintain

and create needed jobs, and contribute to a growing United States

economy.”

— Jean-Mari Peltier, President

National Council of Farmer Cooperatives ■

COMMENTARY

Senate vote sends strong message supporting farmer cooperatives

"In passing this

resolution, the United

States Senate has

reaffirmed that

cooperatives are more

important than ever in

today's agricultural

economy."

2 March/April 2007 / Rural Cooperatives
Rural Cooperatives / March/April 2007 3

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Mike Johanns, Secretary of Agriculture

Thomas C. Dorr, Under Secretary,

USDA Rural Development

Jack Gleason, Administrator, 

Rural Business-Cooperative Programs

Dan Campbell, Editor

Vision Integrated Marketing/KOTA, Design

Have a cooperative-related question?

Call (202) 720-6483, or

Fax (202) 720-4641

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R

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ral COOPERATIVES COOPERATIVES

March/April 2007 Volume 74 Number 2

p. 4

p. 8

p. 20

p. 22

On the Cover:

The nation’s Cotton Belt has shifted northward, as depicted on a

historic map of the Great Plains region, with Kansas represented by

a cotton harvest scene. The Southern Kansas Cotton Growers Co-op

is helping cotton take root in Kansas. See page 4. Photo courtesy

Plains Cotton Co-op Assoc.; Graphic by Stephen Thompson

FEATURES 

4 Above the Belt

Cotton Belt shifts northward into state known for fields of grain

By Stephen Thompson

8 The Big Chill

Sunkist growers scramble to save fruit; co-op adjusts marketing strategy

By Patricia Miller

12 Branding for Success

Trademark law, product certifications important to many co-ops

By Bruce Reynolds

20 Miracle on the Bayou

How one Louisiana parish is resurfacing from disaster

By Jane Livingston

22 Winds of Change 

China looks to co-ops to help farmers duplicate success of industry

By John Dunn

24 Housecleaning co-op members see income,

benefits rise 

By Anne Todd

25 Farmer co-ops report record net income

DEPARTMENTS

2 COMMENTARY

16 IN THE SPOTLIGHT

18 CO-OP DEVELOPMENT ACTION

26 NEWSLINE

34 PAGE FROM THE PAST
4 March/April 2007 / Rural Cooperatives

By Stephen Thompson,

Assistant Editor 

ost people don’t think of Kansas as a cotton

state, but for a growing number of farmers

there, the crop that most people associate

with the South (or California’s southern

Central Valley) has become a promising new

source of revenue on the plains. 

The Southern Kansas Cotton Growers Cooperative is

promoting so-called “stripper cotton” as a high-value

alternative to other crops. It is rotated with wheat, the area’s

primary crop. The advantage of cotton is significant: it

thrives in the dry conditions that make growing non-irrigated

corn and soybeans a risky proposition in the western areas of

the state. 

On irrigated land, this cotton uses about a third of the

water required for corn. Depending on market conditions, it

usually also offers substantially better returns per acre than

other crops.

Boll weevil-free zone

Kansas has an important advantage over the South when it

comes to growing cotton: the boll weevil, scourge of

Southern growers for generations, doesn’t like the state’s cold

winters. There are records of cotton being grown in the state

over 100 years ago.

The cooperative provides ginning services – processing the

crop to make it market ready – and offers technical assistance

in growing and harvesting the crop. Members also belong to

Plains Cotton Cooperative Association, a co-op based in

Lubbock, Texas, which markets their cotton.

M

Above the Belt

Cotton Belt shifts north into Kansas’ amber fields of grain 
Bob Miller, president of Southern Kansas Cotton Growers

Co-op, says that he got interested in growing the crop about

10 years ago “when I watched one of my neighbors make

more money off of 160 acres than I was making off of 160

acres of sorghum.” He started with 320 acres, and now farms

as many as 1,900 acres of cotton each year.

Southern Kansas Cotton was founded 10 years ago by

several farmers in the Winfield area, about 30 miles southeast

of Wichita and just north of the Oklahoma state line. Several

farmers had been experimenting with the crop, but found

that transporting their cotton more than 100 miles to the

nearest gin was imposing heavy costs. 

The growers got together and purchased a used cotton gin

with the help of a Small Business Administration loan. They

used their wheat trucks to move the gin in pieces. 

The first year of operation was a rocky road. Lacking

experienced in running or maintaining the plant, breakdowns

and other snags prevented completion of processing a small

harvest until almost six months after harvest.

“Cotton culture” missing

The cotton pioneers had other problems too.

Traditionally, cotton is not an easy crop to grow. It requires

careful management and specialized expertise. Like any crop,

it also needs a local support infrastructure of processors,

Rural Cooperatives / March/April 2007 5

USDA Rural Development has helped fund the purchase of

special trucks and related equipment to help fuel the cotton

industry in Kansas. The cotton fields of co-op member Don

Drouhard (above) lead virtually to the doorstep of a Catholic

church in Danville, Kan. Photos by Lynette Cockerell and John

Johnson, courtesy Plains Cotton Co-op Assoc.
storage facilities, buyers and suppliers. 

The lack of a “cotton culture” in Kansas meant that none

of these were locally available. It also meant that there was

nobody close by to depend on for advice. 

“You couldn’t ask people in town; you couldn’t ask the

county extension agent,” says Miller. The necessary farm

machinery wasn’t locally available either, nor were the parts

or expertise to maintain it. 

The oddest hurdle, perhaps, was the hostility of some of

the locals. “Some people just don’t like the idea,” says Miller.

“They say Kansas is wheat-growing country.” That attitude

has led to problems for some growers leasing from

landowners who forbid growing cotton on their property.

In 1996, the Freedom to Farm Act allowed grain farmers

more flexibility to grow alternative crops, boosting local

interest in cotton. By 1999, the co-op realized it needed

outside expertise. Production was up, but the operation

continued to have problems getting the cotton processed in

the expected time, and two new gins built nearby threatened

to leave it without customers unless the plant could be

brought up to speed.

Just in time for harvest, the co-op hired an experienced

manager, Gene Latham, from the cotton country of West

Texas. Educated as an entomologist, Latham had spent his

career working for cotton co-ops as a crop consultant and

manager. 

“He knew what to do and who to call,” says Miller. 

Timely ginning essential

Even before he arrived in Winfield, Latham hired a crew,

including a gin supervisor. 

“Cotton is worthless until you gin it,” Latham says. “And

it needs to be ginned in a timely fashion so the farmers can

get their money and pay their bills.” The problem was that

the co-op members just didn’t have the background to

operate and maintain the gin. 

“They were wheat farmers,`” Latham says, who weren’t

aware that a gin needs overhauling after every season. As a

result, the machinery was in dire need of a rebuild. 

The crew spent 28 days going over every part of the gin,

replacing and refurbishing where needed to bring it up to

specifications. Latham, meanwhile, was out in the field

visiting farmers, convincing them that Southern Kansas

would be able to process their crop. 

When the ginning began, the crew worked the customary

12-hour days, seven days a week. “That’s part of the culture,”

Latham says. “You work until the job is done. This year

we’ve worked every day except for three days at Christmas.”

Local labor isn’t used to that kind of schedule, says

Latham, so the gin uses experienced labor from Texas. “Gin

people are used to working around the clock during the

ginning season and making good money.” 

Technical assistance is the other service provided by the

cooperative. Latham says it offers a complete consulting

program, at cost, that allows a local farmer to start growing

cotton with confidence. “We do soil sampling,

recommendations on tillage, weed control, insecticides –

everything they need,” he says. 

Steep learning curve

Latham says that local farmers, used to growing grain,

have a fairly steep learning curve at first. “They’re not used

to growing row crops,” he says. But after some years of

farming cotton, many farmers are now able to go it alone.

According to Latham, farmers with 41 percent of the cotton

acreage avail themselves of the co-op’s technical consulting

service.

New varieties of cotton make it much easier on the novice

grower. Keeping weeds down was a problem for the Kansas

growers because most cotton has a high sensitivity to weedcontrol chemicals. Further, chemical controls used in the

South don’t always work in Kansas. Roundup-Ready cotton,

which became available seven years ago, greatly simplifies

control of weeds.

Local farmers don’t have the specialized spraying

equipment needed to apply older types of herbicide on weeds

growing between rows without harming the cotton plants.

6 March/April 2007 / Rural Cooperatives
The original versions of Roundup-Ready cotton allowed

producers to spray their cotton fields only until the plants

began to develop fruit. After that, herbicide spraying would

prevent development. 

But the latest Roundup-Ready cotton varieties, called

“Flex,” are tolerant of approved weed-control chemicals at

any time until harvest. Miller calls Roundup-Ready cotton

“sort of cotton for dummies.” 

Cotton novices today also have many other advantages

over their predecessors. The development of a local “cotton

culture” is now well along. Equipment and supplies are now

readily available locally, and cotton infrastructure is growing. 

A number of farmers now offer custom-harvesting

services. The acreage of cotton farmed by members of the

cooperative has grown by a factor of 10, and the amount of

cotton ginned at Winfield has risen from 9,000 bales in 1999

to 28,000 projected for 2006. 

The co-op has even purchased a second gin 45 miles away

near the town of Anthony.

USDA provides financial boost

In 2006, the cooperative secured a $558,000 Rural

Economic Development Loan from USDA Rural

Development, administered by the Sumner-Cowley Electrical

cooperative, to update and expand its productive capability.

The funds were used to purchase specialized trucks and

equipment, helping to add 50 bales a day in capacity.

Despite cotton’s rapid growth in Kansas, the crop still has

a lot of room for expansion there. Experts estimate that the

state could easily farm 200,000 acres of cotton a year, more

than twice the current acreage. Latham thinks that figure is

conservative. Plains Cotton Cooperative Association, the

marketing co-op, opened a cotton warehouse near Liberal,

Kan., in 2004. 

Latham is very optimistic about the co-op’s future. 

“We haven’t grown as quickly as we might have this year

because of record-high grain prices,” he says. But as water

tables are depleted in the western part of the state, cotton

will become more important there by necessity, he thinks. In

the Winfield area, cotton just outperforms other crops. “Our

biggest problem,” he says, “is going to be keeping up with

demand for our services.” ■

Rural Cooperatives / March/April 2007 7

Clockwise from left: Gene Latham, who provides

customer and consulting service for the co-op,

outside the gin office in Winfield, Kan. A Kansas

cotton field begins to bloom; Dr. Rex Friesen, an

entomologist and consultant for the co-op, does a

field inspection; ripe bolls ready for harvest.
By Patricia Miller

n Jan. 11, Canada

exported a most

unwelcome product to the

United States: a wave of

Arctic air that rolled

down the West Coast and settled on the

citrus groves of California and Arizona.

“Six weeks before the freeze, the

meteorologists were warning us that

one was on the radar,” says Gerald

Denni, whose Golden Valley Citrus

growing and packing operation in the

San Joaquin Valley covers about 4,000

acres of citrus. “Within two weeks, they

were getting more precise, and within

five days they were saying, ‘Watch out,

it’s coming!’”

That lead time sent growers into

overdrive, harvesting as much of the

orange, lemon and grapefruit crop as

there was room for in the packing

houses. It gave them time to make sure

8 March/April 2007 / Rural Cooperatives

O

Sunkist growers scramble to save fruit while co-op adjusts marketing strategy

The Big Chill
their equipment was ready to protect

the groves and to keep trees and fruit as

warm as possible. That’s done two ways:

with wind and with water.

Defense of wind, water

As the temperatures drop, the warm

air rises. “If there’s a breeze, you can

bring the temperature up three to five

degrees,” says Denni, a member of

Sunkist Growers. Above the groves,

wind machines — giant fans — create

that breeze.

Below the trees, growers turn on

their irrigation systems and begin

misting the trees and fruit. It’s not the

ice coating that protects them, but the

heat that’s released as the mist changes

from liquid to solid and is captured

under the canopy of leaves. 

Despite the preparation, despite the

wind machines, despite the misting,

time was against the growers. For three

nights, temperatures tumbled into the

20s and teens for long, frigid hours at

time, spelling disaster for the fruit

remaining on the trees. It also meant

disaster for the growers, packinghouses,

workers and communities that depend

on agriculture.

“The duration of the freeze did the

most damage,” says Henry Vega,

another Sunkist member who owns

about 65 acres of lemon groves. “The

temperatures stayed low for hours and

hours.”

Assessing the damage

Within days, some of the most

severe damage was obvious: brown

leaves, frozen fruit falling from the

trees. “But it’s very hard to immediately

detect frost damage in citrus fruit,”

Denni says. “The juice sacs freeze and

burst and form hollow spaces. If it’s not

too bad, the fruit may heal itself and fill

those in. If not, the juice evaporates,

leaving dry pockets. That can take four

to six weeks or more.”

So the period of wait-and-see began.

Wait and see how badly the fruit was

damaged. Wait and see how much

young tree stock was lost. Wait and see

how their cooperative’s efforts will

protect markets. And wait and see the

lasting impact on their communities.

When the freeze hit, the state of

California estimated that about $960

million in citrus was still on the trees

and that 75 percent of it may have been

lost. Governor Arnold Schwarzenegger,

in his request for federal disaster aid,

said the losses to agriculture could

exceed $1 billion — more than caused

by either the freezes of 1990-91 and

1998-99. Unlike Florida’s crop, the bulk

of California’s citrus is destined for the

retail fresh fruit market: the navel,

blood and cara cara oranges, pummelos,

tangerines, mineolas and lemons you

find at the supermarket.

Arizona’s citrus crop, while smaller

than California’s, is still worth more

than $38.5 million annually. Early

estimates predicted that 75 percent to

90 percent of the unpicked lemons,

grapefruit, tangelos and oranges in

Yuma County had been destroyed by

the freezing temperatures. At the time

of the freeze, 25 percent of the lemons

and 75 percent of other citrus were still

on the trees. 

Denni says he usually sees 1.2

million cartons of marketable fruit from

his operation from January through

June. But, after assessing the damage

grove by grove, believes that only about

30 percent can be salvaged.

“A month after the freeze, we started

harvesting in the blocks with low

damage, but the majority of the fruit

will have to be separated,” he says.

“Because there was prior warning,”

Sunkist Chairman Nick Bozick explains,

“packinghouses worked around the

clock harvesting and packing as much

fruit as possible. And, as time passes and

we are able to better evaluate the freeze

effects, we are finding that more fruit

escaped severe damage than was at first

thought possible.”

Faced with a funding shortfall

because of the reduced 2007 crop,

Sunkist management immediately

focused on downsizing operations and

reducing expenses while preserving the

cooperative’s fundamental capabilities.

Despite the significant disruption to

overall business operations, Sunkist says

it “does not expect the freeze to have a

Rural Cooperatives / March/April 2007 9

Photos by Shirley Kirkpatrick,

courtesy Sunkist Growers
materially adverse impact on its

financial position.”

“Our attention,” Bozick says, “is now

focused on aggressively selling the fruit

that remains, on maximizing returns to

growers on the remaining fruit and on

meeting the needs of our customers.”

Ripple effect

Vega breathed a sigh of relief when

he made the post-freeze inspection of

his lemon grove in Santa Paula, which

lies near the coast. A persistent wind

from the sea, along with extensive

irrigation in the days before the freeze,

had protected the fruit and trees from

much damage.

“We fared very, very well,” he says.

Where there was damage, it was usually

on the southwest side of the tree and

where he began seeing lemons develop

the tell-tale bronzy-yellow of frost

damage. He expects that some of his

crop will heal itself, although it will be

downgraded for quality.

But while his fruit fared well, his

workers didn’t. As part of his business,

Vega provides workers to growers and

packers, not only of citrus, but of other

fruits and vegetables. 

“Normally, we’d be employing 1,000

workers right now. But only about 300

to 400 are working, and we’re in a

holding pattern,” he says. “A lot of our

workers live paycheck to paycheck and

are scrambling to find other types of

work. So first we have the immediate

shock of the freeze and then the longterm effect from the loss of these

workers in agriculture.”

Denni agrees. “This is the time when

a lot of our workers make their money

for the year,” he said when interviewed

in February. “They’re working 10 hours

a day, six days a week and collecting

overtime. Some of them have been with

us for more than 20 years, and we’re

doing everything we can to keep

them.”

California and Arizona were bracing

for this ripple effect. With less fruit to

pick, fewer workers are needed in the

groves and packing houses. Fewer

workers mean fewer paychecks being

spent in the communities. In California,

more than 20 counties have been

declared federal disaster areas and the

state is also seeking aid for displaced

workers. Tulare County in the San

Joaquin Valley estimates the freeze

could remove $800 million from its

economy.

10 March/April 2007 / Rural Cooperatives

For years, the tried-and-true way to separate damaged

citrus from undamaged fruit was to put it in water. The frostdamaged pieces, which are lighter due to the loss of juice,

would float to the top. However, damaged fruit sometimes

became trapped under the good fruit and would find its way

into the retail market.

Now grower Gerald Denni uses a mass-to-density ratio to

separate the damaged fruit in his packinghouse. The system

can handle 13 pieces of fruit per second per inspection lane,

Black lights, breathalyzers help detect damage

and he has 10 lanes, enabling him to check 130 oranges

per second. 

“We take 30 digital images of each orange and then it’s

weighed,” he says. “It’s very accurate, which is a benefit

to consumers because they’ll get a better product.”

But new techniques using readily available tools are

being developed to detect frost-damaged fruit in the

groves and packinghouse. The tools? Black lights and

portable breathalyzers. 

A task force of researchers from the Citrus Research

Board and University of California Cooperative Extension

Service has discovered that shining black lights on the fruit

reveals tiny, bright-yellow dots on the peel if there’s been

frost damage. The more dots, the greater the damage. 

Here’s how the citrus version of the breathalyzer test

works. The fruit is placed in a plastic bag and sealed for at

least 15 minutes. The bag is then pricked with a hypodermic needle attached to a breathalyzer, which measures the

ethanol escaping from the fruit. If there’s more than .01 milligrams of ethanol, the fruit is damaged. The higher the

reading, the more damage.

On the horizon is magnetic resonance imaging, which

Jim Thompson of the UC Extension Service says will make

all current tests for winnowing out frost-damaged fruit

obsolete.

California Governor Arnold

Schwarzenegger tours the orchard of

Keith Nilmeler (left) with California Dept.

of Food and Ag Secretary A.G. Kawamura.
Rural Cooperatives / March/April 2007 11

Co-op response

As Sunkist members, Vega and

Denni are also concerned about

protecting their markets and their

brand, which is a symbol of citrus

quality for consumers.

“I’m looking for discipline from the

growers and packers not to put

damaged fruit on the market,” Vega

says. “If consumers are burned with

poor quality, studies show it takes them

60 days to buy that fruit again. I’m also

looking for my co-op to help manage

the supply.”

Sunkist estimates that volume for the

fresh market may be down nearly 50

percent.

“We still have fruit, just not as

much,” says Claire Smith,

communications director for Sunkist.

She adds that the cooperative has

beefed up its rigorous inspection

process. “As a branded product, we

have to make sure no damaged fruit has

a Sunkist sticker on it.”

To supply its domestic and

international customers, Smith says

Sunkist is using the fruit it has on hand,

implementing its global sourcing

program and outsourcing some supply,

although the cooperative is very aware

that “any time there’s a dip in supply,

other companies will try to fill the void. 

“We’re radically changing our

marketing plan and switching what

advertising we can from oranges to

lemons, because we have more of them.

Because Sunkist’s marketing efforts are

funded by a per-carton assessment, our

budgets are reduced. So we’re cutting

costs and not implementing some of

the projects we had planned.”

Bozick adds, “We’re also working

hard to get disaster relief for the

growers, shippers, harvesters and

packinghouse employees who have

been severely affected.”

Despite the losses he knows he’ll

incur, Denni hasn’t let the freeze of ’07

diminish his passion for the citrus

industry. “I’m very optimistic by nature,”

he says. “And as a farmer — freeze,

drought, flood — it’s part of the territory.

We get knocked down and we pick

ourselves up. We’ll figure this out.” ■

Sunkist’s annual meeting Feb. 21 in Visalia, Calif., was a bittersweet occasion

for the 6,000-member citrus co-op. Sweet, because 2006 was a record-breaking

year for the 113-year-old co-op, which notched $1.1 billion in sales for the past

year. Bitter, because the month before the meeting growers lost as much as half

of their 2007 crop to a killer freeze.

In 2006, Sunkist’s operating structure was realigned to provide a more integrated approach to its operations and to better use its resources, said President

and CEO Tim Lindgren. “This realignment improves the coordination of our core

domestic and export business with our newer global-sourcing and fresh-cut

programs. It also complements the ways in which Sunkist products — both

fresh and licensed — are presented and helps to increase the value of the

Sunkist brand.”

Last year’s navel orange crop was exceedingly large — 90 million cartons

industry-wide, although fruit size was small, as is typical with a big crop. Sunkist

growers enjoyed the best

Valencia orange season in a

decade, as co-op marketers

worked to maximize revenue on a short crop.

Despite intense international competition, lemon revenue set an all-time record. 

Lindgren credited “excellent collaboration” between

Sunkist’s citrus juice and oil

unit and its fresh fruit sales

division for creating a price

floor under the juice market

and helping to boost peracre returns. 

Grapefruit returns were

also excellent, and Sunkist had record revenue of $42 million for seasonal specialties, a 62-percent increase in just two years. These citrus varieties —

including specialty oranges, specialty grapefruits, tangerines and tangelos —

are an expanding part of Sunkist’s business. 

In 2006, Sunkist Global LLC produced the best offshore selling season since

its inception in 2003 as a citrus global-sourcing program for the co-op. Sunkist

Global concentrated on fruit sourced from Australia and South Africa, as well as

limes from Mexico. Some domestically sourced fruit — including grapefruit from

Texas and non-member clementines — are also handled under the global program. Much of the globally sourced fruit is sold in Southeast Asian markets,

although some is marketed in the United States and Canada.

Sunkist marketed more than 600 different products in more than 50 countries

on five continents. 

Worldwide sales of Sunkist-licensed products approached $1.4 billion in

2006. Sunkist licensees introduced 46 new products in 2006.

Record-breaking sales in ‘06 to help

Sunkist weather severe crop freeze

Sunkist recorded $1.1 billion in sales for 2006.
12 March/April 2007 / Rural Cooperatives

By Bruce J. Reynolds, Ag Economist

USDA Rural Development

bruce.reynolds@usda.gov

randing is a way for businesses to

differentiate their products and services and

establish a reputation that will build

customer loyalty. In 1990, 93 fruit and

vegetable cooperatives owned 482 brands,

with 443 as registered trademarks. The Patent and

Trademark Office (PTO) currently has 255 active trademarks

for fruit and vegetable products owned by businesses with the

term “cooperative” in their corporate name. 

So, even without the benefit of a branding survey more

recent than the one USDA undertook in 1990, a very limited

Internet search at the PTO Web site suggests many

cooperative brands are actively being used in agriculture. 

Brands vary as to the type of information conveyed and

the audiences targeted. For example, some brands are used by

grower associations in the wholesale trade, while others are

widely advertised and prominently used in consumer markets. 

Not every branding program needs to aim for national or

global fame. The resources required to establish famous

trademarks, such as Sunkist, are out of reach for many groups

of growers. Yet, branding can be accomplished with a smaller,

but still, useful scope, involving relatively low-cost steps that

capture value for farm products.

Of course, several factors about a particular product will

influence branding feasibility or type of brand to develop. For

example, with some commodities that cooperatives sell in bulk

form, branding can be developed as an identity-preserved

program. Many co-ops brand services in addition to products,

which are often licensed to other cooperatives or businesses.

AMS Certifications

A good starting point for differentiating products is to

consider some of the inspection and certification

programs offered by USDA’s Agricultural Marketing

Service (AMS).

AMS marketing agreements provide inspections and

certification for agricultural product distributors who are

voluntary signatories of an agreement. By contrast, other

AMS inspection programs are compulsory, such as those in

marketing orders. Certified product attributes in a marketing

agreement may offer more opportunity for branded

differentiation to the extent that they are not mandatory for

B

Branding for Success

Trademark law, product certifications important to many cooperatives
all similar products in a specific market. 

Differentiating a product as “organic” is a significant

attribute. Consumer demand for organic food has rapidly

expanded, with AMS certification playing a critical role in

this expansion. Certification under the National Organic

Program is mandatory for products offered or advertised as

organic. In contrast to verifications of end-product standards,

the National Organic Program involves certifying adherence

to a specific set of production practices. 

AMS provides auditing in its Identity Preservation

Program, which producers and handlers can use to assure

customers of product origin. Identity preservation is useful

for many row and tree crops and livestock products. In the

fruit and vegetable sector, AMS provides Good Agricultural

Practices and Good Handling Practices Audit Verification

(GAP & GHP).

AMS auditing and certifying programs are a way for

growers to differentiate their products, and when combined

with cooperative marketing, members achieve critical mass

for gaining better market access. A brand can be linked to

certified quality attributes by applying either small stick-on

labels or stamp printing on bulk produce or printed on

packaged products. 

Trademarks

In the United States, trademarks are created by adoption

and use in connection with products and services. Federal

government registration of a trademark can assist an owner’s

effort to prevent others from using brands and logo designs

that are likely to create consumer confusion about which

companies are the source of particular products.

A trademark also gives a business more control in how

others may use its brand. While a brand can be developed

without registering it as a federal trademark, registration

protects its value and helps grow the goodwill of the business

associated with its brand. A registered trademark may

develop into a significant asset of the cooperative. 

To obtain a federal trademark, a brand must be used in

interstate commerce. However, a trademark used only in a

single state can also develop rights that apply in that

particular state. When a brand is only used in a relatively

small market area or is of interest to a select type of buyer,

such as a wholesale distributor, the likelihood of its being

copied or used without permission may seem remote. The

major concern in situations such as these, however, is not

unauthorized use, but rather the possibility of being

prevented from using the brand to enter new markets after

Rural Cooperatives / March/April 2007 13
14 March/April 2007 / Rural Cooperatives

spending years building a strong reputation in a single market

area. 

How could this happen? Common law only offers some

rights for brand owners in their traditional operating

markets. A competing brand with a similar name and design

used for related products may hold a federal trademark that

might be a basis for a ruling that could confine the

unregistered brand to its traditional market area.

Furthermore, the dividing lines between industries and the

types of products or services offered in consumer markets

changes rapidly. 

What seems at one time to be unrelated products or

services, or geographically separate

markets, may gradually become

integrated. For example, many farm

supply cooperatives are increasingly

serving the lawn and garden needs

of non-farm customers in remote suburbs of large cities,

which may bring them into competition with new and

different businesses. A plausible future scenario is new

competitors with service marks that could conflict with the

brands of a cooperative that would not have been in the same

market in an earlier period of time. 

Service Marks

The term “trademark” frequently refers to the brand

name of a product, but it is also a general term for other

types of branding. Trademark law includes branding of

services and product certifications that involve different

rights and regulations. These other types of trademarks also

relate to different business applications used by cooperatives. 

Branding a service is often similar to the naming of a

business, and many service marks are also the trade name of a

company or cooperative. Typically, when referring to a trade

name, the indicator of organizational form — such as Inc.,

Ltd., or LLC — distinguishes it from a service mark when

the same name is used. For example, a cooperative has the

trade name GROWMARK Inc., and GROWMARK is its

trademark for products and its service mark for “agricultural

cooperative services, namely, cooperative advertising and

marketing services and retail distributorships of agricultural

products.” 

Service marks are frequently used by federated

organizations. They can function as a collective membership

mark for members to use to indicate their membership in the

federation. In addition, a federation may develop a program

of services for its local members and have it registered under

a service mark to maintain control over its contents for the

membership. 

Service marks are also applied to many other business

structures or situations. Consider a co-op that wants to offer

its service program in a new market where much of the

customer base is non-member. The co-op may want to

contract with other businesses or co-ops for carrying out its

service program in the new locations. As part of such a

contract, it would need a registered mark to license the

service program to others. 

Certification Marks

Trademarks are also used for certification. Candidates for

this type of certification in agriculture are defined growing

Peanut growers in Virginia and North and South Carolina recently obtained a certification mark for peanuts

grown in the tri-state area, which have a high-quality reputation for taste and size. The logo for this certification

can be affixed to any package of peanuts or a product

with peanut ingredients grown in the tri-state region. Use

of the logo is handled by a licensing agreement with the

owner of the mark: the Peanut Growers Cooperative Marketing Association, headquartered in Franklin, Va. 

Peanut cooperatives have emphasized marketing since

the change in 2002 from USDA’s quota system to the commodity-loan program. Under the quota system, peanut

producers were guaranteed a price that could not be

readily increased by promotion and other marketing

strategies. The commodity loan program offers much less

support for peanut prices. Since 2002, peanut acres have

declined, especially in Virginia. 

Dell Cotton, the manager of the peanut cooperative,

noted that Virginia-Carolinas have long had a reputation

for growing great-tasting peanuts, but the impetus to distinguish the product with a certification mark was influenced by the recent emphasis on marketing. 

History of identifying qualities

In the early history of agricultural markets, farmers

delivered to local exchanges where merchants would

estimate the average quality of an individual’s lot. But they

would pay what was often called a “hog-round” price that

made no payment differentiation for qualities. The grading

of commodities was done for wholesale markets, but not

for farmers. Cooperatives were pioneers in implementing

commodity grading for farmers and promoting quality

recognition for member products. 

The federal government assumed a prominent role in

grading farm commodities in connection with the New

Deal Farm Programs in the 1930s. While cooperatives continued to promote payments for quality products, much of

their marketing programs were built around government

Certifying a reputation:

Virginia-Carolinas growers

brand their peanuts
Rural Cooperatives / March/April 2007 15

regions and product attributes created by following specific

agricultural methods that are not routine or standard practice

for an industry. The owner of a certification mark may

function as the certifier, who specifies the criteria for

products that can be labeled with the mark. The French have

a long history of using this type of marketing strategy, such as

Roquefort cheese or Champagne as examples.

Many U.S. agricultural groups have obtained federal

certifications, such as the mark for Vidalia onions. Recently,

the Peanut Growers Marketing Association has been granted

a certification mark for peanuts grown in the tri-state area of

Virginia, North Carolina and South Carolina. 

As an example of an agricultural practice, the California

Certified Organic Growers obtained a certification mark for

organic farming methods in 1990, which were related to

standards set by the California Organic Food Act of 1978. As

demand for organic foods expanded, there was a public policy

need for a single standard in the U.S. market. In 2002, the

National Organic Program established the only standard for

organic product certification in the United States.

Certification marks are often used for an exceptional or

special type of agricultural or food handling practice. AMS

inspections and certifications usually apply to standard

industry practices, as in the case of the development of an

industry standard for organic production procedures. 

Financing brand development

Growers can participate in AMS certification programs

that would distinguish their products from those supplied to

the market by non-participants. If dealers have a preference

for products with a particular certification, growers can take

advantage of such opportunity by identifying their products

with a brand.

Gaining a reputation with consumers usually involves

supporting a brand with advertising and promotion. There

are some federal and state government programs offering

assistance with promotion for special conditions, such as

export marketing. Also, USDA Rural Development’s ValueAdded Grant Program would be applicable for a marketing

program of adding value by improving quality and branding

the products (www.rurdev.usda.gov/rbs/coops/vadg.htm).

Co-branding is an effective way to gain access to the

distribution system of large food processing and packaging

firms. Many firms want to use products from farmer

cooperatives or from those that can certify a quality attribute.

The related article (left) about the peanut certification

describes a co-branding opportunity.

A program for branding agricultural products can be

implemented in several ways and with different objectives.

Aiming for an internationally famous brand is not the only

worthwhile objective. For many commodities branding is

often not a cost-effective strategy except when there are

opportunities for identity preservation or some form of

certification. Even if you only market products to wholesale

dealers or other distributors, branding may help build your

product’s reputation. 

The value added to a business by branding products and

services often increases over time. As consumer markets

evolve, and possibly move in the direction of customers

seeking more attributes that cooperatives can supply and

guarantee, branding will likely increase. ■

stabilization policies and coordinated

with USDA implementation to help

reduce the costs of commodity programs. 

Peanut and other cooperatives continue to play a role in administering the current

commodity loan programs while also exploring

new ways to promote member products.

Creating opportunity

Management and members of the Peanut Growers

Cooperative Marketing Association had anticipated that a

certification mark would be welcomed by local peanut

companies. The benefits of the mark caught on quickly

when one of the first calls came from Kellogg about using

the logo on its Nutri-Grain bar. Their new product has the

Virginia-Carolinas peanut logo on the packaging and displayed in Kellogg’s advertising campaigns. 

Co-branding is an example of a “win-win” situation. In

this case, Kellogg will inform consumers that its source of

peanut ingredients is a region with a reputation for excellent peanuts. For peanut growers in the tri-state region, cobranding with Kellogg will reinforce their quality reputation

and, quite likely, lead to new marketing opportunities. 

—Bruce J. Reynolds, USDA Ag Economist
16 March/April 2007 / Rural Cooperatives

ixie Watts Reaves, a national leader in

agriculture and cooperative education, joined

the faculty of Virginia Tech (VT) in 1993.

Her primary interests are in agribusiness

youth education, agribusiness product and

service marketing and the impacts of agricultural and

environmental policy on economic decision-making. 

Reaves’ youth-education efforts include working with the

Virginia Council of Farmer Cooperatives and the National

Council of Farmer Cooperatives to educate high school

students about agribusiness management. Her current

research focuses on the scholarship of teaching and learning,

including the benefits and costs of extracurricular activities

and the educational value of debates in a classroom setting.

How did you first become aware of, or start working

with, cooperatives?

As a child growing up on a hog and tobacco farm in

Southside Virginia, I was aware of cooperatives: my

electricity was provided by a cooperative and I knew that we

were members of our tobacco cooperative. But my deep

involvement with co-ops really began soon after I started my

career at Virginia Tech. 

The faculty member who had previously worked with the

Virginia Council of Farmer Cooperatives (VCFC) to sponsor

its annual youth conference needed to cut back on some of

his activities. As the newest person in the department, I was

an obvious person to ask to step in. My acceptance of that

invitation to work with VCFC was one of the most important

career decisions I ever made. We have forged a strong

partnership that has continued through the years. 

I remain actively involved in VCFC’s annual co-op

education youth conference. I serve as an advisor to its board

the research and education committee. VCFC supports my

students with scholarships, and its members provide them

with internships and hire them for full-time employment.

VCFC supported my effort to create a cooperatives course at

Virginia Tech, and I consider them a true partner in all of my

cooperative education endeavors.

Why is co-op education at the college level important?

Cooperatives touch many areas of our day-to-day lives,

often in ways that we are not even aware. From providing

services such as phone, electricity and cable, to the marketing

of raw or finished products, to the provision of housing or

child care or health care, cooperatives can, and do, make a

difference. There are many other ways cooperatives could

solve problems, but they are often not considered because not

enough people are knowledgeable of the cooperative model.

Today’s college students need to understand this. They will

be tomorrow’s employees, member-owners and board

members.

You also teach a course on the impact of cooperatives

on the human condition. What major points are made

in that class?

During end-of-semester evaluations, students often say

they had no idea of the widespread nature of co-ops in our

society prior to taking the co-ops course. When I created the

course on cooperatives, I wanted students to be aware of all

of the areas of our daily lives that are, or could be, impacted

by co-ops. We discuss both agricultural and non-agricultural

cooperatives, why they are formed, what unmet need they fill,

how they empower people, and how they help people help

themselves. This course is in our university’s core curriculum,

so it draws students from all colleges on campus and brings a

diverse perspective to our classroom discussions.

What are typical career goals for your students, and are

many of them looking at co-ops as future employers?

Many of our students want to enter the agricultural

finance sector or the input-supply sector after graduation,

while others want to go into production agriculture.

Therefore, cooperatives are an ideal employer for VT ag

economics students, and many are currently employed with

cooperatives in different states across the nation.

You were largely responsible for re-establishing the National

Institute on Cooperative Education (NICE) Conference as a

smaller meeting aimed at secondary-level students. How is

that effort going?

When the National Council of Farmer Cooperatives

(NCFC) decided to discontinue NICE, the state-level

councils took action. Prior to NICE 2002 in Chicago, I

spoke with a number of people who were interested in seeing

the youth component of NICE continue. Finding substantial

IN THE SPOTLIGHT

Dixie Watts Reaves

Associate Professor, Agricultural and Applied Economics, Virginia Tech

D
Rural Cooperatives / March/April 2007 17

support, I organized a meeting at that final NCFC-sponsored

NICE in Chicago, and spoke with the state co-op council

representatives about how we might partner to move it

forward. There was overwhelming support for a continued

youth cooperative education program, and I volunteered to

host the diamond anniversary NICE on the Virginia Tech

campus the following year.

The conference was an overwhelming success, with 100

percent of participants indicating that they would

recommend the conference to a friend. There was a steep

learning curve the first year, determining all that needed to

be done to host a national-level conference like NICE, so I

offered to host a second year, and the state councils agreed. 

Kentucky volunteered to host it in 2005, followed by

Pennsylvania in 2006. The conferences were outstanding,

with general co-op education sessions, case studies, games

and ice breakers, leadership development and a farm-supply

store simulation. Each year, the attendees say they learn a lot

in a fun atmosphere and have an opportunity to meet people

from all over the country. A testament to the success of the

conference is the number of youth who express interest in

returning the following year as a youth leader.

What happened to the NICE Ambassador program?

It has been renamed the Outstanding Youth Scholar

Contest. Each year, one male and one female are chosen to

serve as ambassadors for NICE. They assist with the

planning of the coming year’s conference and assist on-site

the following year. If any cooperative would like to have the

Outstanding Youth Scholars participate in any type of co-opsponsored event, we would welcome invitations for the youth

to participate.

Where will the next conference be held?

Pennsylvania has again agreed to host in 2007, July 19-22,

in Shippensburg. For cooperatives that would like to support

this youth education effort, a number of sponsorship

opportunities are available, and we would welcome any and

all support. If a state does not have a state co-op council that

focuses on youth education, those states could still sponsor

one or more youth to attend the conference. In my mind,

there has been a successful transition from the NCFCsponsored NICE to the state-sponsored

NICE, and I anticipate that in 2028, we will

be celebrating the centennial of NICE.

What can co-ops do to support

co-op education?

Cooperatives are already doing a great

deal to support co-op education. Some

states have very strong and active state

councils of cooperatives, and many host a

state-level youth education program each

year. In those states where such programs

are taking place, it is important for

individual co-ops to support those efforts

through sponsorships, door prizes,

providing conference speakers and simply

being present to allow the youth to interact

with representatives from industry. In those

states where there are no current state-level

programs, a group of cooperatives might

consider working together to start one, or at

least sponsor youth to attend NICE. 

Offering summer internships is another way

to support co-op education. Internships are a

win-win situation, providing cooperatives an opportunity to

assess potential future employees and giving students muchneeded hands-on experience. What better way to learn about

cooperatives and see how they positively impact the wellbeing of their member-owners than by working side-by-side

with those who serve the members every day? 

A number of co-ops or co-op councils support their youth

through the provision of scholarships. In addition to

monetary support, knowing that the agricultural industry

supports ag majors and is willing to reward them for

academic achievement is a powerful motivator.

I am very appreciative of the support that I and my

students have received from VCFC and its member

cooperatives. I know co-ops around the country are

supporting the youth in their local communities, and I’d like

to take this opportunity to say a heartfelt thank you. 

Contact Reaves at: Dixie@vt.edu or 540-231-6153. ■

Dixie Watts Reaves (far right) with a group of her students from Virginia Tech tour

a farm near Clarens, South Africa, in February. 
18 March/April 2007 / Rural Cooperatives

Editor’s note: Margaret Bau, USDA co-op

specialist for Wisconsin, and Susan Davis,

Iowa State University Extension, assisted

with this article.

hen Alphonse

DesJardins helped the

first credit union in

North America

incorporate in 1900, he

probably did not guess that it was the

beginning of a cooperative movement

across Canada and the United States

(since credit unions are basically

financial service co-ops owned by their

depositors). 

More than a century later, the

DesJardins federation is the largest

financial institution in the Canadian

province of Quebec and the sixth

largest in the nation, with $179 billion

in assets and 10.6 million ownermembers. It is the province's largest

employer and a major driver of the

region's economy.

A priority of the DesJardins

federation since the 1990s has been

more proactive cooperative

development. It has worked closely with

the Ministry of Industry and

Commerce, the Conseil de la

cooperation du Quebec, and co-ops

themselves to accelerate the growth of

the cooperative business sector. 

The collaboration helps start new

co-ops as well as existing ones, issuing

regulations, compiling statistics and

offering programs that foster

cooperative enterprises and the access

to capital that will ensure success. 

Co-ops last longer, grow faster

The move to more deliberate co-op

development accelerated in the mid1990s, when a research study revealed

that new co-ops in Quebec had a longer

survival rate than investor owned

businesses. Co-ops had a five-year

survival rate of 64 percent, compared to

the typical investor-owned

corporation's 34 percent chance of

making it to year five. 

Ten-year survival rates were even

more divergent: 46 percent for co-ops,

but only 20 percent for investor-owned

corporations (IOCs). Average annual

job growth rates were found to be 5.8

percent for co-ops, 2.2 percent for

IOCs. The cooperative advantage was

there for all to see.

These facts played a part in

convincing the provincial government

to establish 11 co-op development

centers to serve its 17 districts. Each is

staffed with a handful of practitioners

skilled in such key areas as new startups, marketing and youth. Their work

is coordinated with the national co-op

federation and co-op sector

associations. 

Between 1995 and 2003, the number

of co-ops launched in Quebec jumped

from 85 to 220; homecare co-ops alone

soared from three to nearly 50.

U.S. co-op developers tour Quebec

In the fall of 2006, CooperationWorks!, a network of cooperative

development centers in the United

States, led a U.S./Canadian cooperative

study tour to Quebec to learn from this

cooperative growth spurt and the

infrastructure, including the consumerowned financial services (credit union)

sector, that is helping to make it

possible. 

One of the keys to Quebec’s co-op

success was the passage in 2004 of

legislation that guarantees an

“indivisible reserve” for cooperative

development. If a cooperative decides to

convert to a for-profit company, the

reserves of that cooperative are not

divided among its members. Instead, by

law, any reserve funds have to go to

another cooperative. If the co-op

dissolves, the reserves become a

community asset, not an individual

asset. 

"Therefore," says, CooperationWorks! Executive Director Audrey

Malan, "indivisible reserves remove the

possibility of members gaining huge

windfall profits from renouncing their

cooperative mission, principles and

identity." 

Diverse applications of co-op model

The tour included trips to a studentCO-OP DEVELOPMENT ACTION

Cooperation, c'est magnifique!

U.S. co-op centers take a closer look at Quebec’s phenomenal co-op growth

W

Donna Uptagraaft, of the Arkansas Rural

Enterprise Center, visits the home of

Alphonse DesJardins, founder of the

first credit union in North America.
Rural Cooperatives / March/April 2007 19

run co-op college bookstore, an

ambulance co-op, a funeral co-op, a

worker-owned micro-brewery, several

home healthcare co-ops and the home

of Alphonse DesJardins, the man

credited with inventing credit unions as

an alternative to traditional banks,

which were often not interested in

handling the finances of workers. 

"It was a great networking

opportunity," says Donna Uptagraaft of

the Arkansas Rural Enterprise Center, a

member of CooperationWorks! "I was

impressed with how willing they are to

think big and take risks. And they bring

all the work together well; they do a lot

more coordinating at the provincial

(state) level."

The diversity of types of co-ops was

also very educational, she adds. "We do

a lot of work with agricultural co-ops

back home. In Quebec we saw

cooperative applications we don't see

there."

Bob Mailander of Rocky Mountain

Farmers' Union, another member of

CooperationWorks!, cites "the

interconnectedness of their cooperative

systems, and their ability to access

capital to organize and run their

operations" as a critical element in the

success of Quebec's cooperative

economy.

System’s nuts and bolts

That access to capital includes a

Cooperative Investment Plan that gives

co-op members tax breaks for

supporting cooperative development. A

member investing $100,000 in her coop can deduct 150 percent off her

provincial taxes. 

Since 1985, the plan has channeled

more than $217 million in capital into

cooperatives, including $25.3 million in

2000. In addition, a Deferred Tax

Rebate enables a member to defer both

his federal and provincial taxes on

patronage refunds until the point at

which the shares are disposed.

Through such government

mechanisms as the Cooperative

Investment Plan, the Deferred Tax

Rebate and the creation of the

Nondivisible Reserve — along with the

powerhouse of the DesJardins Co-op

Venture Capital Fund, which has raised

more than $645 million from nearly

118,000 individuals — there are at least

nine funds available to cooperatives. 

"The success of the co-op movement

in Quebec is directly attributable to the

pro-cooperative provincial government

policy, the powerful financial and social

driver that is DesJardins, and the

extensive cooperative networks and

sector associations," says Malan. "It

isn't rocket science; it's just a deep

understanding of and a commitment to

the operating principles and practices of

cooperation." ■

Ripley County, called "the lumber capital of the world"

150 years ago, is now Missouri’s second poorest county.

About 50 small sawmills in the area were facing elimination several years ago. At the same time, many small-scale

forest owners, most of them farmers, did not consider their

woodland as a significant asset. 

The Missouri Farmers Union Family Farm Opportunity

Center (Center) helped them develop a business plan for a

value-added hardwood co-op that would not increase

risks for their families. 

One key to the co-op's success was that the Center

had helped start several community development credit

unions (CDCU) during the past few years. CDCUs make it

possible for independent businesses, small-scale farmers

and rural families to gain access to capital. While they still

had to meet the credit union's standard criteria, the support they got made it easier for the 65 members of Ozark

Quality Hardwoods Co-op to move forward. 

"What we're trying to do is very challenging, given the

resources in this part of the state," says the Center's Russ

Kremer. "But these farmers have the heart for it. They are

not trying to get rich." 

Kremer says that when it opens, the co-op's facility will

employ at least a dozen people. This is welcome news in

Ripley County where, as he points out, people "just want to

be able to watch their kids grow up." 

And maybe even their grandkids. 

Missouri credit union collaborates with value-added cooperative

U.S. and Canadian representatives of cooperative development centers attended the

recent CooperationWorks! study tour of Quebec co-ops and credit unions. 
By Jane Livingston

Editor’s note: Livingston is a Maine-based writer with extensive

co-op experience.

laquemines Parish was the first part of

Louisiana to feel the wrath of Hurricane

Katrina in the early morning hours of Aug. 29,

2005. The hurricane barreled up the Gulf of

Mexico and slammed into Breton Sound,

spewing its fury on this southernmost parish that stretches like

a long finger from the outskirts of New Orleans deep into the

Gulf.

The very tag end of the Mississippi River splits

Plaquemines right down the middle, into Left and Right

Banks. Long before Katrina and Rita hit them, residents of

the two banks have harbored some hard feelings toward each

other. These residents include African Americans whose

families have lived on the bayous for generations, Native

Americans whose families have lived here even longer and

newcomers from Vietnam and other Southeast Asian

countries, many of whom are willing to work for less than a

living wage in order to establish their businesses.

All of them feel the pressure of trying to make a living

from doing the same thing: fishing. The waters here afford

some of the best commercial fishing grounds in the world,

but the people who catch the shrimp, oysters, crabs, red

snapper and other seafood have long watched most of the

profits go to the big commercial enterprises.

“Even before the storms, residents of the lower portion of

the parish were living below the poverty line and earning an

income of less than the average median household income,”

says Cornelius Blanding, disaster recovery coordinator for

the Federation of Southern Cooperatives. 

“For generations, the fishermen of Plaquemines Parish

have had no alternative to the commercial docks for

purchase of essential services and sale of their catches at

consistently low prices,” he explains.

80 percent of fleet lost

The situation was even worse after the storms had passed.

About 80 percent of the parish's commercial fleet was wiped

out. Nearly every dock was gone. In addition to their boats,

their equipment and their businesses, many people living

along the water's edge lost their homes. 

Today, even though recovery has been achingly slow in

coming (the parish is just now getting most of its water and

electricity restored, and many families still live in FEMAsupplied trailers), the multicultural fishing community is

coming together, surmounting overwhelming obstacles to

take the future into their own hands by forming a

cooperative business.

The South Plaquemines United Fishermen's Cooperative

plans to provide its members with docking facilities and

services, and a marketing and distribution system that is

looking to re-establish the parish's devastated commercial

fishing industry from the bottom up.

The Plaquemines miracle began in September 2005, soon

after the Federation of Southern Cooperatives (FSC) began

setting up workshops in hurricane evacuee camps and

20 March/April 2007 / Rural Cooperatives

P

Miracle on the Bayou

How one Louisiana parish is resurfacing from disaster
community centers to teach people about the cooperative

business model. 

Historically, co-ops have a lot to offer people in an

economic crisis. FSC was formed 40 years ago to assist Black

farmers struggling to become masters of their own destiny,

and it has helped thousands of families working together

achieve what would have been impossible to achieve working

alone.

When the FSC team brought their information to a group

of fishermen in Plaquemines, it started a chain reaction. As

more people heard about the idea, old differences and biases

began to seem less important than did the possibility of

finding a silver lining behind the huge dark cloud that roared

ashore on the twenty-ninth day of August 2005. 

Co-op grows rapidly

FSC staff continued to work with the rapidly growing

group, helping it through the initial stages of forming a

cooperative. An FSC co-op development specialist continues

to provide the co-op with technical assistance and training. 

Early in 2007, the FSC initiated the process of developing

a feasibility study and business plan. 

In early March, Bill Brockhouse, a cooperative development specialist with USDA Rural Development, met with the

co-op steering committee as the first step in drafting a

feasibility study for the co-op. Brockhouse advised the

committee on the process he would follow in developing a

feasibility study, including its assumptions, format and

contents. He also suggested surveying prospective members. 

“The survey will help gauge how strong the interest in the

cooperative is, and can help the steering committee identify

issues they will need to address,” says Brockhouse. Based on

prior meetings, the co-op's leadership estimates there is a

potential of 50-100 members for the co-op, representing

both the Left and Right Banks of the parish and a cross

section of its ethnic and cultural diversity. 

“I was impressed with the 15-person steering committee I

met with in Plaquemines,” Brockhouse says. “They have

obviously been meeting regularly and, with assistance from

the Federation of Southern Cooperatives, have thought a

great deal about the important issues in forming a co-op.

There are fishermen (and women) who fish for different

species (crabs, oysters, shrimp, finfish) who are all focusing

on one goal: forming a co-op. In the past, I am told, it was

difficult to even get these different groups in the same room

together. So the prospect of them pulling together to form a

co-op is exciting.” 

Additional technical assistance, funds and support have

been committed by the Cooperative Development

Foundation, Louisiana State University, Southern University

in Baton Rouge and Oxfam America.

South Plaquemines United Fishermen's Cooperative

decided early on to open membership to any small fishing

enterprise in the designated area.

Members recognize that there is not only an opportunity

to rebuild a local economy that is more robust, more

democratic, and more efficient than the pre-Katrina

economy. There is a "co-opportunity" as well, to create a

more robust community that can meet the challenges of life

on the Louisiana bayous. ■

Rural Cooperatives / March/April 2007 21

Hurricane Katrina destroyed 80 percent of the fishing fleet and most fishing docks (left) in

Plaquemines Parish. A diverse group of people are trying to get the industry back on its feet under

the banner of a new co-op. Photos courtesy Federation of Southern Co-ops and USDA
22 March/April 2007 / Rural Cooperatives

By John Dunn

Director, Co-op Resources &

Management Division

USDA Rural Development 

he winds of change are

blowing across the

cooperative landscape

in China. In October

2006, the People’s

Republic of China (PRC) adopted new

cooperative legislation, providing

formal recognition of a new cooperative

model forged in the spirit of that

nation's evolving acceptance of private

business as the key to economic

prosperity.

Evolving co-op model 

Cooperative businesses have

operated in China since the early 20th

century. Prior to World War II, most of

the cooperatives in China were involved

with credit. Following the communist

takeover, emphasis changed in

cooperative development to promote

farm marketing and farm supplies. But

these cooperatives were formed on the

communal-farm model. 

This system of combining

cooperatives and government hurt the

enthusiasm of farmers to produce and

hindered farm production. Following

the Cultural Revolution, a slow

transition began away from communal

co-op models toward a more Westerntype co-op model that rewards private

initiative. 

There are presently an estimated

160,000 farmer cooperatives with 23

million farmer-members in China.

Many of these cooperatives were

initiated or formed by the government

as a way of rationalizing and supporting

supply and marketing channels, which

are often run by government-owned or

-control enterprises.

Prior to the new Chinese legislation,

entrepreneurial cooperatives had

become the predominant cooperative

model being promoted and adopted.

These are actually business

organizations formed by individuals or

processing companies to "capture

farmers" in a manner that locks the coop to an individual's business. 

The small farmer in an area

controlled by this type of "cooperative"

has the choice of being in the

cooperative or not. But if farmers

choose not to join, they may be left with

no alternative markets, sources of farm

inputs or access to other benefits that

the government provides strictly

through cooperatives. This model has

been widely promoted, in particular by

local authorities who depend on

agricultural taxes to support their

government operations. This model

provides a larger and more assured flow

of tax revenues. 

The All China Federation of

Cooperatives, formed in 1950, is the apex

organization of national-level

cooperative associations. Its members are

national cooperative enterprises that are

the primary supply chains — for inputs

and outputs — of the agricultural sector,

including basic materials production,

manufacturing, processing, distribution,

marketing, retail and finance.

The span of the Federation is far

wider than agriculture, covering such

industries as recycling, tourism, catering

and international trade services. The

Federation has been closely linked to

the government and the promotion of

its cooperative models since its

inception. It has played a significant role

in organizing and assisting in the startup

China looks to co-ops to help farmers duplicate success of its industry

T

Winds of Change
Rural Cooperatives / March/April 2007 23

of new farmer cooperatives and is

expected to continue as a key player in

the development of the new model

cooperatives.

New cooperative law

China's new cooperative law is the

first codification of cooperative enterprise

in post-World War II China. The statute

contains broad definitions of cooperatives

as user-owned and -controlled businesses

in a manner that generally conforms to

the statement of cooperative principles

adopted by the International Cooperative

Alliance (ICA).

Before the new law, cooperatives

were loosely regulated or supervised by

three PRC ministries: Agriculture,

Science and Technology Association,

and the Commerce and Industry

Bureau. Under the new law, the

registration (incorporation) of

cooperatives will be the sole

responsibility of the Commerce and

Industry Bureau. Agronomic and

scientific advice to farmers will be

provided by the Science and Technology

Association, while cooperative support

will be provided through the Ministry of

Agriculture's Ag Bureaus, primarily

operating at the township level. 

In December 2006, a conference on

"Promoting the Development of

Farmers' Cooperatives" was held in

Beijing. Speakers included cooperative

experts from many parts of the world,

yet primarily represented an extensive

range of government leaders, including

representatives from USDA Rural

Development, led by Under Secretary

Thomas Dorr, scholars and legal experts

from throughout China. 

The new law will need to be

promulgated through a set of

regulations yet to be developed. This

cooperative conference was a part of the

deliberative process in developing those

regulations. 

Challenges lie ahead

Observers of the cooperative

conference in Beijing were thrilled to

hear Chinese leaders articulate concepts

of cooperation so central to cooperative

philosophies and principles. Speaker

after speaker talked about democratic

control, local autonomy, freedom of

choice and education. The spirit of true

cooperation was in evidence.

Yet there are tall challenges to this

new cooperative approach in China.

The Chinese farming sector has lagged

behind the tremendous successes of that

nation’s industrial sector. Poverty and

social strife are significant. China looks

to the cooperative business model as the

hope to overcome the significant and

systemic problems of its rural areas.

These many challenges include:

How can the government redefine and

reduce its role in cooperatives? How

will local Chinese government, which

dominates local economic life through

the distribution of government benefits,

carry out its role as primary cooperative

startup assistance providers? How will

small farmers of China gain the

knowledge to manage their cooperative

businesses and the trust that they have

the ability to do so?

Great hope is evident in the

cooperative movement in China.

Cooperation and partnership with

Western governments, cooperatives,

educational institutions and non-profit

organizations will open the doors to

wealth creation and productivity for the

farmers of China. The rewards of

success in this experiment will extend

through generations. ■

Town and country: building activity is changing the skyline of Beijing, China, while children in rural China say hello to

a group of touring Americans; Thomas Dorr, USDA Under Secretary for Rural Development, is greeted by Liu Mingzu,

China’s agriculture minister. USDA photos by John Dunn 
By Anne Todd

USDA Rural Development 

omen’s Action to Gain Economic Security

(WAGES), a nonprofit organization based in

Oakland, Calif., was formed more than 10

years ago to help empower low-income

women, both economically and socially,

through cooperative business ownership. WAGES serves the

greater San Francisco Bay area and specializes in

housecleaning co-ops. Because the majority of housecleaners

in California are Hispanic, WAGES focuses on helping

Hispanic women. With WAGES' support, Latina women are

moving out of poverty and into entrepreneurship.

WAGES was developed by women for women. It is

founded on the cooperative model so that women will pool

their skills and work together to succeed. A co-op is a

business owned and controlled by those who work in it.

Members make decisions democratically by giving each

person a vote and distributing income equitably to all

workers. The co-op business model enables workers to reap

more benefits and have a stronger voice in their workplace.

WAGES incorporated in 1994 and opened its first offices

in 1995. The first business WAGES helped develop was

“Heaven Sent Housecleaning” in Palo Alto. In 1998, the

organization began fostering cleaning co-ops in Silicon Valley

and, by 2000, it had expanded its efforts throughout the

Greater Bay Area.

Today, three WAGES co-ops are thriving: Emma's EcoClean in Redwood City, founded in 1999; Eco-Care

Professional Housecleaning in Morgan Hill, founded in

1999; and Natural Home Cleaning in Oakland, founded in

2003.

All of the WAGES-sponsored businesses use an EFCTM

(Eco-Friendly Cleaning) method as an integral part of their

operation. EFC is a environmentally friendly housecleaning

system that uses nontoxic, biodegradable cleansers and

reusable cleaning tools. This EFC method protects the health

of owners/workers, their customers and, ultimately, the

environment.

In 2005, WAGES calculated that use of the method by the

three co-ops cumulatively prevented the release of 4,000

pounds of hazardous materials in that year alone. Because of

the success of this system, other organizations — Eco-Bay

Landscaping in Oakland and Eco-Clean in Winnipeg,

Canada — have started green co-ops as well, with assistance

from WAGES.

WAGES has developed criteria to assess business

enterprises before it organizes a new co-op. The business

should provide women with a stable, decent income after a

two-year period, require minimal investment of time on their

part (not more than 100 hours of vocational training), be

financially accessible to them (under $100,000 in

24 March/April 2007 / Rural Cooperatives

Housecleaning co-op members

see income, benefits rise sharply

W

Housecleaning co-op members

see income, benefits rise sharply

Ana Maria Alvarez formed Natural Home Cleaning to help boost 

pay and benefits for San Francisco Bay Area housecleaning 

workers. Photo by Jason Steinberg, courtesy WAGES 

continued on page 32
Rural Cooperatives / M a rch/April 2007 25

Editor’s note: Information for this article was compiled by the

Statistics Staff of USDA Rural Development’s Cooperative

Programs, including Katherine C. DeVille, Jacqueline E. Penn

and E. Eldon Eversull.

armer cooperatives reported more than $2.5

billion in pre-tax net income for 2005, a new

record and an increase of 130 percent from

2003, when USDA last surveyed farmer

cooperatives. Net revenue from sales and

services was $106.4 billion in 2005, the highest level since

1997 and up 6 percent from 2003. Revenue includes receipts

from the sale of crops, livestock and value-added products

marketed by cooperatives, as well as farm-production supplies

sold and services provided by cooperatives. It does not

include sales between cooperatives

Farm supply sales – buoyed by higher petroleum prices –

led the way, climbing 11 percent from 2003. Crop and

livestock marketing by cooperatives also climbed 1 percent

from the previous year. Service sales fell about 5 percent

(table 1). 

Gross sales (which includes co-op to co-op sales) increased

to $121 billion, compared to $117 billion in 2003. The gain

was remarkable, given the bankruptcies of two large farmer

cooperatives in 2003 and the conversion of a large poultry

cooperative in 2004. A large farm supply cooperative was also

converted to an investor-owned firm in 2005. 

Equity capital fell by about $900 million, and remained

low at 42 percent of all assets. Cooperative assets fell by $300

million as liabilities grew $600 million, lowering equity by

more than 4 percent. 

Patronage refunds rebounded from $92 million in 2003

(the lowest since 1987) to $400 million in 2005, which is

close to the modern average (figure 2). 

Farmer cooperatives remain one of the largest employers

in many rural communities, with more than 180,000 workers

F

continued on page 32

Fa rmer co-ops report record net income

Petroleum sales helped boost farmer co-op income to

a record level in 2005. Photo courtesy CHS Inc. 
26 March/April 2007 / Rural Cooperatives

Cass-Clay, AMPI propose merger

North Dakota-based Cass-Clay

Creamery Inc. and Minnesota-based

Associated Milk Producers Inc. (AMPI)

announced plans in February to merge,

which would create a dairy co-op with

more than $1.1 billion in annual sales.

The boards of directors of the two dairy

cooperatives approved the merger,

which will require approval by CassClay members. 

Together, the cooperatives would

provide a complete line of dairy

products to a regional and national

marketplace. Based on Hoard’s

Dairyman data for 2005, after a merger,

AMPI would rank sixth nationally in

milk production, nearly equal with No.

5 Dairylea.

“This merger is an exciting

development for the farmer-owners,

employees and customers of CassClay,” says Keith Pagel, Cass-Clay

president and general manager. “It will

position us for long-term success in the

dairy industry through gained

efficiencies and the ability to offer a

complementary line of dairy products to

the marketplace.”

Known for quality fluid milk, ice

cream and cultured products such as

yogurt and sour cream, Cass-Clay® is a

recognized dairy brand in the upper

Midwest. AMPI is a private label

manufacturer of consumer-packaged

cheese, butter, instant milk and shelfstable dairy products.

“To compete in a rapidly

consolidating food industry, Midwest

dairy farmers and their cooperatives

must look for new ways to work

together,” AMPI General Manager

Mark Furth says.

“This merger further illustrates our

commitment to Midwest dairy farmers,”

adds Paul Toft, chairman of the AMPI

board and a Rice Lake, Wis., dairy

farmer. “AMPI is solely focused on

making the Midwest the best place to

produce milk.”

To finalize the merger, the dairy

farmer-owners of Cass-Clay must

approve the transfer of assets to AMPI.

The vote on the merger was to occur in

March.

“Both cooperatives have outstanding

reputations on the farm and in the

marketplace,” says David Glawe,

chairman of the Cass-Clay board and a

Detroit Lakes, Minn., dairy farmer. “It’s

good to be part of a merger that’s

farmer-driven, farmer-controlled and a

positive step for both cooperatives.”

Cass-Clay Creamery has more than

$100 million in annual sales. The

cooperative’s 200 farmer-owners

operate dairies that produce about 300

million pounds of milk in North

Dakota, South Dakota, Minnesota and

Montana. The farmer-members of

Cass-Clay also own two manufacturing

plants and the Cass-Clay® brand,

under which fluid milk, ice cream and

cultured products are marketed.

AMPI is owned by more than 4,000

members who produce 5 billion pounds

of milk annually. The co-op generates

$1 billion in annual sales. Members

operate dairy farms in Wisconsin,

Minnesota, Iowa, Nebraska, Missouri,

South Dakota and North Dakota. They

own 13 manufacturing plants and

market a full line of consumer packaged

dairy products. 

Cass-Clay would extend AMPI's

product lines to a range of “soft

products,” including ice cream, ice

cream mix, sour cream, dips, cottage

cheese and yogurt. Cass-Clay also

makes specialty cheese, such as Romano

and Parmesan, for the food ingredients

industry and brings the co-op expertise

in marketing branded consumer

products.

USDA announces $90 million

in electric loans in 10 states

Agriculture Secretary Mike Johanns

in January announced that $92 million

in electric loans will be provided to

electric cooperatives in 10 states. An

estimated 14,093 new customers will be

served and 850 miles of distribution

lines will be constructed with the funds,

NEWSLINE

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

A Gunnison County Electric power

substation near the Crested Butte,

Colo., ski area. Photo by Christopher

M. Schodorf, courtesy Gunnison

Electric 
Rural Cooperatives / March/April 2007 27

which are being provided through

USDA Rural Development's Electric

Program.

"The Rural Electric Program is an

important tool as we continue to

upgrade the nation's power grid and

provide for the needs of rural

residents," said Johanns. "Reliable

electric service is a key to developing

rural economic opportunities and other

infrastructure."

The rural utilities receiving the loans

are in: Colorado, Georgia, Iowa,

Indiana, Kentucky, Minnesota,

Missouri, Montana, Nebraska and

Wyoming. Examples of these projects

include:

• In Kentucky, the Jackson Purchase

Energy Corporation will receive a

$12.1 million loan to improve

electric service in six counties. It

will construct 74 miles of new

distribution lines and make other

system improvements. An

estimated 1,235 new customers will

be served. 

• In Colorado, the Gunnison County

Electric Association will receive a

$57 million loan to construct 33

miles of new distribution lines and

make system improvements,

providing service to 1,122 new

customers in a three-county area.

A complete list of the loan recipients

is available at: www.rurdev.usda.gov.

Since the beginning of the Bush

Administration, USDA Rural

Development has made 1,134 electric

loans valued at more than $23.9 billion.

Indiana co-ops to merge

Ag One Co-op, Anderson, Ind., and

Harvest Land Co-op, Richmond, Ind.,

have voted to merge into a co-op that

will have sales of more than $200

million annually. The two farm supply

and grain co-ops are owned by 7,300

farmer-members. The merger is to be

effective Sept. 1. 

“Hoosier Ag Today” reported that

the cooperatives will continue to use

the Harvest Land Co-op name and will

be headquartered in Richmond. Keith

Applegeet, current CEO of Ag One,

will serve as CEO of the merged co-op.

The co-op will operate facilities in 45

communities throughout eastern

Indiana and western Ohio. 

In another Hoosier state merger,

members of the Gibson County Co-op,

the Dubois County Co-op in

Huntingburg, the Warrick County Coop in Chrisney and the Spencer County

Co-op voted to approve a merger to

gain greater buying power. The new coop was to begin operations March 1

under the name Superior Ag Resources

Cooperative Inc., with the Huntingburg

Co-op office serving as the

headquarters. 

Annual sales of the merged co-ops

will be more than $100 million,

according to a joint press release from

the four organizations. The co-op will

have a 15-member board, with six

directors from Dubois County and

three each from the Gibson, Spencer

and Warrick Co-ops.

LOL sales top $7.3 billion

Strong fourth-quarter performance

for Land O’ Lakes Inc. (LOL)

contributed to 2006 net earnings of

$88.7 million and net sales of $7.3

billion. That compares to net earnings

of $128.9 million and sales of $7.6

billion in 2005. Net earnings for 2005,

however, included a $69.7-million gain

on the company's sale of its ownership

position in CF Industries Inc.

Excluding that gain, net earnings were

up 50 percent.

LOL’s long-term-debt to capital ratio

was 40.1 percent at the end of 2006 vs.

41.6 percent at the end of 2005. The

company reported strong financial

liquidity, ending the year with a

combination of cash-on-hand and

unused borrowing authority of

approximately $451 million.

• Dairy Foods – 2006 sales were $3.4

billion, compared to $3.9 billion

for 2005. The decline was primarily

the result of depressed commodity

(milk, butter, cheese) markets. Pretax earnings, however, were up

dramatically, to $47.2 million,

which compares to a “basically

break-even performance in 2005.”

Retail butter volume was up 1

percent from 2005, led by the

company's flagship branded butter

(up 4 percent). Total butter and

spreads volume were down 2

percent vs. one year ago. Total

cheese volume was up 1 percent.

• Feed – Feed sales were $2.7 billion,

up from $2.6 billion in 2005. Pretax earnings of $36.7 million were

up just slightly from 2005. Sales

volume grew in most feed product

segments, led by a 4-percent jump

in “lifestyle feeds.” Livestock feed

volume was down 5 percent. 

• Layers/Eggs – Depressed egg

prices continued to impact 2006

performance of LOL’s MoArk

LLC layer/egg business. Sales of

$398 million were down from $407

million in 2005, due to the sale of

its liquid-eggs business in June

2006. Volume was up about 2

percent for shell-eggs, with

branded and specialty eggs up 28

percent over 2005. The business

lost $40.2 million (pre-tax)

compared to a loss of $31.8 million

in 2005. 

• Seed – Seed achieved a record $756
million in sales and a record $40.1

million in pre-tax earnings, both

well beyond 2005's $654 million in

sales and $29.4 million in earnings.

Volume was up 10 percent in corn,

3 percent in soybeans and 17

percent in alfalfa. 

• Agronomy – Agronomy pre-tax

earnings were $11.8 million,

compared to $95.5 million in 2005,

which included a $73.5-million pretax gain on the CF Industries sale.

Company officials noted that both

volume and margins in crop

nutrients were depressed by a late

planting season and uncertainty

early in the year regarding nitrogen

prices. In addition, the devaluation

of the crop protection products

industry posed a continuing

challenge. 

MMPA returns $1.6 million 

in cash patronage to members

Michigan Milk Producers Association

recently paid more than $1.6 million in

cash patronage refunds to its dairy

farmer members. This cash allocation

represents approximately 30 percent of

the $5.4 million allocated net earnings

generated by the cooperative in fiscal

year 2006. The cash patronage returned

includes 100 percent of the farm supply

earnings and 25 percent of the milk

marketing earnings. All members who

marketed milk through MMPA for fiscal

year 2006 will be receiving a portion of

the patronage returns.

MMPA members received other cash

payments in May 2006 of more than

$6.2 million through retirement of the

cooperative’s remaining 1996 equities

and all of the 1997 equities. In October

2006, MMPA members received $2

million in cash payments in the form of

a “13th” milk check. With the current

payment of $1.6 million, cash payments

in the last 10 months total more than

$9.8 million.

Since 1987, MMPA has operated

without an equity capital retain, relying

on the Association’s plant operations,

milk marketing and member dues to

fund the cooperative. MMPA serves

nearly 2,400 dairy farmers in Michigan,

Indiana, Ohio and Wisconsin.

Southern States board

elects new chairman

John East, a Leesburg, Ala., grain,

cotton and beef producer, is the new

board chairman of the Southern States

Cooperative Inc. East was elected to

succeed Wilbur C. Ward of Clarkton,

N.C., during the board’s last

reorganization meeting in Richmond,

Va. East served as vice chairman during

Ward’s three years as chairman, and has

been on the co-op’s board since 1999.

Elected to succeed East as vice chairman

was Eddie Melton, who raises grain and

beef cattle in the Sebree, Ky., area.

Melton has served on the Southern

States board since 2000. 

East is a member of the Alabama and

Cherokee County Cattlemen’s

Associations and the Alabama Farmers

Federation. Last year, he received the

Distinguished Cooperator Award from

the Alabama Council of Cooperatives

and in 2004 the Farm-City Committee

of Alabama named East Farms the state’s

Farm of Distinction. The new board

chairman also serves on Congressman

Mike Rogers’ Agricultural Advisory

Committee. East and his family have a

diversified, 2,500-acre operation that

includes cotton, corn, soybeans and hay,

as well as 500 acres of timberland and

650 acres in pasture for some 400 beef

cattle. 

Missouri Farmers Union 

marks centennial anniversary

In March 1907, farm and rural

leaders gathered in West Plains, Mo., to

attend the founding convention of the

Missouri Farmers Educational and Cooperative Union, the organization now

known as Missouri Farmers Union. This

past Jan. 26-27, Missouri Farmers

Union celebrated its rich rural heritage

with a centennial convention in West

Plains. 

In 1907, farmers were concerned

about the low prices of cotton that

threatened their family livelihood. They

joined the farm organization that started

in Point, Texas, in 1902 and was then

sweeping the south with new chapters

forming every day. This organization

offered hope for the depressed farm

economy through legislation to help

family farmers; its innovation is assisting

farmers in starting cooperatives and

providing educational resources for

rural area.

Today, Missouri Farmers Union

continues to work on the same issues:

legislation, cooperation and education.

In the past seven years, the organization

has helped Missouri farmers form valueadded cooperatives to market their

products. The Farmers Union continues

to advocate for fair prices and increased

market access for farm products. 

Grain co-op specialist Charles Hunley dies

Charles "Chuck" L. Hunley — a

USDA agriculture economist known for

his work with many of the nation's grain

cooperatives — passed away on March

3. Mr. Hunley, who worked for USDA

for about 30 years, joined what was then

the Agricultural Cooperative Service

(now the Cooperative Programs office

of USDA Rural Development) in 1982,

where he worked with grain, rice and

tobacco cooperatives. Prior to that, he

had worked in the Grain Market News

section of USDA's Agricultural

Marketing Service, which he joined in

about 1964. Mr. Hunley retired from

USDA in 1994. 

Mr. Hunley provided technical

advisory assistance to cooperatives

producing wild rice, dry beans, domestic

28 March/April 2007 / Rural Cooperatives

Southern States Chairman John East.
rice and other grains. He authored or

co-authored a number of research

reports, including: "Cooperative

Involvement, Adjustments and

Opportunities in Grain Marketing" in

1984, "The Role of Cooperatives in

Tobacco Marketing" in 1988, "Cooperative Marketing of Pulses" in 1992 and

"Marketing and Transportation of

Grain by Local Cooperatives" in 1983.

NMPF seeks data on ethanol 

impact on dairy economics

Many dairy farmers are feeling the

pinch of higher corn prices resulting

from demand for ethanol production.

Because of concerned about the impact

of biofuel production on the economic

health of dairy farmers, the National

Milk Producers Federation (NMPF) is

asking USDA to investigate the overall

implications of the rising production of

biofuels on food production in the

United States. 

While NMPF understands the

need to develop alternatives to

imported petroleum fuels, “We think it

is important for both sides of this story

to be evaluated, and that is why we are

asking the Agriculture Secretary to

form a working group to study the

implications on food producers of the

emerging biofuels industry,” says Jerry

Kozak, president and CEO of NMPF. 

In the letter, NMPF, along with five

other organizations representing the

livestock sector, ask Secretary Mike

Johanns to assemble a working group

within the USDA Chief Economist's

Office to study the emerging biofuels

economy and its full implications for

milk and meat producers, as well as

consumers of those products. The other

groups are the American Meat Institute,

the National Cattlemen's Beef

Association, the National Chicken

Council, the National Pork Producers

Council and the National Turkey

Federation. They share concerns that

producers may face challenges in

sustaining their operations alongside a

robust and growing ethanol economy. 

“Ethanol production will have an

economic impact on the U.S. livestock

industry; good for some, and bad for

others,” says Kozak. “Given that corn

prices are the major feed input cost for

dairy cows, and that corn is expected to

reach record prices levels in 2007,

USDA needs to do more homework on

the implications of the ethanol gold

rush on milk and meat costs. What's

good for energy prices may not be so

good for food prices, and we don't want

the viability of the biofuels sector to

come at the cost of losing the viability

of our dairy industry.” 

USDA marketing grants available

USDA’s Agricultural Marketing

Service is offering $1 million in

competitive grants to support farmers

markets and other direct marketing

projects. The money is available under

the Farmers Market Promotion

Program (FMPP) for 2007. 

Agricultural cooperatives, local

governments, nonprofit corporations,

public benefit corporations, economic

development corporations, regional

farmer's market authorities and Tribal

governments may consider proposals

for these grants. The allocation of

grants will be carried out in a single

round of competition. The maximum

amount of any one proposal is $75,000.

To read the complete notice of

funding availability, visit:

www.ams.usda.gov/FMPP/FMPP/ FY07/NOFA.pdf. 

American Sugar Refining

acquires Redpath Sugar

American Sugar Refining Inc.

(widely known as "Domino") has agreed

to acquire Tate & Lyle Canada Ltd.

("Redpath"). Domino is owned 64

percent by Florida Crystals Corporation

and 36 percent by Sugar Cane Growers

Cooperative of Florida, an ag co-op

owned by 49 sugarcane growers. Florida

Crystals is a subsidiary of Flo-Sun Inc.

The acquisition will make Domino

more competitive, its leaders say, and

enhance its ability to serve its

customers, many of whom have

operations in both Canada and the

United States.

Redpath operates Canada's largest

cane sugar refinery in Toronto. Its sugar

is marketed under the Redpath

trademark, one of the oldest and most

recognized trademarks in Canada.

Domino markets its products under the

Domino and C&H sugar brands. It

owns and operates sugar refineries in

Yonkers, N.Y.; Baltimore, Md.,

Chalmette, La., and Crockett, Calif. 

UK merger would create

world’s largest consumer co-op

The boards of the Co-operative

Group and United Co-operatives have

agreed to recommend to their members

that approval be given to a merger of

their two societies. If approved, the new

co-op would begin operations in late

July and would be the world’s largest

consumer co-op, with annual turnover

of more than 9 billion pounds.

Meetings of members to consider the

recommendation will take place in April

and May.

The two co-op boards have also

announced that the new society's

enlarged Trading Group would be

headed by Peter Marks, currently chief

executive of United Co-operatives, with

David Anderson continuing as chief

executive of Co-operative Financial

Services, the Group's financial arm

which embraces the Co-operative Bank

and Co-operative Insurance.

In a joint statement, Bob Burlton,

chairman of the Co-operative Group,

and Bill Hoult, president of United Cooperatives, said: "We are delighted that

our two boards have given the green

light to the merger. If approved by our

members, it will be the most farreaching [meger] in the history of the

Rural Cooperatives / March/April 2007 29

continued on page 31

Domino Sugar’s processing plant in

Toronto, Canada.
30 March/April 2007 / Rural Cooperatives

Farm, utility, retail and other types of cooperatives interested in helping to ensure America has the type of skilled

workforce it requires may want to consider becoming

involved with SkillsUSA, a national, nonprofit organization

helping to turn today’s young people into tomorrow’s skilled

workforce. 

The SkillsUSA program assists high school and college

students who are preparing for trade, technical or skilled

service careers. The program is carried out through a partnership among participating students, teachers and industry

representatives, who all work together to help the students

excel in their chosen field of study. In coordination with their

vocational training, SkillsUSA also helps students develop

their employability and leadership skills

so that they can become well-rounded

workers and citizens.

Today, SkillsUSA membership stands

at over 283,000. There are more than

14,700 SkillsUSA professional educators

providing hands-on high school- and college-level classes for students using curricula spanning 130 different trade, technical and skilled service jobs. The

SkillsUSA program is offered in more than

17,000 classrooms in about 3,700 public

schools and colleges in all 50 states, the

District of Columbia and the three U.S.

territories. SkillsUSA chapters are available in high schools, career and technical

schools and two-year colleges.

Founded in 1965, SkillsUSA (originally

known as VICA, the Vocational Industrial

Clubs of America Inc.) has developed

more than 9.2 million workers through

active partnerships between employers

and educators. Furthermore, hundreds of

American industries have turned to 

SkillsUSA as a source for highly trained

and able employees.

SkillsUSA sponsors several competitions to encourage student development

and growth. The premiere event is the

“SkillsUSA Championships,” through

which students compete to showcase the

knowledge and abilities they have

acquired. Competition begins at the local

level, continues at the state level and culminates at the annual national championship held in Kansas City, Mo. Additionally, SkillsUSA represents the United

SkillsUSA prepares students

for trade, technical careers

By Anne Todd

USDA Rural Development 
Rural Cooperatives / March/April 2007 31

co-operative movement in the UK, creating the world's

largest consumer co-operative. The financial strength of the

new organization is good news for members, staff and

customers. In the highly competitive markets we operate in,

it will help ensure the continuing growth and profitability of

our businesses so that we can reward our members and fulfill

our social goals in the communities we serve." 

Commenting on the boards' decision, Marks said: "The

business case for merger is overwhelming. The two societies

activities are geographically complementary and together

account for over 80 percent of co-operative retail trade in the

UK. The merger would, for the first time, better enable the

new organization to effectively manage the co-operative

brand — one of the most trusted in the UK — across all its

business activities."

Noted dairy scientist to head West Central research team

West Central Cooperative in Iowa has announced that

former USDA researcher Dr. Jesse Goff was to assume duty

March 1 as the cooperative’s director of research and new

product development. He will focus attention on the co-op’s

two dairy products: SoyPLUS® and SoyChlor®. 

Goff comes to West Central after more than 20 years

working at USDA. He also taught at Iowa State University’s

Veterinary College. Goff’s research has focused on various

issues within the dairy industry, most recently on metabolic

diseases and mastitis immunology. 

Dr. Goff earned his bachelors degree from Cornell

University. He went on to receive his master’s degree, DVM

and Ph.D. from Iowa State University in Ames, Iowa. His

graduate studies have primarily focused on nutrition and

physiology. 

“We’re thrilled to have a world-renowned researcher on

our staff,” says Milan Kucerak, West Central’s executive vice

president of soy processing and nutrition. 

West Central is one of the 20 largest grain companies in

the United States, with 3,148 stockholders, and handled 80.9

million bushels of in-bound grain in 2006. The company

provides members with agronomy inputs and further

processes soybeans into a variety of value-added products. ■

States in the WorldSkills Competition, an international biennial

event. 

SkillsUSA also offers students specialized programs

designed to meet the evolving needs of industry and emerging

trends in education. For instance, “CareerSafe” is an online

training course about workplace safety provided through the

U.S. Occupational Safety and Health Administration. SkillsUSA’s “Professional Development Program” – developed by

the organization in conjunction with private industry – helps

students learn employability skills such as the ability to communicate, work collaboratively on a team, resolve conflicts,

address ethics challenges, and manage their time and assignments. SkillsUSA is about to release the online Career Skills

Education Program (CSEP) to teach employability skills to college age students.

Reminiscent of the cooperative business model where

members mutually own, control and benefit from their business

enterprise, local SkillsUSA chapters are run by the students

themselves, with adult guidance. Participating students elect

officers, and plan and carry out their own community service,

professional development, employment, public relations and

competition activities.

SkillsUSA provides training to students in dozens of subjects that are related to the agriculture sector, and are needed

for the successful delivery of U.S. Department of Agriculture

(USDA) programs and services. Examples include: computer

maintenance, networks and programming; communications;

diesel equipment technology; telecommunications; electronics;

entrepreneurship; environmental control technology; food

management, production and nutrition; forestry; horticulture;

industrial electricity; meat cutting; office technology; power

equipment technology; public service occupations; and total

quality management. 

Cooperatives and other rural businesses can benefit from

working with, supporting, and exploring recruitment opportunities available through SkillsUSA. To learn more, contact 

SkillsUSA at: SkillsUSA, P.O. Box 3000, Leesburg, Va. 20177-

0300; Phone: (703) 777-8810; Fax: (703) 777-8999; Web site:

http://www.skillsusa.org.

SkillsUSA students celebrate a medal-winning

performance (opposite page). Above, TeamUSA 2005

represented America in an international work skills

competition. Photos courtesy SkillsUSA 

Dr. Jesse Goff is heading research for West Central Cooperative. 
32 March/April 2007 / Rural Cooperatives

capitalization requirements) and not

harm the environment. WAGES co-ops

receive start-up loans through Lenders

for Community Development in San

Jose, Calif. After three to four years of

WAGES support, the co-ops are

expected to be self-sufficient and

independent. 

In the future, WAGES hopes to

expand its consulting work and help

bring its eco-friendly model to

communities in other parts of the

country. The organization also plans to

expand its Northern California Co-op

network by launching new WAGES co-ops.

WAGES has had a significant impact

on the Hispanic women who have taken

part. Records indicate that co-op

members are earning 50 to 100 percent

more than they would working at a

conventional cleaning company. On

average, their household incomes have

increased by 40 percent. As the co-ops

grow, they are also able to provide

health insurance and other benefits for

the worker-owners. These benefits

typically are not available to lowincome wage earners in conventional

service jobs.

Ana Maria Alvarez, owner-worker at

Natural Home Cleaning, immigrated to

the United States in 2001. Of her

experience she says, “It wasn’t easy

immigrating here, but I met my current

husband and he helped me settle in

Northern California. I worked cleaning

houses and doing other kinds of

domestic work for a Mexican family.”

Regarding WAGES, Alvarez

continues, “Today I feel happy.

WAGES and Natural Home Cleaning

are giving me the opportunity to work

and to own my own business. I hope to

move ahead and to work with others

toward our common and individual

goals. For me, the group experience is

great because you learn to share with

others and you learn things you didn’t

know — often, when I don’t know

something, my partner does.” 

To learn more about WAGES, visit

http://www.wagescooperatives.org. ■

nationwide. However, employment fell

by 46,000 due to the aforementioned

loss of four large farmer cooperatives. 

Farm numbers continue to drop, as

do memberships and farmer

cooperatives. Cooperative memberships

declined to 2.6 million, or about 7

percent from 2003. Many farmers are

members of more than one cooperative,

hence cooperative memberships exceed

U.S. farm numbers. There are now

2,896 farmer cooperatives, down from

3,086 in 2003. ■

Housecleaning co-op members

continued from page 24

Co-ops report record net income

continued from page 25

Table 1—U.S. farmer cooperatives, comparison of 2005 and 2003

Item 2005 2003 Change

Billion $ Percent

Sales (Gross)

Marketing 78.0 77.2 1.01

Farm supplies 39.3 35.5 10.72

Service 3.9 4.1 -4.59

Total 121.3 116.9 3.76

Balance sheet

Assets 46.6 46.9 -0.73

Liabilities 27.0 26.5 2.09

Equity 19.5 20.4 -4.40

Liabilities and net worth 46.6 46.9 -0.73

Income Statement

Sales (Gross) 121.3 116.9 3.76

Patronage income 0.4 0.1 335.21

Net income before taxes 2.5 1.1 130.50

Thousand 

Employees

Full-time 125.4 165.1 -24.04

Part-time, seasonal 54.4 61.6 -11.62

Total 179.9 226.7 -20.67

Million

Membership 2.6 2.8 -6.75

Number

Cooperatives 2,896 3,086 -6.16
Rural Cooperatives / March/April 2007 33
34 March/April 2007 / Rural Cooperatives

50 Years Ago...

From the March & April 1957 issues of News for Farmer Cooperatives

New answer for an old co-op problem: the credit union

Many cooperative leaders today believe that accounts

receivable and mounting pressure for credit pose one of the

most serious problems for farm supply cooperatives. Co-ops

wrestling with this issue should look at a unique plan being

used by Dunn County, Wis., farmers.

In November 1945, Arthur Gilberts, a fuel oil deliveryman

for the Menomonie Farmers

Union Cooperative, began

suggesting that patrons use the

Menomonie Farmers Credit

Union to finance fuel oil

purchases. This, he said, would

permit the cooperative to use its

limited operating capital for

maintaining much-needed

inventory and help farmers keep

their own credit sound.

Gilberts pointed out to the

farmers that it was as logical for

them to drive down to their bank

and ask for a tank of gas, as to go

to their cooperative and expect

credit. He explained that these

different types of organizations

render different types of service.

This made sense to the farmers,

and more of them joined the

credit union and borrowed to

finance purchases — not only fuel

oil, but also other supplies.

By 1949, the credit union was an important factor helping

the cooperative keep accounts receivable under control. The

directors invited Gilberts to become fulltime treasurermanager. In November 1949, he started to build the credit

union program. Fifty-eight new members, $13,753 in new

share capital and $1,218 in loan volume were added during

the next 60 days.

Today, this credit union has 2,500 members, $860,000 in

share capital and $770,000 in loans outstanding to more than

1,100 area farm families. Since organization, it has loaned

more than $2.75 million with a loss of less than 0.3 percent.

The credit union made 1,182 loans in 1956, totaling

$600,000. Loans averaged $512 and ranged from $60 for a 4-

H project to a $10,000 loan for a dairy farm.

For the farmer, this credit union promotes thrift,

encourages savings and provides a sound local investment

place. For the cooperative, this credit union makes it easier for

the association to keep accounts receivable under control,

reduce loss from bad debts and use funds more fully for

operations. The Menomonie Farmers Credit Union is putting

local capital to work in Dunn County for the mutual benefit

of farmers and their co-op.

What kind of co-op package do farmers want?

The Indiana Farm Bureau Cooperative Association was set

up 30 years ago to serve, through its county co-ops, an

Indiana farmer who typically tilled 80 to 100 acres and had a

livestock operation of 5 dairy cows, 10 brood sows and a flock

of 100 laying hens. Today, typical farm size is 200 to 250

acres, and Indiana farms are highly specialized and

mechanized. 

These changes have vitally affected Midwestern

cooperatives’ promotional activities. The increased farm size

means that the individual farmer approaches other business

institutions’ status in his buying. This also has affected co-op

price policies.

The trend toward specialization has meant that, instead of

being a jack-of-all trades, the individual farmer becomes a

well-versed and highly trained specialist in narrower fields,

such as broiler production or dairying. He must be talked to

in advertising and personal sales contact as the kind of wellinformed specialist which he is. Today’s farmer will be quick

to resent and resist quackery or unscientific products or

services claims.

Because of specialization and increased farm size, large

numbers of farmers are not in the market for a ton of

fertilizer, a truckload of feed or a specialized marketing

service. They will likely already have signed a contract which

covers both the purchase of needed supplies and the

marketing of finished products. 

Almost all U.S. canning crops are now produced under

such a contract. These contracts cover 90 percent of all

broiler production. Experts see egg production and turkeys

going in the same direction. How long it will be before other

PAGE FROM THE PAST

From the archives of Rural Cooperatives

and its predecessor magazines
Rural Cooperatives / March/April 2007 35

types of farming adopt such a program is hard to guess.

Cooperatives are the natural medium for this kind of

integrated service, if they are willing to develop the integrated

package which includes both supply and marketing.

30 Years Ago...

From the March & April 1977 issues of Farmer Cooperatives

Lehigh, Eskimo Pie Join Forces

Lehigh Valley Cooperative Farmers, Allentown, Pa., and

Eskimo Pie Corporation have finalized an agreement putting

the dairy cooperative into large-volume production of ice

cream specialties and novelty products. The deal could result

in up to $10 million in sales

annually, according to

Lehigh president Robert P.

Barry. Under the terms of

the agreement, Lehigh’s

Allentown plant will become

a production center for the

popular frozen items for

distribution under the

Eskimo Pie label.

Lehigh recently launched a $1 million plant- and

equipment-improvement program aimed at maintaining the

momentum of its recently achieved profitability, according to

Barry. Barry said the investment is being made to achieve

operating cost efficiencies and increase productivity in an

effort to sustain the turnaround of the dairy, which only 2

years ago was apparently on the brink of financial ruin.

Three states recognized for Co-op Month activities

Wisconsin received the State Activities Award for the best

Cooperative Month observance and Colorado and Virginia

earned Awards of Merit from the National Planning

Committee for Cooperative Month. For the third consecutive

year, Wisconsin received top honors for its “comprehensive

and innovative activities” during Co-op Month. 

New ideas initiated in

Wisconsin during the 1976

observation included

sponsoring three

conferences titled: “Food —

How Will It Be Shared?”

These involved teachers,

clergy, students and

cooperative leaders; a special

award for county

cooperative associations conducting activities during October;

and the presentation of “Cooperative Builder Awards” to

outstanding members, employees and friends of cooperatives.

Wisconsin also distributed hundreds of co-op publications

to libraries and educators. A special “Governor’s Day on the

Farm” brought 200 urban and rural dwellers together, and

more than 400 cooperatives in the state sponsored newspaper

ads. Special meetings and rallies were held, and more than

8,000 bumper stickers proclaiming: “Cooperative People Are

More Fun” were distributed.

Colorado won its award for a slide presentation made after

a survey revealed the economic impact of cooperatives

operating in the state. Virginia’s award recognized its

production and distribution of a series of TV and radio tapes

that included interviews with two young people, a young farm

couple, a woman, and a cooperative member.

10 Years Ago...

From the March & April 1997 issues of Rural Cooperatives

Dakota Soybean Processing Plant Opens

Nearly 2,100 soybean producers have combined resources

to create South Dakota’s first producer-owned soybean

processing plant. The $32.5 million facility, near Volga, allows

area producers to process their own soybeans, ending their

reliance on outside suppliers.

Four years ago, the group

decided eastern South Dakota

producers needed a local plant as

an economical alternative to

shipping them out of the state to

be processed into meal and then

reshipped back for use in

manufacturing livestock feed. State

producers – who feed their

livestock about 400,000 tons of

bean meal each year – were paying

$10 to $15 a ton for the return

shipment. 

Compounding the problem,

they were receiving 75 cents

below the basis price listed at the

Chicago Board of Trade. “That’s a

considerable loss when you

consider that we’ll produce 95

million bushels of soybeans in

South Dakota this year,” said

board president Paul Casper.

Casper and his group spent two

years conducting producer

meetings across South Dakota and

Minnesota, attended by 7,000 farmers. 

Some 2,100 South Dakota and Minnesota producers

invested $21 million to build the plant. Construction began in

August 1995 and last fall the first load of soybeans was

processed. An estimated 55,000 trucks will annually enter the

plant. In the first year, the plant is expected to process 15

million bushels of soybeans.

At capacity, the Volga plant will process 50,000 bushels a

day into 1,250 tons of crude meal. It will also process 265 tons

of unrefined soy oil for shipment to 2 refineries in Mankato,

Minn., for further processing into edible oil. ■
36 March/April 2007 / Rural Cooperatives

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