Rural COOPERATIVES RATIVES

USDA / Rural Development July / August 2009

H a r d L e s s o n s o f a

C o - o p D e v e l o p e r

Page 24
By Chris Policinski, President and CEO

Land O’Lakes Inc.

Editor’s note: This commentary is based on Policinski’s address at

the 2009 USDA Agriculture Outlook Forum. Land O’Lakes is a

farmer-owned food and agricultural cooperative with annual sales

of $12 billion.

he extraordinary increase in agricultural

productivity is one of America’s greatest —

yet least acknowledged — success stories. It’s

a story of creating opportunity for U.S.

producers, while also meeting our

responsibility to feed a hungry world. 

For nearly 90 years, Land O’Lakes has been involved in

both sides of this story. As a producer-owned cooperative,

Land O’Lakes has been working to build agricultural

productivity and create opportunity for American farmers

since we were founded in 1921. On the global stage, for

nearly three decades, we have worked to alleviate the

devastating effects of hunger around the world through the

efforts of our International Development Division. 

All of this has given Land O’Lakes a unique vantage point

and, as we look ahead, it’s clear that continuing to increase

agricultural productivity is a critical imperative. Today, the

world’s population is nearly 6.8 billion

people. By 2050, that number is expected to

surpass 9 billion. Given this rate of population growth, world

food production must double by 2050 to meet the increasing

demand, according to the United Nations’ Food and

Agriculture Organization (FAO). 

Meeting the challenge

Providing food for an expanding population is the longterm challenge before us. The key to meeting this challenge

is for U.S. agriculture and agribusiness to lead the way in

promoting continued productivity increases. Our

extraordinary track record demonstrates that we have both

the capacity and the commitment to accomplish this

ambitious goal.

Just consider, in 1930 the average U.S. farmer fed 10

people, according to the American Farm Bureau Federation.

In 1960, that farmer fed two dozen people. By 1990, the

figure reached the 100 mark. Today, the number is 155. 

Looking specifically at some key areas of production,

average corn yields in the U.S. have increased from 20

bushels an acre in 1930 to more than 150 bushels today;

wheat yields have tripled since 1930; and per-cow milk

2 July/August 2009 / Rural Cooperatives

Commentary 

Growing world population presents

challenge and opportunity for U.S. farmers 

T

continued on page 42

Data: American Farm Bureau Federation

19 

27 

46

73 

129

155

115

139

1940

1950

1960

1970

1980

1990

2000

Today

The Number of People Fed Annually by One Farmer

Chris Policinski

10 1930
Features

Rural Cooperatives / July/August 2009 3

Volume 76, Number 4

July/August 2009

Rural Cooperatives (1088-8845) is

published bimonthly by USDA Rural

Development, 1400 Independence Ave.

SW, Stop 0705, Washington, DC. 20250-

0705.

The Secretary of Agriculture has

determined that publication of this

periodical is necessary in the transaction

of public business required by law of the

Department. Periodicals postage paid at

Washington, DC. and additional mailing

offices. Copies may be obtained from the

Superintendent of Documents,

Government Printing Office, Washington,

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

send address change to: Rural

Cooperatives, USDA/RBS, Stop 3255,

Wash., DC 20250-3255.

Mention in Rural Cooperatives of

company and brand names does not

signify endorsement over other

companies’ products and services.

Unless otherwise stated, contents of this

publication are not copyrighted and may

be reprinted freely. Any opinions expressed are those of the writers, and do not

necessarily reflect those of USDA or its

employees.

The U.S. Department of Agriculture

(USDA) prohibits discrimination in all its

programs and activities on the basis of

race, color, national origin, age, disability, and where applicable, sex, marital

status, familial status, parental status,

religion, sexual orientation, genetic

information, political beliefs, reprisal, or

because all or part of an individual’s

income is derived from any public

assistance program. (Not all prohibited

bases apply to all programs.) Persons

with disabilities who require alternative

means for communication of program

information (Braille, large print, audiotape,

etc.) should contact USDA’s TARGET

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

To file a complaint of discrimination, write

to USDA, Director, Office of Civil Rights,

1400 Independence Avenue, S.W.,

Washington, D.C. 20250-9410, or call (800)

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

USDA is an equal opportunity provider

and employer.

Tom Vilsack, Secretary of Agriculture

Dallas Tonsager, Under Secretary,

USDA Rural Development

Dan Campbell, Editor

Stephen Hall / KOTA, Design

Have a cooperative-related question?

Call (202) 720-6483, or email:

coopinfo@wdc.usda.gov

This publication was printed with vegetable oil-based ink.

p. 8 p. 14 p. 18 p. 28

ON THE COVER:

Volunteers fill sandbags to help hold back flood waters near Winfield,

Mo., in 2008. In this month’s cover story, co-op developer Bill Patrie says

such efforts symbolize the type of united cooperative effort needed for

agricultural co-ops to succeed. Photo by Jocelyn Augustino, courtesy

Federal Emergency Management Agency (FEMA) 

4 Dairy co-ops maintain steady market position

By Charles Ling

8 Traditions run 100-years deep at Tillamook County Creamery

By Anne Todd

14 Ripe Time Delivery

Carolina growers form co-op to supply farm-to-school market

By Bill Brockhouse & Bruce Pleasant

18 New life for an old town

Wine co-op helps transition from tobacco while boosting agri-tourism 

By Stephen Thompson 

21 Rural advocate Dallas Tonsager to lead USDA Rural Development

By Dan Campbell 

24 Creating Co-op Fever: Hard Lessons Learned

By Bill Patrie

28 City Slickers

Co-op boosts Montana ranches that offer working vacations

By Donna Healy

31 ’09 Co-op Hall of Fame inductees played crucial role in co-op

movement 

34 Shift to multifunctional agriculture complicates biofuels

development

By Thomas W. Gray 

Departments

2 COMMENTARY

17 LEGAL CORNER

32 CO-OP DEVELOPMENT ACTION

37 NEWSLINE

p. 34
By Charles Ling, Ag Economist

USDA Rural Development 

Editor's note: This article is based on RR

218, Marketing Operations of Dairy

Cooperatives, 2007. To order a free copy,

e-mail: coopinfo@wdc.usda.gov, or download it from the Internet at: www.rurdev.

usda.gov/rbs/pub/research.htm.

airy cooperative

members in the United

States marketed more

than 150 billion pounds

of milk in 2007,

maintaining a steady market share for

co-ops during the five-year period

between 2002 and 2007. This and other

findings are the results of a survey of all

dairy cooperatives conducted by the

Cooperative Programs of USDA Rural

Development. The survey is done every

five years, with the most recent

questionnaire collecting information on

the milk-marketing operations of dairy

cooperatives for fiscal 2007.

The 152.5 billion pounds of milk

that dairy co-op member-producers

marketed in 2007 was 9.6 percent more

than in 2002. This volume represented

82.6 percent of the total milk marketed

by farmers nationally, a slight increase

in market share from 82.4 percent

recorded five years earlier. 

The number of dairy cooperatives

during this period decreased from 194

to 155. There were 45 cooperatives that

processed or manufactured dairy

products, the same number as in 2002.

Twelve cooperatives only operated

receiving stations, while 98 co-ops had

no milk-handling facilities. Most of the

latter 98 performed bargaining

functions; a few others were “check-off”

co-ops that provided milk testing and

other services.

Fewer farms, more milk

The 2007 survey shows that there

has been no slowing of the trend

toward fewer farmers producing more

milk, nor in the westward drift of the

dairy industry. 

In 2007, there were 49,675 co-op

member producers who marketed milk

in the United States, 19 percent

(11,715) fewer than five years earlier.

The greatest declines were in the East

North Central and West North Central

regions, each of which had 4,000 fewer

member-producers. 

The two North Central regions and

the North Atlantic region together

accounted for 85 percent of all member

producers, but had only 51 percent of

cooperative milk volume. The South

Atlantic region had the fewest

cooperative producers, being home to

2,118 members.

With the exception of the South

Atlantic, milk volume marketed by

cooperative members in all regions was

greater than five years earlier. The

largest increase, up 9 billion pounds,

was in the Western region, which

remained the top source of cooperative

milk volume. Cooperatives in this

region marketed 58.1 billion pounds of

member milk (38 percent of total

cooperative milk). 

The East North Central region

accounted for 25 percent of total

cooperative milk, the same share as in

2002. The North Atlantic and West

North Central regions each supplied 13

percent of the milk marketed by

cooperative members.

Milk deliveries per memberproducer were up in all regions during

the five-year period. Nationally, the

average per-producer delivery increased

35 percent, from 2.3 million pounds to

3.1 million pounds. Per-member

4 July/August 2009 / Rural Cooperatives

Dairy co-ops

maintain

steady

market

position
delivery was highest in the Western

region, at 21.2 million pounds, a 56-

percent increase from 13.6 million

pounds in 2002. This was more than 12

times that of the North Atlantic region

in 2007.

Steady share of milk

As in 2002, there were four

cooperatives that each handled more

than 6 billion pounds of member milk

in 2007. These four co-ops accounted

for 49.2 percent of cooperative milk

volume in 2007, the same share as

reported for 2002. 

The number of cooperatives in the

next size group (3 billion to 6 billion

pounds of milk) increased by one, to

eight co-ops in 2007. The milk volume

of this group accounted for 22.9

percent of all cooperative milk, an

increase of two points from 2002. The

2-billion- to 3-billion-pounds group

declined by one cooperative since 2002,

and the group’s share of cooperative

milk decreased by 2.3 points, to 8.2

percent in 2007. 

Together, the 17 cooperatives in the

above three size groups had a very

slight, 0.3 point decrease in their share

of cooperative milk. Their share

declined from 80.6 percent in 2002 to

80.3 percent in 2007.

The number of cooperatives in the 1

billion- to 2 billion-pounds group more

than doubled (from 5 to 11), as did the

group’s milk volume (from 7.1 billion

pounds to 15.4 billion pounds), during

the five-year period from 2002 to 2007.

This group showed the most significant

increase in the share of total

cooperative milk volume, climbing

from 5.1 percent in 2002 to 10.1

percent. This increased share came

mostly at the expense of the groups of

cooperatives with smaller milk volumes.

In terms of milk volume, the relative

Dairy producers Michelle and Scott Herber of Altura, Minn., are

member-owners of AMPI, one of 49 dairy co-ops operating in the

West North Central region. Photo by Sheryl Meshke, courtesy AMPI.

Facing page: Hungry Tennessee Holsteins dig in. Photo by Mark

Johnson, courtesy Tennessee Farmers Cooperative 

Dairy co-op financial

performance

Complete financial data for 2007 submitted by 94

dairy cooperatives to USDA show that:

■ Total assets for fiscal 2007 were $12 billion ($8.41

per hundredweight (cwt));

■ Total liabilities were $8.7 billion ($6.09 per cwt);

■ Members’ equity was $3.3 billion ($2.32 per cwt),

with 82 percent of the equity allocated to members. 

■ Net margin before taxes was $404 million (28 cents

per cwt), a return on equity of 12.2 percent. 

■ Together, these 94 cooperatives marketed 94

percent of total cooperative milk volume.
6 July/August 2009 / Rural Cooperatives

position of dairy cooperatives to the

rest of the industry has been

remarkably stable. The largest four

dairy cooperatives had only a slightly

higher share of the nation’s total milk

supply, moving up from 40.5 percent in

2002 to 40.7 percent in 2007.

Broadening the focus to the largest

eight and the largest 20 dairy

cooperatives, both groups also saw little

or no change in their shares of milk. 

Co-op share of dairy products

Volume of butter and nonfat and

skim milk powders made by

cooperatives increased from 2002 to

2007. Cooperatives’ share of butter, at

1.087 billion pounds, remained at 71

percent of U.S. production, and their

share of nonfat and skim milk powders,

at 1.444 billion pounds, was an

overwhelming 96 percent. 

However, cheese made by

cooperatives dropped substantially,

decreasing by 15 percent from 5 years

earlier, to 2.513 billion pounds. This

accounted for 26 percent of total U.S.

production, compared to 34 percent in

2002. Cooperatives’ share of dry whey

products also declined, from 52 percent

to 42 percent.

Sales of packaged fluid milk products

by cooperatives increased both in

volume and in market share. The 4.035

billion pounds marketed was 7.4

percent of the nation's production, up

from 7 percent in 2002. The co-op

share of ice cream increased from 3

percent to 4 percent, while their share

of ice cream mix increased from 6

percent to 13 percent. 

In 2007, cooperatives marketed 11

percent of the nation's yogurt, 14

percent of the sour cream and 20

percent of the condensed buttermilk.

Plant operations and

employees

Dairy cooperatives owned and

operated 193 plants in 2007, more than

half of which were in the two North

Central regions.

A plant may perform more than one

marketing function. Among the 123

plants that reported receiving and

shipping milk as a part of their plant

operations, 17 were receiving stations

that had no other marketing activities.

The other 106 plants also manufactured

one or more dairy products, in addition

to receiving and shipping milk.

Dairy cooperatives engaged in the

production of various dairy products.

Most notable were: American cheeses

were manufactured in 34 plants, Italian

cheeses were made in 17 plants and

fluid milk products were packaged in 49

plants. Twenty-four plants churned

butter, while 39 plants made dry milk

products (other than whey products).

Whey products were dried in 24 plants.

Sixty-five dairy cooperatives

Milk marketed by members Cooperatives Member milk Share of co-op milk

2002 2007 2002 2007 2002 2007

Number Million pounds Percent

More than 6 billion pounds 4 4 68,499 75,089 49.2 49.2

3 to 6 billon pounds 7 8 29,040 34,899 20.9 22.9

2 to 3 billon pounds 6 5 14,615 12,504 10.5 8.2

1 to 2 billion pounds 5 11 7,120 15,439 5.1 10.1

0.5 to 1 billion pounds 13 8 9,101 5,176 6.5 3.4 

100 to 500 million pounds 30 32 6,761 6,740 4.9 4.4

Less than 100 million pounds 129 87 4,063 2,681 2.9 1.8

Total 194 155 139,199 152,528 100.0 100.0

TA B L E 1 SIZE OF DAIRY COOPERATIVES IN TERMS OF MILK MARKETED BY MEMBERS, 2002 AND 2007

Western

21 co-ops

2,736 producers

58.1 billion lbs.

21.2 million lbs./producer

South Central

11 co-ops

2,353 producers

9.8 billion lbs.

4.2 million lbs./producer

NUMBER OF

CO-OPS

OPERATING

IN EACH

REGION
Rural Cooperatives / July/August 2009 7

Category 2002 2007

Percent

Share of cooperative volume

4 largest cooperatives 49.2 49.2

8 largest cooperatives 62.9 62.3

20 largest cooperatives 84.0 83.7

All dairy cooperatives 100.0 100.0

Share of total U.S. volume

4 largest cooperatives 40.5 40.7

8 largest cooperatives 51.8 51.5

20 largest cooperatives 69.2 69.2

All dairy cooperatives 82.4 82.6

TA B L E 2 SHARE OF MILK MARKETED BY MEMBERS OF DAIRY

COOPERATIVES, 2002 AND 2007

reported having a total of 21,475 fulltime and 2,938 part-time employees in

2007. These cooperatives marketed

127.4 billion pounds of member milk,

or 84 percent of cooperative milk. 

Six other cooperatives each had only

one part-time employee. Another 15

cooperatives reported having no

employees.These 86 reporting

cooperatives represented 55 percent of

all dairy cooperatives and marketed 86

percent of cooperative milk. The

remaining 14 percent of the milk was

handled by the 69 dairy cooperatives

that did not supply employment

information to USDA. ■

West North Central

49 co-ops

10,135 producers

19.2 billion lbs.

1.9 million lbs./producer

East North Central

47 co-ops

20,255 producers

37.7 billion lbs.

1.9 million lbs./producer

North Atlantic

62 co-ops

12,078 producers

20.4 billion lbs.

1.7 million lbs./producer

South Atlantic

10 co-ops

2,118 producers

7.4 billion lbs.

3.5 million lbs./producer
8 July/August 2009 / Rural Cooperatives

By Anne Todd 

USDA Rural Development

he two photos were

taken 93 years apart.

But the grainy, blackand-white photo taken

on the Hurliman dairy

farm in 1915 and the color digital photo

snapped at the same location in 2008

tell a story of an unbroken chain of

traditional, pasture-based dairy farming

and cooperation among producers in

the Tillamook Valley of northwestern

Oregon. 

For 100 years now, the story of dairy

farming in this beautiful slice of coastal

Oregon has been the story of the

Tillamook County Creamery

Association (TCCA), a dairy

cooperative that is celebrating its

centennial anniversary all year long. 

The technology in the milking parlor

may have changed greatly over the

Unbroken chain: For nearly a century, the fortunes of the Hurliman family have been tied to the co-op that it is a member-owner of: Tillamook County

Creamery Association (TCCA). Above, family members pose with their herd in 1915; their descendents (from left) Carl, Kenny and Nick Hurliman

returned to the same spot in 2008. Photos courtesy TCCA
Rural Cooperatives / July/August 2009 9

years, but it all still boils down to dairy

farmers who know their craft and

maintain well-cared-for dairy herds that

produce high-quality milk, then

processing it into a line of awardwinning cheeses sold under the farmers’

own brand. 

Nick Hurliman’s family has a

relationship with TCCA that stretches

back four generations, almost to the

very beginning of the cooperative. In

1915, Hurliman’s great-grandfather and

his two sons bought their dairy farm in

Woods, on the northern coast of

Oregon, about a mile from the Pacific

shore and 20 miles south of Tillamook. 

TCCA was formed in 1909, just six

years before the Hurlimans started their

farm. At the time, many small,

independent cheese plants dotted the

county. Ten of these independent

cheese producers founded TCCA,

deciding to join forces in a farmerowned cooperative that could control

Tillamook County

Creamery

Traditions run

100-years deep at
cheese quality. 

Another goal of the new co-op was

to market cheese as a product coming

from the county itself, instead of one

coming from the various individual

plants.

The Hurlimans’ farm is pasturebased, as are most of the co-op’s dairy

farms. Cows graze outside and are

milked twice daily. The family milks

about 80 to 85 cows, mostly Holsteins,

and has 120 acres of bottomland, 90

acres of hill land and rents 80 acres

from neighbors. 

Like other dairymen across the

country, Tillamook farmers have been

affected by the steep drop in milk prices

this year and the overall economic

downturn. “Obviously, we’re not

making as much as we have in past

years,” Hurliman remarks. “But we live

conservatively and we’ll get through it.

Farming has always been an up-anddown occupation.”

Early days of co-op 

The TCCA story begins in the

1850s, when the first settlers arrived

and began establishing farms. But it

took a giant leap forward in 1894, when

a successful dairy entrepreneur named

T. S. Townsend started the first

commercial cheese plant in Tillamook.

He took 30 orders for cows from local

farmers, then went to Portland, Ore., to

purchase the cows and equipment he

would need to start a milk pool and run

a cheese plant. He also hired Canadian

cheesemaker Peter McIntosh, who was

experienced with the cheddaring

process and brought a recipe for

cheddar cheese with him.

By 1909, when the TCCA

cooperative was launched, Tillamook

County was already well known for its

cheese. Although Townsend was the

first in the county to establish a

commercial cheese plant, other

organized, commercial cheesemakers

settled there too. By 1904,

cheesemaking in Tillamook County had

advanced in quality to the extent that a

cheese from Tillamook County won

first place at that year’s St. Louis

World’s Fair. 

In the late 1940s, four of the larger

independent plants in the county

merged. In partnership with TCCA,

they built a large, centrally located

plant north of the town of Tillamook.

This plant is still part of the TCCA

facility today.

By 1968, all of the smaller local

cheese plants in the county had merged

and consolidated their operations under

TCCA and had moved their cheese

production to TCCA’s central plant.

This marked the beginning of the

cooperative’s operations as a single unit

with all of the smaller plants unified as

one organization. 

Hurliman’s grandfather, father and

younger brother have all served on the

Tillamook board of directors at various

times in the past. Hurliman, an avid

outdoorsman, attends all member

meetings and says he feels that his voice

is heard on important issues. “We get

very good communication from

Tillamook. They have a really good

management team,” he says.

Marking the anniversary 

Little did the 10 producers who

banded together in 1909 to protect the

quality of their Tillamook cheese know

that they were creating a cooperative

and product that would grow over the

years into an award-winning, nationally

recognized brand.

TCCA has scheduled events

throughout the year to mark the

centennial. The co-op launched a new

website, TillamookFanClub.com, that is

an on-line resource center and

community for fans of Tillamook

products. They also launched an online store that offers cheese, Tillamook

apparel and other gifts. It is also

offering a special limited-edition

anniversary cheese.

“The name Tillamook is pretty

famous,” says Hurliman. “I feel

privileged to belong with Tillamook.

It’s farmer-owned, dependable and gives

10 July/August 2009 / Rural Cooperatives

Good neighbors: The beautiful Oregon coast (USDA photo by Dan Campbell) is

just a few miles away from the Tillamook cheese plant. Photo courtesy TCCA
Rural Cooperatives / July/August 2009 11

Tillamook’s commitment to community

includes environmental stewardship 

Tillamook County Creamery Association’s commitment to

maximizing the potential of its members’ dairy farms would

mean little were it not for its equal commitment to their

communities and the environment. Indeed, corporate

America, for the most part, has a long way to go before it will

ever match the type of commitment to community practiced

for so long by cooperatives such as Tillamook. These

member-owned businesses have long realized that their coops are only as strong as the local communities in which

their members live and work. 

The cornerstone of Tillamook’s commitment to the

community is the cooperative’s “no-net-loss of farmland”

policy. 

“This is a rural county and we are committed to sustaining

it,” says Tillamook CEO Harold Strunk. “We also believe in

the stewardship of the natural resources in our community,

so we partner with our local Soil and Water

Conservation District, the Watershed Council

and the Tillamook Estuaries Partnership to

improve water quality and salmon habitat and

to mitigate flooding. We do this through

leadership opportunities and funding.”

For the past 20 years, the co-op board has

funded an environmental stewardship program

that finances individual projects to protect the

environment. This April, the State Land Board

presented a streamside project award to

TCCA, the Tillamook Estuaries Partnership and

four other partners for a joint project to remove

the Coal Creek Dam, owned by TCCA, and to

restore more than two miles of stream habitat. 

“We are also committed to supporting the youth in our

community,” says Strunk. “One of our more exciting

partnerships involves inviting students to use our wetlands

property as an outdoor classroom to study and prepare for a

career in the science and environmental field. We also offer

five, $2,000 “Excellence in Leadership” scholarships to

students in Tillamook and Morrow counties each year to

encourage higher education. 

TCCA is the largest employer in Tillamook County and,

counting the 110 independent family-owned dairies that dot

the countryside, it has a large impact on the local economy

and its ability to thrive. 

“You can also look at our impact from the standpoint that

the city of Tillamook is able to host a hospital and other basic

services for its citizen because of our employee base,”

Strunk says. “The farms support the veterinarians and the

equipment dealers and employ workers as well. We are also

large contributors to the nonprofits in the

county,” he adds, noting that the co-op has

a long-standing relationship with the local

food bank and its member dairy farmers

and employees are among the largest

contributors to the United Way. 

“It is also important to factor in the impact

of tourism on the local economy,” Strunk

says. “The Tillamook Cheese Factory

Visitors Center draws approximately

1 million visitors to the Visitors Center

annually. This impacts local restaurants,

hotels and other recreational activities in

the area.” 

High school students take

water samples on TCCAowned wetlands.

A sampling of award-winning Tillamook cheeses (photo courtesy TCCA); a replica of The Morning Star — a two-masted schooner launched in 1855

to ship cheese to Portland, and still depicted on the co-op’s label — rests outside the cheese plant. USDA photo by Dan Campbell
12 July/August 2009 / Rural Cooperatives

us good prices.”

Today, the TCCA cooperative is

owned and operated by 110 family dairy

farmers living in the Tillamook region,

such as the Hurlimans, who work the

land, milk the cows and set the policies

and direction. Profits from the

cooperative go back to the farmerowners to help them keep their dairies

economically sustainable.

In addition to its premiere cheeses —

including several varieties of cheddar,

mozzarella, colby, flavored cheeses,

Monterey jack, pepper jack and colby

jack cheese — TCCA has expanded its

dairy offerings to include ice cream,

butter, sour cream and yogurt.

Tillamook cheese is available in

groceries throughout the United States,

but availability of other products

currently is mostly limited to the

western states. 

Significant plant improvements were

made in the 1990s, including the

addition in 1990 of a new cheesemaking

room and the transition to a new, fully

automated cheddaring system known as

the “Cheddarmaster,” a stainless-steel

piece of equipment that drains the whey

from the curd and aids in the

cheddaring process. 

State-of-the-art visitors center

Tillamook is also home to the

Tillamook Cheese Factory’s Visitors

Center, the most visited tourist

attraction on the Oregon Coast,

according to the Tillamook Area

Chamber of Commerce. It started in

the 1950s when the co-op added a small

cheese shop for visitors at the plant. 

In 1979, TCCA opened an expanded

Visitors Center for the public, which

provides an observation area, an

educational slide show, a museum, deli

and fudge counters, and an ice creamdipping counter. 

The Visitors Center accommodates

nearly 1 million tourists each year. 

TCCA’s farmers strive to produce

the highest quality milk possible. In

order to achieve this, they must meet

many rigorous quality requirements set

by their co-op. One major factor that

has led to the co-op’s success in meeting

this objective is its focus on animal care. 

All Tillamook cheese and other dairy

products are produced with milk from

cows that are not supplemented with

artificial growth hormones (rBST).

In keeping with Tillamook’s guiding

principles, Hurliman considers himself

a good steward of the environment.

“Lately, farmers have been ‘branded’ as

the problem, but farming is

environmental,” he says. “If you don’t

take good care of your cows and your

land, you don’t make any money.”

The Tillamook tradition

TCCA considers cheesemaking an

art form, and the co-op works hard to

carry on the traditions and values

started by its founders many

generations ago. The co-op is also

committed to improving the economic,

social and environmental well-being of

the communities in which it operates.

TCCA has reaped many dividends

from its business practices and

commitment to its members and the

community. For example, the

cooperative won six awards for its

cheddar cheeses at the 2008 National

Milk Producers Federation annual

cheese contest. For the third year in a

row, TCCA was recognized by the

Portland Business Journal as a Most

Admired Company in Oregon for

1909 Ten cheese factory operators form Tillamook County Creamery

Association (TCCA) cooperative to control product quality.

1911 TCCA starts cow testing to ensure use of clean, healthy cows, remove

poor quality ones and help with feed rations and breeding.

1917 TCCA hires ad agency and starts campaign in Los Angeles, San Francisco

and Portland. Credited as first community to advertise cheese under a

brand-name.

1921 The Tillamook brand is on all cheese and trademarked.

1946 TCCA starts making rindless cheese.

1947 TCCA starts bottled milk production.

1949 Four TCCA factories consolidate and build new central plant.

1966 TCCA redesigns packaging for better recognizability.

1968 Seven cheese factories consolidate and move operations to Tillamook

central plant. This brings all formerly independent county plants into

TCCA.

1972 TCCA starts a Premium Ice Cream line.

1978 TCCA starts using refrigerated trucks to haul products to market.

1979 Tillamook opens Visitors Center.

1990 TCCA starts new automated “Cheddarmaster” cheddaring system.

1994 TCCA expands Visitors Center to accommodate more than 900,000 annual

tourists. Starts low-fat yogurt line.

1998 TCCA starts fat-free yogurt line.

1999 Co-op launches www.tillamookcheese.com Web site.

2001 Co-op expands facilities and doubles cheesemaking capacity.

2005 Co-op starts another expansion to increase output by 50 percent.

Launches yogurt smoothie and vintage, 100-day-aged white medium

cheddar products.

2006 TCCA completes expansion project. The new vintage white cheddar takes

top honors at National Milk Producers Federation cheese contest.

2007 TCCA introduces three new flavored cheddars. Names Harold Strunk as

president/CEO.

2008 TCCA launches two more flavored cheeses.

2009 TCCA celebrates 100 years as a farmer-owned co-op.

100-Year Milestones

continued on page 43
Rural Cooperatives / July/August 2009 13

 Question: How important has the co-op business

structure been to the long-lasting success of

Tillamook? What do you consider to be the greatest

strength and weakness of the co-op business model?

Harold Strunk: “The cooperative has allowed the

dairy industry to survive in Tillamook County. Absent

the ability to band together and produce a high-quality

dairy product under a brand name, the dairy industry

in the county would not have been able to survive. 

The weakness is that given the strong brand that has

developed, the co-op structure provides some

constraints to growth. The members have the burden

on their shoulders of carrying the capital requirements

for growth. The members have an investment in the

operation of their own farms and the capital required

to operate the creamery.” 

 How has your marketing strategy evolved or

changed in recent years? Do you have any new

products or marketing efforts planned for the start of

your second century?

“The Tillamook brand marketing strategy is

evolving significantly heading into our second century.

Our strategy recognizes that Tillamook plays a very

important role in the lives of people...as both a lifestyle

brand and a great-tasting food product. To capitalize

on this, we are utilizing two key marketing programs

that allow us to build direct, personal relationships that

have an impact with our targeted consumers: social

media and grassroots events.

In recognizing the power of the Internet, we are

connecting daily with current and potential Tillamook

users via direct, one-on-one social media web

programs. These programs include our Tillamook Fan

Club website, Facebook, Twitter and YouTube. The

information we share about our brand via these web

tools inspires people to become brand enthusiasts; they

then motivate others to connect with us. 

We have built an extremely unique, customized

experiential tasting program that will excite both

consumers and our retail customer-partners. We will

put our great-tasting cheese in the mouths of hundreds

of thousands people via a national tour that launches in

August 2009 and will run throughout 2010.”

 With only 110 members, you probably know

virtually every one of them on a first name basis. Does

that make member relations

and communications easier

than for a co-op with, say,

1,000 members?

“Yes, it is easy to keep your

finger on the pulse of what is

going on. Conversely, members are very interested in

the detailed workings of the company, which means we

have 110 bosses. A large part of our communications is

keeping our members informed about the constantly

changing business environment.”

 You are celebrating the co-op’s 100th birthday in a

year that has seen milk prices plummet severely.

What’s the situation there in the Pacific Northwest?

“Yes, it is difficult in the Pacific Northwest, as it is

everywhere in the country. Milk prices are below

production costs. We have been fortunate that the

Association has been able to maintain a good financial

performance due to strong performance of the

Tillamook brand. 

This has allowed us to pay our members a

substantial premium for their milk. However, it is still

not enough of a premium to cover their production

costs during this very low milk market. 

It is hard to celebrate such a milestone in our coop’s history when the situation on the farms is so tough

for our members. However, we feel it is very important

to celebrate this achievement. The co-op, during its

history, has done a great job looking into the future

and has made good business decisions, which allowed

TCCA to reach our 100-year anniversary, and for that

they should be proud. This is a great cooperative with

a strong and growing brand.”

 The co-op has a state-of-the-art visitors center and

gift store adjacent to the main plant in Tillamook.

Does that generate much profit for the co-op, or does it

fall more under the realm of promotion and

advertising?

“The Tillamook Cheese Factory Visitors Center is

for-profit, but it is a minimal profit. The Visitors

Center is our most important and effective marketing

resource. It is the epicenter of our brand, where our

consumers and fans can enjoy a rich and

multidimensional brand experience. 

continued on page 43

A conversation with Tillamook 

President/CEO Harold Strunk
14 July/August 2009 / Rural Cooperatives

By Bill Brockhouse

Cooperative Development Specialist

USDA Rural Development/Cooperative

Programs 

Bruce Pleasant

Cooperative Development Specialist 

USDA Rural Development/North Carolina

orth Carolina has 2,513

elementary and

secondary schools with

1.44 million students.

That’s a lot of hungry

mouths to feed. These schools are

increasingly turning to North Carolina

produce growers for a wide variety of

nutritious, freshest-possible foods, such

as watermelon, broccoli and cabbage. 

The farm-to-school program in

North Carolina originated in 1997

through a partnership between the U.S.

Department of Defense and the Markets and Food Distribution Division of

the North Carolina Department of

Agriculture and Consumer Services

(NCDA&CS). The first effort involved

supplying apples to schools in western

North Carolina. The initial success

resulted in the program expanding

throughout the state, with participation

growing every year. 

There are more than 2,000 farm-toschool programs operating in 39 states.

They bring healthy food from local

farms to children’s plates at school. This

also helps provide a market for local

farmers and reduce the distance food is

shipped. 

In 2004, 60 school districts in North

Carolina used the program. The

number increased to 67 school districts

in 2008, which made record purchases

of $700,000 through the program

during the 2008-09 school year, up

from $502,000 in 2006-07. 

Birth of the cooperative

The North Carolina Farm-ToSchool Cooperative was incorporated in

2008, born out of producers’ desire to

supply fresh, healthy produce to the

school children of their state. The coop and its mission have been a source of

pride for the state’s produce growers

ever since. 

“The schools’ participation in the

program allows the producers to

diversify their sales and provides a

healthier diet for the children.” says

Carolina growers form co-op to supply farm-to-school market

Ripe Time Delivery 
Rural Cooperatives / July/August 2009 15

cooperative President James Sharp.

“This is also an opportunity to educate

children through promotions about the

origins of their food.” 

In addition to providing fresh

produce, the program teaches

elementary and secondary school

children about North Carolina produce

and how it is produced. This

educational effort involves posters in

school cafeterias, lesson plans and

coloring activities for younger children. 

NCDA&CS tractor-trailers are rolling

advertisements that display images of

school children enjoying North

Carolina strawberries. This year the

group will consider using promotional

“tent cards” on cafeteria tables and

other educational items to help increase

students’ understanding of North

Carolina agriculture and good

nutrition.

Grower/suppliers pay an assessment

of 50 cents per case of produce

delivered to the schools to help fund

promotions and to pay for educational

materials. 

The cooperative has 30 members

who supply 12 commodities. These

include eight varieties of apples,

seedless watermelon, cabbage, broccoli

crowns, sweet potatoes, apple slices,

strawberries and blueberries. 

“You can’t get any fresher produce

than this,” says Tommy Fleetwood,

agricultural marketing supervisor with

the NCDA. “It is delivered to the

schools two days after harvest,” he

notes, compared to at least a week for

produce shipped in from the West

Coast. He says if the schools add a

summer feeding program, produce

could be supplied year round.

The most recent Farm Bill gives

schools the option to purchase produce

from local farmers. A month before

each commodity offering is in peak

season, a memorandum is sent

electronically to all the Child Nutrition

Directors with an order form. Upon

receipt of the solicitation, the schools

place their orders electronically,

guaranteeing the delivery of the freshest

produce available when promised. In

the past, they were not able to indicate

a geographic preference, due to

procurement regulations, explains

Marilyn Moody, senior director for

Child Nutrition Services for Wake

County Public Schools. “This allows us

Bursting with just-picked flavor, North Carolina strawberries are harvested, shipped and served within 48 hours to hungry students in one of the 67

school districts being supplied by the North Carolina Farm-to-School Co-op.
16 July/August 2009 / Rural Cooperatives

to get fresh produce at the peak of ripeness on the lunch

tray,” Moody says. 

Food distribution network

Farm-to-school program delivery is made possible with

the help of a unique food distribution service through

NCDA&CS, which maintains a network of 14 trucks and 30

trailers. It also has facilities for storing and cooling

commodities, helping to ensure that produce is the freshest

possible when it is served to students. 

This fleet of trucks, along with two warehouses with

coolers and freezers, is believed to be the only food

distribution network in the nation operated by a state

department of agriculture. NCDA&CS collects the orders

from school nutrition directors. Produce is then picked up at

three grower delivery points. From there it is hauled to one

of the warehouses, where orders are processed and the

produce is then trucked to the schools — all within 48 hours. 

This past year, 13,000 flats of strawberries were provided

to schools by the cooperative. That represents about 100

acres of strawberries, Fleetwood says. 

The cooperative has a board of seven growers, most of

whom also serve as representatives of statewide commodity

organizations. Three NCDA&CS representatives serve the

board as non-voting advisors. It is aided by a five-member

advisory committee, comprised of child nutrition directors,

which meets two or three times each year. The committee

helps test new products and provides feedback to the

cooperative regarding the success of trial products. 

Boosting quality and distribution

The cooperative’s main purpose, in terms of its members’

operations, is to improve the quality and facilitate the

distribution of members’ produce. Until the cooperative was

formed, NCDA&CS was responsible for program operations,

from farm-gate to schools. NCDA&CS still has many

responsibilities, but is sharing more of them with growers. 

Reasons for using the cooperative business structure

included the desire to provide growers with control of

marketing, to increase coordination and efficiency of

operations and to comply with existing federal cooperative

laws. 

As member-owners of the business, growers have

responsibilities to their cooperative. This includes signing a

marketing agreement which contains requirements for

produce they deliver. Requirements include the volume and

type of produce, cooling, grading, washing and packaging.

They also elect a board of directors and keep informed about

how their cooperative is performing. 

The road ahead

As with any cooperative, organization does not guarantee a

market for the members. A supplier meeting for each

commodity is held each year prior to bidding on the farm-toschool contract. All members participating as a commodity

supplier must have a representative present at the meeting,

where discussions are held regarding price, volume, varieties,

grade standards and packing methods. 

In late July, the NCDA&CS solicits bids on behalf of

Child Nutrition Services for North Carolina Schools.

Produce must be North Carolina-grown and certified as

meeting USDA’s Good Agricultural Practices (GAP) food

safety guidelines. 

Successful bidders must also be able to provide all

commodities listed and provide a $2-million liability policy.

In its first year, the cooperative’s bid was chosen, and it has

enjoyed a successful year with a high volume of high-quality

produce. 

Because of its low overhead and experience in feeding the

state’s school children, the cooperative has a unique

opportunity to keep fresh produce at the “peak of ripeness”

in North Carolina schools. ■

Grower control and responsibility

All North Carolina Farm-To-School Cooperative

members must be growers who are using the

cooperative to market through the farm-to-school

program. Thus, they have responsibility for monitoring

operations, establishing standards and controlling the

overall strategic direction of the cooperative.

The cooperative’s objectives are to:

■ Supply locally-grown fresh fruits and vegetables to

school systems throughout North Carolina; 

■ Promote healthy eating to school students across the

state to fight childhood obesity;

■ Provide nutrition education concerning fresh fruits

and vegetables to students throughout the state;

■ Support organizations that complement the interests

of the organization and its membership;

■ Promote North Carolina farmers and agriculture.

Truck trailers display promotions for the farm-to-school

produce program.
By Stephanie M. Smith, Senior Legal Adviser 

Cooperative Programs, USDA Rural Development 

n today’s uncertain times, the Capper-Volstead

Act is not without reach of legislative change.

Capper-Volstead was enacted to address

economic issues that faced agricultural

producers. It gives agricultural producers a

limited antitrust exemption to market their production on a

cooperative basis, which legally permits reduction of

competition among agricultural producers when they join

and act in the marketplace, in effect, as one farmer.

Summarized below are highlights of possible legislative and

judicial responses to Capper-Volstead.

In 2002, Congress created the Antitrust Modernization

Commission (AMC) to examine whether the antitrust laws

should be modernized and to submit its findings to Congress

and the President. The AMC is a 12-member, bipartisan

commission consisting primarily of antitrust lawyers with

large law firms and major corporations. The commissioners

originally planned to complete a draft report by the summer

of 2006 and to submit a final report in the spring of 2007. At

this time, a final report is still being drafted for

recommendation by commissioners appointed to several

working groups to decide on antitrust immunity legislation,

such as Capper-Volstead. Information about the AMC, its

commissioners and the initial reports of all working groups

are available at: http://www.amc.gov. 

In December 2004, the Department of Justice (“Justice”)

simultaneously filed an antitrust lawsuit against the Eastern

Mushroom Marketing Cooperative (EMMC) of Kennett

Square, Pa., while also entering into a consent decree settling

the case. EMMC, in an attempt to limit mushroom

production by non-members of the cooperative, purchased

and leased land capable of producing mushrooms and placed

deed restrictions on the titles to the land. The deed

restrictions barred mushroom farming on the land, in

perpetuity. 

At this time, Justice did not challenge the Capper-Volstead

status of EMMC. Rather, Justice asserted in its complaint

that the Capper-Volstead Act does not protect members of a

cooperative who conspire to prevent independent, nonmember farms from competing with the cooperative or its

members. 

Under the terms of the consent decree, EMMC agreed to

remove all restrictions on producing mushrooms from the

deeds and to restrain from similar activity in the future. No

fine or other additional punishment was levied against the

association or its producer-members. 

Thus, EMMC members may continue to agree on prices

and otherwise market their mushrooms through their

cooperative. A consent decree does not set a judicial

precedent in the same way a court decision can. However,

this case should put marketing associations on notice that the

Justice Department may intervene when it believes a

cooperative’s actions artificially reduce the acreage and

facilities available to non-members to grow and market the

same product as the cooperative’s members, thereby

depriving consumers of the benefits of competition.

And the beat goes on... 

On March 26, 2009, All American Mushroom Inc., Robert

Altman and Associate Grocers Inc., filed an action against

EMMC related to the same issues brought by Justice. In this

case, however, the court ruled against the cooperative, saying

that it is not entitled to the Capper-Volstead antitrust

immunity. The court found, on cross-motions, for summary

judgment that the cooperative’s admission of a non-farmer

member with voting rights destroyed its antitrust immunity. 

The cooperative and its members have filed a notice of

appeal in the Third Circuit and the plaintiffs have filed their

opposition to the appeal. If the appeal is denied, the case will

be remanded back to the District Court for further review of

antitrust violations and other issues.

Producer-owned marketing cooperatives will want to keep

abreast of legislative and judicial actions and be ready to

defend their antitrust protections if necessary. ■

Rural Cooperatives / July/August 2009 17

Legal Corner

Capper-Volstead, Revisited

Essential reading

for co-op directors

USDA's Capper-Volstead brochure

is back in print, with minor updates.

To order copies, send e-mail to:

coopinfo@wdc.usda.gov, or call

202-720-8381. 
18 July/August 2009 / Rural Cooperatives

Wine co-op helps transition from tobacco while boosting agri-tourism

New life for an old town 
Rural Cooperatives / July/August 2009 19

By Stephen Thompson, Assistant Editor

e-mail: stephena.thompson@wdc.usda.gov

n the picturesque farmland of historic St.

Mary’s County in Southern Maryland, a

cooperative of wine-grape growers is working

to build a new industry that can help take the

place of a lost cash crop.

For centuries, the agricultural lifeblood of the county was

air-cured tobacco. It grew well in the sandy soil and hot,

humid climate and it provided a good living from as little as

30 acres. Fortunes were made from it. In colonial times,

tobacco was Maryland’s prime export, and its leaves even

served as currency. 

But in 2004, the federal tobacco price-support system

came to an end, and with it a way of life. The Maryland

cigarette restitution, or “buyout,” fund provided 10 years of

payments, starting in 2000, to compensate farmers for the

loss of their protected tobacco allotments and help them

make the transition to new crops. St. Mary’s County had the

largest number of participants in the program.

Today, only one year before the buyout program begins to

expire, tobacco has all but disappeared from the Southern

Maryland landscape, with less than 100 acres planted in St.

Mary’s County. The auction houses that were centers of the

industry and of cultural tradition are all closed. The only hint

of the crop’s former importance is the many curing barns

now standing incongruously among fields of corn and

soybeans.

But the trouble with corn and other grains is that they are

low-value crops, requiring much larger acreages to be

profitable. Corn yields are not especially high in the area, and

the small average size of land parcels raises the costs of

cultivation and harvesting. 

So, with the demise of tobacco, local farmers and rural

planners have been searching for high-value cash crops that

can take its place. One that offers some hope, interestingly, is

catnip. Another is wine.

Vines replace tobacco

Rich Fuller is a retired civil servant who worked at

Patuxent Naval Air Station, on the banks of the Chesapeake

Bay in St. Mary’s County. He now volunteers at Summerseat

Farm, a historic former tobacco plantation, owned by a

nonprofit organization, near the county seat of

Leonardtown. He’s also president of the

Southern Maryland Wine Growers Cooperative, an

association of 15 viticulturists who are pioneering local wine

production.

The cooperative was formed in 2007, after political

officials from Leonardtown and the county came to a local

group of winegrowers with an offer. They would provide

funding and a building for a winery. In return, the

winegrowers would help develop wine as a commercial

industry — not just as a new livelihood for farmers, but also

as a means of making the area more attractive to tourists.

Wineries have proved to be valuable tourist draws in

nearby areas. In neighboring Virginia, wine festivals, tastings

and vineyard tours draw thousands of visitors every year.

Next door to St. Mary’s, Calvert County, Md., has established

the Patuxent Wine Trail, a tour of five vineyards.

As a tourist attraction, St. Mary’s County has a lot going

for it. It’s only an hour drive from Washington, D.C., and

boasts beautiful scenery and a historic past. It includes St.

Facing page: Symbolic of the changes occurring in Maryland agriculture, an old tobacco barn provides the

backdrop for a vineyard. Above: A site plan for a development that includes not only the co-op’s winery

(upper right corner), but a park with water access for kayaking and canoeing. USDA photos by Stephen

Thompson
20 July/August 2009 / Rural Cooperatives

Mary’s City, the first capital of Maryland and the fourtholdest English settlement in North America. It is also home

to a number of other charming small communities. Old

lighthouses, plantations, bed-and-breakfasts and small

museums dot the landscape. 

A sizeable Amish colony adds to the atmosphere, and the

wide highway shoulders built for their horse-drawn wagons

and carriages attract large numbers of bicyclists every year for

the Amish 100 bicycle tour.

The building offered by the town for the winery is a

former state highway department maintenance shop. It’s

located next to an undeveloped park, on the banks of a

picturesque creek. 

Winery to anchor park/market development

Laschelle McKay, the town administrator, is supervising

the renovation of the building and the development of the

property. The plan is to make the winery the anchor of a

beautifully landscaped park with a picnic area, nature walk, a

demonstration garden and a canoe- and kayak-launching

area. A canoe-tour company has

announced plans to launch trips

from the park, which McKay sees as

a welcome complement to the

winery (see illustration).

The park will complement other

efforts by the town to draw tourists,

including the redevelopment of the

waterfront; the town originally

served as a tobacco port.

Leonardtown boasts a number of

restaurants, galleries, shops and a

photogenic town square. It also hosts

a number of special events

throughout the year, including a

county fair, a classic car show, crab

and oyster festivals, an antique show,

a bluegrass music festival and other

events that could benefit the winery

project — and vice versa. 

McKay’s current goal is to get the

winery operating in time for this

year’s harvest in September. The landscaping and other

construction will take a little longer. She seems proud of the

cooperation between county, town and winegrowers in

getting the project off the ground. “It’s taken us years to get

to this point,” she says. “But it’s finally coming together.”

Bob Schaller, in charge of business development for the

county and a close collaborator with McKay on the project,

shares her satisfaction in the results of the collaboration. The

county has put up $535,000 and the town added $35,000 for

the winery, including the vats and other equipment. To

develop the park, a grant of $200,000 was obtained from the

state, matched by $200,000 from the town. 

“We need to diversify our economic base, and agritourism is one way to do that,” says Schaller. 

This isn’t the first agricultural development project on

which the county has embarked. The Loveville Produce

Auction, also a recent county initiative, is located a few miles

down the road. Operated by members of the local Amish

community, it is used by more than 50 Amish farmers as a

market for their vegetables, cut flowers, nursery plants,

firewood, hay, and other products. 

Schaller says the auction is succeeding in its goal of

encouraging the development of agricultural cash crops to

replace tobacco, as it is hoped the winery will do.

Co-op experimenting with varieties

With the infrastructure taken care of, the co-op’s side of

the bargain is making the winery work. Each member has

contributed a $2,000 stake and pledged to help run the

facility. A $2,000 investment may not seem like much, but

most of the members have up until now been little more than

hobbyists, some growing only an acre or two of grapes. For

them, going “professional” is a big step. 

The vintners did the research and

located a source for the winery

equipment, but there remains the

problem of how to find grape

varieties that will grow in local

conditions and produce a decent

wine.

“This isn’t the easiest part of the

world to grow wine grapes,” Fuller

says. “There are a lot of varieties that

just don’t work. Syrah vines just die.

Riesling grapes grow, ripen and then

rot immediately. Cabernet Sauvignon

vines grow really well here, but they

continue to grow late in the fall, and

then freeze and die back to the

ground when the cold weather

comes. 

“So, it used to be that people who

grew grapes here used hybrids that

did well in the climate, but didn’t

make the best wine,” Fuller

continues. “They just got used to the way the wine tasted.”

The hot, humid climate also encourages insects, various

kinds of fungus, and other pests. Fuller says that precise and

timely application of crop protectants is vital for a successful

harvest. An untimely rain can disrupt the application schedule

and lead to losses. Summerseat farm is currently trying out

15 different vine varieties supplied by the University of

Maryland’s Cooperative Extension service in a search for the

best compromise between hardiness and flavor. All of them

must be grafted to resistant American rootstock to survive

soil pests. The types that seem to work out best, Fuller says,

are those from Italy, including the popular Sangiovese grape,

Co-op members Gerald Byrne, Carolyn Baldwin

and Rich Fuller inspect one of Byrne's

vineyards. Growing grapes successfully in the

region requires vigilance against pests.

continued on page 42
Rural Cooperatives / July/August 2009 21

By Dan Campbell, editor 

allas Tonsager, a South Dakota farmer with

wide-ranging experience working with

agricultural cooperatives and in key

government positions, is the new under

secretary for USDA Rural Development.

Tonsager will oversee a total portfolio of more than $100

billion that USDA has invested through 40 different Rural

Development programs to make rural America a better place

to live and do business in. Rural Development has more than

6,000 employees in some 500 offices across the nation and in

U.S. territories. 

Tonsager is a well-known champion of rural America who

has a keen interest in cooperatives — especially for the role

they play in uniting producers and other rural people in

order to develop their own value-added businesses. 

Prior to his new appointment at USDA, Tonsager was a

board member of the Farm Credit Administration (FCA), to

which he was appointed in 2004 by President Bush. FCA is

responsible for regulating and examining the Farm Credit

System, a nationwide producer-owned cooperative financial

system that meets nearly one-third of the credit needs of the

nation’s farmers and ranchers. He also served as a board

member of the Farm Credit System Insurance Corporation.

Before joining the FCA, Tonsager was executive director

of the South Dakota Value-Added Agriculture Development

Center, where he helped producers develop value-added

agricultural projects and to increase the consumer appeal of

agricultural products.

This is the second major office Tonsager has held at

USDA. Under President Clinton, he was state director for

USDA Rural Development in South Dakota. He is thus well

versed with the agency and its work to support and develop

rural business and cooperatives, rural utilities, rural housing

and community development. As South Dakota state director

from 1993-2001, he oversaw a diversified loan portfolio of

more than $100 million. In 1999, he was recognized as one of

Rural Development’s two outstanding state directors. 

In the late 1980s and early 1990s, he gained insight into

Building a better rural America: Dallas Tonsager (left) helps participants in a USDA-sponsored self-help housing program build a home in

Delaware. Under the program, low-income people invest “sweat equity” for their downpayment on a new home. USDA photos by Bob Nichols 
the needs of family farmers while serving two terms as

president of the South Dakota Farmers Union. He also

served on the board of National Farmers Union Insurance.

During that same period, he was also a board member of

Green Thumb Inc., a nationwide job-training program for

senior citizens.

From 1990-1993, Tonsager was a member of the advisory

board of the Commodity Futures Trading Commission, the

federal government’s watchdog agency that oversees the

trading of futures for oil, precious metals, grains, currencies

and other commodities. It also regulates trading in derivatives

linked to stock indexes and bonds. 

Tonsager grew up on a dairy farm, and along with his

brother (Doug) he owns Plainview Farm in Oldham, S.D.,

where they grow corn, soybeans, wheat and hay. He earned a

BS degree in agriculture from South Dakota State University

in 1976. 

Tonsager and his wife, Sharon, have two sons. 

The following conversation took place in June a few weeks

after Tonsager had settled into his new office at USDA

headquarters in Washington, D.C. 

Q. With your background, you seem to be ideally suited for

the position of Under Secretary for Rural Development. Are

you feeling pretty excited about it? 

Tonsager: Sure, it’s a great opportunity and something

I’ve been contemplating for some time. I do have some

concerns about the agency, which has seen reductions in

staffing levels and has shifted its focus from direct to

guaranteed loans. I plan to fight to get more emphasis back

on the direct loan programs and to grow the Cooperative

Services program. 

We have in Agriculture Secretary Tom Vilsack a leader

who cares a great deal about rural development. At the same

time, the economic downturn has resulted in an economic

stimulus package being approved by Congress that includes

extra funds for some of our programs, such as broadband,

water and wastewater development. I feel fortunate to have

arrived here at a unique time when Rural Development is

getting a lot of attention and has some extra resources to

work with. 

Q. The Cooperative Services program has declined sharply

in terms of staffing and therefore output (co-op educational

materials, technical assistance, co-op development, research,

etc.) during the past decade or so. Do you see a chance to

rebuild the program? 

I certainly hope so. I am a strong proponent for

cooperatives. I like what co-ops do and I grew up in a co-op

culture. It is the right kind of business model for this time.

Some creative things have been done with co-ops during the

past decade. This has allowed additional capital to flow into

co-ops. The idea of producers investing to create ventures to

add value to what they grow is so important to the rural

economy. So I will be a strong advocate for the growth of

Cooperative Services to better support and work closely with

cooperatives. I’m quite excited about the prospects. 

Q. Can co-ops play a major role in the revival of the rural

economy? 

Absolutely, and they are playing an import role in it every

single day. We have rural co-op electric systems, co-op rural

water systems, co-op telephone systems, co-op farm supply

systems and co-op marketing systems. They are fundamental

to agriculture and to life in rural America. Value-added coops — be they new-generation or traditional model co-ops —

are essential to the rural economy and will play an important

role in rural stimulus. We will look to support them in every

way we can.

Q. Any specific sectors where you see special potential for coop growth?

I think the local foods movement — “know your farmer,

know your food” — is something that really lends itself to

cooperatives. Producers of local foods can associate with

other producers to pursue this market, and in many cases

they already are. It just makes a lot of sense. 

Rural electric co-ops are also well positioned to help with

economic stimulus. Many rural electric co-ops are using

USDA’s Rural Economic Development Loan and Grant

22 July/August 2009 / Rural Cooperatives

Dallas Tonsager discusses USDA’s housing programs during a

National Housing Month event in Delaware. 

“Co-ops need to constantly

examine themselves to ensure

they are reflecting their

members’ needs.”
Rural Cooperatives / July/August 2009 23

Program to support economic development activity in their

communities. This often involves setting up revolving loan

funds for projects. Co-ops have also been very active in

renewable energy development, including wind energy.

We’ve had a strong period of developing value-added

businesses, especially alternative energy. Renewable energy

has gone through some cycles, but I will be a strong advocate

for using co-ops to continue building energy ventures and

other value-added projects. I am also a very strong supporter

of USDA’s Value-Added Producer Grant Program (VAPG). 

Q. As you mentioned, biofuels have certainly been through

some huge swings in fortune during the past few years. Are

you still optimistic about this sector and its potential for

producers to benefit from it?

Absolutely, although we have to pursue it thoughtfully and

on a sound economic basis. I’ve grown up in country where I

can see the direct economic benefits that have accrued to

producers from biofuel programs. But we must also be

cognizant of the impact that biofuels have on livestock

producers. 

That said, the livestock sector also has opportunities with

renewable fuels. I was just at a biogas conference in

California, where they are very excited about the opportunity

of producing methane gas and biogas from waste products.

We need to be looking very hard to see how we can help the

livestock sector get more involved in alternative energy.

USDA has done 120 projects so far just in the biogas area –

some really great demonstration projects. 

Q. How important is it that members be active in their coops?

By definition, co-ops are meant to help people assist

themselves by working together. The more attention people

pay to their local co-ops and participate in them, the more

their co-op will reflect their needs. If co-ops have a weakness,

it is that sometimes when they are working really well, people

stop paying attention to them; they take the co-op for

granted and think they no longer need to be active

participants. 

If co-ops are to be relevant in their communities, members

must go to co-op meetings and participate in the life of the

co-op. And they must communicate to the co-op what they

expect from it. Co-ops need to constantly examine

themselves to ensure they are reflecting their patrons’ needs.

When that stops happening, co-ops get into trouble. When

co-ops start focusing on things that do not necessarily serve

their patrons, they have a problem. 

Q. Tell us more about your co-op roots. 

My family belonged to a dairy cooperative; we got our

electricity from a rural electric co-op; we were served by a

local co-op elevator and we got our oil and fuel from a supply

co-op. Co-ops touched virtually everything we did, and to a

large extent they still do. My brother [with whom Tonsager

still owns a farm] sells corn to ethanol plants and sells

soybeans to a processing co-op. So co-ops have always been

major players in the daily life of my family. 

Q. Any specific projects you worked on during your years

with the South Dakota value-added center or with Farmers

Union that you think exemplify projects that can be

replicated elsewhere?

Even prior to being at the co-op center, I worked on a

contract to develop a blue cheese processing plant in

Wisconsin. That kind of artisan cheese-processing makes a

lot of sense in many areas. Much of my work in South

Dakota revolved around ethanol and biodiesel, and those

types of projects certainly can, and are, being replicated in

other parts of the country. Another project involved organic

flaxseed processing and marketing. Another involved

processing soybeans into a food-grade product. 

The idea is to create products for specialty markets,

adding value to a locally produced commodity. The more

value-added centers and co-op development centers can

facilitate these kinds of businesses, the better. 

Q. From the vantage point of your years at Farm Credit,

what major lesson do you think the nation should have

learned from what has been called “the excessively reckless,

speculative” climate that reigned for so many years on Wall

Street and has been widely blamed for leading us into the

worst recession since the 1930s? 

The Farm Credit System (FCS) is quite conservative.

Even predating my tenure on the board of the Farm Credit

Administration [FCA, which regulates the FCS], they

maintained a very basic regulatory process that requires

system institutions to keep set amounts of capital on hand. If

their capital eroded, we pulled them back and said: “no, you

shouldn’t be doing that; you need to maintain a more sound

capital base.”

As the regulator of the Farm Credit System of financial

cooperatives, we at FCA would send in examiners to make

sure that the underwriting practices at the member

institutions were good and that that they stayed in a safe

zone. Farm Credit has been a very good model of making

sure that the capital of the owners and investors in those coops was looked out for, and that the underwriting of loans

was done in a safe and sound manner. 

My sense is that these other large financial institutions

that got into so much trouble were allowed to reduce their

capital levels very significantly. I’m very disappointed with

how this happened and how these financial institutions overleveraged themselves. I wish that they had been regulated in a

stronger manner, which I believe could have prevented this

from occurring. 

The Farm Credit System learned lessons from its period

of distress in the 1980s, and worked to put itself in a much

stronger position after that, with a fiscal policy that is

continued on page 33
24 July/August 2009 / Rural Cooperatives

By Bill Patrie, Executive Director 

Common Enterprise Development Corp. 

ithout a compelling

vision, co-ops are

not sustainable

A vision (according to

Peter Senge in “The

Fifth Discipline”) is the answer to the

question: “What do you want to

create?” That is a very positive

question. It implies that you can create

something. 

It asks you a deeply personal

question as if the answer really matters.

It does matter, because if you and I and

many others want to create something

very badly, and we are willing to invest

our energies to make it become reality,

there is a good chance we will. 

Images of the future really matter. 

My son, a student at Minnesota State

University at Moorhead, Minn., and

10,000 other volunteers (many of them

college and high school students),

worked around the clock in a fevered,

but well-organized, effort last spring to

build a levy of sandbags when the Red

River reached a record high of 41.6

feet. 

There were two images of the future

of Fargo, N.D., at this time. The

national media portrayed a flood as

inevitable; state emergency agencies

developed relocation plans changing all

four lanes of Interstate 94 to west

bound for evacuees. 

The other image was held in the

minds of those tired college and high

W

Creating Co-op Fever: 

Hard Lessons Learned

Editor’s note: This commentary is excerpted and adapted from a longer paper that presents 14 lessons Patrie learned

during his many years devoted to starting cooperative enterprises in his home state of North Dakota. The title refers to

his 1998 publication (published by, and available from, USDA) “Creating Co-op Fever,” about a surge of new co-ops

and producer-owned businesses in North Dakota and neighboring states. From 1990 until 2006, he worked on 104

development projects that represented $800 million in investments. Of those businesses, 30 are still operating, generating

hundreds of millions of dollars in new revenue and employing several thousand people. For the complete text of his paper,

e-mail Patrie at: bill@cedc.coop.
Rural Cooperatives / July/August 2009 25

school students and the mayors of the

cities of Fargo and Moorhead. That

image was stated quite simply by Sen.

Byron Dorgan who, when he was asked

by the media why the federal

government didn’t order an evacuation,

replied: “The people of Fargo and

Moorhead think they are going to win

— and I won’t bet against them.” They

won.

Organizations that have a negative

image of their own future cannibalize

themselves as they try to fix what is

wrong. They ask negative questions,

such as: “What is wrong with us? Who

screwed up?” 

A steering committee for an

emerging cooperative that does not

have a vision of its own success

embedded in the minds of the chair and

the board is not likely to survive. In my

view, a deeply held positive image of the

cooperative’s future is a more important

asset than balance sheet equity.

There is no easy “cookie

cutter” approach to creating

cooperatives

As co-op developers and educators,

we are always looking for that

“northwest passage” to reduce

cooperative development to a routine.

But all co-op development efforts are

still dependent on local cooperative

leadership. 

Here is the lesson: Don’t ever start a

cooperative without trustworthy local

leadership already in place. This is

indeed a hard lesson and it leads to

bitter arguments. I have lost those

arguments numerous times. But I am

sure about this.

I have seen the other side — where a

developer (usually with the best of

intentions) gains control of a property

from an owner and re-develops it with

the intention of forming a cooperative

and selling it at a profit to the

cooperative. This methodology requires

inordinate faith in someone’s ability to

recruit and train cooperative directors.

It also requires the potential co-op

members to see the financial value of

joining. But they may not.

Because cooperatives are democratic

organizations, they will elect their own

leaders, not leaders selected by experts.

As a co-op organizer, if I can’t find

trustworthy, electable leaders to serve

on the steering committee to study the

feasibility, I stop. Not everyone does. 

A rural electric cooperative bought a

processing plant, put money into it and

attempted to sell it to the growers who

sold oil seeds to it. The growers were

also members of the electric

cooperative; they didn’t understand why

they needed to take the rural electric

cooperative off the hook (to finance the

start-up), since they owned the electric

cooperative as well. They didn’t buy it. 

Many co-op developers will be

tempted to violate this lesson. Don’t!

A vision or a dream is an image of

the future that we deeply desire. Martin

Luther King did not say: “I have a

strategic plan.” Instead, he spoke

personally about the kind of future he

wanted. That vision had power. 

There is no surrogate

for local leadership

Cooperative educators and

developers must find ways to work on

the local level. University- or capitol

city-based development programs that

can’t get their staff to meetings in

farmhouse kitchens will not likely

understand how this works. 

While the Extension Service is one

of the most successful programs in

history at helping to diffuse innovations

(see “Diffusion of Innovations,” Everett

Rogers, 1995, The Free Press, Simon

and Shuster), it has not yet learned how

to capture innovations that come from

the ground up. 

The Extension agent is an

information provider and problem

solver, but only in rare cases are they

agents of change. Land-grant

“To a cooperative developer, the first job is

getting the right local leaders. Fail this test,

and nothing else matters.”

Sandbag dikes such as this — built in a

fevered, round-the-clock effort by students

and other volunteers — helped the people of

Fargo hold back the swollen Red River early

last spring. Photo courtesy Daniel Reetz
universities teach local leadership in

carefully designed curricula to carefully

selected potential leaders. Unfortunately, local leaders are selected by

community members — often with

different criteria. 

The answer is real-time leadership

training for leaders who have already

been elected. This training may occur

at board meetings or community

meetings, but it needs to occur in the

community. 

The trainer of local leadership is

more like a 4-H leader than a

university-based leadership expert. The

leadership trainer is actually a coach,

strategist, confidant and listener who

models good leadership skills. 

Jim Collins, in his book “Good to

Great,” makes an excellent point:

getting the right people on the bus is

the CEO’s first job. To a cooperative

developer, the first job is getting the

right local leaders. Fail this test, and

nothing else matters. 

This is especially difficult, because

the co-op educator or developer doesn’t

control the local leadership selection —

but only influence it. Finding a

trustworthy, already-busy person who

can commit to a long-term “servantleadership” role is asking for miracles.

They do happen.

There are no perfect leaders

John Calhoun supposedly said of

Henry Clay that although Clay was

brilliant, he was also corrupt and “like a

rotten mackerel in the moonlight, he

both shines and stinks.” 

I have learned that to be true in

today’s leadership ranks as well. I have

worked with men and women whose

skills and character were just what the

new enterprise needed. But what is

more common is a mixture of brilliance

and stupidity. It is tempting to

exaggerate the virtues of the leader and

attempt to minimize the weaknesses.

However, local people will not be

fooled since they know their leaders. 

Patience and “just-in-time”

leadership training can go a long way

toward converting a solid community

member into a good leader. It is

essential, however, to have that leader

in charge of the project. If local

leadership is not available, stop the

process until it is. 

Discipline is essential 

There is not yet a recognized body of

knowledge that defines the standards

for co-op development practitioners to

follow. CooperationWorks! (a national

training network for co-op developers)

has published the Madison Principles

(see sidebar) to guide cooperative

developers, but there is no enforcement

mechanism for those who violate them.

Federal agencies that provide financial

support for cooperative development

should agree on something like a “best

practices” statement. 

Contractors, lawyers, doctors,

accountants and many other professions

have standards of conduct that if

violated can cause individuals to lose

professional standing. That is not true

in the cooperative development world

in the United States. 

In the work of co-op development, a

long-term view is generally needed.

The Bank of North Dakota took 10

years from inception to funding. A

power plant takes 10 years to permit

and site. New ideas can transform rural

The Madison Principles

Editor’s note: These professional standards for cooperative development

practitioners were written by the members of CooperationWorks! — a national

network of cooperative developers — in Madison, Wis., in 1995. 

1. Individuals providing technical assistance subscribe to the highest level of

ethics and shall declare any conflict of interest, real or perceived, so that

they can be a credible source of objective feedback and an articulate

advocate of the project as needed. 

2. Cooperatives are tools for development and should promote both social

empowerment and economic goals. 

3. Applied appropriately, cooperatives have value to all population groups and

for all businesses and services in the public and private sectors. 

4. Each cooperative responds to its unique economic, social and cultural

context; as a consequence, each cooperative is different. 

5. There are essential steps that must be taken in a critical path to succeed. 

6. An enthusiastic group of local, trustworthy leaders is a prerequisite for

providing technical assistance. The effective cooperative development

practitioner nurtures that leadership by helping them shape a vision that

will unite members and provide ongoing training. 

7. Cooperatives only work when they are market driven; the development

practitioner seeks to ensure that accurate market projections precede

other development steps. 

8. Member control through a democratic process is essential for success. 

9. Success also depends on the commitment of the member’s time and

financial resources. 

10. There must be tangible economic benefits for members. 

11. The cooperative’s products and services must generate sufficient revenue

so that the effort can be financially self-sustaining. Provisions must be made

to share any surplus equity. 

12. Market opportunities exist throughout the world. Cooperatives and market

development should transcend national boundaries. 

13. Successful, established cooperatives should assist emerging cooperatives

to develop. New and emerging cooperatives should be encouraged to

communicate with and learn from successful cooperatives. 
economies, but the process is

evolutionary not revolutionary. 

Discipline is needed to adhere to a

reliable set of principles — such as the

Madison Principles — by cooperative

developers who must not become

corrupted by the lure of quick fixes.

One-hundred years after the idea of the

Bank of North Dakota was first

advanced, that institution is providing

financing to farmers to join

cooperatives. But there had to be a

great deal of discipline along the way to

keep the bank from going broke. 

Likewise, a cooperative must have

internal discipline. 

At an organizational meeting for

Northern Plains Premium Beef, a

rancher from Saskatchewan protested

the idea of having to place a Northern

Plains ear tag on each of his calves. But

this was essential, because the co-op

had committed itself to being able to

identify all meat products it sold all the

way back to the ranch where a calf was

born. Jim Rainey, a former CEO of

Farmland Industries who was acting as

our executive advisor, was normally a

soft-spoken man, but in response to this

rancher’s comment he banged the table

with the palm of his hand and said:

“Discipline, gentlemen, discipline.” 

Without the discipline of source

identification, Northern Plains

Premium Beef was just another cattle

company. The non-complying rancher

was asked to leave the cooperative, and

he did.

I have learned that if members are

not capable of the necessary disciplines

inherent in running the cooperative, it

will not last.

Courage and intelligence

outweigh charisma as a

leadership trait 

Jim Collins in “Built to Last” and

Peter Senge in “The Fifth Discipline”

all came to this same conclusion. As I

look around at the cooperatives that

last, I see board chairs and managers

who have remarkable humility. They

are focused on delivering a member

benefit in a clear, straightforward way. 

In most cases, they have placed their

egos out of the way, have learned to

take unfair criticism and have come to

understand the unique aspects of the

economic sector they work in. 

Farmers Union Marketing and

Processing Association (FUMPA) was

formed in the 1920s. It operates

rendering plants in Redwood Falls and

Long Prairie, Minn. The co-op picks

up dead stock from farms and

renderable materials from packing

plants in a four-state region. 

FUMPA recently added a biodiesel

facility to its Redwood Falls plant and

has added a line of kitty litter to its

product line. It has also established a

foundation that helps establish other

cooperatives. This co-op has paid

millions of dollars in patronage to its

members. 

FUMPA has experimented with

mobile facilities and more energyefficient processes. Co-op leaders

always have time to talk with you and

give you a tour. It is one of the most

financially healthy cooperatives I know

of, but I have never once heard the

chairman or the CEO brag. 

These types of people are the kind of

folks I look for to help start new

cooperatives. 

Rekindling the dream 

If people do not share a dream, they

have no sense of place and are not a

part of something larger than

themselves, Kent Kedl, an associate

professor at South Dakota State

University, wrote in the December

1984 issue of “Small Town.” The role

of the cooperative educator and

developer is to rekindle the dream. 

The world is turning our way. It

doesn’t always seem that way — but

people really do want to cooperate.

They want better lives, they want to

live in peace and they want their

children to be secure. Ideology and

partisanship and egotism have

imprisoned us, but we can get out. We

can rekindle the dreams of a better life,

and people will use that dream to

change the world and make it better. 

We can learn to treasure our

neighbors and facilitate the cooperation

that leads to a better life. We can enjoy

and practice this life-giving skill we

have been given, so that long after we

are gone and our awards are packed

away in dusty boxes, there will be

people living happy and prosperous

lives — and they will say: “We did it

ourselves.” ■

Rural Cooperatives / July/August 2009 27

Bill Patrie meets with U.S. and Canadian pork producers in Minot, N.D., to discuss buying a

hog processing plant.
28 July/August 2009 / Rural Cooperatives

By Donna Healy

Editor’s note: this article is reprinted

courtesy the Billings Gazette. To see other

photos and video footage, visit:

http://billingsgazette.com.

railed by lone riders,

the black Angus cattle

came together along the

grassy bench in slowmoving dribs and drabs.

In the valley below, a creek, muddy

with runoff, cuts through a band of

brush and trees. A panorama of snowcapped mountains ringed the horizon,

the craggy Crazy Mountains to the

northwest and the Beartooth and

Absaroka ranges curling around from

the south and west.

The Metcalf Ranch, along Lower

Deer Creek, sits a few miles south of

Interstate-90 off the Greycliff exit, east

of Big Timber. But the top-of-theworld view from the bench above the

ranch house seems like a holdover from

another century. 

As the cattle came together, the pace

quickened. Riders veered off to chase

errant cows, loping away from the herd.

More riders turned the herd of about

200 mother cows back in the right

direction when they overshot the gate

and moved them slowly down the road.

Among those riders was a lithe 32-

year-old wearing a crisp white polo

shirt and tight jeans. For Christine

Ortjohann, from Cologne, Germany,

the chance to herd the ranch’s cattle at a

late May branding fulfilled a life-long

dream.

“I have a lot of good pictures in my

mind,” she said, her words nearly

drowned out by calves bawling for their

mothers.

In Germany, Ortjohann sells

newspaper printing ink for a living. She

also spends the equivalent of about

$570 to board a horse in Germany, an

expense she equates with the cost of a

rental apartment.

At the rope-and-drag and into-thefire branding in the Metcalf’s corrals,

the ranch’s other paying guest, an ag

student from a farm in Tennessee,

wrestled several calves to the ground

while Ortjohann watched from the

sidelines.

“I don’t really know how to do it,”

she said. “I will keep on watching and

stay in the background a little bit.”

But, a short time later, ranch owner

Remi Metcalf, who usually prefers to let

his wife, Susan, and 20-year-old son,

Bret, take care of the ranch guests,

steadied Ortjohann’s hand as she

burned the Metcalf’s brand on three

calves.

After many years of taking in ranch

City Slickers

Co-op boosts Montana ranches that offer working vacations
guests on their own, last year the

Metcalfs joined Montana Bunkhouses

Working Ranch Vacations, a

cooperative of more than 20 cattle

ranches.

A handful of those ranches are

clustered around Big Timber, although

three of those ranches have temporarily

stopped taking guests, in the aftermath

of the Derby fire. Some of the ranches

are in decidedly less touristy spots,

including Harlowton and Musselshell.

The first 10 ranches banded together

in 2002 to offer guests a realistic view

of ranch life.

Karen Searle, the galvanizing force

behind the cooperative, describes

herself as a matchmaker, pairing ranch

families and travelers. Searle, a former

hospital administrator in Livingston,

earns a commission for handling the

marketing booking and some

accounting chores.

The former director of a national

center for cooperative business

development credited Searle as having

put together the first agri-tourism

cooperative of cattle ranches in the

United States.

The co-op, which is actually a

limited liability company, was formed

after Searle returned in 2002 from a

World Congress on Rural Women and

Rural Issues in Spain. It’s modeled

along the lines of European farm

holiday programs.

The basics were hashed out around a

kitchen table by 10 Sweet Grass County

ranchers, none of whom had ever

hosted guests.

One common thread was the

authenticity of the ranches, Searle said.

“We started with ranches that had

been in families for generations,” she

said.

To keep it real, they didn’t want

anyone to hire wranglers to care for

guests or to build a lodge to house

them.

The co-op’s members saw agritourism as a way to help preserve family

ranches and to narrow the divide

between ranch and city dwellers on land

use and wildlife issues. Those goals

have put them in the forefront of a

trend in the travel industry labeled

“geo-tourism.”

The term describes travel that

sustains or enhances the character of a

Rural Cooperatives / July/August 2009 29

Facing page: Rancher Remi Metcalf helps Christine Ortjohann of Germany brand a calf at the Metcalf vacation ranch in Big Timber, Mont. Below:

Metcalf and Ortjohann round up cattle for branding. Lower: Kyrk Stenberg of Big Timber ropes calves prior to branding. Photos by David Grubbs,

courtesy Billings Gazette
30 July/August 2009 / Rural Cooperatives

place, helping to preserve its heritage,

habitats and scenic beauty. It fosters

small-scale operations that strengthen

local communities and tends to view

family ranchers and farmers as stewards

of the land.

While eco-tourism uses tourism

revenue to help promote conservation,

geo-tourism extends that conservation

ethic to culture and history, Searle said.

In March, National Geographic

launched an interactive map

highlighting geo-tourism in the area

surrounding Yellowstone National Park.

The map includes the Bunkhouse

Cooperative.

It’s an attempt to spread the spotlight

beyond the park’s boundaries to the

communities and lifestyles that help

forge the character of the place, Searle

said.

“The travel industry coined a word

for something we’ve been doing

forever,” Susan Metcalf said. “They just

kind of put into words what we’ve been

doing: trying to keep families on the

ranches and trying to preserve the

integrity of the ranches and trying to

teach people about our way of life and

our viewpoint and struggles.”

In addition to hosting guests,

Metcalf works part-time as the Sweet

Grass County superintendent of schools

and writes a column for the Western Ag

Reporter.

“You have to do every job you can to

keep the ranch going,” she said. “Last

fall, we had $4 fuel and 90-cent [a

pound] calves, and that just doesn’t pay

the bills. You gotta do it some other

way.”

She has gotten used to juggling

conflicting schedules.

After the branding, she gave out

diplomas at Greycliff School’s

graduation, then went to Springdale

School’s picnic. The previous week, on

short notice, she entertained Anthony

Bourdain, the chef and notoriously

prickly host of the Travel Channel

series “No Reservations,” for a show

focused on Livingston and scheduled to

air in late August.

The Metcalfs offered working ranch

vacations on their own for about eight

years starting in 1991. For Susan

Metcalf, who grew up on her father’s

guest ranch at Augusta, taking care of

guests was no big switch, but her

husband, Remi, found it nerve-wracking

at first.

“It takes quite a bit of change to get

used to having somebody tag along and

ask questions,” he said.

The Metcalfs bought the ranch on

Lower Deer Creek themselves, but

their son, Bret, represents the fifth

generation on family ranches along the

Musselshell River, where they summer

cows, and in the Bozeman area, where

they put up hay.

“Ranching’s changing a lot. It’s

tougher and tougher for each

generation to hang on,” Remi Metcalf

said.

This year, Bret put his “Lazy 4 Y”

brand on cows he bought to start his

own herd. The brand was passed down

from his uncle, Elton “Shorty” Roberts,

of Roundup.

Bret has wanted to ranch since he

was old enough to walk, his father said.

“He’d make drawings of his ranch

when he was a little bitty kid, of the

house and corrals, the whole bit.”

Agri-tourism is not a silver bullet

that will keep family ranches going, said

Bill Bryan, the director of the Rural

Landscape Institute in Bozeman, an

organization that examines agricultural

policy issues.

For working ranches that depend on

agriculture as their primary source of

income, tourism is not usually a large

source of revenue, said Bryan, who has

been in the travel business for 24 years

and co-founded the travel company Off

the Beaten Path. It may generate

enough income to allow a ranch wife to

give up a part-time job in town or allow

a son or daughter to come back to the

ranch, Bryan said. Affordable liability

insurance is often a major stumbling

block.

Having several ranches work

together on a common marketing

strategy helps, Bryan said, because

tapping into the right market can be

prohibitively expensive. Bryan has

worked on the idea of forming a sevenstate agri-tourism cooperative.

Montana Bunkhouses has a much

better reach in the marketplace than

would an individual ranch, he said. It

offers travelers more choices and allows

one person to promptly handle queries

and bookings.

Although bookings through Montana

Bunkhouse have fallen off significantly

in the troubled economy, Searle sees

encouraging signs for future growth,

including the interactive map and a TV

segment about the Padlock Ranch,

which should air this winter, on

“America’s Heartland,” a weekly public

television program.

Bryan sees a niche for working

ranches among travelers who want an

authentic, meaningful experience and

are trying to forge a connection to the

West. He describes those travelers as

looking for “transformational

experiences,” profound experiences that

change their orientation to the world.

Although such geo-travelers make up

a tiny fraction of tourists, Montana’s

rural, agricultural base plays a large role

in attracting tourists to the state, said

Victor Bjornberg, who directs the

tourism development and educational

program for the Montana Office of

Tourism.

“It’s those wide-open spaces,”

Bjornberg said. “We are the Alaska of

the lower 48 states. What we have is the

most unspoiled, wide-open spaces,

unspoiled landscapes.”

Agri-tourism fits into the branding

effort to market the state’s attributes.

Bjornberg dates the current interest

in agri-tourism to the mid-1990s,

triggered, as he sees it, by statesponsored workshops on farm and

ranch recreation businesses, the state’s

centennial in 1989 and the movie “City

Slickers.”

Though the movie portrayal was a

far cry from the reality, city slickers

seem to get a kick out of their up-close

taste of ranch life.

Travelers come to the ranches as

guests, Searle said. They go home as

advocates for family ranching. ■
Rural Cooperatives / July/August 2009 31

Five cooperative business leaders were

recognized at the annual Cooperative Hall of

Fame dinner and induction ceremony at

Washington’s National Press Club in May.

The Hall of Fame, the cooperative

community’s highest honor, recognizes those who have made

heroic contributions to cooperative enterprise. 

This year’s inductees are cooperative entrepreneurs

Howard Brodsky and Alan Greenberg, student housing icon

James Jones, Minnesota agricultural educator Edward

Slettom and Mississippi co-op developer Melbah Smith.

“The profiles of these individuals reflect lifetimes of

achievement as leaders, educators, advisors, innovators, and

advocates for cooperative development, but particularly in

their given sectors,” says Steven Thomas, executive director

of the Cooperative Development Foundation, which

administers the Hall of Fame.

“The contributions of these five

individuals provide solutions on

how to succeed in any economic

era, any region of the country, and

any economic sector — which is

especially instructive in a down

economy.” 

Hall of Fame nominations are

received from throughout the

cooperative community and are

screened by two committees of

national co-op leaders. The final

selection is made by the board of

the National Cooperative Business

Association (NCBA). 

“The 2009 Hall of Fame class will join the 134

cooperative heroes already in the Cooperative Hall of Fame,

whose lives and accomplishments provide historical examples

for the cooperative community and serve as a guide for the

direction of future cooperators in all sectors,” Thomas says. 

This year’s inductees: 

■ Howard Brodsky and Alan Greenberg, CCA Global

Partners, were called “visionaries, leaders and teachers” who

devoted their careers to making cooperative entrepreneurship

a prosperous endeavor that offers small business owners the

same advantages enjoyed by their national chain competitors.

They created a co-op business model that is flexible and

adaptable across industries, markets and countries and that

fully integrates ethical and environmental responsibility. The

organization they founded, CCA Global Partners, provides

its member co-ops with tools for their entire business,

creating sustainability, growth and effective competition in

the marketplace. Greenberg, who died in 2007, was inducted

posthumously. 

■ James R. Jones, NASCO, Inter-Cooperative Council,

is a co-op educator, mentor and developer. He built

NASCO’s organizational capacity and financial sustainability

and increased NASCO Properties’ portfolio nearly threefold. Under his leadership, the Inter-Cooperative Council at

the University of Michigan became one of the largest student

housing co-ops in the country. He has helped create dozens

of student co-ops and inspired thousands of students and

non-students to become involved with cooperatives. 

■ Edward E. Slettom, Minnesota Association of

Cooperatives, is an educator and co-op champion. He

served as secretary of the

Cooperative Foundation and as

Minnesota Deputy Commissioner

of Agriculture and led the

Minnesota Association of

Cooperatives (MAC) for 30 years.

His volunteer work integrated a

cooperative perspective into each

activity or organization. Under

Slettom’s leadership, MAC was

expanded to more co-op sectors,

became involved in legislation

pertaining to cooperatives and

started education and public

relations initiatives. 

■ Melbah M. Smith, Mississippi Association of

Cooperatives, Federation of Southern

Cooperatives/Land Assistance Fund (FSC/LAF), was

recognized for being a “visionary, cooperative developer, and

leader.” With FSC/LAF, she worked as a community

organizer and co-op developer to bring healthcare, economic

development and social justice to rural people in some of the

poorest areas of the country. As executive director of the

Mississippi Association of Cooperatives, she continued this

work, helping to develop more than 25 co-ops in Mississippi

and bringing both immediate assistance and long-term co-op

education and development to areas devastated by Hurricane

Katrina. 

The Cooperative Hall of Fame was established in 1974 by

NCBA and is housed in NCBA’s offices in Washington, D.C.

It can also be visited on the Web at: www.heroes.coop, or

www.cdf.coop. ■

Co-op Hall of Fame inductees include (from left): Ed

Slettom, Howard Brodsky, Melbah Smith and Jim Jones. 
32 July/August 2009 / Rural Cooperatives

By Madeline Schultz 

Iowa Alliance for Cooperative Business Development

he Iowa Alliance for Cooperative Business

Development (IACBD) is introducing the

cooperative succession model as a creative

solution for dealing with the declining

numbers of small meat-processing operations

in Iowa. Cooperative succession involves selling or otherwise

transferring ownership and management to employees and

presents a strategy to maintain the longevity and vitality of

small businesses that are crucial to the prosperity of rural

communities.

The Small Meat Processors Working Group (SMPWG),

established by the Leopold Center for Sustainable

Agriculture at Iowa State University, identified succession

planning as one of the key challenges facing the industry. 

There were 550 small meat processors in Iowa 40 years ago.

Today, there are just 140 meat-processing businesses in the

state. These processors are economically vital to their local

communities because they provide much-needed services to

niche marketers, local food producers and consumers. 

Dr. Joseph Cordray, meat specialist at Iowa State

University Extension, works closely with the SMPWG and

the Iowa Meat Processors Association (IMPA) to help small

meat processors produce quality products and operate

successful businesses. 

Reg Clause and Madeline Schultz, Extension Value-Added

Agriculture Program team members and participants in the

SMPWG and IACBD, presented a three-part succession

planning workshop and training for meat-processing business

owners and industry professionals during the 73rd annual

meeting of IMPA, Feb. 20-21. More than 200 people

attended the convention, including representatives from 41

meat plants and 36 supplier companies. 

Business owners have many different goals when planning

for succession. Allowing plenty of time to develop and

implement succession strategies in a meat-processing business

can alleviate stress, benefit the owners financially and

generate greater long-term success for the business. Speakers

used several worksheets developed by the Ohio Employee

Ownership Center to guide the business owners through the

process of understanding and documenting their succession

planning goals.

The training included a panel of meat-processing business

owners who shared their experiences working through the

succession and business transfer process. Bill Dayton of

Dayton Meats is the second generation of his family to

manage and own the business and is looking for ways to

transfer assets and management to a third generation. 

“You’ve got to let the younger generation know they

matter or they won’t be interested,” Dayton said. 

Clint Smith, owner of Stanhope Locker, bought his meatprocessing business outright from the previous owners.

Smith, who formerly owned an auto parts store, told the

audience: “Parts are parts; I knew I could manage a business,

but I relied heavily on trusted employees for their meatprocessing expertise.” 

John Tiefenthaler, owner of Food Locker Service, started

working for the previous owner while he was still in high

school. During the 1980s, the previous owner knew he would

have a hard time selling the business to an outside buyer, so

he began a gradual transfer of the business to Tiefenthaler.

“He was ahead of his time,” said Tiefenthaler. “I never could

have done this without his mentoring.”

To complete the succession-planning workshop, Doug

Co-op Development Action

Succession planning critical to future

of small Iowa meat-processing plants 

The co-op business model may be able to help stem the decline in

the number of small meat-processing plants in Iowa. Above,

Spillville Locker employees (from left) Matt Kulish, Bill Kuntz and

Brian Scheidel prepare to go to work on a side of beef. Photo by

Arion Thiboumery, courtesy Spillville Locker 
Rural Cooperatives / July/August 2009 33

Gross, attorney with BrownWinick of Des Moines, Iowa,

and a former Iowa gubernatorial candidate, helped the

business owners understand the legal and tax implications of

business transfer. Gross discussed the steps required for

transfer of assets and methods of sale for sole proprietorship,

general partnership, corporation, ESOPs (employee stockowned plan), cooperatives and other legal entities. 

He also talked about the distribution of assets, capital

gains, preferential tax treatment and other tax and finance

issues. “Structuring the deal is important to meeting the

business owner’s goals,” Gross said. He detailed the

differences between an entity sale and an asset sale. He also

reviewed the pros and cons of lump sum vs. installment

payments.

Gross highlighted the unique aspects of selling the

business to co-owners or employees, and making gifts. He

encouraged business owners to develop succession strategies

that will help maintain strong meat-processing businesses in

small-town Iowa. ■

Webinar examines starting

worker-owned cooperatives 

CooperationWorks! — a national network of co-op

development specialists – recently sponsored a four-part

webinar series on the key aspects of starting a workerowned cooperative. Worker cooperatives present an

important business and job creation strategy that

promotes job-stability and satisfaction.

The program is designed for cooperative business

development practitioners, community economic

development organizations and individuals/groups

interested in starting worker-owned businesses.

The series was led by Tim Huet, an expert on

developing new worker-owned cooperatives in the

United States. Cathy Smith, executive director of the

Keystone Development Center, and Audrey Malan,

coordinator of the CooperationWorks! training programs,

participated in the program.

The program addressed the key aspects of worker

cooperative start-ups, including:

• Worker co-op structure and legal models;

• Development strategies, including new start-ups,

business conversions, and innovative incubation

approaches;

• Feasibility analysis and business planning;

• Co-op capitalization and finance.

For program highlights, see:

www.cooperationworks.coop. For more information on

CooperationWorks! programs and services, call Malan at

307-655-9162, or e-mail her at cw@vcn.com. 

practical and cautious. Hopefully, the same will prove true

for these other financial sectors that are currently struggling. 

Q. Of course, co-op programs are just one part of the huge

agency you will now be administering. These programs

touch just about every aspect of rural America: they fund

rural electric, water and sewer systems, help rural people

buy and build homes, build rural hospitals and fire stations,

etc. 

We have about 40 program areas, which truly reflect the

theme that Secretary Vilsack is using: “USDA touches

people’s lives everyday, in everyway.” We try to work with

virtually every sector of rural America, from those who live

fairly close to urban areas, to those who live in the most

remote and impoverished rural areas. We have a wide variety

of tools that can help. The 502 direct rural housing loan

program allows us to work with people in rural areas facing

significant challenges and allows people of limited incomes to

get into a home.

We also have programs that can help create jobs that are

based on generating sustainable income. We can help a

venture create more wealth from something grown in rural

America. I really see farming and the rest of the rural

economy being integrated, because so many non-farm jobs

are in some way connected to what is grown by producers. 

The creation of the ethanol industry — all the jobs and

wealth created that has stayed in rural America because

farmers and other rural people invested in it — is exactly the

type of rural economic development model we want to

replicate. We need to do it in all kinds of ways, be it with

livestock, forestry, or farming — a wide variety of ventures

that create rural wealth. 

Q. If you could change one thing about the American

farmer, what would it be?

I would want them to take better care of themselves.

Farmers tend to work extremely hard and devote themselves

entirely to their farms and families — so much so that I

worry about their physical health. Most farmers I know

(including myself) have bad backs, bad knees and may have

serious allergies from exposure to corn and hay molds. Some

have lost a finger or two in machinery accidents. 

Farmers need to take care of themselves physically in

order to make sure they can continue to participate in this

great endeavor of farming. We want them to live a long time,

in good health. Most producers farm because they love it and

will do just about anything to maintain that way of life,

despite the hard work. They just need to be cognizant of the

impact the work has on themselves and their families. ■

Dallas Tonsager

continued from page 23
34 July/August 2009 / Rural Cooperatives

Thomas W. Gray, Ph.D. 

Rural Sociologist

USDA Rural Development, Cooperative Programs

Editor’s note: The author welcomes feedback from readers on the

tradeoffs of a multifunctional agriculture and how cooperatives may

be affected by these changes. Their thoughts may be used in future

articles, and can be e-mailed to: Thomas.Gray@usda.gov.

uring the past decade, understanding the

multifunctional nature of agriculture has

emerged in scientific and farm policy debates.

New language and new terms are emerging.

Talk about MFA at farm meetings these days may not be

referencing the Missouri Farmers Association, but rather a

multifunctional agriculture (MFA). 

No longer is agriculture solely about food and fiber

production. While food prices have dropped recently, the

price spikes of 2008 were at least partially influenced by

agriculture’s emergence as a developing source of energy.

Mitigation of global warming, rural development and

conservation of resources are other demands. 

In a recent conference in Atlanta, a “Biofuels Symposium”

was held in connection with the 2009 annual meetings of the

Southern Association of Agricultural Scientists. A series of

presentations was made on topics such as biofuels and rural

development, anaerobic digestion, financial crises and

biofuels, and shifts in emphases in farm bill legislation from

trade to biofuels. This article presents some of the highlights

of the symposium. 

Rural development and the environment

Albert Iaori, a sociologist at Kansas State University,

presented a case study on an ethanol plant in Russel, Kan., a

rural community of less than 5,000 people. From a survey of

the local population, Ioari found that community acceptance

of the biofuel plant was mixed. 

More than 75 percent of those surveyed said the ethanol

plant was important, or very important, for the local

economy. The facility was credited for creating new jobs and

helping to boost prices for local grain farmers. It was valued

as well for helping reduce dependency on foreign oil.

However, some of those opposed to the plant argued that

ethanol is not as energy efficient as fossil fuels. 

The most contentious issues revolved around the

environmental impact. Those in support of ethanol saw it as

environmentally friendly. However, nearly 60 percent of

those surveyed said they had moderate-to-high levels of

concern about the environmental impact of the local facility.

Nearly 90 percent said they believed biofuel production

had already contributed to poor water quality. Others

expressed concern about the diversion of water needed for

alternative uses both inside and outside the city. Concern was

also expressed about odors, air pollution, wear on local roads

(due to truck traffic), increased traffic congestion and

increases in local food prices.

Rural development and competing

international interests 

Theresa Selfa, sociology professor at Kansas State

University, discussed the findings of her study: “Biofueling

Rural Development: Prospects and Challenges, Locally and

Globally.” Selfa’s work parallels Ioari’s in documenting the

positive impacts of biofuels development on rural

employment and farm incomes. 

In a study of two rural Kansas communities, nearly 70

percent of those surveyed said jobs at the ethanol plant were

better than most, or among the best jobs available in the area.

Biofuel facilities were seen as having secondary effects as

well, improving economic diversification in rural areas and

Shift to multifunctional agriculture 
Rural Cooperatives / July/August 2009 35

generating additional jobs and incomes from supporting

businesses. 

However, future implications of biofuels’ impact on food

production and food prices are not clear. Brazil was the top

producer and consumer of biofuels until 2006, when it was

displaced by the United States. More than 20 industrial and

developing countries have announced some type of biofuels

incentive program. Brazil, Canada and the United States have

mandated future biofuels consumption. China, India and the

EU have set targets on consumption to be realized by 2022. 

These pressures will have direct implications on what

products are produced — food and/or fuel, for example —

where products are produced, and who the beneficiaries will

be. Global pressures may push production away from fuels

that compete directly with food production (sugarcane, corn,

wheat, barley, sorghum) and toward second-generation

bioethanol and biodiesel production derived from biomass

gasification (such as forestry products, grass and organic

wastes). 

Recession’s impact on biofuel solvency

Anthony Crooks, an ag economist with USDA Rural

Development, presented highlights from his study:

“Renewable Energy and the Financial Crisis.” He provided a

historical analysis of the interrelationships among the price of

petroleum; commodity prices; vegetable oils; ethanol

investment-stock prices and how they are coupled to

commodity hedging; financial markets; and the collapse of

mortgage-linked, derivative markets. 

The coming together of these various factors with the

collapse of major banks created what Crooks referred to as a

“perfect storm” of financial pressure on the solvency of

biofuels plants. VeraSun, one of the largest corn ethanol

producers, and owner of 16 plants, filed for bankruptcy in

November 2008. (Valero Energy Corporation, the largest

refiner in North America, has since acquired seven of these

plants). Further consolidation in the industry is expected. 

Biodiesel production facilities are currently operating at

only 25 percent of capacity. Their further development will

be affected by competing prices for petroleum, alternative

uses of vegetable oils, availability of various tax credit

programs, resolution of technical problems concerning

biodiesel’s tendency to degrade rubber and plastic and

political stability in the Middle East.

“On a much brighter note, cellulosic ethanol may have

finally turned the corner,” Crooks said, adding that several

cellulosic plants were currently slated to come on-line.

Funding from the U.S. Department of Energy and USDA

Rural Development has helped with the development of

these facilities. Patent and intellectual property rights on the

products used in processing may also provide some market

protection, adding to the optimism for cellulosic biofuel

development. 

However, Crooks noted that total development costs are

relatively high for these plants, and may only be affordable by

larger corporations. And the vagaries affecting corn ethanol

and biodiesel fuel — i.e., prices and demand for competing

products, and international relations – will influence

cellulosic development as well.

Anaerobic digestion 

Carolyn Liebrand, an ag economist with the Cooperative

Programs of USDA Rural Development, presented a paper

on “Cooperative Approaches to Facilitate the Use of

Anaerobic Digesters on Dairy Farms.” The report documents

the outputs of anaerobic digestion (decomposition of manure

by microbes that thrive in oxygen-limited environments) as

biologically stabilized products (separated solids and liquid

fertilizer) and biogas. 

The solids produced can be used as bedding for livestock

complicates biofuels development
36 July/August 2009 / Rural Cooperatives

and for gardening products, while the liquid is a fertilizer

with fewer odor problems than raw manure. Biogas can be

used for powering generators for electricity production and

for fueling other farm equipment. The capture and

destruction of methane gas (otherwise emitted into the

atmosphere) may also qualify for carbon credits. 

Liebrand said obstacles to development may include:

• Difficulties in adapting digesters to current manuremanagement systems and connecting to utility grids; 

• Limits on time availability and farmer skills in the

development and maintenance of digesters;

• A limited amount of available information on installing and

operating the systems, given that there are only 98 digesters

operating on U.S. dairy farms at this time;

• Difficulties working with utility companies and negotiating

adequate buy-back rates for the electricity produced;

• Limited knowledge among farmers about procedures for

marketing products: solids, gas, electricity and carbon

credits. 

Liebrand suggests that some of these obstacles might be

overcome with cooperative organization. Given the

membership base of cooperatives, they may be positioned to

provide technical assistance, as well as such supporting

services as back-up equipment, manure hauling and digester

management. 

Co-ops could also serve as aggregators of manure and

developers of centralized digesters and gas plants, as well as

marketers of “green electricity” and the solids produced.

They might also serve as bargaining agents for farmers in

securing fair prices and terms of trade with utility companies,

digester firms and buyers of organic wastes, as well as for

carbon credit trading.

Farm bill vagaries and biofuels

Nadine Lehrer, natural resource scientist at Washington

State University, highlighted the importance of the political

process in biofuels development. She noted that this trend

can be seen in shifts in emphases from trade concerns to

biofuels issues during the most recent farm bill debates. 

Drawing upon the themes of news articles, personal

observations at farm bill conferences and interviews with key

decisionmakers, Lehrer documented how debate emphases

changed during the most recent farm bill deliberations. Early

in the process, farm bill debate was dominated by topics such

as: “Outcome of World Trade Organization (WTO) will

influence U.S. farm policy,” “Trade provision may cause

change in sugar program,” and “Ag Secretary Johanns warns

that farm bill writers can’t ignore WTO.” But after 2006, the

emphasis on trade topics shifted to greater focus on biofuels,

and topics such as: “Ethanol will be the driving force writing

the farm bill.” 

Lehrer suggested that in the context of the 2006 mid-term

elections (and subsequent effects), this shift from trade to

biofuels was driven by spikes in gasoline prices, demands to

reduce reliance on foreign oil, the stalling of WTO

negotiations, budgetary shortfalls and greater awareness of

global warming issues. 

As an example of the shift, Leher referred to the

observations of Phillip Brasher of the Des Moines Register:

“This was supposed to be the year that international trade

concerns would shape the farm bill. They didn’t.” Biofuels

displaced the trade emphasis. The greater prominence of

biofuels was supported, at least to some extent, by most farm

groups, including sustainable agriculture and environmental

groups, general farm organizations, commodity groups and

agribusiness corporations. 

Lehrer concluded that while policies can always shift in

unexpected ways, fuel concerns have nevertheless become a

major component and shaper of policy and decision-making

processes. As such, agriculture policy can no longer be

considered as a sector only for food and fiber production, but

must instead also respond to fuel-related issues. 

Co-ops within a complex environment

Cooperatives were among the first organizations to

develop biofuels. In so doing, they helped move agriculture

from an economic sphere of food and fiber production to one

of food, fiber and fuel. It is a complex, multifunctional field

with many aspects demanding consideration. 

Development of biofuels industries can improve the

incomes and job alternatives of both farmers and other rural

residents. However, while displacing petroleum products with

biofuels may reduce carbon emissions and ease global

warming, the production plants themselves can cause local

environmental stressors in water use, air pollution, local

traffic congestion and road degradation. 

Corn for ethanol and various feedstocks for biodiesel

compete for food production resources. How much this

competition affects food prices is often debated, but ethical

questions are frequently raised in the face of events such as

food riots in some third world countries. As Crooks

documented, solvency and production feasibility questions

are not insulated from the stressors of the larger national and

global economy. 

International demands for fuel in the emerging economies

of Brazil, India and China — and for food globally — leave

unanswered questions concerning which regions will have a

comparative advantage for producing various products (such

as food, corn-derived fuel, biodiesel fuels and cellulosic

ethanol and biogas from anaerobic digestion). 

The coming together of these various factors will likely

effect future farm bill legislation. Just as past legislation has

affected these numerous political, economic and ecological

issues, future legislation will do likewise, potentially resulting

in new pressures and further changes in emphases. Further

cooperative development in the biofuels area will need to

consider this complex, multifunctional and dynamic context,

as the speakers at this symposium indicated. ■
Rural Cooperatives / July/August 2009 37

Newsline

E85 signs sprouting along 

Wisconsin Interstates

Drivers heading for one of

Wisconsin’s biggest fun spots may

notice a change along their route this

summer. The first set of E85 highway

signs, sponsored by the American Lung

Association in Wisconsin, was installed

May 14 along Interstate 90 near the

Wisconsin Dells. The signs alert

motorists of retailers that offer E85

(containing 85 percent ethanol), as well

as regular unleaded fuel. 

The Wisconsin office of the

American Lung Association is paying

for the production and installation of

the signs, plus one year of rent under

the state’s Specific Information Sign

(SIS) program. “The blue highway signs

do a great job of alerting those passing

through the area that E85 is available,”

explains Jackie Blackburn, clean fuels

coordinator for the American Lung

Association in Wisconsin. “Now, flexfuel vehicle drivers can more easily

incorporate E85 into their road trips.”

E85 is an official Clean Air Choice

of the American Lung Association in

the Upper Midwest due to its proven

role in reducing harmful emissions. It

says motorists who use E85 reduce

particulate and ozone-forming

emissions by 20 percent. 

Wisconsin co-op to link

local farms and institutions 

The Producers & Buyers Co-op was

launched June 12 with an event at the

Eau Claire County Exposition Center

in Wisconsin. The co-op, which links

local farms with institutions, shared an

information booth with its business

partner, Sacred Heart Hospital.

The co-op facilitates buying and

selling for farmers in Eau Claire,

Chippewa, Barron, Dunn, Pepin,

Trempealeau, Buffalo, Clark, Jackson,

Polk, Pierce and St. Croix counties.

Sacred Heart Hospital is a founding

partner in the project and committed 10

percent of its $2-million food budget to

purchasing local food products to help

the organization get off the ground. 

“Having a stable market price allows

me to do more long-range planning

with my farm operation,” says Darrel

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

Co-op developments, coast to coast

Highway signs popping up in Wisconsin are helping to direct motorists to filling stations

where they can pump E-85, which helps improve air quality. Photo courtesy American

Lung Association/Wisconsin Chapter
38 July/August 2009 / Rural Cooperatives

Lorch of Lorcrest Farms Inc., in Blair,

Wis. Lorch also serves as an ad hoc

member of the co-op board. 

The co-op intends to bring new

buyers on board as more products are

sourced. It serves institutions such as:

schools, universities and colleges,

hospitals and businesses that provide

cafeteria services. The co-op is working

to facilitate the production and

purchase of locally produced: meats

(beef, buffalo, pork, chicken and fish);

fruits and vegetables; dairy and eggs;

other locally produced food and dry

goods. 

“Co-op stocks are an opportunity to

invest in the local community and to

support sustainable products, local

farms and jobs,” says co-op coordinator

Mary C. Anderson, a value-added

farmer with extensive direct sales

experience. “Support of the co-op also

helps rebuild the local processing

infrastructure (for processing meats,

dairy, etc.), and to expand local food

production by providing a stable

market.” 

The idea for the co-op began in

January 2008, when representatives

from River Country RC&D and Sacred

Heart Hospital met with area farmers at

the Midwest Value Added Agricultural

Conference and Wisconsin Local Food

Summit. Barriers to purchasing local

food (including seasonal production,

quantity, transportation, processing,

pricing and delivery) were discussed,

and subsequent meetings focused on

how to overcome these barriers. 

In June 2008, Sacred Heart

Hospital’s CEO Steve Ronstrom

pledged to buy more local food for the

hospital. A month later, Governor Jim

Doyle visited Sacred Heart Hospital to

announce the statewide “Buy Local,

Buy Wisconsin” (BLBW) grant awards.

Doyle chose Eau Claire to announce

the grants due to the innovative local

food partnership between the hospital

and River Country RC&D Council. A

BLBW grant was awarded to River

Country RC&D to pioneer the best

way to get local food to local

institutions. 

After many planning meetings with

local farmers, articles of incorporation

were filed last March, creating the

Producers & Buyers Co-op. To date,

the co-op facilitated the purchase over

26,000 pounds of locally grown product

from over 14 local rural communities. 

“There have been profound changes

over the past century for farm families

and rural communities; in the 1990s

alone, Wisconsin lost almost 40 percent

of its dairy farms,” says Rick Beckler,

co-op organizer and Sacred Heart

Hospital’s director of hospitality

services. “It’s our responsibility to buy

local food to support our local

agriculture industry. We have had an

outpouring of warm compliments on

our food from patients, our “Meals-onWheels” patrons and employees.” 

United Co-op returns

record $2.37 million in

cash to members

United Cooperative released a

record $2.37 million in cash to its

patron members this spring. The

refund resulted from a successful year

that saw the co-op ring up $429 million

in sales and earn profits of almost $15

million. United Cooperative is based in

Beaver Dam, Wis., with locations

throughout south-central Wisconsin.

The “drastic climb in commodity

prices” during early 2008 and strong

sales growth in many areas boosted the

co-op’s performance, according to coop President and CEO David Cramer.

“I know United Cooperative patron

members will use their cash refund to

stimulate business in their local

communities, something much needed

in today’s tough economy,” he says. 

For 2008, United Cooperative

refunded just over $4 on every $100 of

purchases by members. Overall, United

paid more than $5.63 million to

members during the past year in

patronage refunds, stock (equity)

revolved, estates settled and dividends

paid on preferred stock.

In other news, United Cooperative’s

agronomy facility in Pickett, Wis., has

been selected as the Wisconsin winner

for the Environmental Respect Award,

sponsored by DuPont Crop Protection.

United Cooperative, along with 19

winners from other states, was selected

on May 7.

USDA offers $25 million loan

to reopen SoyMor Biodiesel

Agriculture Secretary Tom Vilsack

announced June 24 that USDA Rural

Development has approved a $25

million loan to help a Minnesota

biodiesel facility diversify its operations

and significantly expand the production

of advanced biofuels. “The investment

announced today helps fulfill the

Obama administration’s goal of

increasing production of biofuels while

securing jobs in the alternative fuels

industry,” Vilsack said. “This is great

news for a community that recently saw

this company cease production of its

operations due to tough economic

conditions.” 

Stacy Workowski unloads grain at Ripon United Cooperative last fall. High grain prices

helped the co-op return record cash patronage to members for 2008. Photo by Dori Lichty,

courtesy United Cooperative 
The USDA guaranteed loan will

allow SoyMor to purchase equipment

to convert multiple types of feedstocks,

including an unrefined corn-oil waste

product from nearby ethanol facilities,

into biodiesel. In its current

configuration, the plant only has the

ability to process soybean oil. High

feedstock costs forced SoyMor to

suspend operations at its Albert Lea,

Minn., facility in the spring of 2008.

The loan is the second one USDA

has made under the Section 9003

Biorefinery Assistance Program, created

in the 2008 Farm Bill. The funding will

have a significant impact on the nearby

communities by restoring nearly 30 jobs

and providing an additional value-added

opportunity for the ethanol industry

and bolstering the local economy. The

plant opened in 2005 and has an annual

capacity of 30 million gallons.

The Biorefinery Assistance Program

promotes the development of new and

emerging technologies for the

production of fuels that are produced

from non-corn kernel starch biomass

sources. The program provides loan

guarantees to develop, construct and

retrofit viable commercial-scale

biorefineries producing advanced

biofuels. 

The maximum loan guarantee is

$250 million per project. The loan is

contingent upon SoyMor meeting the

conditions of the loan agreement. 

AgStar sells three

ethanol plants

AgStar Financial Services of

Mankato, Minn., in May announced the

sale of three of the six ethanol plants it

acquired last March through the

bankruptcy of VeraSun Energy. Neither

sale involves new ownership by farmer

cooperatives.

Green Plains Renewable Energy,

Omaha, Neb., has agreed to purchase

the production facilities located near

Central City and Ord, Neb., which

have a combined annual production

capacity of about 150 million gallons of

ethanol. Combined with its six other

plants, Green Plains says this will boost

its total production to 480 million

gallons per year, making it the nation’s

fourth largest ethanol producer. 

Carbon Green BioEnergy is buying

the former VeraSun plant in Woodbury,

Mich., which can produce 40 million

gallons of ethanol annually. The

purchase represents the first direct

ownership of ethanol production for

Carbon Green, headquartered in

Chicago. 

AgStar and some other lenders

provided Green Plains with $123.5

million in financing for the acquisition,

as well as a $16-million seasonal

revolving loan fund to help operate it.

AgStar will also continue to lead a

group of lenders financing Carbon

Green BioEnergy. 

“We believe the outlook for biofuels

is solid and will improve over time,”

says Paul DeBriyn, president and chief

financial officer of AgStar. A valueadded financial services cooperative,

AgStar serves 69 counties in Minnesota

and northwest Wisconsin and is part of

the Farm Credit System.

Fishermen create new CSF:

Cape Ann Fresh Catch 

Cape Ann Fresh Catch, a new

community-supported fishery (CSF),

was launched in June by a group of

Massachusetts fishermen. According to

an article in the Cape Ann Beacon,

about 750 shareholders living from

Jamaica Plain to Gloucester have signed

up for fish deliveries from the co-op. 

The Gloucester Fishermen’s Wives

Association, the Northeast Atlantic

Marine Alliance and MIT SeaGrant

helped to organize the CSF. The co-op

sold all of its shares and has 500 people

on a waiting list. A share costs $360 for

10 pounds of fish delivered weekly

during a 12-week period, the newspaper

reported. A half share costs $180, and is

worth five pounds of fish each week.

Fish are delivered the day they are

caught, and come whole — cleaned,

gutted and packed on ice. Brochures are

being distributed with recipes, and

demonstrations are being held at each

drop-off point on the art of filleting and

cooking a whole fish.

NCBA supports role for co-ops

in national healthcare reform

As Congress debates what shape healthcare reform will take, the

cooperative business model has entered prominently into the discussion, a

development that the National Cooperative Business Association (NCBA) is

hailing. “Cooperatives save money for members by aggregating demand for

specific services, whether it’s health insurance, pharmaceuticals or hospital

supplies,” says NCBA President Paul Hazen.

For example, in a health insurance purchasing cooperative, consumers or

businesses can band together to purchase private health insurance policies

in bulk, passing savings along to members, he notes. Cooperative healthcare

providers also save money for members because, in addition to buying in bulk,

the not-for-profit cooperative does not answer to outside investors. 

“The National Cooperative Business Association is a strong advocate for

healthcare cooperatives, and we are now analyzing the specific proposals

Senator Conrad has put forth to Congress,” Hazen says. “

Cooperatively owned businesses represent a major contribution to the U.S.

and world economy. Co-ops are businesses that are jointly owned and

democratically run. People form cooperatives to fill their needs for services

that, if obtained on an individual basis, would be unavailable or prohibitively

expensive.” 

For more information about healthcare cooperatives, visit NCBA’s website:

www.ncba.coop. 

Rural Cooperatives / July/August 2009 39
DFA launches Texas

plant expansion

Dairy Farmers of America Inc.

(DFA) has begun a $39.4-million

project to expand and install new

equipment at its plant in Schulenburg,

Texas. A new packaging line will be

added, nearly doubling the plant’s

capacity. The plant also is upgrading

and adding equipment for its

wastewater system. Construction, which

began in May, is slated for completion

in early 2010. 

The Schulenburg plant is a leading

manufacturer for shelf-stable cheese

dips and salsa. Originally built in 1929

by Carnation Co., it was the first milk

plant in the state of Texas. 

The project also includes

construction of a new warehouse, a

boiler area and product cooling tunnel,

expanded freezer space for raw

materials storage and a processing

kitchen for raw material handling.

Docks and parking facilities also will be

expanded. The project will result in 70

new jobs at the plant, making DFA one

of the largest employers in the

community. 

The City of Schulenburg

contributed $3.2 million in utility, street

and waste water system upgrades. City

officials also worked to create an

Enterprise Zone City, which allows for

a lower sales tax rate on the project.

They also supported rezoning and

temporary variances for construction. 

“This expansion reinforces the

cooperative’s commitment to the

communities it serves, and to delivering

a strong return for our members,” says

Art Farris, chief operating officer of

DFA’s Ingredients and Contract

Manufacturing division.

PCCA forms new company

to produce fashion jeans 

Plains Cotton Cooperative

Association (PCCA) of Lubbock, Texas,

is purchasing key assets of Koramsa

Corporation in Guatemala City,

Guatemala, where it will produce

fashion jeans under the auspices of a

new company: DENIMATRIX, LP. 

“DENIMATRIX [represents] the

first fully-integrated, vertical supply

chain — from raw cotton to finished

CWT removes 101,000 cows;

NMPF launches new task force 

In its most aggressive move yet to help bring milk supply and demand into

better balance, Cooperatives Working Together (CWT) in May and June

removed 367 herds in 41 states. These herds were comprised of nearly 101,000

cows that produced 1.96 billion pounds of milk. 

CWT received 538 bids from 41 states during the bidding process in April.

As was the case with previous herd-retirement rounds, most of the cows

removed were in the western regions of the country. This round also removed

818 bred heifers. 

“Even though this was by far the largest of CWT’s seven herd-retirement

efforts, we were able to move quickly in May and June to audit the

participating farms,” says Jim Tillison, CWT’s chief operating officer. “The

national dairy herd will be noticeably smaller this summer as a result of CWT.”

On July 10, CWT announced the second herd retirement of 2009, with a

shortened time-window for submittal of bids (the deadline was July 24). 

The National Milk Producers Federation (NMPF), which administers CWT,

has also launched a new task force to seek additional ways of addressing

severely depressed on-farm milk prices. It voted in June to recommend

available CWT funds be used to help CWT members access the Dairy Export

Incentive Program (DEIP) to its fullest extent. During each DEIP marketing

year, the program has the potential to export the equivalent of more than 1.5

billion pounds of milk. The NMPF board immediately approved the

recommendation. 

To address longer-term factors affecting price and volatility, the task force

was to meet in Chicago during July with representatives from major dairy

producer organizations with their own proposals on how to deal with the

crisis. The objective is to engage in a detailed dialogue “to determine the

economic and political feasibility of those plans, with the goal of achieving a

common understanding of how best to tackle the problems of low milk prices

and high input costs,” says NMPF President Jerry Kozak. 

NMPF has also issued a statement applauding USDA’s decision to apply the

dairy promotion checkoff to imported dairy products, 25 years after the

national 15-cent checkoff was first applied to U.S.-produced milk. Kozak

praised Agriculture Secretary Tom Vilsack for moving quickly to implement the

assessment.

The proposal will assess the equivalent of 7.5 cents per hundredweight on

all dairy-based imports, including cheese and butter products, as well as dry

ingredients such as casein and milk protein concentrates. The money will be

collected by the National Dairy Board to be used for nutrition research,

consumer education, issues management, and other programs that build

demand for dairy consumption.

Project managers review blueprints for a

DFA plant expansion in Texas.

40 July/August 2009 / Rural Cooperatives
jeans — in the Western Hemisphere,”

says Carlos Arias, president of

DENIMATRIX. “We are very excited

about the opportunity to partner with

PCCA’s American Cotton Growers

(ACG) denim mill. The synergies

achieved by incorporating joint product

development and design — from raw

cotton all the way through finished

apparel — will give us the flexibility to

offer a broad range of quick-response

fashion jeans and other apparel to our

customers.”

PCCA President and CEO Wally

Darneille echoed Arias’s sentiments.

“Denimatrix will have the finest

combination of facilities and capabilities

in this hemisphere,” he says. “Those

assets, along with PCCA’s access to raw

cotton, ACG’s 34 years of experience in

producing denim fabrics for a wide

variety of customers and Carlos Arias’s

team of creative and experienced people

will make Denimatrix a truly unique

operation.” 

“We will continue to produce denim

at our Littlefield, Texas, facility in the

heart of cotton country and will deliver

fabric to Guatemala,” Darneille

continues. “This should allow us to

shorten the supply chain further. Given

today’s retail environment, the 60-90

day advantage we will have over Asian

and Middle Eastern supply chains will

provide tangible, measurable value for

apparel brands and retailers.” 

PCCA is a producer-owned cotton

marketing cooperative headquartered in

the center of the “world’s biggest cotton

patch,” representing 55 to 60 percent of

U.S. cotton acreage in 2009. 

Report: broadband critical

to future of rural America

The Federal Communications

Commission (FCC) issued a report in

late May providing a starting point for

the development of policies to deliver

broadband to rural areas and restore

economic growth and opportunity in

rural America. 

Recognizing that the need for

broadband service in rural America is

becoming ever-more critical, Congress

in the 2008 Farm Bill required the FCC

chairman, in coordination with the

secretary of the Department of

Agriculture, to submit a report to

Congress describing a rural broadband

strategy. “Bringing Broadband to Rural

America: Report on a Rural Broadband

Strategy” identifies common problems

affecting rural broadband, including

technological challenges, lack of data

and high network costs. It also offers

recommendations to address those

problems. 

Broadband “is the interstate highway

of the 21st century for small towns and

rural communities, the vital connection

to the broader nation and, increasingly,

the global economy,” FCC Acting

Chairman Michael J. Copps says in the

report. 

Secretary of Agriculture Tom Vilsack

adds: “Providing broadband access to

rural communities will not only

enhance farmers’ and ranchers’ ability

to market goods and enhance

production, it will help residents in

rural communities obtain needed

medical care, gain access to higher

education, and benefit from resulting

economic activity and job growth.”

$1 billion in USDA electric

loans to strengthen rural

infrastructure 

Agriculture Secretary Tom Vilsack in

June announced that 37 rural utilities

and cooperatives in 29 states have been

selected to receive more than $1 billion

in loans to build and repair more than

10,000 miles of distribution and

transmission lines and make system

improvements that will benefit 60,000

rural customers. 

“President Obama is delivering on

his commitment to invest in rural

America’s infrastructure by funding

upgrades to rural utilities and

cooperatives,” Vilsack said. “Rural

communities need affordable, up-todate electric service in order to broaden

economic opportunities. These loans

will enable cooperatives to deliver

improved service to more customers.” 

Rural electric cooperatives are

nationally recognized as leaders in

energy efficiency and demandmanagement practices, he noted. To

date, 402 rural electric cooperatives

have used USDA Rural Development’s

Energy Resources Conservation

program to increase energy efficiency,

conservation and demand-management

initiatives. 

Foster Farms bids on Humboldt 

Foster Farms Dairy, a privately held

dairy company based in Modesto,

Using double-needle sewing machines, workers in Guatemala City are producing fashion

jeans for a new venture of Plains Cotton Cooperative Association. Photo courtesy PCCA 

Rural Cooperatives / July/August 2009 41
Calif., has tendered an offer to the U.S.

Bankruptcy Court in Santa Rosa, Calif.,

for Humboldt Creamery’s facilities in

Fernbridge and Stockton. Its offer was

selected from a number of bids

submitted to the court during an

auction in mid-June. 

The creamery is presently owned by

a cooperative of about 40 dairy farmers,

while Dairy Farmers of America holds

a 25-percent stake. Humboldt also has

a facility in Los Angeles, for which bids

are being sought.

The company’s financial problems

became apparent when the former

CEO Rich Ghilarducci abruptly

resigned last winter. It was then

discovered that the company had $60

million less than the board had

thought. 

According to an article in the TimesStandard newspaper, the creamery's

bank could still bid on the assets using

credit it is owed, and had not agreed to

the sale to Foster Farms as of early July.

■

42 July/August 2009 / Rural Cooperatives

used as the main ingredient in Chianti. 

“There’s nothing wrong with a

decent Chianti,” he says. “In any case,

we won’t be turning out wines in the

$60- to-$70 range. More the $10- to

$20-a-bottle kind — fun wines.” 

Much the same way the local Amish

farmers help each other out, the co-op

members take a communal approach to

their business. Member Carolyn

Baldwin, an experienced wine-grower,

offers advice on disease prevention.

When member Gerald Byrne planted a

new vineyard, Baldwin, Fuller and other

fellow members turned out to help. “I

had to be helped up at the end of the

day,” chuckles Fuller.

Fuller and his collaborators hope to

see a picturesque winery in a gracious

park, where canoeists, boaters and

tourists can relax after seeing the sights

and enjoy a refreshing glass of wine.

Hopefully they will buy some bottles of

wine to take home. 

“We’re counting on selling 80 to 90

percent of our wine at the winery, and

some more at local festivals and so

forth,” he says. “For a winery of our

size, we wouldn’t be able to make

enough profit selling our product at

wholesale prices, anyway.” He foresees

selling to a few local retail outlets, but

“more for publicity purposes,” he says.

Schaller, McKay, and the local

governments are betting that the

winery’s customers will also stop by to

enjoy local restaurants and patronize

other businesses in a revitalized

Leonardtown and the surrounding area.

It may seem a modest goal, but if

successful, it could mean new life for an

old community. ■

production has increased from 4,500 pounds per cow in 1930 to more than 20,000

today. 

This dramatic surge in productivity has been driven by the adoption of modern

production and business management practices on the farm, and the ongoing

development and implementation of new agricultural technology. These advances

have allowed us to expand productivity while protecting the environment,

preserving precious resources for generations to come. 

Telling our story

The story of American agricultural productivity is impressive, but ironically it

remains largely untold. American farmers are an independent and humble lot, not

given to beating their own drum. The fact is, if we’d seen this same kind of

progress in the auto industry, we’d all be getting 100 miles per gallon — and we’d

have heard plenty about it. 

One of the ironies is that as we have learned to do more with less; only about 2

percent of the U.S. population is directly engaged in production agriculture. That

means there are fewer people to tell this story. It’s no wonder that there is a lack of

public understanding about the issues that are critical to our industry. 

Today, the discussion of agricultural issues is often driven by well-intentioned

people who allow opinion, emotion and even nostalgia to fill “the information

gap.” As a result, even safe, proven technologies have encountered opposition. 

Dr. Norman Borlaug, father of the green revolution and winner of the Nobel

Peace Prize, put the situation into perspective. Dr. Borlaug believes technology

can enable us to feed 10 billion people. But in his words: “The more pertinent

question is whether farmers and ranchers will be permitted to use this technology.”

This is a troubling observation, given that 70 percent of the needed increase in

global food production will have to come from advancing technologies, according

to the United Nations’ Food and Agricultural Organization (FAO). 

To protect the ability of producers to use safe, proven technologies, those of us

involved in any aspect of agriculture — producers, cooperatives, agribusinesses,

industry organizations, government agencies, academia — must work to educate

the public and policymakers about our industry. 

As we work to realize the opportunities and meet the challenges ahead, I believe

the most important step we can take is to tell our story. Education and

understanding can drive public opinion and policy decisions that directly affect

producers. It’s our responsibility to ensure that these judgments are based on

sound science and accurate data — not fads, emotion, politics or social agendas. ■

Commentary

continued from page 2

Wine

continued from page 20
Visitors can see our cheese being

made and packaged, sample our cheese

and order meals prepared using our

cheese. They can purchase any product

that we market, including fresh cheese

curds (which we only sell at the Visitors

Center). Visitors can view our special

exhibits to learn about the history of

the co-op and the brand. They can also

purchase branded merchandise that

provides an on-going reminder of their

Tillamook experience. 

The popularity and success of the

Visitors Center is exemplified by the

nearly 1 million visitors who pass

through the center annually.” 

 How is the cheese industry changing,

and how is Tillamook cheese poised to

change with it? What percent of your

milk goes to cheese vs. other dairy

products? 

“The artisan and craft cheese

business is growing and consolidation of

the larger players is taking place.

Tillamook Cheese is a true niche player

in the cheese category because we are a

naturally aged cheese. It is a strong and

growing segment of the market, which

positions us well for growth. 

About 85 percent of our business is

cheese. We make ice cream at our

Tillamook facility, but ice cream

accounts for a very small portion of our

business. It is only distributed in

Washington, Oregon and in some areas

of Northern California.” 

 Like most co-ops, Tillamook has had

to wrestle with the use of bovine growth

hormone, ultimately deciding a few

years ago to ban its use. Did you lose

any members over that? 

“Ultimately, we did not lose

members. However, it was a very

controversial and emotional decision for

our cooperative. If you look at where

the market is today, we made a sound

decision. It was the right decision to

make given the expectations our

consumers have for our brand.” 

 What is the turnover rate like

among your 550 fulltime employees?

How do you attract and keep qualified

workers? 

“It is difficult to recruit employees to

our facilities in both Tillamook and

Boardman. In both cases, we are located

in rural areas with limited amenities,

and TCCA is one of the larger

employers in the area. This means

opportunities for a spouse to find work,

other than with TCCA, are limited.

You are asking recruits to make a

lifestyle change in moving to a small,

rural community. Some are willing to

embrace that, others do not see it as a

benefit. 

However, with that said, we have a

relatively low turnover rate in the nonmanufacturing areas of both facilities.

Our highest turnover rate is in our

packaging operation in Tillamook.” 

 Some of your members have joined

forces to operate a methane gas

digester, to turn manure into

renewable energy. How successful has

that project been, and do you see the

concept expanding to include more

farmers?

“Participation by some of our

members in the community methane

digester project is a good example of

our member dairy farmers working

proactively to address developing

industry issues. In this case, several of

our dairy farmers have partnered with

the Port of Tillamook Bay to develop

and operate an anaerobic digester that

converts manure to energy. 

The technology is working well, but

the financial return to the participants is

minimal. It is hoped that as the national

cap and trade legislation develops these

early adopters of green technology will

benefit from the resulting carbon and

greenhouse-gas markets. If the market

for carbon credits and greenhouse gas

offsets mature to the point that

participation in the methane gas

digester program is financially

sustainable, I expect to see more

farmers interested in participating in

the program. 

In a related effort, TCCA staff is

working with the Port of Tillamook

Bay to develop a business model that

will expand the operation of the existing

digester to include additional feedstock

from non-dairy sources as well as

additional manure from more dairy

farms.” ■

A conversation with Tillamook

President/CEO Harolod Strunk

continued from page 13

agriculture or forestry products.

The foundation for this century of

success, of course, is the co-op’s farmerowners, such as Hurliman. 

“Farming gets into your blood; it’s

what I know. I wouldn’t know what else

to do,” Hurliman says. He hopes to pass

the family dairy tradition to his son,

who is 34 and has two children of his

own. “It’s hard to think about it now,

since things are tough right now,” he

says. But he is optimistic about the

future of dairy farming in Oregon and

of his co-op. 

Asked if he thinks Tillamook County

Creamery Association will still be

around in another 100 years, Hurliman

replies: “I hope so. I really hope so. A

lot depends on the decisions made in

Washington. But we’ll keep taking care

of the farm for future generations, and

Tillamook is a well-run co-op. So I

think so.”

For more information about TCCA,

its centennial activities and products,

visit its Web site at www.tillamook

cheese.com or contact them at 4175

Highway 101 North, Tillamook, Ore.

97141, phone (503) 815-1300. ■

Traditions run 100-years deep

at Tillamook County Creamery

continued from page 12

Rural Cooperatives / July/August 2009 43
Periodicals Postage Paid

U.S. Department of Agriculture

United States

Department of Agriculture

Washington, DC 20250

OFFICIAL BUSINESS

Penalty for private use, $300

NOTICE:

❑ Check here to stop receiving this publication and mail this

sheet to the address below.

❑ NEW ADDRESS. Send mailing label on this page and changes

to:

USDA/Rural Business—Cooperative Service

Stop 0705

Washington, D. C. 20250-3255

44 July/August 2009 / Rural Cooperatives