Rural

COOPERA COOPERATIVES

Stepping up 

biofuels 

production

Stepping up 

biofuels 

production

page 10

USDA / Rural Development November/December 2005
2 November/December 2005 / Rural Cooperatives

Editor’s note: Guest commentary is by

William A. Steel, president of the

National Grange. The opinions expressed

are his own, and do not necessarily reflect

those of USDA or its employees. 

When Congress passes a bill, a lot

can be lost in the numbers. Dollar

signs and pages sometime overwhelm

the actual text of a bill, causing the

people who are directly affected to lose

sight of why legislation was actually

passed in the first place. The mammoth Energy Policy Act of 2005,

recently passed by Congress, fits comfortably into this description. Within

the 1,700-page document, issues ranging from daylight savings time to tax

breaks are thrown together and eventually lost in the magnitude of the text.

The greatest criticism of this legislation is that it does little to immediately address the short-term problem

of rapidly escalating prices for gasoline, diesel fuel, home heating oil,

propane and natural gas. However,

what should not be lost are the positive, long-term effects it will have on

farmers and those living in rural communities. 

Many of the provisions — directly

or indirectly — benefit rural areas, a

part of the country that is sometimes

overlooked when it is time to set constructive federal policies. One of the

most significant benefits is the new

Renewable Fuels Standard established

in the new energy bill. By federal mandate, renewable fuels use will increase

to 7.5 billion gallons by the year 2012.

This mandate will increase the demand

for corn (ethanol) and soybeans

(biodiesel), driving up the price of

these commodities and creating a better market for

farmers. 

Both large

and small producers will benefit from this

mandate, with a

biodiesel tax

credit of up to 10 cents per gallon,

with up to 15 million gallons of production given to small producers to

help balance competition. Many of

America’s families, especially those on

fixed incomes, struggle to pay their

natural gas and electricity bills. High

natural gas prices also translate into

huge costs for the typical farmer.

The domestic exploration and production of natural gas is another provision designed to help farmers. For the

first time in decades, the federal government will be authorized to do a

comprehensive survey of natural gas

deposits that lie off our nation’s coasts.

Current government estimates predict that there is a 15-year supply of

natural gas beneath our coastal waters,

but no one knows for sure. In addition,

special tax provisions will help pay for

development of new supplies of natural

gas derived from abundant deposits of

coal, as well as for new facilities to

store liquefied natural gas.

Input prices for fertilizer and other

[crop inputs] are directly linked to the

price of natural gas. This expansion of

domestic supplies of natural gas will

drive down costs for things like fertilizer, saving farmers money while better using an already proven natural

resource.

Rural communities will benefit from

the $800 million earmarked in the

recently passed energy bill for an innovative new bond authority created to

help in the financing of renewable

electricity projects by rural electric

cooperatives, municipal governments,

and tribal investments.

This provision allows consumerowned electric companies to issue

bonds with zero percent interest. The

“interest” paid on the bond comes,

instead, in the form of federal tax credits to the investor. This new, creative

source of financing will increase

investment in consumer-owned electric

companies and will directly benefit the

rural areas where these companies are

predominantly found.

Although some publications have

erroneously reported that the energy

bill provides few rewards for farmers,

the National Grange strongly supports

the passage of the Energy Policy Act of

2005 and its solid investment in the

future of rural America. It helps to

solidify renewable fuels as a staple of

America’s energy use, while also reducing costs of natural gas and making

investments in consumer-owned electric companies more appealing. All of

these provisions directly benefit farmers and rural communities, and they

will continue to steer rural America

toward a positive and prosperous

future. ■

— William A. “Bill” Steel,

President

National Grange

COMMENTARY

Energizing Rural America: 

How the energy bill helps us all

Cornfields flank a Midwest ethanol plant. USDA photo by Stephen Thompson
Rural Cooperatives / November/December 2005 3

Rural COOPERATIVES (1088-8845) is published

bimonthly by Rural Business–Cooperative Service,

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Ave. SW, Stop 0705, Washington, DC. 20250-0705.

The Secretary of Agriculture has determined that

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Copies may be obtained from the Superintendent of

Documents, Government Printing Office, Washington,

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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. For

noncopyrighted articles, mention of source will be

appreciated but is not required.

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.

Mike Johanns, Secretary of Agriculture

Thomas C. Dorr, Under Secretary,

USDA Rural Development, 

Peter Thomas, Administrator, 

Rural Business-Cooperative Service

Roberta D. Purcell, Deputy Administrator,

USDA Rural Business-Cooperative Service

Dan Campbell, Editor

Vision Integrated Marketing/KOTA, Design

Have a cooperative-related question?

Call (202) 720-6483, or

Fax (202) 720-4641, Information Director,

This publication was printed with vegetable oil-based ink.

Rural COOPERA COOPERATIVES

November/December 2005 Volume 72 Number 6

p. 4

p. 10

p. 15

p. 32

FEATURES 

4 Picking up the Pieces

Co-op aid helping other co-ops recover 

from ravages of Hurricane Katrina

By Donna Abernathy 

10 Prairie Prosperity

From biofuels to buffalo bullion, Minnesota 

town cooperates to boost rural business

By Stephen Thompson

15 IT having major impact on 

farmer-owned ethanol plants 

By Anthony Crooks and John Dunn 

20 Do bigger ethanol plants 

mean fewer farmer benefits? 

By David Morris

25 Expanded database vital 

for future co-op research 

By Dan Campbell

30 Sales and net income climb 

for local co-ops in 2004

By Beverly L. Rotan

DEPARTMENTS

2 COMMENTARY

23 VALUE-ADDED CORNER 

32 NEWSLINE

38 2005 ARTICLE INDEX

47 INSIDE RURAL DEVELOPMENT

On the Cover:

Stairways spiral up and around fuel tanks at the SoyMor biodiesel plant, near

Albert Lea, Minn., which is also home to an ethanol plant. The biofuels industry continues to expand throughout the nation’s corn- and soybean-belt. See

pages 10, 15 and 20 of this issue. USDA photo by Stephen Thompson 
4 November/December 2005 / Rural Cooperatives

By Donna Abernathy

Editor’s note: Abernathy is a cooperative communications consultant based in Murfreesboro, Tenn. 

t age 54, Ben Burkett has lived through four

major hurricanes in his native Mississippi. He

hunkered down with his family when 1969’s

Hurricane Camille cut a path of destruction

and death through the state. But even that

experience did not prepare the produce grower for the ravages of Katrina.

In mid-October, the Mississippi Association of

Cooperatives leader was among the hundreds of thousands

who were still picking up pieces of shattered lives and livelihoods in the wake of

what is called the

worst natural disaster

in U.S. history. With

winds in excess of

150 miles per hour

and tides of more

than 20 feet,

Hurricane Katrina

smashed into the Gulf Coast on Aug. 29, pummeling 90,000

square miles of Louisiana, Mississippi and Alabama. 

While much of the nation’s attention was focused on New

Orleans in Katrina’s aftermath, a compelling story with rural

cooperative roots was unfolding across the storm-ravaged

landscape. From Burkett’s 38-member Indian Springs

Picking up the Pieces

Co-op aid helping other co-ops recover

from ravages of Hurricane Katrina 

A

Fire and water: days

after Hurricane Katrina

pounded the Gulf

Coast, a home in

Biloxi, Miss., burns.

Remaining community

resources were

stretched thin. USDA

photo by Bob Nichols 

Below: Line repair

crews make their way

through countryside

littered with lives and

livelihoods blown

away by Katrina. Photo

by Bret Curry, courtesy

Arkansas Electric

Cooperatives Inc. 
Rural Cooperatives / November/December 2005 5

Farmers Association to the nation’s largest

co-ops, CHS Inc. and Dairy Farmers of

America, the storm wreaked havoc on the

people and assets associated with memberowned businesses. 

The homes of many co-op members

and employees were destroyed. Farmer

co-op members had barns, equipment and

crops blown away. Electric cooperatives

lost thousands of power poles that

snapped like matchsticks in the storm. 

As these coastal cooperatives struggled

to recover, the sting of loss diminished as

help and hope began arriving from co-ops

across the country. An employee of hardhit Coast Electric Power Association

described it as a tale of “cooperative spirit

at its best.” 

Direct hit

“It was catastrophic. There are no

words to describe what I saw. We were at

ground zero,” said Coast Electric employee Melissa Bryant, struggling to explain

what she witnessed in the hours after

USDA hurricane-relief teams 

active on multiple fronts

Editor’s note: Since press deadline for this magazine in mid-October,

Hurricane Wilma caused severe damage in southern Florida. USDA’s

response to that disaster is not reflected in the following article.

From efforts to keep grain shipments rolling, to finding emergency

housing for hurricane evacuees and rescuing people and abandoned

pets and livestock, more than 4,000 USDA employees engaged in hurricane-relief efforts in the Gulf Coast region have been delivering vital services. 

USDA Rural

Development has

led the federal

effort to provide

housing for hurricane evacuees, has

granted extensions

on payments to

home borrowers

and is assisting

rural utilities in

rebuilding electrical, telecommunications and water systems. As of mid-October, Rural

Development had placed about 5,000 evacuees in more than 1,500 housing units in 19 states and provided nearly 23,000 families with temporary

loan-forbearance agreements on mortgage payments. 

Rural Development loan specialists have helped staff Federal

Emergency Management Agency (FEMA) emergency response centers.

To speed the process of helping victims, staff members were dispatched

to the field with wireless, laptop-computers to access the Internet to

assist victims with completing the FEMA benefits application process. 

As with Hurricane Katrina, USDA Rural Development prepared a complete inventory of USDA-financed housing and other facilities impacted

by Hurricane Rita. This includes properties financed through USDA’s

Community Facilities, Housing and Business & Cooperative programs.

Additionally, USDA has worked with numerous partners — including

electrical co-ops, telecommunications providers and rural water associations — to implement existing disaster-recovery plans (which USDA

requires to be in place for its borrowers).

USDA has taken numerous steps to reduce stress on the grain transportation system caused by Hurricane Katrina. These actions include

assisting with the movement of barges of damaged corn from New

Orleans; providing incentives for alternative grain storage; encouraging

alternative shipping patterns to relieve pressure on New Orleans, and

allowing producers to store USDA-owned corn on the farm with the

option to purchase it. 

Following are some examples of how some other USDA agencies are

responding to the most deadly and costly hurricane season in the nation’s

history: 

• USDA Forest Service staff has been managing evacuation centers and

USDA Forest Service staff assist members of the

St. Alphonsus Catholic Church in locating a site

to set up a kitchen. USDA photo by Bob Nichols

continued on page 6

continued on page 7
6 November/December 2005 / Rural Cooperatives

base camps, providing logistical support, clearing roadways, operating mobilization centers and trailer staging

areas. Forest Service Incident Management Teams have

helped provide more than 600,000 people with commodities;

2.7 million meals, 4 million gallons of water and 40 million

pounds of ice have been shipped. 

• USDA’s Animal and Plant Health Inspection Service

(APHIS) sent nearly 50 veterinarians, wildlife specialists

and quarantine experts to assist with recovery efforts.

From rescuing people stranded by flood waters, to rescuing

and recovering pets, livestock and zoo animals, APHIS has

played a critical role in the aftermath of the storm. More

than 300 people were transported to safety in New Orleans

by APHIS employees and close to 10,000 animals have

been rescued and sheltered as a direct result of federal,

state and private efforts. Many of these animals have been

treated by USDA/APHIS veterinarians, who provided medical care while the pets await the return of their owners at

local shelters. APHIS veterinarians assisted with efforts to

rescue eight dolphins from the waters surrounding Biloxi,

Miss. The animals had been swept out of their pools into

the Gulf of Mexico. USDA/APHIS employees have ensured

that any surviving livestock in Mississippi and Louisiana

have fresh water and dry ground for grazing or new bales

of hay. APHIS staff even helped rescue laboratory mice at

Tulane University, which are vital to cancer research and

the culmination of years of work by scientists.

• USDA Natural Resources Conservation Service (NRCS)

maps have been used by first responders to assess ground

conditions during the search and rescue for survivors.

Current satellite and airborne imagery was used to locate

possible dangers, such as fires, and the safest route to rescue survivors. Through the use of NRCS soil survey data,

USDA located the best areas for animal debris disposal and

burial while protecting water sources. “Before and after”

satellite images of the hurricane-affected areas will help

USDA and other federal agencies measure damages and

assess new coastlines. NRCS soils and imagery data are

available to the public at http://datagateway.nrcs.usda.gov.

NRCS continues working with other agencies to assist with

post-disaster cleanup and restoration projects. It has provided approximately $17.4 million in Emergency Watershed

Protection Program funds for hurricane relief efforts. FEMA

provided authority and $10 million to NRCS for the disposal

of hundreds of animal carcasses. In Mississippi, more than

six million birds have been buried with assistance from

NRCS. 

• USDA’s Farm Service Agency (FSA) has made $170 million

in emergency assistance available to agricultural producers. Of this amount, $150 million is available through the

Emergency Loan Program for assistance if there is a 30-

percent reduction in crop production or physical losses to

buildings or livestock. Another $20 million is available

through the Emergency Conservation Program for repairing

land damage and cost-share assistance for up to 75 percent of the cost. 

Additional information and updates about USDA’s hurricane-relief efforts are posted daily on the Web at:

http://www.usda.gov. ■

With limited barge traffic on the Mississippi River in New Orleans following the hurricane, seaworthy barges were moved to grain

elevators along the river to have their cargo transferred to ships. USDA Photo by Bob Nichols

USDA hurricane-relief teams active on multiple fronts continued from page 5
Rural Cooperatives / November/December 2005 7

Katrina. The co-op’s threecounty service area is the

southwest Mississippi region

that received the brunt of

Katrina’s fury.

Coast Electric serves

approximately 60,000 members

on more than 5,900

miles of power line.

Following the storm,

some 30,000 poles

and 10,000 transformers had to be

replaced. Co-op

management initially

estimated it would

take at least six

weeks of work to

restore power to

most members.

Just three weeks

later, 29,000 poles

had been replaced

and power was

restored to 99 percent of members

who were able to

receive electric service. This “miracle”

was performed by a

crew of 3,200 co-op

employees who represent 19 states and 125 electric co-op companies.

The feat was even greater considering that nearly 60

Coast Electric employees lost their own homes and belongings in the storm. Thirty had all of their personal vehicles

destroyed, leaving them with no way to get to work. “We

had linemen reporting for work who had literally nothing

left but the shirts on their backs,” said a still-emotional

Bryant, a communications specialist.

“This horrible situation and the great

success we achieved in

rebuilding our system

in just three weeks

gave me an opportunity to tell the world

about the power of

co-ops,” Bryant said

as she reeled off a

long list of donations

and human support

sister cooperatives had

provided. “This is

cooperative principle

number six in action:

cooperatives helping cooperatives.” 

The cooperative spirit that accomplished work so quickly

in the Coast Electric service area is now the subject of a

Touchstone Energy Cooperative television commercial that

is running nationwide.

A sobering thought remains, however. Nearly 10,000

Coast Electric members were still without power at press

deadline for this publication (Oct. 17) because homes and

Clockwise from upper right: USDA personnel

review weather data at the Incident

Command Post in Gautier, Miss. USDA Rural

Development staff discuss the housing loan

application process with Undersecretary for

Rural Development Thomas Dorr at a FEMA

Center in Baton Rouge. USDA photos by Bob

Nichols; An expression of gratitude for the efforts of Coast

Electric Power Co-op. Relief

crews were housed in a giant

“circus” tent dubbed “Hotel

Katrina” at Coast Electric’s

Gulfport, Miss., office. Photo by

Bret Curry, courtesy Arkansas

Electric Co-ops Inc. 
8 November/December 2005 / Rural Cooperatives

buildings were either completely

destroyed or too damaged to accept

electricity. The co-op is building new

lines to areas with the most severe

damage. The cost to rebuild is staggering. The co-op spent $3 million a day

for personnel and materials to restore

power. The total cost for system

restoration is projected at $100 million.

Down, but not out

Petal, Miss., is some 70 miles from

the Gulf Coast. That’s normally a safe

distance from the worst a Gulf Coast

hurricane can dish out. But not this

time. Several weeks after the storm,

Petal-based Indian

Springs Farmers

Association’s only

produce packinghouse remained heavily damaged and

without electricity to

operate cold storage

equipment. Members

of this small fruit and

vegetable marketing

cooperative lost

freshly picked inventory stored in the

packing facility as

well as crops in the

field. 

Nearly half of the

co-op members are

“completely wiped out,” said member

Ben Burkett. “Fifty acres of watermelons are gone. Eggplants and jalapenos

are stripped — all of it gone.” Worse

than the damage to the building,

Katrina blew away 65 percent of

Indian Springs’ direct and commercial

markets. New Orleans outlets and casinos in the Biloxi, Miss., area were primary customers. 

Two weeks after the storm, members were left struggling to find ways

to plant their next crop, essential to

assuring the survival of their individual

livelihoods as well as their memberowned business. “This is the optimum

time to plant our squash, bell peppers

and cucumbers, but we can’t get the

inputs,” Burkett explained. 

When word spread about of the

desperate need for fuel, some Iowa coop members came to the aid of Indian

Springs members and other Mississippi

growers. West Central Cooperative

donated 15,000 gallons of soy biodiesel

fuel to help their fellow farmers plant

fall crops on time. Until its cold storage is again operational,

Indian Springs members

were trucking their

remaining produce to a

farmers’ market in

Memphis, where another

farmer co-op is sharing its

space.

Farmer cooperatives

from across the nation have stepped up

to provide relief to those in hurricaneblasted areas. They have donated food,

livestock feed, generators, fuel supplies

and transportation. Farmer cooperatives, their employees and farmer

members have directly contributed

more than $1.2 million in hurricane

relief, the National Council for Farmer

Cooperatives reports. 

Dairy devastation

More than 300 Dairy Farmers of

America (DFA) members with about

25,000 cows in Louisiana’s “Florida

parishes” (east of Baton Rouge, along

Interstate 12) were severely crippled

following Katrina’s landfall. Power

outages, feed deficiencies, blocked

roadways, structural destruction and

inadequate milk storage amounted to

an estimated $40 million in damages in

the dairying area north of Lake

Pontchartrain, according to DFA officials. The dairy co-op markets raw

milk for an estimated 90 percent of the

producers in the area. 

Fellow DFA members and personnel came to the rescue of these dairy

farmers. A cooperative-owned plant in

Franklinton, La., became a crisis center, where members could turn for

relief supplies. DFA members outside

the hurricane-affected region sprang

into action, securing cattle feed, delivering generators and arranging transportation for supplies. 

Milk haulers carried chain saws,

cutting their way through blocked

roads. In the first two weeks following

the disaster, DFA delivered approximately 100 industrial generators capable of powering members’ milking parlors and coolers. 

The co-op also coordinated and

delivered six loads of fuel to keep those

generators running. Four weeks after

the storm, 10 percent of the affected

USDA/APHIS staff rescued thousands of stranded

pets and helped establish an intensive-care unit at

the Louisiana State University Veterinary School,

where faculty and students operated on injured

pets. Rhonda Bonds (above, right) retrieved her

cat, Mittens, 21 days after being forced to flee her

apartment. Despite being malnourished, the cat

was otherwise fine. USDA photos by Bob Nichols

continued on page 33
Rural Cooperatives / November/December 2005 9

griculture Secretary Mike

Johanns has announced

the selection of 171 applications from 42 states to

receive over $14.6 million

under USDA Rural Development’s

Value Added Producer Grant (VAPG)

program. “These grants will create jobs

and improve financial returns for growers and farm families across rural

America,” said Johanns. “These funds

assist agricultural producers in marketing their products and enhance opportunities for the development of alternative fuels from renewable energy

sources, part of President Bush’s comprehensive national energy policy.” 

Since 2001, the Bush Administration

has committed over $115 million to support value-added agricultural investments, including more than 110 energy

related projects. Value-Added Producer

Grants may be used for planning activities, such as feasibility studies or business

plans, or to provide working capital for

marketing value-added agricultural products and for farm-based renewable energy projects. 

Eligible applicants are independent

producers, farmer and rancher cooperatives, agricultural producer groups, and

majority-controlled producer-based business ventures. Value-added products are

created when a producer takes an agricultural commodity, like milk or vegetables, and processes or prepares it in a

way that increases value to consumers.

For example, in Nebraska, an on-farm

dairy processing plant that manufactures

a Hispanic line of cheeses will receive

funding to prepare a marketing plan and

design promotional materials and bi-linBioenergy, dairy producers among

recipients of $14.6 million in VAPGs 

A

Co-op recipients of 2005 VAPGs 

For complete list, visit “newsroom” at: www.rurdev.usda.gov

STATE NAME AMOUNT

California Calcot, Ltd. $149,500

California Olive Growers Council of California $100,000

California Pacific Coast Producers $100,000

California Sun-Maid Growers of California $75,000

California Sunsweet Growers, Inc. $150,000

Colorado Mountain View Harvest Cooperative $73,500

Florida North-South Institute of Southwest Broward 

Vegetable Growers Association $95,000

Florida SunFresh of Florida Marketing Cooperative $100,000

Iowa America’s Premium Pork DBA Allied Producers 

Cooperative $105,275

Iowa Farmers Cooperative $100,000

Iowa Heartland Fish Cooperative $86,325

Iowa Swiss Family Farms, Co. $75,000

Kansas Frontier Equity Exchange $41,500

Massachusetts National Grape Cooperative Association, Inc. $100,000

Michigan Michigan Turkey Producers Cooperative, Inc. $150,000

Minnesota Bongards Creameries Cooperatives $150,000

Minnesota Central Minnesota Soybean Processors $40,000

Minnesota Stickney Hill Dairy Inc. $150,000

Mississippi Mississippi Fruit and Vegetable Association $150,000

Mississippi Miss-Lou Blueberry Growers Association 

Cooperative $150,000

Missouri Alma’s Farm Fresh Meats $150,000

Missouri MFA Incorporated $100,000

Missouri Missouri Masa, Inc. $150,000

Missouri Sho-Me Livestock Cooperative, Inc. $147,112

Missouri Soy Labs, LLC $150,000

Montana Western Montana Growers Cooperative $59,998

Nebraska Farmers Cooperative Elevator Company $29,000

Nebraska Nebraska Turkey Growers Cooperative $64,840

North Carolina Old North State Winegrowers Cooperative 

Association, Inc. $150,000

North Dakota Fessenden Cooperative Association $150,000

Ohio Mercer Landmark, Inc. $31,250

Oregon Oregon Trail Beef Cooperative $150,000

Oregon Oregon Woodland and Sales Cooperative $86,000

Oregon Siskiyou Sustainable Cooperative $23,210

Pennsylvania Northern Tier Sustainable Meats Co-op, Inc. $40,748

Texas Rio Grande Valley Sugar Growers, Inc $100,000

continued on page 34 TOTAL $3,723,258
10 November/December 2005 / Rural Cooperatives

By Stephen Thompson,

Assistant Editor 

community in southeastern Minnesota illustrates

the principles of cooperation to promote economic

growth and prosperity in

the face of local economic setbacks.

Community members of the town of

Albert Lea have found that working

together, pooling resources and exploiting every opportunity are the keys to

encouraging new growth. Since losing

500 jobs in 2001 when a processing

plant operated by Farmland Foods

burned down, Albert Lea and the surrounding Freeborn County (with a population of about 33,000) have found new

sources of income and expect to add 500

new jobs in the next 18 months.

The local electric distribution coop, Freeborn-Mower Cooperative

Services, is part of this community

effort, and uses its resources to bring

new business to the area.

“Our membership isn’t growing in

numbers very much,” says Tim

Thompson, president and CEO of the

co-op. “Our growth strategy is working for economic development and

improving the overall quality of life

here.” As well as providing businesses

with competitive rate packages and

help in minimizing power usage, the

co-op offers financing using two funding sources: USDA Rural Development Rural Economic Development

grants and loans; and a program of

DairyLand Power Cooperative (DairyLand), a power-generation co-op that

provides electricity to Freeborn-Mower. 

Ethanol, biodiesel plants

boost rural community 

Just outside the city stands one of

the showpieces of Albert Lea’s economic growth effort. The profitable

Exol corn ethanol plant is 100-percent

farmer-owned through a new-generation cooperative, Agra Resources. It

shares a site with a new soy biodiesel

plant run by SoyMor, another cooperative that shares many of its members

with the ethanol co-op. By sharing the

site, both businesses save on infrastructure costs, including utility hook-ups.

Exol began operation in 1999 with a

13-million-gallon-per-year nominal

capacity. An expansion in 2002 tripled

capacity to 36 million gallons. The

plant is run and its products marketed

through a contract with Broin

Companies, an investor-owned consortium that offers design and construction of ethanol plants as well as marketing and management services. Broin

currently works with 15 Midwestern

ethanol plants, and markets Dakota

Gold distillers grains — the byproduct

of ethanol production used as animal

feed — as a premium product. 

Prairie Prosperity 

From biofuels to buffalo bullion & zamboni repair,

Minnesota town cooperates to boost rural business 

A

The SoyMor biodiesel plant, above, is the result

of a cooperative effort that involved local co-ops

and businesses, nonprofits, individuals and

state, national and local government. USDA 

photos by Stephen Thompson
The facility is now being upgraded

once again, this time to install Broin’s

new proprietary “fractionating” technology that removes part of the corn

kernel before fermentation. The result,

claims Exol general manager Rick

Mummert, is higher-quality distillers

grains. 

Freeborn-Mower and Dairyland

Power played a major role

in getting the Exol project

going. Dairyland saw an

opportunity to add a substantial, steady load to its

system, thus improving

efficiency in off-peak hours

and lowering costs, says its

chief financial officer,

Robert Mueller. But even

more important, the operation had the potential to

benefit the entire area.

“What sold it to us was

that it was all farmerowned,” says Mueller.

“This wasn’t an outside

group of investors that

would take their profits

away. It was members of

the rural community — and the community would reap the rewards of the

risk they took.”

Freeborn County provided crucial

financial and technical support for the

development of the infrastructure

required for the biofuels plants. This

support included a $4 million, lowinterest loan “that helped get the ball

rolling,” said Susan Miller, county

engineer. It also provided a $75,000,

low-interest loan to develop a railroad

spur to serve the plants.

Another $2 million in county and

state funds were used to build access

roads from the plants to Interstate 35

and U.S. 65 that can support 10 tons of

weight from corn and soybean trucks.

The county provided a $200,000, lowinterest loan and did the design and

construction on sanitary sewer lines

that carry waste from the plants to

Albert Lea’s water treatment plant. 

Electric co-ops kick start 

stalled project

When the electric cooperatives first

got involved, the Exol project was at a

standstill. An overly ambitious business

plan had scared away potential sources

of financing. Dairyland and Freeborn

Mower kick started the project by paying for a study by a reputable consulting firm. 

The study found that starting operations with a smaller plant with the

capability to upgrade later offered a

better solution. It also recommended

Broin over the original plan’s engineering and construction contractor.

Dairyland donated the use of its own

airplane to fly ethanol co-op board

members to inspect Broin’s plants, and

even provided a 3-year repayment

guarantee to the small local bank issuing the construction loan.

Freeborn Mower took some risks as

well. The site chosen for the ethanol

plant was originally part

of the local investorowned electric company’s service area. The

electricity distribution

co-op offered to swap

accounts, handing over

the contract for Albert

Lea’s sewage treatment

plant — an established,

blue-chip customer —

in exchange for the

right to provide service

for a start-up operation.

In addition, the co-op

had to build a new

power substation just to

serve the new plant, the

cost of which it would

have to write off if the

ethanol plant failed. 

Dairyland helped out by agreeing to

shoulder half of the loss if the substation had to be abandoned, and by giving Freeborn Mower a 10-year guaranteed rate plan for the power the

ethanol plant would consume. Under

the plan, the distribution co-op pays

the same discounted rate for 5 years,

after which the rate increases by 2 percent each year for another 5 years. The

power co-op also agreed to pick up

two-thirds of any of the distribution

co-op’s unpaid accounts receivable for

the ethanol plant.

Albert Lea, Minn., is benefiting not only from two new biofuels co-ops, but a

number of other new businesses started by a local business incubator. USDA

photos by Stephen Thompson

Rural Cooperatives / November/December 2005 11
12 November/December 2005 / Rural Cooperatives

USDA funds biofuel plants

Freeborn Mower made its own

contribution to the plant’s construction to the tune of a

$400,000 no-interest, 10-year

loan. The loan was made possible

by a Rural Economic Development Grant (REDG) from USDA

Rural Development. REDGs are

given to rural electric and telephone utilities to promote economic development and job creation in their service areas.

Another organization that

helped the ethanol co-op get on

its feet was the Albert Lea

Chamber of Commerce, which

donated free office space and

facilities for meetings while the

cooperative was being put

together. “We don’t have

that many resources,”

says Susie Petersen, the

chamber’s executive

director, “But we use

what we have to help new

enterprises, including

promoting local support

and providing publicity.”

Exol is now a member

of the Chamber, as is

SoyMor, the cooperative

running the biodiesel

plant on the same site.

Like Exol, the SoyMor

facility is fully farmerowned, with 500 members — half of whom live

in nearby Iowa — and a

total investment of $110

million. Also like Exol, its

operations and marketing

are managed by a contractor — in this

case West Central Soy, another co-op.

The plant — currently the largest in

North America — began full production at an annual rate of 30 million

gallons earlier this year. Like the Exol

plant, SoyMor received a $400,000

REDG loan through Freeborn Mower.

Tim Thompson points out that earlier

loans made from the REDG fund are

now being paid back, allowing the

electric co-op to loan the money again

to promising business ventures.

With the two operations next to

each other, and with similar capacities,

the contrast between the two is striking. The ethanol facility dwarfs the

biodiesel plant. This is, in part,

because the ethanol plant has large

storage bins for the corn used as raw

material, while the soy operation currently has its beans crushed elsewhere

and the oil delivered. However, even

leaving out the bins, ethanol production requires a much more massive

structure, and the facility is far more

complicated.

Biodiesel potential

could loom larger than

ethanol 

SoyMor’s first venture was a plant completed last year that

manufactures lecithin, a

valuable soy extract

used in foods, cosmetics, pharmaceuticals

and other products.

Lecithin production for

pharmaceutical use

promises good returns,

says board member

Gary Pestorious, a

founding member of

both the Exol and

SoyMor co-ops. The operation uses

advanced technology to produce the

highest quality product, he says, without unwanted chemicals such as hexane

that contaminate lower grades of

lecithin. This enables the co-op to sell

its product at a premium. Nevertheless,

he thinks biodiesel is already beginning

to come into its own, especially with

petroleum prices climbing.

“I now believe that there is more

demand than supply,” he says. “People

want this fuel. They want it bad.”

Pestorious thinks biodiesel production

Many rural Minnesota

towns are striving to

use all available

resources to maintain

growth and prosperity.

Steve Wenzel (right,

rear), state director for

USDA Rural

Development in

Minnesota, discusses

efforts to build a venture-capital fund with

Albert Lea civic leaders at the FreebornMower Cooperative

Services headquarters.
Rural Cooperatives / November/December 2005 13

could be profitable even without government incentives, and that demand

for the fuel will eventually outstrip that

for ethanol. The reasons include not

only rising petroleum prices, but also

SoyMor biodiesel’s high quality, which

results in better mileage and less

engine maintenance. “Our product is

the best there is,” he declares.

Pestorious illustrates his point with

an anecdote. One company bought

200,000 gallons of SoyMor’s biodiesel

the first year, he says, and came back

asking for 3 million gallons the next.

“That’s how it’s going to go.” He’s

similarly optimistic about ethanol, and

believes that its production could eventually use 15 percent of the nation’s

annual corn crop.

Sharing the site with the Exol plant

brings many advantages, including

cost-sharing for a rail loop facility that

will be able to handle 280 railroad cars

when finished. Another is a ready supply of a vital production factor.

Biodiesel is produced from natural oils

and fats using a chemical reaction

involving alcohol. 

Most manufacturers use methanol,

also known as wood alcohol, for this

purpose. But the SoyMor plant uses

ethanol supplied by its sister co-op.

Business incubator aids start-ups

Meanwhile, across town a business

incubator is helping some much smaller ventures get started. The Albert Lea

Business Development Center is run

by the Albert Lea Economic

Development Agency. Built with the

help of another REDG loan from

Freeborn Mower, it offers support to

start-up businesses that would otherA tanker truck takes on a load of biodiesel at the SoyMor loading facility. The Exol ethanol plant can be seen

in the background. The two plants share a site and infrastructure.

One company

bought 200,000

gallons of SoyMor’s

biodiesel the first

year, and came back

asking for 3 million

gallons the next.
14 November/December 2005 / Rural Cooperatives

wise have trouble getting off the

ground. The Center provides space in

a modern business building suitable for

warehouses, small manufacturing operations, food preparation and storage,

and offices. Reception and other business services are included, as well as

legal, accounting, marketing, and business planning assistance. 

To qualify to use the incubator,

businesses must submit a valid

business plan and other information supporting the viability of

the proposed enterprise. There is

an informal time limit of 5 years

for use of the facility, says Ryan

Nolander, the agency’s business

development director, but the

length can sometimes be extended, depending on the circumstance. He points out that, while

the businesses nurtured by the

incubator are small, it is small

businesses as a group that provide

the biggest single and fastestgrowing source of jobs in the

United States.

The Center currently houses

six budding enterprises. One is

Daisy Blue Naturals, a manufacturer of all-natural lotions, soaps,

shampoos and other cosmetic

products. The business began in

chemist Jena Thompson’s home,

when her young son was found to

be allergic to the ingredients of

commonly available baby oils and

soaps. Thompson tried to find

natural-based products, she said, but

“according to federal government

guidelines, only a portion of a product

needs to be natural in order for it to be

labeled as such. And everything truly

natural was outrageously expensive.”

So, she formulated her own soap and

baby oil.

Soon, Thompson’s neighbors were

buying her formulations, and her business grew using direct sales through

house parties. In July 2002, the business moved into a space in the incubator facility, and has expanded into larger spaces there three times since. All of

Daisy Blue’s products are manufactured on the site, using only natural

ingredients. 

The company now employs 13 people, including Galen Spinler, its chief

chemist. Spinler used to work in the

defense industry, but far prefers his

current job, saying, “It’s a great bunch

of people to work with.”

From wheelchair cushions

to dried buffalo bullion 

The business incubator also houses

six other enterprises, including a firm

that makes wheelchair cushions, a

company that manufactures a dried

bouillon mix made from buffalo

instead of beef, an electrical wholesaler, a caterer and a company that services ice resurfacing machines used on

skating rinks. 

Nancy Jensen runs one of the smaller operations, Day Lily Enterprise Inc.,

a shop that makes custom-printed day

planners. Jensen ran her business out

of her home for five years, until she

was given the opportunity to rent the

incubator space.

“I quit my job and stepped out on

faith,” she says. With only one

employee, the business is still small,

but growing, says Jensen, who is grateful for the chance to get her dream off

the ground. She says the Development

Center gives her enterprise an ideal

venue for getting started. “I love

it here,” she says.

The agency offers help to

other businesses as well, including

aid in locating financing and suitable properties, and a revolving

loan fund that offers up to

$50,000 to small businesses for

acquisition of equipment. It also

operates the Albert Lea Small

Business Development Center, a

joint effort by the Minnesota state

government, a local technical college, and the Small Business

Administration that offers help in

evaluating profitability, marketing,

planning, loan application packaging, and related services.

The economic development

community in Albert Lea isn’t

looking back. Currently on the

agenda is setting up a venture

capital fund to bring potentially

high-income new ventures to the

area. Representatives of the

Chamber of Commerce, the

Albert Lea Development Agency,

Freeborn Mower and other organizations are currently exploring

ways to find funding for such an

initiative. 

On Sept. 27, they met in a conference room at the Freeborn Mower

offices with USDA Rural Development

State Director Steve Wenzel to discuss

the venture capital fund and other

development issues. Wenzel says he’s

encouraged by the initiative shown by

the group. “I think cooperation and

coalition among government and nongovernment entities is the key to job

development in rural areas,” says

Wenzel. “USDA takes a very active

role, but it’s the inventiveness and

resourcefulness of members of the

community that’s going to make the

difference.” ■

One of the tenants of Albert Lea’s business incubator is

George Kessel’s Engineered Ice Systems, which services

and repairs ice-resurfacing machines for skating rinks.

Photo courtesy Albert Lea Economic Development Agency
Rural Cooperatives / November/December 2005 15

By Anthony Crooks and John Dunn,

Ag Economists

USDA Rural Development

Editor’s note: This is the second of two articles focusing on the

impact that evolving information technology is having on the

ethanol industry. The first article appeared in the September/

October 2005 issue, which is on-line at: www.rurdev.usda.gov/rbs/

pub/openmag.htm . These articles are based on a forthcoming

report: “The Impact of Information Technology on Farmer-owned

Ethanol Plants,” RR 209. Call (202) 720-6483 to order, or

download at www.rurdev.usda.gov. Available in January 2006.

nformation technology (IT) is having a profound impact on the ethanol industry, especially in the financing, construction and operations of ethanol plants. It helps to strip costs

out of ethanol plant systems, promotes standardization and mitigates production risks. 

In addition, IT:

• Gets plants up and running as much as 6 to 12 months

sooner than otherwise;

• Keeps plants running to increase production efficiency.

This new technology reduces operational downtime and

increases the annual days of operation from 340 to as

many as 361. 

• Facilitates the inflow of capital into the industry by helping to quantify the risks associated with plant

investment/operations to prospective investors.

• Alters the nature of a firm by digitizing and decomposing

on-site activities (breaking down large jobs into several

small jobs) that can be outsourced, off-shored and otherwise moved around. This changes the economics of plant

location by impacting where various assets are deployed. 

• Changes labor mobility by moving jobs to labor as well

as labor to jobs.

• Alters the skill sets needed for plant management

and labor. 

• Further separates ownership from management

and allows firms to transform themselves faster.

• Alters a firm’s relationships to business and

industry because it supports a contract-based industry

structure that creates significant linkages/collaboration and

enables coordination across enterprises, companies and

specialties.

• Gives rise to the ethanol franchise and uses the standardization of that model to reduce uncertainty. 

Outside investors increasing stake

A better understanding of risks associated with

ethanol plants allows the financial community

to reduce lenders’ equity participation

requirements, to reduce interest rates

and the overall cost of capital and

invite participation among outside investors. IT has altered

our view of the traditional

market structure.

Economic power now

lies in aggregating

information assets,

not in the physical

assets of plant and

equipment associated with

production. 

IT having major impact on

farmer-owned ethanol plants 

I

USDA photos by Stephen Thompson
16 November/December 2005 / Rural Cooperatives

With regard to IT and the future

dynamics of the industry, as IT applications within the ethanol industry

continue to evolve, competitive forces

will spur efficiencies and dynamic

growth. Work activities will increasingly be dispersed across geography,

institutions and dimensions as managers and decision makers ask: “What

else can be digitized, decomposed and

outsourced?” 

The balance of economic power

within the industry shifts daily from

the traditional aggregation of physical

asset ownership to the aggregation and

integration of information services.

However, competitive advantage held

today is more easily eroded and

replaced. This understanding raises the

question: “Will the emerging pricediscovery mechanisms (futures market

and market transparencies) change the

comparative advantage of the information aggregators?” 

The dynamic, intellectual-property

nature of IT continues to shape the

competitive structure of the industry.

Where will the talent to continue operations in this environment come from? 

Information technology

has eroded and distributed the

market power once held

exclusively by global giants.

Enhanced access to inputs and

product markets among midsized fuel ethanol firms arising from the adoption of

information technologies may

inspire similar developmental

opportunities in rural

America. 

The notion that firms may

achieve competitive advantage

from an efficient, internal

information system — in lieu

of the high levels of vertical

and horizontal coordination

typically garnered solely from

a large size operation — provides both an encouragement

for the relative success of

mid-sized firms and a developmental template for similar

enterprises in rural areas. 

Innovation related to new

IT is leading to the development of

new ethanol products innovation and

commercialization. 

DDG product development

Land-grant universities and private

corporations have worked together to

significantly enhance the product

value of distillers grains. Researchers,

such as Vern Kelly and Jerry Shurson

at the University of Minnesota, have

served to not only expand existing

markets for distillers grains as cattle

feed, but have also developed new

opportunities in feeding hogs. So,

instead of being an afterthought or

even a waste product, as distillers

grains were once considered, DDG is

now a significant component of a

plant’s revenue stream. 

Early on, some plants were fortunate to have Farmland Industries as

one of their investors. Farmland’s feed

division helped to market DDG.

Farmland also sponsored and conducted research on how best to use distillers grains. Farmland’s feed division

has since been absorbed by Land O’

Lakes, which markets DDG and is

continuing to do research at its own

facilities and in collaboration with universities. Such research is needed,

because the ethanol industry redirects

about 10 percent of the nation’s corn

crop away from the livestock-feeding

industry. Every opportunity for distillers grains to be included in animal

rations — in substitution for either

energy or protein — relieves some of

the upward pressure on corn prices as

it increases the value of distillers

grains. Inclusion rates for DDG in

feed have increased for cattle (up to 25

percent), swine (10 percent) and poultry (5 percent), but there is still an

excess supply and the price is tracking

downward again. 

Feed researchers and development

groups continue to educate the industry and develop its customer base.

However, the product remains a bargain relative to corn, which in turn

encourages feeders to pursue substitution opportunities. 

Initially, almost 100 percent of the

distillers grains that were sold went

toward dairy rations. Plant managers

soon discovered that drying the wet

grains would not only increase the

product’s shelf life, but would also

improve consistency and quality.

Local feeders pressured plants to sell

quickly and at a discount. Sometimes

the best offer most plants received

from feeders early on was paying the

freight to haul it off. But now — after

years of research, some technological

developments and a lot of education

— feeders know precisely the value of

DDG. 

Bio-refineries promise 

range of products

The bio-refineries concept is similar

to the petroleum refinery concept.

Feedstock (biomass, in the case of a

bio-refinery) is converted into a wide

range of products, based on market

consideration and contractual arrangements. The biomass feedstock is typically fractionated into its various components. Those components are then

processed into intermediate and final

products. 

Grain from Minnesota corn bins such as these is fueling the expansion of the ethanol industry. Farmer-owners of ethanol plants have averaged significant gains

per bushel of corn. 
Rural Cooperatives / November/December 2005 17

What does a medium-sized ethanol plant need to

survive a two-year period of low prices? With recordhigh fuel prices, that is obviously not a problem at present. But the market is cyclical, and some day the

worm will turn again. Experience shows that the

biggest key to surviving a low-price cycle is a strong

CEO or, lacking that, a strong board of directors — and

preferably both.

The board must be able to draw on its managers to

obtain the needed information to run the plant. They

need a business plan that is updated each year. They

need to have a professional marketer for ethanol and

feed. The marketer must understand the customers’

needs (particularly for DDG) so that they can help

develop the market. 

The board needs a risk-management plan that helps

hedge the co-op’s corn and natural gas. It needs to

contract the sale of its ethanol and DDG with a built-in

“crush margin.” The people developing the risk-management plan should be working to provide a program

that will estimate the volatile factors that the plant

faces and indicate whether the expected return is

enough to validate the risk. 

Perfect hedges are not available, but risk-management plans can make use of the new ethanol contract

and hedge DDG based on corn and the natural gas

contract prices (although a number of plants are pursuing renewable and other energy alternatives to natural gas).

Long-term ethanol purchase contracts are becoming more common. One example is a three-year contract with the first-year basis being the cost of unleaded gasoline, while the basis for the next two years is

crude oil price. However, anyone using these contracts

would need to be prepared to meet substantial margin

calls and have access to adequate capital. 

Plants need programs for both preventive and predictive maintenance and to carefully manage their

spare parts inventory. An unplanned plant shutdown

soon creates cash-flow problems. Maintenance of

plants built 5 and 10 years ago is quickly becoming a

first priority. Furthermore, facilities looking to cut costs

soon realize that maintenance/repair is a significant

portion of plant operating expenses. 

Many plants now employ IT solutions to take a more

proactive stance on their maintenance program. A predictive maintenance program is based on a plant’s history of operating requirements and is derived from a

statistically-based estimate of life span (or failure rate)

and priority ranking (importance to operations) for each

piece of equipment and machinery in the plant. The

software dictates the priority of all maintenance work,

schedules any required materials/equipment for just-intime delivery, and documents the entire process. 

What factors will expand the market for ethanol?

Taking out the mandatory uses, an estimated 30 to 40

percent of current use is discretionary blending. Some

market analysts forecast an over-supply and lower

prices for the next two to three years. However, if

Atlanta were to ban MTBE and if California were to

mandate a 5-percent Reformulated Fuel Standard

(RFS), mandatory demand would increase in each of

these areas by 250 million and 950 million gallons,

respectively. An adoption of a 10-percent, mandatory

RFS in California could increase demand by as much

as 1.9 billion gallons per year. ■

Surviving in a low-price cycle 

Intermediate products may be combined to produce additional products.

The basic concept incorporates multiple products and possibly multiple

feedstocks. Flexibility to meet market

demands is an important element of

the bio-refinery concept.

Bio-refinery feedstocks may include

agricultural crops and agricultural

residues, trees, grasses, animal wastes

and municipal solid waste, organic

materials that capture and store solar

energy. They may also use various

combinations of processing technologies including mechanical, thermal,

chemical and biological processes. The

products produced are nearly limitless.

They include fuels, electric power and

heat energy, food and feed, and a host

of chemicals including plastics, solvents, adhesives, fatty acids, organic

acids, paints, dyes, inks, detergents and

more. 

The extended view of this concept

is to develop bio-refinery complexes or

“bio-refinery parks” that produce a

wide range of products and which use

products produced by others in the

park. This concept would aid in the

economic efficiencies of collection,

storage and handling of feed stocks,

production of energy, as well as help

support the required transportation

and distribution infrastructure. 

Further improvements in technology may play an important role in

increasing efficiency of ethanol plants.

New “up front” technologies that fractionate the grain into starch, pericarp,

germ and protein may enable ethanol

plants to produce a wider set of

byproducts and to increase the market

value of the byproducts. This change is

expected to increase the energy efficiency of the ethanol plant and reduce

other processing costs per gallon of

ethanol.

continued on page 35
18 November/December 2005 / Rural Cooperatives

While today’s ethanol industry is fragmented, not long

ago it was much more concentrated. In 1990, three major

players dominated fuel ethanol production. ADM held 60

percent of the market, Pekin Energy (now Aventine, by way

of Williams Bio Energy) and New Energy Co. of Indiana,

each held 10 percent. 

The entire industry was then comprised of about 20 firms

that produced about 1 billion gallons annually. At that time,

construction costs were around $2.50 per gallon, conversion

efficiency was closer to two gallons per bushel of corn and

the average-sized plant required a workforce of about 50.

Structurally, today’s situation is almost a mirror image of

the past. The top three firms produce only about 31 percent

of the nation’s ethanol and 44 of the remaining 68 firms are

farmer-owned. Over 4 billion gallons of fuel ethanol will be

produced this year. Construction costs are about 98 cents

per gallon. Fuel conversion efficiency is now 2.85 gallons per

bushel of corn. A plant requires only 35 full-time staff and is

operational for 360 days per year. 

The transition from a highly concentrated to a fragmented industry was brought about by several key drivers,

including: federal and state policies; natural progression of

the industry; classic “production-push” agriculture; farmer

ownership; crude oil price spike; low-priced corn; development of venture capital interests; and the formation of trade

associations. Each of these factors is examined below. 

Federal and state policies

Federal and state policies contribute substantially to the

viability of the fuel ethanol industry. As one industry representative commented, “state and federal incentives cover a

lot of mistakes. They provide a safety-net.” 

Ethanol’s exemption/credit against the federal excise tax

on motor fuels is a long-standing industry cornerstone.

Programs created under the Clean Air Act Amendments of

1990 enhanced demand for ethanol. These included the

Oxygenated Fuels Program, implemented in 1992 to reduce

emissions of carbon monoxide, and the Reformulated

Gasoline (RFG) Program, which took effect in 1995 to reduce

ground-level ozone (i.e., smog). The federal Bioenergy

Program (CCC-850), established by executive order in 1999

under the Clinton administration, is a key incentive for new

facilities because it offsets part of the feedstock costs

incurred to start up or expand biofuels production. 

The long-term extension of the excise tax credit in the

JOBS Act of 2004, together with the Clean Air Act programs,

reduced the “policy risk” associated with establishing and

operating an ethanol facility. State policies also have had

major impacts on the industry. However, state production

incentives tend to be capped at a certain capacity level,

which contributes to a fragmented industry structure. 

The fuel ethanol industry’s rapid growth is due in large

part to the finding that methyl tertiary butyl ether (MTBE) is

carcinogenic. This eased political fighting between the

oil/energy sectors and agriculture. The MTBE phase-out put

both parties on the same side of the issue. The Minnesota

requirement that gasoline be blended with 10 percent

ethanol is regarded as a model state policy. State bans of

MTBE, a competing additive used to boost oxygen content in

gasoline, expanded ethanol use in recent years. Presently,

20 states have implemented or announced bans of MTBE.

Bans in California and New York took effect at the beginning

of 2004. 

Last August, after more than 5 years of heated congressional negotiations, the Energy Policy Act of 2005 set a

renewable fuels standard (RFS) of 7.5 billion gallons by the

year 2012. While the implication of the Act will involve an

extensive change to fuel regulations, petroleum-refining and

fuel marketing, the full economic and environmental effects

will only be revealed in time.

Natural progression of industry 

To some extent, fuel ethanol is experiencing the “natural

progression” of an industry. It has stalled and re-started

several times over the years. Several times it was on the

verge of death, only to be reborn. The fundamental difference now is the world’s increasing demand for energy. 

Those involved in this business for 25 years still have the

same dream as the preceding generation that launched the

industry. The scope of the uphill battle fought in the industry’s early days probably wasn’t clearly understood.

Nevertheless, they witnessed the emergence of a real biofuels industry. 

More than a fuel 

Ethanol is being viewed as more than a commodity in

many rural areas of the nation, where there is emotional

zeal about the potential of biofuel to strengthen the rural

economy. There is even a sense of patriotism about the part

biofuel may play in helping to reduce the nation’s dependence on foreign oil. These strong beliefs may have helped

the industry survive difficult straights, when it continued to

expand production with only a small clue as to how it would

be sold. 

The consensus was, “It’s a good idea.” But few had any

real vision of the industry’s future. In no small way, ethanol is

classic “production-push” agriculture, in which farmers

plant seeds without knowing their ultimate yield and pay.

Their philosophy has been: “If we build it, they will come.”

Realistically, the industry is not going away. But what will

Fuel ethanol industry structure, past & present
Rural Cooperatives / November/December 2005 19

it look like? The consensus is that there will be a substantial,

long-term positive growth phase. The only real distinction

among ethanol plants in the past 5 years has been between

those that made a “nice” return on investment vs. those that

made a “fantastic” return. 

Farmer ownership 

The emergence of “new-generation” cooperatives and

farmer-owned ethanol plants in the early 1990s played a critical role in the development of the industry. The cooperative

structure provides farmers with the opportunity to collectively raise money to build facilities. Cooperatives also distribute the investment risk over the entire group of investors,

thereby reducing the risk to any individual investor. 

In addition, because cooperative membership is tied to a

right and an obligation to deliver corn to the cooperative, the

corn delivery agreements may have helped the cooperative

survive market fluctuations better than a privately owned

plant faced with purchasing corn in a volatile, open market. 

However, it is harder to put together a co-op today

because most farmer groups within a 40- to 60-mile grainhauling radius of a plant (the distance considered economical for procuring feedstock for ethanol) lack sufficient capital to invest the needed equity. Within a 60-mile radius, a coop can typically raise about $12 million to $18 million through

local equity drives for a plant that will cost $45 million to $60

million. Nevertheless, some farmer groups are getting more

sophisticated in raising capital; one recent success story

involves a co-op that raised $28 million. 

Generally, farmers exhaust their ability to raise equity for

a new plant, then look to plant builders, ethanol marketers or

other outside investors as necessary partners to raise the

rest of the needed capital. Recently, a few Wall Street

investors have entered the picture to finish the equity drive

in some form of partnership arrangement, or to subordinate

the debt. In recent cases, farmer-investor groups have

assumed more of a minority ownership position in the company. 

Crude oil price spike 

The most recent boost to the industry has been crude oil

costing more than $60 a barrel. Still, there has been a perception that the viability of the industry is based on subsidies. About three years ago, it was difficult to get New York

investors to even discuss ethanol. Morgan Stanley was one

exception. It was forward-looking enough to pursue some

ethanol investments, but virtually all other major investment

firms declined to do so. 

The only real change since then has been the spike in

crude oil price. Now the institutional investors and moneycenter banks seem to believe in the long-term viability of

ethanol as an energy source. 

Low-priced corn 

Most producers pursued ethanol plants to boost local

corn prices. Many ethanol plants were financed on that

basis, not the economics of the grain margin going forward.

The driving motivation is simply that a $20,000 investment in

a local ethanol plant can improve a producer’s corn basis —

it becomes a de facto annuity that returns an additional 6 to

12.5 cents per bushel, in perpetuity. This idea drove the

financing and building of the 20- to 40-million-gallon plants. 

Development of venture capital interests

Farmers recognized the economic incentives and experienced what was called the “backyard syndrome.” What

community doesn’t want 5 or 10 cents per bushel more for

its corn? Most weren’t sophisticated enough at that time to

understand the risk-management issues involved or the

operating margins. 

Nor was the possibility considered that there might be a

better place to locate a plant other than in their hometown,

or that perhaps it should be built by somebody other than a

general contractor. Basically, the sole consideration was the

desire to increase the corn-price basis. The industry production standard grew from 15-20 million gallon plants to 45-

50 million gallons, then 55-60 million gallons and now 100

million gallons. 

The success of those plants fueled the enthusiasm to

build. Most of the plants now being built in Iowa are not

farmer investments. Moreover, most investment plans today

include intentions to build two or three additional facilities.

The flow of investment money from outside agriculture is

substantial and increased significantly after the price of oil

exceeded $50 a barrel. 

Formation of trade associations 

The information explosion was also a driving force behind

the formation of ethanol trade associations. As more producers became interested in ethanol production during the late

‘90s, they started organizing into groups. 

The trade associations recognized benefits of bringing the

groups together to provide them with the necessary information. This included production technology, different legal

structures, sources and availability of financing, etc. 

The trade associations met monthly with several producer groups and watched each evolve through the developmental stages of fund raising, groundbreaking, etc., to full

production.

The ability to share information was a prerequisite to a

distributed and fragmented model. In order to have multiple

facilities and many companies forming, each had to have an

understanding about what to do, how to, and when. ■

— By Anthony Crooks and John Dunn
20 November/December 2005 / Rural Cooperatives

By David Morris

Editor’s note: Morris is an economist with

the Institute for Local Self Reliance. The

views expressed are the author’s own and

do not necessarily reflect those of USDA. 

he structure of the

ethanol industry influences the degree to

which its growth benefits

farmers and rural areas.

An industry dominated by small- and

medium-sized farmer-owned plants

creates more wealth for farmers and

their communities than does one characterized by a smaller number of large

facilities owned by national and international investment groups.

Between 1979 and 2005, the ethanol

industry has experienced four major

structural upheavals. In the beginning,

it consisted of a vast number of tiny

production units. The doubling of oil

prices in 1979–1980 inspired farmers

to build such plants. The availability of

a federal 100-percent loan guarantee

for plants with production capacities

less than 1 million gallons a year

allowed them to finance such plants. 

This “stills-on-a-hill” era peaked in

1984, with 163 very small ethanol

plants in operation (some sources estimate as many as 176). The industry

then violently contracted, a result of

crude oil prices falling to $8 a barrel

and a successful, concerted negative

publicity effort by major oil companies.

In a single year, 1985, almost half of

all ethanol plants (but only a small fraction of production capacity) went out

Do bigger ethanol plants

mean fewer farmer benefits?

USDA photos by Stephen Thompson 

T
Rural Cooperatives / November/December 2005 21

of business. By 1990, only 56 plants

remained. More than half produced

less than 5 million gallons a year. 

In the late 1980s and early 1990s,

the ethanol industry was dominated by

100-140-million-gallon-a-year wet

mills. These were built primarily to

serve the expanding high fructose corn

sweetener market. Archer Daniel

Midland (ADM) dominated the HCFS

market. As a result, ADM dominated

the ethanol market, accounting for

about 75 percent of the ethanol industry’s output in 1990. Indeed, in the

early 1990s, the words ethanol and

ADM became virtually synonymous.

Rise of farmer-owned plants

The 1990s witnessed the next structural shift in the industry: the rise of

farmer-owned plants. By the late

1990s, the vast majority of new ethanol

plants were farmer-owned. By 2002,

these were producing, collectively,

more ethanol than ADM. Some 25,000

farmers nationwide had become shareholders in ethanol facilities. 

The average size of new plants grew

from 15 million gallons a year in the

mid-1990s to 30 million gallons a year

by 2002. States such as Wyoming and

Minnesota redesigned their cooperative laws to enable more outside

investment while retaining farmer control. Many farmers chose the limited

liability corporate (LLC) form as a way

to access the capital required.

In 2004, a new era dawned on the

ethanol industry when the nation’s

first 100-million-gallon dry mill

opened in South Dakota. Within a

year, at least 15 more 100-million-gallon dry mills were under construction

or planned. A doubling of oil prices,

an extension of ethanol’s generous federal financial incentives and the passage by Congress of a mandated doubling of the ethanol market by 2012

all combined to make ethanol an

attractive investment. It is likely that

in the next 3 years, 75 percent of new

ethanol production will come from

large, non-farmer-owned plants. 

Some farmers view absentee-owned

plants as an inevitable — and even a

welcome — development. South

Dakotan Dan Endres, who had owned

shares in two farmer-owned ethanol

plants and became a principal owner of

a company building several 100-million-gallon plants, comments:

“VeraSun’s experience indicates that

the farm-ownership model may need

to adapt as the ethanol industry gravitates to large plants. Such operations

are increasingly financed by six to

eight principal investors, without the

need to deal with hundreds of smallscale farm-investors.” 

In mid-2005, several leading firms

in plant construction, engineering and

marketing formed a new entity, US

Bioenergy, a holding company that will

purchase and provide services to a

number of ethanol plants. The minimum investment for shares in the

holding company is $5 million.

Investors anticipate making a significant profit in 2 to 3 years when the

company goes public.

Industry evolution poses challenges

The evolution of the ethanol industry into one dominated by large plants

where investors profit not from the

sale of ethanol, but from receiving the

appreciated value of the plants when

they are sold, challenges policy makers

who are trying to address agricultural,

as well as energy, objectives.

Expanded ethanol production, of

course, benefits farmers and rural areas

in the same as will any new crop-processing facility. Supporters argue that a

more concentrated structure is necessary to raise the billions of dollars

required to significantly expand

ethanol production. Larger plants can

produce and transport ethanol more

cheaply. And larger increments in

capacity allow the industry to expand

more quickly. 

These are valid points. But there is

another side to the rise of large absentee-owned plants that concerns many.

They significantly restrict the possibility of widespread farmer ownership

and control. That begins to sever the

link between ethanol production as an

energy strategy and ethanol production

as an agricultural strategy. 

Bigger plants do indeed lower unit

production costs. But while the savings

are considerable when the size of the

facility increases from 10 to 30 million

gallons a year, the additional reductions from increasing the size of the

facility from 30 to 100 million gallons

are modest. Capital savings may be on

the order of 2-3 cents per gallon; labor

savings are about the same. Reduced

transportation costs from using unit

trains might be about a nickel a gallon.

Large plants do not, of course,

guarantee lower costs. There are diseconomies of scale. A large plant can

strain local suppliers. Reporter Peter

Rohde of Inside Fuels and Vehicles

reports that a new 100-million-gallon

ethanol plant in South Dakota raised

the basis price of local corn by 30 cents

per bushel. This increased feedstock

cost wiped out any savings generated

from reduced capital, labor and transport costs.

But let’s say that making ethanol in

a 100-million-gallon facility does

reduce the cost by 10 cents a gallon

less than that of a 40-million-gallon

facility. We know from experience that

this savings will not show up at the

pump. The consumer will not benefit.

The question is, will the farmer or the

rural area benefit? Or, to pose the

question more pertinently, will they

benefit as much as if there were three

smaller facilities rather than one large

facility?

Advantages of smaller plants

As noted above, farmers and rural

areas benefit when more manufacturLarge absentee-owned

plants . . . restrict the

possibility of widespread farmer ownership and control.
22 November/December 2005 / Rural Cooperatives

ing and processing facilities move in or

when the demand for a specific crop

increases. Farmers who do not own a

share in an ethanol plant benefit from

the increased selling price of their

crop. Studies indicate that increased

local ethanol production raises the

price of corn by about 10 cents per

bushel. Farmer-owners of ethanol

plants, on the other hand, have

received as a dividend, over the years,

30-40 cents per bushel. 

For farmer-owners, the ethanol

plant becomes a hedge. When corn

prices decline, the production costs of ethanol

decline. Thus, at least a

portion of the income lost

to the farmer on the sale of

the raw material is made up

from the increased profits in

the sale of the processed

material.

A 100-million-gallon,

absentee-owned ethanol

plant will return to the

farmers in the area around

the plant about $13 million

less than three farmerowned plants each producing 33 million gallons per

year. 

According to Iowa State

University (ISU), the 5–year

average after-tax return for a

typical ethanol dry mill is 23

percent. In comparison, ISU

estimates that 70 percent of

Iowa’s counties averaged

returns on farmland of 2.5

percent or less (in 2002). In

fact, one community banker

in Minnesota told a National Corn

Growers Association task force he considers financing stock purchases by

farmers in processing plants a far less

risky and potentially much more profitable investment than lending money to

farmers to buy land. 

With regard to the impact on the

non-farm community, large plants,

especially when they are part of a chain

owned by one corporation, spend a

smaller portion of their money locally

on purchasing and management, on

accounting and legal services and on

advertising.

Possible alternatives

What should be done? To date, public policy, at least at the federal level,

has rarely taken into account the size or

ownership structure of ethanol plants. I

am aware of two exceptions. A program

that gave free surplus grain to ethanol

producers who were expanding or

beginning production, rewarded small

producers more than larger producers.

And since the early 1990s, there has

been an additional 10-cent-per-gallon

small producers credit that has been

limited to facilities with capacities of

less than 30 million gallons per year. 

The 2005 energy bill, however,

increased the definition of “small” to 60

million gallons, a ceiling that qualifies

about 90 percent of all ethanol facilities.

The federal biofuels incentive, of

course, has no ceiling. Moreover, it targets the consumer and the intermediary

supplier, not the ethanol producer.

So what should be done? One concrete step would be for the government to convert the federal excise tax

exemption into a direct producer payment. This was done at the state level

by Minnesota in the late 1980s. That

payment could be limited to plants

under a certain size and a higher

incentive would be given to farmerowned facilities. 

To date, the issues of scale and ownership — at least at the federal level —

have not been addressed. One reason

may be that, until recently, farmerowned, modestly scaled biofuels

refineries seemed to have become the

norm. That is no longer true. 

The remarkably rapid growth of

large scale, non-farmer and distantly

owned plants should lead policy makers to engage the question and make a

conscious decision. The question

before them is how to design a strategy

that not only maximizes the use of biofuels but also maximizes the benefit of

that expanded use to the cultivator and

the community in which the cultivation and harvesting occurs. ■

Iowa State University estimates that the 5-year average, after-tax returns for a typical dry-mill ethanol

plant is 23 percent. Here, trucks load with biodiesel. 
Rural Cooperatives / November/December 2005 23

Type of Business:

Appalachian Spring Cooperative is a

100 percent, producer-owned cooperative that markets value-added fruit and

vegetable products. It offers more than

48 different jellies, sauces, relishes,

herbal salves and other farm

and food products.

Business

objective:

To help members start and strengthen value-added

farm and food product businesses by

providing an array of collaborative

marketing and other services.

Annual revenue:

Appalachian Spring Cooperative is 

a very young cooperative, and the

process of developing and finding markets for a value-added farm or food

product is lengthy. So far, 24 members

have developed a product for commercial sale, most quite recently.

Other members are still in

the farm/food-product

development process.

Annual revenue to

the cooperative

in 2004 —

derived

from a

percentage of member sales and grants

— was $148,485.

Number of members & employees:

Appalachian Spring Cooperative has

80 members currently residing in 14

counties of east Tennessee. Of these,

34 produce honey through a project

that is re-introducing honeybees into

the region; another 24 members produce a value-added product for commercial sale while others are still in the

product-development stage. The cooperative has two full-time employees

and one part-time worker.

Description of business activity:

Locally grown fruits and vegetables

are processed in a nonprofit, shareduse commercial kitchen into a variety

of value-added products. These

include: tomato sauce, pasta sauce,

salsa (5 brands), barbecue sauce (3

brands), hot sauce (2 brands), habanero

pepper extract, strawberry jelly, raspberry jelly (2 brands), blackberry

jelly, grape jelly, pumpkin butter, sweet potato butter,

honey, creamed honey,

habanero-flavored

honey and flavored

marinades. Also:

flavored mustards,

cucumber relish,

corn relish, zucchini relish, pepper

relish, chow-chow,

bread-and-butter

pickles, vegetable

V ALUE-ADDED CORNER

Appalachian Spring Cooperative

Treadway, Tennessee

Appalachian Spring Co-op (ASC) members process locally grown fruits and vegetables into a wide variety of

value-added food products using the Clinch Powell Community Kitchen. Photos courtesy ASC 
24 November/December 2005 / Rural Cooperatives

soup starter, beer cheese, herbal skin

salves, herbal lip balms, and more.

Members’ products are marketed

through a variety of channels, including wholesale to area food stores, retail

from the cooperative website

(www.apspringcoop.com), retail gift

baskets promoted to corporations,

churches and civic groups, and retail

from the cooperative store.

How co-op was developed/financed:

Realizing that new producers of

value-added farm and food products

needed help in marketing, Jubilee

Project — a nonprofit community

development organization — helped

local farmers organize the Appalachian

Spring Cooperative, which held its

founding annual meeting in 2002 as a

marketing cooperative for value-added

food products. It quickly added the

Honeybee Project, using a grant from

Heifer Project International to introduce honeybees on 34 farms in the east

Tennessee area. In addition to the

Heifer Project grant, the cooperative

has received federal, foundation and

church grants directly and through

Jubilee Project, which operates the

shared-use kitchen used by cooperative

members (Clinch Powell Community

Kitchens, www.clinchkitchens.org).

The Honeybee Project was set up so as

to pass 10 percent of the honey produced back to the cooperative; members selling value-added products

through the cooperative also pay 10-20

percent to the cooperative.

How USDA helped:

Appalachian Spring Cooperative has

benefited from several USDA funding

programs, including: an initial USDA

Community Food Project Grant of

$182,000 over three years, a ValueAdded Producer Grant of $39,800 for

one year and a SARE Sustainable

Community Initiative Grant of $6,436.

In addition, the cooperative received a

SARE Producer grant of $10,000 in its

second year. Jubilee Project has helped

the cooperative find matching funds

for all these grants.

Leader’s comment:

“At a time when farmers in the east

Tennessee area are looking for new

sources of income, the combination of

Jubilee’s processing kitchen

and our marketing cooperative offer an alternative

enabling local farmers, and

local entrepreneurs buying

from them, to increase farm

income by producing highquality value-added food

and body-care products.”

— Dianne Levy, general

manager, Appalachian

Spring Cooperative.

The results:

Today, 24 cooperative

members are producing

more than 48 products for

commercial sale, with

growing sales through the

Internet and plans for

increased gift basket sales

and establishment of a local

retail store.

Market outlook:

The demand for specialty

foods, including gourmet,

natural and organic food products, has

continued to grow at a faster pace than

overall food sales. At the same time,

more than 70 percent of the public

express a preference for buying local

food. Appalachian Spring Cooperative

expects to grow member sales by capitalizing on both of these promising

trends.

Major challenge/opportunity 

facing co-op: 

A major challenge for the cooperative is that members starting food

product businesses are producing at a

small enough scale that they cannot

keep their per unit costs low enough to

afford producing for many wholesale

markets in the area. A major opportunity is that local and state officials are

willing to help open retail outlets for

locally produced food.

Contacts:

Phone: (423) 733-2095; e-mail: 

manager@apspringcoop.com; 

website: www.apspringcoop.com. 

■

“The combination of

Jubilee’s processing

kitchen and our

marketing cooperative offer an alternative enabling local

farmers to increase

farm income...”

—Dianne Levy

A gift selection from Pure Mountain Herbs, a member of

Appalachian Spring Co-op. Members also produce a

variety of jellies, tomato sauces, five brands of salsa, two

brands of hot sauce and cheese, among many others. 
Rural Cooperatives / November/December 2005 25

By Dan Campbell, Editor

Editor’s Note: The complete text of testimony presented at USDA’s public hearing on

co-op research is posted on the Internet at:

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

ResearchPublicMeetingTranscript.doc. 

The Web site includes comments from co-op

organizations that were not present to testify (and are not reflected below). Anyone

needing a printed text of the testimony

should e-mail: john.dunn@wdc.usda.gov . 

ou can’t tell where you

should be going if you

don’t know where you

are (or where you’ve

been). 

That, in essence, was a major message delivered by a broad array of

national co-op leaders when USDA

Rural Development held a public hearing in October to gather ideas on

where to focus its co-op research

efforts. A new database is critical to the

future of the nation’s cooperatives and

for showing their impact on the rural

and national economy. Such a database

will become the foundation for future

co-op research, they said.

A number of speakers stressed that

this co-op database should cover the

entire cooperative sector, not just

agricultural co-ops. Others, however,

countered that USDA’s Cooperative

Programs office has its hands full just

trying to maintain an up-to-date,

accurate database on farmer cooperatives, and stressed that more resources

would be needed if its mandate is

broadened to include all types of coops. 

Other common themes heard during the day-and-a half of testimony at

USDA headquarters in Washington,

D.C., included calls for more research

into how co-op members can access

their co-op equity, ways to finance new

or expanded co-ops, demutualization

(or co-op conversion) trends and ways

to promote more collaborative

research between USDA, universities,

co-op trade organizations and co-op

foundations.

Many speakers cited the need for

more case studies that document reallife lessons regarding what business

and member strategies are, and aren’t,

working for co-ops. Still others

stressed the need to devote more

resources to cooperative development

and the study of international cooperatives. 

Seize the opportunity 

In his opening remarks, Under

Secretary for Rural Development

Thomas Dorr stressed that the partnership between cooperatives and

USDA remains strong, but that the

government’s co-op research program

must better reflect the needs of the coops it serves. 

“Cooperatives and USDA have truly

grown up together,” Dorr said. “This

partnership has been one of the foundations of the rural economy for generations, and it’s evident to me that if

rural America is going to continue to

be involved in a strong economic

revival — and I would submit to you

that in many areas, there is a strong

economic revival going on in rural

America — it is important that we

Expanded database vital 

for future co-op reseach 

NCFC President Jean-Mari Peltier addresses USDA Rural Development officials during a

hearing on the research needs of the nation’s cooperatives. USDA photo by Pete Manzelli 

Y
26 November/December 2005 / Rural Cooperatives

understand the modern basis for these

relationships.” 

Dorr said research should be

focused “where there will be realworld payoffs for rural America.” With

so much change occurring, he continued, “the challenge is going to be how

to anticipate, prepare for and profit

from change.” 

Cooperatives need to understand

how to “best leverage their member

equity, their traditions and their mistakes into new, strong and viable business models,” Dorr continued. Co-op

research should help co-ops “create

new markets with value-added or

branded products, and exploit emerging technologies in bio-agriculture and

alternative fuels, or leverage broadband

technology to level the playing field

for rural businesses.

“We want to build a research program that helps cooperatives uncover

and take advantage of these opportunities, and we are looking for ways to

build businesses and increase profits

while simultaneously serving the other

social needs that cooperatives can

clearly help fulfill,” Dorr said, adding

that USDA also has “a very special

interest in using cooperatives to

address the problems faced by small

farmers in historically disadvantaged

groups.” 

Following are excerpts from the testimony: 

Paul Hazen, President, 

National Cooperative Business

Association (NCBA)

“This country needs national data

on the impact of cooperatives on the

U.S. economy...This data needs to

include: (1) the number of jobs created

by cooperatives, both directly and indirectly; (2) the level of economic activity created by cooperatives; (3) the tax

revenue generated by the level of economic activity; (4) a definitive census

on the number of cooperatives and the

types of goods and services that are

being offered; (5) the amount of

patronage refunds that are returned to

the members from their cooperatives,

and (6) the extent of the social welfare

benefit where cooperatives are meeting

the needs of communities that would

not adequately be met by other types

of businesses.

“A competent, government-sanctioned, cross-sector, multi-discipline

economic-impact study led by a

respected academic institution will

provide enormous benefits for all

cooperatives. The database that this

study will create will allow and encourage continuing research. This will

increase awareness of the cooperative

form of business, which, in turn, will

generate new business which will allow

cooperatives to attract new members

and investors.

“This is a phenomenal opportunity

to reinvigorate [USDA’s Cooperative

Programs] and continue a tradition of

a public/private partnership that will

truly provide lasting benefits for all

cooperative members.”

Jean-Mari Peltier, President,

National Council of Farmer

Cooperatives (NCFC)

Peltier said NCFC is undertaking a

comprehensive review of the existing

business structures of farmer cooperatives to help identify structural challenges confronting the farmer cooperative business model. The goal is to

“provide a new menu of strategic

options to give farmers and farmerowned businesses the flexibility needed to organize and finance a business

that can effectively compete in the

global marketplace. 

“All of this work is generating literally a mountain of data — a mountain of data that’s going to be able to

be analyzed by both geography” and

type of cooperative. “We’ll be able to

analyze the changing demographics

of their membership and the

impact....” Another key issue is lack

of access to sufficient capital for

farmers to fund their organizations,

Peltier said. “The question is not so

much access to capital, as it is access

to equity capital, rather than taking

on long-term debt.” Farmer cooperatives are also “struggling with being

able to provide a vehicle for their

members to access the value of the

cooperative without selling off the

value of that enterprise.

“Obviously, it’s going to take a lot of

work to review all of this data...we

definitely will be looking for partnerships to help us sift through this data

and analyze what its long-term impacts

will be.” 

Peltier noted that USDA’s legislative

mandate is to operate a co-op program

that focuses on farmer cooperatives.

“We hate to see that diluted,” she said. 

Deb Conley, Executive Director 

Indiana Co-op Development Center

Conley urged that more research

be conducted into international coops — how they are structured and

function. “Are they more or less effective in enhancing quality of life and

economic developments than in the

U.S.?” Other key research topics, she

said, should include: “How much do

cooperatives impact our states’

economies? How many cooperatives

are there? Where do co-ops access

capital? In what areas are co-ops more

successful, and in what areas are they

proving not to be?

“Expanded research should include

co-ops in all sectors; identify the sectors in rural areas which show the

most potential for growth for cooperative businesses; compare the sustainability of cooperative businesses to

other forms of business; measure the

economic impact of cooperatives in

each state; develop a measure for noneconomic benefits of cooperatives,

community cohesiveness, citizen participation, growth in other sectors and

community improvement.”

Other priorities should be the

effect of gentrification in co-ops and

to identify the resources leveraged per

dollar invested in co-ops and the rate

of growth or decline in each co-op

sector. “Identify how co-ops access

capital. And how do we compare

internationally?” Research should

examine what types of co-ops are

incorporating under new state

statutes, similar to Minnesota’s, she

continued. 
Rural Cooperatives / November/December 2005 27

Bill Patrie, Rural Development

Director, North Dakota Association 

of Rural Electric Cooperatives 

Patrie stressed the need for more

case studies, including co-op conversions to non-co-op business structures.

He cited Dakota Growers Pasta

Cooperative and the Saskatchewan

Wheat Pool as two prime examples.

Both conversions were, and remain,

controversial, he said. “What have

been the consequences? What were

the motives of those conversions?

What were the mechanics of those

conversions? What is the aftermath? Is

the stock more liquid now? What

about access to equity investments

from others? Has that improved or

gotten worse or about the same?”

Another case study could look at

conversions that went the other way,

from corporations to co-ops.

“American Crystal Sugar has been

studied, but it would be interesting to

see what has been the long-term effect

of those sugarbeet growers buying

ACS and what they went through.

What is the performance history?”

Likewise, the conversion of U.S.

West telephone into a cooperative

would make a fascinating case study, he

said. “We can learn a lot, because we

have operating history before and after.

What happened to the cost of service?

Did they in fact reduce the cost of service to the subscribers? Is the technology better or worse than when U.S.

West operated those companies?” Two

other case studies involve major co-op

failures: Spring Wheat Bakers Cooperative and the North American Bison

Cooperative (although the later recently emerged from bankruptcy). 

“A seventh study that would be very

useful is to understand the psychology

of human cooperation,” he said.

Paul Darby, Co-op Development

Director, Southern States

Cooperative Foundation

Darby said a top research topic

should be how producers can “truly

access the equity in their farms for

value-added business development

without selling out. That is an issue

that we bump up against every single

day. Equity capital is absolutely a significant issue. It’s not capital, it’s equity

capital. For a group of producers in a

start-up enterprise, it’s even more difficult, even though each of these individuals very likely is successful in their

farming operations. Many of them are

small, but many of them have developed a niche market and are very successful. They may have millions and

millions of dollars in assets on that

farm, and yet — because they either

have a loan with a commercial bank or

Farm Credit, and those assets are part

of the collateral — they’re not able to

touch those. 

“A second issue is: why are cooperatives converting to stock corps. and

LLCs.” He too said the pasta co-op

conversion in North Dakota “would be

a phenomenal case study. A third one:

why are new value-added enterprises

being developed outside the co-op

model.” A good example, he said,

would be Atlantic Bioenergy, a

biodiesel project in North Carolina

that his foundation has spent years

working with. “The leadership of that

project, from day one, wanted it to be

a cooperative. But there was roadblock

after roadblock that prevented it from

being a cooperative...There were

agribusiness investors in North

Carolina that wanted to be a part of

that ownership structure. They couldn’t be involved...so that group had to

go to an LLC structure.”

The new Virginia Poultry Growers

Co-op would be another good case

study, Darby said, including the impact

of the co-op having three non-members — a banker, an educator and a

representative from a value-added

product partner — on its board. That

value-added foods company “made a

multi-million-dollar equity investment

in that cooperative. They couldn’t be a

Class-A member. They had to buy preferred stock, but because of a provision

in state law, they could be a part of the

governance structure. And that really is

the key for a lot of companies and

individuals that want to invest. 

“We think there is certainly value in

USDA not simply going to a university

[for research], but bringing in people

with boots on the ground from the

centers to collaborate on a bigger project, working with the trade groups

that represent cooperatives; really

make this a fairly broad-focused

effort.”

Mike Boland, Professor, 

Kansas State University

(representing NCERA-194) 

Boland said NCERA-194 (an organization of land grant university faculty

members doing research on co-ops)

members believe that more study is

needed on existing equity management

programs used by cooperatives. “As

Mr. Dorr has spoken at length over the

last several years, there’s a lot of

untapped equity in rural America that

we just don’t have access to.”

Information is needed on co-op

finance, governance and strategic

thinking, he said. To improve the

response rates on its surveys of cooperatives, Boland said USDA could build

a broad coalition with others — such

as the Dept. of Commerce. “We need

“I envision this

research as the foundation of a new and

expanded cooperative

development agenda.

Research is the yeast

that makes the

bread rise. ”

—Liz Bailey
28 November/December 2005 / Rural Cooperatives

some baseline information on how

many cooperatives access outside equity, the changes in governance and

organizational structure, and how this

capital is being used.” 

He said NCERA-194 members feel

strongly that co-op research funds

should be awarded on a competitive

basis. “There are a lot of new faculty...and they’re eager to do research

on cooperatives.” 

Boland said a revolving internship

or fellowship program that would

bring university research economists to

USDA for a 6– to 12–month assignment would prove popular. “Most people like going to D.C. for six months

to a year.”

Randall Torgerson,

former deputy administrator, 

USDA Cooperative Programs 

Torgerson said commodity-specific

studies are needed to understand the

structural adjustments and economics

of new, value-added initiatives and

their impact on commodity marketing.

As an example, he cited the burgeoning

alternative fuels industry, which he said

has “greatly altered the patterns of traditional commodity markets and attendant infrastructure needs. How are

cooperatives adjusting to these changes,

and what strategies are needed for

remaining viable businesses serving

farmer members?”

Red-meat processing co-ops also

need study, he said. “Some, like

Oregon Natural Beef Cooperative and

the pork cooperative at Rantoul, Ill.,

have become successful,” while others

have failed. “What have been the keys

to success or the mistakes made that

have led to these different outcomes

for livestock producers? 

“What has been the experience of

cooperatives generally in supply control? Does the CWT (dairy market

balancing program) provide any guidance for potential success in this

endeavor? Bargaining cooperatives

represent grower members and contract negotiations with processors

...Are national legislative remedies

required to augment the bargaining

process?

Organic and natural foods producer

co-ops also merit further study. “What

have been the ingredients for their

success? What relationships exist or

can be developed between niche marketing groups and established cooperatives? The structure of the dairy industry continues to change with more

commodity and ingredient production

concentrated in western states and production of finished products in the

Midwest and East. How can they best

link? How can they coordinate? What

are the alternatives to going public

when dealing with equity redemption

and other restructuring issues?” 

Audrey Malan, Executive Director,

Cooperation Works! 

Malan recommended that USDA

engage in research that facilitates

strategic, sector-based systematic

approaches to co-op development. 

“For example, municipal co-ops are a

proven strategy for county and state

governments to reduce costs without

reducing services...But we lack the

research required to build an effective

implementation strategy.

“The key is a commitment to developing new cooperative businesses, and

to do it in a strategic way. We’ve been

at this now for a long time. We know

what works in co-op development. We

know what new businesses need to succeed, and we know that we can be

more strategic with our resources...

“The home healthcare model of

cooperative care in Wisconsin...is dramatically improving people’s lives. 

It’s improving seniors’ lives because

they get consistent care rather than

new people coming in their house

every day, and of course it’s improved

working conditions for the women

who are taking care of our elderly people, but we need research.”

Liz Bailey, Executive Director,

Cooperative Development Foundation

“First, focus on research and education. We all know there’s a basic lack

of understanding about cooperatives at

all levels of government, in the business community, in the academic

world, in my philanthropic world and

among the general public...We don’t

have access to the kind of aggregated

economic data that is routinely used by

economic and business analysts to map

U.S. economic activity and interpret

the data for those who make or influence public policy. Rather, I envision

this research as the foundation of a

new and expanded cooperative development agenda.” Research, Bailey said,

is the “yeast that makes the bread rise.”

Bailey said there may be “opportunities for collaborative funding proposals with foundations outside the cooperative world that focus on workforce

issues, on healthcare issues or senior

issues.

“How do we capture the interests of

these new potential players?...We need

to be able to provide them with objective data that they can use to validate

the economic impact of cooperatives.” 

Ann Hoyt, Professor, University 

of Wisconsin-Madison

& Chairperson, NCBA 

“One of the major challenges facing

co-ops is demutualization. Another is

member relations and how to maintain

strong member identification and support when the cooperative needs to

grow significantly to achieve economies

of scale. A third challenge is capitalization...and changes in taxation and

accounting policies. There is also the

challenge of low public awareness of

the value and contributions of cooperative businesses, particularly their contributions to local economies.”

She too stressed the need to address

the “absence of reliable, comparable

data on the U.S. cooperative movement, both rural and urban...We have

reliable information on cooperatives in

specific industries — credit unions and

rural electric cooperatives, for example

— but limited information on purchasing cooperatives, worker-owned co-ops

and the many types of cooperatives

that are owned by consumers.

NCBA usually cites the figures of

47,000 U.S. co-ops with 120 million

continued on page 46
Rural Cooperatives / November/December 2005 29

ennessee

Governor

Phil

Bredesen

was one of

the dignitaries on hand to

salute Tennessee Farmers

Cooperative (TFC) and its

predecessors in an eventful

60th anniversary celebration in LaVergne Sept. 27,

which he declared as “Coop Heritage Day.” The

day also honored state

organizations that were

instrumental in helping

organize TFC, namely the

Tennessee Farm Bureau

Federation and University

of Tennessee Extension.

Gov. Bredesen described the federated farm supply co-op as a “major

force in Tennessee’s agricultural economy,” pointing to the competitive edge

it gives farmers by providing quality

products and services and the fact that

TFC is now one of the strongest federated cooperative systems in the

nation. “Because of the foresight of its

founders, TFC has helped Tennessee’s

farm production grow and develop

into the $2.5 billion industry that it is

today,” said Bredesen. “Tennessee is a

state of long agricultural tradition, and

we owe a debt of gratitude to the men

and women of the Tennessee Farmers

Cooperative for helping to shape the

Tennessee we know and enjoy today.”

As evidence of the vital roles co-ops

play in their communities, Bredesen

acknowledged the recent efforts of

TFC and its member co-ops in gathering donations for hurricane victims

and serving as sources for school systems to obtain diesel for school buses

during the fuel shortage caused by

hurricane damage along the Gulf

Coast. 

“Not only is the co-op important to

our economy, over the years it has

become an integral part of Tennessee’s

rural landscape as a gathering place for

farmers and a well-known landmark

for the community it serves,” Bredesen

said. “No matter where you are in

Tennessee, everyone knows where

their local co-op is.”

TFC CEO Vernon Glover said the

co-op’s formation in 1945 began “a

whole new era in Tennessee agriculture. TFC redefined the farm-supply

business in this state by giving farmers

cooperative control over a reliable and

identifiable source of the products they

need.”

“The fact that this mill behind us is

the tallest building in LaVergne

is a symbol of our standing in

the community,” Glover continued. “The same is true for communities all across the state. Our

member co-ops stand tall in

their towns and are vital to the

area’s economy and the operations of the producers they

serve.”

Tennessee Agriculture

Commissioner Ken Givens and

Rep. Stratton Bone, vice chair 

of the House Agriculture

Committee, joined Bredesen

and other state officials in honoring TFC as it reached this

milestone. “We couldn’t do what

we do without the support of

the people here today,” said

Givens, describing the audience as the

“who’s who” of Tennessee agriculture.

“It’s going to take all of us working

together to keep our competitive edge

in the changing global marketplace.

Part of that challenge goes back to

providing farm supplies and service in

a timely and economical manner,

which is exactly what the co-op does.” 

Givens also referred to his membership in Hawkins Farmers Cooperative

in Rogersville. The commissioner, a

beef cattle and hay farmer, is among

the 70,000 farmer-members who own

and control each independent TFC

member co-op. TFC provides products and services to 63 member co-ops

across the state, which, in turn, serve

more than half a million customers

through nearly 150 retail outlets located in 84 of Tennessee’s 95 counties, as

well as several locations in neighboring

states. ■

Co-op Heritage Day declared

to mark TFC’s 60th anniversary 

T

CEO Vernon Glover serves up a piece of TFC’s 60th birthday cake

for longtime co-op truck driver Bud Eldridge. Photo courtesy TFC 
30 November/December 2005 / Rural Cooperatives

By Beverly L. Rotan, Economist

USDA Rural Development

Beverly.rotan@usda.gov

Editor’s note: Cooperatives in this study

were classified by size: small, medium,

large and super (table 1). The cooperatives

were further classified into four types based

on the percentage of their farm supply sales

(see table 1 for the precise criteria).

ocal farm supply cooperatives reaped higher sales

and income during 2004,

according to a USDA

survey of the financial

statements of 263 co-ops. Average sales

per local co-op were just under $18.07

million in 2004, an increase of 3.2 percent from $15.96 million in 2003. 

Farm supply sales (including feed,

seed, fertilizer, chemicals and petroleum) by co-ops increased 14.7 percent

(table 2). Feed sales registered the

strongest gain, increasing about 20

percent. Fertilizer sales shot up 18.3

percent and petroleum sales climbed

by almost 17 percent. 

Grain sales —

including corn, soybeans, sorghum, oats

and wheat (winter,

durum, spring, and

rye) were strong in

2004, increasing 11

percent. Grain production was down

(with the exception of

sorghum, spring

wheat and soybeans).

Prices per bushel

climbed for corn and

most types of wheat.

Prices for sorghum

and soybeans

decreased during the

two–year period.

Income jumps in 2004

The average operating income (from commodity marketing, farm supplies and service) rose

almost 13 percent in 2004. Grains represent almost 98 percent of total marketing sales by the local co-ops studied. 

Average net income per local co-op

was $296,810. This was a 45-percent

increase from $204,864 in 2003.

Total revenue was up 13 percent,

although service income decreased 3

percent. A sizable decrease in patronage refunds was attributed to write-off

of equity, due to the demise of some

regional cooperatives in 2003. This

phenomenon continued into 2004. 

Patronage refunds were an important source of revenue and affected the

net income of some of the local co-ops

(both positively and negatively).

A unique situation occurred in 2003

that also affected the net income of

some locals in 2004. Patronage refunds

were up 140 percent in 2004 because

of negative patronage refunds in 2003.

In past years, patronage refunds created an opportunity for cooperatives

with losses to have a net gain. 

Sales and net income climb 

for local farm co-ops in 2004

L

Table 1— Size and type definitions used for respondent cooperatives, 2004 

Cooperative size definition Number

Small up to $5 million in total sales 67

Medium over $5 million to $10 million 61

Large over $10 million to $20 million 65 

Super over $20 million 70 

Cooperative type

Farm supply total net sales from farm supplies 133

Mixed farm supply from 50 to 99 percent 61

Mixed marketing from 25 to 49 percent 49

Marketing less than 25 percent 20

Table 2 — Average farm supplies sold and products

marketed and change from 2003 to 2004

Change 

2003 2004 2003 to 2004

Million dollars Percent

Farm supplies sold: 

Feed 16.5 1.9 19.96

Seed 3.7 4.3 14.80

Fertilizer 1.6 1.9 18.28

Crop protectants 1.3 1.4 6.00

Petroleum products 3.2 3.7 16.81

Other 1.3 1.3 6.70

Total 9.3 10.7 14.68

Products marketed:

Grains and oilseeds 6.5 7.2 10.78

Other 1.3 .2 26.52

Total 6.6 7.4 11.8

Discounts 3.1 3.0

Net sales 12.8 15.1 13.2
Rural Cooperatives / November/December 2005 31

Patronage refunds saved 30 of 58

cooperatives from having local losses.

Seven percent of local cooperatives

that originally had positive net

incomes ended up with losses because

of negative patronage refunds. The

remaining 41 percent of cooperatives

ended up with net losses.

Cost of goods sold was up about 14

percent. Cost of goods sold averaged

about 89 percent of total sales in 2004.

Co-op assets show gains

Both current assets and total assets

were up slightly, 6 and 5 percent,

respectively. All aspects of current

assets increased during the period of

2003–2004. Farm inventory had the

greatest increase, at 14 percent. 

Current liabilities jumped nearly 6

percent, while revolving equity

redeemed had the largest increase, 58

percent. This was followed by dividends on equity (23 percent). Current

term-debt and shortterm (seasonal) debt

decreased. 

Total expenses were

also up about 6 percent,

paced by a 5-percent

increase in wages, which

represent almost 50 percent of total expenses.

Wage expense included

payroll/salaries, employee

benefits (including retirement) and payroll taxes.

Co-ops in the study

had an average of 39

employees (part- and

full-time) in 2003 and

38 employees in 2004.

At the same time, salaries increased 5

percent. Employees earned an average

annual salary of $26,187 in 2004. 

Directors’ fees and expenses were a

small part of total expenses. However,

director compensation is an important

factor that helps many cooperatives

convince producers to devote time

each month to help guide their cooperative. Co-op boards averaged 7

members, who were paid an average of

$905 per year. Directors’ fees were up

7 percent. 

Some performance factors are within the control of

cooperative management, but others are not. One way to

monitor the performance of your cooperative is through

financial statements and ratios. Ratios for the surveyed

cooperatives remained relatively unchanged from 2003 to

2004 (table 3). 

Financial ratios that help assess your cooperative’s performance include:

• Liquidity ratios — focus on a company’s ability to pay

bills when due. If liquidity ratios remain relatively high

for a prolonged period, too much capital may be invested in liquid assets, such as cash, short-term investments, accounts receivable and inventory, while too little capital is devoted to increasing member equity.

These ratios should equal one or more. On average,

surveyed cooperatives had quick and current ratios of

slightly more than one.

• Leverage ratios — reveal a company’s use of borrowed funds (rather than members’ equity for investment) to expand its business. The goal is to borrow

funds at a low interest rate and invest in business

activity that produces a high rate of return, exceeding

the target rate of return for investment. Debt-to-equity

ratio measures the long-term solvency of a company

by comparing debt to net worth. A company with a high

debt-to-equity ratio could have trouble meeting fixed

interest/debt payments if business falters or does not

grow as planned. Most lenders would prefer this ratio

to be 3 or lower

• Activity ratio turnover — also called “efficiency

ratios,” measure activity or changes in certain assets.

The inventory turnover ratio measures how quickly

inventory is sold and replaced each year. An inventory

turnover of 12 means inventory is turned over once

each month. The times-interest-earned ratio measures

a company’s ability to make interest payments on debt.

If the ratio does not exceed the interest rate on current

debt, the business may not be making enough to pay

interest expenses.

• Profitability ratios — vary from industry to industry and

should be compared to a company’s ratios for prior

years/periods. The return-on-total assets measure how

well a company is using its assets to generate net profits. The return-on-total equity ratio measures a company’s return on members’ money. Marketing cooperatives’ gross margin was lower than cooperatives in the

surveyed group. This may be an indication of lower

demand for their products or higher production of marketed products (crops). 

■

Monitoring performance

Table 3 — Financial analysis ratios for all co-ops,

2003–2004

Ratio 2003 2004

Current 1.36 1.36

Quick 0.66 0.67

Debt 0.45 0.45

Debt-to-total equity 0.82 0.83

Times-interest-earned 3.49 4.26

Total-asset turnover 2.14 2.31

Fixed-asset turnover 8.07 8.81

Gross profit margin 11.49 11.10

Return-on-total assets before

interest & taxes 4.37 5.51

Return-on-total equity 7.03 9.99
32 November/December 2005 / Rural Cooperatives

Ocean Spray marks 75th with 

integrated marketing campaign

Ocean Spray is marking its 75th

anniversary by re-introducing the cranberry to America through an integrated

marketing campaign called “straight

from the cranberry bog.” Ocean Spray

kicked off the effort by giving New

York City its first-ever cranberry harvest in Rockefeller Center, bringing

together cranberry researchers from

around the world for a special cranberry health summit, and launching a new

advertising campaign Oct. 17. 

Ocean Spray flooded Rockefeller

Center Channel Gardens with its

bright crimson berries for the Big

Apple Bog Oct. 4–7, bringing the

breathtaking beauty of a cranberry

harvest to consumers. Most consumers are not aware of how cranberries are grown and harvested, the rich

history of the fruit, or the health benefits the little berry offers every family

member. At the same time, Ocean

Spray is continuing its focus on health

by bringing together research scientists to share the latest in cranberry

health research and make public findings on how the nutrients in cranberries (called PACs) may play a role in

total body health. Ocean Spray partnered with the Cranberry Institute for

the Cranberry Health Symposium at

New York Academy of Sciences on

Oct 5.

Ocean Spray is going back to its

roots with the “Straight from the Bog”

ad campaign that celebrates its rich

heritage as an agricultural cooperative.

Created by Arnold Worldwide, the

campaign features “cranberry growers”

who tell the cranberry story as only

growers can. The series of ads feature

two growers humorously touting the

many taste and health attributes of

Ocean Spray products, while hip-deep

harvesting cranberries. 

Ocean Spray is owned by more than

650 cranberry growers in Massachusetts, Wisconsin, New Jersey, and

Oregon, Washington, British Columbia and other parts of Canada as well

as more than 100 Florida grapefruit

growers.

Sales, member payments

up sharply for Dairylea

Dairylea, Syracuse, N.Y., and its

subsidiaries reported sales of $1.12 billion in 2005, a 16.8 percent increase

from 2004, members were told at the

co-op’s annual meeting in Liverpool,

N.Y. Dairylea General Manager Greg

Wickham reported that the co-op also

returned more to members in 2005,

$955.8 million, up 12.9 percent from

the previous year. “There is only

opportunity,” was the theme for

Dairylea’s 98th annual meeting, which

attracted more than 800 members, as

well as employees and industry guests. 

Dairylea President Clyde Rutherford stressed that the co-op is working

in many ways to help improve the

profitability of its dairy farmers, and

discussed Dairylea’s participating in

Dairy Marketing Services (DMS),

along with Dairy Farmers of America,

St. Albans and Land O’Lakes. In addition, Rutherford recognized the many

customer relationships that the cooperative has established and continues to

cultivate in the Northeast and beyond.

The co-op has more than 2,500

members throughout the Northeast.

Dairylea provides them with resources

such as insurance coverage, loan programs, milk price risk-management

services, business planning, livestock

marketing and investment and retirement planning through its holding

company, Agri-Services LLC.

NEWSLINE

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

Ocean Spray kicked off a new marketing campaign by turning the fountains at Rockefeller

Square in New York City into a cranberry bog. Photo courtesy Ocean Spray 
Rural Cooperatives / November/December 2005 33

Cabot on leading edge of

cottage cheese technology

Cabot Creamery Cooperative

(owned and operated by Agri-Mark

Inc.) is collaborating with CPS

Scherping, Winsted, Minn., to develop

prototype cottage cheese-making technology using CPS’ horizontal cottage

cheese vat (HCCV). The HCCV

replaces traditional open-vat cheesemaking with an enclosed system that

automates every step of the process.

Lloyd Metzger of the University of

Minnesota helped develop and test the

closed-vat system in a pilot program

sponsored by Dairy Management Inc.

(which is funded by dairy farmers). 

By automating the entire process

within an enclosed system, the HCCV

technology minimizes operator intervention, fluctuations in temperature,

and exposures to the surrounding

atmosphere. The result is an extremely

consistent and high-quality product

every time. The HCCV also automates

the cleaning process between batches.

The technology also allows greater

capacity and could add to the popularity of a traditional dairy product and

make it easier to meet demand. The

cooperative installed two HCCV

machines in a new room dedicated to

cottage cheese production in 2004.

Tree Top grower returns soar

Tree Top Inc. returned $13.62 per

ton profit to its grower-owners for the

2004 crop of processing fruit, a 78-

percent increase over the $7.65

returned for the 2003 crop. The coop set a processing volume record for

the 2004 crop. The Selah, Wash.-

based cooperative marked its 13th

consecutive profitable year in 2004. 

“This was a challenging year for us

in a number of ways,” Tom Stokes,

Tree Top CEO said. “We processed an

enormous volume of fruit, while making process and equipment changes in

a number of our facilities. At the same

time, employees continued to develop

and implement cost-saving and operafarms were still dependent on generators for power.

Back in business

For the most part, cooperativeowned facilities in the disaster-stricken

areas were spared heavy damage. The

nation’s largest nitrogen production

facility — CF Industries’ (which was

recently sold by its co-op owners)

complex in Donaldsonville, La.— had

resumed normal operations at 80 percent of its plants two weeks after the

storm. In the same time frame, Land

O’Lakes Purina Feed plants had power

restored and mills were operating

around the clock. CHS’ grain terminal

in heavily flooded Myrtle Grove, La.,

also escaped serious damage, but was

shut down for about four weeks while

awaiting the return of power and

employees. 

Cooperative facilities operating at

or near the Port of New Orleans have

been slower to fully recover from the

one-two punch of hurricanes Katrina

and Rita. Every year, about 50 percent

of the corn and one-third of the soybeans exported by the United States

float down the Mississippi River and

its tributaries on barges, where it is

off-loaded onto oceangoing ships.

Progress in returning the port to full

operations has been gradual, but continual. The Port of New Orleans

announced the intent to be fully operational by Nov. 1.

Though damage to cooperative

plants was not excessive, employee

welfare continues to be a major concern for co-ops. A number of workers

in both Louisiana and Mississippi lost

their homes and possessions. Many are

separated from families forced to evacuate from the storm-ravaged area.

Despite this, co-ops have reported

story after story of employees who

have put aside their personal losses and

worked day and night to help members

recover. 

Some co-ops are taking a direct

approach to relief for these dedicated

individuals. CHS Inc., which has more

than 100 employees working in the

affected area, has established a relief

fund that is being equally disbursed

among employees who need to rebuild

homes and replace personal belongings.

Through its DFA Cares program, DFA

provided generators for employees’

homes as well as food and supplies. 

As the horrors of Katrina ease with

the passing days, cooperative members

and employees are now shifting their

focus from survival mode to rebuilding. Member-owned businesses will

play a significant role in the recovery

of this region where cooperative roots

run deep. For Indian Springs members

and others like them who are struggling to get on with their lives and

livelihoods, a message on the

Cooperative Development Foundation

Web site says:

“Cooperatives are an important

building block in the social and economic recovery. They provide infrastructure, access to credit and access to

markets, all of which will be critical as

the rural economies of these three

states move from their dependence on

the initial relief efforts in the aftermath

of this disaster to long-term sustainable recovery.” ■

Picking up the pieces continued from page 8

Tree Top’s 2004 returns to growers

increased 78 percent from 2003. Photo

courtesy Tree Top
34 November/December 2005 / Rural Cooperatives

tional efficiency measures into their

daily work. Finally, the rising cost of

fuel had a significant impact on this

year’s bottom line.” 

Large crops in 2004 allowed the coop to run plants at or near capacity,

resulting in operating efficiencies company-wide, Tree Top said. The co-op

posted sales of $258.1 million for the

fiscal year, with net proceeds of $29.9

million on a record-high volume of

535,000 tons of apples and pears. Tree

Top has 1,460 members in Washington, Oregon and Idaho, more than

1,140 employees and a payroll of $42

million. The co-op owns and operates

five production plants in Washington,

one in Milton-Freewater, Ore., and

one in Rialto, Calif. 

ACE honors outstanding cooperators

Six individuals and organizations

received awards from the Association

of Cooperative Educators (ACE) for

outstanding contributions to cooperative education at ACE’s Annual

Institute, held in Alexandria, Va., 

in August. The “Outstanding

Contribution to Cooperative

Education and Training” award went

to Bill Patrie, rural development director for the North Dakota

Association of Electric

Cooperatives, Mandan,

N.D. He was honored for

influence on cooperative

development throughout

the United States and

Canada. 

Dixie Watts Reaves,

associate professor,

Virginia Polytechnic and

State University, received

the “Professional

Contribution by an ACE Member”

award for her work with cooperative

education for youth. The “William

Hlushko Award for Young Cooperative

Educators” was awarded to Leslie

Schuler, communications specialist,

CHS Foundation and CHS-Land

O’Lakes Member Services. 

The “Education Program Award”

went to the Ontario Cooperative Association for its

Cooperative Internship

Program for cooperative

employees. The “Outstanding Contribution to ACE by

an Organization Award” was

presented to the Ralph K.

Morris Foundation for its

financial support that has

helped numerous students

and cooperators attend the

ACE Institute. Louis Doering, vice

president of human resources and

training/staff development, Twin City

Co-ops Federal Credit Union, received

the “Reginald J. Cressman Award” for

his outstanding commitment to staff

development.

The ACE Institute attracted more

than 80 educators from the United

States, Canada and the Caribbean. It

included a pre-conference workshop,

which was entitled “updating the cooperative educator’s toolbox.” The theme

was: “Cooperative Education:

Understanding Cooperation as a

Strategic Business Asset.” Speakers

included a diverse contingent of professional cooperative educators.

Conference presentations can be 

found on the ACE Website: http://

www.wisc.edu/uwcc/ace/05/pd.html.

The 2006 ACE Institute will be held

in San Juan, Puerto Rico, August 2–5. 

Duran to lead new global

soybean exporting program 

Almost every other row of U.S. soybeans is exported, so the newly created

U.S. Soybean Export Council

(USSEC) will play a key role in

expanding international markets for

U.S. farmers. Leading the charge for

USSEC will be Dan Duran, the newly

hired chief executive officer. “Dan

brings to the table a unique combination of proven excellence in building

export markets with a commitment to

de-commoditizing commodities,” said

Mark Pietz, USSEC interim co-chairman and a soybean farmer from

Lakefield, Minn. “Considering how

unbelievably competitive the global

market is, building brand preference

for U.S. soybeans and soybean prodgual labels. 

A Mississippi cooperative will

receive a grant to process and market

frozen, processed blueberries. The

Wisconsin Soybean Marketing Board

will receive a grant to determine the

viability of marketing biodiesel made

by a producer-owned soybean processing plant. Businesses and producers in California, Delaware, Illinois,

Indiana, Iowa, Kansas, Mississippi,

Missouri, Nebraska, Ohio, Oregon,

Washington and Wisconsin will

receive grants to assess the feasibility

of marketing ethanol and biodiesel, 

or other types of renewable energy. 

A total of 32 energy-related grants

were awarded this year. A complete

list of the grants is available on 

the USDA Web site at: http://

www.rurdev.usda.gov/. ■

Bioenergy, dairy producers among Recipients of $14.6 million in VAPGs continued from page 9

Bill Patrie addresses

the ACE conference in

Alexandria, Va. 

Students at Paul Norton Elementary in

Bettendorf, Iowa, enjoy single-serve milk

bottles from Swiss Valley. Kids and school

food-service staff love the plastic bottles.

Photo by Nancy Feeney, courtesy Swiss Valley 
Rural Cooperatives / November/December 2005 35

ucts is the only way we are going to

remain number one.”

Duran joins USSEC from Galahad

International, a sales and marketing

company based in Baton Rouge, La.,

that specializes in building global dairy

markets. Prior to Galahad, Duran

spent 16 years with Wells Dairy, the

largest family owned and operated

dairy processor in the United States.

During his tenure with Wells, he initiated the first sales to Mexico, eventually growing the dairy’s international

customer base to more than 30 countries, the majority in developing markets. 

USSEC was jointly created by the

United Soybean Board (USB) and

American Soybean Association (ASA)

earlier this year to implement international marketing and competitiveness

activities on behalf of the soybean

checkoff and USDA-FAS. In addition

to farmer-leaders from ASA and USB,

USSEC will be governed by a board

of exporters and allied industry partners. 

USSEC will focus on a threepronged approach to international

marketing of U.S. soybeans: building

preference for U.S. soybeans, building

demand by targeting specific markets

and addressing market-access issues.

Duran will lead a team of professionals

based in St. Louis and throughout the

world, all representing U.S. soybean

farmers.

USDA provides $9 million

for broadband grants 

USDA Rural Development is providing $9 million in broadband community connect grants to 19 communities in 14 states and Puerto Rico. The

funds will connect essential community

facilities in rural towns and communities where no broadband services currently exist. 

One grant for $325,400 will be

awarded to the community of

Glendora, Miss., for installation of

wireless technology to connect a

library, clinic and public safety facilities. The village of Hughes, Alaska,

will receive $278,871 to cover the

entire community with overlapping

wireless “hot spots.” A Web site will be

designed to enable community businesses to sell items over the Internet.

Local residents will also earn income

by providing data processing services

and will use video-conferencing to

deliver educational classes to homes

and the community center. Timber

Lake, S.D., will receive a $393,300

grant to create a community center

that provides public access points, free

broadband, distance learning and an ecommerce incubator for small businesses and residents of the community. 

USDA received 111 community

connect grant applications. Of the 19

communities selected for funding, 16

will employ wireless technologies and

the other three will provide service

over fiber optic cable. Communities

A major concern, however, when

developing a new product is the necessity of simultaneously developing a

new market. The balance between sufficient production to supply the market

— but not so much as to ruin its profitability — is a delicate one. Information technology will be used increasingly to coordinate these activities

among the marketing firms and their

represented plants. 

References 

Carr, N., Does IT Matter?

Information Technology and the Corrosion

of Competitive Advantage, Boston:

Harvard Business School Press, 2004.

Friedman, T., The World is Flat: A

Brief History of the 21st Century, New

York: Farrar, Straus and Giroux, 2005.

Hale, J.H. III and J. Brown, The

Only Sustainable Edge: Why Business

Strategy Depends on Productive Friction

and Dynamic Specialization, Boston:

Harvard Business School Press, 2005.

Novozymes and BBI International,

Fuel Ethanol: A Technological Revolution,

BBI International Publishing, Grand

Forks, ND, June 2004.

Smith, H. and P. Fingar, IT Doesn’t

Matter, Business Processes Do: A Critical

Analysis of Nicolas Carr’s IT Article in the

Harvard Business Review, Tampa:

Meghan-Kiffer Press, 2003. ■

IT having major impact on farmer-owned ethanol plants continued from page 17

Illustration courtesy United Soybean Board
36 November/December 2005 / Rural Cooperatives

selected do not have access to broadband technology for such essential services as police protection, fire service,

hospitals, libraries and schools. 

Since its inception four years ago,

the Community Connect Broadband

Grant program has provided 109

grants and invested over $39 million to

provide service to local communities.

Each community is required to make

at least 10 computers available to

members of the public. The Community Connect program supplements

USDA Rural Development’s standard,

high-speed telecommunications loan

program. A complete list of the grants

is available on the USDA Web site:

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

CDF grants reflect 

needs of rural seniors

Reflecting a new focus on cooperative development initiatives that will

enhance the quality of life of seniors

living in rural America, the Mutual

Service Cooperative (MSC) Fund of

the Cooperative Development

Foundation has awarded $92,000 in

grants for initiatives to improve

seniors’ access to affordable housing,

home care and health care services in

rural communities. “The new focus for

the fund is based on an assessment that

the needs of the elderly will be one of

the greatest challenges facing rural

communities over the next several

decades,” said Gap Kovach, chairman

of the MSC Fund trustees.

The five technical assistance projects include an innovative rural cooperative housing initiative, expansion of

several existing educational programs

for seniors in rural cooperative housing, a training program for a rural

home care cooperative, and an innovative cooperative approach to meeting

the health care needs in a small rural

community. Recipients include:

Foundation for Rural Housing Inc.,

Madison, Wis. ($20,000); Minnesota

Association of Cooperatives Education

Foundation, St. Paul, Minn. ($14,205);

Senior Cooperative Foundation, St.

Paul, Minn. ($4,600); Cooperative

Care, Wautoma, Wis. ($11,977); Peace

United Methodist Church, Pipestone,

Minn. ($20,000). 

The MSC Fund has awarded more

than $1 million in grants to the cooperative community over the past three

decades. The Cooperative Development Foundation is a 501(c)(3) nonprofit organization promoting community, economic and social development

through cooperative enterprises.

CWT program includes

75 percent of milk supply 

Cooperatives Working

Together (CWT), the

dairy industry’s self-funded market balancing program, has now enrolled

cooperatives and producers representing 75 percent of the nation’s milk

supply. Under the industry

self-help program, now in

its third year, producers

pay assessments used to

compensate other producers to reduce their herd

sizes. Nearly 50 dairy

cooperatives of all sizes

and more than 300 independent farmers are paying five cents her hundredweight of their milk

production to fund the program,

according to Jerry Kozak, president

and CEO of the National Milk

Producers Federation, which administers the CWT program.

The goal this year is to remove up

to 70,000 cows, more than double the

number retired in 2003, and 20,000

higher than last year’s program. Kozak

said he hopes the remaining co-ops

and independent producers will join

CWT to make it even more effective.

The program has been credited with

playing a major role in helping to

solidify producer milk prices the past

two years. Deadline for submitting

bids was Sept. 16.

Breeding co-op marks

passing of greatest sire 

Accelerated Genetics and perhaps

even his own highly extended family,

are marking the passing of the co-op’s

greatest sire: Barbee-M Juror ITO, at

the age of 10 years and 2 months.

ITO’s impact on the next generation of

dairy cattle around the world will be

felt for many years to come through

his daughters and sons, the co-op said

in a press release. The Baraboo, Wisc.-

based cooperative says ITO’s daughters

are known for their beautiful udders,

quiet disposition, fast milk-out and

calving ease. ITO’s influence will also

live on through his sons, which are

currently enrolled in the co-op’s young

sire program and other A.I. programs. 

ITO is currently the all-time leading sire of semen produced and sold

from Accelerated Genetics. And while

he may be gone, ITO left a little

something behind: his semen will be

available from the co-op as long as

remaining supplies last. Accelerated

Genetics will forever remember ITO

with a special marker that is being

placed at the co-op’s production facility in Westby, Wisc.

Hazen elected to international 

co-op association board

Paul Hazen, president and CEO of

the National Cooperative Business

Association, was elected to the board

of the International Co-operative

Alliance Sept. 23 at a meeting of the

Accelerated Genetics’ top sire, ITO, is gone, but his

legacy lives on. Photo courtesy Accelerated Genetics
Rural Cooperatives / November/December 2005 37

organization’s general assembly in

Cartagena, Colombia. Hazen will be

the only U.S. representative on the 15-

member ICA board. 

The International Co-operative

Alliance represents cooperatives and

cooperative organizations worldwide.

Headquartered in Geneva, it has more

than 225 members from at least 90

countries. Together, these organizations represent more than 800 million

people. U.S. members, in addition to

NCBA, are the National Cooperative

Bank, Credit Union National

Association, CUNA Mutual, National

Rural Electric Cooperative

Association, Nationwide Insurance,

ACDI/VOCA and Land O’Lakes, Inc.

Eighty-seven countries were represented at the meeting, attended by

approximately 1,000 delegates. 

“We know that cooperatives can

change peoples’ lives and that, by

working together in co-ops, families

can achieve their dreams,” Hazen said.

“Food, shelter, healthcare and education through cooperatives will do more

to fight terrorism and promote peace

than any war we will ever fight.” 

Bonnie Raitt hits the road

on cleaner-burning biodiesel 

Blues singer/guitarist Bonnie Raitt’s

current tour is being fueled by

biodiesel, which her road crew is using

in her two diesel-powered buses and

two semi trucks. Raitt’s year–long tour

kicked off Oct. 5 in Tulsa, Okla. 

Raitt has endorsed cleaner burning, environmentally friendly

biodiesel (B20). “I believe we should

do everything we can to minimize our

impact on the planet, and using

biodiesel is a simple step that goes a

long way,” says Raitt. “By using B20

on my Souls Alike Tour, we are

reducing pollution and putting a dent

in imported petroleum. Biodiesel has

come so far in the last few years. It’s

wonderful to see it gaining momentum — we can all benefit from more

biodiesel use.” 

By using biodiesel fuel and promoting its benefits during her tours, Raitt

has helped to increase the visibility of

biodiesel, said Joe Jobe, chief executive

officer of the National Biodiesel Board

(NBB). “Today, more than 500 major

fleets use biodiesel commercially, and

600 retail filling stations make it available to the public.” Raitt said she also

supports biodiesel because it contributes to the family farm. Soybean

farmers, through the soybean checkoff,

have led the way in developing the

U.S. biodiesel industry for more than

15 years. ■

Blues guitarist/singer Bonnie Raitt is fueling her current national tour on biodiesel

and promoting its use at concerts and

other events. 

NCFC testifies on

hurricane recovery goals 

Jean-Mari Peltier, president and

CEO of the National Council of

Farmer Cooperatives (NCFC), told

the Senate Finance committee in

October that “farmer cooperatives,

their employees, and their nearly 2

million farmer members are committed to working with Congress and

the Bush Administration to provide

needed hurricane recovery assistance

and to encourage redevelopment of

affected areas.” The hearing was

called to get agriculture’s perspective

on the community rebuilding needs

after Hurricane Katrina, and on the

effectiveness of past proposals. The

hearing examined how tax relief and

incentives can be used to promote

the recovery effort, and the effectiveness of similar efforts made after past

natural disasters. 

As part of a nationwide campaign,

NCFC has urged its members to

join together as part of a cooperative

effort to help provide relief to those

impacted by the hurricanes. At the

time of the hearing, farmer cooperatives, their employees and farmer

members had already directly contributed over $1.2 million in hurricane relief. In addition, many farmer

cooperatives have donated food,

livestock feed, generators, fuel supplies, transportation and other items.

“Given the scale of devastation,”

Peltier said, “we believe what is

needed is a combination of assistance that provides tax relief and

other incentives to encourage

rebuilding efforts, which would be in

addition to traditional disaster assistance for agriculture through

USDA.”

NCFC outlined several recommendations, including:

• Ensuring that any new tax relief

provisions apply to agriculture,

including farmers and their cooperatives;

• Creation of new enterprise zones,

with provisions allowing farmer

cooperatives to pass benefits

through to farmer members;

• Extension of the greater deductions under Section 179 and accelerated depreciation;

• Clarification to allow cooperatives

to fully qualify for deductions for

charitable contributions and food

donations;

• Allowing deductions for donations

made to individual farmers and

others in the disaster region;

• Extension of the general net operating loss (NOL) carry-back period to five years (from two years

currently). 
38 November/December 2005 / Rural Cooperatives

Information appearing in Rural Cooperatives magazine during calendar year 2005 has been indexed to help you find

past articles. Articles are indexed by month and page. Back issues can be found on-line at www.rurdev.usda.gov.

TITLE FEATURES Issue—Page 

A Fresh Advantage

Co-ops help small farms market produce to high-end restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 24

A Perfect Storm

Farmland trustee sues ex-officers, directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 18

Actions that help retain members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jan./Feb. 6

Antitrust review reveals strong co-op support for Capper-Volstead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sept./Oct. 25

Appalachian Spring Cooperative, Treadway, Tenn. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nov./Dec. 23

Atlantic Tender Beef

Canadian co-ops expand market for home-grown meat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/Aug. 8

Bioenergy, dairy producers among recipients of $14.6 million in VAPGs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nov./Dec. 9

Breeding and growing oysters — easy does it . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/Aug. 24

Bucking the Trend

Small dairy co-ops targeting niche markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/Aug. 12

Charley’s Angels

Co-ops show true colors sending aid to Hurricane Charley-ravaged Southern states . . . . . . . . . . . . . . . . . . . . . Jan./Feb. 22

CoBank CEO: Gear co-ops to consumer demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jan./Feb. 28

CoBank’s Schoniger named top co-op communicator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/Aug. 32

Consolidation, expansion spark growth in co-op feed sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/Aug. 29

Consumers prefer locally produced foods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/Aug. 11

Co-op Heritage Day declared to mark TFC’s 60th anniversary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nov./Dec. 29

Co-op payments to patrons subject to self-employment tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 10

Co-op stock exchange

Why choice of trading rules matters for new-generation co-op stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . Jan./Feb. 12

Cooperation Works! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/Aug. 28

Court of Preference

Minn. co-op helps manufactured home residents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 23

Cream of the CROPP

Demand outstripping supply as CROPP organic dairy products go prime time . . . . . . . . . . . . . . . . . . . . . . . . . May/June 15

Dairy & tomato industries show some parallel trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/Aug. 19

Diversified rural economy goal for Under Secretary Dorr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sept./Oct. 17

Do bigger ethanol plants mean fewer farmer benefits? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nov./Dec. 20

Ethanol marketing/contracting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sept./Oct. 11

Executive committees key to CROPP governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 18

Expanded database vital for future co-op reseach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nov./Dec. 25

Farmer co-op business volume nears $117 billion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 11

Farmer-owned ethanol and the role of information technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sept./Oct. 8

Farmland faced classic co-op dilemma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 22

Flying the coop

Why members leave a co-op and ways to prevent it . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jan./Feb. 4

Going with the Grain

New Mexico organic wheat co-op provides lift to farmers, rural economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 12

Hurdles to niche-markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/Aug. 13

How big are “middleman” profits? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/Aug. 15

How small farms benefit communities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 23

Innovation a necessity, not a choice, for 21st century co-ops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 4

IT having major impact on farmer-owned ethanol plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nov./Dec. 15

Keys to success...and pitfalls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sept./Oct. 23

Leaving home?

Reasons vary for co-op conversions; critics remain wary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jan./Feb. 8

Livingston gives producers legislative tips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jan./Feb. 31

Local-based, alternative-marketing strategy could help save more small farms . . . . . . . . . . . . . . . . . . . . . . . . . . . . May/June 20

Low-carb, High Hopes

Co-op’s slimmed-down, SunLite tubers may beef-up Florida’s potato industry . . . . . . . . . . . . . . . . . . . . . . . . March/April 8

Measuring top 100 co-op performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March/April 28

Micro co-op finding success in local markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/Aug. 16

Monitoring performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nov./Dec. 31

New Technology: Opportunity and Challenge

Technology changes could turn milk plants into ‘dairy refineries’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/Aug. 18

No Shell Game

Oyster co-op hopes to revive Mystic’s faded shellfish industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July/Aug. 22

Of necessity & invention

Conference shows diversity of responses by co-ops to changing market conditions . . . . . . . . . . . . . . . . . . . . . . . . . Jan./Feb. 17

2005 Article Index
Rural Cooperatives / November/December 2005 39

Organic Co-ops Taking Root . . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 11

Organic food sales growing at ‘breathtaking’ speed . . . . . . . . . . .May/June 13

Paper or plastic?

For single-serve milk market, the answer is plastic . . . . . . . . . .Jan./Feb. 27

Perils & Pleasures of Partnerships

Key issue of co-ops in business partnerships: 

Who do you trust? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .March/April 30

Picking up the pieces

Co-op aid helping other co-ops recover 

from ravages of Hurricane Katrina . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 4

Prairie Prosperity

From biofuels to buffalo bullion & zamboni repair, 

Minn. town cooperatives to boost rural business . . . . . . . . . .Nov./Dec. 10

Price crisis prompts potato growers to form national co-op . . .March/April 4

Retail co-ops advised to foster member identification, 

not force conformity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Jan./Feb. 26

Running on Empty? 

‘Great ethanol debate’ waged at NCGA forum . . . . . . . . . . . .Sept./Oct. 4

Sales and net income climb for local farm co-ops in 2004 . . . . .Nov./Dec. 30

Slice of the market

Penns Corner, Tuscarora co-ops target 

growing restaurant trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 27

Soybean extruder opens new doors for Kansas co-op . . . . . . . . .May/June 36

Study: co-op conversions rarely member-driven . . . . . . . . . . . . . .Jan./Feb. 11

Taking Stock

Rural food cooperative case studies 

reveal critical retail success factors . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 19

Texas dairy farmer ‘puts joy into his work’ . . . . . . . . . . . . . . . . . .May/June 19

The Inside Scoop on Outside Help

Outside co-op development specialists play 

crucial role for business launch . . . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 26

The ultimate R&D challenge: financing new technology . . . . . .July/Aug. 20

The United We Stand program . . . . . . . . . . . . . . . . . . . . . . . . .March/April 7

Trading Places

Fortunes of California rice co-ops took opposite trajectories. . May/June 32

Turning forest waste into energy . . . . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 47

Unflappable

Plant closure forces Virginia poultry 

cooperative launch onto fast-track . . . . . . . . . . . . . . . . . . . .March/April 14

Upswing Continues

Despite loss of Farmland & Agway, revenue, 

income climb for top 100 co-ops . . . . . . . . . . . . . . . . . . . . .March/April 25

USDA helps Colorado farmers cook up profitability . . . . . . . . . .May/June 9

USDA hurricane-relief teams active on multiple fronts . . . . . . . .Nov./Dec. 5

USDA marks 70th anniversary of landmark rural legislation . . . . .July/Aug. 4

USDA, MSU Extension help Crooked Bow beef take a bow . . . .Jan./Feb. 7

USDA offers co-op development help . . . . . . . . . . . . . . . . . . . . .July/Aug. 27

USDA providing $7 million for rural co-op development . . . . .Nov./Dec. 45

USDA Rural Development offers hurricane-relief . . . . . . . . . . .Sept./Oct. 18

When the sky falls

Advance planning key to crisis communications . . . . . . . . . . .Sept./Oct. 27

Who you gonna call?

ATTRA output helps low-input agriculture 

expand its market niche . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 30

Why wasn’t Farmland reorganized? . . . . . . . . . . . . . . . . . . . . .March/April 21

Magazine Departments

COMMENTARY/EDITORIAL

Defending the cornerstone of cooperation . . . . . . . . . . . . . . . . . . .July/Aug. 2

Energizing Rural America: How the energy bill helps us all . . . .Nov./Dec. 2

Producers are natural leaders for rural communities . . . . . . . . .March/April 2

Rural America’s role in the energy economy . . . . . . . . . . . . . . . . . .Jan./Feb. 2

Shelter from the storm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 2

Spreading the word . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 2

Inside Rural Development

Renewable energy: the new frontier . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 39

Turning forest waste into energy . . . . . . . . . . . . . . . . . . . . . . . . . .Nov/Dec 47

USDA energy program promotes ‘cow power’ . . . . . . . . . . . . . .Sept./Oct. 39

USDA B&I program supports growth of organic cooperatives . .May/June 43

VAPG program creates rural jobs, boosts local economies . . .March/April 43

Legal Corner

Antitrust developments; case against mushroom 

growers’ co-op settled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .March/April 24

Energy Tax Incentives Act includes cooperative provisions . . . .Sept./Oct. 14

Get ready to claim your “QPAI deduction” . . . . . . . . . . . . . . . . .July/Aug. 21

New tax law includes several cooperative provisions . . . . . . . . . .Jan./Feb. 20

Web-based ag/co-op law library puts 

valuable resources at fingertips . . . . . . . . . . . . . . . . . . . . . . . . .May/June 10

Newsline

TFC’s $447-million sales year sets record; income also climbs . . .Jan./Feb. 34

Humboldt Creamery acquires WestFarm’s ice cream division

Record crop returns for Blue Diamond members

USDA awards $8.8 million in rural broadband grants

AMPI butter plant hit by fire

CHS 2004 earnings a record $221 million

Bison co-op optimistic about emerging from Chapter 11

UW co-op reference book newly revised

Specialty grain industry education network expands

Cropp interim director of UW Center for Co-ops

DotCoop launches directory; Paul Hazen to head OCDC

New funding source for rural economic development

Hanson gets co-op leadership honor

Dakota local co-ops merge

Lamb Checkoff faces vote

Record beet payments for Minn-Dak members

USDA Ag Outlook Forum provides insight on “front-burner” ag issues

Crop-based biofuels could add $5 billion to farm profits by 2025

USDA-EPA partnership promotes renewable energy

Another $3 million going back to Walton EMC members

CWT Round II removing nearly 1-billion pounds of milk . . .March/April 33

Southern States Co-op acquires Agway’s share of Co-op Milling

Bio-energy priority for USDA value-added grants

DFA acquires Keller’s Creamery

Health care co-ops get boost in Wis., Minn.

LO’L sales top $7.7 billion; CEO Jack Gherty to retire

Preserving rural heritage, culture goal of White House/USDA effort

CoBank pays record patronage; smaller board approved in vote

Isom, Toelle NCFC’s directors of the year

FCS America board election reflects anti-sale sentiment

“Payback” new CHS feed brand

Michigan cattle producers unite to pursue market opportunities

Georgia Co-op Center gets boost from USDA grant

GROWMARK forms alliance to offer grain-risk services

Soybean association joins crop insurance co-op

Co-ops have $6-billion impact on North Dakota

Iowa, Illinois get new winery co-ops

Preliminary settlement reached in MCP lawsuit

Record-breaking year for DFA . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 37

Cheese sales drive record AMPI revenue

Cairo Co-op building new elevator

Dakota Prairie Beef to dissolve

Two co-ops semifinalists for prestigious award

USDA offers $22.8 million for renewable energy projects

Foremost sets sales/earnings record

Colorado local co-ops merge

Court approves MCP settlement

Walnut growers to vote on co-op conversion

Ocean Spray taps former Pepsi R&D chief to push innovation

Sunkist marks 111th year with higher sales, grower pay

ACE Institute set for N. Virginia

Pennsylvania food-marketing co-op 

completes trade mission to China . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 33

Alto forms whey-marketing partnership

Aurora Co-op buying Cargill’s Grand Island mill

Bin collapse causes co-op to halt storage

Calif. Dairy co-op buying Frito plant

CF Industries plans stock sale

CHS sells Mexican foods operations

Co-op conference slated in Minnesota

$10,000 land stewardship prize offered by AFT
40 November/December 2005 / Rural Cooperatives

Dairy conference eyes national marketing agency

Diamond Walnut to convert

Scope of co-op law project expanded . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 29

NCFC surveying co-op structure

Wisconsin law would allow outside investment in co-ops

Co-op wants incentives for buyout payments to fund value-added ag

Minn. sugar co-op buying Holly Sugar from Imperial

Policinski to succeed Gherty

Bruce Anderson honored

Riceland’s Bell named Arkansas Ag Secretary

Pastureland artisan butter wins top honors from ACS

Penlight celebrates 80 years

Rick Smith named DFA president & COO

Anderson elected chairman of U.S. Grains Council

CDF establishes hurricane recovery fund

Reynolds receives Honored Cooperator Award

Co-op celebrates 80 years

Struggling Kansas local co-op dissolves

New hotline for sustainable ag pubs

Bill expands health care co-ops

Isolated Alaskan villages get USDA help for Internet

Co-op Month material on Web

Co-op Foundation awards grants

Walton EMC sends crews to storm-wracked Mississippi

Sales, member payments up sharply for Dairylea . . . . . . . . . . . .Nov./Dec. 32

Ocean Spray marks 75th with integrated marketing campaign

Cabot on Leading Edge of Cottage Cheese Technology

Tree Top grower returns soar

ACE honors outstanding cooperators

Duran to lead new global soybean exporting program

USDA provides $9 million for broadband grants

CDF grants reflect needs of rural seniors

CWT program includes 75 percent of milk supply

Breeding co-op marks passing of greatest sire

NCFC testifies on hurricane recovery goals

Bonnie Raitt hits the road on cleaner-burning biodiesel

Hazen elected to international co-op association board

South Dakota co-ops merge

Value-Added Corner

Appalachian Spring Cooperative, Treadway, Tenn. . . . . . . . . . . .Nov./Dec. 23 

Farmers Pride Cooperative, Newman Grove Branch, Nebraska Sept./Oct. 15

Iowa cheese co-op helps preserve a way of life . . . . . . . . . . . . . . .Jan./Feb. 15

No loafing

Booming business leads wheat cooperative 

to expand Gerard’s Bakery to East Coast . . . . . . . . . . . . . . . . . .May/June 7

Trading on Tradition

Heartland Farm Foods uses country tradition 

to market members’ beef . . . . . . . . . . . . . . . . . . . . . . . . . . . .March/April 12

SUBJECTS

Aquaculture/Fishery

Breeding and growing oysters — easy does it . . . . . . . . . . . . . . . .July/Aug. 24

No Shell Game

Oyster co-op hopes to revive Mystic’s faded shellfish industry July/Aug. 22

Biofuels & Products

Bioenergy, dairy producers among recipients 

of $14.6 million in VAPGs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 9

Do bigger ethanol plants mean fewer farmer benefits? . . . . . . .Nov./Dec. 20

Ethanol marketing/contracting . . . . . . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 11

Farmer-owned ethanol and the role of information technology. . Sept./Oct. 8

Fuel ethanol industry structure, past & present . . . . . . . . . . . . . .Nov./Dec. 18 

IT having major impact on farmer-owned ethanol plants . . . . .Nov./Dec. 15

Prairie Prosperity

From biofuels to buffalo bullion & zamboni repair, 

Minn. town cooperatives to boost rural business . . . . . . . . . .Nov./Dec. 10

Running on Empty? 

‘Great ethanol debate’ waged at NCGA forum . . . . . . . . . . . .Sept./Oct. 4

Surviving in a low-price cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 16 

Turning forest waste into energy . . . . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 47

USDA energy program promotes ‘cow power’ . . . . . . . . . . . . . .Sept./Oct. 39

Communication

CoBank’s Schoniger named top co-op communicator . . . . . . . . .July/Aug. 32

Flying the coop

Why members leave a co-op and ways to prevent it . . . . . . . . .Jan./Feb. 4

When the sky falls

Advance planning key to crisis communications . . . . . . . . . . .Sept./Oct. 27

Consumer Co-ops

Atlantic Tender Beef

Canadian co-ops expand market for home-grown meat . . . . . .July/Aug. 8

Court of Preference

Minn. co-op helps manufactured home residents . . . . . . . .March/April 23

Keys to success...and pitfalls (for retail food co-ops) . . . . . . . . .Sept./Oct. 23

Retail co-ops advised for foster member identification, 

not force conformity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Jan./Feb. 26

Taking Stock

Rural food cooperative case studies 

reveal critical retail success factors . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 19

Co-op Development

Appalachian Spring Cooperative, Treadway, Tenn. . . . . . . . . . . .Nov./Dec. 23

Cooperation Works . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 28

No Shell Game

Oyster co-op hopes to revive Mystic’s faded shellfish industry. July/Aug. 22

Price crisis prompts potato growers to form national co-op . . .March/April 4

The Inside Scoop on Outside Help

Outside co-op development specialists play 

crucial role for business launch . . . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 26

Trading on Tradition

Heartland Farm Foods uses country tradition 

to market members’ beef . . . . . . . . . . . . . . . . . . . . . . . . . . . .March/April 12

Unflappable

Plant closure forces Virginia poultry 

cooperative launch onto fast-track . . . . . . . . . . . . . . . . . . . .March/April 14

USDA offers co-op development help . . . . . . . . . . . . . . . . . . . . .July/Aug. 27

USDA providing $7 million for rural co-op development . . . . .Nov./Dec. 45

Dairy

Bucking the Trend

Small dairy co-ops targeting niche markets . . . . . . . . . . . . . . .July/Aug. 12

Cream of the CROPP

Demand outstripping supply as CROPP 

organic dairy products go prime time . . . . . . . . . . . . . . . . . . .May/June 15

Dairy & tomato industries show some parallel trends . . . . . . . . .July/Aug. 19

Executive committees key to CROPP governance . . . . . . . . . . .May/June 18

How big are “middleman” profits? . . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 15

Hurdles to niche-markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 13

Iowa cheese co-op helps preserve a way of life . . . . . . . . . . . . . . .Jan./Feb. 15

Micro co-op finding success in local markets . . . . . . . . . . . . . . . .July/Aug. 16

New Technology: Opportunity and Challenge

Technology changes could turn 

milk plants into ‘dairy refineries’ . . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 18

Paper or plastic?

For single-serve milk market, the answer is plastic . . . . . . . . . .Jan./Feb. 27

Picking up the pieces

Co-op aid helping other co-ops recover 

from ravages of Hurricane Katrina . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 4

Texas dairy farmer ‘puts joy into his work’ . . . . . . . . . . . . . . . . . .May/June 19

The ultimate R&D challenge: financing new technology . . . . . .July/Aug. 20

Director Education and Development

Flying the coop

Why members leave a co-op and ways to prevent it . . . . . . . . .Jan./Feb. 4

Disaster Recovery

Picking up the pieces

Co-op aid helping other co-ops recover 

from ravages of Hurricane Katrina . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 4

USDA hurricane-relief teams active on multiple fronts . . . . . . . .Nov./Dec. 5

USDA Rural Development offers hurricane-relief . . . . . . . . . . .Sept./Oct. 18

When the sky falls

Advance planning key to crisis communications . . . . . . . . . . .Sept./Oct. 27
Rural Cooperatives / November/December 2005 41

Education

Expanded database vital for 

future co-op reseach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 25

Of Necessity & Invention

Conference shows diversity of responses 

by co-ops to changing market conditions . . . . . . . . . . . . . . . . . .Jan./Feb. 17

Paper or plastic?

For single-serve milk market, the answer is plastic . . . . . . . . . .Jan./Feb. 27

The Inside Scoop on Outside Help

Outside co-op development specialists 

play crucial role for business launch . . . . . . . . . . . . . . . . . . . . .July/Aug. 26

Who you gonna call?

ATTRA output helps low-input 

agriculture expand its market niche . . . . . . . . . . . . . . . . . . . . .May/June 30

Environment

Charley’s Angels

Co-ops show true colors sending aid to 

Hurricane Charley-ravaged Southern states . . . . . . . . . . . . . . .Jan./Feb. 22

Cream of the CROPP

Demand outstripping supply as CROPP 

organic dairy products go prime time . . . . . . . . . . . . . . . . . . .May/June 15

Farm Supply, Agronomy & Service

A Perfect Storm

Farmland trustee sues ex-officers, directors . . . . . . . . . . . .March/April 18

Consolidation, expansion spark growth in co-op feed sales . . . . .July/Aug. 29

Co-op Heritage Day declared to mark TFC’s 60th anniversary Nov./Dec. 29

Farmer co-op business volume nears $117 billion . . . . . . . . . .March/April 11

Measuring top 100 co-op performance . . . . . . . . . . . . . . . . . .March/April 28

Monitoring performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 31

Sales and net income climb for local farm co-ops in 2004 . . . . .Nov./Dec. 30

Upswing Continues

Despite loss of Farmland & Agway, 

revenue, income climb for top 100 co-ops . . . . . . . . . . . . .March/April 25

Finance

A Perfect Storm

Farmland trustee sues ex-officers, directors . . . . . . . . . . . .March/April 18

CoBank CEO: Gear co-ops to consumer demand . . . . . . . . . . . .Jan./Feb. 28

Co-op payments to patrons subject to self-employment tax . . . .May/June 10

Co-op stock exchange

Why choice of trading rules matters for 

new-generation co-op stockholders . . . . . . . . . . . . . . . . . . . . . .Jan./Feb. 12

Do bigger ethanol plants mean fewer farmer benefits? . . . . . . .Nov./Dec. 20

Energy Tax Incentives Act includes cooperative provisions . . . .Sept./Oct. 14

Farmland faced classic co-op dilemma . . . . . . . . . . . . . . . . . . .March/April 22

Get ready to claim your “QPAI deduction” . . . . . . . . . . . . . . . . .July/Aug. 21

How big are “middleman” profits? . . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 15

It having major impact on farmer-owned ethanol plants . . . . . .Nov./Dec. 15

Measuring top 100 co-op performance . . . . . . . . . . . . . . . . . .March/April 28

Monitoring performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 31

Of Necessity & Invention

Conference shows diversity of responses 

by co-ops to changing market conditions . . . . . . . . . . . . . . . . .Jan./Feb. 17

Surviving in a low-price cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 16

Trading Places

Fortunes of California rice co-ops took opposite trajectories . May/June 32

USDA B&I program supports growth of organic cooperatives . .May/June 43

Why wasn’t Farmland reorganized? . . . . . . . . . . . . . . . . . . . . .March/April 21

Fruits, Nuts, Vegetables

A Fresh Advantage

Co-ops help small farms market produce 

to high-end restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 24

Innovation a necessity, not a choice, for 21st century co-ops . . . .May/June 4

Low-carb, High Hopes

Co-op’s slimmed-down, SunLite tubers 

may beef-up Florida’s potato industry . . . . . . . . . . . . . . . . . .March/April 8

Perils & Pleasures of Partnerships

Key issue of co-ops in business partnerships: 

Who do you trust? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .March/April 30

Picking up the pieces

Co-op aid helping other co-ops recover from 

ravages of Hurricane Katrina . . . . . . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 4

Price crisis prompts potato growers to form national co-op . . .March/April 4

Slice of the market

Penns Corner, Tuscarora co-ops target 

growing restaurant trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 27

The United We Stand program . . . . . . . . . . . . . . . . . . . . . . . . .March/April 7

Governance & Structure

Co-op stock exchange

Why choice of trading rules matters for 

new-generation co-op stockholders . . . . . . . . . . . . . . . . . . . . . .Jan./Feb. 12

Executive committees key to CROPP governance . . . . . . . . . . .May/June 18

Leaving home?

Reasons vary for co-op conversions; critics remain wary . . . . . .Jan./Feb. 8

Perils & Pleasures of Partnerships

Key issue of co-ops in business partnerships: Who do you trust? . . . . . . . .

March/April 30

Study: co-op conversions rarely member-driven . . . . . . . . . . . . . .Jan./Feb. 11

Grains & Oilseeds

Farmer-owned ethanol and the role of information technology .Sept./Oct. 8

Farmers Pride Cooperative, Newman Grove Branch, Nebraska Sept./Oct. 15

Going with the Grain

New Mexico organic wheat co-op provides 

lift to farmers, rural economy . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 12

Leaving home?

Reasons vary for co-op conversions; critics remain wary . . . . . .Jan./Feb. 8

No loafing

Booming business leads wheat cooperative to expand Gerard’s Bakery to

East Coast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 7

Perils & Pleasures of Partnerships

Key issue of co-ops in business partnerships: 

Who do you trust? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .March/April 30

Running on Empty? 

‘Great ethanol debate’ waged at NCGA forum . . . . . . . . . . . .Sept./Oct. 4

Soybean extruder opens new doors for Kansas co-op . . . . . . . . .May/June 36

Trading Places

Fortunes of California rice co-ops took opposite trajectories .May/June 32

USDA helps Colorado farmers cook up profitability . . . . . . . . . .May/June 9

Legislative and Legal

A Perfect Storm

Farmland trustee sues ex-officers, directors . . . . . . . . . . . .March/April 18

Antitrust developments; case against mushroom 

growers’ co-op settled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .March/April 24

Antitrust review reveals strong co-op support for 

Capper-Volstead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 25

Co-op payments to patrons subject to self-employment tax . . . .May/June 10

Energy Tax Incentives Act includes cooperative provisions . . . .Sept./Oct. 14

Farmland faced classic co-op dilemma . . . . . . . . . . . . . . . . . . .March/April 22

Get ready to claim your “QPAI deduction” . . . . . . . . . . . . . . . . .July/Aug. 21

Leaving home?

Reasons vary for co-op conversions; critics remain wary . . . . . .Jan./Feb. 8

Livingston gives producers legislative tips . . . . . . . . . . . . . . . . . . .Jan./Feb. 31

New tax law includes several cooperative provisions . . . . . . . . . .Jan./Feb. 20

Paper or plastic?

For single-serve milk market, the answer is plastic . . . . . . . . . .Jan./Feb. 27

Study: co-op conversions rarely member-driven . . . . . . . . . . . . . .Jan./Feb. 11

USDA marks 70th anniversary of landmark rural legislation . . . . .July/Aug. 4

Web-based ag/co-op law library puts valuable 

resources at fingertips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 10

Why wasn’t Farmland reorganized? . . . . . . . . . . . . . . . . . . . . .March/April 21

Livestock

Atlantic Tender Beef

Canadian co-ops expand market for home-grown meat . . . . . .July/Aug. 8

Leaving home?

Reasons vary for co-op conversions; critics remain wary . . . . . .Jan./Feb. 8

Trading on Tradition

Heartland Farm Foods uses country tradition to 

market members’ beef . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .March/April 12

USDA, MSU Extension help Crooked Bow beef take a bow . . . . .Jan./Feb. 7
42 November/December 2005 / Rural Cooperatives

Management

Farmland faced classic co-op dilemma . . . . . . . . . . . . . . . . . . .March/April 22

Innovation a necessity, not a choice, for 21st century co-ops . . . .May/June 4

Keys to success...and pitfalls . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 23

Perils & Pleasures of Partnerships

Key issue of co-ops in business partnerships: 

Who do you trust? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .March/April 30

Taking Stock

Rural food cooperative case studies reveal 

critical retail success factors . . . . . . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 19

Trading Places

Fortunes of California rice co-ops took opposite trajectories. . May/June 32

Marketing

A Fresh Advantage

Co-ops help small farms market produce 

to high-end restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 24

Atlantic Tender Beef

Canadian co-ops expand market for home-grown meat . . . . . .July/Aug. 8

Bucking the Trend

Small dairy co-ops targeting niche markets . . . . . . . . . . . . . . .July/Aug. 12

CoBank CEO: Gear co-ops to consumer demand . . . . . . . . . . . .Jan./Feb. 28

Consumers prefer locally produced foods . . . . . . . . . . . . . . . . . . .July/Aug. 11

Farmer co-op business volume nears $117 billion . . . . . . . . . .March/April 11

How big are “middleman” profits? . . . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 15

Hurdles to niche-markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 13

Innovation a necessity, not a choice, for 21st century co-ops . . . .May/June 4

Local-based, alternative-marketing strategy 

could help save more small farms . . . . . . . . . . . . . . . . . . . . . . .May/June 20

Low-carb, High Hopes

Co-op’s tubers may beef-up Florida’s potato industry . . . . . .March/April 8

Measuring top 100 co-op performance . . . . . . . . . . . . . . . . . .March/April 28

Micro co-op finding success in local markets . . . . . . . . . . . . . . . .July/Aug. 16

No loafing

Booming business leads wheat cooperative 

to expand Gerard’s Bakery to East Coast . . . . . . . . . . . . . . . . . .May/June 7

No Shell Game

Oyster co-op hopes to revive Mystic’s faded shellfish industry. .July/Aug. 22

Of Necessity & Invention

Conference shows diversity of responses by 

co-ops to changing market conditions . . . . . . . . . . . . . . . . . . . .Jan./Feb. 17

Organic food sales growing at ‘breathtaking’ speed . . . . . . . . . . .May/June 13

Paper or plastic?

For single-serve milk market, the answer is plastic . . . . . . . . . .Jan./Feb. 27

Price crisis prompts potato growers to form national co-op . . .March/April 4

Retail co-ops advised for foster member identification, 

not force conformity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Jan./Feb. 26

Slice of the market

Penns Corner, Tuscarora co-ops target 

growing restaurant trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 27

The United We Stand program . . . . . . . . . . . . . . . . . . . . . . . . .March/April 7

Trading Places

Fortunes of California rice co-ops took opposite trajectories . .May/June 32

Unflappable

Plant closure forces Virginia poultry cooperative launch onto fast-track . .

March/April 14

Upswing Continues

Despite loss of Farmland & Agway, revenue, 

income climb for top 100 co-ops . . . . . . . . . . . . . . . . . . . . .March/April 25

Member Relations

Actions that help retain members . . . . . . . . . . . . . . . . . . . . . . . . . . .Jan./Feb. 6

Farmland faced classic co-op dilemma . . . . . . . . . . . . . . . . . . .March/April 22

Flying the coop

Why members leave a co-op and ways to prevent it . . . . . . . . . .Jan./Feb. 4

Keys to success...and pitfalls . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 23

Taking Stock

Rural food cooperative case studies reveal 

critical retail success factors . . . . . . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 19

Organic

A Fresh Advantage

Co-op help small farms market produce to 

high-end restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 24

Cream of the CROPP

Demand outstripping supply as CROPP organic 

dairy products go prime time . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 15

Going with the Grain

New Mexico organic wheat co-op provides 

lift to farmers, rural economy . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 12

Organic Co-ops Taking Root . . . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 11

Organic food sales growing at ‘breathtaking’ speed . . . . . . . . . . .May/June 13

Slice of the Market

Penns Corner, Tuscarora co-ops target growing 

restaurant trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 27

Texas dairy farmer ‘puts joy into his work’ . . . . . . . . . . . . . . . . . .May/June 19

USDA B&I program supports growth of organic cooperatives . .May/June 43

Web-based ag/co-op law library puts 

valuable resources at fingertips . . . . . . . . . . . . . . . . . . . . . . . . .May/June 10

Poultry

Unflappable

Plant closure forces Virginia poultry cooperative 

launch onto fast-track . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .March/April 14

VAPG program creates rural jobs, boosts local economies . . .March/April 43

Rural Development

A Fresh Advantage

Co-ops help small farms market produce to 

high-end restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 24

Appalachian Spring Cooperative, Treadway, Tenn. . . . . . . . . . . .Nov./Dec. 23

Cream of the CROPP

Demand outstripping supply as CROPP organic 

dairy products go prime time . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 15

How small farms benefit communities . . . . . . . . . . . . . . . . . . . . .May/June 23

Local-based, alternative-marketing strategy 

could help save more small farms . . . . . . . . . . . . . . . . . . . . . . .May/June 20

Prairie Prosperity

From biofuels to buffalo bullion & zamboni repair, 

Minn. town cooperatives to boost rural business . . . . . . . . . .Nov./Dec. 10

Taking Stock

Rural food cooperative case studies reveal 

critical retail success factors . . . . . . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 19

The Inside Scoop on Outside Help

Outside co-op development specialists play 

crucial role for business launch . . . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 26

Statistics

Consolidation, expansion spark growth in co-op feed sales . . . . .July/Aug. 29

Farmer co-op business volume nears $117 billion . . . . . . . . . .March/April 11

Measuring top 100 co-op performance . . . . . . . . . . . . . . . . . .March/April 28

Sales and net income climb for local farm co-ops in 2004 . . . . .Nov./Dec. 30

Upswing Continues

Despite loss of Farmland & Agway, revenue, 

income climb for top 100 co-ops . . . . . . . . . . . . . . . . . . . . .March/April 25

Technology

Court of Preference

Minn. co-op helps manufactured home residents . . . . . . . .March/April 23

IT having major impact on farmer-owned ethanol plants . . . . .Nov./Dec. 15

Low-carb, High Hopes

Co-op’s slimmed-down, SunLite tubers may 

beef-up Florida’s potato industry . . . . . . . . . . . . . . . . . . . . . .March/April 8

New Technology: Opportunity and Challenge

Technology changes could turn milk plants into 

‘dairy refineries’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 18

The ultimate R&D challenge: financing new technology . . . . . . .July/Aug. 20

Web-based ag/co-op law library puts valuable 

resources at fingertips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 10

Who you gonna call?

ATTRA output helps low-input 

agriculture expand its market niche . . . . . . . . . . . . . . . . . . . . .May/June 30

Trade 

New tax law includes several cooperative provisions . . . . . . . . . .Jan./Feb. 20
Rural Cooperatives / November/December 2005 43

USDA

Antitrust review reveals strong co-op support 

for Capper-Volstead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 25

Bioenergy, dairy producers among recipients 

of $14.6 million in VAPGs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 9

Expanded database vital for 

future co-op reseach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 25

Diversified rural economy goal for Under Secretary Dorr . . . . .Sept./Oct. 17

Renewable energy: the new frontier . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 39

USDA B&I program supports growth of organic cooperatives .May/June 43

USDA helps Colorado farmers cook up profitability . . . . . . . . . .May/June 9

USDA hurricane-relief teams active on multiple fronts . . . . . . . .Nov./Dec. 5

USDA marks 70th anniversary of landmark rural legislation . . . . .July/Aug. 4

USDA providing $7 million for rural co-op development . . . . .Nov./Dec. 45

USDA Rural Development offers hurricane-relief . . . . . . . . . . .Sept./Oct. 18

VAPG program creates rural jobs, boosts local economies . . .March/April 43

Utility Co-ops 

Charley’s Angels

Co-ops show true colors sending aid to 

Hurricane Charley-ravaged Southern states . . . . . . . . . . . . . . .Jan./Feb. 22

Picking up the pieces

Co-op aid helping other co-ops recover from 

ravages of Hurricane Katrina . . . . . . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 4

Prairie Prosperity

From biofuels to buffalo bullion & zamboni repair, 

Minn. town cooperatives to boost rural business . . . . . . . . . .Nov./Dec. 10

USDA marks 70th anniversary of landmark rural legislation . . . . .July/Aug. 4

Value Added 

Appalachian Spring Cooperative, Treadway, Tenn. . . . . . . . . . . .Nov./Dec. 23

Bioenergy, dairy producers among recipients 

of $14.6 million in VAPGs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 9

Bucking the Trend

Small dairy co-ops targeting niche markets . . . . . . . . . . . . . . .July/Aug. 12

Co-op stock exchange

Why choice of trading rules matters for 

new-generation co-op stockholders . . . . . . . . . . . . . . . . . . . . . .Jan./Feb. 12

Ethanol marketing/contracting . . . . . . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 11

Farmer-owned ethanol and the role of information technology . .Sept./Oct. 8

Farmers Pride Cooperative, 

Newman Grove Branch, Nebraska . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 15

Going with the Grain

New Mexico organic wheat co-op provides 

lift to farmers, rural economy . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 12

Micro co-op finding success in local markets . . . . . . . . . . . . . . . .July/Aug. 16

New Technology: Opportunity and Challenge

Technology changes could turn milk plants 

into ‘dairy refineries’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 18

No loafing

Booming business leads wheat cooperative 

to expand Gerard’s Bakery to East Coast . . . . . . . . . . . . . . . . . .May/June 7

Prairie Prosperity

From biofuels to buffalo bullion & zamboni repair, 

Minn. town cooperatives to boost rural business . . . . . . . . . .Nov./Dec. 10

Running on Empty? 

‘Great ethanol debate’ waged at NCGA forum . . . . . . . . . . . .Sept./Oct. 4

Soybean extruder opens new doors for Kansas co-op . . . . . . . . .May/June 36

The ultimate R&D challenge: financing new technology . . . . . .July/Aug. 20

Trading on Tradition

Heartland Farm Foods uses country tradition 

to market members’ beef . . . . . . . . . . . . . . . . . . . . . . . . . . . .March/April 12

Unflappable

Plant closure forces Virginia poultry cooperative 

launch onto fast-track . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .March/April 14

USDA helps Colorado farmers cook up profitability . . . . . . . . . . .May/June 9

USDA, MSU Extension help Crooked Bow beef take a bow . . . . .Jan./Feb. 7

VAPG program creates rural jobs, boosts local economies . . .March/April 43

AUTHORS 

Abernathy, Donna

Picking up the pieces

Co-op aid helping other co-ops recover from 

ravages of Hurricane Katrina . . . . . . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 4

When the sky falls

Advance planning key to crisis communications . . . . . . . . . . .Sept./Oct. 27

Borst, Alan

Antitrust review reveals strong co-op 

support for Capper-Volstead . . . . . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 25

Boukari, Ellen

Low-carb, High Hopes

Co-op’s slimmed-down, SunLite tubers may 

beef-up Florida’s potato industry . . . . . . . . . . . . . . . . . . . . . .March/April 8

Campbell, Daniel

A Perfect Storm

Farmland trustee sues ex-officers, directors . . . . . . . . . . . .March/April 18

Cream of the CROPP

Demand outstripping supply as CROPP 

organic dairy products go prime time . . . . . . . . . . . . . . . . . . .May/June 15

CoBank CEO: Gear co-ops to consumer demand . . . . . . . . . . . . .Jan./Feb. 28

Expanded database vital for future co-op reseach . . . . . . . . . . .Nov./Dec. 25

Paper or Plastic?

For single-serve milk products, the answer is plastic . . . . . . . . .Jan./Feb. 27

Retail co-ops advised to foster member identification, 

not force conformity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Jan./Feb. 26

Shelter from the storm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 2

Spreading the word . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 2

USDA marks 70th anniversary of landmark rural legislation . . . . .July/Aug. 4

Why wasn’t Farmland reorganized? . . . . . . . . . . . . . . . . . . . . .March/April 21 

Carson, Marlis

Antitrust developments; case against 

mushroom growers’ co-op settled . . . . . . . . . . . . . . . . . . . .March/April 24

Energy Tax Incentives Act includes cooperative provisions . . . .Sept./Oct. 14

Carter, Colin A.

Trading Places

Fortunes of California rice co-ops took opposite trajectories . .May/June 32

Chesnick, David

Measuring top 100 co-op performance . . . . . . . . . . . . . . . . . .March/April 28

Upswing Continues

Despite loss of Farmland & Agway, revenue, i

ncome climb for top 100 co-ops . . . . . . . . . . . . . . . . . . . . . .March/April 25

Ciccone, Janet

Retail co-ops advised for foster member Identification, 

not force conformity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Jan./Feb. 26

Coble, Erica

Trading on Tradition

Heartland Farm Foods uses country tradition 

to market members’ beef . . . . . . . . . . . . . . . . . . . . . . . . . . . .March/April 12

Crooks, Anthony

Ethanol marketing/contracting . . . . . . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 11

Farmer-owned ethanol and the role of information technology . .Sept./Oct. 8

IT having major impact on farmer-owned ethanol plants . . . . .Nov./Dec. 15

Fuel ethanol industry, past & present . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 18

Darby, Paul

Unflappable

Plant closure forces Virginia poultry 

cooperative launch onto fast-track . . . . . . . . . . . . . . . . . . . .March/April 14

Dawson, Angela

Court of Preference

Minn. co-op helps manufactured home residents . . . . . . . .March/April 23
44 November/December 2005 / Rural Cooperatives

DuMont, Amber

When the sky falls

Advance planning key to crisis communications . . . . . . . . . . .Sept./Oct. 27

Dunn, John

Ethanol marketing/contracting . . . . . . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 11

Farmer-owned ethanol and the role of information technology . .Sept./Oct. 8

IT having major impact on farmer-owned ethanol plants . . . . .Nov./Dec. 15

Fuel ethanol industry, past & present . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 18

Ely, Gerald

The Inside Scoop on Outside Help

Outside co-op development specialists play 

crucial role for business launch . . . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 26

Eversull, Eldon

Consolidation, expansion spark growth in co-op feed sales . . . . .July/Aug. 29

Farmer co-op business volumes nears $117 billion . . . . . . . . .March/April 11

Frederick, Donald A.

Antitrust developments; case against 

mushroom growers’ co-op settled . . . . . . . . . . . . . . . . . . . .March/April 24

Energy Tax Incentives Act includes cooperative provisions . . . . .Sept./Oct. 14

Get ready to claim your “QPAI deduction” . . . . . . . . . . . . . . . . .July/Aug. 21

New tax law includes several cooperative provisions . . . . . . . . . .Jan./Feb. 20

Web-based ag/co-op law library puts 

valuable resources at fingertips . . . . . . . . . . . . . . . . . . . . . . . . .May/June 10

Gray, Thomas W.

Local-based, alternative-marketing strategy 

could help save more small farms . . . . . . . . . . . . . . . . . . . . . . .May/June 20

Holland, Steven J.

Co-op stock exchange

Why choice of trading rules matters for 

new-generation co-op stockholders . . . . . . . . . . . . . . . . . . . . . .Jan./Feb. 12

Jensen, Lynn

Producers are natural leaders for rural communities . . . . . . . . .March/April 2

Jorgensen, Nancy

Leaving home?

Reasons vary for co-op conversions; critics remain wary . . . . . .Jan./Feb. 8

Karg, Pamela J.

A Fresh Advantage

Co-ops help small farms market 

produce to high-end restaurants . . . . . . . . . . . . . . . . . . . . . . . .May/June 24

Soybean extruder opens new doors for Dakota co-op . . . . . . . . .May/June 36

Keeling, Jennifer J.

Trading Places

Fortunes of California rice co-ops took opposite trajectories . May/June 32

Kindelspire, Tony

No loafing

Booming business leads wheat cooperative 

to expand Gerard’s Bakery to East Coast . . . . . . . . . . . . . . . . . .May/June 7

King, Robert

Co-op stock exchange

Why choice of trading rules matters for 

new-generation co-op stockholders . . . . . . . . . . . . . . . . . . . . . .Jan./Feb. 12

Lawless, Greg

Taking Stock

Rural food cooperative case studies 

reveal critical retail success factors . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 19

Liebrand, Carolyn

Bucking the Trend

Small dairy co-ops targeting niche markets . . . . . . . . . . . . . . .July/Aug. 12

Hurdles to niche-markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 13

How big are ‘middleman’ profits? . . . . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 15

Ling, Charles

New Technology: Opportunity and Challenge

Technology changes could turn 

milk pants into ‘dairy refineries’ . . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 18

Merlo, Catherine

Flying the coop

Why members leave co-ops and ways to prevent it . . . . . . . . . .Jan./Feb. 4

Going with the Grain

New Mexico organic wheat co-op 

provides lift to farmers, rural economy . . . . . . . . . . . . . . . . . . .May/June 12

Morris, David

Do bigger ethanol plants mean fewer farmer benefits? . . . . . . . .Nov./Dec. 20

Peltier, Jean-Mari

Defending the cornerstone of cooperation . . . . . . . . . . . . . . . . . . .July/Aug. 2

Rotan, Beverly L.

Sales and net income climb for local farm co-ops in 2004 . . . . .Nov./Dec. 30

Reynolds, Anne

Taking Stock

Rural food cooperative case studies reveal 

critical retail success factors . . . . . . . . . . . . . . . . . . . . . . . . . . .Sept./Oct. 19

Steel, William A. “Bill”

Energizing Rural America: How the energy bill helps us all . . . .Nov./Dec. 2

Thomas, Peter J.

Renewable energy: the new frontier . . . . . . . . . . . . . . . . . . . . . . .July/Aug. 39

Rural America’s role in the energy economy . . . . . . . . . . . . . . . . . .Jan./Feb. 2

Turning forest waste into energy . . . . . . . . . . . . . . . . . . . . . . . . .Nov./Dec. 47

USDA B&I program supports growth of organic cooperatives . .May/June 43

USDA energy program promotes ‘cow power’ . . . . . . . . . . . . . .Sept./Oct. 39

VAPG program creates rural jobs, boosts local economies . . .March/April 43

Thompson, Stephen

Charley’s Angels

Co-ops show true colors sending aid to 

Hurricane Charley-ravaged Southern states . . . . . . . . . . . . . . .Jan./Feb. 22

No Shell Game

Oyster co-op hopes to revive Mystic’s faded shellfish industry . July/Aug. 22

Prairie Prosperity

From biofuels to buffalo bullion & zamboni repair, 

Minn. town cooperatives to boost rural business . . . . . . . . . .Nov./Dec. 10

Price crisis prompts potato growers to form national co-op . . .March/April 4

Running on Empty? 

‘Great ethanol debate’ waged at NCGA forum . . . . . . . . . . . .Sept./Oct. 4

Slice of the market

Penns Corner, Tuscarora co-ops target growing 

restaurant trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .May/June 27

Turpin, Judy

Innovation a necessity, not a choice, for 21st century co-ops . . . . .May/June 4

Webb. Tom

Atlantic Tender Beef

Canadian co-ops expand market for home-grown meat . . . . . .July/Aug. 8

Williams, Paul

Who you gonna call?

ATTRA output helps low-input 

agriculture expand its market niche . . . . . . . . . . . . . . . . . . . . .May/June 30

Zeuli, Kimberly

Innovation a necessity, not a choice, for 21st century co-ops . . . .May/June 4

Of Necessity & Invention

Conference shows diversity of responses by co-ops to changing market

conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Jan./Feb. 17

Perils & Pleasures of Partnerships

Key issue of co-ops in business partnerships: 

Who do you trust? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .March/April 30
Rural Cooperatives / November/December 2005 45

SDA Rural Development

has awarded nearly $7.3

million in grants to

cooperative development

centers in 22 states. 

The funds will be used to increase

economic opportunities in rural 

areas by assisting farmers and rural

businesses in developing cooperative

ventures. “Cooperatives allow

individuals and small businesses to

pool their resources, achieve

economies of scale, and develop 

more sophisticated technical and

management skills,” Agriculture

Secretary Mike Johanns said in

announcing the grants. “These

investments will help farmers, ranchers

and rural small businesses obtain the

technical support they need to expand

their businesses.” 

The Rural Cooperative Development Grant Program awards funds on

a competitive basis to nonprofit cooperative development centers, many

associated with institutions of higher

education. These centers provide rural

residents with education and technical

assistance in areas of cooperative start

ups, marketing and management, as

well as other self-help tools. 

In Mississippi, for example, the

Mississippi Association of Cooperatives

will receive funds to help 15-20 cooperatives develop and strengthen services to aid limited-resource producers

and aid other rural residents in developing successful cooperatives. The services provided will include early-stage

technical assistance, director training,

new product evaluation and identification of alternative funding sources. 

Another recipient, the New

Hampshire Community Loan Fund,

has provided technical assistance and

access to capital to the owners of manufactured housing and created a

statewide system that enhances cooperative ownership as a solution to the

problems of owning a home on rented

land. ■

USDA providing $7 million

for rural co-op development 

U

Rural Cooperative Development Grant Recipient List 

State Recipient Funding

AR Arkansas Land and Farm Development Corporation $118,071

AR Community Resources Group $150,000

AZ Arizona State University $271,642

CO Rocky Mountain Farmers Union

Educational & Charitable Found. $300,000

GA Golden Triangle RC&D $294,897

IA Iowa Agriculture Innovation Center $300,000

IL Western Illinois University $287,780

IN Indiana Rural Development Council $182,550

MI Michigan State University $300,000

MN Northcountry Co-op Foundation $300,000

MO Missouri Enterprise Business Assistance Center $300,000

MO Missouri Farmers Union Farm Opportunity Center $300,000

MS Miss. Association of Co-ops $275,000

MT Montana Co-op Develop. Center $300,000

NH New Hampshire Community Loan Fund $300,000

ND North Dakota Association of 

Rural Electrical Cooperatives $300,000

NJ Rutgers, State Univ. of N.J. $300,000

OH Ohio Farmers Union Family Farm Center, Inc. $298,000

OH Ohio State University Research Foundation $293,334

PA Keystone Development Center Inc. $300,000

SD Value-Added Agricultural Development Center $200,000

TX Texas Cooperative Extension $298,416

TX University of Texas-Pan American $228,536

VA Southern States Co-op Foundation $266,783

VA Virginia Foundation for Agriculture, 

Innovation and Rural Sustainability $217,860

WA Northwest Co-op Develop. Center $300,000

WI Co-op Development Services Fund $300,000
46 November/December 2005 / Rural Cooperatives

members, she said, based on work

from 1984. “[USDA] could make a

vital contribution to the cooperative

community and an important contribution to the country by focusing its

research efforts on establishing an

ongoing method to collect reliable data

that measures the economic impact of

cooperatives on rural communities...I

hope that you will consider establishing a research effort that includes all of

the country’s cooperatives, both rural

and urban. It’s been nearly 50 years

since the federal government devoted

resources to collecting basic data on all

types of American cooperatives.”

Chuck Snyder, President

National Cooperative Bank (NCB)

Snyder said that co-op leaders often

tout the many ways their co-ops benefit their communities. “But it’s very

frustrating because we don’t have the

research to back up some of those stories.” To help address this need, NCB

annually produces the Co-op 100, a

listing of the 100 largest cooperatives

by revenue and assets. 

When a cooperative fails, “the

media will often call me and say ‘gee,

does that mean that cooperatives no

longer work?’ And that’s farthest from

the truth. Like most corporations,

cooperatives have life cycles...If you

look at the Fortune 500 list today, compare it with that of 40 years ago, you’ll

see the list is dramatically different;

there’s nothing wrong with change.

“We need some basic research

which shows the vibrancy of the co-op

sector, as well as some of the needs for

improvements. We need to understand

the role cooperatives play as direct

employers....We need to understand

the role of cooperatives in developing

and sustaining their immediate communities, with a special focus on the

differential effect in retaining earnings

within those communities.” ■

Expanded database vital for future co-op reseach continued from page 28
Rural Cooperatives / November/December 2005 47

By Peter Thomas, Administrator

Business and Co-op Programs

USDA Rural Development

In the last issue of Rural Cooperatives, 

I discussed some of the new energy

programs available at USDA Rural

Development. One of these programs,

the Renewable Energy Systems and

Energy Efficiency Improvements

Program (also know as the Section

9006 Program), was established by the

2002 Farm Bill. This program is part

of the larger initiative by the Bush

Administration to focus on the country’s energy needs with a new emphasis

on renewable energy. 

We have all witnessed the devastation as a result of Hurricanes Katrina

and Rita and the effect the aftermath

has had on energy costs. This recent

tragedy highlights the need for a new

energy policy. 

Although the Section 9006 Program

has been making grants for the past

two years, this year a guaranteed loan

program has been added. Before the

end of the fiscal year, two projects

qualified and received loans. One of

these is a 20 megawatt, wood- fired

biomass plant purchased, refurbished

and relocated to a site leased by Abitibi

Consolidated. The new plant, 17 miles

west of Snowflake, Ariz., will be adjacent to an existing paper mill and will

be fueled by a combination of paper

fiber from the paper mill’s recycling

operation and wood waste obtained

through contracts with the USDA

Forest Service and other local milling

operations. 

The partnership with the Forest

Service is part of the Healthy Forest

Initiative. The power output from the

facility will be sold to Salt River

Project and Arizona Public Service,

two of Arizona’s utility companies. The

parties have entered into two, 10–year

power purchase agreements and will

purchase 10 megawatts at 7.5 cents per

kilowatt hour. 

For this $23 million project, a

local bank submitted an application for

$16 million to USDA Rural Development. The Section 9006 program is

only authorized to fund up to 50 percent of the eligible project costs. To

make the project a reality, a $10-million loan was guaranteed through the

Section 9006 program while a $6-million loan was guaranteed through

USDA’s Business & Industry (B&I)

Guaranteed Loan program. The balance was provided by the borrower.

In addition to producing renewable energy, there is another benefit to

the community. About 460,000 acres of

ponderosa pine trees from the 2002

Rodeo-Chediski Fire in northern

Arizona and timber from local overgrown forests will be burned by the

plant. Overgrown forests are the result

of a forest having too many small

diameter trees per acre. The extended

drought in the region has created a

similar environment to the one they

faced before the forest fires in 2002.

This new plant will provide a use for

the unused trees and the timber from

the overgrown forests, thus alleviating

a potential fire hazard. 

Finally, the project will save existing

jobs and create new ones in the local

community. The positive impacts are

endless.

USDA Rural Development will

continue to look for ways to provide

funding for projects which have a positive financial impact on rural America

and provide new sources of energy.

Now, more then ever, we all need to

find ways to both conserve and use

new sources of energy. This is

President Bush’s charge, and I am

proud of the work Rural Development

is doing to answer the call. ■

Turning forest waste into energy

A biomass powerplant is being built adjacent to this papermill in Arizona. The biomass

plant will produce 20 megawatts of electricity from mill and forest wastes. 

INSIDE RURAL DEVELOPMENT
48 November/December 2005 / Rural Cooperatives

United States

Department of Agriculture

Washington, DC 20250

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