Rural

COOPERATIVES COOPERATIVES

USDA / Rural Development September/October 2008

Tr a w l i n g f o r a s u s t a i n a b l e f u t u r e

Page 4
This issue of Rural Cooperatives

contains some numbers that merit your

attention. Here is a preview: 

• $146 billion — The total sales racked

up in 2007 by U.S. farm, ranch and

fishery co-ops (see page 19), easily

setting a new record. For those

pundits and “coffee-shop economists”

who predicted that the collapse of

Farmland Industries heralded the end

of the nation’s ag co-op sector, please

take note!

• $3.8 billion — The record net income

co-ops enjoyed in 2007 (see page 19).

Much of this was paid to members as

cash patronage or (in the case of

federated co-ops) to local

cooperatives.

Where do we get these numbers?

From USDA’s annual co-op survey.

Co-op managers and accountants put

a lot of time and effort into filling out

those surveys every year — for which

we thank you! The numbers

generated by the survey are used in

many ways, not the least of which is to

show how critically important co-ops

are to the nation’s economic lifeblood.

• $100 million — The amount of money

the fresh tomato industry is estimated

to have lost when tomatoes were

erroneously blamed for the nation’s

largest outbreak of food poisoning in a

decade (see page 13). One hesitates to

become a Monday morning

quarterback in these situations,

because there is no doubt that all

involved were trying their utmost to

get the mystery solved as quickly as

possible. But clearly, government and

industry must resolve to work even

more closely together to make system

improvements needed to avoid a

repeat scenario.

• 100 — The number of years since the

Dairylea co-op was formed (see page

16). Dairylea reached this milestone in

part by reinventing itself into a multifaceted member services cooperative

that meets the needs of its dairy

farmers in many ways beyond

marketing milk. This is a good

example of why so many co-ops are

reaching their 75th or 100th

anniversaries. In the past year alone,

we’ve run similar anniversary salutes

to Aurora Cooperative (100), West

Central (75), and Fruit Growers

Supply (100) — and there are more to

come. Their longevity bespeaks to the

durability of the cooperative business

structure. Well managed co-ops that

adjust to changes in the marketplace

and keep their fingers on the pulse of

their members’ needs can, and will,

succeed. 

• 75 — Speaking of anniversaries, we

conclude the 75th anniversary

retrospective of this magazine with

excerpts from articles that ran in our

pages between 1970 and 2008. From

the farm credit crisis to the ramping

up of the renewable fuels industry, it

has been an eventful 38 years for coops and their members. 

• 11 — Last, but certainly not least,

the number of names on the

seaman’s memorial outside Port

Clyde, Maine, commemorating

local fishermen lost at sea while

helping to feed the nation. A few

of their stories are recounted in a

sidebar (page 6) to this month’s

cover story about a new Maine

fishing co-op. That so many good

men have been lost from just one

small community while harvesting

the sea does indeed give pause. 

I’d wager most farming and ranching

counties around the nation could erect

similar memorials with the names of

hometown farmers and ranchers killed

or maimed over the years while

producing food, fiber and energy. 

In my five years as a newspaper farm

editor in California, I recall twice

running articles about local dairymen

crushed to death by Holstein bulls, a

cotton farmer killed when an irrigation

pipe he was hauling hit a power line,

and a farm worker killed while pruning

trees. 

And let’s not forget utility co-op line

crew workers who risk life and limb

every time they go up in a bucket to

restore power or extend new service

lines. 

As we observe Co-op Month in

October, let’s do so with a salute to the

men and women who produce our food,

on land and at sea, and those who keep

the power on so that we can cook it.

They are the ones who risk it all to keep

our co-ops, and our nation, running.

— By Dan Campbell, editor ■

C O M M E N T A R Y

Stories behind

the numbers

2 September/October / Rural Cooperatives
Rural Cooperatives / September/October 2008 3

Rural Cooperatives (1088-8845) is published

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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,

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To file a complaint of discrimination, write to USDA,

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(800) 795-3272 (voice), or (202) 720-6382 (TDD). USDA

is an equal opportunity provider and employer.

Ed Schafer, Secretary of Agriculture

Thomas C. Dorr, Under Secretary,

USDA Rural Development

Dan Campbell, Editor

Vision Integrated Marketing/KOTA, Design

Have a cooperative-related question?

Call (202) 720-6483, or

Fax (202) 720-4641

This publication was printed with vegetable oil-based ink.

Rural COOPERATIVES COOPERATIVES

September/October 2008 Volume 75 Number 5

p. 4

p. 13

p. 16

p. 20

O n t h e C o v e r :

On the cover: Landing a load of shrimp on deck off the coast

of Maine. The Midcoast Fishermen’s Cooperative is adopting

sustainable fishing methods and is shifting its focus from the

commodity seafood market to a brand-name strategy. Photo by

Kim Libby, courtesy Midcoast Fishermen’s Co-op 

F E A T U R E S 

4 Charting a New Course

Community-supported fishery project may help Maine fishing co-op stay afloat 

By Dan Campbell

10 Farmers, Co-ops and Local Food Marketing

By Alan Borst

13 Feeling the Squeeze

Tomato growers take big hit in food scare

By Stephen Thompson

16 Dairylea: A Century of Cooperation

Track record shows ability to adapt in tumultuous times 

19 Co-ops set new records for sales, income 

Business volume tops $146 billion in 2007 

20 75 Years of Chronicling Co-ops 

Magazine pages reflect co-op progress, challenges, opportunities 

By Dan Campbell

39 Calling All Co-ops! 

Co-ops urged to get involved in Co-op Month ‘08 

By Carissa Heckathorn

D E P A R T M E N T S

2 COMMENTARY

34 NEWSL INE

40 CO-OP DEVELOPMENT ACTION
By Dan Campbell, Editor

hirty-two years ago,

when Glen Libby was

beginning his career as

a fisherman, the

haddock, flounder, cod

and other groundfish he

sought could usually be caught along

the shore near his home in Port Clyde,

Maine. A typical day of fishing involved

steaming out in his trawler as the sun

was rising, dragging his nets along the

sea floor all day, then arriving back in

port to unload his catch and make the

short walk home for dinner. 

That now all seems like a distant

dream, as the fishery that is his

lifeblood and which helps to fuel the

local economy has been drastically

altered by past fishing practices and —

possibly — by environmental factors.

Instead of a day of fishing close to

home, a typical voyage now takes him

25 to 50 miles out to sea for three or

four days at a time. 

With the price of diesel fuel and

some other supplies soaring, and tighter

fishing regulations, this pattern of

fishing may not be sustainable much

longer. At $4.25 per gallon in June (up

from about $2 per gallon just two years

ago), much of his profit is going into

the fuel tanks of his boat and the truck

that hauls the catch to the fish auction

in Portland, three hours down the

coast. 

At times, it has seemed as if the end

could be near for this way of life that

the fishermen love, and which is such a

key part of the culture and economy of

coastal Maine.

But Libby and 15 of his fellow

fishermen formed the Midcoast

Fishermen’s Cooperative nearly two

years ago to try to save their industry

and way of life. They now have a new

vision for the future, which centers on

rehabilitating the local fishery by

catching fewer fish, more selectively. 

This goes hand-in-hand with a new

marketing plan to seek higher prices for

the co-op’s Port Clyde Fresh Catchbrand fish, sold directly to restaurants

and to local consumers through a

community-supported fishery, or CSF

(the aquatic version of communitysupported agriculture, or CSA). About

1,500 CSAs have been organized in the

United States since the movement

began in the late 1980s, but Port Clyde

is one of the first CSFs in the nation. 

Restoring the fishery

“Our whole project is geared toward

somehow getting the fish back up along

the shore to the traditional spawning

grounds,” says Libby, gesturing toward

the inlet, where moored fishing and

pleasure craft bob serenely on a soft

summer day, the cry of laughing gulls

piercing the air. 

“We are increasing the selectivity of

the gear we use to leave juveniles on the

bottom to grow and reproduce — just

not bring them up to the surface, where

most of them won’t survive,” explains

Libby, the co-op president. Using

lighter nets with a wider mesh will not

only be more selective in what is

4 September/October / Rural Cooperatives

T

Community-supported fishery project 

Community-supported fishery project 

Charting a New Course Charting a New Course

USDA graphic by Stephen Thompson 
snagged, but they will have less impact

on the habitat. By exerting less drag,

they also reduce fuel consumption. 

“We’re basically trying to change

people’s fishing practices to have a

beneficial impact on the resource,”

Libby continues. “Marketing for a

higher price allows us to do that; then

we won’t need to fully load the boat to

keep going. That has always been the

model in the past: fill your boat up,

then sell them cheap as a commodity.”

That fishing model has not been

good for the fishery, and it has not been

good for Maine’s fishermen, says Laura

Kramar, the co-op’s marketing

coordinator and its only fulltime

employee. She is working under a

contract from the Island Institute, a

nonprofit rural assistance agency. 

“If this new co-op works in Port

Clyde, the hope is that it will become a

model that can be replicated elsewhere

along the coast,” Kramar says. “This is

the only non-island group the Institute

is currently working with. But the issues

facing Port Clyde are very similar to

those we deal with on the islands, where

we’re trying to help rural communities

that depend on the sea.” 

“If enough of us start doing this, it

could have a significant impact on the

resource. Then we wouldn’t need so

much government regulation,” adds

Libby. Providing

incentives for people to

take voluntary action

almost always nets

better results than do

regulations, he notes.

Co-op fishermen

are taking extra steps to

improve their product

quality. When fish are

landed on deck, they

are first packed in

plastic tubs with ice and

seawater before going into the ship’s

hold, which contains still more ice to

keep the catch chilled. 

“This process has been proven to

reduce bacteria counts,” Libby says.

“Instead of putting hot fish off deck

down there, you are putting ice-cold

fish down there. It really makes a

difference when you are at sea for

several days.” 

The market seems to be coming

around to the co-op’s product, Kramar

says. “It’s not hard to hook them when

your product is wild-caught fish,

harvested in an environmentally

sustainable manner, with a qualityassurance program to back up the

Rural Cooperatives / September/October 2008 5

A co-op member’s boat at dock in Port Clyde, home to the last groundfishing fleet on Maine’s midcoast

area. The town’s general store meets the needs of local residents and summer tourists. USDA photo by

Dan Campbell

may help Maine fishing co-op stay afloat 

may help Maine fishing co-op stay afloat 
sanitation end of things. That’s a

powerful selling tool.”

Kramar says she loves the job. “It

can get a little crazy at times, but

everybody keeps fighting the good

fight. I wake up every day excited to be

working with this co-op.” 

Changing and saving a legacy

“We ran the boats hard in the old

days — harder than we should have,”

says co-op member Randy Cushman as

he stacks plastic fish tubs on the dock.

“I wish we would have done things

differently,” he confides, referring to

the damage to the fishery caused by

many years of intense, no-limit fishing.

The fishing industry here is now

strictly regulated. Permits allow only 48

days on the water each summer for

groundfishing. Most co-op members,

however, supplement their income by

fishing for scallops in the fall, then

switching to shrimp after Dec. 1. 

“It’s a bigger struggle every year, and

it’s been especially bad this year due to

oil prices,” says Cushman, a fourthgeneration Maine fisherman. His three

brothers are also fishermen. “This coop is the only thing that is going to

keep us afloat.”

Port Clyde, Cushman notes, is the

second biggest fishing port, by volume,

in Maine. “But we’re not all that big, so

that gives you an idea of where the

industry has gone,” Cushman says. 

In 1995, there were about 460 active

commercial fishing permits in the state,

he notes. Now there are only about 70.

6 September/October / Rural Cooperatives

For those inclined to take for

granted the fish on their dinner plate

without ever thinking of the hard

work and sacrifice that put it there, a

short trip just a half mile or so south

of Port Clyde, Maine, is in order. 

There, etched on a slab of

polished black granite overlooking

the sea, is a portrait of Gary

Thorbjornson. He stands at the helm

of his fishing boat, face to face with

the mighty North Atlantic. One can

sense his eager anticipation of nets

brimming with haddock as he steers

out into the open sea. 

Thorbjornson never made it

home from a voyage about four years

ago. He was skippering an older boat

that started taking on water in rough

seas. He called some fellow

fishermen and the Coast Guard for

help and had gone below deck to get his survival suit. That’s

when a freak wave hit the boat, rolling it over and trapping

Thorbjornson below deck. 

The other two crew members, who had been on deck,

survived by sharing one survival suit (which provides floatation

and insulation). 

“Fortunately, Gary had managed to get out a May Day call,

and the Coast Guard saved his son and a friend,” says Gary

Libby, also a co-op fisherman and the brother of co-op

President Glen Libby. “Now they require you to keep your

survival gear in the wheelhouse.”

On the other side of the memorial are two lists of names

etched in the stone — 11 local fishermen lost at sea. “These

are the lobster boat guys, and these are the dragger guys,”

says retired fisherman Roger Libby (father of Gary and Glen) as

he points to the names, many of whom he knew and worked

with over the years. “There’s space left for more names, but

we hope we’ll never have to add to it.” 

The most recent addition is James Weaver, another Port

Clyde fisherman who died at sea about two and half years ago.

“It was fall, the last trip of the year, and they had probably

gone out further than they should,” says Gary. 

“They had a big bag of fish on board, and a wave hit them

just right,” Roger recalls. “That was it — the boat rolled over

Danger, risk part of fishing trade
The Port Clyde co-op is the last

remaining groundfishing fleet in the

Midcoast region of Maine.

For every day spent at sea fishing,

there is at least one day of boat

maintenance needed. In the old days,

most maintenance would be hired out.

But with profits down and restrictions

limiting days at sea, most boat owners

have to do their own maintenance,

Cushman says. 

“We aren’t in it for the money,” he

continues. “If you are, you’re in the

wrong business. When I’m on the

water, I’m in my element. I love the

independence — being your own boss.

But you’ve still got to make a living.”

The economics of fishing have

driven some Maine fishermen to

relocate down the coast, to New

Bedford, Mass., where state law allows

them to harvest lobsters in their fish

nets at certain times of year. “State law

in Maine prohibits that,” says Libby.

“In tough times, if you are still selling

fish for 40 cents a pound, you need a

supplement. Lobsters provide that to

these guys, so that’s why they left.”

Co-op members, however, don’t

want to leave Maine. “We want to keep

fishing in Port Clyde,” Libby stresses.

“We want the future to be here, even

after we’re gone.” 

How the CSF works

Only a small percent of the co-op’s

catch is currently being sold through

the CSF or directly to restaurants. Most

Rural Cooperatives / September/October 2008 7

in cold water.” Weaver never

got out.

The only other crew

member, Chris Yattaw, managed to climb into a life raft that

surfaced, but he had no survival suit. He was in the water from

about 1 p.m. until 11 p.m. Luckily, he was spotted by another

fishing boat that just happened to come across him in the dark,

otherwise he might have died as well. 

“Chris is doing plumbing work now; says he’ll never go

back to sea,” Gary says. “I don’t blame him, after something

like that.” 

Most fishermen have had close calls at sea. 

Co-op member Randy Cushman says one of his worst

experiences came with his then 13-year-old son, Nathaniel, on

board. Nathaniel said he wanted to be a swordfisherman when

he grew up, even after seeing “The Perfect Storm,” a movie

about a New England fishing boat lost in a horrendous storm,

Cushman recalls. “But up until then, he’d only been out with

me on good days.”

About a week after seeing the movie, Nathaniel

experienced fishing on an angry sea. 

“We were fighting 40- to 50-knot easterly winds, blowing

in the wrong direction. I didn’t know if we were going to make

it in.” Then the boat’s transmission broke and it was drifting

toward Old Cilley Ledge, a

dangerous tidal ledge. 

“We were less than half

a mile from that ledge —

drifting sideways toward it

at 3.8 knots. I’m on the radio

making calls, telling my son to get in his

survival suit — which he had been

trained to do. But he froze up on me.”

Randy’s brother, Michael, had to help

the boy into the suit.

“When I realized the anchor wasn’t

going to grab, I tried reverse gear, and

it took. I had to go full throttle, wide

open in reverse into 15-foot seas, which were breaking over

the top of us.”

They got home, but that experience was a life-changing

event for Nathaniel. 

“That tipped the scales for him,” Cushman says. The

eighth grader decided this fishing experience “was perfect

enough for him.” Today, Nathaniel is the supervisor of Harbor

Schools, a home for underprivileged youth, and is working on

his Master’s degree. He has never again gone sea fishing. 

The seaman’s memorial is just a stone’s throw from the

Marshal Point Lighthouse, established in 1834. The lighthouse

is seen in the 1994 film “Forest Gump.” In the film, Gump

(played by Tom Hanks) ends a cross-country run by jogging out

to touch the lighthouse, then turns around and heads back

again. 

The film has attracted a new wave of tourists, many of

whom wind up making the short stroll over to the seaman’s

monument. Hopefully, some of them leave with a better

appreciation of the side-serving of risk that comes with every

seafood dinner. 

— By Dan Campbell

The seaman's memorial at Port Clyde honors

the memory of fishermen and lobstermen lost

at sea, including Gary Thorbjornson (left).

Visiting here is Kathleen Starrs, of Cushing,

Maine. The memorial neighbors the Marshal

Point Lighthouse. USDA photos by Dan

Campbell
of it is still trucked to

the fish auction in

Portland. But the

direct-marketing strategy is still in its

infancy, and members are encouraged

by the progress to date. 

Community members buy shares in

the Port Clyde CSF, which entitles

them to a fish delivery each week. The

co-op has been approached by potential

CSF members from other parts of the

state. But the logistics have been

prohibitive so far. For now, the goal is

to build up the local CSF market to

where it will support three or four

delivery days per week (right now there

are just two delivery days).

CSF members get whole fish, which

they have learned to fillet themselves.

“A lost art revived!” Libby says.

The Good Tern Natural Food Coop in Rockland (about 15 miles from

Port Clyde) doesn’t deal in fresh fish,

but it is showing its support for the

fishermen’s co-op by allowing the

store’s parking lot to be used as the

pickup spot for CSF deliveries. 

“We support local agriculture, and

we are trying to extend that support to

the local fishing industry,” says store

manager Tim Sullivan. “And we

naturally hope that some of the

fishermen’s co-op customers will also

come in and buy some stuff that goes

good with fish, like fresh corn on the

cob.” 

Sally Perkins, of Warren, Maine, and

a friend went in together to buy a halfshare in the CSF, and they trade weeks

picking up their delivery at the Good

Tern.

“So far we’ve had haddock, cod and

flounder,” says Perkins. “Last week I

got two haddock; I filleted one and

baked the other — it was delicious! 

“The CSF is wonderful,” she

continues. “I really appreciate that this

fish wasn’t trucked all over the nation,

burning up carbon fuels, and that I’m

supporting the local fishing industry.” 

The co-op encourages restaurants to

put cards on their tables touting that

they serve Port Clyde-caught fresh fish

and, thereby, support the home-town

fishing fleet. “We’re hearing more

reports of people going into restaurants

and asking for Port Clyde Fresh

Catch,” says Kramar. 

Another major marketing goal is to

get better prices for their

shrimp by building the domestic

market. Virtually all the shrimp is

currently sold for export, where prices

have been very depressed. 

“North Atlantic cold-water shrimp

are delicious, and they are not full of

antibiotics,” Libby says. A big

marketing hurdle is that most

Americans insist on over-cooking them,

which makes the shrimp too soft and

ruins the flavor. 

“For perfect shrimp, you just cook

them for a minute or two, tasting for

the desired texture,” Libby says. “Then

immediately cool them with ice water;

otherwise, they continue to cook and

turn soft.” 

Fishing is also good for Port Clyde’s

other main industry: tourism.

“The visitors want fresh seafood and

they want to see the fishing boats. And

they seem to like hearing us talk,” says

Libby, smiling at the thought that

tourists love those colorful Maine

accents.

There can be occasional aggravation

if tourists — or “people from away,” as

the locals sometimes refer to them —

get in the way down at the docks. But

the fishermen grin and bear it, knowing

8 September/October / Rural Cooperatives
how important the tourist trade is to

their town, Libby says. “And we make

up for it in the winter, when you can

take a nap in the road and not worry

about getting run over.”

Legislation sparked

co-op formation

The roots of the co-op go back

several years to a proposed state law:

Amendment 16 to the Groundfish Plan.

“We [co-op members] all supported the

basic concept of the amendment, which

was to come up with specific answers

for specific coastal areas,” Libby says.

“The current law errs by painting

everything with one broad brush. It

homogenizes the whole fishery, rather

than focusing on specific areas of

depletion.” 

Port Clyde fishermen first formed

the Midcoast Fishermen’s Assoc. (MFA)

in 2006 to represent them as a group at

state hearings. “We formed MFA to

bring a united plan to the table,” Libby

recalls. “It turned into a real battle, and

in the end it got tabled. But it will be

coming back soon as Amendment 17,

which will again include area-specific

management plans.”

The MFA in turn soon spawned the

co-op when members saw that they

could also benefit from joint action on

the marketing front.

Coming up with a perfect system to

regulate the industry is indeed a

slippery fish. But MFA anticipates that

there will be a new licensing system

based on fishing-sector quotas that are

applicable to specific coastal areas.

“The trouble with a sector system,”

Libby says, “is that the monitoring costs

are higher; you must keep track of every

fish that comes over the dock and every

fish you throw back. That could prove

to be prohibitively expensive. I think at

the start they’ll wind up going to some

type of fleet discard average, until the

cost issue can be resolved.” 

Such a system will still not be as

effective as voluntarily getting people to

alter their behavior and simply not fish

in areas with high discard rates, he

believes. This ties back to the trouble

with the current

licensing system,

based on allowed days at sea. 

“Under that system, you can’t afford

to go to sea and look around for an area

that has a lower discard rate,” Libby

says. “If I steam four hours to get

somewhere, the clock is ticking, and I

can’t afford to steam another four

hours. I have to fish there. Under the

quota system, the clock is not ticking,

so you can be much more selective

about where you fish.”

Environmental theories

Clouding the waters further are

various theories about environmental

factors — such as global warming and

pollution levels — that could be

impacting the fishery. 

Fishermen take these theories, and

the predictions of some biologists, with

a grain of sea salt. 

“Take haddock, for example,” Libby

says. “Ten years ago, we caught one

haddock all year. A top scientist

working for the state said ‘that’s it,

there will never be any more haddock –

they are commercially extinct.’ Now

there are so many haddock that there is

no limit on them.

“So they can say all kinds of things,

but the situation can turn around

quickly and for reasons the scientists

don’t fully understand. A few years ago

there weren’t many cod. Now we’re

seeing a lot more, so the cod

regulations are lightening up. In my

mind, I wonder if the regulations really

had that much of an impact.” 

The biggest concern around Port

Clyde at present is the flounder fishery.

“But that could turnaround the same

way,” Libby says. 

One worry members can soon shed

is the condition of the dock they tie up

at. This was the last summer using the

old dock, which has needed repairs for

years, but which Libby says the owner

would not agree to make. 

The co-op boats will soon instead be

tying up at a brand new dock just 100

yards away. The construction was

funded through the state’s working

waterfront program and two private

foundations, which aim to help to

preserve sea access for the fishing

industry.

“Of around 5,300 miles of coastline

in Maine, only 20 miles are left that

provide access for fishing operations

like this,” Libby explains. “And part of

that is in private ownership, so actual

public ownership of access to the water

is less than 20 miles.”

The fishermen’s co-op will share the

new dock with the local lobsterman’s

co-op (called the Port Clyde

Fishermen’s Cooperative). 

Rural Cooperatives / September/October 2008 9

continued on page 41

“We ran the boats hard in the old days, harder

than we should have,” says co-op member Randy

Cushman. Photo by Dan Campbell. Facing page

(from left): Glen Libby keeps an eye on his nets;

Landing a haul on deck (using the older nets

here); making a community-supported fishery

delivery. Photos by Kim Libby, courtesy Midcoast

Fishermen’s Cooperative.
10 September/October / Rural Cooperatives

By Alan Borst

Agricultural Economist

USDA Rural Development 

erhaps the world food market won’t be quite

as global as some have been saying.

Increasing U.S. consumer demand for locally

produced foods is growing steadily, the trend

being driven by a number of factors. These

include: food safety issues and the corresponding increased

interest in foods perceived to be more healthful; a greater

desire to preserve local cultivars or livestock (some of which

may not be suitable for commercial shipping or have the

yields necessary to serve distant markets); greater concern for

the environment and an increased understanding of the

importance of maintaining small, sustainable farms on the

fringes of urban environments. 

Increasing numbers of farmers are selling their crops

through local food marketing outlets. The Food Marketing

Institute estimates that 68 percent of consumers now

purchase locally grown food at least some of the time.

However, growth in the demand for local food has been

limited by supply issues. 

From local to international sourcing 

Over the past half-century, the scale of U.S. food

marketing channels has evolved from mostly local, to

regional, to national and, eventually, international suppliers.

After decades of concentration and consolidation in the food

sector, huge infrastructural gaps have emerged to constrain

the potential of local food systems. 

Marketing channels and facilities for processing produce,

livestock and dairy products used to be more decentralized

and local. Now they are controlled by larger and fewer

agribusinesses.

Largely because of this infrastructural gap, local food

products tend to be more expensive than conventional foods.

Under the current agribusiness system, even foods grown in

local areas can end up traveling many miles through the

transportation network to reach processing plants and

distribution centers before returning to retailers in the local

area. However, skyrocketing fuel and energy prices have the

potential to narrow this price margin. 

Traditional local food outlets — such as farmers markets

and consumer-owned food co-ops — have seen considerable

recent growth. According to USDA, farmers’ markets in the

United States have grown from 1,755 in 1994 to 4,385 in

2006. The National Cooperative Business Association

estimates there are more than 500 food cooperatives in

America, many of which were started in only the past few

years. 

Food buying clubs — groups of people who place

warehouse orders together for supplies — are being formed

across the country. United Natural Foods, the largest natural

food distributor in the country — serves more than 3,000

buying clubs in 34 states. Farm stands and “pick-your-own”

P
Rural Cooperatives / September/October 2008 11

farms are also common direct-to-consumer marketing

outlets.

Co-ops leading the way

Food co-ops were at the front of the organic food

movement in the 1990s and are again leading the buy-local

movement today. The National Cooperative Grocers

Association and more than 70 of its members participated in

the Eat Local America Challenge this summer, under which

consumers were called upon to make 80 percent of their diet

local for a set period. The definition of local and the period

of time were left to the individual food co-ops.

One service that cooperatives have provided local food

growers is certification. As with organics, consumers want to

know that foods marketed as local are actually grown locally.

The Marquette Food Co-op in Michigan has created its own

certification program, called Co-op Preferred, which will

involve a farm visit and documentation from the farmer on

their production conditions, commitment to the environment

and community activities. 

The Montana Sustainable Growers Union is operating

under a different model. It provides an alternative to formal

certification for its producer members by directly promoting

relationships and trust between growers and customers.

Scale is another problem that local growers have been able

to deal with through cooperation. Restaurants, retailers and

other large buyers seeking local foods cannot economically

deal with large numbers of small farmers who do not have

the predictable and large volumes that they are seeking. 

When small growers have organized a cooperative

distributor, they have been able to secure access to some of

these large and important markets. They have also been able

to more effectively negotiate price and terms of sale.

Farmers markets & CSAs

Many farmers markets have long been cooperatively

`owned by growers. What is new is cooperation among

farmers markets. 

Several farmers markets around Ohio recently organized

the Farmer’s Market Management Network Inc. Goals

include promotion of networking among farmer market

members, potential joint marketing ventures, resource

sharing and training opportunities.

In addition to these traditional channels, local foods have

been increasingly marketed under more recently developed

business models, such as community supported agriculture

(CSA) farm operations, restaurants and institutional food

service, virtual farmers market Websites and even regular

supermarkets.

While the farmer is managing crop production, consumermembers support the costs of the farm and share the risk and

bounty of variable harvests. CSA membership is based on

shares of the harvest. Members subscribe or underwrite the

harvest for the season in advance. 

Every CSA farm has its own season, crops, level of social

activities and share prices. According to the Rodale Institute,

Facing page: Steve Pincus of Tipi Produce,

Evansville, Wis., is a member of Home Grown

Wisconsin, a co-op of certified organic farmers.

Below: Talking about fresh produce at the

Sacramento Natural Foods Co-op in California.

Photos courtesy pictured co-ops 
the first CSA farms in the nation were started in New

England in 1986. Local Harvest, a leading Website of the

“buy local” movement, estimates that there are currently

about 1,500 CSAs in the nation, of which 1,187 are currently

listed in their directory.

Targeting restaurants

Another innovation in local food marketing has been

marketing to restaurants, some of which use ingredients from

local producers. 

A good source for information on restaurants that offer

local foods is the Chefs Collaborative, a national network of

more than 1,000 members of the food community who

promote sustainable cuisine. Founded in 1993, the Chefs

Collaborative provides its members with tools for running

economically healthy, sustainable food-service businesses and

making environmentally sound purchasing decisions. 

The collaborative publishes a guide, “The Farmer-Chef

Connection,” to promote farmer/restaurant collaboration. Its

“Guide to Good Eating” helps diners locate chefs in their

network.

Home Grown Wisconsin is a cooperative of certifiedorganic family farms throughout southern Wisconsin. The

co-op was founded in 1996 with the mission of delivering

local produce to restaurants in Chicago, Madison and

Milwaukee. The cooperative has grown steadily, developing

strong relationships with local chefs, farmers, schools and

food activists. 

Since 2003, the co-op has provided a successful and

flourishing CSA program for residents of Chicago and its

surrounding suburbs. Farmer-members grow fruits and

vegetables for weekly delivery to 12 pick-up locations in

Chicago.

The Midcoast Fishermen’s Cooperative in Port Clyde,

Maine, (see cover story, page 4) formed in April 2006 and has

adapted the CSA model for seafood. It is using more

environmentally friendly fishing practices and providing the

freshest, highest quality groundfish to local restaurants and

consumers with its Port Clyde Fresh Catch. 

Supermarkets adding local option 

Some supermarkets and grocery stores have begun to offer

a limited selection of locally grown foods. This has offered

consumers a convenient way to purchase local items while

doing their regular shopping. 

There has also been some active promotion of these local

food sections. This has mostly occurred within the past

decade. 

A good example of farmers organizing a cooperative to

establish their own marketing infrastructure recently

occurred in Missouri. The Sappington Farmers’ Market is

a Missouri farmer-owned supermarket that is owned by

Farm to Family Naturally LLC, a Missouri Farmers’

Union Cooperative effort. This supermarket offers food

products that are locally grown by farmer-members. 

An important innovation for marketing local foods is

the “virtual farmers’ market” business model. Local

farmers and consumers both pay a fee and join as

members. Producer members post what crops they have

for sale on the co-op’s Website, and consumer-members

place orders for what they want to buy at the Website.

Growers then bring the produce to one or more

designated distribution centers for consumer pickup.

The Oklahoma Food Cooperative was founded five years

ago as the first virtual farmers market. It only sells products

grown or made in Oklahoma. It generally has more than

2,600 different items available each month. 

As of June 2008, the co-op has nearly 2,000 members, 125

of whom are producers. The co-op is ringing up $61,000 -

$65,000 each month in sales. 

Variations of this model have been adopted across the

country, with similar cooperatives already organized in

Nebraska, Texas, Michigan, Idaho and Kansas. Others are

being planned in Iowa, Massachusetts and Ontario. 

The buy-local food movement is rapidly growing. It is

energized by both the family farmers that supply it and the

passionate consumers who buy into it. Local food marketing

channels have depended upon widespread cooperation among

growers and buyers, and it appears certain they will continue

to do so in the future. ■

12 September/October / Rural Cooperatives

The children of Steve Pincus check on some Brussels

sprouts, soon to be marketed by Home Grown Wisconsin.

Photo courtesy Home Grown Wisconsin
By Stephen A. Thompson

Assistant Editor

he first signs of trouble

appeared in mid April, when

people began coming down with

salmonella infections in New

Mexico and Texas. Of the more

than 1,400 people across the country who

eventually became sick from a strain of

bacterium known as Salmonella Saintpaul, at

least 273 people were hospitalized. 

On June 7, the U.S. Food and Drug

Administration (FDA) and the Centers for

Disease Control and Prevention (CDC) pointed

the finger at contaminated tomatoes as the

possible culprit. In a press conference June 13,

the FDA, which is responsible for dealing with

threats to public health using information

provided by the CDC, mentioned certain

varieties of tomatoes grown in southern and

central Florida as possible vectors of the disease.

Although three days later the agency said that

tomatoes then available to consumers were not

Rural Cooperatives / September/October 2008 13

Feeling the Squeeze

Tomato growers take big hit in food scare

T

Like many mysteries, investigators had a difficult time tracking down the

culprit responsible for the food poisoning suffered by more than 1,400 people

last summer. The first suspect named was fresh tomatoes. Consumers

stampeded away from the fruit, including tomatoes that were regarded as

safe to eat, resulting in huge losses to the tomato industry. Leaders of tomato

cooperatives based in Florida and California say steps must be taken to

reduce the possibility of such calamities for agriculture in the future.

USDA/ARS photo
14 September/October / Rural Cooperatives

from the same places suspected as sources of the

infection, the price of fresh tomatoes plummeted.

Huge numbers of the vegetables went unsold, and

some farmers had to plow their crops under. Losses

have been estimated at more than $100 million.

Meanwhile, after six weeks of investigation,

researchers found the bacterium responsible

for the infections: hot peppers grown in

Mexico.

Tomato grower reaction

Tomato farmers are angry at what they

call an unacceptably long time to identify

the real culprit. They point out that CDC

— which monitors outbreaks and works

with state health officials to identify disease

vectors, such as contaminated vegetables —

didn’t expand its investigation to include

other possible sources of infection until late

June. 

Their cooperative in Florida, the Florida

Tomato Growers Exchange, is seeking

compensation for growers (federal

legislation has been proposed) and is urging

action to prevent the same thing from

happening again.

Officials of the CDC say that their initial

data did point to tomatoes as the culprit,

and that tomatoes may indeed have been

involved in the original outbreak. They add

that the first data implicating tomatoes was

reinforced by information gathered from later cases around

the country. That, says the CDC, plus the fact that two

distinct types of hot peppers turned out to be involved,

greatly complicated the investigation (see sidebar). 

Florida Tomato Growers Exchange is a cooperative that

traces its roots back to co-ops established at the time of the

Capper-Volstead Act. The co-op represents 90 percent of the

tomatoes grown in the state. 

Federal investigators should have consulted more with the

producers, who could have provided vital information much

more quickly, according to Reggie Brown, the co-op’s

executive vice president. “They came and talked to us in

general terms,” he says. “But they didn’t allow us to fully

participate in the investigation. We weren’t allowed to help as

much as we could have.” Partly as a result, he believes,

investigators wasted precious time following up false leads.

The Florida agriculture authorities have a similar

complaint. Agriculture Commissioner Charles H. Bronson

told a Congressional subcommittee hearing that he could not

get the information he was seeking from federal investigators.

“We can’t help if we don’t know what we’re looking for,” he

said. 

FDA spokesperson Stephanie Kwisnek disagrees. “The

FDA worked closely with retailers, growers, distributors, as

well as state and local regulatory officials during

every step of the Salmonella Saintpaul

investigation,” she told Rural Cooperatives. The

FDA has testified that inconsistent record-keeping

by growers, shippers and distributors hampered

efforts to trace the source of vegetables during the

investigation.

Traceability a top issue

The ability to trace agriculture products

to their source is mandated by the Public

Health Security and Bioterrorism

Preparedness and Response Act of 2002.

Beginning with the grower, each link in the

chain of distribution to the consumer is

required to keep records of the previous

source of each shipment and its immediate

subsequent recipient: the so-called “one-up,

one-down” requirement. 

In testimony before the House

Committee on Energy and Commerce’s

Subcommittee on Oversight and

Investigations, representatives of the tomato

industry asserted that tracing the origins of

tomatoes should have been a relatively easy

task.

Tracing the source of the contamination

should have taken minutes, not weeks, using

electronic recordkeeping, says Ed Beckman,

president of California Tomato Farmers, a

cooperative formed in 2006 to establish new

quality and safety standards for the state’s industry. 

The cooperative recently carried out a demonstration of

traceability using electronically saved date-codes and

purchase orders on a shipment of tomatoes sold to a Subway

restaurant in Sacramento. Beckman says it took 35 minutes to

trace the tomatoes to the field in which they were grown.

Moreover, Beckman says, the Minnesota Department of

Health was able to determine that tomatoes were not the

source of the salmonella outbreak in only two weeks. 

Brown wants procedures established that will bring

industry representatives into a food safety investigation on a

confidential basis. “We need to be able to do that at the drop

of a hat,” he says. 

Despite the industry’s unhappiness with the way the

investigation was handled, Brown thinks too much blame has

been directed at FDA for the problems. “They’ve been

unfairly beaten up over this,” he says. “The problem was they

were given bad ‘epi,’ or epidemiological information. Their

hands were tied; with bad data, they couldn’t get a good

answer.” 

Hot peppers came under scrutiny only after restaurant

salsa made with canned tomatoes — which are normally free

of bacteria — was identified as a possible vector of the

disease. 

The U.S. fresh tomato

industry lost $100 million

during an outbreak of

salmonella food poisoning,

later blamed on hot

peppers from Mexico.
How the real culprit was found

Rural Cooperatives / September/October 2008 15

The struggle to find the source of the salmonella outbreak

began in the middle of April, when people in New Mexico and

Texas began showing up in emergency rooms and doctors’ offices

suffering from nausea and vomiting. By the end of May, 19 people,

some of them on a Navajo Indian reservation, had come down with

the disease. 

When salmonella bacteria was found in samples, county health

officials interviewed patients to learn what they had come in

contact with that might have carried the microbes.

At the same time, bacteria samples were sent to state labs,

which used DNA analysis to determine if they shared a genetic

“fingerprint,” indicating that they came from the same source. It

quickly became clear that patients in both Texas and New Mexico

were each infected with the same strain of bacteria, from a rare

variety known as Salmonella Saintpaul. 

The next step was a case control study — another round of

interviews based on assumptions developed from the information

collected in the preliminary, or “hypothesis generating” questions.

In the preliminary interviews, only 5 of 19 patients had said they

had eaten peppers other than bell peppers, so no questions about

peppers were included in the case-control study. 

The questionnaires were tailored to find factors held in

common by all the patients, especially types of food they had

eaten. Uninfected neighbors were also questioned, to help

eliminate common factors not involved in the outbreak. 

Initial suspect

The results of the survey, collated in the beginning of June,

revealed that 88 percent of the patients had eaten tomatoes —

and that sick participants were more likely to have eaten tomatoes

than their healthy neighbors, only 64 percent of whom reported

eating them. “The big, strong signal we got was: tomatoes — and

they may sometimes have been lower-quality tomatoes used in

salsa,” says Dr. Robert Tauxe, the scientist helping to direct the

investigation for the CDC. 

It was at that point, June 7, that the Food and Drug

Administration and people in the tomato industry were informed

that tomatoes were the likely source of the salmonella infections.

The FDA then began attempting to “trace-back” tomatoes eaten by

the patients to find the possible source of the bacteria.

By the middle of June, a large number of new salmonella cases

showing the same genetic “fingerprint” were beginning to show

up across the country. The new patients also reported eating

tomatoes at a higher rate than was statistically probable, says Dr.

Tauxe, and their answers still did not point to peppers.

Break in the case

The break came when the bacteria showed up in salsa made in

a restaurant using canned tomatoes. Canning normally kills the

salmonella bacillus and renders it harmless. While its tomatoes

were canned, the jalapeno peppers the restaurant used in its salsa

were fresh. Another, non-Mexican restaurant linked to salmonella

infections used fresh jalapenos as a garnish. 

“It was an ‘a-ha!’ moment,” recalls Tauxe. “Those examples

told us that something other than tomatoes was causing at least

some of the infections.”

Meanwhile, attempts to trace suspect tomatoes had led

investigators to many different sources. “The tomato trace-backs

weren’t converging,” says Tauxe. “But the trace-backs of peppers

did — to the Mexican border crossing at McAllen, Texas.” 

Samples of peppers taken by the FDA that had passed over the

border at McAllen grew salmonella bacteria when cultured. The

culprit, it seemed, had finally been found.

It turned out that not just jalapenos were implicated. Mexican

serrano peppers, often used by chefs instead of jalapenos, also

showed up as a suspected source of contamination. Moreover, the

farm to which the contaminated peppers were traced grew both

varieties of peppers — as well as tomatoes.

While peppers seem to be the main source of the outbreak,

Tauxe believes that tomatoes may still have been a factor,

especially in the earliest cases. “Remember,” he says, “the farm

grew all three items of produce.” 

The involvement of more than one kind of produce complicated

the investigation, he says. “It was a lot of really intense detective

work by a lot of people that finally got us to the truth.”

— By Stephen Thompson ■

New health and quality standards

Ironically, the state of Florida recently instituted a

rigorous standard to prevent chemical or microbial

contamination of tomatoes. Florida’s Tomato Best Practices

Manual was published as a state regulation in November

2007, and took effect July 1, 2008, in the midst of the tomato

panic. The 14-page manual mandates conditions for soil

testing, irrigation, land use, pest control, cleanliness of

agricultural workers, fertilization, harvesting, washing and

sanitizing the fruit, sorting, packing and transportation. 

The manual requires recording such variables as the

temperature of the water used to wash the tomatoes, the kind

and concentration of any chemicals in the wash water,

housekeeping and sanitation procedures and other factors.

The regulation calls for frequent random inspections by state

officials.

While Florida has gone the state-regulation route, farmers

continued on page 41
Editor’s note: This article was adapted by

Anne Todd from Dairylea’s “100 Years of

Service,” a book commemorating the co-op’s

1907-2007 centennial.

s of 2007, Dairylea had

more than 2,300

members and raw milk

sales of approximately 6

billion pounds —

making it the largest

milk-marketer in the Northeast.

Dairylea is one of the largest

cooperatives in the United States.

This is all the more impressive when

you consider that Dairylea started in

1907 at a time when U.S. dairymen

were in dire straits. They were under

the thumb of a powerful, entrenched

milk dealer system that set “take it or

leave it” prices. Dairymen in those days

received as little as two cents per quart,

even though their production costs

averaged four cents per quart. 

Fearing for their livelihood, a small

group of farmers from Orange County,

N.Y., decided to take a stand against the

system. On August 25, 1907, the

Dairymen’s League Inc., a bargaining

organization, was born, representing

700 dairymen with more than 14,700

cows.

Initially, the League’s impact was

mostly symbolic. All of that changed,

however, in October 1916 and the grim

years of World War I. Demand for milk

was at an all-time high but prices

remained shockingly low. 

The League board was bold and set a

minimum milk price of nearly a dollar

more per pound than the dealer price.

As expected, the dealers rejected it.

However, the League then called on all

dairymen, not just League members, to

withhold milk from the market. After

an 11-day milk strike, the dealers

conceded and signed a contract with the

League.

That victory showed Northeast dairy

farmers the power of banding together

to achieve their goals. As word spread,

farmers joined the League in droves. By

1919, membership had surged to

90,000.

However, the battle with dealers,

who wielded political and even judicial

influence, was far from over. Dealers

and other anti-farm interests tried to

maintain control over pricing, taking

their case to the courts and the media.

In the end — battered but not beaten

— the League prevailed, obtaining

needed changes to New York state law

that allowed dairymen to work together

to secure better prices.

Further expansion needed

Despite its success, the longstanding

duel with buyers convinced the League

that the only way to protect dairy

producers’ interests was to expand into

marketing and sales. In 1920, the

League joined with the State Farm

Bureau and New York State Grange to

create the Grange League Federation

(GLF), which helped farmers buy

equipment and supplies. 

By April 1920, the League was

marketing a sizeable portion of milk

through its own channels. It also began

purchasing dozens of plants in strategic

locations, including several previously

owned by Nestle Foods.

In May 1921, the Dairymen’s League

16 September/October / Rural Cooperatives
Rural Cooperatives / September/October 2008 17

Cooperative Association Inc. was

launched. It was a full-scale milkshedwide marketer for dairymen. As anticooperative sentiments began to die

down, the stage was set for the League

to begin marketing on a wider scale.

Farm organizations at the time were

intensifying their efforts to receive

government aid, and they were able to

develop a “farm bloc” in Congress. On

February 18, 1922, the landmark

Capper-Volstead Act, legalizing

voluntary formation of cooperatives,

was enacted. The cooperative played a

key role in passage of Capper-Volstead.

League vice president and general

counsel Judge John D. Miller drafted

the bill.

The co-op began marketing products

under the Dairylea brand in 1923.

Continuing its tradition of bold moves,

the brand was rolled out in style. The

cooperative presented New York City

with a Holstein cow named Dairylea,

which eventually took up residence at

the Central Park Zoo. It also launched

an extensive advertising campaign in

greater New York for Dairylea

evaporated milk that authorities

pronounced “the best ... that New York

City has ever seen.” 

Depression hits milk market

The onset of the Great Depression

reduced the demand for milk. That,

coupled with a milk surplus, led to a

calamitous drop in prices in the early

1930s. Throughout the decade, the coop struggled with price issues and

instability. 

A series of new state laws impacted

the market: the Milk Control Law of

1933 created a milk authority to

standardize prices, license dealers and

oversee production and distribution; the

Rogers-Allen Law of 1937 allowed

cooperatives to jointly establish prices

and marketing programs; and the New

York Market Order of 1938

standardized prices based on the

product use. Ultimately, the Milk

Control Law, which the co-op opposed,

was found unconstitutional by the U.S.

Supreme Court in 1935. The Market

Order, which the co-op strongly

supported because it reflected core

Track record shows ability to adapt in tumultuous times

Dairylea milestones

1922—Key role in passage of

the landmark Capper-Volstead

Act that legalized voluntary

formation of cooperatives.

1923—The co-op begins

marketing products under the

Dairylea brand.

1927—First to haul milk using

tank trucks, a revolutionary

concept at a time when the

industry was rail-dependent. 

1942—First to offer organized

home delivery of milk (as part of

a larger conservation effort the

co-op undertook during World

War II).

1952—Net sales at an all-time

high — topping all other milkmarketing co-ops in the world.

Helps member farms install onfarm refrigerated storage tanks,

which leads to establishment of

the nation’s first farm-to-city

refrigerated tank-hauling route.

Collage and photos courtesy Dairylea
cooperative principals, was deemed

constitutional in 1939.

The market order helped stabilize

prices within the Northeast milkshed.

Price issues and controls continued to

be a concern into the 1940s, but the

cooperative dug deep during the war

years to help ensure an Allied victory.

Members worked hard to ensure that

civilian and military milk needs were

met. 

Post World War II, milk prices

decreased and marketing and

production costs were on the rise.

Happily, though, sales of Dairylea

products continued to increase.

Technological advances

benefit co-op

Throughout the 1950s and 1960s,

Dairylea experienced turmoil,

transitions and growth. Prices were

stagnant until the mid-1950s, but the

co-op made technological

breakthroughs in refrigeration and steel

fabrication that revolutionized the

handling and transport of milk. 

Toward the end of the decade, there

was an upswing of prices. By the end of

the 1950s, the co-op had thousands of

members in five states, and owned and

operated more than 67 plants, 21

wholesale-retail outlets, eight

manufacturing plants and many ice

cream stores.

The 1960s was an era of

restructuring for the co-op. Operations

were consolidated; outdated plants were

closed. Notably, the co-op opened an

automated milk plant in Goshen, N.Y.,

a technological wonder that ushered in

a new milk manufacture era. 

The mechanized plant could receive,

process, package and load 250,000

quarts of milk in eight hours, without

the need for manual labor. The project

was also financed entirely with the coop’s funds — rare even today.

One of the co-op’s biggest changes in

the 1960s was when it dropped the

Dairymen’s League Cooperative name

in 1969 in favor of Dairylea

Cooperative Inc., to align itself with its

wildly popular Dairylea product line. At

18 September/October / Rural Cooperatives

1956—Hopalong Cassidy — a popular cowboy hero from print, film, radio and

T.V. — becomes Dairylea’s top promoter, appearing on Dairylea products, in

ads, and in person at events throughout Dairylea’s marketing area.

Selects its first female director, Thelma Brown of Lake Ariel, Pa. At the time,

many considered this daring. However, Dairylea had a long prior record of

recognizing women’s worth and their major contributions on the farm.

1964—Creates the Dairylea Agency Inc., insurance subsidiary to offer group

coverage, including workers’ compensation, medical, life, disability and

retirement insurance, to members. (Subsidiary renamed Agri-Services Agency

after offering services to broader ag community.)

1965—Opens a state-of-the-art automated milk plant in Goshen, N.Y..

1969—Renamed Dairylea Cooperative Inc.

1976—Mozzarella production soars to more than 2.6 million pounds (compared

to 225,000 pounds in 1975) as pizza becomes a mainstay of the American diet. 

1989—Dairylea sells its final processing plant, marking full transition to a milk

marketing and services cooperative.

1995—Dairylea markets 3 billion pounds of milk annually.

1999—Dairylea partners with the newly formed Dairy Farmers of America to

create Dairy Marketing Services, a Northeastern milk marketing partnership. 

2001—Dairylea becomes a member co-op of DFA.

2003—Dairylea joins Cooperatives Working Together, voluntary program to

strengthen and stabilize milk prices by better aligning supply with demand.

Dairylea milestones

continued on page 42
Table 1—U.S. cooperatives, comparison of 2007 and 2006

Item 2007 2006 Change

Number Percent

Sales (Gross, Billion $)

Marketing 93.1 76.5 21.76

Farm supplies 49.3 45.9 7.52

Service 4.1 4.1 0.38

Total 146.6 126.5 15.90

Balance sheet (Billion $)

Assets 57.1 47.9 19.31

Liabilities 36.2 28.0 29.42

Equity 20.9 19.9 5.13

Liabilities and net worth 57.1 47.9 19.31

Income Statement (Billion $)

Sales (Gross) 146.6 126.5 15.90

Patronage income 0.6 0.5 29.79

Net income before taxes 3.8 3.2 21.10

Employees (Thousand)

Full-time 125.2 123.4 1.44

Part-time, seasonal 56.2 57.3 -1.94

Total 181.4 180.7 0.37

Membership (Million) 2.5 2.6 -4.27

Cooperatives 2,594 2,675 -3.03

Rural Cooperatives / September/October 2008 19

Business volume tops $146 billion in 2007

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

Statistics Staff of USDA Rural Development, Cooperative

Programs: Katherine C. DeVille, Jacqueline E. Penn and E. Eldon

Eversull.

ales by farmer, rancher and fishery

cooperatives were the highest ever in 2007,

due primarily to increased commodity prices

and continued high fuel prices. This is the

third consecutive year for record pre-tax net

income for cooperatives.

The main increases were in grain/oilseed, dairy, sugar, feed

and fertilizer sales. Grain and dairy sales increased due to

higher prices while feed and fertilizer sales grew due to

increased ingredient prices (feed grains and energy products).

Gross business volume for cooperatives was $146.6 billion,

up $20 billion from 2006, easily eclipsing the previous record

of $128 billion, recorded in 1996. Marketing, farm supply

and service sales all increased (table 1). Both gross and net

business volume records were set, continuing the general

upward trend in sales that started in 2002 (figure 1).

Net income before taxes increased 21 percent, to a record

$3.8 billion. Patronage refunds grew 30 percent, to $600

million, up from $500 million in 2006.

Sugar sales were boosted by the addition of several

cooperatives to the database maintained by the Cooperative

Programs office of USDA Rural Development. The deletion

from the database of a farm supply co-op resulted in a decline

in petroleum sales. This farm supply co-op had been more

than 50 percent owned by another cooperative; its sales are

thus now included in the parent co-op’s consolidated financial

statements (the acquisition occurred in 1993, so this change

in the database was overdue).

Cooperative assets grew, mainly as a result of the increased

value of inventories from higher prices of products marketed.

Equity capital increased 5 percent, to almost $21 billion, but

remains low at 37 percent of all assets.

Farmer, rancher and fishery cooperatives remain one of

the largest employers in many rural communities, with

181,000 workers. The number of full-time employees

increased 1 percent, to 125,000, while part-time and seasonal

employees decreased 2 percent, to 56,000.

Farm numbers continue to decline and grow in size as do

farmer cooperatives. Cooperative memberships were 2.5

million in 2007, down 5 percent from 2006. Many farmers

are members of more than one cooperative, hence

cooperative memberships greatly exceed U.S. farm numbers.

There are now 2,594 farmer, rancher, and fishery

cooperatives, down from 2,675 in 2006.
By Dan Campbell, editor

Editor’s note: The 75th anniversary retrospective of

“Rural Cooperatives” magazine that began in the

July-August issue continues on the following pages,

which provide excerpts from articles that ran from

1970 through the present.

Seven steps to meet

challenges of 70s

In the July 1970 issue of

“News for Farmer

Cooperatives,” Texas A&M

University economist William

Black outlines key challenges facing farmer coops in the new decade:

“It won’t be called the ‘Serene 70s.’ Instead, it

will be known as the ‘Severe 70s,’ because agriculture will

experience a decade of severe change. Ag co-ops will survive

not by reacting to change, but by making change.

Their survival is less dependent on what happens on the

farm and ranch and more dependent on what happens

elsewhere. Without co-ops, we would remain a long way

from bringing about equality in trading between producer

and buyer. With co-ops, all farmers will be better off.

Strange as it may seem, agriculture will never be

controlled through production alone. Marketing will be the

critical lever over farming. Up until the present, people in

the market have exercised far more influence over the farmer

than the farm has exercised over the marketplace. The key in

the 70s will be integrated marketing.

How can cooperatives meet the challenges of the decade?

1. Provide Marketing Leadership; 2. Adopt Tougher Production

and Quality Policies; 3. Form Joint Ventures;

4. Work with Cash and Contract Markets; 5. Build New and

Expanded Markets; 6. Promote Research and Development;

7. Develop Strong Internal Leadership — none of the above can

take place without strong leadership in the management

office and board room. The key: select the best, and keep

them trained.”

Beware fair-weather members

From the March 1971 issuse:

“In our country we have too many fair weather co-op

members. These are farmers who will trade at the co-op

when the price of fertilizer is lowest, or the price of corn is

highest. They are the ‘inners and outers.’ Members like this

can spell only one thing, and that thing is trouble.

No truer words were spoken than those of Benjamin

Franklin at the signing of the Declaration of Independence,

when he said: ‘We must all hang together, or assuredly will

all hang separately.’ Farmers need to determine who their

20 September/October / Rural Cooperatives

75

Magazine pages reflect co-op progress, challenges, opportunities 

1970s

R u r a l C o o p e r a t i v e s
friends are...and not work

against the best interests

of each other.”

USDA pledges

support for co-ops

In April 1971, Clifford

M. Hardin, U.S.

Secretary of Agriculture,

assures co-ops of USDA’s

continued support and

sees a growing role for coops:

“The Department

of Agriculture has pledged

to help farmers help

themselves through

cooperatives. We feel that the present policy, stated in

memorandum last May, is working well. To bring the

agricultural industry up to par with other types of business

and [raise farm income] is our goal. 

Ag exports promise to be a growth area in which co-ops

can play a particularly significant part. In this administration,

we are placing heavy emphasis on a continued expansion in

sales of farm products abroad. The whole subject of trade —

developments to come in Europe in particular — is one in

which co-ops have a great stake. It will be important that we

pool our efforts to reach an understanding that can bring

trade cooperation, instead of trade chaos.” 

Farm Credit managers must confront future

Donald Roark, deputy governor of the Farm Credit

Administration, December 1971:

“Memo to tomorrow’s managers of ag credit institutions:

The gap that separates the well prepared from the poorly

prepared will never be greater. Staying on course will be a

real challenge amidst the turbulence, tension, proliferating

technology and diversification of tastes.

The knowledge explosion places a premium upon every

business decision — capital investment, product mix or

market potential — to the point that a businessman cannot

overlook glimpsing into the future. Executives who set their

long-range goals in terms of today’s population mix may be in

for some rude shocks. Population shifts and growth will

surely result in a dispersion of business activity and of

internal markets.” 

What young farmers think about co-ops

In November 1972, Editor Gene Ingalsbe writes that co-ops

must do a better job of connecting with young farmers: 

“Young farmers are perhaps less inclined to use co-ops

than are farmers generally. At least two reasons are emerging,

and both are disturbing. Young farmers want to ‘have their

cake and eat it to,’ as the saying goes, concerning their

relationship to co-ops. Some local co-ops just aren’t

performing as well as their competitors. One unfortunate

conclusion is that both may find themselves out of business

unless they change their ways.

These observations come from listening to discussions of

young farmers at this summer’s session of the American

Institute of Cooperatives [and from several other sources].

Rural Cooperatives / September/October 2008 21
Some

young

farmers see

co-ops as

“just

another

business,”

not

competitive

in price, not

living up to

promises,

over staffed,

unprepared to serve modern farmers, competing with each

other instead of working together, and so on.

On the other hand, many young farmers just haven’t

grasped — as is also true of older farmers — that the

cooperative is theirs, and when something is not to their

liking, it is their responsibility to do something about it. The

sense of ownership and responsibility is missing.”

Executive compensation: how co-ops compare

Richard Larson, A.T. Kearney Inc., writes in the April 1976

issue:

Cooperative CEO compensation is a little closer to that

paid by other comparable businesses than it was four years

ago, according to a study conducted for the National Council

of Farmer Cooperatives (NCFC). The top co-op CEO is still

making only 70 percent of his counterpart’s share in other

comparable corporations. But that’s up from 66 percent in

1972.

Use of incentive compensation plans is only half that used

by other corporations. Salaries for CEOs of co-ops with 500

or more employees ranged from $200,000 to $50,000. For

those heading co-ops with 75 to 500 employees, the range

was about $125,000 to $25,000. For 75 or fewer employees,

the range was $75,000 to $24,000.

Co-op fragmentation in Northeast hurts farmers

Randall Torgerson, acting deputy director for USDA’s

Economics Statistics and Cooperatives Service, addresses the

Northeastern Dairy Conference, as quoted in the June 1978

issue:

“Nowhere in the country do we find the practice of

cooperation in such disarray as in the Northeast...

Cooperative structure in the region is highly fragmented.

Excluding Virginia, about 150 dairy co-ops are operating in

this region. Although about 70 of these are affiliated with

three or four co-ops, this is still a large number for a region

of this size.”

Several major co-op bankruptcies have occurred in the

region in recent years, and five of the largest co-ops have

suffered losses. Co-op educational programs at land grant

universities in the Northeast are not being maintained, he

says, and buyers are effectively playing off handlers against

each other. He lays some of the blame for the disarray on the

“egos of co-op organizations and leaders,” and calls for

mergers leading to the organization of a “dominant regional

dairy co-op” as one of several options to improve the

situation.

Ag Secretary Bergland testifies

before antitrust panel

From James Baarda’s September 1978 “Legal Corner”

column:

During a hearing before National Commission for the

Review of Antitrust Laws and Procedures, Agriculture

Secretary Bob Bergland made a strong defense of farmer

cooperatives and the marketing order system. “My own view,

well supported by history, experience and research, is that the

Capper Volstead Act and our marketing order system are in

no need of statutory modification...Individual farmers acting

alone lack bargaining power in dealing with those who

purchase their product. Historically and increasingly, farmers

must sell to relatively few buyers that do their processing and

distribution of raw ag commodities.”

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75R u r a l C o o p e r a t i v e s
Rural Cooperatives / September/October 2008 23

Women getting ahead in co-ops

From the May 1980 issue: 

Women are getting more active in co-op

enterprises. Willadean Chapman has served

for five years as manager of Mt. Vernon

Farmers’ Cooperative in Missouri. When

the need arose to open a co-op outlet in Mt. Vernon, the

manager at Monette asked Chapman to “keep things together

until he could hire someone.” But when she showed her

managerial skills, the fill-in job became permanent. “We

started at zero, but this year we hope to hit $1 million in

sales,” says Chapman.

Darlene Nordenhagen is a nine-year member of the board

at Farmers Union Oil Co. in Opheim, Mont. The co-op was

about to close because of poor management when it voted in

its first woman member. The first year was the hardest, when

she worked closely for four months with a new bookkeeper to

bring some order to the co-op’s records. Then she went door

to door collecting unpaid bills in her town of 260 people.

Because of her efforts, a new bookkeeping system was

introduced that has helped the co-op realize gross sales of

$1.5 million in 1980, up from less than $100,000 when she

joined the board nine years earlier. 

Why are they attacking Capper-Volstead?

Lee Kolmer, dean of Iowa State University’s College of

Agriculture, spoke at the Graduate Institute of Cooperative

Leadership in Columbia, Mo. From the August 1980 issue:

“The Capper-Volstead Act is under siege. The intensity of

the battle varies as the attackers marshal new allies, or lose

old allies, and as the defenders are partially or temporarily

successful in fending off the legal thrusts of the opponents.

Why has the battle become so intense over the last decade? 

Opponents see co-ops assuming large-scale processing,

wholesaling and retailing...they see large co-ops

merging...and see more and more co-ops selling branded

products at the retail level. They think co-ops are becoming

indistinguishable from their corporate competitors.

Cooperatives counter that farmer ownership is unique

because the objective is to enhance the income derived from

farming activities of these farmer-owners. The corporate

objective, conversely, is to earn a return on the investment of

a diverse set of stockholders.” 

Secretary Block meets with

cross-sector of co-ops 

Phil Mills Jr. of MFA Inc. contributes an article in

August 1982 about Secretary Block holding a five-hour

roundtable discussion with 31 co-op leaders near Knoxville,

Ill.:

Ag exports and high interest rates dominated the

discussion. “Probably the strongest message may have been

that we need to find markets for our products and protect

existing markets,” Secretary Block says during a briefing for

the co-op farm press after the meeting.

“Washington does not realize the impact of high interest

rates on agriculture,” says Ralph Hofstad, president of Land

O’ Lakes (LOL) Inc. “Unless budget deficits are faced,

interest rates will stay high,” he stresses.

“This is one of the really profitable things the cooperative

movement has done,” Stanley Greathouse, director with

Wayne White Electric Co-op and the National Rural

Electric Cooperative Association, says of the meeting. “Many

times we don’t get our act together as a group.”

“Our biggest problem is that cooperatives just don’t get

together and come across as being united,” says Glen

Gearing, a Wisconsin dairy farmer and chairman of MSI

Insurance. 

Farm supply co-ops are not credit institutions

From Ag Co-op Service Administrator Torgerson’s

commentary, September 1982:

“A common complaint heard across the country this year

is the difficulty experienced in collecting accounts receivable.

1980s
Most co-ops by now have sound credit policies; those that do

not desperately need them.

Local supply co-ops are not credit banks and should not

be used as such. Excessive outstanding credit through unpaid

bills brings inequity among patrons in a co-op. Those who

don’t pay up increase the costs for all others. Uneven

managing of credit policy also creates ill will and serves as a

disruptive force within the organization.”

Keep distance between politics, world trade

Dennis Colleran, president and general manager of Tree

Top Inc., addresses key trade issues for his apple-processing

co-op in June 1984:

“When I pick up a newspaper and read where politicians

are threatening to cut off trade of farm goods to a foreign

country, I become distressed. Agriculture is not a political

ploy. If used as such, we will all lose! The world is shrinking.

What is cut off by United States’ economic sanctions can be

purchased elsewhere...I firmly believe politics and world

trade should be kept just as independent of each other as

church and state.”

Grain co-op policy on risk management

V. James Rhodes, University of Missouri ag economist, based

this October 1984 article on interviews with grain traders

and finance officers at large regional co-ops and on a survey

of 42 Midwest grain co-ops:

“The manager of Co-op X knows the annual audit will

reveal a terrible secret. He has abruptly left town, leaving

behind a note that says he meant well but can’t face his

members. (This is a true story, but the name has obviously

been changed). The auditors find a loss of $2 million in the

grain business — enough to bankrupt it. The manager had

not taken a penny. But he held a large grain inventory,

hoping for rising prices in a falling market. The more he got

behind, the longer he waited for the market to rescue him.

Could that happen at your co-op? How would you face

your membership? Unfortunately, one or more variations of

this story occur every year.”

Rhodes goes on to discuss strategies such as

diversification, pooling and hedging. “There are two basic

rules for your manager to follow in managing risk: thou shall

not speculate in the futures market and thou shall not

maintain open net positions for each commodity beyond

specific bushel and dollar limits agreed upon.

Co-ops should strive to minimize large open positions,

which are risky. In open positions, the co-op either holds a

large inventory or has made sales of grain not yet purchased,

and has no offsetting position in the futures market. Your

goal is the management of price risk, rather than its

elimination. Whatever strategy is used, the buck stops with

the board.”

New law encourages merger of co-op banks

Ron Erickson of the Farm Credit Administration provides

this update in February 1988:

“In January, President Ronald Reagan signed legislation

paving the way for a multibillion dollar plan to aid the

financially stressed Farm Credit System, which posted $4.8

billion in net operating losses from Jan. 1 1985 to Sept. 31

1987. But while the system as a whole wallowed in red ink,

the Banks for Cooperatives operated in the black. They

24 September/October / Rural Cooperatives

75R u r a l C o o p e r a t i v e s
Rural Cooperatives / September/October 2008 25

would have had net earnings of $211 million for the period

had it not been for the financial assistance they provided to

troubled institutions. That assistance will be repaid, under

the terms of the new law. 

And even though they were not part of the problem,

solutions embodied in the Ag Credit Act of 1987 hold the

prospect of change for the Bank for Cooperatives, as well as

other parts of the Farm Credit System. If stockholders of

eight or more of the district Banks for Cooperatives approve

a merger plan, those banks and the Central Bank for

Cooperatives will be merged into a single bank called the

National Bank for Cooperatives.” Such a bank would also

better be able to serve the needs of borrowers who have

“outgrown” the present system, according to a study

commissioned by the National Council of Farmer

Cooperatives (NCFC). 

CoBank looks to build momentum

W.M. “Malcom” Harding, CEO of CoBank, discusses the

newly created co-op bank he leads in the May 1989 issue:

“The new CoBank (National Bank for Cooperatives)

began operations Jan. 1 on a solid base with more than $12

billion in assets, $9 billion in outstanding loans and a capital

base of $803 million. The bank represents the consolidation

of 11 financial organizations. The merger took place in less

than six months. 

Five fundamental standards will guide the bank:

Commitment, Competency, Consistency, Competitive and

Customer Focused.” CoBank will be a more efficient

organization than were the separate banks, he says. 

Co-ops’ share of farm business

stabilizes at 25 percent

Charles Kraenzle, director of ACS

Statistics and Technical Services staff,

writes in March 1990:

“The co-op share of farm marketing and farm production

supply expenditures in 1988 remained 25 percent, unchanged

from 1987. The shares, however, were down from 30 percent

in 1982. Co-ops’ net sales for farm products in 1988 was

$49.1 billion. Co-ops held 76 percent of the milk market, 41

percent of the cotton market, 30 percent of grain and 24

percent of fruits and vegetables marketed.

Co-op share of farm supplies sold in 1988 totaled $15.4

billion. This included 40 percent of fertilizer, 39 percent of

petroleum, 28 percent of farm chemicals, 17 percent of seed

and 18 percent of feed.”

Co-ops ideal vehicle to promote

rural revitalization

Editor Patrick Duffey highlights a new report, “Co-ops and

Rural Development” in the March 1990 issue:

“Cooperatives are a natural vehicle for meeting the needs

of rural America. But despite two centuries of use, they are

not widely known in the United States outside certain

sectors. Current conditions in rural areas suggest now may be

the time for cooperative activities to meet a broader scope of

needs. 

Traditional rural economic activities — such as farming,

forestry, mining and manufacturing — are generating fewer

new jobs. Much of the rural infrastructure built to support

those activities — roads, bridges, telecommunication

networks, water and sewer systems — is worn out and

obsolete. Many young people are leaving rural areas to

pursue more promising opportunities. While rural areas must

1990s
face competitive disadvantages,

co-ops can organize local people

into stable organizations to solve

local problems.”

Saving the black farmer

In the May 1993 issue, Editor

Dan Campbell examines ways in

which co-ops may help to secure

a future in agriculture for black

farmers, whose numbers have

plummeted:

“A $100,000 investment for a

new packing shed may not

represent a major investment in

the annals of farm lending, but it

is a huge step forward for the

Indian Springs Farmers

Association in southern

Mississippi. The 40-member

vegetable growers’ co-op

currently field packs or rents

space in a state-owned packing

facility. With a packing shed of

its own, the co-op expects

current annual sales of $200,000 to double in its first year,

rising to $1 million in three years and creating three to seven

new jobs.

In this way, growers who join the co-op hope to avoid

joining the ranks of black farmers who have left the land.

Once a basic part of the rural landscape in the south, black

farmers today are an “endangered species.” In 1910, there

were 1 million black farmers in the United States who owned

15 million acres, mostly in the South. By the 1960s, the ag

census showed that black farmers owned just 6 million acres.

Today, there are just 20,000 who own only about 2 million

acres.

‘There is no government program that will return this

wealth to us, or help us

protect the land and

other resources that

remain. We must do this

job for ourselves, with

the sympathetic

supporters and allies that

we can find,’ says Ralph

Paige, executive director

of the Federation for

Southern Cooperatives.”

Ignorance kills

co-ops

From the June 1993

issue:

“According to one

estimate, 55 percent of

all Americans belong to

a cooperative. Yet 90

percent of them

probably don’t realize it.

Even if they are aware of

it, the majority have

little real understanding

of what a co-op is or how it functions. So much for the state

of co-op education in America.

At a time when the need for co-op education is as great, or

greater, than it has even been, the trend is going in the

opposite direction — toward a reduction in the level of co-op

literacy nationwide. In high school and colleges the general

decline in ag courses has been paralleled by a decline in

cooperative education.”

Changing tides

Campbell addresses how the “rural shakeout” is affecting

farmer co-ops in Kansas:

“Rarely has so little yielded so much. With a miserly sky

26 September/October / Rural Cooperatives

75R u r a l C o o p e r a t i v e s
Rural Cooperatives / September/October 2008 27

that drops an average of only 19 inches of rain per year, the

farmers of western Kansas produce one of the greatest

bounties of food harvested anywhere on earth. Dryland wheat

fills huge white grain elevators that seem to rise up like

clockwork every 10 or 12 miles across the High Plains. 

The rural infrastructure of western Kansas is an odd mix

of feast and famine. Some regional trade centers, such as

Dodge City and Garden City, are experiencing explosive

growth and scrambling to cope with overcrowded schools

and housing shortages. Meanwhile, many of the surrounding

towns are struggling just to hang on to their last store or café.

Indeed, if anyone ever discoverers a market for boarded-up

store fronts, they could get rich in the small towns of western

Kansas. 

The declining farm population, combined with the trend

toward greater concentration of business in regional trade

centers, has siphoned away business from small town

merchants. As a result, “plywood curtains” covering

storefronts give stark evidence of the shakeout in the rural

economy.” 

Breaching the fortress

Gene Ingalsbe, recently retired from ACS, reports on his

trip to Albania as part of a team from Volunteers in

Overseas Cooperative Assistance (VOCA):

“Only the shell of a processing and manufacturing sector

remains in Albania. The skeletons of closed and partially

dismantled manufacturing plants can be seen everywhere —

monuments to the failure of the centrally planned economy.

Perhaps most striking is evidence of an all-consuming fear

that gnawed at the nation’s communist leaders. Some 700,000

domes, reinforced-concrete military bunkers, dot the

countryside. Vineyards contain concrete posts tipped with

iron spikes, meant to skewer paratroopers — all built in fear

of an invasion by American troops.

The Americans have finally arrived, but instead of coming

with guns, they are extending the hand of friendship.

Albanians are literally leaping forward in adopting private

enterprise. Changes are visible almost daily. Yet “cooperative”

is a dirty word here. Cooperatives under the former Albanian

regime were state owned and controlled and often highly

inefficient. They did not resemble the private enterprise

cooperatives found in the United States.” 

Fair trade prescription

In August 1984, USDA Ag Economist Alan Borst sees a

major role for co-ops in combating unfair trade practices:

“When the ship Pioneer Reefer unloaded 700,000 trays of

New Zealand-grown kiwifruit in Tacoma, Wash., in late

1990, it touched off a heated international trade dispute. It

caused a rising tide of imported fruit to swell into a glut. As a

result, U.S. kiwifruit prices plunged to $415 a ton, down

from more than $1,000 a ton three years earlier. During that

three-year period, N.Z. kiwi exports to the United States

tripled.

The industry’s two largest cooperative handlers of kiwi —

Blue Anchor and Calavo Growers — responded with an antidumping petition, which eventually resulted in a 98.6 percent

anti-dumping duty on imported kiwifruit from New Zealand. 

In an industry with a significant co-op presence, co-op

members often play a key role in state marketing orders and

commodity commissions. These institutions frequently

initiate anti-dumping or countervailing duty cases to help

avoid the “free rider” problem that can occur if one co-op

pays all the legal costs and takes all the risks while other firms

share in the benefits of a legal victory.” 

Cheese co-op brings hope to Rio Grande farmers

In the February 1995 issue, USDA Ag Economist Jerry

Namken and Editor Dan Campbell report on an effort to

help low-income Hispanic farmers in the Big Bend area of

southwest Texas form a dairy goat co-op:

“Para los ninos [for the children]. That’s why we have

worked so hard to establish this cooperative,” says Sergio

Hernandez, gesturing toward a new goat cheese factory

which should be operational by this spring. For Hernandez
and 18 other members of

the Big Bend

International Dairy Goat

Association, the cheese

plant represents more

than a promising

economic development

project; it is the primary

hope for the future of the

village and the means by

which their children may

be able to break the cycle

of rural poverty endemic

to the area.

Two-thirds of the

families here exist below

the poverty level, with an

average annual income of

only about $4,000. Most

families receive food

stamps and commodity

distributions from USDA.

The median education

level is eighth grade.

Playing a key role in

the co-op formation has

been the Rev. Melvin La

Follette, assisted by USDA’s Rural Business and Cooperative

Development Service, which is providing technical expertise

and economic assistance to help the co-op clear the final

hurdles. The initial marketing plan calls for the co-op’s

cheese to be sold to retail outlets in nearby markets, such as

Presidio, Texas, and Ojinaga, Mexico.”

Goat cheese is a staple of the Hispanic diet, but as recently

as the 1970s, virtually all goat cheese in the United States was

imported. Dairy goats are ideal for small farmers because

they have a high-production yield in comparison to what they

consume.

Fuel for thought

In April 1995 David

Morris, vice president of the

Institute for Local SelfReliance (ISLR), discusses

“an emerging carbohydrate

economy,” and what it could

mean for cooperatives and

rural development:

“The carbohydrate

economy offers an organizing

principle that can bring

together those who focus on

rural development, those

interested in environmental

protection and those who

reduce government spending.

Bio-refineries (a term coined

by ISLR) are attractive for

several reasons. They tend to

be environmentally benign

because they are based on

renewable feedstocks and are

often based on biological

processes. In the ideal biorefinery, the wastes of one

part of the production

process becomes food for the other part.

Bio-refineries are also attractive because they are locally

based. Plant matter is bulky and expensive to transport. The

plant matter will tend to be processed in the regions where it

is grown. The modest size of bio-refineries means that they

can become important engines of rural development. It also

means they lend themselves to cooperative ownership.

We are beginning to look with new eyes at our biological

resources. In so doing, we may be redesigning the shape of

our future economy and ushering in a renaissance in rural

America.”

28 September/October / Rural Cooperatives

R u r a l C o o p e r a t i v e s
Rural Cooperatives / September/October 2008 29

In the crab’s claw

In November 1995, Campbell reports on a fishing village’s

hope that a new crab- meat packing co-op can revive the

economy of their Chesapeake Bay island:

“The town of Tylerton, Md., has been losing population

since the turn of the 20th century. Events of the last few

years have left people wondering if slow death is the only

future for Tylerton, one of three small communities on Smith

Island. The latest blow has been a threat by state health

inspectors to shut down Tylerton’s crab-meat packing

industry. It’s almost as if the town is trapped in a crab’s claw

that is slowly, steadily closing on it.

To save the crab-meat picking industry, women on the

island formed a co-op. After a three-year struggle, Smith

Island Crab Meat Co-op Inc. has secured funding for a

picking and packing facility, which should be in operation by

next summer’s harvest. ‘The co-op is the last gasp for this

island,’ says one member.”

Hope for the Hmong

In a special issue in 1997, Field Editor Catherine Merlo

reports on how Hmong refugees from Laos hope to create a

better way of life in Central California, using a farmer coop:

“An estimated 100,000 Hmong, former refugees from

Southeast Asia, are now living in California’s San Joaquin

Valley. They are leaders in Fresno County’s strawberry and

cherry tomato industries, growing nearly 90 percent of those

two crops. 

But something hasn’t been working for the Hmong. Most

of the Hmong have yet to step into the mainstream of

American life, with some 70 percent of Fresno County’s

Hmong receiving public assistance. They are studying a form

of business that could lead to economic self-sufficiency for

their people: a cooperative.

With the help of several organizations, including a

$60,000 grant from USDA’s Rural Business-Cooperative

Service, the organization has launched the Hmong Economic

Development Pilot Project. The new venture is exploring the

feasibility of forming a marketing co-op for Hmong-grown

fruits and vegetables.”

Co-op Share of Farm Market hits

30 percent

In the January/February 2000 issue,

Charles Kraenzle reports on the co-op

share of farm products marketed:

“Farmer co-op’s share of total farming marketings —

including crop, livestock and poultry sales — was 30 percent

in 1998. That’s up from 29 percent in 1997, but below the 32

percent level reported in 1996. Total co-op marketing

business volume for the year was $76.6 billion, down slightly

from the record of $79.4 billion set in 1996. A major factor

for the increase was cotton and cotton seed sales, which rose

to 43 percent of the market in 1998, up from 38 percent the

year before. 

Co-ops’ market share of major farm production supplies

— feed, seed, fertilizer, crop protectants and petroleum —

was 29 percent in 1998, unchanged from 1997. Net sales of

farm supplies by co-ops was $24.6 billion, down slightly from

the record of $25.2 billion in 1997.” 

Seeing the forest for the trees

In January/February 2000, Field Editor Pamela Karg

writes about co-ops promoting sustainable forestry and

tapping into “green” trends:

“We’re committed to managing our forest lands in a

sustainable way, logging them with discretion and building

efficiencies into how we prepare that lumber for the

marketplace,” says Tom Thieding, president of the

Sustainable Woods Cooperative in southwestern Wisconsin.

Almost three years old, the co-op includes 85 members who

own 10,000 acres of woodlands that stretch across some of

the same landscape that Frank Lloyd Wright and John Muir

called home. 

Three hours away, a second sustainable forestry project is

2000s

Facing page: Lowell

Forman of the Country

Natural Beef co-op in

Oregon. This page: a

Midwest ethanol plant.
taking shape in the

Mississippi River coulee

region north of LaCrosse,

Wis., and Winona, Minn.

Other woodlot owners

across the two states are

also discussing sustainable

forestry practices and the

formation of co-ops to

process and dry the

harvested wood.

Credited with helping to give birth to these new

cooperatives is Jim Birkemeier. “When I started talking about

sustainable forestry, all I did was get people irritated,” he

recalls. “The industry was making big money off the forests,

and the landowners didn’t think their timber was worth

managing.” But now the concept is steadily spreading.

Consolidation in the heartland

In the Nov./Dec. 2000 issue, USDA Ag Economist Anthony

Crooks takes a closer look at grain co-op mergers and

acquisitions during the mid 1990s:

“When the directors of two small cooperatives in North

Dakota approached USDA Rural Development in 1997 for

technical assistance regarding a possible merger, they

probably had little idea how large a trend they were joining.

About 95 other grain co-ops merged or were acquired in

1997. Both of these Dakota co-ops — one petroleum and

farm supply co-op with grain assets, the other a grain

elevator co-op — were seeking to strengthen their operations

and improve financial performance.

In addition to consolidating assets, these cooperatives

wanted to expand a rail load-out facility owned by one of the

co-ops and to add an agronomy center near another facility.

They also wanted to reduce grain shipping costs and generate

additional revenue from spring fertilizer sales.

Both co-ops and their plans were soon superseded by an

even bigger merger: that of Cenex and Harvest States. The

merger of two

giant regional

co-ops was the

biggest in a

recent tide of

mergers,

consolidations,

alliances, joint

ventures and

acquisitions that

swept over the

U.S. grain industry.” The small Dakota petroleum co-op was

an affiliate of Cenex and a competitor of Harvests States.

Thus, the merger and improvement plans of these two small

co-ops were placed on an indefinite hold because of the

merger of the two regional co-ops.”

Co-ops respond to terrorist attacks

with aid, calls for unity

In the Nov./Dec. 2001 issue, USDA’s Patrick Duffey

describes the response of co-ops to the Sept. 11 terrorist

attacks on America:

“Co-ops across the country were quick to respond to the

terrorist attacks with offers of assistance to victims and calls

for national unity. For example, West Central Cooperative in

Iowa donated 20,000 gallons of soydeisel to New York City

to help fuel equipment used in removing debris from the

disaster site. The National Milk Producers Federation in

Washington, D.C., working with Dairy Relief Inc.,

established a special fund for dairy farmers and other

interested parties to donate money to the victims of the Sept.

11 terrorist attacks.

The Cooperative Development Fund in Washington also

set up a relief fund for the victims. The National Credit

Union Assoc. is providing grants of up to $15,000 to aid five

low-income credit unions in New York City. At Southern

States Co-op in Richmond, Va., $13,000 was collected from

employees for the American Red Cross relief efforts. The

30 September/October / Rural Cooperatives

75This page: fires burn at

the Pentagon on

9/11/01. Facing page:

The Southern Plans Coop elevator still stands

in Kansas following a

devastating tornado;

Brian Miles harvests

corn for Mid-Missouri

Energy ethanol.

R u r a l C o o p e r a t i v e s
Rural Cooperatives / September/October 2008 31

CHS Foundation matched $30,000 from local co-ops and

CHS employees for the United Way’s Sept. 11 Fund.” 

Making the grade

Brett Fairbairn, director for the study of co-ops at the

University of Saskatchewan, writes that all North American

co-ops will be in trouble without more attention to co-op

education:

“We must distinguish co-op training from co-op

education. Training imparts specific, predetermined facts,

procedures and skills. Education develops in people the

capacity to know what is important, how to do something

and how to find the information and skills they need.

Cooperatives have gotten by for decades by doing a great

deal of training — particularly of staff and elected leaders.

But in the new information age, they have to go back to

doing more education, especially member education. This

must be a new and innovative kind of education.

Grade for Board Education: B. Education of directors

improved dramatically in the 20th century, with emphasis on

helping directors understand their role as key decision

makers in setting policies that guide the co-op. But recent

co-op failures indicate a need to do more in this area.

Directors often need to serve as a counterweight to strong

managers.

Grade for Member Education: C. Too often, member

education programs do not convincingly show members why

their cooperatives are needed. In addition to co-op basics,

members need to be educated about the economy they are in.

If they understand this — including emerging trends and

where the economy is heading — they will understand why

they need co-ops.” 

Taking it to the next level

The success of a small Florida vegetable co-op leads to a

network of similar co-ops. From the Sept./Oct. 2002 issue: 

“New North Florida Cooperative is a new-generation coop formed by small-scale vegetable and fruit farmers in the

Florida panhandle to create and expand marketing and

processing opportunities for its members. When they

operated individually, they were “price takers,” members say.

The co-op has enabled them to become “price makers,” by

taking greater control of their products and providing

member-growers with bargaining power in the marketplace. 

From its initial success helping members sell collard

greens and other crops to a local school district, this Florida

co-op has now expanded its scope of operations to 15 school

districts in three states, added product lines and increased the

level of value-added preparation and packaging. It has also

created a network of similar co-ops which are working

together to expand value-added processing and marketing

opportunities for small-scale farmers.” USDA Rural

Development is helping the effort with a $327,000 Rural

Business Enterprise Grant. 

Bargaining is big for small business

In the March/April 2003 issue, USDA Ag Economist Bruce

Reynolds examines resurgence in bargaining cooperatives:

“At least 250 purchasing co-ops currently operate in the

United States. About 50,000 businesses are members of

purchasing cooperatives, with membership having doubled in

the past decade.

The traditional practice of purchasing co-ops is to capture

discounts by buying in large volumes and providing cost

savings with wholesale distribution for their members’ retail

businesses. This modus operandi is frequently used by co-ops

whose members are in the grocery and hardware business. 

Many recently formed purchasing co-ops operate instead

by negotiating a standard contract for members who then

make their own individual transactions according to the

negotiated terms. Members have the flexibility to address

contingencies not covered by, or in conflict with, the contract

negotiated by their purchasing co-ops.”

The closure dilemma

USDA rural sociologist Thomas Gray says conducting
business in a way that helps keep both members and the coop in business can sometimes be a challenge. From

March/April 2003:

“Press coverage of member reaction to recent closures of

several local grain elevators by a regional co-op underscores

one of many dilemmas faced by co-ops in maintaining

business for member users. Changes in farm production

toward fewer, larger farms can pressure boards and

management to consolidate operations — particularly grain

and farm supply co-ops in Midwest and Plains states.

Closures of facilities can improve survivability of larger co-op

businesses, but may also compromise the survivability of local

farmers.

Negative reactions to the closures may be quite intense,

and loss of farmer loyalty and survival may further strain the

co-op. How to conduct a business for members in way that

helps keep both members and the co-op in business is

becoming a growing challenge in many parts of the nation.”

Greener pastures seen for bio-tech co-ops

In March/April 2004, Assistant Editor Stephen Thompson

writes that new bio-based products may only be scratching

the surface of the potential bio-products revolution:

“What do lubricating oils, diesel fuel, glues, plastics,

paints, solvents and packing

“peanuts” have in common? If

you thought “petroleum,” you’re

only partly right. Other raw

materials can also be used for

their production, including those

grown on farms. The

manufacture of new “bio-based”

products to replace or

supplement non-renewable materials may provide new

opportunities for farmer co-ops to add value to members’

crops.

The Farm Security Act of 2002 requires federal

government agencies to buy officially designated, bio-based

products whenever possible for purchases of $10,000 or

more. Production of ethanol and biodiesel for fuel additives

are the most common bio-products produced by co-ops.

Farmer-owned ethanol plants — both as traditional co-ops

and LLCs that operate like co-ops — are springing up like

mushrooms across the Midwest.”

One bio-based cleaner advertises that it is “powerful

enough to clean battleships, yet mild enough for kittens,”

while better for worker and environmental safety.

Fueling a rural revival

Campbell reports on the impact of an ethanol plant on one

rural Minnesota town in the July/Aug. 2004 issue:

“It started as the dream of farmers and the managers

of the local electric co-op who were searching for ways to

add value to corn and help stabilize electric rates. The

Chippewa Valley Ethanol plant outside Benson, Minn.,

has not only accomplished that, it has also been the

sparkplug that ignited efforts to reverse the rural decline

Benson seemed locked into for a time.

“If you go back 15 years, Benson was facing a malaise

like that of so many other rural towns with slowly

declining populations, loss of jobs and eroding tax base,”

says plant manager Bill Lee. “The people of Benson are

survivors and have a very progressive business philosophy.

They were willing to vote with their pocketbooks — to

invest their money in the future of the community.”

In the years after the ethanol plant opened in 1995,

the business community launched a concerted effort to

keep a farm-manufacturing plant in town when it

appeared likely to move, and the plant soon expanded.

They raised $2.5 million to remodel the local

hospital...and attracted a biomass plant that will burn

turkey litter to generate 55 watts of electricity. The

success of Chippewa Valley and the town go hand in

hand and are indicative of “the power of people working

together in co-ops,” says Jan Lundebrek, president of a

local bank.

32 September/October / Rural Cooperatives

75R u r a l C o o p e r a t i v e s
Rural Cooperatives / September/October 2008 33

Price crisis prompts potato growers

to form national co-op

Stephen Thompson reports in the March/April 2005 issue:

“United Fresh Potato Growers of America was organized

March 3 in Washington, D.C., during the meeting of the

National Potato Council. The co-op hopes to become an

umbrella organization for a network of state co-ops that will

monitor the potato market and encourage farmers to take

voluntary action to limit potato production when required to

keep prices at, or above, a break-even level. 

Whatever the cause in the slump in potato demand, the

impact on prices has been dramatic. Bulk prices for fresh

potatoes now hover around $2 per hundredweight — $2.50

below the price producers say they need to stay in business.” 

A perfect storm

In March/April 2005, Campbell reports that the trustee for

Farmland is suing ex-officers and directors for “gross

negligence” in the co-ops’ collapse:

“In its final years, Farmland Industries was trapped in a

‘death spiral of debt,’ made worse by a series of business

blunders that provide evidence of reckless and negligent

behavior by the co-op’s managers and board,” according to a

lawsuit filed by the estate trustee for Farmland. The result

was the largest co-op bankruptcy in the nation’s history. The

board was little more than a rubber stamp for management’s

high-risk ventures, the lawsuit says, and directors repeatedly

failed to demand that obvious alternatives be explored.

The 34-page lawsuit reads bit like a “how-not-to-run-acooperative” primer, complete with lessons in throwing good

money after bad. The lawsuit provides a detailed look into

how Farmland tried to grow its way out of debt by taking on

even more debt as it constructed major new facilities and

acquired another failing farm supply business. In the end,

Farmland succeeded only in swamping itself in an everdeepening sea of red ink, which led to its bonds being

downgraded to “junk” status. That in turn led to a ‘run on

the bank’ by panicked bondholders when press reports picked

up on the co-op’s intensifying financial problems.”

Wind power energizing rural America 

USDA Ag Economist Alan Borst, writing in the Nov.-Dec.

2007 issue:

“Wind energy is a bright spot on the rural economic

development horizon. Wind power projects across rural

America contribute to local and regional development. The

wind energy industry creates new jobs and new sources of

revenue for farmers and ranchers, and it increases the local

tax base of rural communities.

Wind turbines generate homegrown energy that helps

secure America’s energy future during uncertain times while

reducing pollution and conserving water resources. Wind

energy is the fastest growing energy source in the world, and

numerous rural communities are reaping the benefits.”

Co-ops get serious about renewable energy

Rural Development staff writer Lindsay Atwood reports on

formation of a new “super co-op,” in the July/August 2008

issue:

Electric co-ops across the nation are banding together to

do what co-ops do best: pool resources for the greater good

of everyone involved. In this case, they are joining to form

the National Renewable Cooperative Organization (NRCO),

essentially a “super cooperative” made up of many individual

rural electric co-op utilities. NRCO will identify viable

renewable energy projects and make them available to its

members to help co-ops diversify their portfolios. NRCO

provides the added benefit of helping co-ops in some states

meet the Renewable Portfolio Standards.

“As a generation and transmission co-op in central and

western Kansas, we realized that we have substantial wind

resources,” says Earl Watkins, CEO of Sunflower Electric

Co-op. The question is: “How can we help other G&Ts who

don’t have the resources in their back yard that we have in

our back yard?” The answer, he believes, is the NRCO. ■
34 September/October / Rural Cooperatives

N E W S L I N E

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

Farmer Co-ops Conference

focus on strategy, finance

The 11th annual Farmer

Cooperatives Conference will be held

Nov. 18-19 in St. Paul, Minn.

“Cooperative Strategy, Structure and

Finance” is the theme for the

conference, sponsored by the University

of Wisconsin Center for Cooperatives. 

“Today’s farmer cooperatives must

pursue growth opportunities to remain

competitive, and simultaneously assume

more risk to meet supply-chain cost

pressures,” explains Anne Reynolds,

assistant director of the UW Center for

Cooperatives. “The equity and capital

management issues that result are major

drivers for a cooperative’s strategic

planning and decision-making process.” 

This year’s program will explore the

innovative structural and financial

strategies that cooperatives are adopting

to meet these challenges. 

The national conference, Reynolds

noted, offers a unique opportunity for

cooperative board members, CEOs and

others doing business with agricultural

cooperatives to explore these issues.

Experienced cooperative business

leaders and knowledgeable experts will

share their insights on topics that

include: strategies for growth,

managing risk, cooperative finance

strategies and case studies of equity and

finance strategies employed by

individual cooperatives.

For more than a decade, the Farmer

Cooperatives Conference has provided

a stimulating forum for those in the

agricultural coop¬erative community to

learn and exchange ideas. The UW

Center for Cooperatives is assisted by a

national planning committee of

cooperative scholars and practitioners in

organizing the conference. 

The annual meeting of NCERA210, which promotes and coordinates

research on agricultural cooperatives,

will follow the Farmer Cooperatives

Conference on November 19 and 20, at

the same location. 

Updates on the conference and

registration information will be posted

at: www.uwcc.wisc.edu/farmercoops08.

Questions about the conference can be

directed to Anne Reynolds at (608) 263-

4775, or atreynol@wisc.edu. 

Peltier leaving NCFC

to lead grape/wine group 

Jean-Mari Peltier, CEO of the

National Council of Farmer

Cooperatives (NCFC), resigned Aug.

31. Peltier, who had been at NCFC for

four and a half years, is leaving to lead

the newly formed National Grape and

Wine Initiative (NGWI) in her home

state of California.

“Jean-Mari has revitalized NCFC

during her term as president, and leaves

behind a healthier and more vibrant

organization than she inherited,” says

NCFC Chairman Bill Davisson of

GROWMARK. “On behalf of the

members of the Council, I thank JeanMari for her hard work on behalf of

America’s farmer-owned cooperatives,

and I wish her well in her new

endeavors.”

During her tenure, Peltier refocused

the organization, expanding NCFC’s

policy agenda to include a broader

range of issues affecting cooperatives

and their producer members. Under

her leadership, NCFC refined its

strategic vision to represent the policy

and business interests of members,

reflecting the changing farmer

cooperative business structures and

Agriculture Secretary Ed Schafer confers with NCFC President and CEO Jean-Mari

Peltier at USDA headquarters. Peltier recently left NCFC and is now working with the

grape and wine industries in California. USDA photo by Ken Hammond
Rural Cooperatives / September/October 2008 35

practices in a rapidly changing global

marketplace.

“I feel honored to have been able to

work for an outstanding organization

and a wonderful membership for the

past five years,” says Peltier. “While I

look forward to returning to California

and getting NGWI up and running, I

will truly miss the hard-working and

exceptional staff at NCFC, as well as

the supportive and engaged members of

the Council.”

NCFC Chief Economist Terry Barr

is serving as interim president as the

board searches for the next CEO.

Chairman Davisson has named a special

committee of the Executive Council to

work on the search and will be

engaging an outside executive search

firm to assist in the vetting process.

Correction: A photo of NCFC’s

annual Co-op Country Barbecue at

USDA headquarters printed in the JulyAugust issue of Rural Cooperatives

incorrectly identified Bill Davisson as

sitting next to Ag Secretary Ed Schafer.

That is actually NCFC Senior Vice

President Randy Jones.

United to expand feed facility 

United Cooperative, Beaver Dam,

Wis., has approved plans to expand its

feed and grain facility in Sauk City,

Wis. Additions include a 400,000-

bushel grain bin, movement of an

existing 20,000-bushel wet bin, a new

4,700-bushel-per-hour dryer, two new

10,000-bushel-per-hour legs and one

new grain receiving pit. 

“The addition of the 4,700-bushelper-hour dryer offers a total drying

capacity of 6,700 bushels per hour at

the United Cooperative feed and grain

location in Sauk City,” says Mark

Wiegel, the co-op’s grain operations

manager. “Together, these changes

result in larger storage capacity to serve

customers, faster unloading for grain

customers bringing their harvest into

the elevator, and more efficient service

to the feed mill.” 

“This is an exciting step for our

state-of-the-art feed mill in Sauk City,”

commented John Scheuers, vice

president of feed operations for United

Cooperative. “Currently, a feed mill

employee has to spend about four hours

per day hauling grain from the existing

grain bins over to the feed mill for use

in animal feed rations. This new

equipment will free up that time for

other work and offer greater

convenience for serving customers in

Sauk City, Prairie du Sac, Lodi,

Reedsburg, Loganville and surrounding

areas.” 

The new system should be operational by Oct. 15, 2008. 

Formed in 1936, United Cooperative

is a full-service cooperative offering

feed, grain, agronomy and energy

products and services to south-central

Wisconsin farmers and consumers. 

Cal/West opens new HQ

Cal/West Seeds, the largest memberowned U.S. cooperative devoted

exclusively to the seed business, has

opened a new headquarters on 70 acres

of rural, Sacramento Valley land near

Woodland, Calif. Co-op leaders says

the 12,000-square-foot complex is a

state-of-the-art facility that will keep

the co-op on the leading edge of seed

science. 

Cal/West offers genetics, seed

production and conditioning. It started

one of the first private forage breeding

programs in the United States. The coop’s basic seed production is focused on

alfalfa, safflower, clover, sudangrass,

dichondra, sunflowers and teff grass. All

of the seed subsequent grasses are

primarily used for animal forage, or to

maintain nutrient levels on farmland

where forage grasses are grown. 

Long-range goals of Cal/West have

been described by company President

and CEO Paul Frey as being focused

more on biotechnology and growing

crops in harsh soils. “We are investing

today, realizing there are numerous

challenges to overcome both from a

scientific as well as a political view,”

Frey says. 

Virginia to build

seafood market 

Plans have been announced to build

a 39,000-square-foot Eastern Shore

Seafood Market on state-owned land

neat Melfa, Va. The new facility, to be

built within two years, would be next to

the Eastern Shore Farmers’ Market.

According to a report in the Eastern

Shore News, the facility will include

warehouse storage, coolers and two

blast freezers. 

A major expansion is underway at United Cooperative’s feed facility in Sauk City, Wis.

Photo courtesy United Cooperative

Cal/West Seeds has opened a new

headquarters on 70 acres near

Woodland, Calif. Photo courtesy

Cal/West Seeds
The nonprofit seafood market will

follow the same model as the farmers

market, with space leased to shippers

and brokers. Watermen also will be able

to rent storage space for their catch on

a per-package basis, according to the

press report. 

The idea for a seafood market goes

back a decade, when the Eastern Shore

Marketing Cooperative board — which

is responsible for operating the farmers

market — decided watermen would also

benefit from the central marketing and

storage at a market similar to the

farmers’ market, which has since

handled more than $100 million in

vegetables from local farms since it

opened in the early 1990s, the Eastern

Shore News reported. 

The Virginia General Assembly has

approved issuing bonds to fund

construction of the $5.4 million project. 

Webster Scholarship

fund launched

The CHS Foundation has provided

initial funding to launch the Ralph K.

Morris Foundation’s new Elroy

Webster Cooperative Studies Fund, a

program which provides a scholarship

and honorary award to graduate and

law students interested in agriculture

and cooperatives. The

scholarship program was

created in memory of

Elroy Webster, a

Minnesota farmer and

CHS Inc. leader who

helped drive historic joint

ventures and mergers of

U.S. agricultural

cooperatives. 

Webster established

the CHS New Leader

Program for farmers and

ranchers and created a

grant-based funding

program for cooperative,

agricultural and rural development

projects through the CHS Foundation.

He was also involved in a wide range of

organizations, including FFA,

Agriculture Future of America, the

Ralph K. Morris Scholarship

Foundation and the Agriculture

Council of America. 

“Elroy Webster was one of the most

influential figures in agriculture and

cooperatives in the last half century,”

says William Nelson, president of the

CHS Foundation. 

Application forms and additional

details can be found on the Ralph K.

Morris Foundation website:

www.ralphkmorrisfoundation.org. 

AGP announces sale

of AGP Grain Ltd.

Marty Reagan, CEO of Ag

Processing Inc. (AGP) has announced

the sale of AGP Grain Ltd. (a wholly

owned subsidiary of AGP Inc.) to

Columbia Grain of Portland, Ore. The

sale includes AGP Grain Ltd. assets in

Minnesota and North Dakota. Terms of

the transaction were not disclosed.

“We have worked for many years

with Columbia Grain to market grain

from the Upper Midwest,” said Reagan.

“We have continually looked at ways to

best serve producers in this region. Our

mutual conclusion is that this

agreement will move toward that goal,

given Columbia Grain’s direct link to a

multitude of domestic and international

markets. This transaction will also

enable the AGP Grain Group to

reposition its grain assets

to better serve its customer

base.”

Columbia Grain was

formed in 1978 and

operates 38 grain elevators

in the western United

States, including an export

terminal in Portland, Ore. 

AGP Grain Ltd.,

formed in 1994, operates

elevators and terminals in

North Dakota and

Minnesota, including an

export facility in Duluth,

Minn. The company also

has merchandising offices in the

Minneapolis Grain Exchange and in

Antwerp, Belgium and Barcelona,

Spain.

Gary Olsen, AGP senior vice

president for grain, said the sale does

not include AGP’s interest in Maple

River Grain and Agronomy LLC, in

Casselton, N.D.

GROWMARK purchases

fuels terminal

GROWMARK Inc. has purchased

the Menard County refined fuels

terminal near Petersburg, Ill., from

Magellan Midstream Partners L.P.

Continued operation of the 10-milliongallon facility, first opened in the 1980s,

will enable GROWMARK to ensure a

continued supply of refined fuels and

solidify the cooperative’s commitment

to the energy business, according to

Shelly Kruse, the co-op’s Energy

Division manager.

In addition to refined fuels,

GROWMARK will add biodiesel to the

mix of refined fuels available from the

terminal. 

The Menard Terminal will expand

GROWMARK’s supply capacity and

facilitate continued growth, Kruse says.

“With the addition of the Menard

Terminal, we will be able to more easily

take advantage of market opportunities

and better serve our customers,” she

said. Magellan will continue to deliver

refined fuels into the Menard terminal

via its Midwest pipeline system. 

In other action, GROWMARK has

also acquired Waterloo (Iowa) Service

Co.’s facilities in Waterloo, which it

plans to use for an expanded truck shop

and bulk lubricant storage and

distribution operations. 

Illinois & Iowa co-ops 

announce mergers 

Ludlow Cooperative Elevator Co.,

36 September/October / Rural Cooperatives

GROWMARK has purchased this refined

fuels facility near Petersburg, Ill.

Elroy Webster
Rural Cooperatives / September/October 2008 37

Ludlow, Ill., and Danforth-Gilman

Grain Co., Danforth, Ill., merged

operations on Aug. 1, and will now

operate as Ludlow Cooperative

Elevator Co. “Both companies have

served their area farmers-owners’ grain

handling needs for more than 100 years,

and we look forward to building on our

historical success as we work together

to build an even more successful

future,” says Bruce Bastert, general

manager.

The newly formed company will

operate 10 grain elevators in

Champaign, Ford and Iroquois

Counties. More information about the

cooperative is available at:

www.ludlowcoop.com.

In northwest Iowa, Midwest Farmers

Cooperative and Alceco have signed a

letter of intent to merge, according to a

report in the Sioux City Journal.

Members were to vote on the merger in

September. 

USDA awards $677 million 

to rural electric cooperatives 

Agriculture Secretary Ed Schafer in

August announced the selection of 20

rural utilities and cooperatives to

receive almost $677 million in loans for

new electric lines and system

improvements in 19 states. “America’s

electric co-ops provide a vital service to

rural areas, electrifying communities,

serving farms, businesses and

homeowners,” Schafer said. “Electric

co-ops do it with a remarkable track

record of reliability. The loans we’re

announcing today will help make

system improvements that will benefit

consumers across the nation.”

The loan funds will finance the

construction and repair of over 4,200

miles of distribution and transmission

lines benefiting almost 40,000 rural

electric cooperative consumers. 

For example, East Central Energy in

Braham, Minn., has been selected to

receive a loan of more than $49 million

to serve 4,600 new consumers in

Minnesota and Wisconsin. The utility

will make system improvements to

construct and upgrade over 700 miles of

distribution lines. 

Suwannee Valley Electric Cooperative in Live Oak, Fla., has been selected

to receive an $18 million loan to build

or improve almost 325 miles of

distribution lines and provide service to

almost 3,700 new consumers. Central

Electric Cooperative in Parker, Pa., will

receive a $17 million loan to build and

improve more than 400 miles of

distribution lines and provide service to

almost 1,400 new consumers.

The funding is being awarded

through USDA Rural Development’s

Utilities Programs, which Congress

authorized under the Rural

Electrification Act of 1936.

USDA Rural Development has

awarded approximately $28 billion in

electric loans since 2001.

Funding of the individual recipients

is contingent upon their meeting the

conditions of the loan agreement. For a

list of all loan recipients, visit:

www.rurdev.usda.gov. 

CHS Crop Nutrients expands 

Texas distribution facility 

CHS Inc. is constructing a crop

nutrients warehouse/terminal at the

company's Friona, Texas, grainhandling facility. The expansion will

include a 29,000-ton fertilizer

warehouse, two load-out towers for

straight or blended orders and

additional rail receiving equipment to

handle 110-car trains. Plans call for the

plant to be completed by late spring of 2009.

“CHS Grain Marketing brings grain

to west Texas to serve feedlots and

dairies, and now CHS Crop Nutrients

will use some of the same assets to

position fertilizer imports from its

deep-water port in Galveston, Texas, to

serve west Texas customers,” says

Cheryl Schmura, CHS vice president of

Crop Nutrients. 

A&P Growers Co-op

acquires Arizona orchards 

An irrigation water shortage in

California has spurred Tulare, Calif.-

based A&P Growers Cooperative to

leave the state for additional pistachio

acreage. The nut growers’

cooperative has purchased

Tucson-based Pistachio

Corp. of Arizona for an

undisclosed price,

according to a report in

The Packer, an industry

trade journal. 

“We had planned to

plant additional acres in

Lost Hills, but because of

the water situation we

decided against it,” Jim

Zion, managing partner of

Meridian Nut Growers

LLC, Clovis, Calif., the

cooperative’s marketing

arm, told The Packer in

July. The Arizona company is the state’s

largest pistachio grower-shipper, with

700 acres of orchards, Zion said.

Student-designed device may

protect utility workers 

Engineering students at Johns

Hopkins University in Baltimore have

invented a tool that allows utility

workers to disconnect power lines from

residential transformers at a safe

distance, beyond the range of

dangerous electrical arcs. Their

prototype, built at the request of a local

utility company, consists of a

lightweight aluminum frame that uses

rope and lever-and-pulley system to

enable the worker to detach a

transformer’s power connector, known

as a load-break elbow. 

This operation sometimes triggers an

East Central Energy received a $49 million loan from

USDA to serve 4,600 new consumer-members. 
explosive arc that can cause serious skin

burns and eye injuries. Such arcs can

travel as far as eight feet from the

transformer, but the students’ device

would enable workers to disconnect the

line from 10 to 12 feet away.

Johns Hopkins undergraduates Kyle

Azevedo of Bridgewater, Conn., Julie

Blumreiter of Muskego, Wis. and Doo

Hyun Lee of Seoul, Korea, developed

the device as part of project in an

engineering design class. 

For more information, visit:

www.me.jhu.edu/. 

Knouse to cease applesauce

production at Inwood plant 

Knouse Foods Cooperative Inc. has

announced plans to shut down its

applesauce production operation at

Inwood, W. Va., on Nov. 14. It will

maintain warehousing, storage and

distribution business there, according to

a report in the Hagerstown Morning

Journal. 

About 90 people work at the Inwood

plant. The co-op plans to offer

employees positions at other Knouse

plants in Pennsylvania.

Co-op President and CEO Ken

Guise said the decision was a result of

the continued decline of apple supplies

in the area and the need for major

infrastructure improvements to facilities

at the Inwood plant, the Journal

reported. “Housing developments now

stand where orchards once were, and

there’s been a continuing decline in

cases produced at the plant, a function

of fewer apples received,” Guise said in

a press release. He added that Knouse

needs to be where their growers and

apples are. 

Pennsylvania-based Knouse Foods’

1,500 members grow fruit along the

Appalachian Mountains and throughout

the Midwest. ■

38 September/October / Rural Cooperatives

Johns Hopkins University students

test a new safety device they

designed to aid electric line crews. 

Editor’s note: The following article

by Dan Wheat is reprinted courtesy

the Wenatchee World.

Central Washington Grain Growers

Inc. allocated a record $2.5 million in

dividends to its 1,500 grower members

for its fiscal year ending March 31,

2008, mainly because of increasing

wheat prices, the cooperative's

manager says. The dividends were

announced and half were paid at the

co-op’s annual meeting June 19 in

Waterville, attended by 218 members,

said Kevin Whitehall, manager.

The remaining half of the 2007

dividends will be paid in future years.

Typically, the co-op pays dividends

over 10 to 12 years, but currently it is

paying on a four-year cycle because

of its healthy financial condition,

Whitehall said.

The co-op paid off the balance of

its 2004 dividends and one third of its

2005 dividends, which totaled $606,507.

Combined with half of the $2.5 million,

a total of $1.856 million was paid back

to members at the meeting, he said.

Over the past seven years, the coop has paid growers $9.9 million in

dividends (an average of 10.96 cents

on every bushel delivered) while

putting $3.68 million into capital

improvements and increasing the

amount of working capital (cash

available) by $2.6 million, he said.

“We’ve done a lot. We've been

aggressive in paying back dividends

while still doing capital improvements

and increasing working capital,”

Whitehall said.

The storage and marketing

cooperative spent $920,000 in capital

improvements in 2007, including a new

247,000-bushel grain elevator in

Withrow, he said. The co-op spent

$178,000 on capital expenses in 2006.

The cooperative made $2.98 million

in net income after taxes at the end of

its fiscal year on March 31, 2008,

compared with $2.21 million in 2007,

Whitehall said. Grain Grower

dividends totaled $1.6 million on the

2006 crop, $1.3 million on the 2005

crop, Whitehall said.

Wheat prices climbed to record

highs in the past year, largely because

of the second year in a row of drought

cutting Australia's wheat crop in half,

tight world stocks and unusually high

market volatility.

The total crop received in 2007 was

13.2 million bushels compared with

14.3 million bushels in 2006, a 10

percent drop due to dry growing

conditions, Whitehall said.

This year it looks like the crop will

be about 12 million to 12.5 million

bushels and will be a week to 10 days

late in harvest because of cool

weather.

State Rep. Mike Armstrong of

Wenatchee was honored as the coop’s “Legislator of the Decade” at the

annual meeting for his lead role in

saving the Coulee City to Cheney short

line railroad operated by Eastern

Washington Gateway Railroad,

Whitehall said. A past operator

planned to close and salvage the line

for lack of revenue, but the state

bought it in 2006 and kept it open, he

said.

The co-op ships about 50 percent of

annual production from Grant and

Lincoln counties to Cheney over the

line. Douglas County production is

trucked to Wenatchee and shipped to

Portland, Ore., by rail or trucked to the

Tri-Cities and barged to Portland.

“Saving the line is a benefit for our

growers,” Whitehall said. “It saves

them thousands of dollars for many

years to come.” ■

Wheat co-op pays record dividends
Rural Cooperatives / September/October 2008 39

By Carissa Heckathorn

National Co-op Business Assoc.

Manager, Marketing & Multimedia

or more than six decades, co-ops of all types

all across America have united to celebrate

October as Co-op Month by

promoting co-op awareness.

Even if your co-op has not

yet planned any Co-op Month activities, you

still can (assuming most of you will read this

article about the first week in October). But

there’s no time to lose! 

“Last minute shoppers” can use

advertisements, brochures and other

materials developed by the National Co-op

Month Planning Committee to help co-ops

promote themselves and the contributions

co-ops make to our society. Go to:

www.coopmonth.coop to download

materials. 

Here are some examples of what others are doing to

observe Co-op Month.

New ‘Go Co-op’ Website — The National Cooperative

Grocers Association (NCGA) is launching its redesigned

www.go.coop Website as part of the 2008 program to

continue providing a destination site for U.S. consumers to

find out more about all types of co-ops. NCGA reached out

to the cooperative community for stories from cooperatives

everywhere, asking for anecdotes from employees and

members to showcase the human impact of cooperatives in

every sector. The updated Website goes live Oct. 1.

Day in the Life — NCBA just updated its A Day in the Life

of Cooperative America booklet, which all cooperatives can

purchase to use and display. This in-depth publication

spotlights each cooperative sector, and recently won honors

at the 2008 Cooperative Communicators Association

conference. For a PDF of the booklet to post on your

Website, or ordering information for copies, go to:

www.coopmonth.coop. “This booklet is something all co-ops

should share with their members,” says Adam Schwartz,

NCBA’s vice president of public affairs and member services.

“The booklet offers compelling stories and anecdotes which

points out the value of cooperatives.” 

Reaching the next generation — The Co-op Month

committee recognizes the value of communicating to, and

recruiting, the “Millennial generation” (those born after

1977) to support cooperatives. Research

shows that younger people entering the

workforce want to support companies with a

corporate social responsibility strategy, so

the Co-op Month Committee partnered

with the “October is Co-op Month, but I

Cooperate All Year Long” Facebook page to

deliver updates on Co-op Month activities.

Facebook, one of the most popular social

networking sites, unites people who share

the same passions and provides another

venue for networking. To see the power of

this social networking tool for cooperators,

go to: www.facebook.com and register for a

Facebook account. Once that’s complete, you can enter the

term “Co-op Month.” 

Co-op Month items at Zazzle.com — Every marketer knows

the power of brand recognition. That’s why the committee is

providing a venue to purchase Co-op Month branded items

through Zazzle.com. When you purchase the items featured

in the Co-op Month gallery, the Co-op Month committee

receives 10 percent back. Visit www.zazzle.com and search

for “Co-op Month.”

Co-op Arts and Crafts Auction — The Cooperative

Development Foundation (CDF) also celebrates Co-op

Month. “A Celebration of Co-op Arts and Crafts” runs the

entire month of October. This online auction of arts and

crafts — produced and sold by co-ops around the country —

goes to the various cooperative development funds. 

Run for co-ops — CDF also sponsors the Race for

Cooperative Development, which raises funds for its

operations. This year’s race will take place Oct. 18 in

Arlington, Va. For each $100 donated to the race, individual

donors receive a $10 credit for the Arts and Crafts online

auction. See www.cdf.coop for more details. ■

F

Co-ops urged to get involved in Co-op Month ‘08
40 September/October / Rural Cooperatives

By E. Kim Coontz

CooperationWorks!

istory tells us that times of economic and

social struggle create opportunities to

implement non-traditional problem solving

strategies. The crisis in the housing market

creates an opportunity to promote

cooperative housing to communities looking for viable

solutions, particularly in addressing home ownership for lowand moderate-income households.

Fueled by a combination of good intentions and data

showing that home ownership positively affects everything

from improved school performance in children to reduced

criminal activity, an array of programs involving public funds

were created to generate home ownership opportunities. 

While government supported lending programs such as

Fannie Mae and Freddie Mac assist a wide range of income

groups, a number of other programs specifically target lowand moderate-income households that have not previously

owned a home. 

Traditional assistance programs for these people help them

purchase single family homes with down payment and loanqualifying assistance. This funding strategy has inherent flaws

that have effectively squandered public funds and left many

beneficiaries worse off than they were before the assistance. 

First, they lack effective strategies for preserving

affordability when the initial household changes ownership so

the subsidy benefit is not passed on to subsequent

homeowners. Second, the financial monitoring mechanisms

used have proven ineffective as many of these buyers

refinanced to predatory, sub-prime lending schemes. Many of

them ultimately lost their homes, causing federal, state and

local agencies to lose their investments and leaving

beneficiaries of the program homeless and with credit scores

so low that even rental housing is difficult to obtain.

Avoiding flaws of traditional programs

Cooperatively owned manufactured home parks and

limited-equity housing cooperatives are models of home

ownership for low- and moderate-income households that do

not have the flaws of traditional programs. 

Public subsidies used in either of these housing models are

prudently invested because they include built-in mechanisms

for preserving affordability over time and because the

financing structure of cooperatives insulates the project from

problematic refinancing schemes.

When subsidies are involved, beneficiaries of these

programs typically exchange the assistance they received for a

share of the re-sale appreciation value of the dwelling they

own. 

The exchange still reaps benefits for the cooperative

member, whether it is a manufactured home park or a

limited-equity housing development. In either case,

membership includes entitlement to cooperative ownership

and a voice in the community.

Cooperative housing members are no longer vulnerable to

a landlord’s decisions to raise rents, sell land or delay repairs

on critical infrastructure (such as water lines, sewage, roads

and electricity). Cooperative members gain payment stability,

asset investment and control over how funds are allocated to

infrastructure repairs and improvements. 

Remarkable features of cooperatives include social and

community building mechanisms.

Green Pastures Senior Co-op 

Last spring, residents of a central Oregon manufactured

home park unanimously voted to form Green Pastures Senior

Housing crises presents opportunity for

co-ops for low- & moderate-income people 

C O - O P D E V E L O P M E N T A C T I O N

H

Members of Green Pastures Senior Housing Cooperative in

Redmond, Ore., sign share-purchase agreements. 

continued on page 42
in California have taken a different tack. California’s

regulatory and political climates are not conducive to

establishing state regulations on agricultural produce,

according to California Tomato Farmers, so the co-op was set

up two years ago to institute voluntary standards. 

The co-op’s Fresh Standard is compatible with the Florida

Best Practices Manual, approved by the U.S. Department of

Agriculture (USDA), and calls for inspections carried out by

USDA officials. It also covers issues of social accountability

and sustainability. 

A member of the cooperative who fails to meet safety

requirements loses membership and is no longer eligible to

use the Fresh Standard logo (see illustration, page 14) on his

product. California Tomato Farmers says it represents the

producers of 80 percent of the tomatoes grown in California.

Tim McCarthy, president of the Central California

Tomato Growers Cooperative, a tomato packer and shipper

in Merced, is skeptical about the need for government

benchmarks and the Fresh Standard. He believes that the

need to satisfy consumers’ concerns about the safety of the

food they buy is the biggest incentive producers and shippers

have to maintain top standards. 

“Growers already have to meet stringent requirements for

food safety,” McCarthy says. “In this business, everybody has

standards you have to meet. State standards are usually just

watered-down versions of the ones our wholesale customers

demand.” Even so, he says of the Fresh Standard, “More

power to them.”

Sales drop hurts California too

While Florida tomato growers suffered huge losses,

McCarthy says that California growers weren’t, as a whole,

hurt badly by the tomato scare. 

“The issue was perceived as a Florida and Mexico

problem,” he says. “California tomatoes were designated as

‘safe to eat.’” As a result, the demand for California tomatoes

actually rose. While tomato prices in his area are usually

about $5 a box, McCarthy says that during the height of the

scare in July, he was seeing “anywhere from $6 to $7 or $8.” 

“There may be long-term damage to the tomato market,”

McCarthy says, “But for now we’re doing okay.”

Ed Beckman disagrees. “Right now, FOB prices to the

grower are running about $3 per box,” he says. “I’d hardly

say that California growers have not been impacted by this

outbreak.” He points to AC Nielson figures saying that retail

sales of fresh tomatoes are 20 to 40 percent below what they

were before the scare. 

“Prices pre-Salmonella were $13 to $15 per box,”

Beckman says. “Right now [late August], a consumer is

paying $3.49 a pound for California tomatoes at two major

retailers — the same tomato that’s being sold by the grower

for about $3 for 25 pounds. These numbers raise any number

of questions about the impact on California growers and

consumer demand.”

In any case, “The fact is that this wasn’t a salmonella

outbreak from the United States. The salmonella came from

Mexico,” McCarthy says. “The real story is the need to

control imports at the border.” In fact, recent news reports

indicate that nine shipments of salmonella-contaminated

peppers had been stopped at the border over the previous 12

months.

Will establishment of tighter sanitary standards such as the

Florida Best Practices Manual and the California Fresh

Standard make a difference in a future infectious disease

investigation? The argument can be made that rigorous

standards would allow investigators to quickly eliminate from

their investigation produce grown and shipped under those

requirements. 

However, the biggest benefit is likely to be increased

consumer confidence. Scientists looking for the source of a

virulent, possibly fatal disease, faced with the evidence

pointing in a certain direction, need to follow the clues

wherever they lead. Reggie Brown, among others, hopes the

system isn’t put to the test again anytime soon. ■

“In some places, lobstermen don’t

get along with people who drag —

there are gear conflicts and such,”

Libby says. “But we are fortunate in

that we work well with the lobstermen’s

co-op — we’re all a pretty tight group

here in Port Clyde. We’ve all grown up

together here, and are all friends and

neighbors. We all realize the

importance of both fisheries to the

town and general economy of the

state.” Some members belong to both

co-ops.

Is there a potential for the two coops to merge?

“I think it can happen as we move

forward with the marketing plan. There

are a lot of opportunities for joint

marketing and developing the Port

Clyde Fresh Catch brand.” 

Co-op members must vote to allow

any new members to join, and several

have in the past year. Members buy a

share of stock for $100, which is

refundable if they leave. 

“Honesty, a sense of cooperation and

support for our commitment to

sustainability are the main things we

look for in new members,” Libby says. 

Lest one think the life of a Maine

fisherman is all work and no play, Libby

was just about to depart on a camping

vacation to the mountains when

interviewed.

“Don’t forget your fishing rod,” he is

reminded. 

“No fishing rods!” he replies. “We’ll

climb a few mountains. But, no fishing

on this trip!” ■

Rural Cooperatives / September/October 2008 41

Feeling the Squeeze

continued from page 15

Charting a New Course

continued from page 9
Cooperative. In the process, both economic and community

benefits have been created. 

Resident and board secretary Dick Martin, observes: “We

are so fortunate to have had this golden opportunity to save

our homes and our future here at Green Pastures.” Maura

Swartz, Northwest Center for Cooperative Development, has

been providing cooperative development assistance to the

project. 

Swartz reports: “The co-op development process has

promoted excitement among residents; many of them have

commented on the increased level and sense of community.

The process has promoted a truly palpable sense of coming

together.” 

While members remain the center of housing

cooperatives, development assistance and various sources of

special funding are required, as is the support of county and

local planning departments and housing officials. 

Brandon Failing, resident member of Bennett Park

Cooperative in Moorehead, Minn., notes: “Ultimately, the

residents joined together and created this cooperative, but it

was through the guidance of NCF (Northcountry

Cooperative Development Fund) that we were able to make

things happen.” 

Cooperative Development Centers are responding to the

need for affordable housing and the opportunity to assert the

vitality of cooperative solutions in this time of crisis. The

California Center for Cooperative Development, the

Northwest Center for Cooperative Development and

Northcountry Cooperative Development Fund all have

special programs to promote cooperative housing. 

In each case, Rural Cooperative Development Grant funds

from USDA Rural Development are helping fund technical

assistance for promoting and developing housing

cooperatives. ■

the time, the line included milk, low-fat

milk, ice cream, cheese, cottage cheese,

ultrapasteurized products, powder,

butter, yogurt and more.

Co-op struggles in 70s;

reinvents itself in 80s

The 1970s and early 1980s were

difficult for Dairylea. The 1970s found

Dairylea on the edge of bankruptcy,

hemorrhaging money

and members. Many

of the problems

stemmed from the

overall economic

collapse the country

experienced. 

Some

problems resulted

from questionable decisions made by

the co-op, and it failed to adapt to the

changing marketplace. The co-op hit a

turning point, though, when thentreasurer Clyde Rutherford convinced

the board to hire professional

management. Rutherford, elected

president in 1977, spearheaded a series

of institutional reforms and began

working collaboratively, instead of

competitively, with other regional dairy

co-ops. He brought Rick Smith (who

later became vice president and chief

executive officer, and recently took the

post at DFA) on board as general

counsel. 

Smith spearheaded the sale of the

co-op’s last processing plants and

engineered a dramatic financial

turnaround. By 1985, the co-op had

managed to lower operating costs,

reduce debt, make significant new

investments and improve equity.

The 1990s saw Dairylea working

hard to secure competitive prices for

members’ milk, but also investing in a

suite of services to give new value to

members. The 1990s also hailed the

onset of new technologies that made

dairy farms more efficient and

productive. 

By the mid-1990s, Dairylea profits

were steady and the co-op redoubled its

efforts to achieve unity among dairy

farmers.

Partners with DFA

In 1999, Dairylea partnered with the

newly formed Dairy Farmers of

America (DFA), a national cooperative,

to create Dairy Marketing Services, a

Northeastern milk marketing

partnership. The venture combined the

resources of the two powerful co-ops,

allowing for increased savings on

assembly, transportation and hauling

costs. 

The successful DMS partnership led

to a closer relationship with DFA, and

Dairylea became a DFA member co-op

in 2001. In 2006, Smith became chief

executive officer of DFA, further

tightening the alliance between the two

co-ops.

The success of the DMS partnership

convinced two major co-ops, Land

O’Lakes and St. Albans, to join in 2003.

DMS currently includes more than

9,500 farms that annually produce

about 16 billion pounds of raw milk.

Today, Dairylea is heeding the

lessons of its rich, tumultuous, 100-year

history. The co-op has learned to

embrace change and looks forward to

the challenge of responding to

emerging market conditions. The co-op

also continues to strive to find new

markets for its members’ milk, keep

prices competitive and help its members

achieve greater profits through its suite

of farm services.

Of Dairylea’s accomplishments,

Rutherford says: “Our success is a direct

result of the unwavering loyalty of our

farmer-members and the dedicated

employees that serve them. Without

them we would not be where we are

today.” ■

42 September/October / Rural Cooperatives

Co-op Development Action

continued from page 40

Dairylea: A Century of

Cooperation

continued from page 18

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