Rural

COOPERA COOPERATIVES

USDA / Rural Development USDA / Rural Development January/February 2004 January/February 2004

Fresh approach 

at co-op produce auction

Fresh approach 

at co-op produce auction
2 January/February 2004 / Rural Cooperatives

Cooperatives yield enormous benefits not only to their member-owners in

the United States, but also around the

world. USDA has long been active in

helping to spread the use of the cooperative business structure internationally, a charge contained in the

Cooperative Marketing Act and other

legislation. This work may be accomplished through the exchange of educational and research materials, engaging

in joint activities, providing direct technical assistance to agricultural producers and even by stationing representatives at institutions or with farm organizations in foreign countries.

Since Congress has not specifically

provided a budget for international coop development work carried out by

the Cooperative Services program of

the Rural Business-Cooperative

Service (part of USDA Rural

Development), most of our assistance

over the years has either been through

information exchanges and meetings or

through in-country technical assistance

(usually funded by international donor

groups). Countries receiving this assistance tend to follow the thrust of U.S.

foreign policy direction at a given time

(hence, Central and South America in

the 1960s and 1970s, the Pacific Rim

in the 1980s and Africa in the 1990s

and at present). Significant historical

events have also played a part in

directing these efforts, such as the fall

of the Iron Curtain and a resulting

emphasis on developing co-ops in

Eastern Europe.

RBS Cooperative Services also hosts

hundreds of foreign visitors annually

(usually farm organization representatives and government officials) who are

interested in U.S. cooperatives and

how their practices and operations

might be adopted for use in their

native lands.

Of course, USDA cooperative publications are in high demand by these

groups and by others around the

world. Many of our basic cooperative

publications have been reprinted in

foreign languages and are widely distributed around the globe, both in

hard copies and through the Internet.

For example, one of our basic co-op

primers, “Co-ops 101” by Donald

Frederick, was recently translated into

Chinese. The U.S. style of cooperative

structure, where farmers are the owners and beneficiaries of a business, has

obvious global appeal.

Most direct international technical

assistance provided by RBS

Cooperative Services is closely linked

to assistance efforts by other USDA

agencies. For example, the Nigerian

assistance effort (reported on page 12

of this issue of Rural Cooperatives) is

part of an overall USDA initiative to

help the Nigerian Ministry of

Agriculture achieve broad-based rural

development objectives in agriculture.

Technical expertise in Nigeria is also

being supplied by USDA’s Cooperative

State Research, Education & Extension

Service, Foreign Agricultural Service,

Agricultural Research Service, Food

Safety and Inspection Service, Natural

Resources Conservation Service, Animal

and Plant Health Inspection Service and

Agricultural Marketing Service.

In a neighboring West African

country, cooperative development and

education work is at the centerpiece of

a partnership between USDA and

Ghana’s Ministry of Food and

Agriculture. Several of the other

USDA agencies named above are also

involved in a wide range of joint projects to strengthen Ghana’s agricultural

sector. Projects are underway to

strengthen the farmer cooperative system in Ghana by adapting contemporary cooperative principles and business practices to that nation’s needs. In

so doing, cooperatives should become

more effective competitors in the marketplace and generate more income for

their farmer members. 

RBS Cooperative Services-directed

projects in Ghana, done in partnership

COMMENTARY

International co-op development promotes trade, democracy

By helping 

developing nations

adopt Westernstyle cooperative

business structures

that raise farm

incomes, we will

build stronger

trading partners

and related 

economic 

relationships.

continued on page 35
Rural Cooperatives / January/February 2004 3

Rural COOPERATIVES (1088-8845) is published

bimonthly by Rural Business–Cooperative Service,

U.S. Department of Agriculture, 1400 Independence

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

The Secretary of Agriculture has determined that

publication of this periodical is necessary in the

transaction of public business required by law of 

the Department. Periodicals postage paid at

Washington, DC. and additional mailing offices.

Copies may be obtained from the Superintendent of

Documents, Government Printing Office, Washington,

DC, 20402, at $21 per year. Postmaster: send address

change to: Rural Cooperatives, USDA/RBS, Stop

3255, Wash., DC 20250-3255.

Mention in Rural COOPERATIVES of company and

brand names does not signify endorsement over

other companies’ products and services.

Unless otherwise stated, contents of this publication

are not copyrighted and may be reprinted freely. For

noncopyrighted articles, mention of source will be

appreciated but is not required.

The United States Department of Agriculture (USDA)

prohibits discrimination in all its programs and 

activities on the basis of race, color, national origin,

sex, religion, age, disability, political beliefs, sexual

orientation, and marital or family status. (Not all 

prohibited bases apply to all programs). Persons 

with disabilities who require alternative means for

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print, audiotape, etc.) should contact USDA’s TARGET

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

To file a complaint of discrimination, write USDA,

Director, Office of Civil Rights, Room 326-W, Whitten

Building, 14th and Independence Avenue, SW,

Washington, D.C. 20250-9410, or call (202) 720-5964

(voice or TDD). USDA is an equal opportunity

provider and employer.

Ann Veneman, Secretary of Agriculture

Gilbert Gonzalez, Acting Under Secretary,

USDA Rural Development

John Rosso, Administrator, Rural BusinessCooperative Service

James Haskell, Acting Deputy Administrator,

USDA Rural Business-Cooperative Service

Dan Campbell, Editor

Vision Integrated Marketing/KOTA, Design

Have a cooperative-related question?

Call (202) 720-6483, or

Fax (202) 720-4641, Information Director,

This publication was printed with vegetable oil-based ink.

United States Department of Agriculture

Rural COOPERA .

COOPERATIVES

January/February 2004 Volume 71 Number 1

On the Cover:

The goal of the Badgerland Produce Co-op Auction in Montello, Wis., is to

sell produce at a fair price – for both farmers and buyers. Article on page 8.

Photos by Pamela J. Karg 

FEATURES

4 On the front line

Field representatives are the eyes and ears of a co-op

By Catherine Merlo 

8 Wisconsin co-op offers fresh approach 

to produce auctions

By Pamela J. Karg

11 Agribusiness, co-ops awarded $28 million 

in USDA grants

12 Boosting the giant

USDA assistance effort helping Nigerian producers

By J. Haskell, G. Ely & J. Jobe

15 African ag co-ops leading fight 

against HIV/ AIDS

By Susan G. Schram

16 Meeting the test

8,200 service calls in 24 hours tests mettle of 

Adams Electric Co-op

By Steve Thompson

21 Co-op leaders focus on strategies for success

By Kimberly Zeuli 

23 How business culture drives 

economic behavior in co-ops

By Julie A. Hogeland

28 Farmer co-op sales, income fall in 2002

By Eldon Eversull

DEPARTMENTS

2 COMMENTARY

10 VALUE-ADDED CORNER

20 FOCUS ON...

30 MANAGEMENT TIP

32 NEWSLINE
4 January/February 2004 / Rural Cooperatives

On the front line 

Field representatives are the eyes and ears of a co-op 

Tom Burlando, field representative for Diamond of California, guides a camera crew through a California walnut orchard during filming for a

cable TV food show. Photo courtesy Diamond of California 

By Catherine Merlo

Editor’s note: Merlo is a Bakersfield,

Calif., based freelance writer and editor

who is a frequent contributor to this and

other co-op publications.

n any given day, Bill Van

Skike’s office might be a

California cotton field, a

coffee shop or even the

hood of his silver Dodge Durango,

miles from the headquarters of

California Planting Cotton Seed

Distributors (CPCSD), his employer. 

Larry Seamans regularly reports to

work for Maryland and Virginia Milk

Producers at a dairy barn or milk

hauler’s station.

It’s not unusual for Land O’Lakes’

Ray Cherry and one of his field staff to

meet at the kitchen table of a

Minnesota dairy producer.

Each of these men is a field representative for an agricultural cooperative, a role that’s vital as “the liaison

between management and member,”

according to Dave Baker, director of

member relations for Blue Diamond

Growers, the almond co-op based in

Sacramento, Calif.

Although their specific responsibili- O ties vary from co-op to co-op, field
Rural Cooperatives / January/February 2004 5

representatives share common responsibilities. They answer members’ questions, provide information and nurture

relationships for the organization and

owners they serve. They are the eyes

and ears of a cooperative, a primary

communications link and the “go-to”

source for members. They deliver

good news and bad, take the heat during tough times, and frequently form

genuine friendships with co-op members. They work on salary without

commission and often are part-time or

former farmers themselves. 

“We take the business of the co-op

to the growers, and the business of the

growers to the co-op,” says Tom

Burlando, a field representative for

Diamond of California, the Stocktonbased walnut co-op. 

Connecting with grower-members

Everyone interviewed for this article

agreed that successful field representatives for a farmer-owned organization

must have, and show, enthusiasm for

the co-op and agriculture in general.

Personal integrity is also paramount.

Straight shooters make the most successful field reps. 

“I find more and more that if I don’t

have a good feeling about the field representative, I don’t have a good feeling

about the co-op,” says Richard

Stadden, a cotton grower from Tulare,

Calif., who belongs to two co-ops and

serves on the board of one. “A member

has to have confidence in the field rep,

who not only needs to know the nuts

and bolts of the co-op but have real

enthusiasm for it.”

A background in agriculture, biology — even finance — helps co-op field

representatives provide expert service

to members. But personality may

count most of all.

“I can teach a person what he or she

needs to know about the co-op and the

industry,” says Van Skike, who is also

president of the 1,600-member

CPCSD. “But I can’t give them the

personality that farmers will relate to.”

“Personality is extremely important,” says Cherry, director of Land

O’Lakes’ Midwest Milk Supply

Division. Cherry supervises 17 field

representatives and four procurement

managers for 2,000 Land O’Lakes’

dairy members in the Midwest.

“You have to be able to express

empathy,” Cherry says. “You’ve got to

be able to deliver a strong, succinct

message to people you truly like to

work with, especially when it’s bad

news.”

Seamans, Maryland and Virginia

Milk Producers field rep, agrees.

“You’ve got to be able to handle any

situation without taking things personally,” he says. 

Personality includes not only discretion and diplomacy but self-motivation

as well. 

“There’s a lot of flexibility and freedom in the job,” says Jeff Bitter, vice

president with Allied Grape Growers,

a 500-member co-op based in Fresno,

Calif. Bitter oversees the co-op’s fourmember field staff. “A field representative needs to be active in the grower

community, to regularly provide new

information and insight, to take the

initiative to gather information from

buyers.”

Necessary knowledge

Soliciting new memberships, keeping farmer-members informed on state

and federal regulations and reporting

on marketing conditions are part of

the field representative’s responsibilities. Knowledge of farming and cultural practices is important, too. Many

field representatives are actively

involved in helping improve their

members’ quality and yield, lower their

production costs and share best-management practices.

For example, dairy producers can

earn a quality premium for meeting

strict milk standards. In some cases,

the premium can bring a producer an

extra $4,000 each month. For both

Seamans and Cherry it’s part of the job

to monitor members’ milk quality and

to help them achieve the premium.

“My job involves helping our producers find their weak points and

improve their practices to help them

be successful,” says Seamans, who was

a Virginia dairy producer for 17 years

before he was hired by Maryland and

Virginia Milk Producers.

Sun-Maid’s Mark

Sorensen (left) 

and member Bir 

Dillon examine justharvested raisins 

near Delano, Calif.

“We interact with 

our members on the

quality of the raisin

crop, the market,

sales, prices and

delivery,” Sorensen

says.

“I can teach a person what he or she needs

to know about the co-op and the industry.

But I can’t give them the personality that

farmers relate to,” says Bill Van Skike, here

meeting with CPCSD member John

Hernstedt during a lunch stop at a café

near Shafter, Calif. Photo by Catherine Merlo
6 January/February 2004 / Rural Cooperatives

The five field representatives who

serve the 2,000 members of Diamond

of California must “know everything

about walnuts,” Burlando says.

“It used to be that growers farmed

from the boots up,” says Burlando,

who holds a master’s degree in plant

pathology. “Now, in addition to knowing about varieties, pests, disease and

weather, it’s become more and more

important to know about soil health

and maintenance, as well as cover

crops.”

“You have to understand the grower’s perspective,” says Mark Sorensen,

part of the grower relations department for Sun-Maid Growers of

California, a raisin co-op. “That’s easy

for me to do.”

A fourth-generation Fresno-area

farmer and Sun-Maid member,

Sorensen was recruited to become a

field representative for the co-op two

years ago. 

“If you know what you’re talking

about as far as growing practices,

growers will trust you,” Sorensen says.

“When I talk to growers about pruning or harvesting, I tell them how I’m

doing it on my farm. It relieves them

that I know how to do it.”

Tools of the trade

Because the job’s flexible nature

often takes a field representative far

from the cooperative’s offices, his or

her most valuable tools may be a cellular phone or laptop computer.

“Farmers don’t clock in at 8 a.m. or

out at 5 p.m.,” Van Skike says.

“There’s no off-time for them, and

that means there’s no off-time for us.

My cell phone is the first thing I turn

on each morning and the last thing I

turn off at night.

“The No. 1 issue is communications,” he adds. “Nothing is more

important. If a grower has a question

or problem, we get back to them right

away. And if we don’t know the answer,

we don’t beat around the bush. We let

them know we’ll get back to them with

an answer as soon as we know it.”

Says Seamans, “Every one of our

members knows he can call me at 1

a.m., if necessary. We’re on call 24

hours a day, seven days a week.”

Still, the latest in high-tech tools

can’t replace face-to-face contact with

members. 

“We try to spend time in our members’ world,” says Sun-Maid’s

Sorensen. “Meeting in vineyards or

coffee shops is part of that world.”

“Coffee shops are a valid meeting

place because they’re informal,” agrees

Van Skike. “Growers are open to talk

about what’s really on their minds.

Sometimes, coffee shops offer better

quality time than at meetings, which

are more structured.”

How often field representatives

meet with their members varies. 

“Some members need more contact than others, while others are

comfortable with an annual visit,”

says Burlando, who has 550 grower

accounts while also serving as a plant

manager for Diamond’s walnut

receiving and processing plant in

Linden. 

Sun-Maid has 1,200 members and

five field representatives. “Our goal is

to visit every grower at least once a

year,” Sorensen says.

Most also use co-op meetings and

industry functions as opportunities to

visit with their members.

The downside

Like any occupation, a co-op field

representative’s job has its downside.

Member problems with crop or milk

quality, payments or shipments can

cause difficulties for field representatives. Agriculture’s economic troubles,

competitor-driven rumors and the

tragedies of life can also weigh heavily

on the relationship-based job.

“It’s been very hard watching the

anguish and hardships that have been

occurring over the past 20 months,” says

Cherry. “The worst part has been

watching farmers losing their farms, and

that’s been occurring on a daily basis.”

“The hardest part is getting tangled

in their lives,” Burlando says. “There

might be a death in the family, a bad

business decision or an economic challenge. You work through their grief

with them.” 

Co-op field representatives sometimes find themselves walking a fine

line in serving members. 

“Occasionally, a member will want

special treatment,” Van Skike says. “If

it’s a small request, you try to accomSuccessful practices of cooperative field representatives

• Be truthful. “Integrity rates extremely high with producers,” says Land O’Lakes’ Ray Cherry. Don’t sidestep bad news.

Don’t feel you have to have an answer for everything. But if you don’t know, make sure you let the member know you’ll

work to get him or her the answer.

• Respond to members’ questions or needs as quickly as possible. Be accessible.

• Reach out to members. Don’t wait to be called. “Growers appreciate a spontaneous call or visit,” says CPCSD’s Bill Van

Skike. When you do pay a visit, bring news or the latest information on the market or crop production.

• Be consistent. Treat each member as you want to be treated. Don’t cut special deals or give special treatment. 

• Do your homework. Know what’s going on in the co-op, industry, field and market.

• Have the right attitude. Believe in your co-op and project a positive image. ■
Rural Cooperatives / January/February 2004 7

modate that. But sometimes, those

requests are not in the best interest of

the membership or of fairness. You

have to handle that as politely as possible. You’ve got to learn to say ‘no.’

I’ve found it’s best to handle it right

then and there.”

Rewards

But there are rewards that come

with the job. Not long after a neighboring dairy cooperative merged with

Maryland and Virginia Milk Producers,

Seamans called for the first time on one

of the newly merged members. 

“The dairy producer was about 

60 years old and he told me he had

never made a quality premium

before,” says Seamans. “We found 

his weak points and fixed them. He’s

now made the quality premium for 

12 months straight. That’s rewarding

to me.”

Blue Diamond’s Baker says he is

rewarded when “a grower gets out of

the co-op, several years pass, and then

he comes back to the co-op.”

In the end, field representatives

agree that theirs is a job of building

relationships, and that takes time.

“It’s not the first or the third or the

10th visit that builds the relationship

but all the visits,” says Burlando. “All

relationships, whether they’re personal

or professional, are built that way. You

have to find out how to satisfy a person’s needs and how to tailor each relationship.”

CPCSD’s Van Skike agrees. “The

more and the longer you’re out there,

the better your relationship,” he says.

“If you can earn your members’

trust,” says Sun-Maid’s Sorensen,

“most of the battle is done. The bottom line is that if we don’t have happy

growers, we lose them. They’re the

basic unit of the co-op, and without

the crop they supply, nobody has a

job. That’s why field representatives

are extremely important to the co-op

they serve.” ■

“A field representative is the front line, the first contact, and sometimes the first impression

a producer receives of the co-op,” says Larry Seamans of Maryland and Virginia Milk

Producers, here in the milk house of member Kevin Phillips of Waynesboro, Va. 

Photo courtesy Maryland and Virginia Milk Producers 

Measuring job performance

How does a co-op measure the success of its field staff? 

Comments and phone calls to management from members, directors and industry participants are taken seriously in helping a co-op gauge its representatives’ performance. Feedback from the field staff itself also is valuable.

“Do we hear about issues in their infancy or after they’ve blown up?” says Bill Van Skike, field representative and president of California Planting Cotton Seed Distributors. “Good field reps are in touch with members and they report regularly to

management, so there are no surprises.”

Management also may look at the number of new memberships a field representative brings into the co-op. Likewise, the

field staff’s performance may be judged by the number of members who withdraw during the co-op’s sign-out period.

Field managers and representatives for Land O’Lakes must meet performance objectives, such as securing specific volumes and quality of milk from producers. “These help measure our performance,” Cherry says.

Land O’Lakes also has a number of feedback tools in place to gauge how its field staff is functioning. This includes member surveys, exit interviews with producers who are withdrawing from the co-op and a computerized tracking system of

compliments and complaints. ■
8 January/February 2004 / Rural Cooperatives

By Pamela J. Karg

Editor’s note: Karg is a freelance writer

based in Baraboo, Wis., with extensive

experience working with cooperatives. 

rowers are hauling professionally boxed fruits,

vegetables and flowers

into a large metal auction building, where they

line up their goods on neat rows of

pallets. Keeping a watchful eye on the

action is Juanita McDowell, manager

of Badgerland Produce Co-op Auction

near Montello, Wis. 

“We really stress that the auction be

fair for both the sellers and the buyers,” McDowell says of the newly

formed sales outlet. At precisely 10

a.m., she welcomes the growers and

the auctioneer goes to work, selling

everything from raspberries and sweet

corn to gladiolas and mums.

“We’ve had a lot of growing pains,”

McDowell says. “But we really keep

encouraging each other because we

know it’s going to take time.”

The project began when a grower

shared an article on an Ohio produce

auction with Laura Paine, an agricultural agent for the University of

Wisconsin (UW)-Extension in

Columbia County. “I thought it was

an interesting idea,” says Paine, “but it

was the grower’s persistence that made

it a reality. He wanted to see this happen for Columbia County growers.”

After several grower meetings, a

core group emerged and decided to

form a cooperative. Completing its

first year, the co-op continues making

small steps toward success.

Farmer-driven co-op

“It’s been the same evolution you’d

see with any new business,” Paine says.

“The strength of the organization is

that it’s farmer driven and directed.

That’s the weakness, too, because these

members are also trying to run their

farms. It’s hard to juggle both.”

The auction is the third of its kind in

Wisconsin and the first with open coop enrollment. Its organizers learned

about produce auctions, structure

options, capital requirements and other

start-up issues from similar operations

at Withee, Wis., which organized as a

limited liability corporation, and at

Cashton, Wis. The latter is a cooperative of Badgerland Amish growers who

obtained information from Amish

friends and relatives involved in produce auctions in Indiana.

Badgerland received an $18,000

Agricultural Development and

Diversification grant from the

Wisconsin Department of Agriculture,

Trade and Consumer Protection, and

another small grant from the UWExtension Central District. In addition

to UW-Extension assistance, growers

spent hours with UW Center for

Cooperatives staff. 

“I was very impressed by the speed

with which the farmers acted this

spring to set up the auction,” says the

UW Center’s Greg Lawless. He

advised growers on the fundamentals of

creating a cooperative. Center staff

provided initial legal assistance for the

co-op.

“Despite the reluctance of some of

the more conservative but supportive

producers, who wanted to wait a year

and get more ducks in line, a core

group said ‘it’s now or never,’ and they

just plowed forward,” Lawless says. 

Starting in mid-June, auctions were

held two to three times per week. In

October, auctions were held only on

Fridays. Lawless attended auctions several times this past year.

“While supply and demand still

aren’t where they need to be, it’s very

impressive what they’ve accomplished

so far,” he says. “While a common

opinion of co-ops is that they are too

slow and clunky due to their democratic nature, this group was definitely an

exception.”

More buyers needed

“Just the fact that the auction exists

is an incredible success, but they do

need to seek out more buyers,” says

Kathleen Haas, county UW-Extension

G

Wisconsin co-op offers fresh

approach to produce auctions

Badgerland Produce Co-op is “an excellent

example of different cultures and groups

having a common interest and working

together to make something happen,” 

says Kathleen Haas of UW Extension. 

Photos by Pamela J. Karg
Rural Cooperatives / January/February 2004 9

community development agent. She

and ag agent Paine are local resource

people to the co-op. “The first year

has been rough, but it’s given the coop time to figure out roles for people

like Juanita, as the manager, and the

expectations members have for the

auction.” 

On the buyer side, produce stand

operators, supermarket owners and

restaurateurs participate. On any day,

however, it’s guesswork who will show

up. Everyone agrees more buyers are

needed to strengthen this weakness.

To that end, McDowell makes

buyer reps available if buyers are too

busy to attend. These substitute buyers have sold to wholesale warehouses

and know top-quality produce. The

buyer rep gets the limit an absentee

buyer is willing to go and then bids

accordingly. 

Although membership in the cooperative is not required to sell there, it

is encouraged through reduced commission rates. Badgerland membership

spans the gamut of the local community. Amish and Mennonite farmers participate as both buyers and growers.

Other members include Hmong and

Hispanic people. 

Growers come from down the road

or across several counties to participate.

Each grower comes as an equal partner,

willing to support and encourage the

other as they sort out this new business.

“We really have a nucleus of support and almost a family feel,”

McDowell says.

“It’s an excellent example of different cultures and groups having a common interest and working together to

make something happen,” Haas says.

Recognizing that diversity, producer

user fees are set on a sliding scale.

Non-Amish growers decide at what

level they want to buy in. A parallel fee

structure respects the Amish growers’

reluctance to join formally organized

groups, yet it provides them with similar co-op benefits.

Clean produce, boxed or packaged

professionally and picked fresh within

the previous 18 hours, are marks of

quality. 

Striving for fair prices

While several Badgerland members

had wholesale experience and knew

these expectations, a series of grower

meetings helped ensure all producers

brought quality wares to market.

Certified organic produce requires that

documentation be presented before

each auction.

Some days, the price of

sweet corn is low. Other

days, colorful pepper prices

soar.

“We’re really striving for

fair prices for every farmer

and every buyer. It’s that

simple,” McDowell says,

adding that their own first

experiences at an auction

were “interesting.”

“Even though we still go

to the Dane County

Farmers Market (on

Saturdays in Madison,

Wis.), we wanted to know

how an auction worked, just

to get more familiar with it.

So we drove to Withee,” she

says. “Coming home, I realized that I only got $2.50

for 20 pounds of tomatoes. I

wasn’t going back. But it

was a good thing it was such

a long ride home.”

During that ride, she

realized that other produce

brought average-to-good

prices. Moreover, there were

many tomatoes for sale the

day she marketed hers. The

McDowells went back a few more

times. Sometimes, prices were good.

Other times, they were OK. Overall,

though, the experience was good and

convinced the McDowells and others

that an auction could work in central

Wisconsin.

“Many of our growers had wholesale experience, but that market is

changing,” McDowell explains.

“Through a lot of mergers, buyers

are getting bigger and changing how

they do business. They don’t mean

to, but some are squeezing out the

smaller farmers who have been selling

to them for years.” She said the auction brings together farmers seeking

a viable new market outlet and buyers

who want to emphasize local farm

produce. 

Through another small grant,

county agent Paine wrote and

received from the UW-Extension

Emerging Agricultural Markets Team,

Badgerland organizers plan to “fellowship” this winter with Cashton and

Withee members. Paine says the

meetings will focus on education as

well as explore ways in which the

three auctions might cooperate further, such as bulk-buying packaging

materials.

For more information about the 

auction, contact McDowell at 

608-297-8989 or e-mail her at jmcdwll

@maqs.net or http://www.ccedc.com/ag/

badgerland.asp or Laura Paine at 

608-742-9682 or e-mail her at

laura.paine@ces.uwex.edu. ■

Recognizing the diversity of its membership, the co-op’s

producer user fees are set on a sliding scale.
10 January/February 2004 / Rural Cooperatives

USDA helps Michigan sugarbeet 

growers purchase processing plant

By Richard E. Leach, Director of

Community and Government

Relations, Michigan Sugar Company

e had just finished

supper at Imperial’s

hunting lodge, about

10 miles outside the

small southwest Texas

town of Hebbronville. Imperial Sugar

Co. had invited the executive board of

the Great Lakes Sugar Beet Growers

on a quail hunting trip in January

2000. Imperial, owner of Michigan

Sugar Co., had a reason for the hunting trip: to ask if the growers would

consider forming a cooperative to

explore the feasibility of purchasing

Michigan Sugar Co. From that weekend forward, the Great Lakes Sugar

Beet Growers Association would never

be the same.

The first step in the exploration

process was to find the best attorney

with experience in creating sugar cooperatives. Attorney Randon Wilson, Salt

Lake City, Utah, was hired to organize

the feasibility of a purchase and move

the project forward. 

The growers appointed a steering

committee. Attorney Wilson went to

work almost immediately with a trip to

Imperial’s home office in Sugar Land,

Texas, to establish himself as the buyout attorney for the growers and to

gather information. Imperial told him

that they would not set a price on

Michigan Sugar — the growers would

need to make an offer. 

A financial modeler was hired who,

along with Wilson, began collecting

financial information to evaluate the

value of Michigan Sugar. Financial

information was difficult to obtain and

even more difficult to understand. Part

of the problem was that in 1984,

Michigan Sugar had been sold by the

Flegenheimer family to Savannah

Foods & Industries. Imperial purchased Savannah Foods in 1997,

including Michigan Sugar. After the

purchase, Imperial moved all the

accounting to its home office in Sugar

Land, Texas.

Imperial became more difficult to

work with. The president and CEO of

Imperial was telling the growers that

the buyout was never going to work

because they couldn’t raise the money.

Money to fund the project became a

real problem. Because one of Michigan

Sugar’s factories is located in Michigan’s

Huron County, the Huron County

Economic Development Corporation

provided a $50,000 matching-fund

grant to help with attorney expenses. In

early 2001, the growers received a

$210,000 Rural Business Enterprise

Grant (RBEG) from USDA Rural

Development. This matching-funds

grant was for the feasibility study. 

In the fall of 2000, Michigan Sugar

Beet Growers Inc. was formed as a

cooperative. Shortly afterwards, a draft

offer (in the form of a letter of intent)

was sent to Imperial. We received no

meaningful response and, in midJanuary of 2001, Imperial and their

subsidiaries, including Michigan Sugar,

filed for protection under Chapter 11

bankruptcy. 

The growers (under contract) had

delivered the 2000 sugarbeet crop and

received approximately 70 percent of

the estimated value of that crop.

Growers were considered “critical vendors” under the bankruptcy and could

be paid at Imperial’s discretion. At this

time, a bankruptcy attorney was hired

to represent the growers. 

The growers were reluctant to sign

a 2001 contract to grow sugarbeets for

V ALUE-ADDED CORNER

The Michigan Sugar Beet Growers cooperative used financing from USDA Rural

Development, including a $210,000 Rural

Business Enterprise Grant, to purchase this

processing plant from Michigan Sugar Co.

Below, Pioneer Sugar is the co-op’s branded product. Photos courtesy Michigan

Sugar Beet Growers

W

continued on page 36
Rural Cooperatives / January/February 2004 11

SDA Rural Development

in December awarded

$28.7 million to promote

development of valueadded products made

from U.S. agricultural commodities,

which USDA hopes will spur economic growth in 40 states. Cooperatives

received 79 of the 184 grants.

“These grants will foster the development of value-added projects to help

create the opportunity for economic

development and job creation in rural

areas,” Agriculture Secretary Ann

Veneman said. “The Bush

Administration is committed to providing the necessary tools to help rural

businesses create jobs and improve the

quality of life for their communities.”

Authorized as part of the 2002 Farm

Bill, the Value-Added Producer Grants

provide an opportunity to refine agricultural commodities and products to

increase their value in the marketplace. 

Applications selected for funding

range from Planters Cotton Oil Mill

Inc. in Arkansas, which will receive

$497,000 to develop a feasibility analysis and business plan for marketing and

manufacturing oilseed products (neutralized dried soap stock), to

Massachusetts Woodlands Cooperative

LLC, which will receive $499,253 to

expand markets that focus on forest

stewardship, green certified materials

and other value-added forest products. 

In support of President Bush’s

2001 energy plan, 29 applications

focusing on bio-mass and renewable

energy were selected to receive $4.3

million in grant funds. For example,

the Central Illinois Energy

Cooperative will use $250,000 as

working capital to operate its 30-million gallon per year ethanol processing and cogeneration facility.

Funding of selected applicants will

be contingent upon meeting the conditions of the grant agreement.

Following is a list only of cooperatives

that received grants. A complete list of

the grant recipients can be found at

the USDA Rural Development Web

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

Agribusiness, co-ops awarded

$28 million in USDA grants

U

Co-op recipients of USDA Value-Added Producer Grants

Recipient Grant Amount 

Ag Processing, Inc., MN $ 198,500 

Ag Ventures Alliance, IA $ 12,500 

AgraMarke Quality Grains, Inc., MO $ 235,950 

Agriculture Marketing Institute, Inc., KY $ 79,900 

Agri-Mark, Inc., VT $ 175,000 

Amalgamated Sugar Company, ID $ 91,200 

Aurora Cooperative, NE $ 309,600 

Beef Marketing Group Cooperative, Inc., KS $ 37,500 

Blue Diamond Growers, CA $ 329,938 

Blue Sun Producers, Inc., CO $ 450,000 

Cal/West Seeds, CA $ 100,030 

Calcot, Ltd., CA $ 337,400 

California Canning Peach Association, CA $ 39,962 

California Olive Growers, CA $ 500,000 

CEA Farm Cooperative Steering Committee, TX $ 40,000 

Central IL Energy Cooperative, IL $ 250,000 

Citrus World Inc., FL $ 293,000 

Columbia County Farm Bureau, Inc., WA $ 50,000 

Dairy Farmers of America, CA $ 150,000 

Diamond Walnut Growers, CA $ 500,000 

Recipient Grant Amount

East Central Ag Products, Inc., MO $ 500,000 

Farmer Direct Foods, Inc., KS $ 349,033 

Farmers Co-op Oil Company , NE $ 120,000 

Farmers Union Marketing & 

Processing Assoc., MN $ 500,000 

Garden State Ethanol, Inc., NJ $ 75,000 

Great Lakes Pork Cooperative, IN $ 280,000 

Hallock Cooperative Elevator Company, MN $ 50,000 

Hawaii Cattle Producers Cooperative 

Association, HI $ 319,960 

Home Grown Wisconsin Cooperative, WI $ 20,000 

Hopkinsville Elevator Co., Inc., KY $ 87,500 

Kearney Area Ag Producers Alliance, NE $ 162,000 

Kentucky Produce and Aquaculture 

Alliance, Inc., KY $ 35,000 

Living Forest Cooperative, WI $ 39,500 

Michigan Edible Bean Cooperative, MI $ 247,175 

Michigan Sugar Company, MI $ 74,120 

Michigan Turkey Producers Cooperative, MI $ 55,574 

Mid-Iowa Cooperative, IA $ 450,000 

table continued on page 36
12 January/February 2004 / Rural Cooperatives

By James Haskell, Gerald Ely

and Jeff Jobe

Editor’s note: Haskell is acting deputy

administrator of the Rural BusinessCooperative Service of USDA Rural

Development; Ely is the USDA Rural

Development co-op development specialist

for Pennsylvania, while Jobe holds the

same post in Iowa. They recently spent

two weeks in Nigeria training key cooperative technical assistance providers in three

targeted agricultural states.

igeria is the giant of

western Africa, with a

land area about twice the

size of California and a

population of 123.3 million – more than the entire U.S. population west of the Mississippi River.

Only 10 percent of the labor force in

Nigeria works in industry, and 20 percent in service trades. The other 70

percent has ties to agriculture, yet

agriculture accounts for only 39 percent of the gross domestic product;

crude oil exports account for most of

the remainder.

Agriculture in Nigeria primarily

consists of producers tilling and harvesting small land holdings, producing

food for their family and as a source of

income. Their products may be sold to

others in their community or to buyers

who go from village to village buying

fruit, vegetables and animal products

for resale in more distant markets. 

When traveling across the country,

producers set up colorful roadside markets to sell their produce. Driving

through the countryside, you can stop

to purchase a bundle of bananas or a

sack of peanuts (called groundnuts) to

snack on. The prices received by these

producers are often limited by their

access to market information, their

inability to transport products to a better market or to process their crops into

value-added food products.

In an effort to improve the lives of

rural residents, the U.S. Department

of Agriculture has teamed with

USAID’s Opportunities Industrialization

Centers International program to conduct several efforts to strengthen

Nigeria’s agriculture processing and

marketing. One program, the Nigeria

Agricultural Cooperative Marketing

Project, focuses on cooperative organizations that serve agricultural producers.

Cooperatives have long served U.S.

farmers in their efforts to improve

income for their products, to secure

quality farm production supplies at reasonable costs and for credit and utility

services. Cooperatives offer similar

opportunities for agricultural producers

in Nigeria.

While associations of farmers, frequently called cooperatives, exist in

Nigeria, they do not have a history as

viable business entities. Rather, they

have served as vehicles for distribution

of governmental programs.

Membership in the associations has

been the means by which farmers

might receive seeds, fertilizer, credit,

technical services or other assistance

in agricultural production. Farmers

have rarely made use of cooperatives

for marketing purposes.

Making strides

Nigeria is making strides toward

business development, placing

increased emphasis on the development of successful cooperative businesses. The development of sustainable

cooperative businesses requires sound

feasibility analysis and business planning. In fact, the new cooperative

Boosting the giant 

USDA assistance effort helping Nigerian producers 

to help themselves with user-owned cooperatives 

N

A typical rural home in northern Nigeria. Chameleons (top of page) are an ever-present

part of the landscape in Nigeria, often seen on building walls, basking in the sun.

USDA Photos by Ely Gerald
Rural Cooperatives / January/February 2004 13

development policy currently being

implemented in Nigeria requires each

cooperative to pass an “economic feasibility” test before it can even be registered as a cooperative. It’s essential

that assistance providers have the

capacity to carry out this new mandate.

The initiative to developing stronger

business cooperatives is focused on

training cooperative leaders and a cadre

of extension specialists and other technical assistance providers. These

individuals, in turn, will train

others in the field about cooperative principles and operations.

They also work directly with

cooperative leadership to form

new cooperatives or improve the

business operations of existing

organizations.

Training conducted by

USDA began with basic cooperative governance, principles,

practices and operating procedures. A second team, including

the authors of this article,

focused on feasibility analysis

and business planning. Seminar

participants learned about the

components of a feasibility

analysis; then they split into

small groups and worked

through analytical exercises for

a real or hypothetical cooperative marketing effort. All of these marketing

endeavors were relevant to their individual communities.

The final step was to learn how to

evaluate business feasibility and the

results of financial projections to reach

a decision as to whether a proposed

business activity could be successful.

Participants learned to recognize the

importance of using realistic business

assumptions, careful analysis and welldeveloped business plans. 

“It was exciting to see some of the

projects the groups came up with, and

— as they developed the project — to

see how the assumptions they made in

each phase of the feasibility study

process affected the outcome and financial results of the proposed business,”

Jobe says. “We stressed to the participants that if the results of the analysis

indicated that the project wasn’t feasible, they were doing their job in preventing a producer group from investing in a project that was not feasible.” 

Wide application possible

Training was provided to a dozen

handpicked technical assistance

providers in each of three agricultural

states: Abia, Nasarrawa and Kano.

Each session lasted three days.

Workshop materials developed by

USDA were contained in a notebook

that included discussion information,

work exercise aids and slides that could

be reproduced as teaching aids. In

addition, project leaders were provided

a CD that included all workshop materials that can be reproduced for additional training programs.

A Nigerian boy takes a break from his schoolwork to help cultivate his teacher’s cornfield. 

Jeff Jobe, co-op development specialist for USDA Rural Development in Iowa, takes a turn

laying the foundation for the new Abia State Agricultural Business Development and

Planning Center in Umhahia, Nigeria. USDA is supporting the center. 
14 January/February 2004 / Rural Cooperatives

Each training recipient was asked

(he or she knew this in advance) to

use their newly gained knowledge by:

(1) training an additional 10 technical

assistance providers in their state, and

(2) presenting a feasibility analysis and

a business plan for a designated agricultural marketing cooperative in

their community. Follow-up procedures are in place to access the results

of their work. 

Future training is being planned to

continue the development of successful

cooperatives. Sessions on market

analysis, financial management and

cooperative marketing techniques are

planned for next year. Classes on the

responsibilities of directors and cooperative bookkeeping will follow. 

As in other parts of the world,

Nigerian cooperatives will only be successful with informed and responsible

leadership. 

“International co-op development is

always a very interesting learning experience,” Haskell says. “Terminology

typically used in the United States

often carries different meanings in

other cultures. For example, on this

trip, Jerry (Ely) was explaining how and

where to account for patronage refunds

on the various forms included in the

feasibility analysis. Following a short

period of confusion, the group finally

explained to us that in Nigeria, patronage covered such things as a “direct

cash payment” in order to get one’s

truck to the front of the line. They

thought this should be counted as an

operating expense. Always quick on his

feet, Jerry promptly found a substitute

phrase for patronage refunds.”

Nigeria has vast potential to improve

its food production and distribution systems, and the cooperative form of business provides a strong self-help vehicle

to enable producers there to continue to

strive toward a better future. ■

James Haskell of USDA Rural Development is presented with a blanket by the director of

the of ag development programs for the Nigerian state of Kano. Below, roadside markets

where farmers sell their produce are a common sight throughout Nigeria. 
Rural Cooperatives / January/February 2004 15

By Susan G. Schram, 

Vice President

Ag & Co-op Programs, ACDI/VOCA

Editor’s note: See ACDI/VOCA’s

2003 “World Report” for more on this and

related international aid efforts at

www.acdivoca.org.

CDI/VOCA is helping

agricultural cooperatives

play a critical role in the

fight against HIV/AIDS

around the world, particularly in Ethiopia and Malawi.

Cooperatives are well suited to serving

as conduits for delivering information,

training and technical assistance to

farmers and their families. Co-op members represent a significant proportion

of the agricultural labor force in rural

communities. As democratically governed, member-based institutions, coops help determine their own solutions

to problems, use their own resources

and can work in partnership with community-based health organizations to

bring education and change to hard-toreach areas. 

The productivity of the agricultural

labor force is the lifeblood of developing

countries, particularly in Africa. Broadbased food security and prospects for

economic growth depend largely on the

health of the agriculture sector. But in

many developing countries, the

HIV/AIDS pandemic is devastating

smallholder farms, diverting assets from

food production and changing conditions from surplus to subsistence, or

even shortage. 

ACDI/VOCA’s Agricultural

Cooperatives in Ethiopia (ACE) program has undertaken a three-year

awareness and prevention initiative to

address the severe human resource and

capital impact of HIV/AIDS on cooperatives. In Ethiopia, current infection

rates are estimated at 7 percent of the

population, but in high-risk groups rates

are as high as 50 percent. 

Ethiopian farmers interviewed prior

to the program reported that, although

they had heard of HIV/AIDS on the

radio and through the church, they had

never received any direct training.

Although they knew condoms could

prevent HIV, they said, they had never

seen one.

The number of infected family

members returning home for care

and support is increasing, but poor

rural families typically lack the assets

and the ability to look after the ill.

ACDI/VOCA’s ACE program will

help cooperatives create, implement

and monitor sustainable HIV/AIDS

mitigation activities prioritized by

their members.

To carry out this program,

ACDI/VOCA-Ethiopia has teamed

with DKT, a social marketing organization with expertise in

HIV/AIDS. The program will use a

“train the trainer” approach, using

cooperative bureau promoters and

key cooperative union staff. Twentyfive cooperative unions will receive

training. 

The unions will then implement

a comprehensive HIV/AIDS awareness and prevention program in

their respective 399 primary co-ops,

reaching a total family member population of 2.5 million. In addition to

development of training materials,

condoms will be made available for

sale in cooperative shops, and

mobile resource centers will host

frank discussions with question-andanswer sessions. Music and drama

will be used to convey health messages

and literature will be made available. 

ACDI/VOCA helped establish the

National Smallholder Farmers’

Association of Malawi (NASFAM),

African ag co-ops leading 

fight against HIV/AIDS

A

At meetings such as this, co-op members in

Malawi and Ethiopia learn about the health

risks of HIV/AIDS and how to fight its spread.

Photo courtesy ACDI/ VOCA

continued on page 31
By Steve Thompson, writer-editor

USDA Rural Development

Editor’s note: This article concludes a

three-part series focusing on rural electric

co-ops that deliver exceptional service and

which have expanded their traditional

duties to better serve their communities. 

ith its well-groomed

farms and verdant

countryside, the area

of southern

Pennsylvania served

by Adams Electric Cooperative looks

as if it could have been painted by

Norman Rockwell. But the scene was

anything but idyllic late last summer

when Hurricane Isabel came calling.

Co-op employees who thought they

had seen Mother Nature dish out her

worst say it inflicted more damage

than any other storm in three decades.

But the co-op came through with flying colors for its 28,000 consumermembers, restoring all power within

72 hours when many other areas hit by

the storm took weeks to get everyone

back on line. 

Changing service area

Although still an agricultural area,

the four counties around Gettysburg

served by Adams Electric Cooperative

are among the fastest growing parts of

Pennsylvania, home to a growing

number of new bedroom communities. It is also a haven for retirees.

Despite these changes, the area

retains a sense of community and

neighborliness, a characteristic mirrored by the co-op that provides it

with electrical power.

Adams Electric, like other power

distribution cooperatives, sees itself as

more than a utility. It is an active participant in the communities it serves, and

has earned a reputation for service and

efficiency across its service area and

beyond. That reputation is based on

hard work, community involvement, a

commitment to its members’ interests

and a friendly, “can-do” attitude.

Hurricane puts co-op to the test

Hurricane Isabel put those qualities

to the test. By the time the storm

ripped through southern Pennsylvania,

it had been downgraded to a “tropical

storm.” But Isabel still packed a wallop, with 40- to 60-mile-per-hour

winds that brought down trees and

power lines all over the region. The

storm hit the night of Thursday,

September 18, uprooting trees and

snapping off others like matchsticks. 

Rural power providers such as

Adams were especially hard hit. Many

of their lines run through heavily

forested, mountainous areas in which

the trees are dozens of feet taller than

the power poles. Lines were often

downed in hard-to-reach places, making merely finding the breaks difficult,

especially in the rain, wind and dark. 

“Hurricane Agnes was bad,” says

Ron Plank, the co-op’s manager of

operations, referring to the 1972 storm

that caused 48 deaths and more than

$2 billion worth of damage in

Pennsylvania. “But this was the worst

storm I’ve seen in 30 years.” 

Power utilities had their work cut

out for them, rerouting power lines

and replacing downed lines. Some

nearby investor-owned utility companies still had customers without electricity as much as a week after the

storm. Even though Adams Electric

Cooperative’s lines suffered the full

brunt of the storm, every one of its

members was back on line by Sunday

evening.

Meeting the test

8,200 service calls in 24 hours tests mettle of Adams Electric Co-op 

W

16 January/February 2004 / Rural Cooperatives
Rural Cooperatives / January/February 2004 17

On the day of the storm, linemen

and other employees put in a regular

eight-hour workday, then prepared to

do battle. Once the storm hit, it didn’t

take long. By 7:30 p.m. power outage

reports started to trickle in. Soon calls

were flooding in – 8,200 in the first

24 hours.

“They were coming in as fast as we

could answer them,” says Wanda

Spahr, the member/office services

supervisor for the Gettysburg District

office. The cooperative encourages

everyone who has a power outage to

call in. “That’s the only way we can be

sure we’ve restored power to everyone,” she points out. “If you assume

that because your neighbor called in,

you’re covered, your power may not be

restored because you’re on a different

circuit, or because there’s a fault on the

line to your house.”

Account representatives staffed the

phones 24 hours a day in eight-hour

shifts. But for the linemen, there were

no shifts at all. They worked for 24

hours straight before taking four or five

hours off to grab some sleep – sometimes they had to sleep in their trucks.

That Saturday morning they were out

at first light, working until 10 p.m.

Trees topple like dominoes

During the night of the storm, the

wind often blew so hard that workers

had trouble keeping their feet under

them. Falling trees and branches were a

constant hazard, both during the storm

and afterwards. But lineman Mitch

Orchowski says that the hardest part of

the job was getting ready to move on

after restoring a break, only to see

another tree topple and take the same

lines out again.

“Sometimes the trees would fall like

dominoes,” Orchowski recalls. “One

would fall over, push another one over,

and so on.” 

Plank says that the quick restoration

of service resulted from the dedication

of Adams employees and the workers

detailed to Adams by four other electric co-ops.

“The journeyman linemen and the

phone workers have the two toughest

jobs in the co-op,” he says. “Without

their commitment to the co-op way of

doing things, we would have had five

to six days of power outages instead of

only three days.” The night of the

storm, Plank learned from an area

investor-owned utility that it wasn’t

planning to send out its crews until the

next morning.

Close relationship with firefighters

Adams’ close ties to the local communities it serves is exemplified by the

ways its crews cooperate with volunteer fire departments. Co-op line crews

and fire companies often work closely

during outages caused by lightning

strikes, vehicle crashes and fires. 

Jim Krut, the co-op’s manager of

communications and community services, says that firefighters have told

Trees toppled like matchsticks when Hurricane Isabel hit. Here Adams’ CEO/General Manager

Dan Murray, left, surveys damage near Rinley, in York County. Photo courtesy Adams Electric Co-op

Facing page: The front page of the York Daily Record from last September captures the 

terrible damage inflicted in southern Pennsylvania by Hurricane Isabel. Reprinted courtesy 

York Daily Record 

Adams Electric works closely with volunteer fire departments in the communities it serves,

especially when responding to lightning strikes, fires and vehicular accidents. Here,

Arendtsville Fire Co. Chief Chris Herman, left, and Fire Captain Jack White, second from right,

thank Jim Cole and Jim Krut of Adams Electric for the co-op’s help in purchasing this tower

truck. USDA Photo by Steve Thompson
18 January/February 2004 / Rural Cooperatives

him they’re glad when the affected

lines belong to Adams, because of the

co-op’s fast response. The co-op also

supports fire companies by hosting

informational dinner meetings at their

fire halls. A fire company ambulance

provides emergency services at the coop’s picnic-style annual meeting. 

When a huge ice storm felled trees

and power lines in the Buchanan

Valley in March 1996, Adams and the

local fire company worked as a team.

The firefighters cleared fallen trees to

open roads while co-op linemen

repaired the downed lines. Adams provided two-way radios to the fire companies to help speed the work. 

The emergency brought out the

best in the rural community, says

Duane Kanagy, Adams Electric’s communications coordinator. “Everybody

pulled together,” he says. “People

brought in chainsaws to help clear

downed trees. And the fire department

fed everybody.”

USDA, co-op help 

purchase fire truck 

When the village of Arendtsville

needed a new fire truck for its all-volunteer company, it was only natural

that they looked to Adams for help

with the financing. 

A year before, the co-op had assisted with the purchase of a new, automated external defibrillator (AED). 

Using a $400,000 Rural Economic

Development Grant (REDLG) from

USDA Rural Development, the co-op

established a Community

Development Fund. The fund was

used to offer the Arendtsville Fire

Company a $100,000, low-interest

loan to be used toward the $165,000

purchase price of a used tower truck.

Finance manager Joe Cole and Jim

Krut processed the loan and presented

it to the cooperative’s board of directors for approval. 

In addition to carrying a number of

portable ladders, the tower truck uses a

telescoping arm equipped with a highpressure pipe and nozzle with two

buckets on either side to carry firefighters. The nozzle can be directed

from the buckets, or from the ground. 

Firefighters say they feel much

safer using the tower than a traditional

ladder. “Having this truck helps out

the whole county,” says Arendtsville

Fire Co. Captain Jack White. “No

local fire department can have everything they need, so we all cooperate.

Some departments have rescue trucks,

while others have tankers or ‘brush’

trucks that can go off-road. They go

where they’re needed.” 

The Arendtsville firefighters were

so grateful for the co-op’s Community

Development Fund that they put a

sign on the truck: “Financed in part by

Adams Electric Cooperative.” The

truck got a fresh paint job and was displayed at the co-op’s annual meeting

last June. Hilda Legg, administrator

for the Rural Utilities Service of

USDA Rural Development, was guest

speaker at the meeting. 

Other fire companies have also benefited from the cooperative’s Community

Development Fund. Four loans have

been made, including one for $125,000

for the construction of the Bendersville

fire hall and community center. Another

was to Buchanan Valley Fire Company,

which assisted the cooperative during

the 1996 ice storm.

Dry hydrant program

makes rural areas safer

Less visible, but also important, is a

program started in 1995 to make it

easier for firefighters to draft water

from ponds and streams in rural areas

where there are no pressurized

hydrants. Adams Electric’s dry hydrant

program enlists the labor of local fire

companies and the excavation equipment of local municipalities to construct the dry hydrants. Sections of 6-

inch PVC pipe are buried underground between a water source and the

road. A strainer at the water source filters out debris, and a hydrant-head at

the road enables firefighters to make a

quick connection to their pumper

truck and begin to draft water. This

avoids chopping through the ice in

winter or getting fire equipment

bogged down in a muddy field in the

spring, and speeds the delivery of

water to the fire.

The installations, for which the coop provides the hardware at no charge

to fire companies or at cost to businesses or homeowners, are called “dry

hydrants” because they are unpressurized, relying on suction from the

pumper to draft the water. Since the

program began, 125 dry hydrant kits

Marvin Snyder (left), shipping line superintendent for Adams Electric, discusses ways the coop can help the Beistle Co. reduce its energy costs with Ken Strayer and Ron Parr of Beistle.

USDA Photo by Steve Thompson
Rural Cooperatives / January/February 2004 19

have been donated, providing quick,

potentially life-saving sources of water.

Adams has even created a manual for

the installation and care of the hydrants.

The close relationship between

Adams and local fire companies was

highlighted when Hurricane Isabel

came to town. The house of Adams

lineman Guy Gorman – who was

working with a line crew at the time

on storm-related repairs – was

destroyed by fire. Members of his family were injured in the blaze, which was

not caused by the storm. 

Firefighters responded by starting a

collection, to which many Adams

employees and members contributed.

“The whole community pulled together

to help them,” says Plank. “And we were

able to get Guy to the hospital before

the ambulance arrived with his family.”

Adams is involved in a number of

other community-service efforts,

including electrical safety demonstrations and electricity lesson plans for

local schools, a program that installs

free street lights in small communities

and various individual projects, including raising the funds, designing and

Helping members reduce their power use is the key to

keeping a lid on their electric bills. Adams Electric CEO

and General Manager Dan Murray points out that, unlike

investor-owned utilities, the co-op has no incentive to sell

members more power.

“Our goal is to provide excellent service at the best

prices possible, not to increase our sales,” Murray says.

“When members reduce energy use, it makes their electric bills more affordable. If conservation measures mean

we can defer some capital expenditures, it means we can

save money for members. Keeping down power use also

reduces the need to purchase supplemental power, which

is usually coal-fired and can be costly.”

Scott Wehler, the co-op’s engineering manager, says

that load management is the key. “Traditionally, utilities

have concentrated on their large customers when it

comes to controlling power use,” he says. “But we sell 85

percent of our power to residences, so we had to find

ways to save power in the home.” 

Electric water heaters of customers can be controlled

remotely from a computer in the Adams Electric dispatch

center at co-op headquarters outside Gettysburg. Eighty

percent of co-op members have electric water heaters, so

they represent a sizeable proportion of the base load. 

The co-op sells the $350, 80-gallon units for only $80 to

members, who also get a break on their electric rates.

About 10,000 of the co-op’s 28,000 members currently have

load control switches on their water heaters. “Half the

benefit goes to the customer, half to the co-op,” Wehler

says. “They get an inexpensive water heater and a lower

rate.” Resulting reductions in peak-demand costs mean

that the water heaters pay for themselves within three

years. 

When loads get too high, some or all of the heaters can

be turned off. “They can be off for as long as four hours;

most people never even notice,” Wehler says. 

Some customers also have air conditioning and heating

units that can be remotely controlled to reduce power use

at peak times. 

Co-op’s technology helps poultry farm

Remote control also contributes to the bottom line for a

large chicken farm. With a million birds in seven large

chicken houses — each of which draws a peak load of up

to 150 kilowatts — farmer Jim Bailey has a strong incentive to control his power consumption. 

Power failures also pose a major threat to his flocks, so

the farm maintains its own emergency generators – a significant capital investment. Bailey and Adams Electric

have an arrangement under which the utility can remotely

start the generators at times of peak demand. In return,

Bailey gets a $9-per-kilowatt-hour rate break. 

Several golf courses in the service area also have

remote controls on their irrigation pumps, while others

have timers restricting their use to non-peak hours. All of

these power-saving programs are completely voluntary.

Using the load-management tools at its disposal,

Adams can control 10 percent of power use without inconveniencing any members. Load-management programs

have won environmental stewardship awards for the coop, including one each from the Commonwealth of Pennsylvania and the local Chamber of Commerce.

These power-management efforts extend to the co-op’s

own headquarters. Its air conditioning system uses three

1,600-gallon tanks containing an anti-freeze and water

mixture that turns to icy slush when cooled by a large

compressor during off-peak periods. 

When air conditioning is needed, the compressor is

turned off and small, circulating pumps — which use

much less electricity than the compressor during demand

peaks — help to cool the building. 

– By Steve Thompson

Co-op strives to help members 

reduce power use, lower bills

continued on page 37
20 January/February 2004 / Rural Cooperatives

hat is the

Southern

Marketing Agency

(SMA)? 

SMA is a marketing-agency-in common, the primary purpose of which is

to seek efficiencies in supplying the

fluid milk needs of the southeastern

United States. SMA began operations

on April 1, 2002, as a Kentucky agricultural cooperative organized under

provisions of the Capper Volstead Act.

Current members are: Arkansas Dairy

Cooperative Association (Damascus,

Ark.); Dairy Farmers of America Inc.

(Kansas City, Mo.); Dairymen’s

Marketing Cooperative Inc. (Mountain

Grove, Mo.); Lone Star Milk

Producers Inc. (Windthorst, Texas);

and Maryland & Virginia Milk

Producers Cooperative Association Inc.

(Reston, Va.).

Initial goals:

1. Promote member cooperation

and communication;

2. Seek cost savings in the purchase

of supplemental milk;

3. Preserve over-order prices in the

Southeast;

4. Seek cost savings in farm-to-market hauling;

5. Seek cost savings in seasonal surplus balancing.

Results to date 

• “Member cooperation and communication simply could not be better,” says Jeff Sims, as administrator

and assistant secretary of the

agency. “The goals of the agency

are clearly defined and all the

members are dedicated to working

together to reach the goals.” 

• Supplemental milk purchase costs

have declined, and supplemental

milk agreements have been

restructured, Simms notes. The

new supplemental milk agreements

have allowed Class I utilization

percentages in the Appalachian and

Southeast Federal Milk Marketing

Orders to increase over comparable months last year. 

• Prices over federal-order minimums in the Southeast were not

only preserved, but they increased

in 2003, Simms reports. 

• Agency members have saved more

than $10.6 million in hauling costs

since April 2002, adding more than

12 cents per hundredweight to the

SMA-weighted average pool value.

Savings are also increasing monthto-month. 

• A study of current and future needs

for seasonal milk surplus balancing

capacity is underway to help determine short- and long-term needs

for balancing capacity and optimum plant locations.

Key management members:

Day-to-day operations of the

agency are handled through the

Operations Committee, made up of

senior management members of the

member cooperatives. Committee

members are: Floyd Wiedower, from

Arkansas Dairy Cooperative

Association; John Collins from DFA;

Don Allen from Dairymen’s Marketing

Cooperative Inc.; Jim Baird from Lone

Star Milk Producers Inc.; Jay Bryant

from Maryland & Virginia Milk

Producers. Other members of senior

management of each cooperative may,

and regularly do, participate.

How is SMA governed? 

The Operations Committee reports

directly to the SMA board of directors,

made up of 10 dairy farmers, all of

whom are producer-members of the

five member cooperatives. Board seats

are apportioned by member patronage,

with each member entitled to at least

one board seat, without regard to any

minimum patronage level. 

Biggest obstacle overcome 

“The change in mindset of cooperation vs. competition is not always an

easy transition to make. The group

has now fully completed that transformation and cooperation is at an

extremely high level,” Simms says. 

Future plans?

The agency continues to seek efficiencies in milk hauling, which is a

major cost in serving a milk-deficit

market. “Agency members feel the

cost- savings achieved thus far in milk

hauling may have only scratched the

surface. The recommendations from

the study of balancing plant needs will

offer opportunities for savings there

too,” Simms says. “As production continues to decline in the Southeast and

fluid milk sales continue to grow,

focusing on the efficient and cost

effective procurement of supplemental

milk to fill the growing deficit will be

an ongoing process.” ■ 

FOCUS ON...

W

Southern Marketing Agency Inc.
Rural Cooperatives / January/February 2004 21

By Kimberly Zeuli, 

Assistant Professor, 

University of Wisconsin—Madison 

eading major newspapers

lately, one might get the

erroneous impression

that all agricultural cooperatives are in trouble. A

recent New York Times article stated:

“The collapse of Farmland has some

farm groups worried that co-ops are

losing their ability to compete with big

food companies” (Sept. 16, 2003). The

demise of Farmland and Agway has

been the subject of many similar articles. Still others have focused on financial issues at Land O’Lakes, governance problems at Ocean Spray and

the conversion of such notable co-ops

as Dakota Growers and Birds Eye to

investor-owned firms. 

Is the agricultural cooperative sector

close to collapse? Are successful cooperatives fleeing a sinking ship?

Whatever happened to the optimism

and missionary-like zeal that surrounded the wave of new generation cooperatives created during the 1990s?

This challenging, changing business

environment requires innovative thinking and tough decisions. Cooperative

executives and board members are

being called upon to redefine their

cooperative’s vision and to create new,

competitive strategies. To help them in

this process, the sixth annual Farmer

Cooperatives Conference, Executing

Vision and Strategy with Success, was

held in Kansas City, Mo., Oct. 30-31.

Each year for the past six years, co-op

directors and CEOs, government representatives, financial and legal professionals and cooperative scholars have

met at this conference to think broadly

and critically about the future of agricultural cooperatives. 

The University of Wisconsin

Center for Cooperatives (UWCC)

established this conference series in

1998, with financial support from

Farm Foundation, to provide a forum

for the exchange of ideas on a timely

set of issues affecting the agricultural

cooperative sector. 

Implementing these strategies — to

make the vision a reality — can be more

difficult and time consuming than

cooperative leaders and members anticipate. By addressing the constructive and

successful action some co-ops have

taken, the conference offered a counterperspective to the press reports.

Speed of execution

According to Chris Peterson, ag

economics professor at Michigan State

University, cooperatives need to pay

particular attention to a new trend:

ever-shorter product and operational

cycles. Agribusinesses are being forced

to respond faster and faster to customers and changes in the marketplace. “The key to success in the new

agribusiness world is to either be big

or be fast, but never get caught in the

middle,” Peterson said. 

Steve Montgomery, executive vice

president at CoBank, and Jack Gherty,

president and CEO of Land O’Lakes,

agreed that co-ops are competing in a

fast-paced, tough marketplace.

Montogomery said the recent bankruptcies of Farmland, Agway and

TriValley have led many to wonder if

the cooperative model is broken. But,

he noted, the failures of Enron, MCI

Worldcom and other investor-owned

companies have not caused similar

questions about the future viability of

the corporate model. 

All agribusinesses face a “new reality”

— an economy that has evolved from

being industrial-based to one that is

knowledge-based, driven by management, technology and customer

demands. Success requires navigating

this new reality with a strong board of

directors and management team executing a strategic business plan with measurable objectives. 

Montgomery warned co-ops: “...

if you are not adding value for your

members, then why should you remain

in business?” Gherty added:

“Change...You don’t have to do it.

Survival is not mandatory.” 

Non-traditional equity arrangements

Many cooperatives are looking into

alternative equity strategies. Mark

Semmens, managing director of investCo-op leaders focus on

strategies for success

R

Don Gales, president of ADM-Collingwood

Grain, addresses the Farmer Cooperatives

Conference in Kansas City. Photo courtesy

University of Wisconsin
22 January/February 2004 / Rural Cooperatives

ment banking at D.A. Davidson, compared alternative capital structures that

allowed co-ops to compete with other

business types in capital markets. Using

CHS Inc. as a case study, Semmens

explained how co-ops can successfully

use perpetual preferred stock to achieve

their capital objectives. 

David Swanson, of the Dorsey and

Whitney law firm, said changes in the

co-op model in some states were driven by a desire for greater flexibility in

raising capital, tax treatment and member-equity liquidity. Without greater

flexibility, more cooperatives may convert business structures, he said. 

Steve Wright, CEO and general

manager of Pro-Fac, a Rochester,

N.Y.- based fruit and vegetable growers’ cooperative, provided an overview

of recent changes at the co-op. In

August 2002, the Pro-Fac board of

directors accepted a private infusion of

equity from Vestar Capital Holdings,

which invested roughly $175 million in

AgriLink Foods. AgriLink had been a

wholly owned subsidiary of the co-op,

but Pro-Fac had to seek outside capital

due to the heavy debt load it accumulated when purchasing AgriLink and

Dean Foods’ vegetable operations

(Birdseye Foods). The co-op is now a

minority (40 percent) owner in the

food company, which has been rechristened Birdseye Foods. 

Closing local plants and branches

Jeff Stroburg, CEO of West Central

Cooperative in Iowa, kicked off a trio

of presentations by discussing the difficulties involved with closing local

plants and branches. Smaller margins,

he said, are forcing co-ops to investigate unprofitable sources in the business. All local plants and branches

need to be assessed in terms of their

ability to create value; they should not

remain open simply because they are a

“legacy location.” 

David Fuhrmann, president of

Foremost Farms in Baraboo, Wis.,

discussed the tough decisions facing

the dairy co-op. Confronted with

declining regional milk production,

excess manufacturing capacity and

“devastating” milk prices following the

9-11 terrorist attacks, Foremost pursued a “plant-rationalization” strategy.

Fuhrmann explained that these actions

require cooperatives to “plan, plan,

plan, and communicate, communicate,

communicate.” 

Building brands

Don Schriver, executive vice president of Dairy Farmers of America

(DFA), said “a cooperative’s brand is

the face it presents to the world.”

According to Shermain Hardesty,

Director of the Center for

Cooperatives at the University of

California, only a limited number of

cooperatives have nationally prominent

brands. Some structural characteristics

of cooperatives seem to impede brand

building, she noted. Several presentations discussed the importance of

brands to cooperative growth and

innovative strategies for achieving

strong brand names.

Keys to success

Mark Hanson, attorney at the

Lindquist and Vennum law firm, said

there are four keys to successful cooperatives: leadership, a solid and focused

business plan, an efficient capital structure and member liquidity. Hanson

said that cooperatives need to distinguish between an income business

model, in which earnings are distributed, and a business growth model, in

which earnings are reinvested. Co-ops

also need to understand where their

capital is coming from — not through

assumption, but by close observation.

Mike Maranell, senior vice president at Ag Processing Inc. (AGP), an

Omaha, Neb.-based soybean-processing co-op, provided these “take-home

concepts” in his conference wrap-up:

1. It is important to understand the

“purpose” of a business, particularly your business.

2. The success of execution depends

on the following key ingredients:

• a clear vision of what you want

the business to look like in the

future;

• a formalized, strategic plan that

involves multiple stakeholders;

• alignment of the board of

directors and management;

• finding the right people for coop leadership positions.

3. The cooperative system has,

and will continue, to evolve. ■

• The impact of global and industrial trends in agriculture on cooperatives (1998). 

• Achieving excellence in cooperative governance (1999). 

• Building cooperatives’ economic strength with new ideas regarding capitalization and equity redemption 

programs (2000).

• Measuring a cooperative’s value and choosing competitive business strategies (2001).

• How cooperatives have adapted their structures to succeed in a challenging business environment (2002).

Post-conference summaries, programs, and some presentations can be found on the UWCC Web site

(http://www.wisc.edu/uwcc/farmercoops03/index.html). ■

Previous Farmer Cooperatives Conferences 

have addressed the following issues:
Rural Cooperatives / January/February 2004 23

By Julie A. Hogeland, 

Agricultural Economist

USDA Rural Development

julie.hogeland@usda.gov 

Editor’s note: The following article is

based on the author’s presentation at the

“Mapping Cooperative Studies in the New

Millennium” conference, held at the

University of Victoria, Victoria, British

Columbia, May 29, 2003. 

Conference papers may be found at:

http://web.uvic.ca/bcics/map_conf_papers

.html

he premise of this article

is that culture affects

economic behavior. The

focus is on how the concept of service, as offered

by regional and local farm supply and

grain cooperatives, has evolved during

the past 20 years. 

Service started out as a producer-driven concept, associated with cultural

expectations of entitlement. The institutional framework for realizing these

expectations was created by multi-commodity cooperatives, such as Farmland,

Countrymark and Agway. The producer’s needs were foremost in this setting.

Service ended up becoming defined as a

market-driven concept, where the needs

of the customer become paramount. 

The institutional framework has

evolved into an industrialized system of

agriculture, in which producers have

faded more into the background as

cooperative identity has coalesced

around participation in value-added

food chains. In this context, being a

low-cost supplier or getting a high price

becomes the key definition of service.

Typically, economists have not paid

much attention to culture. They tend

to treat most decisions as a matter of

price and quantities, or as financial

considerations, such as interest rates.

Cooperative management, members

and directors also have not explicitly

considered culture. When decisions

diverge from economic considerations,

the cooperative community typically

regards the decision-making process as

“political.” This does not mean a

political party, but refers to the variety

of commodity interests, geographic

interests or farm organization affiliations that can subtly influence cooperative agendas on a day-to-day basis.

Characteristics of 

cooperative culture 

There is an underlying, more fundamental and unified aspect of cooperative culture that reflects common

understandings of what cooperatives

should be and the values and duties

they should encompass. These typically include:

1. Emphasizing service over making

money;

2. Being altruistic — not exploiting

the business for a profit;

3. Attaining self-sufficiency to minimize farmer dependency on those

perceived as outsiders;

4. Emphasizing a hierarchical style

of leadership and dependence;

5. Often displaying an unwillingness

to let go of relationships, things

or places;

6. Valuing the “small and personal”

over the “large and impersonal”;

7. Preferring to subordinate individual goals to the good of the

whole; and

8. Valuing equality (treating everyone equally).

How business culture drives

economic behavior in co-ops 

T

Ag Processing Inc. (AGP) staff led buyers from some of the nation’s largest food manufacturers

on a field-to-factory tour to show them how soybeans are raised and processed. AGP focuses

all of its attention on what it does best: process and market soybean products. 

Photo by Jim Rodenburg, courtesy AGP
24 January/February 2004 / Rural Cooperatives

Collectively, these are the social

mores of a group that is more like a

family than a business. Together, they

form a framework for understanding

multiple dimensions of cooperative

behavior.

These themes were drawn from

some 30 interviews conducted with

regional and local cooperative management during the past two years.

During the interviews, managers

were asked to provide examples of

expressions or language that represented traditional ways of talking about

cooperatives. Managers were also

asked how they would respond to such

traditional thinking. This give-andtake provides a useful compendium of

how local cooperative managers —

who are on the front lines of cooperative activity, because they interact

directly with farmers — are gradually

reshaping cooperative culture.

Cultural road map 

The primary cultural road map followed by most co-ops (other than bargaining cooperatives) is the competitive yardstick model of Edwin Nourse

(Nourse 1992). But in some important

ways, this is probably an outdated

script. Nourse established the “competitive yardstick” in the 1940s. He

believed farmers should form cooperatives only when needed to offset

monopoly power, or to compensate for

inadequate services. 

After cooperatives had disciplined

potential monopolists through the

yardstick of competitive efficiency,

Nourse believed they should simply

maintain watchdog status over an

industry, not try to dominate it themselves. He even suggested cooperatives

might consider abandoning industries

where they had been particularly successful in establishing competition.

Leave it to others to compete and let

farmers go back to their traditional

activity of farming, he advised. This

was a very passive vision of cooperation

that left unanswered many of the questions that concern cooperatives today.

For example, it is not clear how big

cooperatives should get, how long they

should stay in a particular industry and

whether their relationship to other

industry participants should be one of

competitor or partner. The main prescription of Nourse’s competitive-yardstick model was that cooperatives

should provide “an extra bid” or “extra

competition” to “keep everyone honest.” But this cultural model was

formed in response to concerns about

market concentration and farmer

exploitation during the first part of the

20th century. 

Today, the concerns of farmers and

their cooperatives are much different.

These concerns include: getting access

to information, finding a place within a

value-added system, negotiating an

equitable ownership role within that

system and addressing food safety and

other product specification issues

which are integral to the success of

those systems.

Recent severe financial pressures,

including the bankruptcies of the

Farmland Industries, Agway and

TriValley cooperatives, suggest that the

culture may be pointing cooperatives

in the wrong economic direction, at

least in some respects.

The primacy of service 

The primary cultural value that drives economic behavior in cooperatives is

service. The way service dictates choices

within cooperatives is demonstrated

when managers or directors say, “We

take care of our members.” Or, if managers want to cut costs, and so cut back

on services, they may say: “I can’t do it

because my members won’t let me.” 

As part of this service culture, there

is a broad definition of member needs

because farmers are continually asked

what they want their cooperative to do.

This leads to an “add-on” mentality, in

which the mindset is: “let’s add on this

and add on that.” This attitude is reinforced by certain expectations, which

local cooperative managers describe as:

“Farmers like to go into every location

and get everything they want.” Or,

“Farmers like to see their equity

investment spent at their own location,

where they can see it.”

The service culture gives primacy to

member needs above all other factors.

The fact that members want something

and the cooperative exists to serve their

needs makes other factors secondary,

including what the service costs, how it

fits in with the other services offered by

the cooperative, whether the service is

already offered by competitors and so

on. The economic consequence is that

the cooperative can become a multipurpose business that lacks a clear customer definition. 

AGP headquarters in Omaha, Neb. This regional soybean co-op has a straightforward 

mission: get member co-ops a better price for their soybeans. Photo courtesy AGP
Rural Cooperatives / January/February 2004 25

The expression, “Cooperatives are

all things to all people,” reveals the

fundamental loss of purpose created by

the add-on mentality, which other

cooperatives (discussed later) are

attempting to recover. With the “addon” mentality, the cooperative defines

itself as it goes along, by accumulating

a wide number of product lines, which

are often not clearly related.

Ultimately, it becomes very difficult

for such cooperatives to achieve the

critical mass and scale economics that

would enable them to compete with

more efficient and focused suppliers.

“Add-on” mentality

leads some to ruin

The “add-on” mentality brought

Agway, the largest cooperative in the

United States in the 1980s, to bankruptcy in 2002. Despite a strict policy

that it would not get involved in dairy

processing, the New York-based supply

cooperative in 1980 purchased H.P.

Hood, a fluid dairy company, in order

to help members of Northeast dairy

cooperatives stabilize milk markets

(Anderson & Henehan 2002:3). 

“Agway had no prior experience

running a fluid milk business,” which

is “very competitive, and operates

much differently than an agricultural

supply company,” according to

Anderson & Henehan. In the following decade, Agway was able to pay a

patronage refund only twice.

Intense member support for a particular service, sometimes just the

highly vocal support of a few members,

can be sufficient to dilute or override

the importance of economic factors.

“Members, at times, asked Agway to

do too much on their behalf without

thoroughly understanding the costs

involved” (Anderson & Henehan

2002:11).

The management of the cooperative, particularly a regional cooperative, then has the responsibility to

build an organization around member

choices. Gold Kist used the slogan

“Diversification is Our Strength” to

reflect its interests in poultry, agronomy, cotton, poultry and peanuts. “By

shedding its non-core businesses, Gold

Kist Inc. is fast becoming a lean, mean

poultry machine,” according to the

May 2002 issue (page 16) of

“Refrigerated & Frozen Foods.”

Farmer attrition limits

diversification strategy 

If there are a large number of farmers to be served by the cooperative, the

cooperative may be able to make a

diversified service strategy work.

However, there are particular economic stressors that make it particularly

hazardous for cooperatives to follow

this strategy. 

Chief among these factors is farmer

attrition. As the number of farmers

declines, fewer will want any particular

service. When agriculture began leaving the Southeast, Gold Kist’s diversity

became a weakness. Farmers also have

become increasingly specialized, so

their demands have become more oneof-a-kind. Consequently, the service

culture can set the cooperative up for

dying a slow economic death, insofar

as the assets accumulated to serve

members in a variety of ways are slowly and painfully sold off, one by one. 

To maintain cash flow, Agway shed

two profitable businesses, Telmark

leasing and its North Dakota sunflower business. But this did not save it

from bankruptcy. 

Some service cooperatives have

turned to “bundling” — grouping a

particular service within a group of

related products or services and pricing them as a unit. As economic pressures force many producers out of

farming, those that remain are forced

to examine costs more closely.

Cooperatives that have bundled items

together may be forced to decouple

them so that producers can compare

prices individually. 

Cooperatives that have built an

administrative or overhead system

around providing service packages or

production systems may find that producers prefer to assemble their own

systems, piecemeal, from different vendors because it is cheaper. Appealing to

customers through a broad product

array may make a cooperative vulnerable to transient consumer loyalties. 

Farmers may pick and choose, but

the cooperative is stuck with the overhead. Cooperatives may have invested

in costly assets, such as feed mills, and

assumed that farmer desire was equivalent to farmer use. Managers refer to

this cultural concept as: “We will build

it, and they will come.”

Large producers demand bargains 

Consolidation among suppliers and

farmer-customers has resulted in large

producers driving hard bargains, and

agribusiness conglomerates are often

willing to do what is necessary to capture the business of these customers.

In this context, the service strategy

puts cooperatives in a particularly vulnerable position. More and more farmers may be seeking the one-time-only

“best deal.” 

So, local cooperative managers are

beginning to revise the way they

approach the concept of service. Some

are asking: “Who do we serve? Who is

our customer? Will they still be there

“Agway had no

prior experience

running a fluid

milk business,”

which is “very

competitive, and

operates much 

differently than 

an agricultural

supply company.”
26 January/February 2004 / Rural Cooperatives

in the future? Is that the business we

want?” There’s good business and bad

business.

These managers are starting to look

at how much it will cost to serve a

group of farmers. Some are saying:

“Hey, we can’t do that. Let’s walk

away. Let someone else serve them.” 

This is the sort of approach a corporation operating for profit would

take. Instead of serving all customers

— being all things to all people — the

cooperative “cherry-picks” by pursuing

the most attractive customers.

Co-ops: a family business? 

Looking at their farmer-patrons in

terms of their potential profit to the

cooperative introduces a form of “distancing” into what may have been a

personal or social relationship. In some

rural communities, the relationship

between management, directors and

cooperative members has been so personal and closely linked that the cooperative is more like a family, in some

ways, than a business. 

This is shown in the way managers

of small-town, locally owned grain elevators and farm supply stores go out of

their way for their farmer-members.

When a farmer pulls up at the co-op

elevator at closing time with a truckload of grain, the manager will stay

late, even though elevators operated by

multinational corporations have probably closed. Similarly, the co-op will

spray the farmer’s fields at night

because that is when the winds have

died down. 

Why do managers do this? “Because

our kids go to school with their kids,”

they say.

In such communities, there is an

intertwining of economic, social,

neighborhood, kinship and political

dimensions within the cooperative

bonds. While this has given cooperatives their cohesiveness and unity, it

has also established certain expectations among farmers that may be resistant to change. 

If managers charge for advisory services previously provided as a free service, farmers have objected, saying: “You

never charged me before. You want my

business? You better do it [for free].” 

Yet managers cannot attract the skill

level of technical help farmers need

without paying a particular salary level.

So, they have to become, in their

words: “more of a business than a

cooperative.” This linguistic distinction shows the extent to which cooperatives have been put in a class apart

from other businesses and held to different rules and expectations.

As managers try to revise these

expectations, they anticipate their

cooperatives will become less personal

than what their father’s co-op was,

more of a business (“arm’s length”)

than family relationship. Long-term

margins will be in technical support

services, not in the bulk commodity

products that have been the traditional

source of income for local cooperatives.

Regionals must also adjust

Regional cooperatives have a similar

adjustment to make. Their task as

manufacturers is to answer the question: “What are we good at?”

For Gold Kist, the answer was poultry, which co-op leaders defined as the

co-op’s core business. This decision

led them to divest their operations in

agronomy, pecans, catfish, farm supplies and peanuts. Similarly, Land

O’Lakes recently announced a phased

reduction of its involvement in the

pork industry, due to the displacement

of family farmers by integrators and

increased market volatility.

By streamlining and narrowing their

commodity focus, these cooperatives

are approaching the question of service

from the standpoint of: “Who do we

serve?” and “What are we good at?”

They are using a dual focus that

allows them to take more than just

producer interests into account. Agway

essentially looked at the question of

service from the standpoint of, “Who

do we serve?” That is, of producer

interests. “What are we good at?” is a

question that addresses the economic

efficiencies of the cooperative. 

The multi-commodity cooperative

has to balance different producer interests, which can be a difficult task.

Farmland and Countrymark were two

such cooperatives. These cooperatives

had portfolios that, between them,

included grain, pork, turkeys, fertilizer,

beef, agronomy and petroleum. The

portfolios were built from the standpoint of anticipating that a good year

in one commodity would offset a bad

year in another. 

So, an expectation of loss was built

into the cooperative’s culture. At some

point, a commodity cycle was going to

hit the cooperative hard. And, in fact,

when particularly severe losses

occurred for one commodity, as in the

case of Farmland and fertilizer, it hit

sufficiently hard to push the entire

cooperative into bankruptcy.

The case of Farmland is particularly

interesting because it represents a mix

of cooperative values of self-sufficiency

and service. Self-reliance may be a

value that can be traced to pioneer values and distrust of outsiders. It also has

figured prominently in farmers’ desire

for a source of domestic fertilizer supplies so they can undertake spring

planting on schedule. 

During the 1970s energy crisis,

farmers were able to accomplish this

critical task because cooperative

“Who do we 

serve? Who is 

our customer? 

Will they still be

there in the future?

Is that the business

we want?” There’s

good business and

bad business.
Rural Cooperatives / January/February 2004 27

resourcefulness maintained sufficient

natural gas reserves, a seedstock for fertilizer. This accomplishment became an

established cultural model for a later

period of high natural gas prices.

During 2001-2002, a period of particularly high natural gas prices,

Farmland Industries tried to assure

farmers of self-sufficiency for fertilizer

supplies, following the example set by

cooperatives 30 years earlier. At the

recommendation of members,

Farmland went into considerable debt

to buy domestic manufacturing plants. 

Imported fertilizer would have

been much cheaper, possibly less

available and sometimes it even

looked odd, because it was colored

black instead of white. Farmland was

the largest U.S. farmer cooperative,

but the fertilizer debt helped pitch it

into bankruptcy.

What was different between the

energy crisis of the 1970s and 2002

was that new suppliers, such as Russia,

had come on stream. The need for

cooperatives to respond to the mandate “We take care of our members”

was suddenly an anachronism in the

context of the wider availability of supply on the world fertilizer market. 

New service model needed?

Rethinking conventional notions of

service means that some demands

made by farmers have to matter less

than others. Some demands have to go

by the wayside. The rules of the game

have changed. 

The expectation that farmers will

automatically be loyal to their cooperatives is no longer true. Someone

else may be cheaper. Someone else

may have a better product. The cultural obligation — that cooperatives

should go out of their way to provide

service to their farmer-members —

may no longer be valid. 

Farmland and Agway experienced

problems in part because their definition of service was so producer driven

that the overall health of the cooperative became secondary. 

For the local cooperatives that are

members of Ag Processing Inc. (AGP),

a regional cooperative, service is

defined as getting a better price for

their soybeans. AGP, as a regional

cooperative, is focused only on soybean

processing. That dedication allows

AGP to be a low-cost supplier to

industry users of soybean oil and meal. 

If there is a lack of demand for soybean oil or some other setback in the

soy-processing industry, the local

cooperatives that own AGP accept this

as a consequence of their ownership.

The lines of accountability are clear.

This clear demarcation of boundaries

seems to be one of the evolving characteristics of cooperation.

The intensive specialization followed by Gold Kist and AGP was triggered by recognition that consolidation has happened within interdependent parts of the food chain.

Cooperatives that lack the critical

mass, focus and capitalization will be

locked out of desirable value-added

opportunities, such as instant meals.

To qualify as players in this highstakes game, cooperatives often need

to be low-cost producers, which

requires high product volumes and

dedicated, efficient handling.

Cooperatives such as Farmland

and Countrymark that pursued a

counter-cyclical, diversified portfolio

had to spend considerable attention

managing the divergent commodity

cycles and any resulting complications in member relations. Their definition of service was necessarily producer-driven. 

With specialized cooperatives,

such as Gold Kist or AGP, the relationship with the investment partner

becomes paramount, whether the

partner is another cooperative or a

corporation, as they jointly develop

their respective contribution to a

value-added system. What becomes

important in defining service is not

what Farmer Joe wants, but what the

customer wants. The definition of service is market driven.

Re-evaluating Nourse

The cultural model of Nourse’s

competitive yardstick was a negative

one, skewed toward countering

monopolistic exploitation and power,

not the pursuit of opportunities for

cooperative growth and influence.

Nourse wanted to see that farmers

were served well. His cultural legacy

may have been a sense of “farmer

entitlement” that has overburdened

the economic capacities of cooperatives.

With the industrialization of agriculture, the pendulum is swinging back

the other way. Farmers are often now

regarded in a more detached way as

“the most efficient managers of land”

within an industrial management system (Urban 1996:70). Attention has

shifted from farmers per se, to the drivers of the value-added systems found

in agriculture today, including cooperatives. These systems could offer an

economically healthier cultural environment for cooperatives to flourish in

than the Nourse-influenced setting of

a previous era. ■

References:

Anderson, Bruce L. and Brian M.

Henehan. “What Went Wrong at Agway”

Occasional Paper, Cornell Cooperative

Enterprise Program, Dept. of Applied

Economics and Management, College of Ag.

and Life Sciences, Cornell University, Ithaca,

NY. October, 2002.

Refrigerated & Frozen Foods, May 2002

Vol. 13 (5), 16. ISSN: 1061-6152. 

Fulton, Murray, “Traditional versus New

Generation Cooperatives,” in Merrett,

Christopher D. and Norman Walzer, eds., 

A Cooperative Approach to Local Economic

Development, Westport: Conn.: Quorum

Books: 2001.

Hogeland, Julie A., “The Culture of

Cooperation,” Presentation to the Annual

Meeting of the American Anthropological

Association, November 24, 2002, New

Orleans, Louisiana.

Nourse, Edwin G, “The Place of the

Cooperative in Our National Economy,”

Reprint from American Cooperation 1942 

to 1945. Journal of Agricultural Cooperation

1992 Vol (7) 7:105-111.

Urban, Thomas. ”Agricultural

Industrialization: It’s Inevitable.” The Best of

Choices— 1986-1996. (Reprinted from

Fourth Qtr. 1991, pp. 70-72). Ames, Iowa:

American Agricultural Economics Assn.,

1996. 
28 January/February 2004 / Rural Cooperatives

By Eldon Eversull, Ag Economist

USDA Rural Development/RBS

espite sales gains in the

livestock and cotton sectors, final sales data for

2002 shows that net

business volume for the

nation’s 3,140 farmer-owned cooperatives fell to $96.8 billion, with a net

income of $1.21 billion. With assets

totaling $47 billion and almost $20 billion in equity, farmer cooperatives continued to be a major employer in rural

areas, with 166,000 full-time workers

and 54,000 part-time and seasonal

workers.

U.S. farmers overall had increased

sales of products that they produced in

2002, but many farmer-owned cooperatives experienced lower sales and

incomes. There are a number of reasons why cooperative sales and income

do not strictly follow national farm

trends. The fiscal year for about half of

cooperatives ends in June or earlier,

meaning that most of their sales are

from the prior year while farm production trends are based on calendar

years. Further, many cooperatives sell

value-added products that do not necessarily reflect raw commodity prices.

Cooperative marketings declined in

all sectors in 2002, except for livestock

and poultry, which increased $600 million (4.5 percent), and cotton, which

climbed $100 million (2.5 percent).

Low milk prices caused dairy co-op

sales to drop while several larger fruit

Farmer cooperative sales,

income fall in 2002

D

Table 1–Farmer cooperatives’ net business volume1, 2002 and 20012

Commodity or function 2002 2001

Million dollars

Products marketed

Cotton 2,461 2,400

Dairy 23,038 26,187

Fruits and vegetables 7,338 8,822

Grains and oilseeds3 17,474 18,055

Livestock and poultry 12,304 11,776

Rice 748 756

Sugar 2,440 2,648

Other products4 3,852 4,398

Total products marketed 69,656 75,042

Commodity or function 2002 2001

Million dollars

Supplies sold

Crop protectants 2,713 2,957

Feed 5,373 3,998

Fertilizer 4,315 4,966

Petroleum 7,157 8,446

Seed 1,086 1,051

Other supplies5 3,035 3,338

Total supplies sold 23,679 24,756

Related-services and

other income6 3,416 3,471

Total 96,750 103,269

1 Excludes inter-cooperative business. Volume includes value of products 

associated with cooperatives that operate on a commission basis or bargain for members’ products.

2 Preliminary. Totals may not add due to rounding.

3 Excludes cottonseed.

4 Includes dry edible beans and peas, fish, nuts, tobacco, wool, and other miscellaneous products.

5 Includes building materials, containers, hardware, tires-batteries-auto accessories (TBA), farm machinery and equipment, food, and other supplies.

6 Includes receipts from trucking, ginning, storage, artificial insemination, rice drying, and other activities as well as other income.
Rural Cooperatives / January/February 2004 29

and vegetable co-ops had much lower

sales. Overall, almost all of the decline

in sales occurred on the marketing side,

falling about 7.2 percent from 2001.

Net business volume includes

receipts from the sale of crops, livestock and value-added products marketed by cooperatives, as well as farm

production supplies sold and services

provided by cooperatives. It does not

include sales between cooperatives.

Farm production supply sales fell

4.4 percent due to large decreases in

petroleum and fertilizer sales. On the

plus side, livestock feed and seed sales

both increased, with feed sales growing

by $1.4 billion. 

Net income for cooperatives fell

from $1.4 billion to $1.2 billion. Sales

were lower in each of the three primary

sectors USDA tracks: crop and livestock marketing (including value-added

goods), farm supplies and farm services.

Several types of marketing cooperatives bucked the downward trend,

reporting higher net income in 2002.

After posting almost no income in

2001, rice cooperatives were back to

historically high levels, with net income

of $6.6 million. Cotton cooperatives’

net income almost tripled from 2001, to

$89.6 million, while grain and oilseed

cooperatives had a 4-percent increase.

Farmer-owned cooperatives had

combined assets of $47.5 billion in

2002, and net worth of $19.6 billion.

Cooperatives financed about the same

percentage of assets with debt capital

(58.7 percent in 2002 vs. 58.4 in 2001)

rather than equity. 

The number of cooperatives

declined to 3,140 in 2002, down from

3,229 in 2001 and 3,346 in 2000. The

main causes were mergers, consolidations, acquisitions and dissolutions. 

Memberships in farmer cooperatives totaled 2.8 million in 2002, down

from 3 million in 2001. The number

of memberships is larger than the

number of farmers in the United

States because many farmers belong to

more than one cooperative.

Co-op data is generated by USDA

Rural Development’s annual survey of

cooperatives. ■

Cooperative type 2002 2001

Million dollars

Marketing 

Cotton 89.6 33.4

Dairy 283.6 364.2

Fruits and vegetables -147.8 76.6

Grains and oilseeds 258.7 248.8

Livestock and poultry 69.1 -67.3

Rice 6.6 0.1

Sugar 71.2 -23.2

Other products3 131.8 176.8

Total marketing 762.7 809.5

Total farm supply 337.8 429.0

Total related-service4 109.1 118.4

Total 1,209.6 1,356.9

1 Preliminary. Totals may not add due to rounding.

2 Net income less losses and before income taxes.

3 Includes dry edible bean and pea, nut, tobacco, wool, fish, 

and other product marketing cooperatives.

4 Includes trucking, ginning, storage, artificial insemination,

and other.

Table 2–Farmer cooperatives’

net income1

, 2002 and 20012

Cooperative type Cooperatives2 Memberships

Number Thousand

Marketing

Cotton3 14 43

Dairy 198 82

Fruits and vegetables 212 33

Grains and oilseeds 768 542

Livestock and poultry 85 120

Rice 15 12

Sugar 48 14

Other products4 219 203

Total marketing 1,559 1,049

Total farm supply 1,201 1,637

Total related-service5 380 107

Total 3,140 2,794

1 Preliminary. Totals may not add due to rounding.

2 Operations of many cooperatives are multi-product and multi-functional. They are classified in most cases according to predominant commodity or function as indicated by business volume.

3 Cooperative cotton gins are included with related-service cooperatives.

4 Includes dry edible bean and pea, nut, tobacco, wool, fish, and other

product marketing cooperatives.

5 Includes cooperatives that primarily provide trucking, ginning, storage,

artificial insemination and other.

Table 3–Farmer cooperative 

numbers and memberships, 20021

Several types of co-ops

bucked the downward

trend...
30 January/February 2004 / Rural Cooperatives

Beverly L. Rotan, Economist

USDA Rural Development/RBS 

e-mail: beverly.rotan@usda.gov

he past year saw cooperatives struggle with economic downturns for many commodities and

bad weather in some regions, among other challenges. Financially, has your cooperative fared

better, about the same or worse compared to

cooperatives with similar functions? Comparisons with other

cooperatives may help to determine whether your cooperative

is doing well or poorly. These include trend and industry

norm comparisons. 

The two tables on these pages contain average financial

data compiled from a survey of 263 cooperatives for 2001

and 2002. Fill in the blanks and compare these benchmarks

with your cooperative’s financial data. How’s your cooperative doing? ■

MANAGEMENT TIP

How is your co-op doing?

Tables give local co-ops a chance to compare their performance to national averages 

T

Compare your farm supply cooperative1 with averages for cooperatives with similar functions.

Size (2001) 2, 3 Size (2002) 2, 3 Your 

Measure/Item Unit Small Med. Large Super Small Medi. Large Super coop

Sell farm supplies only Number 72 31 24 10 72 31 24 10 ______

Total assets Mil. dol. 1.6 4.0 7.6 14.2 1.9 4.1 8.0 15.4 ______

Long-term debt Thou. dol. 77.6 272.6 627.9 2,150.3 95.2 366.4 687.4 2,711.6 ______

Total liabilities Thou. dol. 450.0 1,458.0 2,852.0 6,001.0 544.0 1,453.7 3,180.1 7,183.5 ______

Total sales Mil. dol. 2.6 6.7 13.7 28.0 2.9 6.8 13.2 26.5 ______

Total service revenue Thou. dol. 80.4 214.5 224.6 631.7 84.8 240.6 191.8 632.1 ______

Total revenue Mil. dol. 2.7 7.0 14.2 29.3 2.9 7.3 13.7 27.6 ______

Net income (losses) Thou. dol. 40.4 169.6 373.9 607.1 40.1 199.4 380.0 155.4 ______

Labor of total expenses Percent 54 52 55 51 55 52 55 52 ______

Patronage refunds received Thou. dol. 26.1 65.3 107.8 272.5 43.2 104.4 245.9 474.5 ______

Liquidity ratios

Current Ratio 2.24 1.60 1.42 1.30 1.95 1.67 1.38 1.40 ______

Quick Ratio 1.14 0.93 0.79 0.65 0.97 0.92 0.78 0.78 ______

Leverage ratios

Debt Ratio 0.26 0.35 0.38 0.46 0.29 0.35 0.40 0.47 ______

Debt-to-equity Ratio 0.34 0.54 0.62 0.85 0.41 0.55 0.66 0.87 ______

Times interest earned Ratio 4.68 4.17 3.79 2.10 3.21 5.96 6.99 1.59 ______

Activity ratios

Fixed asset turnover Ratio 8.15 5.97 5.94 5.91 7.42 5.85 5.83 5.60 ______ 

Total asset turnover Ratio 1.57 1.54 1.75 1.88 1.47 1.66 1.65 1.72 ______ 

Profitability ratio

Gross profit margins Percent 16.57 16.78 18.47 15.75 17.52 16.63 20.29 17.97 ______ 

Return on total assets before

interest and taxes Percent 4.19 5.51 5.73 4.90 3.32 6.25 6.25 2.93 ______ 

Return on total equity Percent 5.43 8.04 8.39 5.70 3.94 10.32 10.58 2.35 ______ 

1100 percent of sales were generated from farm supply sales. 2 Small = Sales are $5 million or less; medium = over $5 million to $10 million; large = over $10 million to $20 million; and super = over $20 million. 3 There were 294 cooperatives surveyed in both years.
Rural Cooperatives / January/February 2004 31

which today has 100,000 members.

NASFAM is using its well-honed outreach capacity to spread information

regarding HIV/AIDS. Issues related to

the disease are discussed at general

meetings, and labor-saving farming

techniques are promoted to counteract

family labor losses. 

Each issue of NASFAM’s monthly

newsletter, “Titukulane,” devotes a page

to HIV/AIDS, arming local groups with

accurate information and encouraging

them to abstain from risky sexual behavior and to help infected group members

with their farming enterprises. More

women are joining NASFAM and they

will be able to benefit from this life-saving information. 

It has been said that the best existing

vaccine for HIV/AIDS may be empowering women. UNAIDS estimates that

infection rates among young women in

Africa are three to five times higher than

among men in the same age group. 

Mounting HIV/AIDS programs that

effectively reach rural people will

require long-term, results-based cooperation between the health and agriculture

sectors in developing countries, and

within and among international development organizations. The rural populations of nations hard-hit by

HIV/AIDS are critical to this effort,

both because they constitute a vital food

production resource and because — if

their means of livelihood is undermined

— migration to already overstressed

cities may result. 

Cooperatives represent a readymade, proven conduit to hard-toreach rural people as well as a means

to communicate their needs back to

government, civil service agencies,

community organizations and others

that serve them. ■

Compare your mixed farm supply cooperative1 with averages for cooperatives with 

similar functions.

Size (2001) 2, 3 Size (2002) 2, 3 Your 

Measure/Item Unit Small Med. Large Super Small Medi. Large Super coop

Market farm products and

sell farm supplies Number 11 8 20 18 11 8 20 18 ______

Total assets Mil. dol. 1.4 4.2 7.9 20.0 1.6 4.2 8.4 23.4 ______

Long-term debt Thou. dol. 70.6 455.2 934.3 2,856.7 30.6 405.3 902.7 3,909.0 ______

Total liabilities Thou. dol. 465.7 1,661.9 3,254.8 9,776.0 410.7 1,443.2 3,444.1 12,342.3 ______

Total sales Mil. dol. 2.8 7.1 13.5 38.0 3.3 7.1 13.1 38.9 ______

Total service revenue Thou. dol. 123.0 298.9 555.6 1,455.1 125.3 350.7 634.6 1,788.7 ______

Total revenue Mil. dol. 3.0 7.7 14.2 40.2 3.5 7.7 14.0 41.5 ______

Net income (losses) Thou. dol. 26.8 141.8 293.4 628.6 9.2 -9.7 311.8 473.5 ______

Labor of total expenses Percent 51 52 51 50 53 47 51 51 ______

Patronage refunds received Thou. dol. 25.7 54.2 161.3 309.7 27.3 94.8 192.4 474.5 ______

Liquidity ratios

Current Ratio 1.94 1.35 1.34 1.33 2.68 1.77 1.39 1.33 ______

Quick Ratio 1.02 0.64 0.74 0.66 1.72 0.86 0.74 0.67 ______

Leverage ratios

Debt Ratio 0.33 0.40 0.41 0.49 0.25 0.34 0.41 0.53 ______

Debt to equity Ratio 0.50 0.66 0.71 0.96 0.33 0.52 0.69 1.12 ______

Times interest earned Ratio 3.15 3.07 2.99 2.47 2.16 2.13 4.47 2.36 ______

Activity ratios

Fixed asset turnover Ratio 10.68 5.77 5.77 6.51 9.17 5.76 5.72 5.83 ______

Total asset turnover Ratio 2.02 1.71 1.71 1.90 2.00 1.69 1.55 1.66 ______

Profitability ratio

Gross profit margins Percent 13.14 14.15 15.76 15.50 14.18 14.04 15.60 14.72 ______

Return on total assets before

interest and taxes Percent 3.49 5.46 6.04 6.02 1.30 2.29 4.96 4.06 ______

Return on total equity Percent 3.92 7.82 8.65 8.56 1.05 -0.43 8.45 6.08 ______

150 to 99 percent of sales were generated from farm supply sales. 2Small = Sales are $5 million or less; medium = over $5 million to $10 million; large = over

$10 million to $20 million; and super = over $20 million. 3There were 294 cooperatives surveyed in both years.

African ag co-ops leading fight against HIV/AIDS continued from page 15
32 January/February 2004 / Rural Cooperatives

NEWSLINE

Compiled by Patrick Duffey

A trio of outstanding cooperative leaders will be

inducted into the Cooperative Hall of Fame this spring.

Honorees are Henry Schriver, Ohio farmer and cooperative educator, who has motivated thousands of young

farmers in speeches and workshops to become active in

cooperatives; Ralph Paige, executive director, Federation

of Southern Cooperatives/Land Assistance Fund, and

Allen Thurgood, founder and CEO of 1st Rochdale

Cooperative. 

The award, the most prestigious in the cooperative

community, is a tribute to the inductees’ outstanding

efforts on behalf of cooperatives. The presentations will

be made April 28 at the National Press Club in

Washington, D.C.

Schriver is a true believer of the cooperative model

whose career as an active volunteer in local farm credit,

farm supply and dairy cooperatives spans 61 years.

Schriver left his mark as an exceptional volunteer, educator and advocate. Not only has he been a teacher of cooperative principles, but he also has been a motivator who

has brought many people into cooperative organizations.

His success in teaching the basic principles of cooperatives, which spans more than 40 years, can be measured

by the number of young farmers he has motivated to get

involved in cooperatives in more than 3,000 speeches and

participation in numerous workshops sponsored by

farmer cooperatives, youth organizations and other farm

groups. His cooperative legacy includes raising a family

of true co-op believers. Six of his sons are currently farming and serving as members of a variety of cooperative

organizations.

Paige has dedicated his life’s work to proving that cooperatives can be used to enhance incomes and improve

quality of life for black family farmers and rural, lowincome families. Never deterred by scarcity of resources

or organized resistance, he has been a tireless advocate,

fund-raiser and teacher. Under his leadership, the federation has been the primary organization representing black

farmers and fighting their precipitous decline in farm

ownership and independence.

Among the federation’s accomplishments under his

leadership: more than 200 units of low-income housing

developed; 18 community credit unions formed; 75 cooperatives started; and the federation’s rural training center

at Epes, Ala., was opened. He has put the federation at the

center of national advocacy and legislative battles for public policy affecting farmers. He made the federation’s

model and cooperative development expertise available to

international audiences. 

Thurgood has a well-earned reputation at the state and

national level as an effective consumer advocate, community activist and government advisor. His clear, pragmatic

understanding of the cooperative model helped him bring

cooperative solutions to areas such as housing, health care,

banking, issues of aging and energy. He led the metropolitan New York cooperative housing community as executive director of Cooperative Housing Services and as

coordinator of the Coordinating Council of Greater New

York. He formed a powerful coalition of diverse community housing cooperatives that have effectively worked

together to address the common concerns of more than

500,000 New York families.

He helped secure passage of federal legislation to clarify IRS code exemptions for housing cooperatives and he

played an important role in securing the funding for

Naturally Occurring Retirement Communities that allow

seniors to age in place. He led the New York community

in its advocacy on behalf of credit unions as they competed with the commercial banking industry. And as New

York restructured its electric utility industry in the 1990s,

Thurgood developed 1st Rochdale as the nation’s first

metropolitan electric utility cooperative. 

Trio being inducted into 

Cooperative Hall of Fame 
Rural Cooperatives / January/February 2004 33

Record growth for

Organic Valley

Producing organic

farm products and

marketing them

through a cooperative can help farmers

earn 60 percent more

and buck the trend that is driving 330

farmers out of business every week,

according to the George Siemon of

Organic Valley Family of Farms, at La

Farge, Wis. The co-op had record

sales of $156 million in 2003, a 25-percent increase from 2002. It projects

that 2004 sales will rise to $189 million. It paid its 633 members an average $20.17 per hundredweight of milk

in 2003, which far outpaced the

national average price of $12.07 per

hundredweight, Siemon noted. 

“Organic Valley’s goal is to plow our

profits back into the earth and our

rural communities,” Siemon says,

adding that the co-op has been 100

percent farmer owned since its founding in 1988 and now produces 130

products labeled under USDA’s new

organic standards.

“Organic Valley never measures

success in dollars alone,” says Pam

Riesgraf, a co-op board member who

milks 60 cows and farms 250 acres with

her husband, Jeff, near Jordan, Minn.

“What counts for us is the number of

farmers we’re able to keep on the land.

This year’s total of 633 (members) is

living proof that the Organic Valley

model can be a lifeline.” 

Organic Valley, which built a $4

million, 45,000-square-foot barnshaped headquarters in 2003, says

major product accomplishments this

year include: the introduction of its

Omega 3 organic eggs, winning the

prize for best salted butter at the

World Dairy Expo, the introduction 

of 11-ounce plain or chocolate singleserve reduced-fat milk in Holstein-patterned packages and launching an educational organic foods Website,

www.moomom.com, among others. 

The co-op also has added a veterinarian to its services staff. Paul Detloff,

DVM, will assist the cooperative’s members with a full range of animal health

issues and provide special guidance to

new organic farmers who are just

learning new herd health strategies. Detloff is a leading authority on botanical, homeopathic

and alternative animal treatment

methods and the author of four

books, including his newest, “Alternative

Treatments for the Ruminants.” 

CHS income down

despite sales climb

“What we do reaches far beyond

the farmgate, grain elevator, refinery

and food production plant,” CHS

President and CEO John Johnson told

shareholders attending the St. Paul

cooperative’s annual meeting in

December. While CHS net income of

$123.8 million was down from $126.1

million in 2002, sales were up significantly from $7.2 billion to $9.3 billion

in fiscal 203. During fiscal 2004, CHS

will return $56.2 million of its fiscal

2003 earnings to its members and

other investors in the form of cash

patronage, equity redemptions and

preferred stock dividends. 

Highlights for the year showed

growth in the CENEX brand energy

business, initiation of federally mandated upgrades to reduce sulfur content in fuels and emissions produced at

its refinery at Laurel, Mont., and

opening grain shuttle facilities at

Friona, Texas, and Collins, Miss., to

reach livestock and poultry producers.

Other highlights included completion

of a soybean processing plant at

Fairmont, Minn., and repositioning

CHS’ Mexican food business to gain

greater efficiencies and improved economics while enhancing service to

food service and other customers. 

Western Sugar plans 

new $3.5 million diffuser

Western Sugar Cooperative has

announced plans to install a $3.5 million diffuser at its processing plant in

Billings, Mont. The new tower is

expected to save the cooperative on

energy costs by more efficiently

extracting sugar from beets. The new

unit will replace the existing diffuser,

installed in 1955. The improvement is

scheduled for February, after the sugar

beet harvest.

Meanwhile, grower payments totaling $21.5 million for the 2002 crop and

averaging nearly $40 a ton were mailed

Sculptor Tom Paul Fitzgerald puts the finishing touches on a 330-pound butter cow, exhibited

at the Michigan State Fair. The unsalted butter was churned at the Constantine plant of

Michigan Milk Producers Association. Fitzgerald, a contemporary art sculpture professor at

Wayne State University, has sculpted 40 cows. Photo courtesy MMPA
34 January/February 2004 / Rural Cooperatives

in December to the cooperative’s 1,300

members in four western states. It was

the highest gross payment made to

farmers in the past five years. 

Swiss Valley picks pair

to replace CEO Quast

The board of Swiss Valley Farms at

Davenport, Iowa, has tapped a pair

from its management team to lead the

cooperative during the interim until a

replacement is found for CEO Gene

Quast, who resigned in late October to

pursue other interests. In his place, the

board has chosen J. Gordon Toyne,

vice president of membership and procurement, and Donald Boelens, chief

financial officer, to jointly act as the

office of interim chief executive officer. 

Gerald Bratland, board president,

said the pair had the board’s “full confidence and support to move the company forward. Jobs are secure and the coop’s leadership is strong and experienced

and positioned for new opportunities.”

The cooperative serves 1,400 dairy-producer members operating in five

Midwest states. It has 700 employees

and annual sales of about $550 million.

Meanwhile, dairy industry conditions have forced the cooperative to

extend revolving members’ equity from

a seven-year to a 10-year schedule.

The change is for allocated earnings

only, not the Swiss Valley Farms

revolving fund paid in December. Coop leaders note that Swiss Valley still

has one of the fastest member equity

revolvements in the dairy industry and

one of the strongest marketing arms in

the upper Midwest.

DFA allocates $28 million;

plans N.M. cheese plant

For the fifth consecutive year, members of Dairy Farmers of America

(DFA), Kansas City, Mo., are sharing

patronage allocations totaling $28 million, including $7 million in cash. The

payout represents 8 cents per hundredweight of milk on 35 billion pounds

marketed in 2002. DFA annually markets and processes milk for more than

24,000 dairy farm families in 48 states.

Meanwhile, DFA has purchased 50

percent interest from its partners in

Sinton Dairy, Colorado Springs, Colo.,

and subsequently sold its entire interest to National Dairy Holdings

(NDH) LP of Dallas, in which DFA

has an ownership interest and supply

contract. An $8 million expansion was

completed last spring at Sinton. The

232-employee workforce may be

expanded if NDH decides to shift production to the plant. NDH now operates 32 plants in 15 states.

In another move, DFA is partnering

with Glanbia PLC of Ireland and its

cooperative partners in the Greater

Southwest Agency in a $170 million

cheese processing plant in Clovis, N.M.

The plant will employ about 200 people. Operations should begin in the second half of 2005. The plant will benefit

from low milk transportation costs,

since many of the producers operate in

a 50- to-60-mile radius of the future

plant. Other cooperatives in the

Greater Southwest Agency are Select

Milk Producers Inc., Lone Star Milk

Producers Inc. and Zia Milk Producers

Inc. Select Milk was formed in 1994 by

a group of dairies in New Mexico and

has since added others in west Texas. 

Tom Camerlo 

Dairyman of Year;

Beckendorf to lead

NMPF 

Dairy Farmers of

America (DFA)

Chairman Tom

Camerlo Jr., a dairy

farmer from

Florence, Colo., was named 2003

dairyman of the year at the World

Dairy Expo at Madison, Wis. “Those

who initiate change and lead us in

uncertain times inspire us and guarantee a bright future in the dairy industry,” Expo Manager Tom McKittrick

said of Camerlo. Camerlo recently

stepped down as president of the

National Milk Producers Federation in

Washington, D.C., to concentrate his

attention on DFA. Charles Beckendorf

of Tomball, Texas, also of DFA, was

elected by NMPF delegates to succeed

Camerlo. Beckendorf cited two major

challenges facing the dairy federation:

how to use dairy ingredients for the

benefit of farmers and how to serve

producers of every farm size.

Riceland buys ADM

share of grain venture 

Riceland Foods of Stuttgart, Ark., has

gained full control of a grain milling and

storage partnership with Archer Daniels

Midland (ADM). The ADM-Riceland

Partnership, a nine-year-old venture,

processes rice and rice products.

Riceland President Richard Bell said the

firms had “different missions and interests and concluded the assets in the

partnership more nearly fit the continuing interests of Riceland.” He said the

purchase will be financed from working

capital, with no material impact on the

cooperative’s balance sheet. Since its

inception, the partnership has operated

rice milling and grain storage facilities at

Stuttgart and Jonesboro, Ark., and

Crowley, La. Riceland intends to continue those operations.

Premium Pork plans 

plant in Missouri

Pork producers of the Premium

Pork cooperative plan to build a $130

million processing plant at St. Joseph,

Mo. The plant would be built in the

city’s stockyards area and eventually

employ about 1,000 people. Chief

Executive Officer Rich Hoffman anticipates that construction would begin

this spring. Members of the cooperative claim to own 5 percent of the

nation’s pork supply. While members

will continue to own their individual

farms, genetics and nutrition will be

coordinated by the cooperative to produce a uniform pork product.

One of the members is Allied

Producers Cooperative, which represents small- and medium- sized farms

in Nebraska, Kansas and Missouri.

The cooperative had been looking to

invest in a processing center for the

past few years. Allied Producers will

be represented on the new board by

Gerald Schmidt of Jansen, Neb.

Members have committed 435,000

hogs to the venture.

Tom Camerlo
Rural Cooperatives / January/February 2004 35

Sun-Maid buys raisin

facility in Selma

The city manager of Selma, Calif.,

has welcomed Sun-Maid Growers back

to the community after it purchased

the former International Raisins property. Sun Maid owned the facility nearly 60 years ago. It will be used to

receive, store and inspect the cooperative’s raisins harvested this season. 

The facility has the capacity to store

10,000 tons of raisins. It will employ

about 20 seasonal workers. Sun Maid

President Barry Kriebel said the cooperative considered building a new facility but found purchasing the Selma

property for nearly $1 million more

cost effective. The raisin cooperative

now owns three plants, including its

130-acre processing plant at Kingsford,

its headquarters.

AGRI Industries to end 

grain pact with Cargill

AGRI Grain Marketing, a joint

venture of 17 years standing between

AGRI Industries of West Des Moines,

Iowa, and Cargill Inc., is being terminated as of March 1, 2004. The venture has 30 employees who handle

grain trading, accounting and logistics

and another 80 working at 11 grain

handling facilities in Iowa, Illinois and

Wisconsin. AGRI Industries also

serves producers in Minnesota and

Nebraska. The three terminals originally owned by AGRI Industries – in

Burlington, McGregor and Fulton, Ill.

— and Cargill’s seven terminals will

revert back to the parent companies.

No decision has been made on jointly

owned facilities at Joy and Pekin, Ill. 

AGRI’s share of the profits have

accounted for 50 to 75 percent of the

cooperative’s total annual net income.

Chief Executive Officer Jerry Van

Der Kamp says the decision was

prompted by the changing nature of

the grain trade. Farmers are now selling grain and soybean directly to feed

mills and ethanol plants, bypassing

grain elevators that had been their

traditional market.

Chippewa Valley’s Lee heads

Renewable Fuels Association

Bill Lee, general manager of the

Chippewa Valley Ethanol Co., a

farmer-owned ethanol cooperative

organized in 1993 at Benson, Minn.,

was elected chairman of the 30-member board of Renewable Fuels

Association (RFA) at its recent annual

meeting in Washington, D.C. RFA

President Bob Dinneen said Lee’s election “is a reflection of the evolution of

the ethanol industry. It has added 20

plants and more than a billion gallons

of production in just the past three

years. Most of that growth has been in

farmer-owned ethanol plants, bringing

jobs and economic development to

rural America.”

Agway seeks court OK

to sell produce business

The Agway name continues to fade

from the Northeast farm supply and

fresh produce market as the Syracuse

cooperative spins off segments of its

operation to satisfy creditors lined up

since it sought Chapter 11 bankruptcy court protection last year to cover

$1.5 billion in liabilities.. The bankruptcy court at Utica, N.Y., had

granted the cooperative until Jan. 25

to have its reorganization plan

approved. 

Agway signed a deal to sell its

Agway Energy Products LLC assets

to Suburban Propane Partners for

$206 million from which Agway will

net about $175 million. The energy

subsidiary served 500,000 customers,

employed about 1,800 people, and

produced annual sales of $500 million. The cooperative is selling its

Country Best Produce and Country

Best Adams Divisions to AMPCO

Distribution Services LLC for $8.3

million. The business had 223

employees and its sale should net

Agway $7.6 million. Meanwhile, the

Syracuse cooperative received a bid

of about $6.7 million from NSM

Feed of East Middlebury, Vt., for 

its Feed Commodities International 

division. 

LOL member promotes

farmer-to-farmer aid

“Global leaders may sit around tables

and discuss peace, but farmers helping

farmers will build peace, because farmers know that peace doesn’t have a

chance where people are hungry.” That

was Pete Kappelman’s message at a

with Opportunities Industrialization

Centers International, include: technical assistance and education work with

rice, fruit and vegetable cooperatives;

organizing new cassava cooperatives;

and curriculum development and

design and information technologycapacity building with the Cooperative

College in Kumasi, the sole institution

of higher learning in Ghana dedicated

to cooperative education. Ghana’s

extension personnel are also being

taught about cooperative organization

and methods. These efforts and similar work done recently in Senegal

have involved a wide range of publicand private-sector partners, many of

which have been named above, plus

the U.S. Peace Corps, the Federation

of Southern Cooperatives, CLUSA

and USAID.

What are the benefits emanating

from such international work with

cooperatives? By helping developing

nations adopt Western-style cooperative business structures that raise

farm incomes, we will build stronger

trading partners and related economic relationships. Cooperatives also

help export that most fundamental of

all American values: democracy in

action.

By James Haskell,

Acting Deputy Administrator

Rural Business-Cooperative Service

Commentary continued from page 2
36 January/February 2004 / Rural Cooperatives

recent press conference in Washington,

D.C., held to showcase the efforts of

the Volunteers for Peace program of

the U.S. Agency for International

Development (USAID). 

Kappelman, a dairy producer from

Two Rivers, Wis., and vice chair of the

board of directors of Minnesota-based

Land O’Lakes, discussed his trip to

Malawi in sub-Saharan Africa. He

worked there on a USAID-funded

project designed to foster individual

family dairy production and cooperative marketing of their milk to provide

better nutrition for families and to

stimulate economic development for

their communities.

“The Volunteers for Prosperity initiative will allow Americans to play an

expanded role in assisting people in

developing countries, and give Land

O’Lakes the opportunity to send more

of its farmers and employees on volunteer assignments that build the foodproducing capacities of those nations,”

Kappelman said.

“Volunteers for Prosperity is a vehicle for practical action. It facilitates the

opportunity for concerned and dedicated American professionals to help

meet people’s basic needs and lay the

foundation required for peace to exist,”

he said.

Established in May by President

George W. Bush, Volunteers for

Prosperity is a new volunteer-based

initiative designed to support major

U.S. development initiatives overseas,

using the talents of highly skilled

Americans who work with U.S. organizations in helping to promote health

and generate prosperity in countries

around the world.

NCRA invests $340 million

to settle clean air suit

National Cooperative Refinery

Association (NCRA) will invest $340

million to install pollution-control

equipment at its refinery at

McPherson, Kan. The environmental

enhancements will be completed within two years. The cooperative opted

for the pollution controls to settle lawsuits with the Environmental

Protection Agency (EPA) and the

Kansas Department of Health and

Environment. The settlement included

a $350,000 fine. The investments were

part of the cooperative’s clean fuels

modernization project aimed at meetImperial, because of the bankruptcy

and the uncertainty of receiving the

balance of payment for the 2000 crop.

A sugar company without sugarbeets

loses value fast. With the real possibility of not having beets to process, the

new cooperative was able to negotiate

the letter of intent with four separate

agreements and a lease agreement in

the event the purchase could not be

completed by harvest time. The negotiated purchase price was $83.5 million

and the agreements were approved by

the bankruptcy court. 

The cooperative successfully contracted growers to produce the 2001

crop. After the contracting was completed (114,000 acres), Imperial

informed the cooperative that it could

not continue to run Michigan Sugar,

rebuild the factories and pay the growers the remaining balance owed them

for the 2000 crop. Agreements were

finalized and the growers were paid all

but $2.44 per ton (approximately 7

percent of the total value) owed them

for the 2000 crop. 

In June of 2001, a co-op stock offer

was made to area growers for $200 per

share. Each share required, and

allowed, one acre of sugarbeets to be

delivered to the cooperative. 

That same month, the cooperative

received approval of a $5 million loan

from the state of Michigan, at no

interest, for five years, to be used for

the purchase of the company. In

August, a $500,000 matching funds

grant was approved by USDA Rural

Development for use of startup operating expenses.

The sale of shares was progressing

slowly and the cooperative was having trouble raising capital for the

purchase. Imperial Sugar changed

chief executive officers and the new

CEO wanted to sell Michigan Sugar.

In a meeting in October, the new

CEO offered to lower the purchase

price by $20 million (making the new

price $63.5 million) and to finance

the transaction. This was exactly

what the cooperative needed and the

share offering became over subscribed. The purchase was completed

on Feb. 12, 2002.

The first year under cooperative

ownership, Michigan Sugar Co. produced a record amount of sugar —

over 630 million pounds. The 2003

crop that has just been harvested is

also an excellent crop.

Michigan Sugar Company provides over 350 full-time jobs and

1,000 seasonal jobs. The company

adds $180 million to the Michigan

economy.

The grower-owners and employees

of Michigan Sugar Co. are proud to

produce pure and natural Pioneer®

Sugar with only 15 calories per teaspoon. ■

USDA helps Michigan sugarbeet growers purchase processing plant continued from page 10

LOL Dairyman Pete Kappelman, left, and

Ernest Bethe, LOL ABCI, right, are joined

by Malawi associates including the manager (yellow headband), chairman of the

board (top right), and Austin Ngwira, LOL

Malawi country coordinator (top left) at

the milk bulk cooperative. (LOL Photo)
Rural Cooperatives / January/February 2004 37

ing EPA standards for low-sulfur fuels.

Harmful air emissions will be reduced

by more than 3,000 tons a year.

Another $1.5 million will be spent

to clean up an underground water

contamination zone south and east of

McPherson. NCRA officials spotted

trouble after an audit in 2000 and disclosed its findings to the environmental agencies. The inter-regional cooperative is owned by, and provides

petroleum supplies to, CHS Inc.,

GROWMARK Inc. and MFA Oil Inc.

USDA, NRECA seek to

boost renewable energy use

Agriculture Secretary Ann Veneman

has singed a memorandum of understanding between USDA and the

National Rural Electric Cooperative

Association (NRECA) to identify and

advance voluntary opportunities for

rural electric cooperatives to partner

with farmers and ranchers to reduce

greenhouse gas emissions. The agreement emphasizes the potential for public-private cooperation in research,

standards development and education

in communities served by rural cooperatives. The goal is to increase the use

of renewable resources to generate

electricity. 

NRECA will help co-ops to increase

the use of renewable energy, including

biomass gasification power plants,

waste-to-energy systems and wind and

solar power. It will continue research

and development of new technologies

and will explore ways to integrate

renewable electricity into the grid.

installing a lighting system for a local

high school’s soccer field. 

The co-op hasn’t limited its efforts

to its service area. It has a sister co-op,

Coopelesca, in Costa Rica, to which it

donates engineering assistance and

training. Adams also recently donated

surplus maintenance vehicles to the

Costa Rican cooperative, as well as the

national electric company in

Guatemala. 

Promoting business, creating jobs 

Despite growth in the Adams service area, it is not heavily industrialized. However, outside the town of

Shippensburg stands a huge, 650,000-

square-foot factory and warehouse

that is home to the Beistle Company

– the oldest and largest manufacturer

of paper party goods in the world.

With a payroll of over 450 people, the

company is vital to the local economy.

Ken Strayer, plant facilities superintendent, and Ron Parr, assistant supervisor of the maintenance department,

say the co-op goes beyond supplying

power by providing energy efficiency

and safety advice. “I could not imagine

a better relationship,” says Parr. “If we

have a problem, they’re right here or

on their way.” 

Strayer and Parr say a good example of how the co-op goes beyond supplying power is its energy-efficiency

advice and safety services. Power utilities use infrared detectors to scan

switches, lines, and other equipment

for hot spots, indicating faults or

potential problems. When Adams

crews are doing scans in the area, they

stop by Beistle to check the plant’s

electrical junction boxes.

The biggest benefit Beistle enjoys

from being an Adams member, according to Parr, is the help it receives in

keeping costs down. “They analyzed

our heating and air-conditioning needs

and suggested a new work schedule to

minimize power usage at peak times.

At the time, we had a four-day, 10-

hour work schedule. We tried their

suggestion, an eight-hour day ending

at 2:30 p.m.”

Management originally presented

the new schedule to the employees as

an experiment. “They agreed to go

along with it because we’re a profitsharing firm, and they benefit from

any money we can save,” says Parr.

After trying it for a while, the workers

actually preferred the new hours. “A

lot of our people are mothers with

school-age children. Now they can be

home with their kids after school. And

we’re saving about $12,000 a year by

avoiding peak power-demand periods.” 

The co-op also studied the plant’s

lighting requirements using a software

program called Lighting Technology

Screening Matrix (LTSM). The software looks at each lighting fixture in a

facility and suggests more economical

alternatives. As a result, plant management spent $140,000 to switch to more

efficient lighting systems. The changes

paid for themselves in only two years,

Strayer says. 

Even minor items, such as exit

signs, have come under scrutiny. The

company used to spend four hours a

week checking each one and replacing

burned-out light bulbs. At the suggestion of Adams staff, the signs were

replaced with units that use light-emitting diodes (LEDs). These not only

last far longer, but also save the company $1,000 worth of energy per year,

in addition to labor savings.

“Most vendors encourage you to

buy more from them,” says Beistle

president Tricia Lacy. “Adams encourages us to save more money. They

work with us to make us stronger. It’s

very much a partnership.”

Co-op members reap 

$11 million patronage

In part due to its load-management

efforts, not only has the cooperative

managed to keep power prices down, 

it has also returned more than $11 million in patronage refunds to its 33,000

members since 1991, including a record

$1.29 million in December 2002.

Adams’s efforts to go the extra mile

for its members are repaid by loyalty

and friendship. 

“People often go out of their way to

stop by and chat, instead of dealing

with us by mail or telephone,” says

Spahr. “And during the storm almost

everybody was polite and considerate

when they had to call in.” 

The co-op and its members have

the kind of relationship most urban

utilities can only dream about. ■

Meeting the test continued from page 19
38 January/February 2004 / Rural Cooperatives

PCCA net margins double

as co-op marks 50th year

It was a fitting

financial and marketing performance that

marked the 50th

anniversary of Plains

Cotton Cooperative

Association (PCCA)

at Lubbock, Texas.

Total net margins of $7.6 million for

fiscal 2003 (ending June 30) more than

doubled the 2002 performance. PCCA

also distributed $15.2 million in cash

patronage to its members. 

The increase stemmed from an

improved denim market for the co-op’s

textile division, record setting warehouse division performances and good

overall marketing volume. PCCA

President and CEO Van May said

working capital increased, as did

patron equities. “We had a tremendous

turnaround year in our textile division

and posted an overall net margin of

more than $4 million while most of the

industry struggled.” 

USDA to provide $1 million in grants

for rural home health care co-ops

USDA is providing $1 million in

grants to promote the establishment of

rural home health care cooperatives.

Deadline for applying for the grants,

provided under the Rural Community

Development Initiative (RCDI), is

Feb. 13, 2004. The grants are to be

used for pre-development work or

revolving loans. 

“Creating a strong network of rural

health care services is critical to

improving the quality of life of families

living in rural areas,” says Agriculture

Secretary Ann M. Veneman. “These

grants will support community-based

efforts to establish home-based health

care cooperatives that will help meet

local health care needs.” 

Pre-development grants to assist

cooperatives with providing outreach

to home-based health care providers,

assessing local-level human service

provider needs and assisting with the

organizing and implementation of a

successful cooperative structure are

available to qualified public bodies or

nonprofit-based community development organizations. 

Grants to assist in the funding and

administering of a revolving loan program to provide start-up and operating

funds to newly created home-based

health care cooperatives are available

to qualified public or nonprofit intermediary organizations (including tribal

organizations). 

For revolving loan fund grants,

recipients are required to obtain

matching funds equal to the amount of

the USDA grant. Eligible applicants

must be located in rural areas with

populations of 50,000 or less. Funding

of selected applicants will be contingent upon meeting the conditions of

the grant agreement.

Detailed information about grant

requirements and information on how

to apply is available in the Federal

Register or by visiting USDA Rural

Development’s Website at:

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

■

Recipient Grant Amount

Midwest Grain Processors, IA $ 150,000 

Mountain States Lamb Cooperative, WY $ 200,000 

National Trail Biodiesel Coop., IL $ 33,000 

NC Farm Bureau Foundation for Agriculture 

in the Classroom, NC $ 53,700 

Nebraska Turkey Growers Cooperative, NE $ 120,000 

Norpac Foods, Inc., OR $ 55,676 

Ohio Premium Pine Cooperative, OH $ 78,950 

Olive Growers Council, CA $ 148,250 

Organic Essentials, Inc., TX $ 450,000 

Ozark Mountain Pork Cooperative, MO $ 420,000 

Palouse Grain Growers, Inc., WA $ 24,955 

Planters Cotton Oil Mill, Inc., AR $ 497,000 

Planter’s Grain Cooperative, TX $ 349,240 

Premium Ag Products, LLC, MO $ 349,990 

ProFac, NY $ 180,000 

Progressive Producers Nonstock 

Cooperative, NE $ 450,000 

Purchase Area Aquaculture Cooperative, Inc., KY $ 139,700 

Santa Fe Family Farmers Cooperative, NM $ 51,510 

Schoharie Co. Coop. Dairies, Inc., NY $ 15,000 

Seafood Producers Cooperative, WA $ 48,000 

Recipient Grant Amount

Sequim Growers Cooperative, WA $ 85,084 

Siskiyou Sustainable Cooperative, OR $ 18,875 

Southeast Nebraska Alternative Crops Association, 

Nonstock Cooperative, Inc., NE $ 96,355 

Soyex Cooperative, IA $ 149,000 

Stateline Bean Producers Cooperative, NE $ 500,000 

Sunrise County Wild Blueberry 

Association, Inc., ME $ 5,000 

Sunsweet Growers, CA $ 500,000 

Texas Aquaculture Cooperative, TX $ 245,000 

Texas Hair Sheep Producers Coalition, TX $ 145,194 

TOPC Texas, LLC, TX $ 249,500 

TransCon Ag, Inc., MO $ 332,119 

Two Rivers Grape and Wine Cooperative, IA $ 150,000 

United Cooperative Farmers, Inc., MA $ 248,250 

United Farmers Cooperative, NE $ 367,500 

Upstate Farms, NY $ 20,000 

Ursa Farmers Co-op, IL $ 30,000 

Valley Fig Growers, CA $ 34,409 

West Bend Elevator, IA $ 30,500 

West Central Cooperative, IA $ 140,000 

Western United Dairymen, CA $ 299,871 

Agribusiness, co-ops awarded $28 million in USDA grants continued from page 11
Rural Cooperatives / January/February 2004 39
40 January/February 2004 / Rural Cooperatives

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